P.E.R.M.A. – The Five Elements of Well-being

The Positive Psychology movement has evolved its collective thinking over the last 10 years, from a focus on life satisfaction (measured by the subjective question: “How satisfied are you with your life?”) to a more comprehensive focus on the construct of well-being. It turns out that when people answer the life satisfaction question, 70% of their answer is dependent on their mood at the time they answer the question. So, in its focus on this measure of life satisfaction, the movement has primarily been centered around mood (positive emotions) and to a lesser extent perceived life satisfaction, which primarily consists of a sense of meaning (connection to something bigger) and engagement (flow, being lost in what you’re doing).  In Flourish, Seligman points out that the Positive Psychology movement, like many branches of psychology and philosophy, has suffered from “monism “– a view point that seeks to reduce all phenomena to one, single principle.  Well-being, he argues, is made of five key elements, identified primarily by considering what human beings choose entirely uncoerced and irreducible, that which we desire for its own sake.  Here are the five elements that comprise well-being:

P – Positive Emotions (gratitude, appreciation, joy)

E – Engagement (flow, the sense of being lost in an activity)

R – [Positive] Relationships (strong connections to others)

M – Meaning (impact, a sense of connection to something bigger than ourselves)

A – Accomplishment (achievement of specific goals)

Unlike life satisfaction, these five elements can be measured by a combination of objective (directly measured, externally validated) as well as subjective (self-reported) metrics. Interventions developed by scientists and psychologists (such as resiliency training, best possible self visualization, gratitude journaling and letter-writing, empathy training, optimism training, social skills training, etc.) have demonstrated the ability to meaningfully impact these metrics and increase well-being, and are being applied in the U.S. military (though an inspiring, far-reaching program called Comprehensive Soldier Fitness) and in education (though pilot programs at the Geelong Grammar school in Australia and at the Strath Haven High School, outside of Philadelphia ). The next phase of the Positive Psychology movement will involve converging on a validated, agreed-upon measure of well-being that can form the basis of public policy decisions, and hopefully supplant, or at least supplement, GDP as the primary goal of U.S. and most Western policy. Seligman puts forth a vision for the Positive Psychology movement: 51% of the population flourishing by 2051.

So… how can these findings be best applied to build a happy startup?

First, I think the shift amongst the Positive Psychology movement away from its singular focus on life satisfaction to multiple measurable objectives under the construct of well-being is an insightful idea. This has started to happen a bit in socially-responsible, double-bottom line enterprises, but it is far from the norm. Debates have raged as to whether the function of a business is solely to maximize shareholder value, and typical arguments about social responsibility, employee wellness and global impact are couched around whether or not they positively impact shareholder value. I think these arguments miss the mark by assuming that the phrase ‘shareholder value’ implies ‘shareholder dollars’.  Last I checked, all shareholders are human beings (or at least are entities that are ultimately owned by human beings). Over the last 20 years, we’ve (finally) had some of the brightest scientists and psychologists on earth evolving our collective thinking on what is, in fact, valuable to a human being. It turns out, it is not just money.

Interestingly, researchers at Penn have found that the age old adage “money doesn’t buy happiness” turns out to be largely wrong. While it’s true that above a certain level, the impact of additional dollars of wealth diminishes, on a logarithmic scale the effect seems to persist linearly indefinitely. This basically means the more you have, the more you need to impact your well-being, but as long as you are capable of collecting enough additional wealth, you can continue to increase your well-being.  So, this would seem to contradict my previous statement.  However, in nearly all cases, generating additional income or wealth requires additional time and resources. It turns out there are MUCH easier, more productive ways to increase well-being using your limited time and resources than working to increase your wealth and income. So the old adage “money doesn’t buy happiness” might be more aptly stated as “money is a really expensive way to buy happiness.”

In a startup, you have limited time and resources so it’s important to consider the best possible ways to invest your scarce resources in increasing the well-being of your stakeholders. Let’s look at how each of the five elements of well-being can be applied to each of your three key stakeholders: Customers, Employees and Investors.

I. CUSTOMERS

P – Positive Emotions

In some ways, this is the most obvious one. If your products and services don’t make your customers happier, or better off in some important way, you likely won’t be in business for long. But that’s just the subsistence level. What if you made it your explicit goal to delight your customers – to give them a significant positive emotional experience? What if you spend as much time talking about how you want your customers to feel, as you do what the product needs to do?

