Background
Ideas are intellectual capital with a value attached to them. It is not uncommon for ideas to attract funding; though the initial investment is done by their originator(s), the ability to increase the value of the idea is a form factor component, meaning that the value of ideas can go up or down based on how well they are constructed.
PROBLEM / OPPORTUNITY STATEMENT
Ideas are complex and contain multiple service propositions. One of the ideas on which we worked, i.e., from the concept stage, had six value propositions built into it as one single idea. When broken down, it increased the value by 5x. Without breaking down the ideas into unit value propositions, the business would be cluttered, service assets would be undefined or confused, and there would be a lack of clear mandates for service compositions.
CRITICAL CONSTRAINTS
The meticulous nature of idea breakdown is the only constraint, and it could take hours, depending on how complex the idea is.
KEY OBSERVATIONS
New ideas create excitement and bring along high energy, which limits focus on mundane problem statements.
SOLUTION
We use a methodology that divides ideas into Demographics, Psychography, Geography, Environment, Technology, Socio-Political Impacts, and Economic Conditions to analyze them. This is a fairly structured process that necessitates meticulous attention to detail and is frequently time-consuming due to the fact that it forces one to question many assumptions in various ways. This effectively fragments an idea into such small fragments that it can become a function point and connects the functions to personas, resulting in a comprehensive idea-to-commercialization roadmap.
APPROACH TO SOLUTION
We work with the idea originators to map out the ideas into small constraint associated value proposition statements and derive functional components to identify the efforts and task routine that idea will carry, problems it addresses and thus the direct value it produces. This when summed up, creates the direct value for the idea on its own and help the idea creator, to see how much their idea can be valued at.
KEY SOLUTION METRICS
increased the value at pre-seed stage from under $1 million to $5 million, managed to reduce equity dilution at seed stage, and opened up additional value systems that contributed to revenue.
SOLUTION LIMITATIONS
As a result, there are no limitations to this method; the more complex an idea, the more the approach helps simplify and communicate, identify preferred and disfavored scenarios, personas, and so on.
PROCESS APPLIED
We always believe in walking before running, so the process is done with a pen and paper or using spreadsheets, and it becomes an exhaustive document from which the business plans, system designs, UI/UX components, and even policy elements are constructed, ultimately creating a very visible value calculation system.
REVENUE IMPACT
Since the exercise is so meticulous, it leaves limited room for interpretation or unsupported assumptions. When the value is communicated to the investor, the communication is backed by a significant understanding of the idea and its purpose, which is to create value. This allows for firmer ground in negotiations and the ability to accurately value the idea within a limited margin of error.
AD-HOC CONTRIBUTORS
It helps identify unfactored elements up until the idea is dissected, helps prepare more comprehensive and complex plans in modules, alleviates the pressure of building up the plan, and helps augment the overall architecture, both technology- and business-wise.
KEY BENEFITS OF SOLUTION
Understand your ideas better and know their true value as a result of detailed analysis of every cost and effort component of value delivery.