The Nature of Opportunities

Larry Schmitt

Innovation Partner

Opportunity – a situation or condition favorable for attainment of a goal.

It is common to talk about ideas as the raw material of innovation. We hear about ideas emerging from both diligent exploration (e.g. ethnography, open innovation efforts, etc.) and from creative activities (e.g. ideation, design thinking, etc.). We hear about how innovation is about turning ideas into profits, or at least some form of value. But should ideas really be the foundation of innovation efforts? An idea is such a nebulous concept. An idea can be about anything – about a cool technology, about a potential solution or about an unmet need. Isn’t it time to come up with an alternative to the ‘idea’ and its traditional place in the innovation hierarchy?

In 1993, Peter Drucker in his classic book ‘Innovation and Entrepreneurship’ had the answer and that answer was the opportunity. In his list of the seven sources of innovation opportunities, Drucker singled out the opportunity as the object of attention for any innovative activity. Although the term opportunity has hung around since them and been used occasionally, it has nowhere near the prevalence or currency today as the term ‘idea’. After all, we have ‘idea management systems’, not ‘opportunity management systems’. We implement open innovation efforts to seek new ideas, not to seek new opportunities. When you search Amazon for ‘idea’ and for ‘opportunity’, there is an order of magnitude difference in the number of books devoted to the two topics (hint: books on ideas are the bigger number). Ideas are what come from brainstorming, design thinking and other creative activities, not opportunities and we always talk about the new idea. Ideas have cachet.

Now is the time to change our innovation focus from the ‘idea’ to the ‘opportunity’. Our innovation efforts should be creating new opportunities, not just new ideas. An opportunity is not an idea, it is not a concept or a design, it is not an unmet need or a value proposition. An opportunity is all of these things – and more. An opportunity must encompass innovative new products and services as well as innovative new business models, innovative new manufacturing processes and innovative new business processes. It must encompass what is wanted, what is possible and what is actual. It must encompass not only the artifact, but the enterprise that surrounds the artifact. It must encompass not only the physical material and the virtual information but also the behavioral rules. It must encompass not just the outcomes of adoption but also the experiences. It needs to encompass technology, design, channels, segments, value chains, customer relationships, costs, revenue, value claims and all the myriad of things that we now know are required for an innovation to flourish. In other words, an opportunity must be all encompassing. Ideas then transform from being at the center of our attention to becoming the avenues through which we create all of these facets of the comprehensive opportunity.

The opportunity then becomes the ‘IT’ – the central, organized, knowledge entity that informs value creation. A well-defined opportunity reveals how what is wanted, what is possible, and what is offered connect to deliver value. To refer back to the definition of an opportunity, the goal we wish to achieve is to create value. The situation and condition we are faced with is what is wanted and what is possible and the attainment we are seeking in pursuit of the goal is an offering – the artifact that will be adopted. The questions for the innovator then become, what would IT be, how could we make IT and why should we make IT (or why should someone adopt IT). This tripartite structure of an opportunity is shown in the following figure.

Figure 1 – The Opportunity Architecture

The three corners of the opportunity are the would, the could, and the should.

• Offering – What would IT do – the ‘job-to-do’
  • The artifact that is created
  • What is the outcome, what is the experience?

• Possibilities – How could IT be created
  • The actions and resources that enable existence
  • What possibilities are within reach

• Wants – Why should IT be created
  • The actions and resources that promote adoption
  • What wants are satisfied

Naturally, when the initial notion for a new opportunity first emerges – the ‘idea’ for the opportunity – not all of these facets of the opportunity are well formed, thought out or researched. It is immature and abstract, but having this opportunity architecture at least makes the opportunity complete and comprehensive, no matter how nascent the ideas of thoughts that surround the different facets are. The opportunity therefore forces new avenues for learning, creation, evaluation and selection that can be employed in front-end innovation activities. The dynamics of opportunity evolution, from the very initial notional hypothesis to a mature, detailed and comprehensive profile, along with specific examples, is described in ‘The Dynamics of Opportunity Creation and Evolution’.

This simple model can be quite powerful. It incorporates the business model framework of Osterwalder as well as Adam’s definitions of Intangible Capital It is compatible with O’Connor’s 3 phase discovery, incubation, acceleration innovation model. It accommodates the basic components that are necessary for implementing Blue Ocean Strategy, Outcome Driven Innovation, and Open Innovation efforts as well as many others that are now popular, and it opens up the possibility to go beyond all of these by creating a more comprehensive and unified approach to innovation that is based on the fundamental principles of technological and societal evolution. The model is as applicable to opportunities that focus on products or services as it is for opportunities that can focus on processes and business models. It can accommodate innovations that involve transformation of atoms, bits, and rules. The model explicitly acknowledges that innovation is much more than the idea for a new solution or a new performance dimension or strategy attribute, it is everything that affects the creation and adoption of a realized solution over time. As innovators, we need to move away from the preeminence of the ‘idea’ to the centrality of the opportunity.