Innovation expert: This hack can help identify new business ideas
From Elon Musk to Jeff Bezos, it's tempting to think that the world's most successful entrepreneurs are born with an innate ability to innovate.
But according to former space engineer-turned-entrepreneur, James Chin Moody, there are patterns at play in innovation that mean even the most inexperienced entrepreneurs have a good shot at identifying new business ideas.
"Innovation is not a noun, it's the process of technological change," he told CNBC Make It.
It's about unlocking existing technologies to existing markets in brand new ways.James Chin Moodyco-founder and CEO, Sendle
"Innovation is the process of creating the thing, yes, but that's such a small fraction. It's the process of taking the thing and convincing someone that they need the thing," said Chin Moody, who has a Ph.D. in innovation theory. "The process in the middle is really what we mean when we talk about innovation."
Understanding the process of innovation
The process of innovation can be thought of in three ways: changes in technology; changes in the market; and changes in institutions or the way technology gets to the market.
The majority — around 80% — occurs in that third segment, with existing technologies reaching existing markets in new ways, said Chin Moody, who co-founded his own company in 2015 based on this theory. The business, Sendle, is a shipping service that leases empty legs from existing courier companies and which claims to be carbon-neutral.
"When you think about what is giving rise to some of the major shifts that are occurring right now, or where are the big business opportunities in the future, yes, you can look at new technologies, yes you can look at new markets, but often it's about unlocking existing technologies to existing markets in brand new ways," he said.
That's especially important now, as we enter what Chin Moody refers to as the "sixth wave of innovation," in which the physical and digital worlds are becoming more interconnected.
"You can now take something in the natural world and really start to identify its digital counterpart," said Chin Moody, co-author of "The sixth wave: how to succeed in a resource-limited world."
Identifying new business opportunities
That leaves plenty of opportunities for would-be entrepreneurs to make their mark. Chin Moody recommended starting on the market side, by looking for a "really painful problem" and trying to solve it.
"The more painful the better, and the more you can fall in love with that problem the better, because that will be what serves that drive for technology," he said.
Innovation never happens at the center of a discipline, it's often at the boundaries. Look for the intersection.James Chin Moodyco-founder and CEO, Sendle
For Chin Moody, that meant pivoting Sendle when he discovered a real pain point. What started as a second-hand sharing platform for children's items turned into a delivery service after he noticed the high shipping costs independent sellers and small businesses face.
"That problem was so painful, and it was a problem not just for the people but for e-commerce," he said.
As such, Chin Moody advised looking at the "intersections" between industries and figuring out how they can work better together.
"Innovation never happens at the center of a discipline, it's often at the boundaries," he said. "Look for the intersection. Look for the places where it's a bit forgotten about, where you can become an expert."
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