Entrepreneurship Essentials 1: Coming Up With a Business Idea
A comprehensive guide on business idea generation.
Objective
In this module, we share insights on overcoming one of the most common initial barriers when starting — a compelling business idea.
Topic(s):
The Historical Evolution of Entrepreneurship
Finding Your Giants
Idea Development and Prototyping
What Makes a Good Business Idea
Activities:
Create Your Entrepreneurial Vision
Choose Your Role Models
Use Design Thinking to Come Up With 3 Business Ideas
The Historical Evolution of Entrepreneurship
The word "entrepreneurship" derives from the French verb "entreprendre", meaning "to undertake." It is the notion of undertaking ventures, risks, and proactively having initiative. From early explorers moving trade across seas, to medieval artisans crafting bespoke goods, an entrepreneurial spirit has always thrived amidst uncertainty and opportunity.
In the 18th century, the Industrial Revolution sparked a different wave of entrepreneurial activity, as inventors and industrialists capitalized on new technologies to revolutionize production and commerce, paving the way to the rise of mass production and large-scale corporations.
In the 20th century, academics began studying entrepreneurship as a distinct field. Theories such as Joseph Schumpeter's concept of "creative destruction" or Israel Kirzner's theory of entrepreneurial discovery and the different schools of thought have helped shed light on the complex interplay between entrepreneurship, innovation, and economic development.
Another major milestone was the emergence of the Dot-Com era in the late 20th century, completely disrupting how businesses operated. The internet changed everything: it democratized access to markets, resources, and information, giving birth to some of today’s most valuable companies and bringing terms such as startups and unicorns to our vocabulary.
A little disclaimer before we continue: Although this module is about discovering new business ideas, it is critical to emphasize that not all entrepreneurs are business owners. There are individuals within existing corporate structures, leveraging resources and support systems available to them to bring new ideas to fruition and address unmet needs in the marketplace. They are known as intrapreneurs.
Video: The Art of Entrepreneurship
Exercise: Creating an Entrepreneurial Vision
An entrepreneurial vision is a clear picture of the future you aspire to create through your business endeavours. It should be able to provide clarity, guide your goals and inspire action every step of the way.
Additional Resources:
Case Study: Entrepreneurship and the Industrial Revolution in Britain
Case Study: Bursting the dot.com "Bubble': A Case Study in Investor Behaviour
Finding Your Giants
Nothing is made from nothing. Like matter, we believe that one's achievements and insights are always built upon the knowledge and contributions of those who came before them, and we can leverage their wisdom and experiences to inform our endeavours.
“If I have seen further it is by standing on the shoulders of Giants.” — Isaac Newton
Role models are valuable sources of knowledge, advice, and perspective, helping us navigate challenges, make informed decisions, and stay grounded in our goals and aspirations. In addition to all the business lessons, role models also encourage self-reflection and introspection, giving us clarity about the qualities and attributes we admire and aspire to embody.
Video: The Role of Role Models
Exercise: Choosing Your Entrepreneurial Inspirations
Define: Think about the business leaders who have had the greatest impact on your development or in your fields of interest. Choose three to five individuals whom you admire and consider as potential role models.
Analyze: Research about each one of them to gain deeper insights into their background, accomplishments, values, and leadership styles. Identify specific traits, characteristics, or achievements that you find particularly inspiring.
Reflect: Take some time to reflect on how their traits align with your personal values, goals, and entrepreneurial aspirations. Define what each role model represents to you personally.
Integrate: Consider how you can integrate the insights gained from your role models into your daily practices and decision-making processes.
Additional Resources:
Idea Development and Prototyping
Our observations tell us that the most successful businesses are often built around the owners’ passions or professional experiences. Hence, before going any we would like to take some time to introduce you to a Japanese concept called Ikigai, meaning "a reason for being," which encapsulates the intersection of four elements: what you love, what you are good at, what the world needs, and what you can be paid for.
Ikigai represents finding one's purpose in life, where passion, vocation, profession, and mission converge for maximum fulfilment. It serves as a guiding principle for personal and professional development, encouraging us to pursue activities that bring joy, make a positive impact on society, and help us reach our financial objectives.
Complete now an Ikigai workshop.
Design Thinking
Okay, we’re back on track. It is time to generate and structure some business ideas. For this, let’s look into the Design Thinking methodology.
Design Thinking is a five-stage human-centred approach to innovation that focuses on understanding the needs of consumers, challenging assumptions, and iterating through rapid prototyping to create innovative solutions.
This is how it works:
Empathize:
This is the first stage, where the goal is to gain a deep understanding of the customers' needs, motivations, and challenges. By staying attuned to changes and developments in the market over a certain period, you will be able to identify untapped opportunities and areas ripe for innovation.
Define:
Based on the insights gathered during the Empathize stage, the Define stage involves synthesizing the information to define the core problems and opportunities within the market. This helps to frame the design challenge and set clear goals for the subsequent stages. The key is to remain open-minded and receptive to new ideas.
Ideate:
In the Ideate stage, you will brainstorm a wide range of possible solutions to address the defined problem. You shouldn’t be bothered by the quality of your ideas but rather generate as many ideas as possible without judgment.
Prototype:
Once you have a clearly defined idea, the next step is to create a representation or simulation of the potential solution. Prototypes can take various forms, from sketches, PowerPoint presentations, and mockups to physical and digital models - the goal is to quickly and cheaply get the idea to the testing phase.
Test:
Validating ideas early helps to mitigate risks and ensures that resources are invested wisely. This is done by gathering feedback on the prototyped solution, understanding the market demand, potential competition, and feasibility factors. The goal is to gather as much feedback as possible, incorporate it into your idea and understand if the idea is worth pursuing.
Video: Design Thinking: What is it and why should I care?
Additional Resources:
FREE Design Thinking Certification from IBM: https://www.ibm.com/design/thinking/
What Makes A Good Business Idea
Flavio Augusto has a simple system that we adopted long ago to measure the attractiveness of a business idea. He looks at three criteria: a) the potential to generate high margins; b) ease of scale and c) recurrence of need.
If an idea meets at least two of them - it’s a fairly good one. If an idea meets the three criteria, you might have a jackpot. If only one criterion is met, it is very average and could be a wasteful application of your time and energy.
Let’s take a closer look into each:
Margin: refers to the difference between the cost of producing or acquiring a product or service and the price at which it's sold. Higher margins generally mean higher profits, while lower margins may require cost-cutting or pricing adjustments to maintain viability.
Scale: refers to the ease of increasing a business operations size to accommodate growth and meet demand. This can involve expanding production capacity, entering new markets, or diversifying product offerings.
Recurrence: refers to the frequency or regularity of transactions. Recurrence is desirable for businesses as it provides predictability and stability in cash flow, making it easier to plan and manage operations.
Video: Evaluating a Business Idea
Additional Resources:
Reminder
This module is only complete when you have used all the learnings shared previously to come up with three viable business ideas. Until you have done it, don’t bother proceeding to the next modules as you won’t extract much value from them.
If you have any doubts, certain parts are unclear or any other feedback you might have, do not hesitate to share in the comments section below, or DM our Editor on LinkedIn.