The size of your market

Tuesday’s class covered Blue Ocean strategy and how to guesstimate the size and growth of a market. After an initial exercise on “plummer mathematics” the groups got the chance to apply both bottom-up and top-down market estimates on their projects. We also discussed the difficulties of estimating the market of innovative products that does not exist yet, as well as the common pitfalls of forecasting disruption. Ny bild (52)

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18 responses to “The size of your market

  1. ABC Tool (Amazon-Bestseller-Categories):
    A funny tool I found was called ABC-Tool. It is considered to be very simply by skimming existing data from the amazon web-page. All you need is going on the Amazon bestseller site and checking the bestsellers.
    When looking at the bestsellers you should always ask yourself three questions.
    1. Is it possible to find a substitute? (no-name)
    2. Is it possible to find an additional product which make the product better?
    3. Is it possible to customize the product to improve it and better satisfy the customer demand?
    I consider it as even a very funny product development tool because I’ve tried the bestseller button today for my first time and it is very interesting and crazy what people buy. I am pretty sure you can make something out of it.

    Make connections technique:
    This technique actually is new for me but I think its genius. You simply take two or more completely unrelated things and combine them in a random way you think this could be solution.

    [Cf. http://www.theweeklystartup.com/wp-content/uploads/2014/05/Top_Ten_Tools_to_generate_business_ideas_final.pdf%5D

    Steven Johnson is talking about the environmental perspective where good ideas come from. Some ideas from Steven coincide with what I found and some not.
    One thing which definitely is not the case with ABC- and make connections technique is the time you need to create an idea. You simply look or combine things already existing and it does not take a long time. With what I totally agree is the increasing possibilities of connectivity and exchange information. Especially the ideas above originate from this logic. It is very easy to borrow hunches from others combine them with your own ones and create something completely new. There are also so many ways like the internet and all its platforms and pages to find the last necessary piece you need to to fill up the last gap of an perfect idea like.

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  2. – Google trends
    With Google trends, Goodle adwords and Google keyword Planner it is possible to see trending topics and problems. These can be further investigated to invent potential products or services. Especially the “breakout” shows topics with high attention and how the development was over time. Further it visualises what topics and themes are related to the topic which can show interesting issues or keypoints.
    A small look into the website showed me some interesting issues, but it shows only the topics – not the idea which is to be created.

    – SCAMPER Technique
    SCAMPER stands for Substitute, Combine, Adapt, Modify, Put to another use, Eliminate and Rearrange/Reverse. Every of these steps gives the opportunity to adapt an existing product and thereby generate something new. This can give further value to a product.
    Here one has to be careful that the product does not end up in a ‘Christmas tree’.

    The video “Where good ideas come from” by Steven Johnson shows that good business ideas need time to evolve and be discussed iteratively and from many different point of views in order to create a good idea in the end.
    In regard of this every tool/method to generate ideas can be useful to get new ideas. With Google trends, it is possible to illustrate related problems (hunches have to collide to build something better) to the topic and discover further value potentials and needs.
    The ability to change your idea gives SCAMPER as well.
    The thing what these methods are lacking is the aspect of connectivity with other people in order to exchange, get new ideas/input and different mindsets together to enhance ideas.

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  3. This is my review of Business idea generation, since I was away Friday the 24/3.

    https://www.forbes.com/sites/alanhall/2012/07/10/how-to-create-a-world-class-business-idea-in-six-easy-steps/#326cac192773

    Forbes suggests a six-step-process for creating business ideas:
    1. Infinite ideas – Find the idea that are “perfect” for you to develop. Use your own imagination or take a researched idea and bring it to the market
    2. Knowledge – To study, listen to instructions and experiences will help build businesses. This way you will see problems and opportunities.
    3. Connecting the Dots – Ideas comes from connecting related facts. A business idea comes from connecting facts in a new way, that has not been made before. Hence, you need to have knowledge. (Just like the economists Joseph Schumpeter and Brian Arthur define disruptive innovations: they are only new ways of combining existing innovations and technology.)
    4. Test the idea – make experiments to prove the success.
    5. Timing of ideas – the audience has to be ready for the product. Wait with your idea if not.
    6. Good idea? – Don’t waste time, energy or money on ideas that will not be successful, and do this in an early stage.

