Ideation for New Ventures

Meir Russ, Ph.D.

Professor Emeritus
Austin E. Cofrin School of Business University of Wisconsin - Green Bay, USA
Draft – March 29, 2021

Introduction
Innovation is the driving force of advancement in society and organizations. Nimble start-up firms are rapidly generating innovative
product/service ideas with customer-centered strategies at an increasingly faster rate, and some of them are changing the society as
well. Personally, I become aware of this phenomenon and the power of new ideas as a founder of a new venture in the Israeli kibbutz
(that I was a member of at that time) in the late 1980s. Since then, in my research, teaching and consulting, ideation, entrepreneurship
and new venture formation were a passion and a corner stone of my professional growth. Following my latest paper, discussing the
new economic and social era of continuous technological revolutions, (Russ, 2021) I thought now would be a good time to revisit my
thinking and update my earlier model (draft). This manuscript is the result of this process, and is written as a ‘recipe’.
One critical stage of the innovation process is the idea development, or what has been referred to as ‘concept generation’ or Ideation.
To develop ideas effectively and efficiently, one needs to control the needed resources and the access to networks within their
environment that specifically includes: leadership, culture of creativity and action, culture of learning, access to talent, digital systems
and process. Such access and more will be needed later on, when the idea is managed into fruition as a new product, service, process
and/or business model. Let us start with Process.
Process
The traditional approach for innovation calls for a staged process (see great resources at https://en.wikipedia.org/wiki/Phase-
gate_process ) and for using the innovation funnel (see great resources at http://www.ifm.eng.cam.ac.uk/research/dstools/innovation-
funnel/ ). Here, in this paper, the author is proposing a more organic, cycled, integrated and iterative approach (see Figure 1 below),
similar to what can be found at (https://www.openinnovation.eu/22-01-2016/the-lean-scale-up-innovation-entrepreneurship-for-new-
ventures/ ). The models identifies four different aspects/ingredients needed to be caried by an actor for successful ideation,
specifically, an issue to be solved, a solution to resolve the issue, a practical (physical, biological or digital) prototype, and a

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sustainable (financial, social and environmental) business model that can take the idea into the real world and make it a reality. Such a
process is dynamic, interactive, symbiotic; can start almost at any time at, any point, BUT, must pass successfully (at least once)
throughout all the aspects, and be caried on/driven by an action oriented, visionary and creative actor/leader, collaborating with
internal and external talent and partners.
For example, the classic stage process suggests defining the issue (gap, problem) first and then looking for a creative solution. But
sometimes, the solution comes first, or the first duo (issue [1]- solution [2]) does not work; and the ‘actor’ needs to redefine the issue-
solution, before proceeding to the next stage (evaluation). Here, the four loops of learning (see Figure 2) can be useful for opening a
broader set of options (out of box thinking), both for framing the issue and for defining the solution. And what if after successfully
passing the evaluation stage, it is determined that the goals are NOT being achieved, then what? Change the goals? Reevaluate? Find
another solution? Redefine the issue? Again, the four loops of learning can be helpful here. Similar dynamics can be seen when
exerting rapid prototyping [3] and business model development [4]. Which comes first: building a prototype according to a business
model, or developing a business model enabled by a prototype? And if the performances of the prototype are not satisfactory, what
should be changed, the evaluation criteria? The business model? Or, if the business model does not deliver the financial outcomes,
what should be done? So, the leader/actor (e.g., company owner) can have an insight at any stage, which can energize each one of the
four stages, as well as build on itself. Also, below are four evaluations (for which there should be clear criteria for passing) centered
around four questions: 1) What is the issue? 2) What is the solution? 3) Could it work? 4) Can the founder/owner make money on
this? But a word of warning; an evaluation too early can stifle creativity.
The models below (Figure 1 and Figure 2) describe the dynamic process as mentioned above, as the author sees them. Please note that
one part of the model is the three dimensional “space” of Ethics, Cybersecurity and Time. Ethical considerations, as well as
sustainability must always be a part of the entrepreneurs’ concerns. Cybersecurity should be considered today from the inception of
the business and incorporated at every step of the venture development and implementation. Managing time effectively and efficiently
is one characteristic of successful entrepreneurs. See more about the three aspects in Russ (2021).

