Let us start by understanding the life of say - 1,000 ideas. What happens through their evolutionary journey to become, maybe, a valuable enterprise? Disclaimer - the chart below is not accurate but close enough. The information sources I used are several:
- Over 5,000+ ideas/innovations nurtured processed by proof of concept initiatives;
- statistics culled from published papers and reports;
- experienced observations from many years as a venture capitalist and due dilligence consultant;
- as Board member for twenty-four small and emerging technology companies;
- forty-five years working in the proof-of-concept trenches with corporations, governments, and universities.
A glossary of chart terms, below, may be helpful.
- Novel Idea is a thoughtful conception of doing anything in a new way.
- Rejected because the idea is not market timely nor developed enough to consider.
- Sift for Reality rates the innovation for probable market acceptance.
- Proof of Concept determines whether the innovation is feasible to develop and make.
- Development brings the feasible innovation to performance/value demonstrability.
- Pre-Market Beta is the first trial by typical users/customers.
- Product/Service
Launch takes to market a value validated offering. - Revenue/Growth occurs as user demand continues to buy a product/service.
- Cash-Out exchanges money for the valuable product/service enterprise.
AN IDEA'S LIFE JOURNEY
| Event | Timetable | Investment |
Survival Rate
|
Cum Ideas
|
| Novel idea |
Immediate
|
Zero
|
100%
|
1,000
|
| Rejected - too early/late |
4 weeks
|
Listen time
|
40%
|
400
|
| Sifting for Reality |
3 months
|
$5 - 10K
|
50%
|
200
|
| Proof of Concept |
1/2 - 2 yrs
|
25 - 100K
|
60%
|
120
|
| Development |
1 - 2 yrs
|
250K - 2M
|
50%
|
60
|
| Pre-Market -Beta |
6 - 9 months
|
1M
|
80%
|
50
|
| Product Launch |
3 - 9 months
|
1 - 2M
|
75%
|
40
|
| Revenue/Growth |
2 - 4 yrs
|
3 - 5M
|
30%
|
12
|
| Cash-Out – from launch |
5 – 7 yrs
|
40%
|
5
| |
| Cum Totals |
9.5 yrs
|
$7.2 million
|
0.50%
|
Comments to consider:
- Building a flow of novel ideas is mandatory to assure enough will survive.
- The first filter, rejected - too early/late, drops sixty percent of Innovator ideas. Good practice is feedback about why, what they can do to improve the idea, and help offer to resubmit.
- Sifting for reality will yield innovations that are just "incremental" – that is, adding modest improvement/value over existing ways; and, innovations that are ground breaking, disruptive, paradigm changing. Good practice is nourishing these.
- Innovations, incremental or disruptive, CAN NOT move to the development phase without passing through proof of concept stage. Unless an innovation is shown feasible, there is not development funding.
- The PoC Manager stands between arm-waving innovators and risk-averse investors. Your work is the most vital in the idea's journey to enhance its value.
- Note that although attaining feasibility, only 50% get funds to reach the development phase.
- While 70-80% of those move into the market, 70% fall away before reaching revenue growth.
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