Opportunity Search

Our discussions around identifying venture opportunities covered various approaches to venture ideation.  Since my first exposure to entrepreneurship in undergrad I have always contemplated which venture ideation strategy is best.  For the purpose of this discussion I will focus on two different approaches, the ‘problem first’ approach and the ‘technology first’ approach.  I have always believed that the ‘problem first’ approach is best however I read a book recently, The Idea Factory: Bell Labs and the Great Age of American Innovation, which has caused me to second guess this view.    

The ‘problem first’ approach to venture ideation starts with a problem (i.e. company A needs to frequently send messages back and forth to company B) and then explores ideas (i.e. phone, email, hand delivery, etc…) to identify the best solution for that problem.  This ‘problem first’ approach is largely the methodology for product innovation that I have been taught to use by the Master’s of Product Development program at CMU.  In my limited experiences this approach seems to be very successful at yielding better solutions to problems.  However, a limitation to this approach that I see is that it inherently limits us to only creating solutions to known problems.  Sometimes the best innovations come about to solve a problem that we are not even aware of.  

Another approach to venture ideation is starting with a new technology (i.e. conductive polymers) and then searching for a problem (i.e. illumination, circuitry, solar power, etc…) to solve with the technology.  In my experience this ‘technology first’ approach is typically leveraged by entrepreneurs with close affiliations to research universities, which are able to provide the entrepreneurs with a wealth of new technologies to test in the marketplace.  I believe this is an inherently more risky approach to venture ideation due to the tendency to want to quickly pick a problem that seems the new technology can address without fully considering whether the new technology is really the best solution for that problem.  However, many of the groundbreaking innovations (such as the transistor, the laser, and C++ programming) that came out of Bell Labs in the 20th century can be attributed to this approach.  

So the question remains is the ‘problem first’ or ‘technology first’ approach the best approach to venture ideation and most likely to yield a successful venture?  Both sides have a compelling argument and like many ideas in entrepreneurship it is hard to formulate a black and white answer.