7 Ways to Generate Your Next Big Business Idea

How do you get your best business ideas?

My observation is that most entrepreneurs fall into 2 camps: those that solve their own problems (i.e. “scratch your own itch”) or those who seek exploitable or underserved markets (i.e. “markets matter most”). Personally, I gravitate towards the former: I find it easiest to brainstorm and work on solutions to my own problems.  But I think it’s important to try a variety of approaches to find your next big idea.  In fact, I make a point to follow “markets matter most” entrepreneurs to challenge my thinking patterns.

The 7 techniques below should help you get ideas flowing no matter what your disposition.

1. Scratch Your Own Itch

“The easiest, most straightforward way to create a great product or service is to make something you want to use. That lets you design what you know – and you’ll figure out immediately whether or not what you’re making is any good.”

– Jason Fried, Rework

Find something that is missing in your life and supply that need.

There are many examples of people who scratched their own itch and in the process, exposed a market of people who needed exactly what they needed.  The company 37 Signals wanted to track their interaction with partners and customers and created Highrise, a contact management software that is now used by thousands of companies. Track coach Bill Bowerman decided that his team needed lighter running shoes. His experiments with pouring rubber into the family waffle iron resulted in Nike’s waffle sole.

What problems do you find intolerable?

What products or services do you use and frequently complain about?

What do you need but don't have? What is your dream solution?

 2. Scratch Your Group's Itch

Related to scratching your own itch is scratching the itches of your social, industry and professional groups. The idea here is that you are more intimate with the problems and needs of your tribe than those outside the circle.

Look creatively at your resume, work experience, habits, and hobbies and compile a list of all the groups, past and present, that you can associate yourself with.

Which social, industry, and professional groups do you belong to, have you belonged to, or do you understand?  What groups of people purchase the same products you own and services you use?

What products or services do these groups use and frequently complain about?

What do these groups need but don't have? What is their dream solution?

3. Follow the “Iron Law of the Market”

“Market matters most; neither a stellar team nor fantastic product will redeem a bad market. Markets that don’t exist don’t care how smart you are.”

– Marc Andreessen, Co-founder of Netscape

Follow the “Iron Law of the Market:” even the most ingenious idea will fail if no one wants it.

Your guiding question for this technique is “what are people willing to spend money on?”  Instead of elusively searching for the perfect idea, see what people are buying or searching for now.  Then build a better or complementary solution.

I highly recommend you read Noah Kagan’s post on How to Create a Million-Dollar Business this Weekend to employ a “markets matter most” mentality to find your profitable idea and find $1,000,000 worth of customers.

Some suggestions to find a product and/or market with guaranteed customers:

Review Top Sellers on Amazon (or your niche/favorite e-commerce site)

Check completed listings on Ebay (or your niche/favorite e-commerce site)

Browse the Q&A on LinkedIn (or your niche/favorite forum site)

Look for frequent requests on Craigslist Gigs (or your niche/favorite job site)               

Find number of potential customers through Facebook Ads (for example, you could see how many Ivy League graduates live in Vietnam, or how many Lakers fans there are worldwide. that's why Facebook tries to get you fill out your profile in detail!)

 4. Copy, Transform and Combine

There’s the myth that creativity is the product of geniuses. In actuality, as Trey Kirby shows in his thought-provoking web series Everything is a Remix, creativity happens by applying ordinary tools of thought to existing materials.  Those tools are copying, transforming, and combining, of which combining is the most powerful.  Some of the most heralded inventions of mankind – the printing press, the Ford Model T, the internet – happened when ideas were connected.

Everything is Remixed - Part 3 (Part 1, Part 2, Part 4)

Clayton Christensen, author of the Innovator’s Dilemma and one of the world’s foremost authorities on innovation, calls associating the “backbone of the innovator’s DNA.”  And Twyla Tharp, widely acknowledged as one of America’s greatest choreographers, has taught that you don’t have a really good idea until you combine two little ideas. Comedy writers also use association techniques to generate punchlines and even premises for movies i.e. “what would happen if you had a detective… for pets?”  ACE VENTURA.