    https://www.entrepreneur.com/article/74184
    Entrepreneur suggest the following ten methods:
    1. Start with family – Take help from your family and what you can learn from them.
    2. Get a little help from your friends – Your friends might have good ideas that can widen your idea bank. “Keep your antenna up” and be perceptive to any idea from your surrounding.
    3. Look at the things that bug you – If you find a problem, or something missing – make use of that and make up a solution!
    4. Tap your interests – It is easier to make something good and successful if you really love it.
    5. Travel – It opens your eyes for new ideas and maybe they have some cool things in that country that you home country have not, so you can introduce it.
    6. Keep your eyes open – When there is something that piques your interest think about why the situation was special? Narrow it down to one single idea.
    7. Examine old mousetraps – then build a better one – If there is a product that do not work the way you want it to do, create a better one!
    8. Take it to the streets – In the city you can find what is trendy, which can give great ideas.
    9. Sleep on it – Dreams are helpful, and a good idea might pop up but make sure you write it down before you fall asleep again.
    10. Check out the net – Search for What’s new, What’s hot, where trends and new web sites can be found. It may trigger an idea or concept you have never thought of before.

    The video presents ideas as hunches where the majority comes from slow evolving hunches. Some ideas come early but we might not be ready for it yet and hence it takes time to develop it. This is also stated in both Forbes six-step-method as mentioning timing as an important aspect. The Entrepreneur believes travel and sleep/dream can help you which is neither an instant idea creating method, even though these methods do not discuss the development of the thoughts or ideas.

    Connecting the dots can be compared with the collisions of smaller hunches to create a bigger idea. Entrepreneur suggest to look out on the city streets for trends, and if combining this with a friend’s idea a connection is made.

    Further, according to Forbes you need a lot of knowledge which takes time to build. In the same way the video concludes that the driver of scientific innovation is nowadays the internet access which increases connectivity. Through this, we can borrow hunches and connect them into a complete idea or reach the knowledge piece missing for out idea to be compete.

    A conclusion and a message that is common for the three is that you cannot only rely on yourself when creating business ideas. Make use of family, friends, your network and the internet to get knowledge and find ideas.

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  4. After watching several videos regarding the subject of market sizing, no one can argue that these estimations in general are not rough nor uncertain.-Especially when the market is immature or new as in many start up cases. However showing understanding and respect for the market estimation are heavily stressed to reach success with investors. The most common ways to determine the market size is either a top down or a bottom up approach, which is explained in this video, https://www.youtube.com/watch?v=xqYPBKAh7Gs. The top down approach implies that we should breakdown the broadest parameters, much like a whole industry or market, as the bottom up approach relies on a calculation where you start off with small variables used in the very business model to calculate upwards. However there could still be great uncertainty in these numbers, but a video suggesting a good take on this estimation issue is the following: https://www.youtube.com/watch?v=3hMjR50cTIw. In this video the presenter points out the benefit in combining the top down and bottom up approach with a benchmarking strategy to conclude that your numbers are in line with reality, to make sure that the estimation is as good as possible.

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  5. Business idea generation

    In his speech “The Art of Innovation” Guy Kawasaki presents 11 steps that includes business idea generation and realization, where the first 8 relates to how you generate and evaluate your business idea.
    1. Make meaning – decide how you want to change the world first, then you’ll find a way to make money
    2. Make mantra – decide why you should make meaning
    3. Jump to the next curve – find a disruptive innovation
    4. Roll the Dice – have a great product
    5. Don’t worry, be crappy – the first thing of something will have elements of crappiness. This is ok once you have jumped the curve.
    6. Let 100 flowers blossom – people will use your product in ways you cannot anticipate. Be open with who your customer are and listen to them. If they define your product in ways you did not expect, follow.
    7. Polarize people – great products make people to both love and hate your product, don’t be afraid of this.
    8. Churn baby, churn – keep on iterating, changing and trying your idea.

