Imagine you want to come up with a great new business idea. Where to start?

I’ve spent a lot of time thinking about this. Somewhere along the way I came up with the following diagram:

thing

For a brief while I hoped I could use this diagram as my muse. I thought I would simply sit down, guru-like, and seek ideas at the intersection of trends, problems worth solving, and things I am passionate about and capable of tackling. Easy, right? Just like a gigantic database join. Let the flow of brilliant business ideas commence!

Well, it turns out that for me, at least, the diagram isn’t useful at all as a discovery tool. While it provides a nice litmus test to help determine whether you have come across an idea worth pursuing, I found it didn’t help me generate or find concrete ideas in the first place.

Since then I’ve talked to lots of entrepeneurs about their approaches for generating new business ideas. In the spirit of helping other would-be entrepreneurs, here’s the list I put together from those conversations. Much of this is conventional knowledge, but hopefully some of it is helpful or news for you.

  1. Seek customer pain points. If you are deeply knowledgeable about a particular problem domain, or particularly good at getting into other people’s shoes, start by thinking about the types of customers you might like to serve, and problems worth solving for those customers. Alternatively, jobs to be done for those customers. Teaming up with a subject matter expert can help fill your domain knowledge gaps.

  2. Bottoms-up / Technology Building Blocks approach: start by thinking about the elemental building blocks of the business. For example, an enabling technology that can power a compelling product or service, which could then be wrapped in a business model. This is how Google Search came to be, for example: the PageRank algorithm came first, and the search advertising business model followed. Most techies find the bottoms-up approach natural, if not alluring, but be warned: you can waste an awful lot of time on technology looking for a problem to solve, and never come up with a viable business. (Blockchain, I’m looking at you.)

  3. Trend/Context-Driven approach: think about the global context which the business must plug into, e.g. important trends, the economic environment, government regulations, and so on. Then try to generate ideas that fit within this global context, or at least are not at odds with the context. Anticipate demands the trend will create. Example: global warming drives the need for clean energy solutions.

  4. Imitate and Translate: find an existing successful business model somewhere in the wild. Then tweak an element of it to invent a derivative business. For instance, translating a great business model from one location to another place where it doesn’t exist yet, but is or will likely be in demand. Japanese toilets, for example.

  5. Look for anomalies on the frontier of human knowledge. Paul Graham wrote about this in How To Get New Ideas: The way to get new ideas is to notice anomalies: what seems strange, or missing, or broken? You can see anomalies in everyday life (much of standup comedy is based on this), but the best place to look for them is at the frontiers of knowledge. Knowledge grows fractally. From a distance its edges look smooth, but when you learn enough to get close to one, you’ll notice it’s full of gaps. These gaps will seem obvious; it will seem inexplicable that no one has tried x or wondered about y. In the best case, exploring such gaps yields whole new fractal buds.

How do you generate or discover potential business ideas? I’d love to hear.