Welcome back. I hope that last quiz was not too difficult for you. I'm again James Lenz, with the University of Illinois. And we're here in module one of, course Quantitative Customer Insight Techniques. In this module, I'll just review very quickly again this idea of ideas, idea generation and where it leads to is inventing and inventing leads to innovation. The goal here is your own idea, your own new product idea and that will be the assignment at the end of this lecture. So, we talked about three other critical issues for you to consider, as you're thinking about your idea. This technology readiness, is the technology available? Or is there something that's just needs to be completely invented? Or how well is the product defined? Can you envision the cost? Can you think about how much it might cost to produce this? It's good enough just to think what it would cost you to buy the parts. Many times that cost is higher because you have to actually have manufacturing cost, cost of factories, capital has to be included in the cost of that product. But for you, to just think about the material cost of the product is good enough at this point. And then again, how many customers? Can you think of the customers? Have you talked to a customer that might want this type of idea? And first question to ask is are you yourself interested in this idea? Would you buy this? Which isn't always the case. Probably out of 100 products, probably the people themselves would use it maybe it's only one percent. But again, the world's full of ideas and needs that are airplanes, transportation, food growing and so on. So, things maybe not directly need but indirectly you will use them. So, let's talk again about some more things to consider about a new idea. One is, this originality of the idea and we're going to do this by surveying people. We'll be doing this a little bit. Another thing to consider, is how will it be funded? And the third thing to consider is, who are the first people to convince about this idea? Is it investors or is it customers? I want to tell you a little bit about example I did myself here I'm inventing, is I'm wearing this watch. You've maybe noticed it, that I invented the sensors that are in this watch. And this was done through a very strange story that, I was giving a paper at a conference about a possible idea of how you could build a magnetic sensor that could detect a truck moving 100 meters off the road and in the sensor could run on a battery for 30 days. I showed this technology, at that time, the technology for building that type of sensor looked more like this than it did as a miniature device and certainly this type of device was not going be very small and it certainly was not going to run on a battery for 30 days. So, I envision this idea and I get a person came up to me at the end of the presentation and said, "You know I like your idea, you need to convince my colleagues about your idea". So, I called this an MR sensor with the name of magnetoresistive sensor and I was invited to Washington D.C. I was invited there to come alone and I went to this address. It was by 10:00 in the morning in Arlington, Virginia. And I walk in this room and there's a room, one person sitting there behind a desk. And I said, I'm James Lens, here to meet with Robert and he said okay. Goes behind the desk opens up the elevator, pushes the button, says come on in. He says don't touch anything. Door opened up and says I'll meet you. I go up, I don't know eight, nine stories in this building. Darb's up there, meets me. Then takes me into a room and I give an hour and a half lecture about this idea. About this magnetoresistive sensor. How it works? How it can be done. What developing needs to be done? I showed them what the potential was. But I didn't have all the steps of what exactly was going to be done. And Robert came in there and they asked lots of questions and anyway they got done with this and they said okay time to leave. And they put it back in the elevator went down and I remember going outside and just saying, what was that just about? What was that? What happened to me? And I go back to my office in Minneapolis and a month later I get a letter from this organization that's a secure letter and our head of security said, you're not cleared to read this letter yet. You need fill out the security clearance for all of these forms. Another month, I get my security clearance. They bring this letter. Basically it's a letter from the CIA and it's a letter, that it funds me for six million dollars to develop the technology. And I wrote the device up and this was the first unit that we built. Here's one of the first ones. One million dollars were spent just making this. This is the wafer of chips that makes the magnetic sensors. And what they wanted, what we built them then, unit's devices I can't show you the pictures of those, but devices that they use for drug surveillance. So, they can watch drug trafficking and trucks driving back and keep the devices far enough off the road, that they can monitor trucks and the weight of trucks as they move past because of their changing magnetic field. Well, we kept the technology and before long I was talking to companies about how to use this technology. And one of them was a company in Sweden that picked up our product and put it in a watch. So, there's two of these magnetic sensors in this watch that form a magnetic compass. And today in fact, in every mobile device that I've seen there is a magnetic compass in there and it's based on this technology. So, here we are 20 years later and now this technology has gone around the world and is useful to everyone that needs a magnetic compass and I wear this watch. It was a gift from this company to me for the inventing that sensor technology. People always ask me then, Well, are you a millionaire? I say, no. When you invent something that is part of a big organization, the organization owns all the rights. And I made sure when we did this with the CIA, that our company owned all the rights to this technology. So, that's why we could commercialize it and put it in many other applications. But no. I got paid like $100 for the idea and got a chance to do more research. Come up with more ideas and build more things for this company. So, there is a little example of how was it funded? Who were the first customers to convince? In this case, it was funded by a secret organization which is very unusual as well as the first customers where this group of audience, Robert's colleagues. They were very technical, ask many different technical questions. Will this idea work or not? Is it worth funding so we can build this device? So, let's talk about that a little bit more in thinking about this funding schemes. So, it's another way to think about your idea and help you formulate your idea what's being done. So, there's two methodologies here that really work. One is this self funded business which is what most companies do, what most people do. And I show a long timeline in one, this curve of one. You only do a cost benefit analysis. Find a percent of your profit as for an investment in the next product and what needs to be done, and then after some time you work through this idea. In Type two, is where we called venture funded businesses and everybody wants this kind of approach to your idea. You want an idea and you