Idea Engineering: How To Think Like An Entrepreneur
Where I live, entrepreneurship is a highly celebrated profession. A massive ecosystem exists supporting the profession. We have investors and employees swarming around successful entrepreneurs. We have reporters celebrating the success and failures entrepreneurs. And entrepreneurial success has brought both wealth and a host of social issues.
Welcome to Silicon Valley, the original home of the entrepreneur.
Even though we celebrate the entrepreneur, the actual creation of the successful entrepreneur is essentially a random process.
Entrepreneurs are really nobodies until they strike it big. It is a hero culture. One day you are nothing, and the next day you are a celebrity with all the benefits it provides. The road to become a successful entrepreneur could be instantaneous, or take a long time. Most never make the grade, with blogs and books filled with analysis of the high failure rate of entrepreneurship, the qualities of an entrepreneur, etc, etc.
Venture capitalists adopted this random process by heart very early on. They bet on many entrepreneurs, and hope some strike it big. It's intelligent gambling for a venture capitalist, and they extract a pound of flesh from entrepreneurs. Particularly the ones who fail, often destroying their passion, wealth and health in a grueling process of faking-until-you-make it – or more like not.
I am a big believer in the entrepreneur, even if the whole process is messy with a low probability of success. The reason is that we desperately need more entrepreneurs to dig humanity out of the moribund mess it has gotten itself into.
So it is important that we increase the probability of success for all entrepreneurs. Although the random process does work sometime, it does not work often enough.
So what can we do? I don't have all the answer myself, but maybe if we put more focus on the topic, we could perhaps make progress together.
So lets take a shot at it.
First, there are many things wrong with how people think about entrepreneurship, starting with what it actually is. The average person from the street will probably tell you an entrepreneur comes up with a great idea and makes a lot of money from it. Often there is mention of technology, apps, or more recently AI, robotics and the like.
This is a very limited definition, because it focuses on the entrepreneur and wealth, which does little to help humanity.
A much better way is to think of an entrepreneur as a person who changes the behavior of people. Or in the most successful outcome, the behavior of humanity.
This crisp definition is divorced from wealth, technology, company structure and the like, which makes it suitable for addressing larger scale issues that face the human race. It also makes it more suitable for analysis, as we will see.
The definition of an entrepreneur assumes there is an idea that is powerful enough to accomplish behavior change. With a proper and repeatable framework, you should think of developing this idea as an engineering process.
Lets call it idea engineering.
Ideally, if we want high probability of success, idea engineering should be a rigorous process. Of course, we are nowhere near a engineering process for ideas today. It is a wide open field for investigation and nobody really knows how to do it right.
With our new definition of entrepreneurship, we can start borrow approaches from other fields of study. There is a lot of work on behavior change, for example. What works and what does not.
For example, we know that educating a person often does not change their behavior. You might know that some animal is endangered, but you choose to do nothing about it.
What we do know is that emotions do affect behavior. Some will say this is the primary driver of behavior. If you don't feel something, typically nothing happens. Behavior is deeply ingrained in the human limbic system, responsible for emotion.
Since the world is full of humans, and there are too many of us, lets target changing the behavior of the average consumer. Of course, as an entrepreneur, you may choose to target other segments, such as business, which might be easier, but probably have less impact on a planetary scale.
Now of course, there are some stand-out examples of how human behavior has changed over the last hundred years. Television, the internet, the smart phone, Facebook, etc has fundamentally changed how people spend their time. With many examples of successful entrepreneurs behind them. Some may argue not always for the betterment of humanity.
So for business-to-consumer (B2C) endeavor, behavior change most often means changing normal people they spend their time. And there a very close link between time and emotion, which is the link the successful entrepreneur uses to change behavior.
It is possible to break behavior change into smaller manageable classes, which is convenient for separate analysis.
Lets take a more detailed look.
Time sink behavior change
A time sink, as you would expect, is something people spend time on. Major examples include working, watching TV, playing games, Instagram, shopping, and the like.
