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After finishing their curriculum in university, students are offered multiple potential choices, such as joining a company, continuing their education as a graduate student, or pursuing one of the most popular and ambitious choices: embarking on the journey of entrepreneurship. With insights shared by a Kellogg alumnus/search fund owner from Nashville and profound visions from an accomplished consultant, this article will explore two avenues that lead to success in entrepreneurship, which are, respectively, making something new, and making something better.
Making Something New
Making something new sounds like an empty exercise without a well-formed idea. Here are three considerations to guide the thought process on what kind of product to develop when starting from scratch:
- First, what trends are currently popular, or what emerging technologies hold promise?
Readers must undoubtedly be thinking of AI at this point. AI is indeed a versatile technology with applications across various industries. It can be applied to create innovative products. For example, Abridge, founded by Dr. Shiv Rao in 2018, uses AI to extract keywords from recorded doctor-patient conversations and automatically generate medical records. As a startup, it has raised $27 million in funding.
- Do conventional business strategies work for the new product?
Sometimes, new operational strategies are invented when technology progresses. For example, during the rise of the Internet, Wikipedia was founded. It introduced wiki as a form that allows users to create and edit its pages collaboratively. While it initially raised concerns about accuracy and efficiency, it soon became a widely beloved platform for sharing knowledge. As of 29 September 2024, the English Wikipedia alone contains 6,889,101 articles, profoundly transforming how people around the world access and share information online.
- Industry competition needs to be a primary consideration.
Despite the opportunities, popular industries often face intense competition, and developing new technologies typically requires substantial research and development investment. Therefore, in addition to exploring cutting-edge technologies, another consideration is that entering an established, evergreen industry can also be a wise approach. If people want to start a business, one possible idea for them is to choose a mature industry with well-established operational systems, such as fast-moving consumer goods (FMCG). Consumer demand never wanes, as evidenced by the fact that almost all of the largest private companies in the U.S. operate in the FMCG sector. Innovation certainly helps, but isn’t necessary for a business to be successful.
Making Something Better
Aside from exploring new product ideas and industry trends, when starting a business whose goal is to improve a service or product that already exists, there are three points of note:
- Success does not always lie in the pursuit of a groundbreaking innovation.
The ability to recognize and capitalize on existing opportunities is also important. As a local Nashville business owner noted “Find a problem where there’s a good enough opportunity, and then worry about how to solve it.” This insight underscores the potential opportunities in the existing market. Entrepreneurs can solve a problem or improve on an existing solution to a problem, which makes their effort into areas where demand already exists and solutions already needed, instead of introducing an unprecedented idea into the market.
- The problem needs to be significant and the improvement substantial.
As the search fund owner pointed out, not every improvement is destined for success. In the process of improving, or refining an existing solution, two critical factors must be thoroughly considered.
- First, is the problem significant enough for targeted audiences to care about?
- Second, is the improvement substantial enough that consumers or sponsors are willing to pay?
It’s important to recognize that the same problem can be addressed through a variety of approaches, just as a single solution can be enhanced through multiple pathways. Therefore, the solution that one plans to implement should stand out in a certain way that companies are willing to sponsor, and consumers are willing to pay for.
- People will pay if the improvement is worthy enough.
Canon recently successfully spotted a problem with the launch of a new model Canon R5II. The model targeted a significant challenge that had troubled photographers for years, particularly those working in dynamic, crowded environments like concerts, conferences, or other crowded events where the moving crowd made it difficult for photographers to ensure their cameras could accurately focus on the desired target. While the majority of competitors attempted to solve this by enhancing focus speed and increasing shutter counts which only offered temporary relief rather than a definitive solution. R5II allows photographers to register their target into the camera which will be automatically recognized and prioritized focused of. R5II is a successful innovation that is being marked as wanted by more than 93% of Canon users. Addressing such problems innovatively can lead to impactful improvements on an existing problem and lead to the success of a business.
The ability to identify a market, whether for a new idea or an enhancement of an existing solution, stems from extensive knowledge, keen observation, and an innovative mindset. We encourage students to engage in conversations with business owners, like the one we had to inform this article. Their experiences and insights are valuable to learn from, and the challenges they are encountering may reveal profitable solution measures for you to explore.