    In the speech “Our approach to innovation is dead wrong” Diana Kander argues that the best method to generate a good business idea is to spend less time planning, brainstorming and forecasting and more time experimenting, playing and interacting with customers. Like Kawasaki Kander stresses the importance of listening to customers and changing your idea based on their response.

    Steven Johnson is making a similar point about the importance of communication and iteration of business ideas in the video “Where do great ideas come from?” He argues that we should be connecting instead of protecting ideas since an idea is essentially a new network: in your brain and then as a business idea in the real world. Connection is fundamental to its existence. Furthermore, ideas do not come from eureka-moments, but arise in coneccted liquid networks. He also mentions “The slow hunch”, meaning that ideas have long incubation times.

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  6. Market sizing or guesstimate is one of the most important questions when considering starting a new business. Guessing and estimating is used to come up with a “good enough” value that can be used for further development. MCP (Management Consulting Prep) uses a 4 step approach; Step 1 – Clarification, defining vague terms and concepts that are linked to your product/service; Step 2 – Breaking down the problems/sectors, divide the market into smaller segments that can more easily be handled; Step 3 – Solving each piece, take the smaller segments into consideration; Step 4 – Consolidating, bring all the estimates and guesses together in order to reach a final number. (source: https://www.youtube.com/watch?v=v5eKAmZuQzs)

    Market sizing requires a lot of detective work, finding good information can alleviate some of the guessing work. Defining your target market is very important to see what kind of people and profiles that will use your product/service. Further on, you should identify the type of information you need for your sources. Alternatively, you can do a top-down approach (or even a bottom-up approach – speaking to potential customers and so on). One thing that should be mentioned is that it is better to be roughly right rather than precisely wrong, meaning that high levels of accuracy is hard to get right. (source: https://www.youtube.com/watch?v=v5eKAmZuQzs)

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  7. Assignment for missed lecture on 24/3

    Link to both models: http://www.innovationmanagement.se/imtool-articles/seven-strategies-for-generating-business-ideas/

    Model 1, Involve Customers in Your Process
    The main argument for this method is that most new ideas come from the customers of a company. The collective minds of all your customers will be brighter and have more ideas, than those present at a company brainstorming session or similar focus groups. You, as a company, should be in contact and have discussion with the lead/early adopters of your products. Those that usually buy the latest product when possible can provide insight about the market that you do not have yourself.

    Model 2, Seek Ideas from New Customer Groups
    By looking at customer groups you do not already sell to, you will encounter new problems that you have not thought about before, and therefore be able to develop new products/solutions. These customers can both be previous ones that you no longer sell to, or groups that your competitors currently cater, but you do not. If you do this, you do not necessarily have to develop new products based on your ideas. It might be enough to create new versions and/or slightly modify your existing products to solve some of the problems you find.

    Method from lecture
    The focus of the video was that one person rarely have a whole idea that can become a success. Often you have a hunch, that needs to brought together with other hunches. This is proven with that most new companies have more one than one founders, since one person can not do it all, at least it’s very rare among larger projects. They did not talk as much about the knowledge needed, but they acknowledged that an idea often needs years of “hatching” before it is fully fledged. This can be compared to people working in same industry for a while before coming up with a new idea, as one of the slides talked about. This is not only true because you need a long time to really find your edge before turning it into a business model, but also because the timing rarely is perfect just as you come up with it. Sometimes you need to either build up funds, or perhaps wait for new technology to arrive. Similar, the video talks about bringing “hunches” together, that one small is barely enough. This can be compared to observing competitors that you can learn from. Maybe, you have an idea but you miss the last 20% for it to become a viable business. Then you can either try to find people to cooperate with, or simply look at established companies trying to have the same role that you want.

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  8. Starting with the methods:

    1. SCAMPER
    A checklist of generating an idea. This method focuses on providing a structured way for a person to think of the idea in several perspectives. More specifically when coming up with new ideas either for a new product or modification of one. SCAMPER stands for:
    S – Substitute
    C – Combine
    A – Adapt
    M – Modify
    P – Put to another use
    E – Eliminate
    R – Reverse

    2. Brainwriting
    This is a method where you do collective brainstorming. Instead of having an open discussion, everyone has chance to out its ideas in writing. When you have written down your ideas, you pass it on and get a paper with another ones ideas on and from there try to come up with new ones. This will generate collective ideas with the help of the knowledge and creativity within a chosen group of people.

