The concept of an idea funnel isn’t new. It has its limitations. But I still find it a helpful visualization tool for outlining a high-level innovation process in search of good ideas. It’s also equally applicable to bootstrapping entrepreneurs and corporate innovators alike.
Here’s a reference idea funnel assembled over hundreds of bootcamps that we’ve run across bootstrappers, startups, and corporate innovation teams.
The key to any funnel optimization is improving:
- the top of the funnel (quality and quantity),
- conversion rate between stages,
- time to conversion between stages.
Let’s walk through the steps.
I often get asked how does one go about creating something valuable from nothing. My answer: “It’s near impossible”.
This part of the funnel is about setting constraints. Without constraints, you find yourself chasing an infinite problem/solution space. In order to find a breakthrough idea, you need to start somewhere — or more specifically, many somewheres.
Vision and mission statements may be able to help with alignment, but they often err on the side of being too vague. At the core, everyone in the org should be able to
- identify who is our customer (simple, but not always easy), and
- what core job do we help them do (the bigger context)
The innovation thesis helps outline the organization’s worldview made up of beliefs and leaps of faith on how we intend to help our customer get the job done better. Portfolio management is a tool that ensures we aim to realize these beliefs from many different angles so as to leave no stone unturned.
Taken together, they help improve the quality of the top of the funnel.
Where do good ideas come from? Answer: From anywhere.
I made a list of seven idea sources (if you have more, please post below):
- Scratch your own itch
- Accidental discovery
- Customer requests/behavior change/metrics
- External changes
- Innovation Theory
Each has its set of biases (that I outline here), and while we’d like to eliminate all bias, such is the reality. Rather than trying to create a better ideation process, I recommend lowering the barriers at the top of the funnel, and instead investing in better idea validation processes (further down the funnel).
How do we know it’s a big enough idea? Answer: Start with what does big enough mean — minimum success criteria.
Innovation for innovation’s sake usually leads to interesting solutions, but disappointing business models.
Time-boxed business modeling (2 weeks )is a great way to uncover both the qualitative business model assumptions (e.g. using a Lean Canvas), and the quantitative business model assumptions (e.g. using a Traction Roadmap).
Taken together, they can be used to ballpark the viability of a business model at the outset of an idea. Setting some minimum success criteria is a constraint that helps teams align their ideas against business outcomes that matter to the org, which can then be translated to leading indicator metrics (like customer acquisition, activation, and retention).
This is a key step for establishing any kind of meaningful innovation metrics. Measuring the number of customer interviews, experiment velocity, business model canvas updates are all proxy metrics that can and will be gamed. Traction is the only metric that matters.
Also, within the exploration phase, any early customer/problem validation (through customer interviews, for instance) goes a long way in making a stronger case for the idea. You’ll inevitably end up refining your models for the better.
How do we decide in what to invest? Answer: Use the modeling/early validation artifacts and your current portfolio allocation to decide.
And, If the idea is promising, how much investment do we need to make for an idea? Answer: Every idea gets the same initial investment in time and people.
The first stage of the validation process isn’t about building a solution or even building an MVP (minimum viable product).
See: Don’t start with an MVP.
Rather, it should be about demonstrating traction for the idea by testing the core customer/problem (uvp), solution (demo), revenue (pricing) assumptions using an offer (not an MVP).
From hundreds of bootcamps, we have found that irrespective of the environment (startup vs corporate) and/or domain (digital vs physical), 90 days is sufficient time to navigate stage 1 — problem/solution fit.
Rule of thumb: give selected teams 3–5 people and 3 months to achieve problem/solution fit.
How do we measure progress? Answer: Review model evolution and innovation metrics at set intervals e.g. 90 days.
By standardizing all teams around the same traction metrics, you communicate clear expectations and have clear measures for progress. This fights the dichotomy of many progress stories which gifted teams spin across a myriad of different metrics — more specifically, the ones that happen to be trending upwards at the moment.
Having a consistent set of metrics allows teams to instead focus energies on navigating through the three stages: problem/solution fit, product/market fit, and scale.
Each has a clear mission measurable by the traction roadmap — leaving the teams to focus on achieving that mission through iterative learning and rapid experimentation — lean sprints.
Time-boxed reviews help with pivot, persevere, pause decisions and are used to inject more investment into teams.
The Idea Funnel Visualized
Over time, you get to see the funnel take shape: