A process for identifying those new business development ideas with a higher than average probability of success, was developed at the Hoechst Celanese Corporation Office of Innovation. They reviewed more than 1000 ideas generated through their Idea Fund and Opportunity Bank in order to come up with a way to improve the survival rate of ideas going through the Hoechst Celanese stage gate process. Their opportunity enhancement process was based on research and venturing process of Dr. Rajiv Tandon, a professor of entrepreneurship at St. Thomas University in Minneapolis Minnesota.
The opportunity enhancement uses a series of questions, called screens or cuts, to identify high potential ideas. The questions helped the teams consider the idea from broad range of perspectives, before any money was invested. The process is shown in the “Overview of Opportunity Enhancement Process” figure. This process enables groups or individuals to screen a large volume of ideas quickly and methodically. The process identifies high potential ideas and allows others to fail quickly and cheaply, on paper instead of in the lab. Opportunity enhancement also strengthens the emerging concepts and provides a flow of improved ideas back into the process.
This process works because it sets boundaries upon all the ideas that come in. In the First Phase market scope is conducted to see if the idea falls into the existing product lines for the corporation, or product lines were the Corporation intends to grow. The best sources of ideas came from customer problems, internal problems, competitors’ problems, social interactions, reading which identified unmet needs, and frustrations the Corporation experienced with its consumers. Less productive in generating ideas were environmental scans and futuristic reports, and efforts focused on creating one good or profitable idea.
When a user submitted an opportunity, the first task was to fill out the question zero worksheet. A set of questions are asked and answered utilizing an anchored scale for each. If the following questions can be answered with a positive answer, the questioners are scored with +2 points. If the question needs more information in order to be answered, it gets +1 point. If the question has a negative answer it’s given no points.
The questions are segmented into Description, Reward, Risk, and ROI categories as shown below.
Does it fit the Corporation’s business environment?
Do we have the resources to implement it?
If we do not have resources, could we get them through joint venture, licensing, etc.?
What would we make or sell?
Are niches available?
Would we have a sustainable advantage (via some form of IP or business position)?
How large is the market?
Is it growing?
How profitable is it?
What market share might we capture?
How would the business be structured (JV, acquisition, etc.)?
Would we have a cost advantage?
Would we have legal protection (patents, licensing, trademarks, etc.)?
Limited Downside Risk
Will the business be cyclical?
How new is the technology?
Does it fit our technical expertise?
How great is the technical risk?
What would be the magnitude of any loss?
How forgiving is this business?
How long would it take us to break even?
How soon can we have a positive cash flow?
Is this a business we could eventually sell?
Would we develop technology that we could license to others?
These questions are answered by small groups of individuals. These individuals usually consist of 3 to 5 people. Individuals compare their scores and discuss them looking for points of view that others may have missed. After an evaluation session, each breakout group produces a listing or spreadsheet of the ideas segmented into three categories. These are those that have support by unanimous agreement, those ideas that have support by consensus after group discussion, and those ideas that most members in the group rated negatively.
Although there is not much information to be used as a basis for the ratings, if the small groups are comprised of individuals from sales, marketing, manufacturing, technical, and legal, the groups’ gut reaction is just what’s needed. At this stage in the process the results are not intended to be quantitative. Depending on the ideas submitted, a Question Zero Review can have a high attrition rate. Celanese found that at times 90% of the ideas dropped out. Note that this process is best suited for Horizon One or simple Horizon Two projects. This is because the technology and the business model needs to be somewhat familiar to the group. For Horizon Three product ideas, for which the technology and business models are not known, this process is inappropriate.