    Comments:
    After watching the video, I had following thoughts about the mentioned generation tools.


    SCAMPER: A method I would use for the purpose of refining my own thoughts before sharing them to the community. It provides a tool for doing more of a concrete creative thinking on a single mind level.

    Brainwriting: A method I would use for the purpose of sharing and acquire better ideas by collective thinking, taking advantage of the principle ”The Wisdom of the Crowds”. The method itself is built on the belief of the benefits of ”collision of hunches”.

    None of these methods includes the perspective of time and increased connectivity, parameters whose importance are emphasized in the video for creative thinking and ideation.

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  9. SCAMPER (https://www.youtube.com/watch?v=-Dz7S4IOT2E) is a different way of brainstorming where you follow a checklist. This was created by Bob Eberie. The list is;
    • S – Substitute
    • C – Combine
    • A – Adapt
    • M – Modify, Magnify or Miniaturize
    • P – Put to another use
    • E – Eliminate
    • R – Reverse
    I believe this is a good way to take an existing product and come up with ideas of changing it hopefully for the better. As you follow a checklist the risk of forgetting a step is very low. It will also give you a lot of options along the way as you can change every new idea along the steps. The acronym will also help you remember the method so you have it with you wherever you are, whenever.
    MIND MAPPING (https://www.youtube.com/watch?v=O0lEj2d-ipE) this is not only good for remembering a specific topic, but also evolving a business idea. You choose one topic and the expand with ideas. It is also very good it you are more than one trying to get an overview of the idea. You can have a time limit on the brainstorming and every person has their own color. When the time is up you will go through the ideas and maybe a few new will spark. I believe this is a good idea to generate ideas faster as you are more than one so you can feed of each other. Steve Johnson talks about that ideas need time to mature and that you can steal ideas or parts of ideas from other people to make yours better. This is a good way to speed up this process I believe.

    I think Steve makes a good point, and I do not disagree. I also believe that ideas sometimes take a while to mature and can appear when you least expect it. The internet has created a possibility for this process to speed up as you can get information and ideas from other far away. But I also believe that is sometimes can have a negative effect as it is so easy to just look something up instead of thinking on your own.

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  10. Missed lecture 24/3:

    Ideas that have the potential to become great business ideas are all around us. Here I will present two tools that can help with the generating part of creating business ideas. Since a lot of great tools for creating completely new ideas have been discussed above, I will focus more on creating new business idea within companies.

    The first tool is ”Design Thinking” which is also known as Human-Centered Design. It is a problem solving technique, focused on finding better ways for users to use existing products and services. The process goes through 5 stages:

    1. Empathize
    The first stage of the Design Thinking process is to gain an empathic understanding of the problem you are trying to solve

    2. Define
    During the Define stage you will analyse your observations and synthesise them in order to define the core problem. The problem should be defined in a human-centred manner

    3. Ideate
    During the third stage designers are ready to start generating ideas

    4. Prototype
    The fourth stage is creating a number of inexpensive, scaled down versions of the product or specific features found within the product

    5. Test
    The fifth stage tests the best solutions identified during the prototyping phase

    This is not a linear process, they can occur simultaneously and can be repeated. Within every step, problems can be framed and more ideas can be created and from this the best answers can be chosen. The purpose of Design Thinking is to “attempt to inspire the essential element of creativity, the ability to take an abstract idea and create something with it.“

    More can be read here:
    https://www.forbes.com/sites/reuvencohen/2014/03/31/design-thinking-a-unified-framework-for-innovation/#595e1ea88c11

    https://www.interaction-design.org/literature/article/5-stages-in-the-design-thinking-process

