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Many seemingly good ideas have ended up being colossal failures while many others are currently wounding up as a great mistake. The marketplace is filled with gallant business failures founded on so-called brilliant ideas that were never subjected to effective viability tests. Many organizations and entrepreneurs commit huge amounts of resources to the development of ideas that aren’t worth their attention. It is a given that every big business success story all around us was once an idea. However, one must not also forget that many sad losses also occurred as a result of embarking on an idea. Not every good idea is a market winner.
How do you then know if a business idea has the potential to succeed so that you can give it your all? No one can tell for sure if a business will succeed or not because business success is a result of the interplay of multiple factors. Great ideas always give clues likewise bad ideas. Subjecting every idea to a certain test is the best approach every manager should adopt. Let's examine some of the tests you could use to assess the viability or otherwise of an idea.
What Market Gap Is It Filling?
Every successful business is a creation of market gaps. A specific unmet need was identified and calculated steps were made to meet it and at a cost, the customer was willing to pay. The idea of Facebook came when Mark Zuckerberg identified the disconnect among school leavers and he went ahead to find a solution by devising a platform that keeps schoolmates constantly connected and that transformed the Facebook idea into a multi-billion dollar business. Also, Google identified a gap in the search engine experience and sought to improve it. By developing an algorithm that presents people with a more efficient and organized search result users found Google as the best browsing alternative if not the only option. This singular idea has since catapulted Google into a multi-billion dollar enterprise.
How Much Information Was Captured in the Conceptualization?
The amount of information taken into account in the formulation of the idea increases the chances of its success. Detailed accurate information helps in capturing the target customer's pain points and needs. It also widens market and customer knowledge and makes it easier to generate leads and ultimately market success. Data-driven ideas provide the insight needed to build great products that solve critical problems for real people. Ideas based on multiple perspectives are more likely to avoid major industry pitfalls and harness opportunities that enable them to win in the marketplace. Customer knowledge increases the chances of a business's success. Data also helps one recognize and quantify needs in the marketplace enabling you to either fine-tune or jettison the idea.
What Makes It Unique?
Every day, countless businesses are born and they are targeting the same market. What sets the idea in question apart? What is it bringing to the table that never existed? A Business dies or thrives based on how well it distinguishes itself. When the competition in the Nigerian transport industry was about who had the best fleet of big luxury busses, God is Good Motors ventured into the smaller busses category but with a strong focus on excellent travel experience. As the pioneer of the small bus category, God is Good Motors had no known competitor enabling it to enjoy a near monopoly and quickly emerged from being a small player by the corner to becoming the controlling brand in the transport market with a net worth running into millions of dollars. How do the value propositions of the idea differ from the rest?
Who Will Buy It and Where Are They?
Any idea that targets everybody will be lost in the market. If you chase two rabbits at the same time you will end up with none says a Chinese proverb. You simply can’t please everyone. A business idea should have a specific customer in mind. Any idea worthy of the market must provide an answer to who the buyer is and where are the buyers located. Random ideas hardly win. It is well-curated and targeted ideas that swing the numbers and achieve remarkable market success. One of the gains of identifying the ideal target audience of an idea is that it makes the development of a clear and effective marketing strategy to reach them possible.
How much value does it offer?
The value of an idea is determined by the quality of the problem it is designed to solve. What problem or set of problems is the idea before you are solving? How will it help the target audience increase revenue or improve effectiveness at a cheaper cost? Identifying the problems an idea solves will help you identify the real people it is supposed to serve and their social and economic demands and demography. An idea that solves critical problems for a higher number of people will most likely succeed.
Is it cost-effective?
Excessive overhead cost is one of the major reasons why a lot of businesses fail. The cost of executing an idea could be the difference between its success and failure. The dynamics of pricing a product begins at the ideation stage of the business. An overwhelming and disproportionate cost implication will certainly increase the odds against the viability of the idea. The high cost of idea implementation automatically translates to a high cost of product or service. Price is a critical driver of market success. Customers want great value at a low cost. Price can drive a product so high that nobody bothers to buy it. What is the use of a great product or service nobody can afford? You should consider how much is needed to implement an idea and how much it hopes to fetch. If the answer is in the negative, creating a business around the idea won't make any economic sense.
Resist the temptation to jump into any seemingly good idea without subjecting it to unbiased and rigorous tests. It saves you from painful financial losses and unnecessary energy dissipation while helping you identify promising ideas. The 6 tests mentioned above are not exhaustive, they are simply a few guides to ascertain the prospects of an idea before committing resources to it.