Implicit in the power of combination is that the more diverse our experiences and knowledge, the more connections our brains can make. It’s the reason why businessmen, scholars and musicians alike explore unfamiliar industries, fields, and genres for inspiration, and why we often get our best ideas when traveling.

What ideas could you copy, transform or combine for your market? 

What metaphor could you use to express your business idea?

5. Phrase Ideas as Questions

To paraphrase Peter Drucker, the important and difficult job is never to find the right answers, but to find the right questions.

To generate more ideas practice asking “Why?” “Why not?” and “What if?”  Instead of thinking in statements, think in questions. Phrasing your idea as a question generates many more possibilities.

Paul Graham describes this beautifully in his essay Ideas for Startups:

“The fact is, most startups end up nothing like the initial idea. It would be closer to the truth to say the main value of your initial idea is that, in the process of discovering it's broken, you'll come up with your real idea.

The initial idea is just a starting point-- not a blueprint, but a question. It might help if they were expressed that way. Instead of saying that your idea is to make a collaborative, web-based spreadsheet, say: could one make a collaborative, web-based spreadsheet? A few grammatical tweaks, and a woefully incomplete idea becomes a promising question to explore.

There's a real difference, because an assertion provokes objections in a way a question doesn't. If you say: I'm going to build a web-based spreadsheet, then critics-- the most dangerous of which are in your own head-- will immediately reply that you'd be competing with Microsoft, that you couldn't give people the kind of UI they expect, that users wouldn't want to have their data on your servers, and so on.

A question doesn't seem so challenging. It becomes: let's try making a web-based spreadsheet and see how far we get. And everyone knows that if you tried this you'd be able to make something useful. Maybe what you'd end up with wouldn't even be a spreadsheet. Maybe it would be some kind of new spreasheet-like collaboration tool that doesn't even have a name yet. You wouldn't have thought of something like that except by implementing your way toward it.

Treating a startup idea as a question changes what you're looking for. If an idea is a blueprint, it has to be right. But if it's a question, it can be wrong, so long as it's wrong in a way that leads to more ideas.”

6. Pick a fight

Creativity is an act of defiance.  You’re challenging the status quo and questioning universally accepted truths.  You’re asking 3 questions that mock conventional wisdom: 1) why do I have to obey the rules? 2) why can’t I be different? 3) why can’t I do it my way?

- Twyla Tharp, The Creative Habit

Pick a fight with the routines and rituals of the world. If you think a competitor sucks or the current way of doing something sucks, say so.  Having an enemy gives you a great story to tell and forces people to take notice and take sides.

Refuse to accept things as they are.

What pisses you off more than anything?

Who would you like to start a fight with?  

How can you embrace, change and make your mark on life?

7. Understand the Sources of Innovation

Peter Drucker, in his classic book Innovation and Entrepreneurship (written in 1985!), lays out 7 sources of innovation. I highly encourage you to read the book to find more examples of each source.

  1. The unexpected success, failure, or outside event i.e. accidentally discovering penicillin
  2. The incongruity between reality as is and reality as it is assumed to be or ought to be i.e. why buy DVDs for $20 when there are so many free or cheap alternatives?
  3. Innovation based on need i.e. there’s got to be a better way to search the web
  4. Changes in industry structure or market structure i.e. more people buying books on Amazon online than at Borders bookstore
  5. Demographics (population changes) i.e. baby boomers retiring, China’s growing middle class
  6. Changes in perception, mood and meaning i.e. “asia is the place to do business,” "Apple products are the best for creatives"
  7. New Knowledge, Both Scientific and Non-Scientific i.e. nuclear energy

We can use these 7 sources as signals for the opportunity to innovate. As you can tell, the key is awareness of accidents, incongruities, changes and trends.  We should embrace chaos because it is chaos that brings the greatest opportunities for creativity and innovation.

Reading List

Peter Drucker, Innovation & Entrepreneurship
Twyla Tharp, The Creative Habit
Timothy Ferriss, The 4 Hour Workweek

Web

Noah Kagan, How to Create a Million Dollar Business This Weekend (article)
Paul Graham, Ideas for Startups (article)
Trey Kirby, Everything is a Remix (video series)
37 Signals, Getting Real - What's Your Problem? (chapter)