A focus on inefficiencies is a good method to find a underserved market where you can bootstrap you way to viability. Here is a list of several others.
Q: Is a Focus on Inefficiencies a Good Way to Find an Underserved Market
Q: It’s always been a dream of mine to start something on my own, but I’ve never considered myself very good at identifying new market problems worth solving. I have carved out time to focus on designing technical solutions and a supporting business model for existing solutions I find frustrating. I have also given a lot of thought to identifying inefficiencies in existing processes and industries. What approaches have you seen successful entrepreneurs use to identify opportunities?
A: To focus on inefficiencies is to look for a “better mousetrap.” It’s a useful model one of several you can use for successful innovation. But let’s take a step back and first look at what is required for innovation to take place. Dave Snowden had a thought provoking post on Culture and Innovation where he identified three necessary, but not sufficient conditions for innovation to take place:
- Starvation of familiar resource, forcing you to find new approaches, doing things in a different way;
- Pressure that forces you to engage in the problem;
- Perspective Shift to allow different patterns and ideas to be brought into play.
Snowden also observes:
Creativity is just one way, and not necessarily the most effective to achieve perspective shift. In fact I am increasingly of the opinion that creativity is not a cause of innovation, but a property of innovation processes, its something that you can use as evidence of innovation, but not to create it.
There is a related video:
What Does This Mean For Bootstrappers?
A couple of thoughts about what this means for bootstrapping entrepreneurs:
- Successful entrepreneurship is an ongoing self-improvement project, it’s frequently painful as you force yourself to confront your own shortcomings and leave your comfort zone to try new things (which often don’t work the first time).
- Find a customer problem that you care about solving and put the pressure on yourself.
- Don’t assume you can plan your way around failure. Run small experiments with small budgets that simulate a starvation of resources.
- Try and “walk around problems” and look at them from different angles. Some books/tools to help
Some Rules of Thumb for Innovation
First up are Paul Graham’s “Six Principles for Making New Things”
Here it is: I like to find
(a) simple solutions
(b) to overlooked problems
(c) that actually need to be solved, and
(d) deliver them as informally as possible,
(e) starting with a very crude version 1,
(f) then iterating rapidly.
Successful innovators have ways of seeing the world that throw new opportunities into sharp relief. They have developed, usually by accident, a set of perceptual “lenses” that allow them to pierce the fog of “what is” in order to see the promise of “what could be.” How? By paying close attention to four things that usually go unnoticed:
- Unchallenged orthodoxies—the widely held industry beliefs that blind incumbents to new opportunities.
- Underleveraged competencies—the “invisible” assets and competencies, locked up in moribund businesses, that can be repurposed as new growth platforms.
- Underappreciated trends—the nascent discontinuities that can be harnessed to reinvigorate old business models and create new ones.
- Unarticulated needs—the frustrations and inconveniences that customers take for granted, and industry stalwarts have thus far failed to address.
- Do Something
- Do Something Small
- Do Something Small But Useful
- Do Something Small But Useful Now
In his book “Innovation and Entrepreneurship” Peter Drucker offered the following observation on the frame of mind need to spot opportunities for innovation.
“Innovation requires us to systematically identify changes that have already occurred but whose full effects have not yet been felt, and then to look at them as opportunities. It also requires existing companies to abandon rather than defend yesterday.”
Drucker goes on to suggest seven places to search systematically for opportunities
- The Unexpected
- The Incongruous
- Weak Link In Existing Process
- Industry Or Market Structure Change
- Demographics: Size, Age Structure
- New Zeitgeist: Perception, Mood, Meaning
- New Knowledge
Here “Weak Link in Existing Process” would be to focus on inefficiencies, where “New Knowledge” might obsolete an existing approach and be uncovered by a focus on inefficiencies.
Related Blog Posts on Sources of Innovation
- Innovation Needs Starvation and a New Perspective
- Paul Graham’s Six Principles for Making New Things
- Do Something Small But Useful Now
- Seth Godin’s Book “The Dip” Save Your Money. The money saving part are some references to Drucker articles on innovation and acting as a change agent.
- Peter Drucker on Why Entrepreneurs Reject Unexpected Success
- Customer Interviews: Allow Yourself to be Surprised
- Don’t Practice Veterinary Marketing: Talk to Prospects
- Market Discovery and Exploration Requires Models from Physics, Biology, and Psychology