    The second tool is even more focused on already existing companies where a new business idea can create strategic incentives to change the existing business model. I think that this will grow in the next coming years, which is why I will also choose to present these 7 key strategies for creating a process/structure where ideas are hatched. Today the leading-edge organizations use seven key strategies for fortifying the idea factory according to Robert Tucker:
    1. Invite everyone in the quest for new ideas.
    2. Involve customers in the process of generating ideas.
    3. Involve customers in new ways.
    4. Focus on the needs that customers don’t express.
    5. Seek ideas from new customer groups.
    6. Involve suppliers in product innovation.
    7. Benchmark idea-creation methods.
    More can be read here:
    http://www.innovationmanagement.se/imtool-articles/seven-strategies-for-generating-business-ideas/

    What Steven Johnson talks about in his video “WHERE GOOD IDEAS COME FROM” have some similarities with the mentioned methods. Johnson mentions that ideas most often are born in the form of hunches and they need years to incubate and then collide with other hunches by creating a place where the ideas can mingle, swap and create new ideas. This is in some way similar to tool 2 that understands the significance of creating this innovative space, what tool 2 doesn’t focus on is the importance of time.

    In his TED video (https://www.ted.com/talks/steven_johnson_where_good_ideas_come_from#t-1046528 ) about idea generation he shares some more interesting views. There he mentions the fact that we today have more possibilities to reach out to find that missing puzzle piece. I think in some sense that this is driving up the innovation speed, ideas don’t need as much time to incubate, especially since many markets face different conditions from year to year, sometimes even month to month. This forces the process to be faster and for this to be faster it must be possible to find that missing puzzle piece easier. This creates incentives for existing entrepreneurs to develop new business ideas faster and for existing companies to build an innovative climate. For this tool 1 can be used. Other similarities with what Johnson says and Design thinking tries to achieve, is the focus on humans, on how to involve the customer and understand the purpose of why something is created. Johnson and Design thinking both take a step back from thinking that idea generation is something of a “Eureka!” moment, they share a view that a perfect idea is not something that is directly achieved but worked out.

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  11. I like Guy Kawasaki and I’ve mentioned him before in my earlier posts. This seminar held by Guy Kawasaki (https://www.youtube.com/watch?v=IBt_z2ZZSLI) goes through the common mistake of “multiplying big numbers by 1 percent”. In this example he dismisses the common thought made by entrepreneurs that simply capturing 1 percent of a given large market will suffice as a short term goal. He illustrates this by giving a humurous example of how people have erroneously estimated the market size of online dog food retailing. He said that the “typical Silicon Valley pitch” will look something like this: One assumes that 1 out of 4 Americans own a dog, and dogs eat 2 cans of food per day, which means that in a day there is 150 million cans of dog food worth tapping into. Therefore, getting 1 percent of the market will surely make you rich, how hard can it be?

    His comment to this common mistakes made by new entrepreneurs is that it is very difficult to get 1 percent of any market, and that the vast majority of investors aren’t pleased to hear that you aim for a mere 1 percent anyway. His solution to the problem is to “calculate from the bottom up”, another way of saying it would be to focus on the demand side. Using the same analogy, the dog food entrepreneur should be wise to open up a functional website with all the algorithms and technicalities already implemented, and target a small portion of the population. Then the entrepreneur could calculate how many of the visitors actually buy dog food from the website and from there on scale it upwards if needed.

    The second video I want to discuss is from Steve Blank (https://www.youtube.com/watch?v=UO0HxlWsM1g). In this video, Blank talks about the “hockey stick” which explain revenue estimation for new markets. Essentially the part of the stick that touches the puck is the revenue line within the first initial years after launching. The revenue is virtually flat since the entrepreneur hasn’t managed to gather any sustainable traction yet. The curved part of the hockey stick represents the “tipping point”; where all things that didn’t exist before come together to create a new market in which the product now can thrive; the line goes upwards. Blank says that most startups only see the beginning of the stick, and don’t adapt to these situations. They see almost no revenue growth and eventually goes out of business, which means that they have failed to detect macroeconomic trends. The time that passes from the launch until the tipping point is met is the time aspect of the diffusion of innovation theory postulated by Rogers. Blank’s verdict is that the reason this failure happens to a lot of startups is because they scale too fast in the beginning and don’t consider that things can change and that the market might shift. His solution is to not eat more than you can digest. A entrepreneur should not be too ambitious, instead he / she should gauge the market by taking shares from the incumbent, which means benchmarking against them and improving the results on an existing market.

