Most new products or services are, in reality, incremental improvements on existing ones. In considering this option, there are two important questions to keep in mind: First, put yourself in the place of your target customers. Is your potential new product or service sufficiently better, either in the features it offers or the cost involved, so that customers will shift to your offering from whatever they are using today? Second, what happens to your proposed business if existing participants in this arena quickly match your improvement in response to the threat of your offering? It’s a tremendous plus for your business opportunity if you have a valid reason to believe this type of fast competitive response is unlikely, or impossible, in the business area you are assessing.

Focus on a Dysfunctional Industry

In its 2003 annual ranking of the fastest-growing small public companies, Fortune Small Business magazine concluded that inefficient industries or industries in flux are good places to build a supercharged company. Thomas Cigarran, the cofounder of American Healthways, which ranked number one on the magazine’s list, noted that “health care is a mess, and we’ll just keep focusing on what’s not working.” Cigarran told the magazine that great business opportunities arise in industries that are not functioning properly. “There are just so many opportunities to make this sector more functional,” he says. This book repeatedly stresses the importance of focus in creating a go-it-alone business. In a dysfunctional industry, this means finding a very specific, meaningful problem (perhaps one that you or a friend has experienced) and developing a useful solution. Plus, it can’t be too far ahead of the customer or the industry, as detailed in Chapter 2, “Principles for Success.”

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