Section II Creating Business From Opportunity

Not All Ideas are Opportunities An opportunity is an idea that is based on what customers need or want and are willing to buy sufficiently often at a high enough price to sustain the business. “What is the difference between an idea and a product” “What is the difference between a product and a business”

When is an Idea an Opportunity? When it … It creates value It solves a problem It has robust market, margin, and money making characteristics It’s a good fit with the founder, the time and the market

Good ideas are important, but by themselves ideas don’t create a business. The Fallacy of the Better Mousetrap CREATIVITY is thinking up new things. INNOVATION is doing new things. Theodore Levitt

Don’t Get Caught Up in Being Completely New “Anything that’s going to have an impact over the next decade—that’s going to be a billion-dollar industry—has always already been around for 10 years.” “If you want to spot the next thing, you just need to go “prospecting and mining”—looking for concepts that are already successful in one field so you can bring them to another.” 7/st_thompson_breakthrough/

What is an Opportunity? An opportunity has four essential qualities

Three Ways to Identify an Opportunity

2-8 Changing Environmental Trends Economic trends – When the economy is strong, customers are more willing to purchase discretionary products and services – Need to evaluate who has the money to spend – Identify areas to avoid

2-9 Changing Environmental Trends Social trends – Impact the way people live their lives and the products and services they need – Products often do more to satisfy a social need than the actual need the product fills

2-10 Technological advances – Ongoing source of new business ideas – Technologies can be used to satisfy basic or changing human needs – Once a technology is created, products emerge to advance it Changing Environmental Trends

2-11 Changing Environmental Trends Political and regulatory changes – New laws create opportunities for entrepreneurs – Changes in government regulations motivate entrepreneurs to differentiate themselves by exceeding the regulation – Political change can encourage the emergence of new business ideas

Possible Business Ideas Identify Opportunities for the Following Trends: Graying of America Increasingly obese population Changing technology i.e. Storage of electronic information or increasing demands for wi-fi technology Dual earner couples High unemployment/economic uncertainty

2-13 Unsolved Problems Many companies have been started by people who by trying to solve a problem create a business idea Entrepreneurs can capitalize by modifying products created by advances in technology

Shumpeter’s Sources of Opportunity  Use a new technology to produce a new product.  Use an existing technology to produce a new product.  Use an existing technology to produce an old product in a new way.  Find a new source of resources to produce more efficiently.  Develop a new market for an existing product.

Creative - Destruction

2-16 Gaps in the Marketplace Key large retailers compete on price and target the mainstream customer, leaving gaps in the marketplace New business ideas can be formed by taking an existing product and targeting a new market or geographic area

2-17 Finding Gaps in the Marketplace Product gaps in the marketplace represent potentially viable business opportunities. In 2000 Tish Cirovolv realized there were no guitars on the market made specifically for women. To fill this gap, she started Daisy Rock Guitars, a company that makes guitars just for women.

Factors of Competitive Advantage 1.Quality 2.Price 3.Location 4.Selection 5.Service 6.Speed/turnaround

Defining Creativity Paul Torrence: “Creativity defies precise definition.” Robert Sternberg: “ability to produce work that is novel (i.e., original, unexpected), high quality, and appropriate (i.e., useful, meets task constraint).” Howard Gardner: “A person isn’t creative in general – you can’t just say a person is ‘creative.’ You have to say a person is creative in X, whether it’s writing, being a teacher, or running an organization.” Mihaly Csikszentmihaly: “Creativity occurs when a person, using the systems of a given domain such as music, engineering, business, or mathematics, has a new idea or sees a pattern, and when this novelty is selected by the appropriate field for inclusion into the relevant domain.”

Since creativity is a set of thinking skills, it can be developed. Anyone can become more creative. Creative skills are built through developing the habit of looking for new problems, trends and opportunities in order to make things better for the people of the world. The Nature of Creativity in a Business Environment

Don’t Get Caught in the Rut When we use the same mental modes over and over again, it’s difficult to think of different ways to solve a problem.

2-22 Creativity Process Five-Steps to Generating Creative Ideas

1.Domain Skills 2.Creative Thinking Skills – Divergent Thinking (Brainstorming) – Convergent Thinking (Bringing it down to Earth) 3.Intrinsic Motivation Elements of Creativity

Brainstorming – Divergent Thinking Basadur’s Seven Guidelines to Developing Creative Output: – Withhold evaluating ideas while diverging. – Don’t worry about being right. – Generating a lot of ideas is the goal. – Don’t interrupt a stream of thought. – Reach for radical, impossible ideas. – Think in pictures. – Build on other ideas.

Convergent Thinking Keys to Successful Convergence: – Develop a value system for which to base all decisions. – Consider the original problem or issue for which divergence and convergence were applied. – Avoid scope creep.

Disney’s Blue Sky Disney Imagineers: Using the ‘Blue Sky’ philosophy, this group has become one of he most well-known and recognized divergent thinking groups. Walt Disney: “The best way to get started is to quit talking and begin doing.” (Convergent Thinking)

2-27 Other Creative Techniques Focus Group – A focus group is a gathering of five to ten people, who have been selected based on their common characteristics relative to the issues being discussed. – These groups are led by a trained moderator, who uses the internal dynamics of the group environment to gain insight into why people feel they way they do about a particular issue. – Although focus groups are used for a variety of purposes, they can be used to help generate new business ideas.

2-28 Library and Internet Research Library Research – Libraries are an often underutilized source of information for generating new business ideas. – The best approach is to talk to a reference librarian, who can point out useful resources, such as industry-specific magazines, trade journals, and industry reports. – Simply browsing through several issues of a trade journal or an industry report on a topic can spark new ideas.

2-29 Libraries and Internet Research Large public and university libraries typically have access to search engines and industry reports that would cost thousands of dollars to access on your own. Examples of Useful Search Engines and Industry Reports Lexis-Nexis Academic ProQuest IBISWorld Mintel Standard & Poor’s Net Advantage

Patent Search

First Screen – Shown in the exercise, is a template for completing a feasibility analysis. – It’s called “First Screen” because it’s a tool that can be used in the initial pass at determining the feasibility of a business idea. – If a business idea cuts muster at this stage, the next step is to complete a business plan.