Business Idea Evaluation with The Innovator’s Scorecard

Need another way to evaluate your business idea? Thomas McKnight, author of Will It Fly? How to Know if Your New Business Idea Has Wings…Before You Take the Leap, has a robust method he calls the Innovator’s Scorecard. This scorecard rates various factors of your business idea to tell you if it is worth pursuing. Each factor is discussed in detail in the book, so if you would like to learn more about this method, check out the book.

An Excel version of the Scorecard is available. I’ve also created this online version of it.

To use this scorecard, type in a score for each feature into the Raw Score column. This score can range from -10 to +10, with -10 being the worst and +10 being the best. McKnight discusses each factor in great detail in his book. Purchase a copy if you would like to know more about any of them.

Criteria	Raw Score (-10 to +10)	Weight	Total
Compelling unserved need Does your product fulfill a lack of something required, desirable, or useful?
Explainable uniqueness How unique is your product?
Sustainable differentiation Can you sustain your uniqueness, or regain it if lost?
Demonstrable now Can the customer touch, feel, taste, see, sense, or use your product right now?
Good competition Are there weak competitors that validate your market, yet can be beaten easily?
Bad competition Are there strong competitors that pose a real threat?
Compelling pricing possible Could you offer your product at a good price?
Closable customers Do you have any actual customers right now you could sell to, even before you have a product?
Quality of evidence of demand Do you have good proof that there is a demand for your product?
Ahead of market Can you deliver your product at the right time to capture substantial market share?
Ambush exposure How likely are you to be ambushed by an unknown competitor? How defensible is your product?
“Hot Market” Is there a wild, almost irrational demand for your product right now?
Attitude: confidence and fearlessness Do you & your team have enough confidence in yourselves & your product to push no matter what?
Commitment Can you & your team realistically commit yourselves to this product?
Staying Power Do you & your team have long staying power, even if your product isn’t profitable at first?
Passion Do you & your team have true, deep passion for your product?
Management Competence How competent are you & your team in building and marketing your product?
Honesty and Integrity Are you & your team known to have high honesty and integrity?
Success Ethic Do you & your team have a record of achieving significant successes? Are you all capable of doing so?
Looking Good in the Lobby Are you & your team presentable in fromt of investors?
Cash Flowing Now Can you earn a cash flow now or very soon?
Revenue Model Swamps Costs Will your business model allow you to earn real profits (revenues minus expenses)?
Delivery Advantages Do you have any special relationships or privileges within your intended distribution channels?
Resources available Do you have access to the resources you’ll need to launch your product?
Preemption & Domination Would you be able to preempt your competitors and dominate some aspect of your market, value chain, distribution channels, etc?
Strategy to Penetrate Market Do you have a strong strategy with which to enter into the market?
Strategy for Breaching the Chasm After you’ve released your product, do you have a strong strategy with which to reach a general audience?
Proprietary Ownership Can you attach enough value to your product that those who wish to own or use it think of you first?
Partnering Candidates Are there good partnership opportunities that will give you an advantage without hindering you as well?
Appropriateness of Location Does your company’s location give you any advantages in resources or customers?
Quality of back-up plan Do you have a good, realistic back-up plan in case things go wrong?
Unfair Advantages Do you have any significant advantages in your favor that competitors don’t have?
Manageable Capital Requirements Do you need to raise an unrealistically large amount of funding? Or is it a manageable amount?
Low Cash Required Prelaunch In the days & weeks immediately before the launch, do you need a large, or manageable amount of cash?
Visible Capital Is your funding proven? Is it in the bank, or at least accessible to you with a good degree of certainty?
High Potential Value Will your business have a high valuation after about five years of existence?
Foreseeable Harvest How likely will a return on investment be possible for an outside investor?
Taboo Does your product violate any ethical, societal, cultural, politcal, or environmental taboos?
Lack of Showstoppers Do any foreseeable showstoppers exist to block your success?
Pretending not to Know Are you or your team in denial about any threats to your success? Be honest.
High Profile Persons Available Can you attract any high profile individuals as team members, customers, or evangelists?
Punchy, compelling story Do you have a solid, interesting, and catchy elevator pitch?
Government Relevance Can you gain any political standing or supporters in the government?
Low-Hanging Fruit Do you have any easy wins you can make, such as prospective customers, rock star employees, low-cost resources, etc?
TOTALS

Grade:

After you’ve finished scoring your business idea, your final Grade will indicate the viability of your idea. If your grade is:

• 80% or higher – You have a good chance of success, and your grade is high enough to potentially seek outside funding.
• 70% – 79% – You have a decent chance of success. Examine each factor to see if you can improve its score.
• 60% – 69% – You have a low chance of success. Examine each factor to see if you can improve its score.
• 50% or lower – You should move on to another idea.