In recent years, Apple has consistently delivered products that don’t just meet the functional needs of their customers, but actually create a powerful emotional experience. Other companies have been able to copy most of the product specifications and features as Apple’s iPhone and iPad, but without the internal focus on the customers’ emotions, they consistently fail to design products that are truly competitive.

E – Engagement

Engagement in this context refers to the sense of flow, of being lost in an activity.  Think about not just the product or service that you provide, but the overall experience that your customer has at every step of interaction with your company. As Dan Pink points out in his book A Whole New Mind, the age of being able to successfully compete on competence and creating offerings that simply meet customer needs is behind us. To compete, you have to think about how to create an engaging, transcendent experience for your customers. What can you do to create an engaging experience that your customers can get lost in?

R – [Positive] Relationships

Imagine if everyone in your organization who interfaces with customers viewed it as their job to create meaningful positive relationships; relationships that in some small way contribute to the lives of the human beings that purchase your company’s products or services. Too often, we lump customers into a nameless, faceless bucket of those pesky people we need to buy what we sell, and whose complaints we need to find a scalable way to address.  Tony Hsieh (Zappos’s CEO) loves to tell the story of a drunken call to Zappos’s HQ in which the caller was trying to find a place to order some pizza at 2am because room service in their hotel was closed. Instead of laughing (or screaming) the caller off the phone, the Zappos rep did some Internet sleuthing and found the names of a pizza place near the caller that was open. While in no way contributing immediately to Zappos’s bottom line, that rep enhanced the life of the caller.

M – Meaning

In Simon Sinek’s book and Ted Talk, he discusses the importance of ‘Start(ing) with Why.”  “People don’t buy what you make,” he says, “they buy Why you make it.” In a (Western) society where the majority of basic survival needs are met, people are increasingly searching for more meaning in their lives. Companies that stand for something and seek to have an impact give customers a chance to have more of a sense of meaning in their lives. Consider TOMS Shoes. For every pair of shoes you buy from TOMS, they donate a pair to a child in need. What a great way to ‘do good, while doing well’ and more importantly, give customers a chance to do the same!

Consider what you stand for as a leader, and as a company? How can you make an impact, and give your consumers a chance to have a deeper sense of meaning by buying what you make? Do you communicate an inspiring vision to a your customers? What’s your ‘Why’?

A – Accomplishment

Interestingly, the recent trend in ‘gamification’ I think is largely a broadening understanding of customers’ basic desire to achieve. Providing customers ways to achieve milestones can be a great way to keep them engaged and enhance their well-being. It’s no coincidence that some of the most successful marketing tools across more ‘traditional’ industries ranging from retail stores to airlines and hotels are loyalty programs that give customers ways to earn points and achieve different levels and rewards. If the idea of enabling customers to achieve can work for all these different companies and industries, it’s worth at least considering: how can provide opportunities for your customers to achieve?

II. EMPLOYEES

P – Positive Emotions

Research has shown that most employees (i) value praise and recognition from their boss and co-workers at least as much as a significant financial bonus and (ii) don’t get it. Ironically, expressing gratitude and appreciation does as much (or more) good for the one doing the expressing as the recipient. One of the most consistent and effective interventions found to boost positive emotions involves writing a letter of gratitude to someone who made a positive impact on you and reading it to them. So, expressing gratitude and praise can boost positive emotion in both the giver and the receiver of praise – and yet, it is rarely done. What if you started giving praise and expressing gratitude to just one other team member each day?  What difference would that make in your day, and in theirs?

Another study (featured in Flourish) in which researchers transcribed hours of discussions during company meetings across a variety of companies showed that companies who had a ratio of 3 positive statements for every 1 negative statement were thriving economically, while those with a ratio of lower than 3:1 were struggling. This ratio (called the Losada ratio after the researcher who discovered it) has been shown for the well-being of individuals and couples as well (though couples need a 5:1 ratio).  How’s your ratio? What can you do to increase the amount of positivity and reduce the positivity in your company? Your bottom line, and your well-being, depends on it.

