On how to turn ideas into business opportunities

STARTING a new venture requires time and effort. But this seemingly obvious statement has led to confusion among entrepreneurs and academics.

Many budding entrepreneurs believe that an idea alone will guarantee them success and wealth. What they ignore, however, is that it takes time, effort and resources to turn a venture idea into a venture opportunity — and that not every idea will automatically turn into an opportunity.

The same holds true for the academic community. Over the past two decades there has been plenty of research about entrepreneurial opportunities, but we know relatively little about what an opportunity actually is.

Instead of discussing philosophical questions, we should be trying to create meaningful frameworks: tools that help entrepreneurs and academics to understand the potential of an idea to become an actual opportunity. Here I’ll explain the broad principles of this framework.

We have all heard a lot about business models and most entrepreneurs have, at least once, used the business model canvas in order to specify the different dimensions of their business. But evidently, no entrepreneur starts with a complete business model in mind when he or she has a first idea in mind. Instead, this idea forms the seed, including some partially-complete and fragmented pieces of information about what such a business model might look like in the future. It takes a lot of churning and turning, shaping and refining, market research, pivoting and testing on the market in order to find out the right “ingredients” and actually turn this idea into a viable business opportunity.

In the analogy of the seed, it requires the desire, care and nurturing by the gardener in order to turn the seed into a small plant and hopefully a large tree at some point. But besides this effort, it also takes skills and capabilities from his side (individual-level factors) as well as sunlight, water and the right soil (external factors) in order to help the plant grow.

Similarly, a venture idea can only turn into a venture opportunity, if there is a favorable combination of circumstances that make it both desirable and feasible for the entrepreneur to exploit a venture concept and to introduce a potentially value-adding offering into the marketplace. While the exploitation of one business may be an opportunity for one entrepreneur, another might not find it all that interesting, hence he or she does not see it as an opportunity.

So when you have just come up with an idea and think about starting a business based on it, you should remember the following principles: Be open and share, and be patient and persistent.

It takes time, effort and resources to transform an idea into what may hopefully become an opportunity.

Peter Vogel is professor of family business and entrepreneurship at IMD Business School in Lausanne, Switzerland. Shanghai Daily condensed the article.