This scorecard isn’t only designed to give you a one-shot assessment of your business idea. As mentioned above, it also reveals the various factors that can significantly improve the success of your business. If you have a low score on any of these elements, consider revisiting each one and thinking of ways to raise that score.

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Business Idea Evaluation with The Product Opportunity Assessment

Want to know if your idea is worth pursuing? There are lots ways to determine this. Marty Cagan, author of Inspired: How To Create Products Customers Love, outlines a lightweight method he calls the Product Opportunity Assessment. This document’s goal is to determine whether or not a particular product opportunity is worth pursuing.

Here is what goes into a Product Opportunity Assessment.

1. Value Proposition: Exactly what problem will this solve?
2. Target Market: For whom do you solve that problem?
3. Market Size: How big is the opportunity?
4. Metrics/Revenue Strategy: How will you measure success?
5. Competitive Landscape: What alternatives are out there now?
6. Differentiator: Why are you best suited to pursue this?
7. Market Window: Why now?
8. Go-to-Market Strategy: How will you get this product to the market?
9. Solution Requirements: What factors are critical to success?
10. Go or No-Go: Given the above, what’s the recommendation?

This sounds like a method entrepreneurs can use as well. It’s meant to be fairly basic, yet comprehensive. While it may not replace a full business plan for a VC presentation, seeing all of these factors spelled out and help you decide on your next product or business idea.

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The Fourth Wave

When venture capitalist John Doerr has a theory, people sit up and listen. Over at the TechCrunch Disrupt 2010 conference (happening today), he’s presenting what he calls the Third Wave. As reported by TechCrunch yesterday:

The First Wave was personal computers and the wave of disruption that caused. The second wave was the Internet, ditto. We are now, says Doerr, in the Third Wave.

What exactly is the Third Wave? It’s the tectonic shifts we’re seeing in mobile platforms (read his post here about the iPad), the social graph (particularly Facebook), and online commerce. All of these things are related and being accelerated by each other (Facebook is the largest mobile application, Zynga leverages Facebook and also stokes Facebook growth, Groupon is social/flash commerce, etc.).

John Doerr’s Waves of Disruptive Technologies

To summarize, it sounds to me like Doerr is saying:

1. The First Wave is personal computing
2. The Second Wave is the internet
3. The Third Wave is social media & mobile devices

Common Traits of Disruptive Technologies

When I look at these waves, I see several common traits. Each subsequent wave builds upon one another. Also, each wave:

• Increases the level of communication the previous technology affords. These advances, to some extent, mirror real-world interactivity, and extend beyond it. For instance, real-world interactivity only happens at a specific time, a specific location, and by the specific people who are present. Online interactivity can do this, and be at any time, at any place, and by multiple people in real-time or delayed-time. Additional information about the other person can also be shared, such as location, work history, and favorite restaurants, providing a context that real-world interactivity may not.

• Decreases the distance & friction between two or more parties, consumer-to-consumer, business-to-consumer, consumer-to-business, and business-to-business. Each of those entities can be plural as well. This means the velocity of communication has gone from weeks to minutes to immediate. This also means traditional layers of hierarchy have broken down. A grade school student can contact a CEO or the President of the United States, for example. Or a fast food franchise can send a coupon to your phone if you walk by one of their restaurants.

• Increases the utility of the previous technology for the user. The personal computer allows a person to write reports, spreadsheets, and presentations. The internet allows a person to conduct research on any topic in the world. Social media allows a person to communicate with friends, family, customers, and more. Mobile devices allow a person to conduct any of these operations wherever that person is located. It is becoming easier, faster, and in some ways, more effective & efficient, to accomplish all the tasks you need to accomplish.

