- Types of Opportunities
- Opportunity Recognition
- Process of Opportunity Recognition
- Refinement Process
- General Advice on the Idea Generation Process
- Evaluation of a Business Idea
Types of Opportunities:
The first thing you need to build a company is an opportunity. Successful ventures are usually built on one of the following three types of opportunities.
Opportunities based on a Paradigm Shift:
Opportunities based on a paradigm shift mean that opportunity exists because of both a new market and a new product. A paradigm shift is a fundamental change that changes the way people behave and business is done. Paradigms do not change every day and such fundamental changes probably occur only every 10 years. A paradigm shift usually creates a whole new industry and market. Examples for how a paradigm shift has created new industries are the semiconductor industry in the 70s, the personal computer industry in the 80s and the internet industry in the 90s. Such new markets are often called evangelical markets, because in a paradigm shift the market is not yet existent and the early players have to develop the market. Thus companies that take advantage of a paradigm shift often enter untouched market space and there is little understanding of the market. Examples of such companies are Netscape and Amazon.com. The early companies in a new market face a tremendous challenge. They have to cause a behavior that does not exist today to come into existence and to become popular I would probably not try to be a pioneer again. Trying to create a market is a very difficult challenge. Especially if this is your first time around. It is an incredible thing to do a market where there are no models, no analogues and you cannot find somebody who has done before like you. For that reason it is difficult to attract investors, to attract customers because they are not used to paying what you are providing.
Opportunities which are based on a paradigm shift are there for very risky, but they also offer tremendous rewards.
Opportunities based on a New Product or Business Model
Compared with a paradigm shift, here opportunity exists because of a new product or new business model in an existing market. It is very difficult to create a market from scratch such as in a paradigm shift, and indeed most successful companies in Silicon Valley are rather based on this concept of a new and successful product in an existing market. The most interesting existing markets are so-called flash point markets, meaning a market where you have pressure on two perspectives: There is a problem that is very pressing, painful, and when you inject a solution into that market, the market ignites. Suddenly there is a solution space and the product gets consumed in huge amounts because there had been latent demand in the market. The importance of the need will determine the rate at which the new product is accepted. If the need it urgent, it will be a flash point market that ignites. If the need is less pressing it will be more of an evolutionary development.
Opportunities based on a Me-too Product:
Here opportunity exists because of an existing but improved product in an existing market. The product is usually faster, cheaper or better. Successful me-too products are usually superior in an order of magnitude in one of these dimensions.