Ideation, the Starting Point for Company Building2021-12-01 | Maria Paula Polchlopek
As a Venture Studio leveraging the Company Building methodology, our purpose is to build digital platforms to empower the emerging middle-class in Latin America. To do so, we have developed an entrepreneurial methodology for emerging markets. These markets look very different than hubs like Silicon Valley, so how you design, launch, and fund companies need to look different.
Our company building methodology is designed to build market-transforming business models. It’s about finding a big untapped opportunity and building a 10x better product. Especially to serve the mass demographic in Latin America, it also means business model innovation.
Ideation is where everything starts
To design for people first we must understand them, the ideation phase is precisely for that. Successful company building relies on the right identification of opportunities – check our ideation about fintech -. It’s not about what startups get the most funding or the trendiest business model, it’s about solving deeply unmet needs and achieving product-market fit before scaling.
Ideation is a collaborative process of discovery and experimentation designed here at Polymath that aims to arrive at 1 validated concept. To do so, the team focuses on uncovering surprising insights about our target demographic, translating them into 8 to 10 business concepts, and then testing 3 to 4 prototypes.
Only by addressing real needs can you expect to create real solutions, and relevant, successful companies.
How to get to the concept?
As a Venture Studio, we do not take ideas from the outside, meaning ideas developed by entrepreneurs outside our organization. Instead, we start by identifying big opportunities where clients are clearly under-served. Some of our most revisited industries/spaces are; Fintech, Social Commerce, Employment, Mobility, Health, Education.
We usually go back to the core issues of the society, for example, the inequality in banking, or the average transportation time in one of our region’s cities vs the global average. Take a look at the “phenomenal” problems of your industry or business, since there will be an opportunity.
Map the space
Start by mapping out what is known about the sector, and begin developing an understanding of the project scope.
- You can break down a sector by identifying its stakeholders and brainstorming the characteristics and needs of each. Take notes of relationships and tensions and move forward to building your first project statements.
- You can also formulate statements in the form of “How Might We” action statements. For example, “How Might We give informal workers access to financial products”?.
A guide of discussion points is an important investigative tool for the team to prepare. This will help the interviewer navigate conversations, and ensure that the right information is captured for the team. After each interview, the perspective of the team will broaden and shift, and it is important that the interview guide be a dynamic document that can be updated as new questions arise.
Let them know that you are there for their stories, that they are the experts.
Once you get to the synthesis phase the team will translate the raw information into understandings and structures to inform new ideas and distill insights. An insight is a rich piece of information that you have learned – something you did not know before. An insight should contain a tension between what should be happening and what is not, illuminating a need.
The act of creating new ideas is uncertain, messy, but definitely exhilarating. Although is a creative process, we like to distill it into three general steps: expansionary thinking, evolutionary thinking, and contractionary thinking.
- In expansionary thinking, numerous ideas are generated around a question or topic and the goal is to achieve volume. The purpose is to get past the obvious and get into the unexpected.
- Evolutionary thinking is where interesting ideas are developed to deepen their meaning.
- In contractionary thinking, directions are developed further. Your goal will be to evolve the best ideas into strong concepts.
In prototyping, one of the final stages of Ideation, we test desirability but also the robustness of the business model. It’s like making tangible hypotheses.
To accomplish our goals, we apply a series of learning cycles to establish the evolution rhythm of a concept. We suggest cycles of 1 to 1.5 weeks with 4 to 6 interviews pers cycle. After the interviews, the learnings are synthesized and the prototypes are updated to be tested once again in a new cycle of interviews.
We also work on the P&L of the business to estimate the potential EBITDA and understand its value. In this exercise, we include future costs as the support structure that the biz model will need to grow.
You made it! You got to one concept and now you are ready to move forward. To learn more about the next steps, take a look at our Company Building playbook, which includes the detail of all the four phases and practical tools to deploy in your process. In the meantime here are a few tips.
- Validation: After testing the prototypes, our team focuses on building the MVP and verifying the desirability, feasibility, and viability. The ultimate outcome is to build the value proposition through 2 to 3 MVP cycles.
- PMF: The goal of this stage is to achieve PMF (Product-Market-Fit). To do so we build multiple versions of our product. At this point, we also start recruiting the founding team that will lead the next stage of the business.
- Acceleration: During this stage, the team completes the last iteration of the product and focuses on launching the company and growing through digital marketing, and improving unit economics.