Startups - finding a winning idea

I have been researching the sources of successful start-up business ideas for our forthcoming workshops for AQA AS Business Unit 1. A really interesting exercise, though I’m left unconvinced that the standard textbook answer tells the whole story.

The new AQA AS Business Studies Unit 1 specification focuses students on the pre-trading process of setting up a new business - the journey from an idea to a business launch. It is the first time that the AS course has included this aspect of business, so I was intrigued to check out the approach taken by the various new AS textbooks.

I must admit to feeling a little disappoinment at the depth of the textbook response to this new area. The stock, common answer to the question “where do businesses get their ideas from” seems to be “brainstorming”. A couple mention in passing that entrepreneurs take inspiration from their business or personal experience. Only one textbook suggest that an startup entrepreneur might get the business idea from “observation”.

This is shame - hopefully later editions of these popular texts will devote more space the concept of a good business idea, and the sources from which they arise. There is a wealth of accessible information on the topic and dozens of interesting case studies that enable students to appreciate the diversity of sources for business ideas.

Rachel Bridge’s weekly column in The Sunday Times is a must-read for anyone looking for a topical example of a successful start-up, and I really like the regular “Starting Out” feature in the Telegraph money section.

David Lester, founder and editor of Startups.co.uk, has recently published a superb book profiling the stories of 30 successful startups. The sub-title? “How 30 good ideas became great businesses”.

I have pulled my research together in a presentation that we’ll be using at the AQA workshops and which will also be included in our new 2008 Teacher Presentation Pack for AQA Unit 1.

Thinking about the emerging themes from the presentation, I jotted down the following notes:

Good business ideas:

- Solve a problem: the challenge is to work out whether and how potential customers can be prepared to pay for their problem solved
- Offer a better, cheaper way than the competition
- Are simple & practicable
- Are delivered quickly - speed to market is often essential
- Have a clear focus
- Anticipate trends & exploit growing markets. An idea exploited in a growing market is much more likely to succeed than one launched in a mature or declining market.

Returning to those textbooks, is it right that brainstorming is the key process that identifies a good business idea?

I’m not convinced.

To my mind, brainstorming implies a group or collective effort rather than inspiration generated by an individual. But I haven’t come across many business ideas that were developed by a group (maybe the popular case studies just like to focus on individual entrepreneurs).

I’m more convinced that good business ideas come from:

- Thinking laterally
- Listening - to customer complaints, strangers
- Watching/observation
- Other people: there is nothing wrong with copying someone elses good idea and doing things better!