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Figure 1: Ideation: Process, actors, and models

In order to develop ideas rapidly the founder needs to familiarize herself and get practice with a number of tools. Here are a few the
author is recommending based on his experience and teaching.

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Data and Knowledge
At every stage and at every point, the founder has access to data and knowledge that she can utilize. The author proposes the use of the
new model of Knowledge Management that was recently proposed by Russ, (2021). The model suggests that the founder learns new
knowledge and makes decisions, at the same time, continuously and seamlessly. As such, the founder is developing new knowledge
while using her existing knowledge (see Fig 1 above) at the same time. In the process, data is accessed, and it is expected that big data
and machine learning will be engaged in the process as well at different stages in the very near future (if they are not already).

Figure 2: Single, Double, Triple and Quadruple Loop Learnings

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Idea generation (issues and solutions)
A large number of creativity (individual or group) methods are available. See good examples at the MindTools website
https://www.mindtools.com/pages/article/newCT_88.htm and https://www.mindtools.com/pages/main/newMN_CT.htm .
Ideas have a life cycle. This means that ideas should also be allowed to die, especially when they fail. As Einstein said, if you did not
fail, you did not take a risk. So, in some cases the company founder needs to encourage to develop an immune system (personal and/or
organizational) that kills ideas (especially if they are bad or fail). This is one more reason why the company founder/owner needs to
have measurable key success indicators and/or use a business model (see below). These constraints will help the founder to be creative
in a context, since creativity lives on the edge of chaos.
Warning: Ideas or concepts are the source of innovation and are vital (but NOT sufficient) to the successful launch of new products or
service. Also, do not confuse creativity with innovation; they are not synonymous.
Regardless of the source of the idea, insight, serendipity, or tool used, the generation of ideas should be practiced extensively, since
the success rate is very low (there is a need for over 100 ideas for one successful venture). Using an idea log (see below) might be a
healthy practice.

Idea log
An idea log is a record of one’s thinking--issues and solutions; it can be graphic (see for example
http://hci.stanford.edu/courses/cs247/2011/idealog.html ) or written (see for example
http://cs247.stanford.edu/2007/handouts/WhatsAnIdeaLog.pdf and http://www.cherylreif.com/2014/04/07/boost-creativity-with-an-
idea-log/ )
Here are the author’s guidelines for how to write an idea log:
• Record the issue to be resolved (it is OK to refine it again and again). List at least three solutions. There is nothing
wrong with starting with an ‘aha’ moment (solution), then defining the issue, and then suggesting at least two
additional solutions (always can have more than three).
• Do it daily; incorporate it into a daily routine.
• Record everything.

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 • Have a clear set of “success” criteria--write them down; They MUST be specific, measurable and within a time frame
(see for example SMART goals at https://www.clearvoice.com/blog/smart-goal-examples/ ).
• Review them (the criteria, the issues, the solutions) occasionally; choose the best; and reflect.
• While reflecting, consider this (at least, you can always add) questions:
o Was the idea challenging?
o Did I force myself out of my comfort zone?
o Would I accomplish the goals I intended to?
o Am I using the right criteria.
o Was I clear about how to make it work?
o Did I consider all possible scenarios, contingencies?
o What did I learn from this?
• Involve other trusted people; be sure to collect both positive and negative feedback (see more for example in Verganti,
2016).

Visual thinking1
There are four steps of visual thinking (Roam, 2009, pp. 32-42; For a summary watch the short videos at
https://www.youtube.com/watch?v=7oSAuGjBN8w and https://www.youtube.com/watch?v=aGnns7VqMug
1. Look -- semi-passive process of observing the situation (using existing meta-data, baskets).
2. See – proactively re-categorizing the view of the situation (rearranging the metadata and data into ‘new’ information which
will enable the creation of ‘new’ knowledge). See also https://www.youtube.com/watch?v=NcbS0t2WfzI
3. Imagine -- utilizing the new knowledge for creative possibilities enabling value creation.
4. Show – effectively communicating the output to the audience of interest.

