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Sunday, April 5, 2015

[#innovation - 12] Objectifying (as much as possible) the potential value of an idea.

Ok, you have some ideas. Now what?
Ideally, it would be fantastic if the proposer were already able to tell you something like: this project will need €1mln of initial investment and will take 3 years to pay you back with a 30% Internal Rate of Return.
Having such awareness would require a business case to be developed.
Numbers sound so comfortable when you navigate in a sea of uncertainty.
But, let’s suppose we can have very little clues about financials.
This means you cannot base your preliminary evaluation on quantitative criteria and you’ll have to base your estimate on qualitative ones.
Does it make you feel uncomfortable?
Even if a qualitative evaluation will necessarily be less precise … having common sense, shareable, well expressed a priori criteria will be surprisingly concrete.
When we have to evaluate many ideas, having a way to map them will help you to understand which of them will deserve your main attention. I mean prioritize.


Let’s talk about 2 main drivers.
The most important proposals will be those declaring the most plausible benefts and requiring the most affordable feasibility.
The potential impact (benefits) is related to:
    •The concreteness of the pretended market demand. Is the target well clear? Do you believe, based upon your experiece, that the demand  really exist? That means there is someone ready to give credit and pay some money to have the value you promise them.
    •More, what is the innovation content of that idea? Is it disruptive or incremental?  The more disruptive, the higheer the potential value; but only if the idea makes sense and you truly believe there might be a demand.
The stage of development is about the level of maturity of the idea in terms of its feasibility. How easy is it to be concretely realized by the team working on it? Is that team well balanced in terms of needed competence? Does it take to catch up on some competence and/or resource they lack?
Having to qualify those drivers (benefits and feasibility), according to a 1 to 9 range, will help you to classify ideas into three subsets: low, medium, high potential impact. The same will be for the maturity.
As raw this model might seem, you will appreciate its value when you’ll have to merge several contemporary evaluations, which might come from your cooperators, and when you’ll have to compare the qualitative value of several proposals.
What you get, in the end, is a map which can be read according to hyperbolic curves.
Any idea might have some good potential and probably it can be difficult to definitely say an idea is a good or a bad one. But now you can more easily say which ideas are more appealing, based on your evaluation criteria. And which ones are less valuable. 
You can also tell which ideas are the ones you’ll focus more now. And which ones you’ll focus on tomorrow.

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