New Business Discovery · Idea Screening
New Business Screening
What is new business discovery?
- Clearly separate divergence from convergence
- Three steps: quick elimination, scoring, and in-depth validation
- Ask about company fit first
When you make screening a formal process, what changes is not the quality of ideas but the order of decision-making. In a new-business meeting without a criteria sheet, whatever the loudest executive cares about that day becomes the conclusion, and anyone who objects has to read the room instead of citing evidence. If you agree on criteria first, the debate shifts from the idea to the criteria, and the reasons for rejection are documented. Even if the same idea resurfaces six months later, you don’t have to repeat the argument from scratch.
A filter shouldn’t mix two different kinds of criteria. Separating knockout conditions from bonus criteria is the key. A knockout condition excludes an item regardless of total score if even one applies, such as licensing being impossible, an initial investment you can’t afford, or a head-on clash with an existing core channel. Keep bonus criteria to five or fewer and score them on a 1–5 scale, but if you split the weights evenly across criteria, total scores bunch up in the middle and the ranking loses meaning. Give important criteria at least twice the weight of the others to create real differentiation.
Keeping screening separate from a feasibility study matters too. Screening is work you finish in a few days using public data and internal interviews, while a feasibility study costs tens of millions of KRW and takes months. If you try to gather perfect data at the earlier stage, a year goes by while you review 30 candidates. A safer rule: if fewer than half of your candidates drop out at the first gate, your criteria are too lax.
The most common pitfall is assuming the top total score is the most promising idea. With weighted-sum scoring, an idea that is decent on every criterion wins, while an idea that is outstanding on one criterion but clearly weak on another gets pushed to the middle. In the end, only 'ventures that are fine either way' remain. Another is setting pass criteria but not putting stop criteria in writing. Then no one can shut down a project that has already spent KRW 2 (≈ US$1) billion, and the budget keeps draining until the executive in charge is replaced.
John KimInstructor John Kim, CEO of Nanum Consulting and author of “B2B Marketing Design”
Kwangdong MinExpert in business models, revenue models, and market researchIt was established as the idea-screening stage in new product development (NPD) research, and was structured as an early gate in Robert Cooper’s Stage-Gate model.
Consider a hypothetical case. Company A, which makes industrial valves, has 240 employees and annual revenue of about KRW 90 (≈ US$1) billion, with 70% of that revenue tied to shipbuilding and plant orders. After pushing two new ventures over the past two years and writing off a cumulative KRW 1.2 (≈ US$1) billion, the CEO told the strategic planning team, 'Build the process first this time.' The task force worked through 34 candidates over six months.
- At the first meeting, the strategic planning team lead laid out 34 candidates, and the head of sales asked, "Why would we do this better than anyone else?" Only 6 had an answer on the spot.
- Before the scoring sheet, the task force first fixed four knockout conditions: certification taking more than 3 years, initial investment above KRW 5 (≈ US$1) billion, channel conflict with existing dealers, and zero utilization of existing equipment. Within two weeks, 21 candidates were gone.
- The remaining 13 were scored with weights of 30 for marketability, 30 for equipment and technology fit, 20 for channel fit, 15 for profitability, and 5 for execution difficulty. When the CFO pressed, "Why is profitability only 15?" the team lead answered, "Any estimate of year-three profit we make now will be wrong anyway."
- The top 4 moved on to 3-week on-site validation at KRW 3 million (≈ US$2,240) each. We asked 12 purchasing managers at existing accounts directly, "Would you buy at the current price?" and two candidates were dropped on the spot when the answer was, "Without a delivery track record, we won’t even consider it."
- Of the remaining two, one was stopped at a cumulative KRW 80 million (≈ US$59,900) at the second gate after a six-month pilot, and the other generated KRW 2.7 billion (≈ US$2,020,100) in revenue within 18 months. The average review period per item fell from 5 months to 9 weeks.