The most common emotion behind time sinks are love or boredom. People simple love doing it, sometimes to the point of addiction. Or it is convenient distraction during a period of boredom.
Most often a time sink takes all your attention, meaning you can't do anything else meaningful at the same time.
Entrepreneurs target time sink behavior change at their own peril. The nature of the time sink is that it is a highly competitive environment. You are going up against highly entrenched behaviors that are extremely difficult to change. Can your own endeavor compete against Netflix?
Also remember, you are competing against so many other entrepreneurs. Your own time sink might just be a flash in the pan, dethroned by somebody that is more fashionable.
So entrepreneurs really really have to thing twice about endeavors in this space. It is absolutely rife with failure. If you do compete in this domain, your emotional drivers for change need to be extremely high and stable over a long period of time.
Time source behavior change
Time source behavior change involves creating more time for consumers. Examples include businesses like home cleaning, home shopping, online shopping, and other services of convenience.
Those entrepreneurs who give consumer an additional “source” of time, are often richly rewarded, because these consumers have money to spend in exchange for time. Some have way more money than time, so you can build quite a profitable business here. Unfortunately and depressingly, the time saved is often plowed back into time sinks, but who are we to criticize.
Time source behavior change is driven by inconvenience and sometimes hate. If you don't like house cleaning or shopping, get somebody else to do it, if you have money, of course.
Identifying opportunities in this space is as simple as asking two questions. What don't you like to do? Do you have money to spend on it?
Since it is so simple for the entrepreneur to identify opportunities in this space, it is also a highly competitive space where most of the niches have been filled, and it is often a race to the bottom most of the time.
People like to get a lot of time for little money. There is always someone trying to offer time cheaper and more efficient. Since a lot of the cost of an offering is because of labor cost, this area is always chasing automation. Technology plays a huge role in time source behavior change.
Examples are online market places, where consumer and producer are connecting with each other efficiently, and the platform takes a cut of the transaction value. Behind the scenes, a reverse auction determines the cheapest labor worldwide (service providers bid to offer you extra time in your day) and optimizes value.
More recently, the development of artificial intelligence (AI) grabbed the attention of entrepreneurs all over the world. By removing humans from the cost equation via AI, essentially time can be sourced much cheaper.
We really don't know where the automation trend will end. It may be a very destructive path for humans overall. In the race for a better deal on sourcing time, we might be shooting ourselves in the foot.
As an entrepreneur, if you can source time cheaper than anyone else, you should consider it. Just be aware that you will most likely be chased by others sooner rather than later.
Time stacking behavior change
Time sink and time sources are a nice complement of each other. One feeds the other. But there are other interesting forms of behavior change that entrepreneurs can experiment with, and one of the most interesting is time stacking behavior change. It has a lot of interesting business opportunities too.
At a given time, a consumer might be doing two or more things at the same time. There are interesting relationships and constraints when it comes to “time stacking”.
An obvious constraint is that you can't do some things together, for example, watching Netflix and driving a car is not compatible. This is because both tasks are mindful, and requires your attention.
But some activities don't require much attention, and can essentially be performed in a mindless way. Driving a car is pretty much mindless for most folks – you can think about other things or talk on the phone, without much danger. You are essentially using separate parts of your brain. Just like you can knit while watching TV.
Entrepreneurs use time stacking behavior change all the time.
Starbucks is a good example. Their core business is selling you a coffee, but they stack it with several other activities. The most obvious being as a space for customer to work – remote workers might prefer camping at Starbucks for the social feeling, rather than work from home. Starbucks is competing against offices and expensive co-working spaces by providing a free place to work, in exchange for a cup of coffee. They accomplish this by having tables and Wifi. If they they remove either, they would lose a lot of business.
Starbucks also creates social spaces. If you've hung around one during the day, you often see small groups of retirees chatting. They have comfy chairs for this.
There are lots of other stacking examples. McDonald's sometimes offer play spaces for kids, giving the parents a bit of peace, and saving on baby sitters.
