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Thursday, February 25, 2021

Elements of Startup of a New Business

What are the criteria for an idea for a successful business? With these seemingly similar ideas, why do some businesses hit the jackpot and others easily collapse? In order to get an answer to this, it is necessary to consider the idea sufficiently.

An idea is, in a word, a creative idea that governs and develops human activities. In the easiest examples, ideas include products that are high-performing yet inexpensive and practical and new sales methods that attract customers’ attention.

Ideas can be divided into many different categories according to field, industry, work method and use. Among them, the nature of startup ideas can be categorized into two categories, based on the criterion of the present time we live in’. They are new ideas’ and derived ideas’.

1. Breakthrough idea

It is a solution that is completely different from the technologies or methods that already exist around us. It can be said to be a solution that suddenly appeared one day in a way that was different from the previous one, which is in line with revolutionary innovation.

New ideas enable mankind to advance several generations through rapid development, and in the process, create a new market that was previously unthinkable, namely’Blue Ocean’.

Blue Ocean is a market that does not need to compete with other companies. Rather than striving to secure market share in the existing fiercely competitive market, it is a unique market that has been created through attractive products and services. A new idea can make a blue ocean like this, and it can be huge.

Most of the new ideas are first created in the research and development organization of schools or large corporations. There are some that are developed for specific commercial uses with large budget allocations, but they are usually made without considering commercial use.

Therefore, the new idea has nothing to do with the market principle of’listen to the customer’s voice and make the product the customer wants’. Because these ideas come from quiet labs that have no idea what their customers want.

The Internet, which we take for granted today, is the best example of this new idea. In 1980, Tim Berners Lee, a software developer at the European Institute for Atomic Nuclear Research (CERN), developed a network of interlocking computers to share information easily and inexpensively. This is what has evolved into today’s Internet.

At that time, the team had no idea that the general public needed a network like this, and even less thought that the network they had created could connect the world with a huge network. Other good examples of new ideas are Ford’s production of cars that replaced horses, which were public transportation at the time, and the creation of Amazon, an internet bookstore that changed the concept that books can only be bought in bookstores.

Taken together, the new idea has the following characteristics.

  • New technology that did not exist before
  • High uncertainty
  • Create products, services and processes that enable unprecedented breakthroughs
  • Disruption of traditional markets or industries, or creation of entirely new markets

2. Derivative idea
It can be said that it is an idea that develops a product or service that already exists in the market or transforms it in other ways. Derivative ideas, unlike new ideas, lie on the same extension of existing technologies. It is also in line with incremental innovation.

If we see the new idea as the’creation theory’ in the Bible, the derivative idea can be compared to the’evolution theory’ asserted by Charles Darwin. Unlike new ideas that lead to breakthroughs that can drastically change human life, derivative ideas can make our lives more prosperous.

It can be seen that this derivative idea is continuously applied to the washstands of the highway break room and public toilet in Korea. Automatic faucets using sensors, automatic soap dispensers, automatic dryers that can dry hands, and tunnel-type dryers that take this automatic dryer to the next level.

These inventions make our lives more prosperous, even if they have not completely changed our lives like a toilet seat. In that respect, they can be said to be good examples of the impact of derived ideas on real life.

Unlike new ideas, derivative ideas can be widely discovered and developed in everyday life, not in the laboratory, and are generally created by market demand. This is because customers are well aware of existing technologies and characteristics of products, and companies that provide products can grasp new needs through their voices.

Taken together, derivative ideas have the following characteristics.

  • Technology that recycles existing technology
  • Low uncertainty
  • Add functionality or reduce costs to existing products, services and processes
  • Enables to strengthen competitiveness within traditional markets or industries

What ideas do you need to start a successful business? Is it a new idea or a derivative idea?

The ideal case is to start a startup with a new idea that can change the world. The greatest companies in human history started their business based on ideas that brought great innovation to human life. And those who started their business with such original and fresh ideas have accumulated tremendous wealth. The problem is that not everyone can start a business with a new idea.

Because ideas that are great and innovative enough to change the world don’t come out very easily. It will certainly require high intelligence to come up with such an idea, but it requires extraordinary insight, thinking, and tremendous effort.

This is because it is not easy to create a new means of transportation called cars when everyone is on horseback. Unfortunately, it would be no exaggeration to say that the probability of coming up with a new idea like this is one in a billion.

Then the answer becomes clear. It’s natural to do all your heart on the things that have a higher probability rather than stick to the things that are unlikely. It is to promote a startup through derivative ideas. In simple terms, it is like this. The way startups generate revenue is to provide users with services that are slightly better than the ones they currently use.

However, there are surprisingly many products and services that need improvement around us. Even if you have a good eye for catching these parts, you can easily get derivative ideas. It is natural for consumers to favor products with slightly better performance or improved discomfort compared to existing products. When starting a new business, it is incredibly important to consider reaching out to potential clients to assess if the idea is attractive to them. Sites such as Helpfull.com enable you to create surveys based on your target client population, allowing you to receive feedback that can help you decide which ideas are likely to register better performances. Consumers’ goodwill soon becomes competitive, and the moment they become competitive, profits are secured.

Derivative ideas also have an advantage in terms of attracting investment. Most investors prefer derivative ideas to completely new ideas. This is because the marketability and size of the market for products and services based on derivative ideas are measured to some extent, and the uncertainty of the business is relatively low.

Entrepreneurship is not an invention

“I really want to start a business, but I don’t have a revolutionary idea to change the world. What do I do?” This is the question that prospective founders ask the most, regardless of Korea and the United States.

But entrepreneurship is not an invention. Entrepreneurship is not about inventing new products that do not exist in the world, but a skill that transforms existing products faster, cheaper, and more conveniently.

 

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