E – Engagement

In the book Flow by Mihaly Csikszentmihalyi, it’s explained that flow is achieved when the level of challenge we’re facing is equal to our talents and abilities. When the level of challenge is below this, we get bored. When the challenge is greater than our talents, we become anxious and overwhelmed. To what extent does your company focus on ensuring that all team members are in flow (and that they stay in flow as their talents and abilities expand)?

R – [Positive] Relationships

In the book Tribal Leadership, authors Dave Logan and John King, discuss the notion of triads – three way relationships based on shared values between each of the pairs in the triad. The triad is a strong relationship structure because the job of each member of the triad is to strengthen the relationship of the other two members. The classic example of this is parents and child, in which the child will intervene when mom and dad are fighting, mom will step in when dad and child aren’t getting along, etc. Interestingly, having done some work with Dave Logan and his team at his consultancy CultureSync, Zappos measures the number of triadic relationships within the company, as well as across divisions and hierarchical levels. When each team member logs into their workstation, they see a photo of another team member and are asked: “How well do you know this person?”  Once they answer, they see the person’s name and profile. While this alone is helpful to build familiarity, what they are actually doing is a systematic measurement of triads. Managers are incentivized to increase the number of triadic relationships, and Zappos is notorious for the number of events and extracurricular activities they do with their team. In Tony’s speeches, he cites a 20% increase in productivity when you have people who trust each other and feel connected, so he believes it’s justified to have employees spend as much as 1 day a week simply getting to know each other better (in fact, they achieve a deep level of connection in much less time). What are you doing to invest in your team members having positive relationships with one another?

Importantly, employee-to-employee relationships aren’t the only, or the most important, relationships in your team members’ lives. Consider what you can do to enhance your team members relationships with their own families and friends – whether that’s indirectly by building a work schedule and pace that takes into account the realities of peoples’ lives, or directly by including families (and potentially even friends) in company events.

M – Meaning

Employees who understand how what they do everyday contributes to the overall (inspiring!) vision of the company will work harder, stay longer and be happier. So, (i) how inspiring is your vision? And (ii) what are you doing to make sure that employees understand how what they do contributes to it?

A – Accomplishment

Achievement is important to everyone’s well-being, and yet in many companies the only people in the company with clear goals and metrics for success are the salespeople. Think about how you can create clear, measurable results for each and every member of your team so that they can enjoy the fulfillment of knowing when they’ve achieved their goals.

Kleiner Perkins encourages their portfolio companies to use a system called O.K.R.’s, in which the company creates its overall Objectives and up to 3 Key Results for each objective. Then, the leadership team’s Objectives are built from the company’s Key Results, and the next level of the organization builds its Objectives from their Key Results, etc. This creates a flow down of clear, measurable goals for everyone in the company (and helps ensure that everyone understands how what they do contributes to the company’s overall vision and goals).

III. INVESTORS

P – Positive Emotions

One thing that I think startup founders and CEOs too often forget is that investors are people too. There’s a lore amongst the startup community around investors (especially venture investors)- investors are often looked at as judge and jury, a force to be reckoned with and sometimes even the enemy. Consider the impact of taking a different approach and looking at investors as simply fellow human beings who have chosen a career path around allocating capital instead of operating companies. What would your life be like if you spent time and energy helping to make your investors feel good, checking in with them periodically to see how they’re doing, getting to know them on a personal level and helping them appreciate the impact of their decision to invest in you and the ways in which its benefiting you, your team and your customers.

I’ve seen many startup founders/CEOs seek to build ‘real’ relationships with their investors and board meetings too late in the game, once the situation has gotten contentious or their job is in question. Consider what those ‘difficult conversations’ would be like if you’ve been investing in the relationship and helping your investors feel good from day 1.

E- Engagement

Try looking at each of your investors as members of your team. If your job is to keep the team fully engaged in their work, what would this mean for your investors?  Some of the most successful startups look at their investors exactly this way, and make sure to fully leverage their incredible networks, experience and insights by engaging them in the process of building the company.  Instead of being afraid to impose on your investors, consider that giving them a chance to be fully engaged with you in building the company is an opportunity to increase their well-being. Try to understand each of their strengths and find ways to put them to work that most leverage their unique strengths.

