What, where and why

It takes more than having an idea. The world is full of inventors, companies offers royalties of only 1-4% of wholesale revenue, that shows how little raw ideas are worth. What is called for is the talent to convert ideas into companies that generate profit. It is the what, where and why that counts.
Photo by TT Zop Flickr CC

What

One common sense idea is to "follow the money", to see where people spend their money and try to get a share. It surely can be discussed if this is innovative and entrepreneurial enough, but I would argue that it is just exactly that. It is the anti-thesis of the typical inventor that finds a solution and then go looking for the problem, I know, I've been there. Now I find that speaking only to "early adopters" is engaging but not offering sufficient financial returns. If you can do something better in areas where people already are willing to spend, I believe that your chances improve.

The average US consumer spends his pay-check on:

1. 34.1% - housing


2. 17.6% - transport


3. 12.4% - food


4. 10.8% - insurance and pensions


5. 1.9% - education... roughly half of clothing

Where

To be a major player in a big and growing market must feel like being a lion when the wildebeest return to the plains, you just wander over to pick up you prize when you please. Not bad, problem is you must know where they will appear, and the phosphorus levels in the grass might not be the first thing on the mind of the average lion.

But, if you know that the wildebeest like high amounts of phosphor, then you know where they will go. Same thing with prices on housing, transport and food. Right now the fertile plains seems to be in Shanghai.

Why

What makes up the "must-have product"? It seems to be a continuous search and adaptation process.

You need to find the demographics of the must-have users, or at least the "use cases", to understand who really needs the product - and why. Then you can start to build a thriving business, if the number of potential users is big enough.

Being in mostly training and education, this blog-post has given me a lot to think about, am I in the right business? Is there a real interest for education and investment in Human Resources? What do you think, what are your thoughts?