At some point, every scaling business faces the decision: Do we stay in our core business or venture into uncharted territory? It’s a choice between improving existing products and expanding to create something entirely new.
For tech giants looking to expand into uncharted territory, the common approach often involves acquiring early-stage companies or even teams and integrating them into their ecosystems. This is because for mature organizations, moving away from their core business is not an easy task. In practice, going from zero to one is always more difficult than going from one to 100. In fact, less than 8% projects launched on an internal scale.
And the mergers and acquisitions (M&A) strategy may not necessarily be the answer to growth. This approach requires deep pockets, a luxury primarily enjoyed by industry titans like Adobe, Google or Meta, along with the expertise to acquire and effectively integrate ventures. And even, 70% to 90% of acquisitions end in failure.
At Reface, we set out on a tough challenge to learn how to build new business within the company. In this article, I’ll reveal our framework for evaluating new product ideas and how we determine whether an idea is worth pursuing.
Enlightenment or methodology?
Classic Y Combinator Tips for “observing” the ideas it is undoubtedly a great way to discover ideas. However, it cannot be the primary approach for a company that needs to constantly generate ideas to work on. Therefore, through trial and error, external advice and extensive research on the subject, we develop our own methodology. This methodology can lead to a greater number of ideas that are good enough to test compared to just going the “observation” route.
The first essential step in cultivating innovation in an established company is to create a special space where new ideas will be born.
The first essential step in cultivating innovation in an established company is to create a special space where new ideas will be born. In the day-to-day life of an operating business, employees are usually preoccupied with their day-to-day tasks and tend to stick to established processes and clear goals, rather than exploring new ideas or starting new projects. Therefore, it is necessary to create conditions that encourage the creation of ideas.
This might include creating a small, dedicated team (ideally no more than five people) responsible for managing the idea backlog, creating an analytical flow of ideas, and developing a framework for evaluating and prioritizing ideas based on its strategy your company. I believe in collective brainstorming during the early stages of idea exploration, gradually transitioning to clear ownership during the execution phase of the idea to closely resemble the conditions of a founder starting a startup.
Building an analytical feed of ideas is just as important. We designed a system that analyzes recent ML research work, reacts to social media trends and search spikes, and tracks various other sources of inspiration.
For the entire ideation process, we offer two key pieces of advice. First, take a laser-focused approach with focused sprints that target a group of ideas. When an idea is rejected, quickly move on to the next one. Second, focus on identifying promising idea spaces, not a specific idea. While the initial idea may not succeed, exploring the right space can lead to the discovery of viable alternatives. In essence, we hunt for fertile ground, believing that within it the seeds of innovation will naturally sprout.