R – [Positive] Relationships

Again, think of your investors simply as fellow human beings and find ways to build strong, positive relationships with them. Seek out opportunities to help them establish relationships with other people on your team and in your network. One of the most effective ways to strengthen your own relationship is to make a valuable introduction.  Think about who on your team would benefit from getting to know certain investors, and vice versa.

One of the best investments you can make in your relationship with investors is working to build trust from day one. According to Stephen M.R. Covey (in his book Speed of Trust), the keys to building trust in relationships are:

o    telling it like it is

o    actually caring about them and their opinions

o    immediately make things right when you make a mistake

o    acknowledging their contributions

o    establishing a track record of results

o    showing your commitment to continuous learning and growth

o    confronting tough issues head on

o    clarifying expectations

o    listening to what they have to say before speaking

o    honoring your commitments, and

o    extending trust to them

M – Meaning

A lot of people think investors are just in it for the money. Most great investors view their role as empowering entrepreneurs to change the world in important ways. When raising money, make sure to clearly convey the higher purpose of your vision – why are you really doing what you’re doing? How do you want the world to be different because of your company? (see my post on Creating an Inspiring Vision).  You have a chance to give investors a meaningful experience of seeing how their work is making a positive difference in the world.

Once you’ve raised money, seek out opportunities to share stories with your investors about the ways your products or services are impacting people’s lives. Share those touching emails you get from customers thanking you, and include them in celebrating the ways in which your team members are growing through their involvement with the company.

A – Accomplishment

Make sure to acknowledge your investors’ role in your company’s success. Invite them to celebrate wins with you, and keep them informed about the company’s achievements.  The more your investors view your company’s success as their own, the more engaged they will be and the better your relationships will be.

View your investors as members of your team and take responsibility for assigning them tasks and responsibilities that match their unique talents and strengths. This will give them a chance to enjoy the satisfaction of their own achievements, and of helping the company in a meaningful way.

Article Source: http://awesomeculture.com/2011/09/13/the-science-of-a-happy-startup/
Article Author: Dave Kashen

The 6 Excuses Entrepreneurs Use To Justify Their Struggling Business

He that is good for making excuses is seldom good for anything else. 

~Benjamin Franklin

Still juggling excuses to justify your struggling business? You are not alone—not by a long shot. But it’s time to face them, once and for all.

Many of our struggles as entrepreneurs are a direct result of the excuses we make up. It’s almost like a convoluted badge of honor that goes something like this: “You think you have it bad? I have it really bad.” Come on, enough is enough already. Here's the big six excuses that I hear day in and day out from entrepreneurs, and more importantly, how to fix them.

1. The competition is too established

What you are saying here is that you are simply throwing your hands up into the air and admitting that you don’t believe you can compete head-to-head with them. The fix for this? You need to realize that in business, you don’t need to go head-to-head. In fact, it is to your advantage to make new rules and approach your business in an entirely new way. Drop the excuse and change your approach.

2. I don’t have the money

Cash is simply a shortcut to getting things done. Without cash, you can still achieve the same results; you’ll just need to get innovative. Stop using cash (or the lack thereof) as an excuse, and start getting innovative. Haven’t you heard? Necessity is the mother of invention.

3. I am too old (or too young)

This is a common excuse, but there is no “ideal” age at which to grow your business. You are alive, so there is no better time to grow than now. And, the only thing guaranteed is that tomorrow you will be a day older—so start now. There have been successful entrepreneurs that run the spectrum of ages. Colonel Sanders started in his mid 60's and Mark Zuckerberg started as a teen. Both made enterprises worth tons of money.

4. I don’t have enough experience

Experience takes you down the path of repetition. Experienced entrepreneurs often get into the dangerous trap of repeating the past, just because it worked back then. But that doesn’t guarantee that it will work now. Consider that lack of experience to be your greatest asset, because it can bring about new approaches that experienced entrepreneurs are blind to.

5. I don’t have enough time

This is one I hear all the time. “If only there were 28 hours in a day, I would be rich!” Here’s the deal: everyone has the same amount of time in every day. You simply need to choose your priorities. When you don’t have enough time, you are simply choosing something else to devote your time to. It’s a choice, not an excuse. (Just for grins, keep tabs on how many hours you sit in front of the television or Facebook for a week. That will show you how much time you really have available to dedicate to your business!)

