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Part I: Overview

Part I: Overview

Before we begin, there are many ways to go into business for yourself. Consulting; acquiring a professional license to practice law, medicine, or accounting; buying a franchise; or taking over the family business all work. This book is for people who wish to pursue a new idea or innovation that responds to a need customers are waiting to have solved. It is also about finding an idea that has a high likelihood of someday being worth a considerable amount of money.

Another consideration before we get started is the personal circumstances of the entrepreneur. If you are starting a new business, it takes time. This goes for all new businesses, frankly, so it should come as no surprise. Securities and mortgage brokerage, law, medicine, and accounting are all demanding exercises in the first lean years. Starting a new company is the same idea. You must build support for your product and then enjoy the fruit of your work. If you are raising money for your business, remember that the investor is not likely to allow you to walk away with a substantial salary until you have proven yourself and your products. The point is that if you are unemployed and considering a new venture as a possible means by which to support the family, be realistic. It could take longer than you think for you to bring home enough dollars to cover all the bills. The key is to calculate carefully the distance between today and that moment when you will receive cash remuneration. If it takes one month to land a great job for every $10,000 in salary you are seeking, you have a rough rule of thumb against which to measure your chances. For those of you who believe that you are a victim of discrimination, the odds shift even more dramatically against your being hired soon.

Allow me to introduce my co-teacher. I have always used this wise owl to help teach my classes because he or she (I could never figure out the gender of my co-teacher) is absolutely, positively never wrong. Our co-teacher inspires great respect from me and the students. Ladies and gentlemen, meet Dr. Market:

From time to time Dr. Market will offer special insight into a particular matter, garnered after years of experience in the field of new venture launching. Here is its very first observation: It is difficult to conjure up any business idea that cannot be grown to a logical and large critical mass. Let’s look at golf caddying and seamstress work. Can they be grown to a greater scale and provide you with greater net worth and income? Absolutely. The golf caddying can grow into an institute with training, certification, distinctive jumpers or uniforms, and PGA/ LPGA endorsement. The seamstress business can grow with training, licensing, practice standards, and possibly a trade association for independents that will register their voices in the congress and state legislatures. This book addresses the potential for bigger and better businesses at the very moment an idea pops into your mind. It does not address the possibility of keeping your business a solitary, one-person-band.

Finding the Right Idea

Let’s pause for a moment and examine how people find ideas to pursue. The process of finding the right idea involves several questions that you should ask yourself and your friends. They can be answered from experience or personal knowledge. The first question is so important that it is one of the 44 elements of the Scorecard, and you will see it again soon. The other questions are calculated to trigger a thought in your mind, maybe several. The objective of this chapter is to help you find one or several ideas that are worthy of analysis with the Innovator’s Scorecard.

Dr. Market’s Observation:

Don’t just quit with one idea! The Innovator’s Scorecard is so quick and efficient that you should be able to analyze a number of ideas simultaneously. In my classes we routinely analyzed between 10 and 20 ideas and the students selected the ones that scored the highest, all in the limited confines of one class session.

The Scorecard Elements

Compelling Unserved NeedDelivery Advantages
Explainable UniquenessResources Available
Sustainable DifferentiationPreemption & Domination
Demonstrable NowStrategy to Penetrate Market
Good CompetitionStrategy for Breaching the Chasm
Bad CompetitionProprietary Ownership
Compelling Pricing PossiblePartnering Candidates
Closable CustomersAppropriateness of Location
Quality of Evidence of DemandQuality of Backup Plan
Ahead of the MarketUnfair Advantages
Ambush ExposureManageable Capital Requirements
“Hot Market”Low Capital Required Until Launch
Attitude of Confidence and FearlessnessVisible Capital
CommitmentHigh Potential Value
Staying PowerForeseeable Harvest
Management CompetenceLack of Showstoppers
Honesty and IntegrityPretending Not to Know
Success EthicHigh-Profile Persons Available
Looking Good in the LobbyPunchy, Compelling Story
Cash Flowing NowGovernment Relevance
Revenue Model That Swamps CostsLow-Hanging Fruit

