A guide to discerning which ideas to pursue and which to set aside.
Hello, and welcome back to the second edition of this newsletter! In our previous issue, we explored the crucial concept of problem-centric ideation. This time, we delve into what makes an idea great. We’ll explore evaluating your idea and ensuring it’s one to pursue.
If you have a couple of minutes to spare, here are the Key Takeaways:
Find an idea that solves a problem that is important, underserved, and that you’re genuinely excited about.
Gauge a problem’s importance using the LUV framework: Large, Urgent, and Valuable.
Identify an underserved problem by evaluating the existing solutions out of 10. If the best ones are rated 4-6 by their customers, you have an underserved problem.
Building a new company is a significant commitment, so choose an idea you’re passionate about.
Do you have a great idea?
There are three main areas in understanding if your idea has long-lasting value to offer. You have to look for ideas that are:
Important
Underserved
Personally Compelling
Ingredient 1: The Problem is Important
To create a successful venture, your idea must tackle a problem that truly matters to a substantial audience. There needs to be many people willing to spend money for the solution you offer for the problem. Most startups fail not because the idea isn’t good but because the market for the solution is just too small. Your problem must be significant to build a scalable business and deliver lasting value.
Consider Uber, for example. It solved not one but many critical problems related to transportation: transportation availability, accessibility, and ease, customer experience, and driver-customer connectivity. These were very pressing issues associated with a core need, and solving them led to Uber’s large-scale success.
So, how do you identify a significant problem? The LUV (Large, Urgent, Valuable) framework is a great way to start:
Is the problem large?
Understand how many people are genuinely experiencing this problem, how often, and to what extent. If many are experiencing pain in that area, the problem has a significant impact, or both, then you have a large problem.
Is the problem urgent?
“Why now?“ is an essential question for evaluating your idea. Understand if the problem is urgent and if it is the right time to solve it.
Is the problem valuable?
People must value the problem enough to pay for the solution. To understand a problem’s value, consider if you can postpone solving it or find alternative ways to deal with it. Consider the problem’s prevalence and impact.
Remember that value emerges from the gap between the starting point and the desired outcome. So remember to pay attention to where your customer stands in relation to the problem.
One of three, and you don’t have a business. Two of three, and you have a business, maybe just not venture-scale (nothing wrong with that!). Three of three, and you’re onto something great. —Hunter Walk.
Ingredient 2: The Market is Underserved
People don’t easily change their habits and adopt new ways of doing things. The anxiety of embracing something new and the friction caused by the change make moving to different solutions or products uncomfortable. So people will not switch to your product if many excellent products exist in the same area.
Existing solutions need to be doing a subpar job of solving the problem. The founder of CRED, Kunal Shah, has an excellent framework for evaluating potential new solutions called Delta-4:
How would a customer rate the existing solution on a scale of 1 to 10?
How would they rate your solution?
Your solution needs to be +4 better for anyone to care about your product.
This also means that if the existing solution gets a 6 or higher (e.g., Google Drive), replacing them will be challenging.
But, if you ask your potential clients how they feel about their current service providers or products and they start cursing and complaining, you have an opportunity.
Ingredient 3: You’re Excited About Solving The Problem
Finally, the issue needs to be something you are willing to spend many years of your life solving. Building a new business takes a lot of time and effort. You’ll want to endure the difficulties associated with building up a company only if you’re passionate about your idea and the problem it solves.
Dylan Field, co-founder and CEO of Figma, highlights the importance of loving your idea:
“If you are, let’s say, three to four years in on an idea that you hate, you’re just going to burn out and you’re going to quit. It won’t feel good and you’ll be hating life. Don’t just go for an idea because it’s kind of working. Go for an idea that you really care about, because even if it doesn’t work, you’ll still learn from it and you’ll still have one.” —Dylan Field, via Elad Gil.
Bonus: Ignite Your Idea Generation
If you need inspiration to spark your idea generation, consider these questions:
Past or Current Pain: What product do you wish you had or have heard people wish they had?
Ponder and Probe: What are emerging trends and technologies? How important is the problem you’re exploring to potential customers?
Present pull: What problem are you currently facing with your startup that you wish someone would solve? Explore solving it yourself. What side project have you wanted to build that you haven’t?
Conclusion
Evaluating the potential of your idea is a crucial step toward entrepreneurial success. This is a quick guide to help you understand the potential of your vision and get some additional clarity on what you aim to accomplish.
Remember, a great idea is the cornerstone of every successful endeavor. Happy ideating!
We will be tackling how to validate your idea in the next issue. Don’t forget to share your thoughts and experiences on the framework in the comments below.
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