Every time you ask find yourself saying – “I have a new idea for a business, no one else is doing it!” – Pause for a second and try to consider why nobody else is doing it. This article has some analytical tools to help tackle this burning question.
SETI and the Great Filter Concept
There is a scientific organization called the Search for ExtraTerrestrial Intelligence (SETI) which is tasked with devising new methods for finding alien life, ranging from bacteria to super-intelligent machines. One of the biggest problems that they face, and the whole reason for their existence is the “Fermi Paradox” – which simple put means if aliens exist, “where are they?”
To answer this question, theorists and philosophers have come up with the idea of the “Great Filter” – which boils down to representing a test. A Great Filter is something which can destroy a civilization, or prevent it from becoming spacefaring. The reason why aliens haven’t been detected yet might be due to the fact that their species failed to flourish, and there are no intelligent aliens for us to detect. If this is the case, then we need to learn what Great Filters exist, so that humanity can overcome those challenges.
This same concept can be applied to the business world, whenever trying to come up with a new business concept, if the market is devoid of competition, ask yourself “why?” Is there some Great Filter in the business world which is preventing companies from becoming wildly successful? Or are there actually no companies trying this to begin with? Or, if there are a lot of companies in a particular niche, is that because there are no big challenges to overcome? The concept of Great Filters applied to business terms, is a “make-or-break” challenge which impacts the total number of competitors in a particular market space.
The Drake Equation in Business: How many companies exist?
The idea behind the drake equation is that scientists can take an educated guess at the number of intelligent species which MIGHT exist in our galaxy (or in the whole universe.) This can in turn be used to figure out how likely we are to detect alien signals, and can give clues on where to look. The equation itself can be understood by children in middle school, it’s simply the multiplication of fractions:
- N is the total number of civilizations in our galaxy.
- R* is the average rate of star formation
- fp is the fraction of stars which have planets
- ne is the average number of planets around a star
- fl is the fraction of planets which can support any form of life
- fi is the fraction of planets which evolve intelligent life
- fc is the fraction of civilizations which develop radio waves or other communication.
- L is the length of time that a civilization can survive.
The L factor is where the Great Filter concept comes into play. A Great Filter might be the ability to deflect a killer asteroid, or having population growth which exceeds food production, or avoiding nuclear war. These filters could be any number of deadly events or economic tragedies which might cause a civilization to permanently end.
By multiplying these together, scientists guess the number of civilizations in the galaxy. Determining the value for each fraction is where things get hard. However, that would involve a comprehensive science lesson, and you’re here to learn business. What’s important to take away here is that similar estimations can be made for business.
The Drake Equation in Technology Business
Here is one way you might model an understanding of the number of businesses in your field.
N = Rb • fsector • nsector • fsector • nsector • fexp • foffer • fleaders • L
- N is the total number of companies in the world.
- Rb is the average rate of new business formation
- fsector is the fraction of companies in a particular technology sector.
- nsector is the average number of companies in a particular sector
- fexp is the fraction of companies experimenting with a new technology
- foffer is the fraction of companies offering that technology as a business service or product
- fleaders is the fraction of companies which become market leaders.
- L is the length of time that a company in this sector can survive.
Please take this with a grain of salt however, I am neither an economist nor a statistician – but this model should not be taken as THE one to use. Rather, creating a model like this one through disciplined study, can help you determine the likelihood of your success. For the basis of this article however, we’ll consider a few of the factors here as universally acceptable.
Pan-Spermia in Business: Does an idea spread naturally or arise independently?
Very often, companies will practice use of a Non-Disclosure Agreement (NDA). When taking into account Rb (the average rate of new business formation) – one thing that is highly important is whether or not the idea is truly new, or if the idea behind it was seeded from somewhere else. An idea which is already made public will have a better chance at generating more businesses. A concept or technology which remains both private and hidden, will result in fewer competitors.
This same principle applies to finding alien life. A concept scientists use in this comparison is called Pan-Spermia – the idea is that primitive life might survive on comets and asteroids. A gravitational event, either from a passing star or an encounter with a gas giant orbit, might result in a comet being ejected from the one solar system an into another. That comet, with stowaway life onboard, might eventually reach another solar system and spread life. On a smaller scale, simple lifeforms might have been sent back and forth between Earth, Mars, Venus, and the moons of the outer solar system.
The comparison here is that just like a lifeform, the idea for a technology or product in business, if spread by some cause, would cause a huge increase in the number of competitors. Unless of course, the cost to research that technology is to prohibitive, or if some other reason might exist to prevent new projects from forming. This is where The Great Filter concept applies. With lifeforms, finding a suitable planet to harbor life is required, even with pan-spermia; with business, a suitable organization needs to exist which can take the technological concept to the next level.
How to define a Great Filter
Understanding how to estimate the number of successful competitors for a given technology or concept, means understanding where the great filters might exist. These variable fractions could each contain multiple Great Filters: fexp foffer fleaders
Each stage in the “Business Drake Equation” – experimentation, product offering, and market leadership, each requires passing a certain set of dilemmas or challenges. For SETI, the Great Filter can be represented as a means to show existential level threats to a civilization, but to life itself on any particular planet.
Below is a diagram, the x-axis represents the “progress” of a civilization in the most abstract sense. Planets which hit a Filter and fail either die out or stagnate. A “Great” Filter (shown in Red) represents a barrier that is extremely difficult to pass. Applied to SETI, this means one of three things, either:
- A – We Are Rare: other lifeforms either don’t exist, are too far apart, or are less progressed than we are.
- B – Difficult Entry: we’re already past the great filter, but very few other planets/species get this far.
- C – Galactic Civilization is Hard: it’s too big of a task, or nature is too cruel, life never leaves it’s home planet.
Now, here are these rules but applied to business:
- A – You Are Rare: other projects with similar technology have been started, but they are very few. OR they are not as far ahead as you are.
- B – Difficult Entry: the tough challenges are behind you. Others have failed long before you reached this point, but it’s still uncertain if you will become a global web company.
- C – This is TOO Hard: the scale of the project/technology is so large or complex, and the benefits are so little that it might never come to pass. Other projects have failed, and statistically speaking you will too unless you can find a way to do things differently.
Importance for Progress
The Great Filter concept is a way to understand your project’s relevance with respect to any potential competition, with a particular emphasis on analyzing whether or not an opportunity is worth pursuing. What’s different between SETI and the Business case, is that with SETI, there are no clear cases of alien life. In business, there are plenty of market niches where the global success stories emerged.
Also, in business, the failures are often observed. In the case of social media sites, Facebook, Twitter and LinkedIn became dominant powers. Many of their competitors failed to become globally used, but they are still well known to early developers of social network sites. The challenge with SETI is that we don’t know what our “competitors” are doing, which is why the Great Filter is a tool for rationalizing “unknown unknowns.”
This makes the Great Filter is a conceptual tool for speculating on unseen competitors. If you are working on an application that performs some function which is completely novel AND highly needed, using prediction tools like this can help you figure out why that application does not yet exist. It’s a way to bucket business scenarios such that you are not under-prepared for unexpected risk.
By simply being aware that a Great Filter might lie ahead of you, plans can be made to fight through that challenge and win. It’s probably a lot easier for a business to pass through it’s Great Filter than society at large, we’ll just have to push onward and find out. Maybe we’ll meet the competition sometime too!