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The author is suggesting that the reader, while reading this part (pages x-y), have a specific issue at hand, and, after watching the
examples and videos embedded in this document, apply them to her/his specific issue, so the tools will make sense and are practiced.

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 The process is not always linear (1 to 4), and may require reprocessing, consistent with the model introduced in Figure 1
above. In his book, Roam (2009) elaborates on each of the four steps listed above. Below, the author will briefly cover a few of
the most important aspects of these steps (in his opinion).
Roam (2009, pp. 67-88) suggested six formulas to structure the proactive re-categorizing of the situation (mentioned above) by
using the 6w’s (or 5w2h--see a brief introduction in https://www.designersreviewofbooks.com/2009/01/the-back-of-the-
napkin/ .
The 6w’s are:
1. Objects -- relate to who and what
2. Quantities -- measurement of how many and how much
3. Position in space -- where in space and process
4. Position in time -- when and timing
5. Influence/cause and effect -- how (system thinking)
6. Putting it together (the big picture) – why
Roam (2009, pp. 89-120) also suggested five dilemmas (the SQVID) to consider and resolve when thinking about visualization (see a
summary video at https://www.youtube.com/watch?v=oZjFlCkW7UU) . These five are:
1. Simple vs. elaborate
2. Quality vs. quantity
3. Vision vs. execution
4. Individual attributes vs. comparison
5. Change vs. status quo
To facilitate the visual thinking process, Roam (2009, pp. 121-130) also proposed a framework and a set of specific tools for showing
– what we see and what we show – see summary in https://www.youtube.com/watch?v=NcbS0t2WfzI
1. Why -- multiple variable plot
2. How -- flowchart
3. When -- timeline
4. Where -- map
5. How many -- chart
6. Who, what -- portrait

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Two additional examples of the graphic tools by Roam can be found at:
Visual Thinking Codex -- Six W by SQVID; Roam (2009, pp. 131-136). See at https://www.youtube.com/watch?v=QphzPHGmByk
and the VIVID grammar at https://www.youtube.com/watch?v=kSpBxwkRZjE

Three more examples of visual thinking from other sources that you may want to consider:
• A new advanced tool: visual thinking for business and a video, can be found at https://www.youtube.com/watch?v=vcW1_l-
nRes
• One from Stanford, https://stanfordgsb.tumblr.com/post/51889767187/5-core-skills-of-disruptive-visual-thinking
• A Master project from Buffalo State College by Melinda Walker, M. (2012). "Visual Thinking: Sketching my Future as a
Visual Practitioner". Available at
http://digitalcommons.buffalostate.edu/cgi/viewcontent.cgi?article=1169&context=creativeprojects

At this point, the founder should have gone iteratively through steps 1-3 (in Figure 1 above) a few times and have practiced all the
tools described above at least once, prior to moving to the next stage.
Value Proposition and Evaluation-Business model
For the business model, the author likes to use Osterwalder and Peigner (2010) as a canvas. See a great preview at
http://www.businessmodelgeneration.com/downloads/businessmodelgeneration_preview.pdf
Important considerations about the business model at the stage of idea development and management include the following:
• Have some numbers, so if asked by a banker or a Chief Financial Officer, the supporting numbers and data (based on insight)
will be available.
• Using the canvas and its nine building blocks (customer segments, value proposition, channels, customer relationships, key
resources, key activities, key partnerships, revenue stream and cost structure) is one way to explicitly formalize a value
proposition (which is the core of the canvas) from the customer’s perspective (NOT the founder’s) and how value will be
created (or profit) from the idea.
• What is really important is the focus on cash flow, which is the ‘killer’ of any new idea or new venture. Using this tool will
force the founder to think in terms of customer needs and finance and will help to crystalize key success indicators.