6. I’m just not there yet

This may be the most insidious excuse of all—it puts you on the hamster wheel for life! And, as I know from personal experience, you will never be “there.” Entrepreneurship, like anything else in life, is about the journey. The rewards will come, but they won’t always be monetary (which seems to be almost the only measure of progress that entrepreneurs use). The rewards may be that you simply demonstrate courage, or that you achieve entrepreneurship. Stop using excuses and just go for it. Saying you are not there yet is just one more excuse. You are there. Right here. Right now.

Article Source:http://www.openforum.com/articles/the-6-excuses-entrepreneurs-use-to-justify-their-struggling-business?extlink=sm-openforum-tw

10 pieces of management conventional wisdom you should ignore,especially in a weak economy

With uncertainty in the market, many business leaders are focused on “playing it safe.” By following conventional practices, they may be taking a far more dangerous route. While it is important to rely on best practices, some may be short-sighted and hold your business back from achieving its true potential. 

As CEO of Beryl, a company that manages patient interactions for hospitals, we have a unique culture that has resulted in extremely low turnover and engaged employees who deliver exceptional customer service, resulting in loyal customers who allow us to continue to grow our business. We’ve challenged conventional wisdom to protect our culture at all costs. As a five-timeInc. 5000 company that continues to meet our business goals, we have no regrets. 

To that end, over the past few tough economic years, we’ve chosen to ignore these 10 common practices:

1. Outside capital is necessary. In January 2010, I signed a letter of intent to sell a majority interest in the company to a private equity firm. In the end, I walked away from the deal because I realized that bringing in a financial partner with a short-term view of financial performance could have a negative impact on culture, which has been a key ingredient in our success.

2. Never fire a client. A very large customer put our employees in the position of violating their core values. This customer charged clientele for something they didn’t buy, and when it received complaints, wanted Beryl to try to talk them into keeping the product—a prospect we felt would compromise our integrity. As a result, our employees voted to fire the customer. While the loss of income had a short-term financial impact, we realized that ignoring our core values was a slippery slope that could significantly impact our business in the long term. Core values are the one thing in our business that never changes. If we go outside those lines, we can lose the trust of our employees and our customers.

3. Keep talented employees, even if they aren’t a culture fit.  At Beryl, we had an operational leader with a great resume and tremendous experience.  However, the employee was not able to gain the trust and buy-in of other employees.  Great ideas will only take you so far.  Ultimately, we fired that employee because her leadership style was not a fit for our organization.

4. Don’t hire during a recession.  If there is one positive for employers during a recession, it is the availability of great talent. We have hired more than 100 net new employees since 2008, many of them senior leaders with extraordinary experience that have helped take our company to the next level. 

5. Avoid spending money on “fun.”  When times are tight, it seems difficult to justify spending money on things like a holiday party.  However, these activities foster employee engagement, and help reduce employee turnover. 

6. Scale back on training and education.  Spending on training and education directly benefits both employees and employers.  Employees enhance their skill set and feel good about the company’s investment in them, and businesses benefit from more productive and engaged employees.  

7. Keep benefits to a minimum.  When businesses started experiencing pain at the start of the recession, many reduced employee benefits such as their 401K match. At Beryl, we doubled our 401K match to show employees that we were committed to them in the long-term. Actions like this have helped us maintain low turnover.

8. Grow by acquisition. Certainly there are more stories about failed mergers and acquisitions than successful ones.  It is even more challenging when culture is important.  During a recession, it may be tempting to acquire a struggling company with promise.  However, it is rare to find another company that shares your value set. While it is possible to infuse your culture within the new organization, it creates a significant distraction and risk, since it isn’t always possible. Instead, we’ve focused on organic growth. 

9. Stay focused on your product or service. People buy relationships—not just your product or service. You can enhance the relationship by elevating the conversation to a topic that is important to you and your customers. At Beryl, we also have The Beryl Institute, which engages healthcare leaders in the broader discussion about patient experience.  Ultimately, we all have a product or service to sell, but it’s listening to and talking with customers and potential customers that helps get us (or even keep us) in the door.

10. Put customers first. It seems counterintuitive, but employees should take priority over your customers. When employees have a high level of job satisfaction, it translates to excellent customer experiences, which results in growth. This isn’t to suggest that you should ignore customers, but rather that your customers will benefit more when you focus on your employees. 

