I come across a lot of doctors who think they have a good idea with commercial potential. If you think you have a good idea, ask yourself the following three questions:
- Is my idea innovative? If so, does it fall into the category of sustaining innovation, low-end disruptive innovation or new market disruptive innovation? The answer to the question should guide your thinking about commercial feasibility, the value network you plan to create or challenge, and your business plan.
- Are you planning to sell something to customers that is nice to have or they need to have? Taking top down numbers, e.g., the percentage of school-age children in India who could benefit from educational materials, is not necessarily an indication of whether their parents will buy the product. You need to validate marketing assumptions, along with your other business plan assumptions, by doing small experiments to test feasibility and market acceptance. By doing these experiments, and doing them properly, you can spend a little and learn a lot. You need to measure not only the quantity of the market pain, but the quality as well. Not all patients need narcotics.
- Does your business model make sense? Where you pick to play should determine potential revenue, cost of goods sold, profit margins and overhead expenses. If you plan to challenge market leaders with a product that offers minor sustaining innovative features and benefits, you are likely to fail.
Answering these three questions early in your planning process should help determine whether your idea has the potential to be a successful technology, product or business. In addition, since investors will be asking these questions when you look for money, it will prepare you for what's to come. Finally, you will be confronted with the innovator's dilemma just like every other entrepreneur, so watch your flank.
Good luck with your new venture.
Dr. Arlen Meyers
Professor of otolaryngology, engineering and dentistryUniversity of ColoradoFounder, CEO and presidentSociety of Physician Entrepreneurs