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HunchCrunching Theory

HunchCrunching Theory | HunchCruncher

Hunch - Crunch - Munch

The table below shows how we define Hunch, Crunch and Munch as part of the innovation process. There are fuzzy boundaries but we define Hunch Crunching as everything that happens before the first product or service is sold.  This is a very, very small part of overall business activity - perhaps less than 0.1%.  This is something that most business people only do a very few times in their life, and maybe only once.

 

Hunch (0.01%)

Crunch (0.09)

Munch (99.9%)

Start of idea

Developed usable idea worth pursuing

Adoption of idea by public

Imagination

Experimentation

Implementation

Guess 

Validate

Distribute

Insight

Development

Optimization

Dreaming

Playing

Building

Idea of where to run

Validation it may be worth running there

Running there

Inspiration

Confirmation

Dissemination

General idea

Idea developed enough to be useful

Idea used, and continually slightly tweaking

Blue sky thinking

Research and initial development

Ongoing development

Idea for a product

First product sold to customer

Scalable product - growth

Feeling that something could make an impact

Developing idea far enough so it has a chance to make impact

Idea makes an impact

Thinking something may be worth doing

Verifying its worth doing

Doing it

Conceiving a business

Verifying business worth pursuing

Running the business

 Industry examples

Estimating where minerals are

Testing and verifying they are there and how to get them out economically

Mining the minerals

Sketch of building

Detailed plans to validate it can be built and is worth building

Building the building

Estimating where new fisheries may be

Testing and verifying they are there and how to get them out economically

Catching the fish

Idea for book

Finished book

Book published, marketed and read by lots of people

Sketch art work

Produce art work

Market and sell art work

Specific examples

People might buy books online

First Amazon website

Current site and all modification in-between

Apple hitting Newton’s head

Philosophiæ Naturalis Principia Mathematica

Everyone learns or knows about gravity

May be good to send document via wire

First fax machine

Fax network

Notice dead bacteria in petrie dish

Turning it into drug Penicillin

Getting people to prescribe and use it

Cyclone for vacuum with no bag

500+ prototypes to get first Dyson cleaner

Making factory to build and sell them

High jumping back first might be good

Fosbury flop technique developed

Everyone uses it after Dick Fosbury won gold

Highly improbable things seem to happen a lot and have a huge impact

Black swan theory (described in book)

Understanding of uncertainly by lots of people (bestselling book)

Wonder if there is a different form of bicycle that is inherently smaller

First YikeBike sold

Making and selling YikeBikes while iterating the designs

0.01% of business

0.09% of business

99.9% of business

 

I've always loved the TED by-line "ideas worth spreading."  In this terminology it would be "crunched hunches worth munching." 

The vast majority of effort in building a start-up happens after you have shipped your first product.  The vast majority of value is created from growing the business (munching) rather than in the pre-first product stage, and almost all business books focus on running your business rather than how you decide where to start running from.

If HunchCrunching is such a small part of business, why bother?

The lean start-up theory popular at the moment suggests the need to produce a Minimum Viable Product (MVP) as fast as possible and iterate quickly after that to build a business (I generally agree).  It really doesn't matter too much what your MVP is if it takes very few resources to get there.  However some of life’s more interesting issues do take more resources and hence anything that can be done to make sure the first MVP is on the right track can pay dividends. The graph below illustrates the relationship between the time it takes to get to your MVP and the importance of how good the MVP is.

 

Our assumption is that by focusing only on hunch crunching and systematizing the way we approach it we can get better at it.  At HunchCruncher we are only interested in problems that are non-trivial.  MVP’s that have a bigger head start are more likely to thrive on subsequent iterations.  It is far from clear that repeating and systematizing the HunchCrunching process is a learnable skill but we suspect it is (either that or we have had a remarkable amount of luck so far). It’s an open question as to whether we can build a business out of focusing on HunchCrunching but it looks promising.


What comes after the hunch in crunched? Minimum Viable Innovation

We almost always are involved in some munching with the innovations we start as it is often required to get to the Minimum Viable Innovation.  Our aim is to get the innovation into a form that gives it the best chance of being adopted (munched), by doing one of the following:

  • Build a company - attract staff and funding and build as a standalone entity (e.g. what we are doing with SLI-Systems and YikeBike).
  • Licence the Innovation or sell the patents (e.g. Eurekster)
  • Sell the early company to a larger one capable to scaling the innovation faster (e.g. GlobalBrain, RealContacts)
  • Partner with other companies or organisations
  • Give it away (e.g. Elevated Garden City, Economic Cost of Being Boring)
  • Any combination of the above

Note that our aim is not to get to minimum viable company but minimum viable innovation - growing our own standalone company will not always be the best way to make an impact with our innovations and our aim is to make the biggest impact – we don’t have to own it all.

The unwritten assumption of almost all business books, particularly those focused on innovation, is that your desire is to start up and run a huge organisation.  This is not our goal as there are lots of people who are better at the munching than us.  We believe that we have a unique advantage in focusing on the micro pre-startup phase of the game. We aim to get systematically better at identifying and verifying quality opportunities that create a good head start and some very unfair sustained competitive advantage.

 

Level of competition and time to MVP

The graph below shows the relationship between competition and the size of the innovation.  Everyone’s first business is usually in the bottom right, and it has to be because of lack of resources.  Because of this there is usually brutal competition and a large amount of luck and contacts involved in determining the outcome.  We certainly got lucky with our first innovation (GlobalBrain). The best muncher, or fastest runner, will be most likely win these opportunities and it's not a space we like to play in.

At the top left it is generally the best funded, connected, and staffed companies or innovation that win (Khosla Ventures target market).

 

HunchCruncher targets the middle spot that require more resources than your average set of Stanford students can throw together.  We also actively target non-trendy areas where we may be creating a new class of product.

 

Laser like focus on a very, very small part of the game

As discussed Hunch Crunching is a minute part of overall business activity (less than 0.1%).  But we have an additional level of focus that is summarized in the diagram below. We split innovative opportunities based on the level of complexity and level of trendiness.

High complexity - this tends to be mainly scientific risk and is normally where university research is active, eg: advanced nano-tech, drug discovery, biotech.  Huge brains are key requirement here (hence not for us.......).

Moderate to high complexity - (trendy and competitive) - this is generally where large companies play eg: new smart phone, aeroplane design, oil exploration (if it wasn't for Elon Musk I'd also include car design and rockets but let's face it the man is an outstanding innovation freak).  Deep pockets and long term commitment are key here.

Moderate to simple complexity - (very trendy and highly competitive) - This is generally where the Stanford and MIT folks go crazy - eg: YouTube, Instagram, Facebook, NetFlix, Zappos, AirBNB, Zipcar.  Speed and rapid iterations are key here along with lots of capital to run fast and dominate the market once you have traction.

Very simple - these things tend to be trivial and mostly involve first time inventors or existing companies eg: beanie babies, leatherman multitool, post-it notes.  Lots of perfectly fine businesses here but we'd prefer to find non trivial things if possible.

Moderate complexity in non trendy area eg: YikekBike - too simple for university professor, too out there for existing large company, non-trivial if it works, not as likely from MIT or Stanford students (bit untrendy and takes time for first MVP)

As illustrated in each part of the innovation space there are lots of great opportunities but we actively choose not to compete in most of them because other people are better suited.  While there may not be much left we think there is plenty – take a look at what we are working on to get a feel for what we are doing.

We prefer to put lots of hard work into finding a really great head start and working with others that are better suited to run the race..