Each of the 44 elements in the Innovator’s Scorecard will measure a specific aspect of your idea. The Scorecard, which is also downloadable at http://www.prenhall.com/willitfly/, can be seen in Appendix IV—you can calculate with it by hand with a simple calculator or you can enter the values and formulae into an Excel spreadsheet.[4] The scoring of each element varies according to the subject matter of the idea. In the next few paragraphs we will explore the role of intuition, how to score and weigh the elements, a bonus method of using the Scorecard, how to deal with a bad score in an element, adjusting your scoring if an item is truly irrelevant, maintaining reality, synthesizing the scores, and dealing with overlap, that is, the possibility that two or more elements seem to be covering the same concept. Once we grasp these administrative details, we explore the various sections that are presented in each element. Each element has an actual scoring sample at the end so that you will understand how it can be applied to a real-life situation. Occasionally I will need to make assumptions that would be based upon my personal experience, such as my political contacts or my access to capital. I will describe these assumptions and disguise the names.

[4] Don’t forget to test your spreadsheet by entering 10s for each score—the total should equal 860. Divide that number into your idea’s weighted aggregate score to determine your grade. A 70 or more is passing.

Subjectivity and the Role of Intuition

In the first few precious moments of an idea’s existence, a struggle emerges between objectivity and subjectivity. If you were perfectly objective, you might just toss away a very good idea. Perhaps objectivity can be thought of as an offshoot of the strategic planning process.

The key to the Innovator’s Scorecard is therefore intuition, which Webster’s Dictionary defines as “the act by which the mind perceives the truth of things immediately without reasoning and deduction, a truth that cannot be acquired by, but is assumed in experience.” In a world that honors research and objective analysis, the possibility that a purely intuitive tool could be helpful is intriguing.

The Numbers on the Scorecard

Here is the description of the two numbering schemes used for each element. The first is scoring and the second is the weighting. Scores are unique to each business idea, while the weights are identical for each element for all business ideas.


The scoring continuum runs from +10 to –10. The first challenge is to determine whether the score is positive or negative. Essentially, this means evaluating the risks and rewards of a certain action or behavior. You may not realize it, but that is something you do every day: What are the odds that I will maneuver around a slow poke if I were to take the far-right lane on the freeway? Would I be happier if I were to use the other cleaners? Should I overstay my welcome on a parking meter? In each of these cases we assess the odds of success against the penalty for failure.

Importantly, you must comfort yourself that a feeling you have about a particular score is sufficient. This is a critical component of the intuitive: the educated guess. You can always adjust the score later if after further consideration your score would “feel better” if it were adjusted. How do I score each element? I begin with a pass/fail mark, a 7 being the magic threshold. Does it deserve a score above 7? How much? Is it C (7), B (8), or A (9) level work? Is it a perfect 10? Since nearly all readers have had experience with this scale, it should be a manageable scoring proposition. If it is a flunk, is it a close 6? Or does it plunge down through a 5 (that is, a 50%), 4, or a 3? Does it deserve a flat zero, as in no possible way? Does it deserve something slightly more than a zero, say a 1 or a 2? I give a 1 or a 2 to elements that deserve a zero but that also have some redeeming value.

A Bonus

In addition to rating the viability of a new venture, the Innovator’s Scorecard can be used years later as a diagnostic tune-up tool.[7] As experience mounts and the entrepreneur accumulates and synthesizes information over time, the Innovator’s Scorecard gains accuracy. It is, after all, a snapshot of the imagined reality at any given point. The most valid picture is likely to be a sequence of several snapshots rather than any one single image.

[7] But beware of earning a “Game Caution.” See p. 311.

Individual Bad Marks

No individual element score should be low enough to bar a venture. Low scores are simply a map of the land mines on the business’s landscape. If you can disarm the mines, you may be able to succeed even if you have a low score. The lowest possible Showstoppers score applied to Orion, as discussed above. We were confronted by 130 angry nations allied against us in a functioning and legal cartel. We deserved a –10 on the Showstoppers score, which would have derived a –30 for the project. Was it fatal? Not at all—we succeeded! The point here is to persist and keep nurturing solutions to poor scores. They could some day bloom into respectable passing marks. The key to successful analysis using the Scorecard is the aggregate score. Can it reach at least a passing 70%?

