Entrepreneurship 3 Cognitive Foundations of Entrepreneurship: Creativity and Opportunity Recognition

“People think that at the top, there isn’t much room “People think that at the top, there isn’t much room. They tend to think of it as an Everest. My message is that there is tons of room at the top.” --Margaret Thatcher

Three Key Processes Idea Generation Creativity Opportunity Recognition Increasing Relevance to Founding Venture

Memory Working memory—holds limited amount of information fro brief periods Long-term memory—retains vast amounts of information for long periods Procedural memory—automatic knowledge gained through practice

Mental Frameworks Mental frameworks help us to interpret new information and relate it to information we already possess.

Prototypes Idealized mental representations of the most typical member of a category.

Mental Shortcuts Heuristics—simple rules for making complex decisions or drawing inferences in a rapid and seemingly effortless manner Availability heuristic—the more easily we bring information to mind, the more importance we assign to it

Thinking “Tilts” Optimistic bias—expect things to turn out well without basis Confirmation bias—notice, process, and remember information that confirms current beliefs Illusion of control—assume that our fate is under our control

Creativity Items or ideas produced are both New (original, unexpected) Useful or appropriate

Concepts Building blocks of creativity Internal mental structures developed to organize information Categories for objects or events that are somehow similar to each other in certain respects

Escaping Mental Ruts Concepts can be stretched in several different ways Combination Expansion Analogy

“An old thing becomes new if you detach it from what usually surrounds it.” --Robert Bresson

Human Intelligence Individuals’ abilities to Understand complex ideas Adapt effectively to the world Learn from experience Engage in various forms of reasoning Overcome a wide range of obstacles

Kinds of Intelligence Analytic intelligence Creative intelligence Practical intelligence Social intelligence Successful intelligence

Successful Intelligence Practical Intelligence Analytic Intelligence Successful Intelligence Success Creative Intelligence

Confluence Approach Creativity emerges from a confluence of Intellectual abilities Broad, rich knowledge base Appropriate style of thinking Personality attributes Intrinsic, task-focused motivation Environment supportive of creative ideas

Broad, Rich Knowledge Base Having varied work experience Having lived in many different places Having a broad social network

Opportunity Recognition Some people are more likely to recognize opportunities because They have better access to certain kinds of information They are able to utilize the information once they have it

Superior Utilization of Information Richer and better-integrated stores of knowledge Higher in intelligence Higher in practical intelligence Higher in creativity

Additional Aspects Active search Entrepreneurial alertness Prior knowledge Social networks Opportunity recognition

Pattern Recognition Seeing links between seemingly unconnected trends, changes, events Connections form an identifiable pattern

Enhancing Opportunity Recognition Exposure to broad range of business experience Learning to search in the best places Learning to search in the best ways Exposure to a broad range of business opportunities