• Increases the level of intimacy of the technology, while conversely decreasing the level of privacy. A personal computer enables a person to publish print newsletters and reach a limited, yet known audience. The internet enables a person to publish websites and reach a vast, yet unknown audience. Social media enables people to publish thoughts, opinions, and self-expressions, and reach a vast, yet selective audience. Mobile devices enable people to publish anywhere, not just at their laptops, but on a train, plane, or even the toilet. The Third Wave allows you to share your intimate thoughts during potentially intimate moments, though the services are still struggling with the appropriate levels of privacy.

• Increases the relevancy & clarity of the message. As the intimacy level increases with each wave, the sender is able to know more and more about the receiver. This enables the sender to customize and personalize each message, making it more relevant and useful to the receiver. A skilled sender will also know how to use the latest technologies to send a clear message that can prompt action and be measurable. There is still value to broadcasting a common message to the masses, though sending customized messages to targeted individuals will yield a higher conversion rate & return on investment.

Predicting the Fourth Wave

When placed in this light, I think it’s possible to draw tentative conclusions on what the Fourth Wave may look like. Some trends that I foresee are:

• Predictive computing. Communications have sped up to real-time now. How much faster can you get than that? How about happening before it even happens? There are indications that predictive computing may already be here, so perhaps this will be just another trait of the Third Wave. Facebook already has a data science team that may know who you may hook up with. Ferreals.

• Life action streams. Foursquare allows you to publish where you are when you are there, though it’s just a single message and not an exact note of when you arrive and when you leave. Miso allows you to publish what you are watching when you watch it, though it doesn’t let anyone know if you are tuning into the commercials or channel-surfing. The Fourth Wave may offer a continuous stream of all your actions. It’s a bit scary, but I could see its usefulness in ethnographic studies, television ratings, and perhaps tracking your children when they are at Disneyland with you, in case they get lost (mobile phones with GPS can already do this though).

• Bio-sharing. Devices could be implanted into us to provide someone with immediate information about our bodies. To some extent, this is already being being done in the medical community, like the pacemakers that transmit a heart’s condition in real-time. But how about a device that monitors how well the body is holding up to chemotherapy? Or how happy or angry you are at a game? Could be a good predictor of riots. I suppose some enterprising individual could foresee social media uses too, like sharing when you’re hungry and when you’re sleeping.

What do you think may be in the Fourth Wave?

Photo via: cliff1066™

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Biz Idea: Hawaiian Shave Ice Franchise

It started innocently enough. My fiancee took me to a Hawaiian shave ice (yup, it’s “shave ice,” not “shaved ice” with a “d”) shop one day. The famous Matsumoto Shave Ice shop, to be specific.

And I fell in love. With the Hawaiian shave ice, I mean. I was already in love with my fiancee, of course. (Plug disclaimer: her relatives own Matsumoto Shave Ice.)

What is Hawaiian Shave Ice?

If you haven’t had the pleasure of trying Hawaiian shave ice before, let me enlighten you. First, you start with finely shaved ice. Very finely shaved ice. If you’ve had a Slurpee, snow cone, or Italian ice, that’s not finely shaved enough. Hawaiian shave ice is more like fresh, fluffy snow. Those others come off like coarse ice in comparison.

Next, you add some delicious syrup. Flavors include strawberry, pineapple, lemon, coconut, banana, vanilla, root beer, grape, lime, melon, mango, lychee, peach… you get the idea. All of this can sit on top of vanilla ice cream (which adds a nice, creamy component, if you like that) or sweet red beans (mmm mmm good). Then you top it all off with sweetened condensed milk. And that’s all there is to Hawaiian shave ice. All of these ingredients are optional and can be mixed-and-matched to your tastes.

(Oh boy, my mouth is so salivating as I write this.)

Potential Market Need?

When I returned to the hot California weather and faced droughts & wildfires, I longed for more of that sweet Hawaiian shave ice. The only offerings around me were frozen yogurt shops. Good as they were, they aren’t refreshing like finely shaved ice is.