Irrelevant Elements

From time to time you will be tempted to ignore an element or two. What, pray tell, could a famous person or a congressman have to do with your business idea? Plenty! I don’t care if you are opening a commercial tool shed, if Tom Cruise loves your stuff, or if a congressman could stand guard over legislation that impacts tool sheds, you must pay attention. The moments that I have believed that an element was irrelevant were often followed by a revelation that I was being adversely impacted by an opponent on precisely that element. All the elements are here for a reason and you need to “squeeze your brain” to address each one honestly. There is, in my opinion, no such thing as an irrelevant element.


Be realistic. Intuitive estimates on a score are not excuses to be silly. Each one demands realism. One of the 44 elements indeed confronts the reality of the underlying business idea head on—see Pretending Not to Know on p. 261. A strength of this tool is its ability to derive practical results that are synchronized with reality across all of the elements.

Synthesizing the Scores

If you were to score a perfect 10 on all 44 elements, you would accumulate 860 total points. This is because the individual score on each element is multiplied by the weight or importance of each element. When you are ready to determine how you fared on the Scorecard, divide your total points by the maximum possible—860. This is the score you need to use to determine if you should move forward. If you cannot reach a percentage close to 70, your idea really needs more work. Return to the elements that are below a 7 and improve those flunking scores until your aggregate exceeds 70%. If your score remains significantly below 70% even after you have twisted your idea and done all you can to improve the bad numbers, your idea could be in trouble.

Dr. Market’s Observation:

It should be difficult to score below 70% if you have optimized your idea during the scoring process. Your idea is likely to have changed a little bit by the time you emerge from the scoring process so that it reconfigures itself into a passing score. Be as flexible as you can be and drive yourself into a situation that has a maximum chance for a successful launch. Don’t be afraid to give up something about your idea if it can mean that you score higher and further assure yourself a big win. Also, don’t forget to adjust all of the element scores to conform to the changes in your idea—if you change the idea halfway through the scoring, you need to start again from the top (it can’t take long to redo the score!).


Most of the scorecard elements slightly overlap other elements. You never know when you will catch a glimpse of a problem or a blessing that will have a material impact on the potential for success. If you believe that the product is sustainably unique but there is no way to confirm that the product is ahead of the market, there could be a problem. You may have stumbled onto a hidden competitor or product substitute, or even an ambush or something important that you were pretending not to know. Only after you score each item will you have a sense of the precise nature of the threat. Have patience.

Features of each item


Often the scorecard elements are idiomatic and where the dictionary is helpful in defining each term, we use it. Where we’ve used a phrase that you may not find in the dictionary, we will try to use common sense to explain what it means. This book uses the cultural lexicon of new venture launching. For example, while “showstoppers” and “low-hanging fruit” are not found in the dictionary just the way we require (showstopper here means something quite different from its dictionary meaning), the words themselves connote the appropriate image for our purposes.

Relevance—Why Add This Element?

Each element is described in terms of its relevance to a successful launch. In some cases there is relevance for the long-term prospects of the enterprise (see Strategy for Breaching the Chasm on p. 181). This section is in keeping with the learning process from which the Scorecard emerged. Learning can often bloom after a moment’s reflection upon context and relevance and it is in this section of each element that I hope to explain why it is that the element has been added. If you don’t understand the relevance, then you may not grasp why it is being addressed.

Putting the Number to the Scorecard

One surprising aspect of the Scorecard is the ease with which you can apply the scores. Let’s try it a few times. What if we were trying to create a new broker–dealer securities firm that sells stocks and bonds? Compelling Unserved Need would absolutely deserve a negative score for element number one. It is so uncompelling that I would score it a –10. What about a cure for prostate cancer? If that is not a 10, it certainly deserves a 9 in the same element. How about the High-Profile Persons Available element for the new securities firm? Perhaps something positive, but until you contracted with someone special, it would have to remain in the low positives, say a 3. Win the support of Warren Buffet and you are into serious passing territory, say a 9 on that element. High-Profile Persons Available and the cure for prostate cancer? Same drill—I would score it a 3 (primarily because it surely should attract someone) unless you could win the support of a famous victim of the disease and then I would award it a 9 or a 10. As you can see, the scoring flows very easily and does not demand anxious precision. One thing to remember is that negative scores are reserved for crushing and penalizing scores and 7 or above is reserved for scores that pass and do not require much scrutiny in the future. You will be returning to the poorer scores to try to improve them. Just post the mark you feel it deserves on this element and move on. You will review each one several times before you tally your final aggregate score.



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