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See additional resources at http://www.alexandercowan.com/business-model-canvas-templates/ and
http://blog.strategyzer.com/posts/2014/7/25/great-ideas-need-great-business-models

Evaluation- Six hats

Another technique that the author likes to use for evaluation is the ‘Six thinking hats’ developed by de Bono (1985). Using this
technique will allow the business founder to access multiple perspectives about her/his idea, and will be helpful in the evaluation of
her/his idea. The six hats are:
1. Green--Creativity -- statements of new ideas, possibilities; visualizing a potential future; go-with-the-flow and out-of-the-box
thinking.
2. White--Information, data -- considering what information is available, what are the facts, what data is missing and needed?
3. Red--Emotions -- intuitive or instinctive (no need for justification or rationale) reactions of emotional feeling.
4. Black--Judgment – cold, practical, realistic logic; reasons to be cautious and conservative. The devil’s advocate (this is the ONLY
time disagreement is acceptable and the only time it is required).
5. Yellow--Optimistic response -- logic applied to identifying benefits and value. Sees the positive, sunny side of the state of affairs.
6. Blue--Managing the six hats thinking process -- what is the subject? What are we thinking about (which hat are we using now)?
What is the goal? Preventing negative, disagreement thinking (unless you are using the black hat). Look at the big picture.
The above is based on and modified from http://www.debonogroup.com/six_thinking_hats.php and
https://en.wikipedia.org/wiki/Six_Thinking_Hats

Planning for application – Leading with a culture of creativity and action

To succeed, the founder will need to create some kind of an organization (since seldom is anything accomplished alone) and lead and
think with a bias toward action while being creative. As Belsky (2010) suggested, to make ideas happen, the founder will need: ideas,
organization, communal forces and leadership capability. For that, she will need innovation, which is ideation and execution (to create
value), and to increase impact, she will have to combine creativity and organization. In order to accomplish this, the founder will need

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to harness a community and the forces around her. Such an organization should include a network of different players like dreamers,
doers, and incrementalists (Belsky, 2010), so stimulation from serendipity can be sought, and complementary skill sets can be
cultivated. As a leader, the founder/owner should also learn to talk last, develop a tolerance for failure and ambiguity, and avoid the
trap of visionary narcissism.

Planning for communication

There are two types of communication the founder needs to plan for: internal, within her/his organization and, external.
Internally, the key points for planning communication are: 1) to frame the space where creativity can and should happen; and 2)
ongoing alignment of activities, processes, resources (time, social, human and financial capital) and actors.
Externally, the founder must communicate effectively with a diverse constituent base, including: supporters, naysayers, customers,
suppliers, etc. Academic studies have shown that involving customers in the innovation process could result in a greater success in
new product/service development. This is especially so, when the founder can identify lead users, those who seek new products or
innovative services. An alternative approach could be using experts’ opinions and/or open innovation (see for example
https://openinnovation.eu/22-01-2016/the-lean-scale-up-innovation-entrepreneurship-for-new-ventures/ ). Employees, when
appropriate, can be helpful as well.
Kotter and Whitehead (2010) present an interesting perspective on how to understand the generic attack strategies that naysayers and
obfuscators utilize and how to minimize the risk of their potential, future attacks. They also suggest how to encounter these
adversaries with tactics tailored to each strategy. For example, by "inviting in the lions" to critique an idea--and being prepared for
them--the attention of busy people will be captured, which will help them grasp the value of the proposal, and secure their
commitment to implementing the solution. By considering probable attacks and responses, value proposition can be crystalized and
the image and brand strategy sharpened. Founders can also use prosumers to improve on their products and/or services (see for
example https://brandminds.live/the-rise-of-prosumers-is-the-latest-challenge-for-marketers/ )

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Additional reading
1. Books

Belsky, S. (2010). Making Ideas Happen: Overcoming the Obstacles between Vision and Reality. ISBN-13: 9781591843122

de Bono, E. (1985). Six Thinking Hats: An Essential Approach to Business Management. Little, Brown, & Company. ISBN 0-
316-17791-1 (hardback) and 0316178314 (paperback).