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  12. Idea generation and business creation is often regarded as an important part of the entrepreneurial work, but it must not be forgotten that these processes are important for the intrapreneur. As stated in an article at entrepreneur.com leading edge organizations seem to operate similarly when it comes to their in house idea generation. The framework they stress is based upon seven key activities which follows:

    • Invite everyone in the quest for new ideas.
    • Involve customers in the process of generating ideas.
    • Involve customers in new ways.
    • Focus on the needs that customers don’t express.
    • Seek ideas from new customer groups.
    • Involve suppliers in product innovation.
    • Benchmark idea-creation methods.
    (https://www.entrepreneur.com/article/74184)

    By only looking at these bullet points one can clearly see that the framework is customer oriented. The ideas that organizations want to pursue is the ones that will enhance customer value which both can be by offering a new or better product, or just an improved process which can reduce lead time etc. By stressing the importance of customers one might improve customer value in the end, but as the fourth bullet point states, there should be focus laid on the needs that customers don’t express. This is probably the nexus of any good disrupting idea, and should therefore be considered as the goal in many cases. . The most important part should therefore be to learn from customers by observing “what they are not doing, listening to what they are not saying”. This framework suggests that one hopefully can find the customers’ sources of frustration and find new ways of eliminating it.

    In contradiction to the very intrapreneurial framework above, brighthub.com suggests two very straight forward ways for any entrepreneur two create great ideas. By either doing market research or reinventing old ideas one can find business ideas that suit the market very well today in terms of timing and demand (http://www.brighthub.com/office/entrepreneurs/articles/64142.aspx). Brighthub suggests two rather evident start off points, but simplicity implies that simple and important questions are to be posed as what will be marketable in your area, what is missing, what have customers been waiting for in your market area? By looking at others i.e. customers or existing businesses one can find new services or products, which basically should be essential in any idea generation process. This rather simplified concept of choosing one way or another to create an idea should therefore be reconsidered since the combination of the both sides would benefit the outcome of the idea generation process. Very much like in the example above, the customers should be in focus. If you thereafter try to look at existing ideas and try to either piggyback or come up with a more refined product or service the feasibility and success rate might be higher than in other cases?

    These two “concepts” above focuses on the mind set and start off point that might create a successful idea. As a contradiction to these process focused concepts, the Ted talk video highlight the importance of the geographical space where these idea generation processes can take place. It makes sense since without any connected minds within the idea generation process, the outcome will be less likely to end up as an idea created with insight from several perspectives. –Something that one would want if you seek a customer centred solution or idea…

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  13. In the article “Is there a formula for generating great business ideas?” James Caan identifies steps to help increase creativity for business idea generation. According to Caan using your own interests and talents is a good way to start. Especially if you combine the two of them. He brings up the example of Larry Page and Sergey Brin, founders of Google, who were studying technology and computer science at Stanford when they came up with the idea of Google. This was their area of expertise as well as their passion. [1]

    I’d say that these factors are very important to actually get your business idea going once you start executing it. If you identify a business opportunity in an area where you don’t have any expertise or passion I think it’s fair to say that you won’t get very far. At the same time having the right expertise will probably help generating better and more thoroughly thought of business ideas that in the end are more sustainable. Steven Johnson says that good business ideas evolve over time and are often a result from smaller hunches that collide. He doesn’t say anything in particular about passions or specific skills in the video although in the example of Google, that Caan used, you can clearly see that the space where these “smaller hunches” collided was at Stanford University where Page and Brin met.

    When searching the web for idea generation methods I found one called “Wishing” that seemed interesting/fun. You ask for something unattainable and then the team brainstorms ideas to try and make it into reality. The team members should be encouraged to use their imagination to come up with wild, -even bizarre, ideas. You should then focus on some of these unattainable wishes and use them as stimuli to trigger new ideas [2].

