In this module, we shall study one of the most critical challenges faced by an entrepreneur. How do I forecast demand for my new idea that I plan to take to the market, but more than that oftentimes bet my life on it. Under forecasting is just as problem problematic as over forecasting. If you're under forecast, you're losing an opportunity. Forecasting is not easy, but we can use some simple proven methods to improve our estimates and more importantly, learn how to influence demand. If it is low or if it's expected to be low, what can we do to improve it? We shall think of this problem in two parts. In the first part, we shall ask the question, will my idea take off, what are some of the common characteristics of ideas and products that make them take off and how well they do and how does my idea stack up on those criteria? In the second part, we shall ask the question, how do I quantify the demand for my product and more importantly, what can I do to influence it? What levels do I have under my control that can influence demand? So, let's start on the first part will this idea take off? Professor Everett Rogers wrote a classic book titled Diffusion of Innovations. This was founded foundational work based on his many years of research studying what kind of innovations took off and which did not. Professor Rogers grew up on a farm and started to ponder why some innovations were adopted by farmers and why some were not. I had the privilege of taking a course with Professor Rogers when I was a PhD student at Stanford University. Professor Rogers distilled his findings into six criteria that determine the success or failure of a new idea. These have come to be known as the accord model. So, what are these six characteristics, and what does accord stand for? So, A stands for advantage or more specifically relative advantage, this could oftentimes be the economic advantage. Will my idea save the customer some money, but not always. It could also be, will this idea provide some emotional benefit or some symbolic benefit? We shall talk about this later. C stands for compatibility or, more precisely, the first C stands for compatibility. Are the methods needed to use or apply the new idea similar to the ones we used for in the existing products that the customers are using. The second C in accord stands for complexity, how easy it is for me to understand why this new idea will deliver or perform what it claims to deliver on performance. Is the science or the logic behind the idea is simple to understand. O stands for observability, if one user were to adopt this idea, will other users be able to see and then adopted themselves in essence imitate behavior in today's world? We can also add that, will the product naturally generate word of mouth, either online or offline? R stands for risk, how risky is the adoption, what if the product does not work, what's the downside? Clearly, there could be an economic downside. But Professor Rogers also highlighted the social risk along with the economic risk. What will others say if the new idea adopted does not work? Will I appear like a fool amongst my peers? And finally D stands for divisibility, can I try this idea at a smaller scale before both going full stream? So, those are the six characteristics that make the accord model. Let's now try to bring this to life and let's look at an example that's close to my heart and also involves all of you. Let us think of Whalton's decision to offer an online course on entrepreneurship, the one you are enrolled in. Wharton in the past only offered such courses in person and you have to come to campus to take these courses. Let us now try to use the ACCORD model and put it in practice to see if Wharton's idea of offering an online course on entrepreneurship will fly. A relative advantage, clearly, the online course has some advantages. It is less expensive, you can take it at your own convenience, it's on demand. But it may not give you the same opportunity to connect with expert professors at Wharton, shake their hand, meet them personally, as well as peer learners as effectively as an in person course. But clearly, it has some relative advantages. Now, let's look at compatibility, this is a more complex question in this case. Online learning is quite different than learning in person, but from a capability perspective, if you have a computer, internet access and you're used to learning online. Then taking an online course on entrepreneurship is quite compatible with taking other online courses on other topics. So, what does it mean, if you have taken other courses online, our online course is quite compatible with the other online courses. May be different than in person courses, but quite compatible with other online learning, other online courses. And online learning happens beyond just courses we learn online through other methods also. Complexity, will online learning deliver what you expect? Is there some basis to claim that the learning will be effective, Wharton may have to give you some evidence that it does. This could be testimonials from other learners. Note that as we evaluate the new idea on these criteria, it also forces us to focus on what we need to do to correct some of the weaknesses of the new idea. If we believe on complexity scale on a one to seven, it rates at three or four people will not know whether this will deliver the same level of learning as an in person course, we must provide some evidence. Evidence could come, as I said, in the form of testimonials. Now let's go to O, observability, if one learner takes this course, will others be able to observe and then follow? The answer to this is probably no, you're taking this course in the privacy of your own home or in the office. But we could tackle that problem by offering badges that you put on your Linkedin page, then your friends will be able to see that you took the course. You can see how we are coming up with solutions as well as we are looking at challenges. R, risk, this can take many forms, what if you do not get what you expected, the fee you spent on the course will not have paid off. Time you spent, would also not pay off, but then is this risk more or less than other ways of learning about entrepreneurship? And one way to tackle risk is we go to the next criteria which is divisibility and divisibility is one way to mitigate risk. So, what do we mean by divisibility here, can you try this new idea, the new online course at a small scale before taking it on fully? The answer is clearly yes, wharton can offer a free trial option, you can sample the course before taking the entire course. And this divisibility aspect also mitigates risk. What we were trying here was to learn a framework and practice applying it in a familiar setting, Wharton evaluating whether or not to offer an online course on entrepreneurship. I now urge you to apply the ACCORD model to your idea that you are passionate about. As you apply the model, rate your idea on a scale of 1-7 on each of the six dimensions. But also ask yourself if the idea rates low on a particular dimension, what can I do to improve it on that dimension? Just like we thought about this in the case of Whalton online course on entrepreneurship. Also have your friends evaluate your idea using the ACCORD model. I know investors who use some version of this model formally, and many use it informally when they evaluate ideas that are pitched to them.
