I.Creating and validating an idea
Once you’ve gotten a good understanding of your target customers and the problem they have, you can start sketching ideas to solve that problem. Every startup idea is established somewhat differently, and there’s not really any “correct” way to do it or a set path to follow. You also can’t force an idea to appear, but there are some things you can do in order to help you generate valid ideas:
1) Be proactive
Spend time talking to potential customers and try to understand their needs as thoroughly as possible. Get to know the domain by searching for current trends online and talking to people that know about it. Be enthusiastic about the subject.
2) Analyze existing products
Search for products and services that are already solving (or have failed to solve) the same problem or a similar one within the same industry. Read reviews, forums and comments, and interview current users to identify possible weaknesses that you could tap into.
Don’t be afraid of competition. If somewhat similar companies already exist, this usually just proves that someone else also thinks that this is a problem. There is a first-mover advantage, but quite often there is also a second-mover advantage. Many startups that have scaled globally are not the first ones with the idea.
3) Consider your skill set
Think about your strengths and which skills you could potentially utilize when proceeding with the idea. What makes you exclusively qualified to work on the problem?
4) Collect ideas
Keep a notebook or another type of note taking tool with you at all times and write down any ideas as soon as they appear. The best ideas usually happen at random moments, and if you don’t collect them then and there, it is possible you’ll forget them for good.
Technology or concept innovation?
Startups and their solutions can be divided into two broad categories:
- A concept innovation
- A technological innovation
By concept innovation, we mean that a startup uses existing technologies to solve a problem in a smarter way. We call this a concept innovation because, at the end of the day, it’s about coming up with better concepts to solve problems. A technology innovation on the other hand means actually creating a technology that no one else has made before. Some startups are doing both of these, so the line is often blurred in real life.
For concept innovation to be successful, the entrepreneurs have understood something no one else has understood. For example, the startup Karma has created an app where the user can order surplus food from restaurants, cafes and grocery stores at half the regular price. There is nothing special in the technology itself – the innovation is understanding that restaurants are willing to sell their surplus food at a cheaper price and that people like to buy cheaper food and eat in a sustainable manner. With a digital platform, this kind of concept is easy to facilitate.
People often don’t see how things can be done differently as we all get used to our routines. Perhaps that’s why in some cases, successful entrepreneurs come from outside of an industry. On the other hand, some concept innovations are born after someone has spent 20 years in an industry and understands that something could be done in a smarter way. The essential thing is to be open minded. If you are trying to understand something no one else has understood it is probably not going to be obvious, otherwise someone would have done it already.
In the past decade(s), many startups have been based on digitalization, business model restructuring, removing manual processes with software, machine learning, or creating a platform where different stakeholders can easily interact. So you can also think if a similar approach could be applied to your problem. But we definitely warn against thinking superficially. For example, the entrepreneurs who say they are creating the “Airbnb of X” or the “Uber of Y” often haven’t investigated their case properly and have just quickly copied the logic of a popular company.
For a startup to be based on technological innovation, the team has to of course have the knowhow to produce the new technology. So it is harder for an entrepreneur to choose this path. If you are an expert in some field (or your team is), maybe you have the possibility to try to create a technological innovation. Sometimes you can also do it together with a partner.
Validating your idea
Although many startup ideas seem reasonable and aim to solve an existing problem, they don’t necessarily result in products that customers want to buy. It’s common for founders to fall in love with their solution instead of the problem, make assumptions about customers’ behavior and needs, and end up spending months or even years developing products that nobody (or only a small group of people) wants to use. That’s why validating the idea properly in the beginning – as opposed to developing a solution right away and overlooking the customer – is essential.
Again, going back to your target customers and interviewing them is a great way to validate your hypothesis (see Chapter 3 to get advice on how to conduct interviews and avoid false positives from your interviewees).
You can also start validating any ideas you have during the same interview as you validate the problem. Start with the problem first.
You can test your hypothesis in various other ways as well. One common way is to create a prototype (the very first draft of the concept). This can be used to convey the idea to stakeholders — such as customers, potential partners, or investors — either in the form of a landing page, mockup, video, 3D print or a simple algorithm that produces results with a limited dataset. The purpose isn’t to deliver any actual value to the customer, but to show in a tangible way how an identified customer problem could be solved.
One common example of a prototype is a simple landing page (created for example using Wix or Squarespace) where you explain the idea and give people a call-to-action like a newsletter signup to test their reaction to your proposed solution. In order to gain traffic to your site, you may post it to any relevant groups or forums within the field, or run a few Facebook ads with a small budget targeted at the right audience. If your site fails to get any traffic, it’s unlikely that your solution will be something that people want. If, on the other hand, click metrics are off the chart and people seem to respond to the call-to-action, you should move to develop the first working version of the actual solution itself.
The next step from a prototype is a proof of concept, which is a small project to test whether the prototype or some selected feature or functionality of it is feasible. For a B2B company, it can be done in collaboration with a potential end customer. A successful proof of concept gives the green light to start the development of the Minimum Viable Product.
The need for prototypes and proof of concepts is dependent on what kind of solution you are developing. The fundamental idea is to test the solution with something (either not functional or with limited functionalities) that is more concrete than only talking about your idea. When you have something to show for example to potential customers, it’s easier for them to give feedback and you probably will also get new ideas on how to improve the solution.
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