So as Asian-influenced frozen yogurt shops like Pinkberry, Red Mango, and a bunch of self-serve froyo shops spread like Starbucks (SBUX), I can’t help but wonder if Hawaiian shave iced shops could fare just as well. They’ve certainly got a lot going for them:

• The refreshment factor, especially in hot, dry weather
• The novelty factor; I don’t think many Americans outside of Hawaii are familiar with this
• The operating costs shouldn’t be much higher than a frozen yogurt shop

I also mentioned this idea as a Facebook status update and got alot of surprisingly enthusiastic responses. Granted, they could just be friends showing support, but it shows that there certainly are potential customers. Like me, for one!

Anyone want to create such a shop? Then launch it into a national franchise? Methinks it’s got potential. And you can open your first store right next to me please. Thank you.

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Biz Idea: What I’m Feeling Right Here, Right Now

Here’s a tongue-in-cheek idea. With all the talk about the dangers of location-based services, I started to wonder: People share their thoughts (foursquare, Google Buzz (GOOG), brightkite), reviews (Yelp), and photos (Flickr) to the world with a stalker-friendly geotag. What else could they share?

How about their mood?

Remember a time when social networks were full of “How are you feeling today” icons and notes? Some people loved those mood icons. Some still do. I think MySpace (NWS) and LiveJournal still have them, in fact.

So how about sharing how you are feeling, exactly when you are feeling it, wherever you are feeling it? Maybe you could even take a picture of your face to reflect that emotion. Think of it as a real-time geotagged emotion.

Friends could follow your mood throughout the day as you travel through Machu Picchu, Tokyo, or a local softball game. Researchers could look into whether or not riding the bus dampens people’s moods. Stalkers could follow you around until you’re feeling low and vulnerable, then approach you and offer some candy.

I’m feeling pretty cheerful right now. Oh how I wish I could geotag this emotion in real-time to the world.

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Biz Idea: Fuel Injector Cleaners at Gas Station Pumps

I’m not sure what it is about gas stations that spark business ideas in me.

Maybe it’s the selling opportunity I see at the gas pump. There I am, standing there with my credit card or cash out, waiting for my tank to fill. With that extra free time, it seems an obvious chance to hook me with an impulse buy. You could call this situation a good customer touchpoint, in sales parlance.

And what better impulse buy, besides drinks & snacks, than fuel injector cleaners and other related fuel treatment fluids next to a fuel pump? In tough economic times, consumers tend to invest more in their cars because maintaining one’s current car is cheaper than buying a new one or making costly repairs.

Although there is some debate on the effectiveness of fuel injector cleaners, I’m sure there would be an increase in sales if consumers knew about these products and had a convenient way to purchase them. There are many drivers who are unaware of such products. (There are also fuel additives, though those don’t really work.)

Gumout, STP, and Valvoline would no doubt benefit from such a set-up as well. By placing fuel injector cleaners next to a gas pump, they can increase customers awareness significantly. A poster or banner briefly explaining their benefits may help too.

Gas station owners could also do this themselves. Why wait for the manufacturers? Put some fuel injector cleaners out by your pumps and cha-ching!

Operationally, this new distribution channel may pose some challenges. Aside from changes in delivery destinations, there would need to be an easy mechanism for handling the sale. Putting it inside a gas station’s convenience store wouldn’t be close enough to the customer. Most customers walk in, pay for their gas, and walk out without looking at the fuel injector cleaner aisles. A vending machine by the gas pumps then, perhaps? That would certainly automate the buying process.

Maybe I should just open up a gas station (or preferably, a green vehicle service station) and set up such vending machines myself. So many ideas, so little time.

Photo by: futureatlas.com

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The Twitterverse

Now for some Friday fun.

Here’s a neat visual of most (maybe all?) the apps that, in some way, aid your usage & experience of Twitter. The Twitterverse, as authors Jesse Thomas & Brian Solis call it.

This is just version 0.9. They’re still working on the final version.

It’s a tough job for sure. I tried to visit a bunch of the apps listed in this chart and a few did not seem to exist anymore. And new ones seem to be cropping up every day. Makes me kind of wonder how this chart could look as a living, breathing animation that is constantly updated – and perhaps done in AJAX or Flash.

