Where do the best entrepreneurial ideas come from? And can you train yourself to identify the really good ones early?
Often, especially for first-time entrepreneurs, the best answer can be to try to cross-pollinate two (or more) proven ideas or insights: Take Insight A, add Insight B, and see if they lead you toward a great, new venture idea. Here are a few strategies to show you how it's done:
1. Import or Export Proven Trends
Thirty years ago, Americans visiting Europe would often remark on the café culture in major cities. Why did Paris, Vienna, Venice, and Prague have vibrant coffee shops on virtually every street, but not the U.S.? Of course, a few enterprising entrepreneurs took notice as well, and they combined European cafes with an understanding of American consumers. Now it seems there's a Starbucks and/or independent coffee shop on every corner in every city in America.
You don't have to go that far, though. Ask yourself, what are hipsters doing in Brooklyn? What are the sports fans doing in Chicago? What are the soccer moms doing in Houston? What are the publicity hounds doing on the red carpets of Los Angeles?
Explore what trends are hot in other cultures, and see if they can be transported to where you live.
2. New Needs and Niches
Another way to ride the coattails of other companies' proven business models is to segment their customers. Figure out which needs and niches they don't fill as well as others and devise solutions.
As an example, think of Facebook. At its start, Facebook was limited to Harvard University undergraduates—and then to other Ivy League universities, then to all college students, and finally to anyone with an email address.
If Facebook were a country now, it would be the third largest in the world. Your grandmother is probably on it. The boy or girl you least want to remember from high school has probably tried to "friend" you through it.
So what doors might that open for aspiring entrepreneurs? Take a look at how entrepreneurs are combining social networking with the growing interest in mobile applications. That's how you get a company like Here on Biz. Think of all the other combinations of proven models that could be applied to new niches.
3. Entry-Level and Mid-Market Products
Often an innovative company brings a technologically advanced product to market only to experience "feature-creep." Over time designers add so many bells and whistles to a product, that large segments of customers can no longer afford to make the purchase.
Clayton Christensen has written extensively about this phenomenon in The Innovator's Dilemma.
Left behind, there might be a market for slower adopters who are willing to wait a few years for similar products at a lower price, or who simply don't want all the bells and whistles to begin with. This creates opportunities for other entrepreneurs to come into an established market, and to focus on the lower end.
4. Serving Macro Changes
Americans, Europeans and Japanese are growing older. The Indian and Chinese middle classes are growing. The world is growing ever-more connected, more environmentally conscious, and more innovative than ever before. When you think of how the world around you is changing, think of how those changes can mean opportunity for you as an entrepreneur.
For example, consider some of the needs that aging baby boomers develop as the U.S. population shifts towards a higher percentage of older citizens. Possible opportunities include anything that would address people's hopes for financial stability as they live longer, or help them face their fears of disease and aging.
5. Booms/Busts in Larger Markets
Even if you find a great niche market, there is always a likelihood that established players will move into your field once they see your success. Top clothing brands, for example might partner with H&M or Target to launch a budget line in order to compete with less-expensive, off-brand competitors. Right now entrepreneurs in the clothing industry are trying to provide custom tailored clothing at lower cost (Blank Label is a good example).
You can hedge against this risk to some degree by finding new opportunities that are a bit tangential to a more obvious market.
Take the current push toward green tech and clean energy, such as wind farms and turbines. Modern wind turbines are humongous machines, far too large to be transported on standard semi-trailers. Thus, an entire industry has grown up around giant trucks and massive train cars that are big enough to transport the blades and towers. Innovators in this tangential transportation industry don't necessarily care which wind farms make it or don't; they just care that the market itself survives.