want people to just put lots of money on it and really go very quickly. This concept is about risk analysis and technology driven decisions and affordability. It's a different theme and then the next course we'll be talking more about these different funding approaches. But you should realize from an idea, that still the main understanding is about the market. It doesn't matter whether you're going for self funding or venture funding concepts is that you need to understand the market and that's what reduces the risk associated with that investment. And of course when you're on a venture funded business, they want to make a decision. Is it going to be successful or not at some point? There's a decision point. And at that point, the business has to stand on its own and starts to be funded as if it's a standalone business. And otherwise it gets killed and I showed this red line going down that they are no longer as their funding. And typically things never really die quickly. They sort of fade away. Nine out of 10 of your ideas get to the point where they sort of fade away and then they sort of come back sometimes as you heard Philip Pot talk about in the first lecture that he did. So, are you having trouble coming up with ideas? My colleagues have said I have to list some ideas for you. I feel like everybody can come up with ideas. But let me just make a list, if you'd like to use some of these ideas. They're little bit crazy, I think. But you can think about them like a pencil with Wi-Fi. I don't know what the need would be. So, I think about the technical readiness, certainly that technology is more or less available. Miniature Wi-Fi systems are available. What the product is defined. I don't exactly know. I can think about a little bit about it but it's the market need, boy I really don't know where there's a market need for such a thing. So, I'll just give you a little feeling of this scoring as you do this with your colleagues in this course. I want you to think about these ideas. Sometimes even the title needs to be stripped of enough, it gives you enough thinking about what could it be. How do I envision it? I scored from my feeling that many people this is how decisions are made in business today. People use their own instincts and knowledge to sort of, on the spot, review ideas and think about ideas. Another thing is just a self powered flashlight. This is the sort of, free energy scheme again. Can I shake it? Can I use heat? Can I use methodology? What is the technology? There's many technologies again for generating energy. The trouble would be, is that generate enough energy for what you need and certainly the market is well-defined. Everybody would like a self powered flashlight, that I don't ever have to the power, it's just available to me. Certainly if it was miniature in size, would be a wonderful thing again. But it's this kind of free energy scheme. I said, there's always a market pull for free energy and for levitation. Self powered mobile phone. Who doesn't want this type of thing? But again as we know, if they could be made every phone manufacturer would be doing this. Why is this battery such a pain inside of these things? Just because you want to have a bright display, you want to be usability, you want to be fast, you want to talk to Internet and talk to cell phone towers long ways away. All these things take power, which are difficult to have with just a self powered system. Autonomous cars are very much in the news these days. I think that's a fascinating story of what these companies are doing. Google and Uber and Tesla and so on. They are preparing the market, they're not sure the technology is really ready. There's just many questions about if the technology is ready or is it safe enough or can make the right decisions and in the right situations to do that? Technology has made you ready. The product is still not really clear in my mind what it's going to do, but certainly the market, they're preparing the market to accept it and be ready for it. And the need for it. The large cities are saying, yes this is the kind of thing we need for delivery trucks for mass transit. We need to get the congestion of cars outside of our city. This sounds like a solution to that. So, the market is certainly leading and they're creating this market pull to help bring them along as they do a technology development. Electronic paper. Reinventing paper that can do things better. The technology just isn't available yet. Product's not very clearly defined. Market's not clear where it is. But it's an idea. It's been an idea, it's been around and you see people talk about it and come up with new ideas all the time related to that. Maybe some apps. Now, I was thinking about this app, does my plants need water app? You can think about the technology of using the camera, using the proximity sensor, using some methodology, searching the Internet. The connectivity of this. Is the technology available to be able to tell if that plant needs water? This is a very difficult thing to do as we know, if you've ever watered plants, you know that this is not easy to see if this plant really needs water. Not until it's too late. I think it's sort of an average product to find sort of, average and its market forecast. Do my tires need air. I mean how many cars you've drive with low pressure? Even bicycle, I watch a lot of people ride bicycles and they're all short of air in their tires and I think they should have an app they can just take their phone and look at their tire and see if they need air or not. They don't really know because it's not so easy just to look at it and see. Again, by the time you can see that it needs air, it's really way too late to be dealing with it. But again, the technology is just very difficult here to see this, but certainly a strong market pull for the ideas. So, there's a list of ideas. You're welcome to use those ideas and build on them. Think about them and at least give you a feeling of how you would score those ideas and that'll be something that you go through with your assignment here coming up. The assignment again, is to fill out the form with your idea. Think about these categories. Product technology readiness, product defined, market forecast. I want you to score your idea. Be honest to score your idea in those categories and then you'll score four other ideas and comment on them. Here's the form, you will now have access to this. Describe it. Draw a picture of it and score this with your technology readiness product defined, 1 to 10 scale, 1 being undefined, 10 being the technology is ready available and you believe it's actually available. Again, Product Defined is unclear or is completely understood to you what the product is, how it works, what it does especially the cost. What is the cost of that device or idea or to develop it if it's a service or is an app? What is the cost to develop that? Apps is not much recurring cost to those types of products. And third, is the market pull or is there a market push? So, hopefully with that you can fill out your idea and you'll have fun doing this and talking with your friends and colleagues and understanding that and thanks for listening to this module and we'll see you at the next module. Which will take your idea and learn more about how to do more data analysis on evaluating the market need for this idea.
