Finding Opportunities through Simple Questions
The secret to finding opportunity is to be curious, alert, and willing to run experiments with a high likelihood they won’t work, at least at the beginning. Often, an opportunity is the answer to some simple but powerful questions. Here are some examples:
- Why does it take so long?
- Why does it cost so much?
- Why can’t I…?
- What could I do with this new technology?
- Could I apply new analytical techniques to large data sets to create new possibilities?
- A new model works in a foreign country or a particular industry—can it work elsewhere?
- Can I turn a capital commitment into a rental stream?
- I have (or, somebody else has) extra capacity—could I figure out how to use it more productively?
- Can I deliver an existing product or service with a new business model (e.g., build to suit, online, etc.)?
- Can I cut out a middleman?
There are many entrepreneurial ventures that were formed to respond to these kinds of questions. They are taking time out of a system, lowering costs, going directly to consumers, making services more convenient, developing new technology-based products, or finding ways to leverage existing assets. Here are some prominent examples:
- Hyperloop Technologies is developing a super-fast, low-capital and operating cost transportation system for passengers and freight
- Boohoo manufactures and sells fashionable clothing in a fraction of the time required for traditional fashion designers and retailers
- Dollar Shave Club sells high quality, low cost razors and other men’s toiletries direct to consumers
- Indigo Agriculture harnesses the plant microbiome to create insect and heat-resistant, fast-growing crops that are environmentally safe and nutritious
- Stitchfix delivers styling services and clothing direct to women based on their preferences and analyzing choices by other customers
- Uber uses software to connect consumers with drivers who use their own cars
- Docusign allows users to securely sign and manage documents online
- Coupa enables companies to optimize their purchasing processes, saving cost and improving quality
- Boatbound enables owners to list boats for rent and users to rent boats and hire crews
- Rubicon Global has created a virtual national waste hauling and recycling network for large and small businesses
- Iora Health has a radically different model for primary care that improves health outcomes and lowers costs
Some of the ideas underpinning these companies have been replicated across the global economy. To illustrate, there are hundreds of Uber clones in different geographies – DiDi in China, GrabTaxi in Indonesia, and Ola in India. Indeed, “Uber” has become a descriptor for hundreds of new companies trying to apply the Uber model but in a different industry. You can even buy inexpensive software that allows you to recreate the Uber software architecture and adapt it to a new location or industry. And, there are services that aggregate all the possible transportation options – Uber, Lyft, etc. – in a consumer-friendly app.
The famous economist Joseph Schumpeter once described entrepreneurship as the process of creative destruction in which companies develop some combination of new products or new ways of commercializing existing products. Uber is an old product (think taxi service) but delivered in a completely different way – independent drivers using their own cars, all linked to customers in a multi-sided marketplace. Schumpeter’s description of entrepreneurial action can be extended by adding a “place” dimension – DiDi is mimicking an existing model but in a new place.
When I look at some of the great entrepreneurial successes in history, I have identified one other common theme – many ventures take an existing service or task that many people hate and make it much better. Ride-hailing services like Lyft and Uber are perfect examples. Getting in a taxi in many cities has been an unpleasant and frustrating experience for many. I don’t know about you, but I find the new services to be far more efficient, less costly, and more pleasant. I’m not saying these services are perfect or that all taxis are bad, just that the new model works better for many – competition is a great tool for customers.
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Resources of these articles are: Harvard Business School