Chapter 3 – Idea Generation [ENK]
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Idea Generation
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Original ideas
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Search & spin
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Validating ideas through research
Case study on idea to profits
Idea Generation
The first step in establishing an entrepreneurial venture is to come up with the
idea. Success for the entrepreneur depends on how well this idea is executed.
This in turn depends on having a well developed strategy crafted around the
idea concept. Ideas may come from a variety of sources including the following:
 Consumer insight – consumer research may alert you to an unmet
consumer need that you can provide. This research could take a
variety of forms including surveys and focus groups where consumers
are asked about preferences or specifically, about a particular
category or industry. In some instances, the complaint of a customer
may be a source of good ideas directly relevant to how to provide a
better service or product that meet those complaints. 75% of new
product introduction has come from consumer research.
 Competitive Response – the success of currently existing companies
may alert you to certain product development opportunities.
 Personal or Professional Experience – based on your own experience
you may become alert to a gap in the market place.
 Hobbies or interest – Many people in pursuit of their hobbies have
founded very successful companies,
 Franchises – provide a proven business format which may be attractive
to prospective entrepreneurs. The advantage of this option is that the
franchise owners would have researched the idea thoroughly and in
many cases have several successful examples of the idea being
implemented. There is therefore a ready pool of knowledge base that
the franchisee can rely on.
 Media – the media is a source for ideas and business opportunities.
Scan magazines like The Economist or look through the classified
pages of Daily Graphic or Ghana Review for example.
 Exhibitions – also provide a good source of business ideas as it provides
a forum to showcase new products and service ideas, as well as an
opportunity to meet several people such as manufacturer's
representatives.
 Brainstorming – is another way of generating ideas for new business.
A good idea though is not enough. You must develop that good idea into a
good concept. A good concept should meet:
1. Consumer taste – the concept must be one that customers are willing to pay
for again and again.
2. Number of potential buyers - the category of customers willing to pay for the
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product or service must be big enough to ensure that the venture is
economically viable for the entrepreneur.
Purchasing Power of potential buyers – the target group must have sufficient
purchasing power to be able to make the venture worthwhile. A concept for
a small car to carry students to lectures may be a good idea but the number
of students who would be able to purchase such a product might be so small
as not to make it worth while.
Return on investment: Most concepts would require investment. A venture is
only worth pursuing if the investment required to bring the concept to fruition
would provide at least a reasonable level of return, given the risk involved in
the particular venture.
Individual values and interest: The best idea in the world is completely useless
in the hands of an entrepreneur who does not have a passion or interest for
that type of venture or whose values are inconsistent with the idea. A business
concept around alcoholic beverages may be of no use to a devout
pentecostal priest.
Value proposition – the value offering from the product or service should be
one that can easily be sold to consumers and would last the test of time
(subject to minor tweaking from time to time). For example the value
proposition for the consumer should not be tied into a short term fad that
would disappear over night.
The entrepreneur's resources & skills – The entrepreneur must have the requisite
resources or have ready access to the skills and resources required to start
and develop an enterprise.
Once a concept has been generated that meets the criteria above, the next
stage would be to use further consumer insights to validate (or tweak) the
concept.
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