Kotter, J.P. and Whitehead, L.A. (2010). Buy-In: Saving Your Good Idea from Getting Shot Down. ISBN-13:
9781422157299.

Miller, D. (2021). Business made simple. HarperCollins Leadership ISBN 978-1-4002-0381-9

Osterwalder, A. and Peigner, I. (2010). Business Model Generation: A Handbook for Visionaries, Game Changers, and
Challengers. ISBN-13: 9780470876411.

Roam, D. (2009). The Back of the Napkin: Solving Problems and Selling Ideas with Pictures. ISBN-13: 9781591843061.

Sedniev, A. (2013). The Business Idea factory. ISBN 978-1-49368-220-1

2. Articles
Alam, I. (2002). An exploratory investigation of user involvement in new service deployment. Journal of the Academy of
Marketing Science, 30(3), 250-261.
Chesbrough, H. W., & Appleyard, M. M. (2007). Open Innovation and Strategy. California Management Review, 50(1), 57-76.
Fairbank, F. J., & Williams, S. D. (2001). Motivating creativity and enhancing innovation through employee suggestion system
technology. Creativity and Innovation Management, 10(2), 68-74.

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Franke, N., Von Hippel, E., & Schreier, M. (2006). Finding commercially attractive user innovations: A test of lead user theory.
Journal of Product Innovation Management, 23(4), 301-315.
Girotra, K., Terwiesch, C., & Ulrich, K. T. (2010). Idea generation and the quality of the best idea. Management Science, 56(4),
591-605.
Grunlund, J., Sjodin, D. R., & Frishammar, J. (2010). Open Innovation and the StageGate Process: A revised Model for New
Product Development. California Management Review, 52(3), 106-131.
Howard, J. T., Culley, S. J., & Dekoninck, E. (2008, March). Describing the creative design process by the integration of
engineering design and cognitive psychology literature. Design Studies, 29(2), 160-180.
Poetz, K. M., & Schreier, M. (2012). The value of crowdsourcing: Can users really compete with professionals in generating new
product ideas? Journal of Product Innovation Management, 29(2), 245-256. http://dx.doi.org/Retrieved from
Russ M. (2021). Knowledge Management for Sustainable Development in the Era of Continuously Accelerating Technological
Revolutions: A Framework and Models. Sustainability, 13(6):3353. https://doi.org/10.3390/su13063353 .
Russ, M., Fineman, R., and Jones, J.K. (2010). Conceptual Theory: What Do You Know? in M. Russ, (Ed.) Knowledge
Management Strategies for Business Development: 1-22. Hershey, PA: Business Science Reference. DOI: 10.4018/978-1-60566-
348-7.ch001. Draft available at https://www.uwgb.edu/UWGBCMS/media/faculty-site-
russm/files/chapter_1_russ__fineman_jones_2008.pdf
Shin, S. J., Kim, T., Lee, J., & Bian, L. (2012). Cognitive team diversity and individual team member creativity: A cross-level
interaction. Academy of Management Journal, 55(1), 197-212.
Verganti, R. (2016). The Innovative Power of Criticism. Harvard Business Review, 94(1- 2), 88-95.
Walker, M. (2012). "Visual Thinking: Sketching my Future as a Visual Practitioner". Creative Studies Graduate Student Master's
Projects. Paper 156. http://digitalcommons.buffalostate.edu/cgi/viewcontent.cgi?article=1169&context=creativeprojects

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3. TED lectures on creativity

https://www.ted.com/topics/creativity

https://www.ted.com/playlists/20/where_do_ideas_come_from

https://www.ted.com/playlists/11/the_creative_spark

https://www.ted.com/talks/astro_teller_the_unexpected_benefit_of_celebrating_failure

https://www.ted.com/talks/knut_haanaes_two_reasons_companies_fail_and_how_to_avoid_them

https://www.ted.com/playlists/28/sustainability_by_design

http://ideas.ted.com/the-surprising-stories-behind-clever-inventions/

https://www.ted.com/talks/neri_oxman_design_at_the_intersection_of_technology_and_biology/transcript?language=en

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