In my last post, Entrepreneurship Debunked, I started an inquiry into distinguishing the reality of being an entrepreneur and some of the bullshit that you get fed, e.g., books about how to start a company. I promised to develop my conjecture that entrepreneurship comes down to two things: opportunity recognition and opportunity exploitation. I’m sure you can tell what I’m going to talk about in this post given its title ; I’ll be dissecting the phrase opportunity recognition into separate parts because it is important to understand what an opportunity really is versus how to go about creating them. I’ll share some insights on best practices that I have found and how I come up with ideas, and then I’ll leave you with some thoughts about what to do with the idea once you’ve come up with it.
So what’s an opportunity?
Of all the definitions that The Google gave me, I think the best definition of opportunity is a “possibility due to a favorable combination of circumstances”. Steven Johnson, in his TED speech, states that an idea in the brain is not some single flash of genius or a ‘eureka’ moment like everything tends to think. Rather, he states that an idea is a network. When you look at how the brain (a super-network of neurons) actually works, an idea, Johnson says, “is a new network of neurons firing in sequence with each other inside your brain; it’s a new configuration that has never formed before.” So there you have it. It all boils down to a network of microscopic brain cells firing in a way that they’ve never fired before. To incorporate the concept of an opportunity into this, the “favorable” part of the definition is a function of the quality of neurons that you already have. See, you aren’t coming up with new information per se but rather a reconfiguration of information that already exists. Therefore, the quality of the opportunity that emerges from an idea is simply a function of the information that you have rolling around in your brain.
How to recognize opportunities:
Well… it’s not about recognizing them but more about tinkering with the inputs so that the reconfiguration generates the most value. Therefore, opportunity recognition is a bit of a misnomer—we should be calling it Opportunity Generation. Most innovations came about by accident or slow discovery (generation) before the new neuron network solidified in the brain (the moment of recognition). So, given that ideas are new networks of neurons, how do you go about getting your brain into an environment where these new networks are more likely to start forming? Good thing you asked. Mr. Johnson goes on to say that the external networks (our social circles) actually mimic the internal networks of the brain. That’s why networking is so crucial: it influences your life and how your brain conducts your actions and, thus, the trajectory of your life. Does it make sense now why I wrote about building a network?
Methods of opportunity generation:
In a previous paragraph, I mentioned getting your brain into an environment where it can start generating new neural networks, so here’s a list of methods that either I personally employ or know someone who does:
· Get friends/colleagues together to bullshit over coffee or beer – Model the same thing that the brain does: get the components of a network together and start firing out ideas to see what new configurations seem interesting. Getting together in an informal setting is best because that’s when the psyche relaxes and lets the neural networks become flexible. If you call it a “brainstorming” session, the brain tries to force things to happen, which, in fact, limits its creative ability. Stimulants like beer or coffee help too – at least that’s been my experience.
· Think about what annoys you – Have you ever been going about your daily life and, after handling the same annoyance, wondered, “Why hasn’t someone figured this out?” Rather than getting frustrated, think about what the solution might be and then how exactly you could make a company to deliver that solution for a profit.
· Ask how and why – Did you have anything go surprisingly well or surprisingly bad? Take a second when that happens to deconstruct the factors that had a hand in contributing to the outcome. Think about how the outcome might have been different if you took out some of the factors or simply rearranged the sequence.
· Be a pirate – Whenever you hear an argument or someone who takes a particular position on a subject, take the opposite view. Pirates (the Johnny Depp kind, not the Somali kind), were sailors who were as smart as the navy guys but didn’t like being told what to do. They took the opposite view and acted on it. Now, I’m not giving you a green light to go pillage and plunder, but I am telling you to act a little bit on your devious curiosity and see what you come up with. For help with first steps on that, go to my article on Throwing an Industry Under the Bus.
· Get informed – Reading shitloads helps out a lot too. The more information that you have about what’s going on in the world, the more opportunities you’ll see. In fact, I recommend intentionally overwhelming the brain with information from time to time. The brain, in its natural desire to label and organize the informational bombardment, will rely on your subconscious, thus giving it the potential for “accidentally” generating brand new neural networks.
· Transpose business models that work in industry onto another – A friend of mine takes the Inc. 500 list and ports a business idea from one company on the list into the industry of another company on the same list. A good example of that is Better Place. They are taking the cell phone network business models that Verizon and T-Mobile use and are applying it to the transportation industry to get more consumers to switch from gasoline cars to electric cars. Click here: “Shai Agassi Charlie Rose Interview” to get a better understanding of what I’m talking about.
Getting out what you put in:
Hopefully, you’ve been able to gather that the quality of your ideas is a function of the quality of your network. If you tend to rely on your personal network to help you generate new ideas, then it’s important to take a look at the quality of people you hang out with. You are the average of the five people who take up most of your time. If your friends and colleagues aren’t very well-informed and don’t care to think carefully about solving big problems, then don’t expect to come up with ideas that the general population will care about. Same thing with information that you get through social media and other information sources: if the information bytes that you get a dozen times a day are Facebook and Twitter updates from friends who only care about the newest video game or want to tell the world what they are having for lunch, don’t expect to come up with ideas that are much different. As an aside, I use social media not to broadcast my meal plans but to capture and aggregate important information from solid thinkers and problem solvers (Harvard Business Review, Venture Capital Blogs, Tech Blogs, etc).
Closing thoughts:
This is what we’ve covered:
- Ideas/opportunities are networks of neurons that have never been configured in the brain before.
- You can’t generate new ideas on your own.
- You need a network to do it. This can either be from your friends and colleagues or the information sources that you receive digitally (I recommend combining both).
- Quality of idea has to do with the quality of the input that you have. Average of top 5 people that you hang out with. So if you hang out with really stupid people, you aren’t going to get ideas that have much value outside of the people talking about it. Example: ideas that you and your friends come up with when you are high (Cheetos + peanut butter) sound good to you guys but not to many other people.
- Encode your thoughts as you go through the idea generation process. If you want more information on how to do this, comment below and I can write a post about how I develop ideas and document them while I am in progress.
An intro into what’s next:
So to bring it all together and to help you understand how everything I talked about is connected with my next post on opportunity exploitation, I will leave you with this to chew on: A new neural network is formed (idea), which causes you to take actions (your public expression of your new neural configuration); people react to those actions and either find it valuable or not and may be willing to pay money for that. How you go about structuring your actions so that you can get the best possible information back from your audience/market is another topic entirely – one which we’ll cover next time.
Phantom out.
Sources:
Steven Johnson TED talk: Click Here
Shai Agassi interview: Click Here