    I suppose this is a method that’s more convenient for already established companies that are looking for new ideas to further expand their business. Once you have a successful business it’s easy to get stuck in conventional ways of thinking and it might be more difficult to be creative compared to a new start-up. Brainstorming in a team like this is very on point with Johnson’s idea of spaces where hunches can collide.

    Sources
    [1] https://www.theguardian.com/small-business-network/2013/oct/09/formula-ideas-generation-business-james-caan#comments
    [2] https://www.cleverism.com/18-best-idea-generation-techniques/

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  14. Top-down or bottom-up methods are often used when estimating market size. In this video (https://www.youtube.com/watch?v=R6bzO5RqWzU) they estimate the diaper market in the US with a top-down approach. They start off with the entire US population and then breaks it down into customer segmentations and then the number of diapers each segment will purchase. In the end they add the numbers from the different segments to get the annual market size. I think that methods like top-down and bottom-up works very well on markets such as this one where you can easily differentiate the different customer segments. In this case they can split the diaper market into infants and elderly. Obviously this will not be an easy approach on new markets or markets where you have big uncertainties about different customer segments.

    Another video I watched (https://www.youtube.com/watch?v=QBfLsXhRYPc) brought up some interesting aspects that I think could be more useful on new/more uncertain markets. For example they talk about the market growth rate and the current structure of the market. Is it mature or is it in a flux? The lecturer says that the most important way to achieve this is to talk to customers/sales channels and second most important is to estimate market size by competitive approximation (if it is an existing or segmented market). The most important outtake for me here is that you look into the structure of the market to see whether if it’s growing, stagnating or declining. This isn’t included in traditional methods such as top-down and bottom-up.

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  15. To get an market size estimation he suggests a methodical approach to defining the total addressable market. Although this approach is based on many hypothetical steps built on top of each other. He takes the example of a baby pregnancy app.

    Start out looking at number of women who will have kids each year. How many of these use an iOS/Android app? How many would download your app? Then ask yourself what would you charge, how many people would buy it? He then moves on to estimating the lifetime value of a customer through calculating reoccurring purchases over time.

    In defining the market size he emphasises on understanding the current market. Who are the current players, how many users are their today etc. He suggests looking into the material of industry analysts (depending on the industry of the company in question) and also complementing this with research reports written by Wall Street analysts.

    In order to determine your market share he suggests first to do some quick estimations based on very basic assumptions to get a grip of how much your share would be worth. In the next step one should start talking to potential customers and channel partners and competitors.

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  16. To get an market size estimation he suggests a straight forward approach to defining the total addressable market. Although this approach many hypothetical steps that build on top of each other. He takes the example of a baby pregnancy app, as following:

    Start out looking at number of women who will have kids each year. How many of these use an iOS/Android app? How many would download your app? Then ask yourself what would you charge, how many people would buy it? He then moves on to estimating the lifetime value of a customer through calculating reoccurring purchases over time.

    In defining the market size he emphasises on understanding the current market. Who are the current players, how many users are their today etc. He suggests looking into the material of industry analysts (depending on the industry of the company in question) and also complementing this with research reports written by Wall Street analysts. Often available for free through university.

    In order to determine your market share he suggests first to do some quick estimations based on very basic assumptions to get a grip of how much your share would be worth. In the next step one should start talking to potential customers and channel partners and competitors.

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  17. http://www.gv.com/sprint/

    Google Sprint is a very interesting methodology built on the concept of ”Design Thinking”, originally developed by IDEO. This method is typically not applied to generate ideas from nothing, but it is still very powerful and for sure can help in developing new business ideas. The main concept is to boil down projects that would take weeks, months or years to the time period of a week. Through a very rigid and intense process this is possible. Usually one starts of with a question that needs an answer or a problem that needs solving. The method itself can be applied in a manner that optimises for the outcome to be a business idea. In the end, on Friday, when the project is done one might have one or several business ideas at hand. The drawbacks of this method is that it requires a team of typically at least five people, and it would consume a week of full time work which means setting aside all else. It’s also quite complicated to fully learn and master. This is my analysis based on experience and from what I have read.

