Ideas are without doubt the key to innovations. Without them, there is nothing to develop, nothing to execute, nothing to learn. But do they inevitably lead to innovations?
The answer here is a clear "noy", because ideas are as diverse and as different as their creators. Generating ideas is not difficult at first and can even be encouraged with modern tools. But for innovations, this does not necessarily help, because it is about the quality of an idea and about identifying and isolating it in the mass.
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If you've ever been to an ideation workshop, you may be familiar with the motivational saying from the workshop leader that there's nothing to be afraid of when it comes to ideation, because there are no bad ideas. Unfortunately, this is a myth. There are even really bad ideas!
And that's why it's a long road from idea generation to implementation or realization. Because ideas must first be collected, honed and continuously revised, before the evaluation of the ideas follows. Finally, the ideas are validated and finally subjected to a final test. Along the way, many ideas are sorted out and either revised again or discarded. Hopefully, after many iterations, a pile of ideas remains that are worth developing.
In an innovative company, there is an idea management system that continuously runs a large number of ideas through a predefined process to extract and implement the ideas that will move the company closer to its strategic goal. This is important because most business ideas fail within the first year. However, idea management, idea validation and intensive market research are important and useful measures that can put ideas on the right track.
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Idea validation - the "why”
There are bizarre ideas that have caught on quickly and good ideas that have failed. To get a feel for the value of an idea, it needs to be tested, revised and, most importantly, validated. According to Julia Kylliäinnen of the Finnish innovation software company Viima, idea validation is about gathering evidence of the feasibility of ideas through experimentation in order to make quick, informed, low-risk decisions. The purpose of idea validation is to test the idea in the real world before the final product or offering is developed and presented to the public. New ideas contain unpredictable elements and assumptions that can abruptly destroy innovative plans and strategies. Validation can minimize this risk and accelerate the delivery of a value-added service and reduce costs. It should happen before a lot of time and resources are invested in developing the idea. This can avoid developing and bringing to market a product or concept that has no takers and for which no one is willing to pay. The purpose of idea validation is to ensure that there is a real demand and not just "another cool idea" seeing the light of day. A viable idea should either be able to solve a real problem, fulfill its intended purpose, or provide other incentives. As a rule, it is wisest to first analyze the problem and see if your idea can solve it. It's really not a good idea to develop a solution before the problem. Idea validation can reveal whether there is a real market for a product and whether a clientele already exists that is willing to spend money on it. A second important statement can be made regarding the timing and whether it was chosen correctly, because sometimes the product is excellent, but the market or the clientele is not yet ready for the product.
Google Glass is one such example of a seemingly good idea that was implemented, but no one really wanted or needed. The glasses were also not only poorly marketed, but triggered plenty of safety and health concerns. The high price ($1,500) didn't make the situation any better, especially since Google Glass didn't offer any clear benefit to the target audience, other than making it easier to violate the privacy of others (blickcheck.de). In the meantime, two updates have been developed (Google Glass 2 and 3), which should be launched in the near future. The Enterprise Edition (Google Glass 2) is designed specifically for businesses and is intended to help make manufacturers' and employees' workflows safer and increase productivity. A third, completely redesigned version of the AR glasses has been publicly unveiled, but is still in the testing stage (Smart Home Fox, 2023).
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Idea validation - the "how”
There are different ways to validate an idea. Which is the best or most target-oriented way depends on the nature of the idea. If the ideas are only aimed at incremental changes that involve little or no risk, validation may not be necessary at all. However, for new business ideas, products or concepts that involve higher risks, idea validation is highly advisable. To save time, it is essential to test the highest possible risk at the beginning. Matthew May's Playing-to-Win Strategy Canvas can be a helpful start here.
Although there are several ways to validate an idea, it is always useful to check your assumptions and know your business limitations at the beginning before you start testing the idea.
1. Define Goals
Like any other idea management activity, validation starts with defining the goals. In this phase, one decides what the actual goal of the review should be and which aspects one wants to validate.
For example, the goal may be one of the following:
- Problem-oriented - Is the problem real or worth solving?
- Solution-oriented - Is the product or offering suitable to solve the problem?
- Function oriented - What are the core functions of the product?
- Model-oriented - Is the business model viable and scalable?
- Price-oriented - Is the demand high enough to realize the business model at the price set? How does the pricing model work in practice?
2. Formulate Hypothesis
After the goal has been defined, it is time to develop a hypothesis based on that goal. The hypothesis should address the most critical point of the idea, because it is important to identify possible failure at the very beginning and avoid the worst possible economic consequences.
In the case of Amazon, the key assumption was that people would be more willing to purchase books, music, and movies online than to get in their car and drive to the mall or bookstore of their choice. 2 things supported this hypothesis: 1) a 2000% increase in Internet usage per year at the turn of the millennium (erfolgsgeschichten.org) and 2) the convenience of Americans. Jeff Bezos launched his classic online bookstore out of his own garage in 1994 with a parent's seed money ($300,000) (www.capital.de). By his own admission, he would rather have failed than not have tried at all. Consequently, he gave up his high-paying job as vice president at the investment bank D.E. Shaw and Co. where he was mainly responsible for investigating investment opportunities on the Internet (erfolgsgeschichten.org, Finanzen.net). In that sense, Jeff Bezos was sitting in the right place at the right time to formulate his hypotheses. But for testing and validating his idea, he had to jump into the deep end himself.
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3. Trial and Error
Once a hypothesis has been developed, move on to putting it through its paces. The trick is to find a quick and inexpensive way to test the assumptions in practice. The sooner you find out whether your hypothesis is true or false, the sooner you can either refine, discard, or pursue the original idea. Often the original idea is only the starting point for a better and more refined idea, since improvement is almost always inevitable.
To test the hypothesis, interviews and surveys are often sufficient in the beginning. Sometimes, however, more is needed, especially when it comes to the functionality of a particular product. In this case, developing a prototype is often a good way to gather first impressions and critiques.
If you care about the potential market and research and analyze it conscientiously, then you should assign received feedback to 3 core fields:
- Customers who show interest in the product = target market.
- Customers who want to buy or will buy the product = demand
- What customers are actually willing to pay for it = price
With information on the target market, demand and price, one already has a very good idea of whether one's hypothesis will be suitable for business or not. The more comprehensive the data collected, the more meaningful and reliable the estimates and predictions about the market.
4. Validation
Validating an idea does not always guarantee success, as execution is what matters. But validating the most critical assumptions and using the data collected during the validation process can be very helpful in developing and implementing an idea. Idea validation is important because it should minimize the risk of implementing ideas that no one wants and no one is willing to pay for. It ensures that a product or business idea has potential and that the key assumptions are valid. It is about finding the fastest and least expensive way to test one's assumptions so that a decision can be made whether an idea should be pursued or needs to be revised or discarded. Unfortunately, validation is often hampered by the fact that assumptions often do not match actual challenges.
Conclusion
Yep, idea validation looks like a long and arduous process. But here's the good news...it's worth it! After gaining some experience, you'll be able to test your ideas quickly and effectively.
And it gets even better: if you fail at any stage, you don't have to fret and despair, because it just means you've successfully avoided wasting money on a bad idea. Thomas Alva Edison once described this very well with the words: "I have not failed. I've just found 10,000 ways that won't work." The trick is not to give up, but to keep playing with an idea until it works.