How to come up with a good business idea

Nearly every week I hear from an aspiring entrepreneur with a familiar question:

“Hey John, I want to start my own business, but I don’t have a good idea. How do I come up with the perfect idea?”

My first response is that ideas are cheap. Successful entrepreneurs know that it’s all about execution. Most businesses are copies or iterations of existing ideas. Timing is another huge factor in the success of a business. Some ideas were exactly right, but were just too early for the market. Others’ ideas may have been better than their earlier competitors, but simply arrived too late. However you slice it, I have no doubt that the idea is only a small part of the recipe for success for any entrepreneur.

But the question remains: How do you come up with truly good ideas? Here’s my advice.

Use the Good Idea Matrix™

The Good Idea Matrix is a simple framework that helps you generate ideas and decide whether they are worth pursuing. The concept is simple:

The key is to apply a new solution to an old problem, or apply an old solution to a new problem. The new/new combo is most likely too early, untested, or the market won’t understand. The old/old combo is simply disrupted and no longer relevant.

A couple examples to help illustrate the concept:

• Airbnb came along in 2008 and took an old problem (“I need a place to stay while I travel. Where can I sleep for a fair price?”) and applied a new solution (Turn empty bedrooms, homes, and apartments into hotels and use the internet to bring supply to the demand.).
• Uber did the same thing: Old problem (“I need a ride.”), new solution (Tap a button on your phone and a car arrives.).

On the flip side:

• A new problem we saw this year was that restaurants had to close their dining rooms because of the pandemic. To keep their businesses alive and competitive in a changing market, so many restaurants pivoted to offer takeout and take-and-bake meals — even fancy ones who’d never offered it before.
• Another new problem for me in today’s world is that I’m on too many Zoom calls all day (maybe you can relate?). An old but effective solution: Go for a walk and talk on a plain old phone call.

How to Apply the Matrix

Now that you understand the simple genius of applying a new solution to an old problem or fixing a new problem with an old solution, what’s next?

Walk through your everyday life with your eyes and ears open for opportunities to apply the principles of the Good Idea Matrix. What new problems exist because of the global pandemic? What’s a task that you’ve had to complete that makes you think, Why is this so hard? (e.g., refinancing your mortgage, going to the DMV)? Is there a new solution being applied in another industry that you can copy and apply in your industry?

The key is to search for problems (new and old) and then apply the corresponding solution (old or new). Apply fresh perspective and 2020 smarts to familiar challenges, or apply old wisdom to new ones.

But remember: At the end of the day, the idea is cheap. Execution is the hard part.

For more great insights about leadership and mindset, check out my new show, the Leadmore Podcast, where I talk with leaders of the past and present to help create more leaders for the future. Find it here or wherever you listen to podcasts.

I also write a weekly newsletter to share something that’s on my mind (like the Good Idea Matrix). You can subscribe here.

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