    https://en.wikipedia.org/wiki/TRIZ

    Triz is a very interesting approach to generating business ideas in the sense that it is very different to many other methods. It forces you to outside the box thinking while still being very rigid. It is based on the premise that history repeats itself. The four steps goes as follows:

    Identify the problem. 2. Find a generic Triz Problem that ”suffers” from the same contradiction 3. Find the generic Triz solution (using a defined table) 4. Apply it to create a specific solution to your problem

    One drawback of this method is that for all types of problems it might not be true that it has been previously solved. The other drawback is that this starts out with a problem in mind, this requires you to have some sort of starting point in mind for generating a business idea.

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  18. Extra assignment for seminar on 24th of mars
    Idea generation method 1: SCAMPER
    SCAMPER is a method that is a form of structured brainstorming. The point is to follow this structure to evaluate, improve or come up with a new idea within a certain field, in each step you should ask questions that relate to the topic. The aim is to ask as get as many questions and answers as possible, this process will lead you to new ideas or improve existing ones. The structure is as follows:
    1. Substitute: ask questions relating to what you can swap or change in relation to the product or idea.
    2. Combine: ask questions on how you can combine your current idea or product with other ideas or how you can combine current resources in a new way.
    3. Adapt: ask questions on how you can adapt your current ideas or how you can adapt competitor’s ideas into your product.
    4. Modify: ask questions relating to the possibility of modifying the products design or emphasizing different aspects of the product or idea to create more value
    5. Put to another use: ask questions regarding what other potential uses your idea or product could have in different circumstances or different markets.
    6. Eliminate: ask question on what can be eliminated or streamlined within the idea or product
    7. Reverse: ask contrarian questions regarding the product, such as doing things completely different or changing fundamental aspects of the idea.
    I find this method easy to use and easy to grasp, and the importance of simplicity should not be underestimated. I think this method can be an easy and quick way to get creative thinking going if a team is stuck. However, while this is a structured brainstorming, this method has similar weaknesses as any brainstorming process since it runs the risk of becoming slightly on the edge of tinfoil, as well as lacking a clear connection to the customer.
    Link: https://www.mindtools.com/pages/article/newCT_02.htm\

    Idea generation method 2: The Reynolds method
    Siimon Reynolds, a contributor at Forbes, write about a methodology for generating business ideas that revolves around asking 10 questions.
    1. What’s something I could do that’s really extreme?
    2. What could we add to something we already do to make it more extraordinary?
    3. What could we strip away from what we already do?
    4. What ideas could we rake from other industries and apply to ours?
    5. What could we steal from competitors and make a slight change to?
    6. What will they be doing in our industry in 20 years?
    7. What would we be scared to do?
    8. What would Steve Jobs do in this situation?
    9. What is the fastest thing we could do?
    10. What is the cheapest thing we could do?
    This is another brainstorming method, but more limited and slightly more to the point. I prefer this method to SCAMPER basically because it more forces the user to think broader about the market with question 4 and 6. I would like to include more of a customer focus however. This method also gets points deducted for indulging in the personality cult of Steve Jobs. Question 8 is hardly helpful for anyone since the answer is unknowable, and unless you are in the same industry or in a similar situation as Apple has been in, you run the risk of applying lessons to a venture that is completely different to what Steve Jobs encountered.
    Link: https://www.forbes.com/sites/siimonreynolds/2013/11/07/a-brilliant-method-to-generate-ideas-for-your-business/#606becc0458f

    In relation to Steven Johnson’s ”where do good idea come from? ”
    The fundamental idea of both of the above stated methods run contrary to the premise that Johnson makes, that ideas do not get created in an eureka moment, instead ideas are slowly developed over time. On the surface, any method that is based on brainstorming kind of suggests that ideas can be invented through a quick, or at least semi quick, method. However, second big statement that Johnson makes is that connectivity and mingling of ideas between people are key to true creativity. And in this, any brainstorming method excels. If a brainstorming method, such as the above stated ones, are treated as group work where different people’s ideas are mingled together, then these methods align well with the theory that Johnson puts forward.

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