In a recession, it is especially tempting to try different approaches, even if they challenge your core values. No one knows your business better than you. Resist the urge to be a lemming. Know the trends. Watch the trends. But charter your own course.

Article Author: Paul Spiegelman

Article Source:http://www.inc.com/articles/201109/beryl-companies-paul-spiegelman-lead-your-own-way.html

5 Ways To Thrive In A Overcrowded Industry

3 real stories

Back in 1994, an excited Tony Ellison sat down with a few friends to tell them of his plans for a new company. Just minutes into the meeting, one of his friends interrupted Ellison, and with a blank stare shrieked, “Tony, are you insane?!”

His friend was rightfully worried. Ellison, a veteran of Wall Street, was planning to leave his job to start an e-commerce company selling office supply products. Huh?

“The industry was already crowded with the big guys like Office Depot and Staples, and back then, no one really knew what e-commerce was; but I had read papers suggesting how big the Internet was going be an how it would be a great way to conduct business, so I went for it,” says Ellison.

He soon launched Shoplet.com and turned a profit within the first three years. Today, the company supports 70 employees and is wildly successful.

Entrepreneurs Thomas Hoebbel and Michael Carney also know what it takes to succeed in a crowded marketplace. In 2001, Ithaca, New York-based Hoebbel launched a photography company titled Thomas Hoebbel Photo~Video; and in 2009, Carney, a CPA based Chicago, founded MWC Accounting. Both companies are going strong.

I sat down with all three small business owners to learn the five best ways to thrive in market saturated with like-businesses.

1. Focus on a niche

Hoebbel is a theater and music buff, so when he started his photography company, he focused on his passions. He called up studios, theaters and concert venues and offered his services. “I soon established a reputation for being the best at that niche in the area,” he says.

According to Hoebbel, it’s important for small business owners to think hard before choosing a niche.

“Don’t just go out there and pick a niche because you think it will work—instead, go with what you love and are really good at. Eventually, you will be seen as the expert in a specialized area,” he adds.

2. Study the market and fill gaps

Upon launching Shoplet.com, Ellison wanted to differentiate himself in the market and solve customer problems at the same time. He knew of a company that helped streamline procurement processes for large businesses, but was too expensive a solution for small business owners. To solve this problem, he developed a free online procurement platform for the little guys.

"In the old days, admins had inefficient processes for collecting purchasing requests and didn’t have a way to keep track and manage inventory—the system we set up allowed them to do it and do it for free,” he says.

Ellison launched the product and small businesses flocked—a lesson for other small business owners in saturated markets.

“Come up with a unique value proposition that helps you gain a competitive advantage in the marketplace,” he suggests.

3. Network, network, network

Carney was a 28-year-old with public accounting experience when he launched his company. Without any clients, he focused on one thing: Pounding the pavement.

“I knew I wanted to focus on small businesses, so I started with my own network and took people out for coffee—I would ask them how they got started and just build a relationship, not focus on the hard sell,” he says.

His plan worked. After numerous coffee dates, he had a nice roster of clients—and recommends the same strategy to others.

“You really need to get out there and let people know who you are. Don’t just think people will find you—that will take way too long and you won’t have any money by the time it happens,” he says.

4. Diversify your offerings

When the economy tanked in 2008, Hoebbel was ready. “I diversified and created a Web-based marketing video department in my company,” he says.

His plan worked and carried his company smoothly through the recession.

“I recommend small business owners be ready to innovate and change your business for the better; if you diversify you could open up a whole new business stream in a similar industry,” says Hoebbel.

5. Focus on customer service

Yes, customer service is a key ingredient to the success of any company—but it is especially important to those in saturated markets.

“I want my clients to enjoy working with me; I’m never happy unless they are happy—and sometimes that means I have to go back and reshoot something on my own time, but I’m OK with that,” says Hoebbel.

Great customer service doesn’t mean offering low-ball prices, he adds. In fact, undercutting the competition can come back to bite you later on.

He says, “Not everyone is going to go for the cheapest price. Remember: You want people who value your service and are willing to pay you for it—if you are the cheapest person in town you will get the cheapest clients in town.”