Each layer in the stack typically involves either an essential or necessity, or caters to an emotion. Restaurants, hotels and other service businesses use stacking extensively. Its starts with a location, a mood, various services, price and the like. There is typically something essential (food or a bed), and then layers and layers of interesting things that cater to your emotions. The idea is if another layer is added, it could influence the behavior of consumers. For example, if a gym adds day-care, it might attract more stay-at-home parents.
Shopping malls essentially stack a lot of business stacks together, a sort of a super stacking. No wonder they are so popular, and why free-standing stores have such a hard time to compete.
In technical products, stacking results in more and more product features. However, it often leads to over complex products, and can lower adoption rates. So stacking lots of things with the hope of changing user behavior, does not always work. It can get confusing. Essentially, you can't be everything to everyone.
Creating a unique product offering via stacking behavior changes is rich with possibilities for entrepreneurs. You can simply stack together things involving positive things that people love, or you can attempt to improve things that people hate with things that people love or need.
It is all about the emotions when you stack behavior changes together. Lets look at some examples.
There is nothing worse than a soul killing commute in your car. You can spend hours a day in traffic. Not only does it take a lot of time, it is expensive and dangerous too. So commuting involves a highly negative emotion, and so entrepreneurs naturally spent a lot of effort changing behavior here. Some of “products” here include radio, car-pooling, car-pool lanes, buses, public transport, private transport networks, remote-working, co-working spaces, online conferencing, self-driving cars, electric cars, ride-sharing, car-sharing, navigation systems, car insurance, parking garages, valet, baby seats, crossing guards, and probably a hundred other things, and more to be discovered by future entrepreneurs.
Simply moving a person from A to B causes massive behavior changes and created a lot of products made by creative entrepreneurs. What they did is to stack some behavior changes on the simple physical rule that you can't be in two places at the same time.
And as we can see, often the stacking happens on top of someone else's business when that business does not address consumer emotions adequately.
There are lots of stacking behavior changes happening in other areas where humans spend a lot of time, for example working and earning a living. There are a lot of heavy emotions involved in the job market, so there are zillions of opportunities for entrepreneurs.
Just pick something that consumers either love or hate, constrained by a particular activity, and find a way to stack something on top of it, and you probably hit a business.
Needless to say, this is a rich area for entrepreneurs to explore, and is likely to bring you success.
Time neutral behavior change
Time neutral behavior change is when an entrepreneur changes behavior but it does not affect time spent of a person. This the opposite behavior change from none of the classes above.
Examples include investing, donating to charity, supporting social causes, insurance, and the like.
Time neutral behavior changes often involves a momentary decisions to initiate something which then is pretty much on auto-pilot and can practically be forgotten. You for example decide to save money in our retirement plan, and then pay attention to it again when you retire. Or you give a donation to charity. Or you write a letter to complain about something.
Since this event is just a blip on the radar of your life, it is easily ignored or postponed. You can basically do without it most of the time, and often not much emotion is associated with it. Hence it is hard for an entrepreneur to affect behavior change, exactly due to the lack of emotion.
So one way affect change here is to whip up very strong emotions, be it anger or fear. For example, the fear of being destitute in your retirement, or of an expensive accident, or being angry about something close to your heart, like animal cruelty or saving the planet.
This is a hard area for an entrepreneur to change behavior in. There are many other endeavors that try to get you to do the one thing that they want you to do. And they all pull heavily on the emotions.
But if you can pull it off, you might have a client for life. The best example being insurance.
OK, so how does all of this help with the concept of idea engineering? Do we have any more of a process?
Well the most obvious conclusion is that some things are easier than others for an entrepreneur to find success in. And that given a choice, you should be aware that some paths will be easier than others.
Also, that emotion plays a massive role in changing the behavior of people.
No emotion. No behavior change. No business.
And if you are a technical founder, be aware that technology plays a supporting role. It is probably the least important thing. Please don't start with the clever technology and then try to pick your idea.
Always start with thinking about behavior change.
Good luck and prosper, entrepreneur!