Now there’s a fun project if you have some time on your hands. You could even extrapolate it into charts for other ecosystems, so to speak. Like Twitter celebrities, or popular blogs, or start-ups within a certain industry, etc.

Great work by Jesse and Brian though! I’m eager to see the final version.

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Biz Idea: Social Media Market Research App

Want to see a list of links that will boggle your eyes? Last week, I listed a number of online services that could be used to perform market research. After seeing that list, I wondered:

How about a single online app that helps you do all of that? A social media market research app. Here’s what I think such an app could offer.

The Dashboard

It could have a dashboard that provides a snapshot of your market, ideally updated in real-time. There could be search results from the blogosphere, forums, Facebook (Groups and Fan Pages), LinkedIn, Twitter, Flickr, YouTube, Yahoo! Answers (YHOO), and other social media sites. Perhaps this information could be displayed through different filters:

• By relevance
• By publication date as a stream of news
• By publication date on a timeline
• By type of source
• By source
• By discussion in a threaded format
• By tag (more on this later)
• etc.

Features

My previous post listed a number of services that searched social media sites, allowed you to post questions, displayed search trends, and offered a wealth of company information. I’ll discuss those features first.

Keyword-Based Search Results of Social Media Sites

All of this information could be obtained through APIs and RSS feeds, some from the sources directly, some from the search services I listed. There would have to be some research done to see how real-time updates could be handled, however. Push or pull? Do they ping us or do we have to constantly ping them?

Asking Questions and Retrieving Answers

A mechanism to post questions & messages on forums, mailing lists, and answer boards could be really helpful. It should also harvest any subsequent answers & replies. This would be a tricky technical problem to solve though. Automatically posting on forums and mailing lists could be seen as spam.

Displaying Trend Data

The trend data could be presented in a timeline similar to Google Trends (GOOG) and Dipity, with items such as news articles, company events, and social media posts aligned with it. There could also be filtering options to control what is displayed. I don’t believe any of the trend tracking services offers APIs, however, so this may require a custom technical solution.

Displaying Rich Company Information

Every time a company is mentioned, it could link to a detailed company page that fetches financial & stock data from Yahoo! Finance and places it alongside rich information from sites like LinkedIn, Jigsaw, Crunchbase, etc. In the case of the paid service Jigsaw, they won’t have any APIs. But perhaps a partnership could be brokered.

Additional Features

In addition to the four features above, there are other cool things this app could do. A neat feature could be a Google (GOOG) map with real-time updates, a la DailyBooth or HashParty’s reach map. Each time a new piece of content is published, it could appear right away.

Another could be related keywords, similar to those seen on search engine results pages. I wonder if any search engines offer up related keywords in their web services.

This could also be a really useful feature: How about the ability to tag, rank, and annotate any piece of content the app finds? This is how you could maintain order when deluged with content. Filtering options could include tagged items as well, like displaying only the events tagged with “positive news” or “negative news” on the timeline. Ranking a piece of content could be a way to prioritize its visibility and/or subjective relevance to your research. Perhaps items could be flagged so customer service or public relations representatives can respond right away. And it’s always helpful to take notes against important pieces of content.

Challenges

The technical challenges are tricky. They are not impossible, but it would take a sharp technical team to think through these issues, such as:

• How do we fetch the appropriate data reliably and quickly?
• How do we deal with content that requires authentication?
• How do we post on mailing lists and forums without triggering spam filters?
• How do we get, display, and/or build trend data?
• How do we attach metadata to each piece of content we’ve fetched?
• How do we display the updates in real-time?
• How do we design an easy-to-use user interface that allows non-technical business owners to use this app?
• etc.

I’m sure there are a lot of social media consultancies that offer market research services. But as competitors, service firms rarely hold up to self-service packages. In such situations, self service firms tend to focus on the high-end of a market and offer highly specialized & customized services at premium prices. Going for low-end customers puts their profit margins at risk. Meanwhile, self-service packages like this app can afford to focus on the low-end as a cost-effective solution for them, while still maintaining fair profit margins. And who knows, maybe social media consultancies could become customers of this app.

There might even be such an app in existence already, though I haven’t heard of one. If you have, please let me know.

What do you think?

Photo by: curiouslee

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