Last week I attended an event in which individuals were pitching new ideas to a big audience. It was refreshing to listen to clever people coming up with innovative ideas to bring a product or service to the market, and aspire to make money with it. Most of the ideas were about building up new services on health care, networking, kid’s education or real state. Ideas on products contemplated green alternatives to existing ones.
Though a few of the pitches raised a silent ‘oh, that’s cool’ in my head, I found many ideas somewhat lousy. Let me detail two of those:
Pitch A. The US government spends hundreds of millions of dollars on making coins and people keep jars of coins at home. The idea is to introduce a ‘change keeper’ which keeps the balance of coins. At stores, people pay only dollar amounts. If the balance of the keeper is enough, the customer pays a little less and the balance is reduced. If it is not enough, the customer pays a little more and the balance is increased. Since its balance never goes beyond $1, no heavy security is necessary. Thus, the payment can be fast, even faster than using coins. This idea helps the government save some money, customers be freed from jars of coins and stores receive money more quickly at the cashier.
Pitch B. A system for using cold air from outside to keep refrigerators and freezers cold. It could be a small box which is retrofitted onto existing refrigerators and has an air duct leading outside, similar to a dryer. It would of course only activate when it’s cold enough outdoors, but that’s a large part of the year in areas like New York.
At first hand, the two ideas seem worth considering. Pitch A proposes to eliminate the hassle of dealing with small change. Pitch B proposes to reduce the energy bill in houses by improving the efficiency of refrigerators. Now, what both have in common is that they are products of narrow thinking. Not only are these ideas likely unprofitable, but also doomed to failure.
The ‘change keeper’ generates obvious problems. For instance, it can only work if businesses accept the law of large numbers – or what I lose with you, I gain it with the next customer. It also should be implemented globally, otherwise any user could be off by much more than one dollar if done in a per-business basis. This makes putting the service into practice very difficult if not impossible.
The idea on the ‘refrigerator box’, regardless of the details, is not going to work. Refrigerators operate at 3 degrees Celsius, and the refrigerant is at about -25. This big difference in temperature is part of the reason why refrigerators are mostly silent (the compressor has to turn on only occasionally). Now, air, being not that cold, and a poor thermal conductor, will have to be pumped in significant volumes inside the house. One big problem will be noise. And, what’s more, the ‘refrigerator box’ will have to be insulated as much as the refrigerator itself. Letting many other engineering problems aside, it is not easy at all to determine how much can one save on the electricity bill – and thus will likely have little appeal for customers.
In summary, both ideas generate more problems that they solve. Actually, they don’t solve any real problem. If somebody hates coins, he pays with bank cards. If anyone wants to save some dollars on the energy bill, cranks down the thermostat of the heating system or turns lights off. You don’t change people’s habits with small improvements. For a new idea to have chances of being successful in improving an existing service or product, it better be really, really good.
The pitch event made me realize that we all think narrow more often than we believe. For instance, some try to save a few pennies in the supermarket by buying possibly inferior products while spending tenths of dollars more in that flight booked too late, or in that magazine subscription rarely read, or in that expensive restaurant one ends up at because of lack of patience to look for a cheaper offer around. The advice is: forget about little savings in groceries. They are likely insignificant compared to the fluctuations in other costs. But the reason most of us save a few dollars in groceries is that it is easy to compare two numbers next to one another in the shelf of a supermarket, but it is not so easy to evaluate savings with many other expenses.
Other ideas are narrow minded when, as with the groceries, involve clear savings in one aspect, but omit to add expenses in another, because they are difficult to measure, or just not easy to see. For example: it is easy to find the cheapest insurance, but difficult to measure the cost of the risk of taking that option versus a more expensive one. Or it is easy to count how much one saves by booking that cheap flight, but not so easy to see how much will we have to pay for extra expenses because of the constraints involved with the cheap option (extra transportation or meals, or time lost). Or that claim that obesity is contributing to global warming, which fails to realize the contribution of physical exercise of the non-obese.
Ideas are easy to generate, and easy to find – just look at 999 business ideas for inspiration (# 917 is the funniest idea ever) – but please, if you want to invest time and money on them, give it a second, broader thought.
