External Context Analysis

What is this?

The external context is the outside world. In this step we want to invite you to open up to that world with all your senses: for inspiration as well as for focus. In this step you try discover new ideas, trends, problems, frustrations, etc. by studying the outside world.

Now where do you start?

If you start from a concrete idea it is good to hold it against the light of dominant trends. Your reality spotting should be focused on your potential customer’s world. This may help refine the idea.
If you do not have an idea yet, the outside world will offer a wealth of inspiration and possibilities.

In either case: get connected! What kind of trends or problems can you spot? To which trends and problems do you and the team relate? And what trends do you see in solutions to problems? What new technologies are emerging? Which trends are important to you (positive or negative)? Can you also quantify these trends?

How?

Trend Board

A trend board is a kind of storyboard or mood board. It is an observation, visualisation and creativity technique. It helps to spot (consumer) trends. It builds on the fact that all of us spot trends every day unconsciously. This exercise brings common insights to the surface.

Work as a team
Each participant brings along a number of different newspapers and magazines and a pair of scissors. Bring your own pictures, websites, blog postings, youtube movies, etc you find significant.
Individually cut pictures which you find significant, representative, inspiring, irritating or moving and compose a collage or trend board.
Put the respective collages on the table and observe collectively.
Try to capture a number of dominant trends or problems you see coming back more often on the boards.

The consumer trend canvas created by trendwatching.com is a useful tool to analyze trends and use them as a source of inspiration for new products or services. You can find the canvas here. Also check out these 15 trend watching tips ! Trendwatching is an excellent website to spot consumer trends. And by the way, its sister website Springwise looks at how these trends match with emerging new ventures!

Frustration Board

A frustration board is an equally valuable approach for a brainstorm session. It helps to spot opportunities/trends by listing personal frustrations. The basic question is "what is the most frustrating in the world?"

Imitate and Adapt Successful Business Ideas

It is a misconception that a business idea should be something completely new. Most new successful businesses are imitations and adaptations of existing business ideas. You will even find many entrepreneurs using this in their pitches to investors, customers or suppliers: "We are the Michelin guide for foreign investments" / "The Groupon for industrial products" / ... The German Samwer brothers even made their fortune copying US businesses.

The major benefit of copying and changing existing business ideas is that you have some evidence that the idea can work. You will have to adapt it to your specific context and improve it wherever possible. To what extent can you blend insights from other successful businesses in your business idea? A key skill of an entrepreneur is to use your eyes to steal wisely from other business ideas!

Picasso made the following remark: "Good artists copy, great artists steal". Steve Jobs picks it up remarkably well in this 1994 movie on youtube. When adapting ideas, some of the following techniques suggested by Osborn might help.

The following websites are a great source of inspiration for new business ideas: Springwise, TrendCentral, Inc. 500 (5000 Fastest Growing Companies in the US) and Europe's 500 (500 Fastest Growing Companies in the Europe). You can find a great overview of inspiration sources on the following link provided by the Board of Innovation!

Observation

External context analysis can also be done by direct observation. Ideas you develop from such an empathic position, will be much more connected to reality:

In the streets or any other public place (taking a camera)
In case you already have a more defined opportunity space: go and observe your potential client in his natural environment (office, bar, hospital, home, ...)

This is a video of Jan Chipchase, an anthropologist and professional observer, that is worth watching. This is Chipchase's website with plenty of material on observation. The following link from IDEO also offers insights on how to engage yourselve in the context you want to study. Download their human-centered design toolkit and check out their HEAR guide!

Identify a Major Challenge or Problem

The world is facing many serious problems today: poverty, climate change, food shortages, pollution, ageing population, ... . To what extent can your business idea contribute to the solution of the overall problem? It is key to split up the major problem in a set of microproblems and focus on one of them. A good starting point to identify problems is to read the newspaper or to watch documentaries. To give you just one example of a documentary watch "Taste the Waste" about the worldwide destruction of food. How can your business idea offer a solution to this well defined problem?

Want to know more?

REFERENCES

Boynton, A., Fischer, B., 2011, The Idea Hunter: How to Find the Best Ideas and Make Them Happen. See the following link.
Nalebuff, B., Ayres, I., 2006, Why Not? How to Use Everyday Ingenuity to Solve Problems Big and Small. See the following link for a video on the book.
IDEO, Human-Centered Design Toolkit. See the following link.
Seelig, Tina, 2012, A Crash Course On Creativity. See the following link for a talk on TED.