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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.

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.

Value Proposition: Exactly what problem will this solve?
Target Market: For whom do you solve that problem?
Market Size: How big is the opportunity?
Metrics/Revenue Strategy: How will you measure success?
Competitive Landscape: What alternatives are out there now?
Differentiator: Why are you best suited to pursue this?
Market Window: Why now?
Go-to-Market Strategy: How will you get this product to the market?
Solution Requirements: What factors are critical to success?
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.

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:

The First Wave is personal computing
The Second Wave is the internet
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™

The Growing Ebook Market

If there was ever a doubt that ebooks would be the wave of the future, now’s the time to cast it away.

When I first heard about the Amazon (AMZN) Kindle, I had high hopes. I saw the coupling of the Amazon marketplace & the Kindle akin to Apple’s (AAPL) iTunes Store & the iPod, and hoped a similar success could follow.

I even put my money where my mouth is and purchased some AMZN stock, which I’m happy to say is up over 50% right now. Hells yea!

I still have high hopes, though the competition has certainly stiffened. And that’s a good thing. Competition makes products better. It also validates a market. With all of this competition, there’s no doubt in my mind that there’s a market for ebooks now. A report by Global Industry Analysts even puts the ebook market at $9.5 billion:

Driven by growing popularity of online shopping, lure of discounts offered by retailers, faster delivery, free shipments, and the convenience offered by home shopping, the market for online books is projected to reach US$9.5 billion by 2010.

United States is the largest market for online books worldwide. The market is estimated at US$4.8 billion in 2007 as stated by Global Industry Analysts, Inc. Europe is the second largest regional market with a projected value of US$2.76 billion in 2009. The US and Europe together account for close to 95% of the global online books market.

Imagine how much larger this market will grow once non-English ebooks are released & made available. Big international growth opportunity here.

There have been other small indications of market growth domestically too, such as:

The iBooks app on the Apple iPad. Some people love this app and it’s been getting a lot of buzz lately. Whether or not you believe the iPad will break into the mass market, the iBooks app is still a significant milestone in the ebook timeline.
The upcoming launch of Google’s (GOOG) ebook store, Google Editions. With their scale & resources, this is bound to make some kind of an impact, though lots of questions still remain: Will they support the ePub format? Will their ebooks be downloadable to ebook readers? How many ebooks will they have? Etc.
Stanford University’s preparation of a “bookless” library for cost reasons. I have a feeling other universities are watching closely; if Stanford pulls this off successfully, others will surely follow. If college students across the country become comfortable with ebooks, they are surely to become ebook consumers once they graduate.
O’Reilly’s Ebook Deal of the Day (just for today), where every ebook is on sale for $9.99. O’Reilly has been a strong supporter of ebooks, and for good reason: their customers want ebooks. Perhaps other publishers will follow suit someday.

Goodbye doubt, hello ebook market!

Game Design and Business Design

You know who Sid Meier is, right?

Sure you do. He’s the creator of the infamous Civilization series, the turn-based strategy games that pit you against the computer and other players for utter world domination. It’s history class on crack cocaine.

As the Director of Creative Development at Firaxis Games, we have Meier to thank for our addictions.

How did he architect such engrossing worlds? By understanding player psychology.

Gameplay is really a psychological experience, and that this fact can make the game design process easier sometimes, but it can also make it more difficult for those in development too. [Meier] outlined several major “disorders” that players deal with: egomania, paranoia, delusion, and self-destructive behavior.

Ultimately, if the designer can make games that address these psychological issues, the player will feel much better, and the game most likely will be a much greater success as a result.

Egomania, paranoia, delusion, and self-destructive behavior, eh? Methinks the way Meier dealt with these disorders can also be borrowed into the business world. Let’s see how they translate, one at a time.

Egomania

First and foremost, the designer must recognize that the player is an egomaniac. The game is all about the player, not the designer.

The products you create are all about your customers, not you. They don’t care if you’re a nice person, spent all of your savings on these products, and help little old ladies across the street. If your products don’t solve their problems, or make them feel great about themselves, then they won’t purchase your products. Fashion designers know this. Charles Revson, co-founder of Revlon (REV), knew this very well when he said, “In our factory we make cosmetics. In the drugstore we sell hope.” Your business, and your products, need to be all about them, the customers.

Paranoia

Paranoia in the player is also something that the designer must be careful to avoid. Meier said that randomness in a game can trigger paranoia quickly because the player wants/needs to be in control of the experience.

Quality consistency is key. Customers aren’t going to stand for uneven and unpredictable solutions. What good is a product that turns left when the customer steered right? Who wants to buy wine from a vineyard where some bottles are a little too dry and others a little too sweet? Once a product’s credibility is shattered, it is very difficult to restore. If variety is part of your offering, like variety in flavors, colors, or tastes, that’s fine. But don’t vary in quality. Otherwise, your customers will not know what to expect when they purchase additional products, if they even do.

Delusion

Player psychology had nothing to do with rational thought.

This quote is from another source. You may think it unfair, but customers aren’t necessarily thinking in pure logic when dealing with your products. They’ll bring with them all of their preconceptions, misconceptions, and other mental baggage. These psychological issues will be the filter through which they view your products. You could be doing everything right, but if your customers perceive you as doing something wrong, then you are doing something wrong. So the key is to change those delusions into favorable perceptions.

Self-Destructive Behavior

It’s important to protect the players from themselves.

Can good products have unintended consequences? Sure they can. Look at automobiles a century ago. Before seat belts became standard issue in the 1950s, countless lives were lost in automobile collisions. To a car manufacturer, isn’t just a matter of ethics, it also means the permanent loss of customers. If your product has the potential to be harmful or fatal, it is up to you to protect your customers. The food industry is another example. By succeeding, they’re slowly killing their customers. They’re making some moves to reverse their predicament with healthy alternatives, but it’s doubtful this will be enough. In my opinion, it’s just good business practice not to kill your customers.

Player Psychology Drives Design

Like any good psychologist, listening is a crucial skill; Meier said that designers need to listen to what the player is really saying. The designer can’t take everything literally, but the feedback can be very helpful. … Ultimately, Meier said the designer’s goal is to take the player on an “epic journey” and psychology can be a great tool to do that.

Spot on, Mr. Meier. Ultimately, your products and your solutions should take your customers on an epic journey that is all about your customers, is consistently high-quality, encourages favorable perceptions, and cares enough about your customers to genuinely take care of them.

Via: Carsonified

Toyota Sienna’s Swagger Wagon

Now for some Friday fun.

I gotta give props to Toyota (TM). This is one hilarious commercial. Almost makes me want to buy a Sienna minivan myself. Almost.

Created by the international production agency Caviar Content (in conjunction with Saatchi & Saatchi) and with music by the studio Black Iris, Toyota seems to be going after a new demographic. It hits the mark with some, but not so much with others.

Me, I think director Jody Hill and actors Rachel Drummond & Brian Huskey (as Mom & Dad) did a hilarious job. After a friend shared this with me on Facebook, I spent the better part of my morning watching the other Sienna ads on YouTube. They’re not as clever as the Swagger Wagon, and feel a lot more like typical – tho funny – commercials. But the Swagger Wagon seems to be the first aimed at this new audience.

P.S. If you like this song enough, you can download it as an MP3.

Props to: George Diaz