Article Source:http://www.openforum.com/articles/5-ways-to-thrive-in-a-overcrowded-industry

Article Author: Katie Morell

 

Four Guidelines for Picking the Right Idea For Your Startup:

1) Your idea needs to do at least one of three things:

Make something difficult easy: For example, AirBnB made finding an apartment rental easy. In fact, almost all businesses derived from Craigslist follow this criteria-- they make exchanging things between people very easy. My startup, GiftRocket, makes it easy to buy a gift for someone anywhere in the country. Even social tools like Facebook and LinkedIn make staying in touch with people easy, though that is a bit more abstract. Just to test the ubiquity of this quality, I checked the companies in YC's W11 batch and 83% fell into this category.

Make something expensive cheap: Hard technology companies like Apple make the most advanced technology available to a consumer in an affordable package. Deal sites like Groupon do this far more directly. People care about money, and if you're offering them something for a discount, there's a clear value proposition. I did a quick count, and 14% of YCW11 companies matched this quality.

Make something that entertains: Music, gaming, video, and media companies entertain. Zynga solves problems of loneliness and boredom. 23% of YCW11 companies checked this box.

These are all a more specific way to say that your idea needs to fulfill an existing need, and more generally should be something people want.

2) Pick something with a big market pain.

Market size isn't always a great indicator of potential for success. The better question is how happy are you making your users? If you make a few users exceptionally happy, that might be far better than making a lot of users marginally happy. That means that the market for your product may be small, but if you're creating thousands of dollars of value for those users by solving a major problem for them, they'll seek you out. User acquisition and marketing problems just go away.

3) Commerce ideas are very different from social ideas.

Social software (e.g. foursquare, Instagram, Twitter) follows a different path than ecommerce. These companies have userbases that are valuable because of their engagement, and are ultimately monetizable for their data. Foursquare sells their data to local merchants. The key metrics for companies like these are user growth, virality, and engagement.

Compare this with ideas that have a clear business model from the start. For example, Hipmunk and SeatGeek make money on affiliate for flights / hotels and ticketing sites. The key metrics for these businesses are revenue, and eventually margin.

There are big impacts for how you get users to your product depending on which one of these your idea is. Social software usually has to rely on word of mouth and virality. On the other hand, commerce businesses have more concrete customer lifetime values and can buy customers and traffic using ads.

4) Pick something where you can empathize with your users.

Ideally, you would be building something for yourself. However, a lot of founders are able to build something that they don't regularly need-- it just requires that they are good at getting and acting on user feedback. So for example, if you were building some software you needed at your old job, you still might need to build it with the interests of the procurement officer or IT manager in mind.

How to come up with good startup ideas

1. Keep a log of things that you use that were not good throughout the day.

Life is full of inconveniences, and the neurotic complainers actually have a huge advantage in this department. Every time I get in the cab line when I get to the airport, I always think "there's got to be a better way." Out pops an idea like Uber, or some sort of ride sharing service that helps me split cabs with people nearby.

2. Look through your business and personal credit card statements.

If you're already spending money somewhere, is there a way to cheapen the amount that you're spending? Or do you feel like you're not getting your money's worth on something you bought? Spend statements are a great way to see where there are big markets waiting for disruption.

3. If you work for a company, think about some of the biggest issues that you face.

I was a former management consultant, and version control for documents and powerpoint files was a massive problem for us. I would stay up late at night writing a deck, and find out the next day someone else was working on that same section. Other times, I'd realize that I was using an older version of a deck, working on slides that had been deleted in later revs. There should be solutions to those problems out there, but what exists isn't still sucks. I'm convinced every company out there still has multitudes of these problems, and if you've ever worked for one you've probably encountered them.

In Conclusion

Given even the most experienced investors miss out on ideas that end up being very successful, the only real way to know whether something will be successful or not is to launch it and see what happens. There's no shortage of ideas. Every YC demo day, including the one that just happened, there are always 4-5 companies where everyone wonders "why didn't I think of that?"

But before dedicating your life to a startup idea-- it's certainly worth having a good brainstorming period of a couple weeks, or even months, where you familiarize yourself with the spaces out there and commit to working on something.

Article Source:http://onstartups.com/tabid/3339/bid/64782/How-To-Pick-The-Right-Idea-For-Your-Startup.aspx