HOW TO TEACH OPPORTUNITY RECOGNITION Frank Hoy Paul R. Beswick Professor of Innovation & Entrepreneurship Worcester Polytechnic Institute USA

The Coleman Foundation Definition of Entrepreneurship DEFINITIONS The Coleman Foundation Definition of Entrepreneurship Self-employment through business ownership which has significant elements of risk, control and reward

Other Common Definitions Pursuit of opportunity without regard to resources controlled Process of creating value through unique resource combinations that exploit opportunity

A Philosophy of Life a way of thinking a way of acting lots of different professional contexts but also a way of approaching personal issues, family life, community involvement, etc. Michael Morris

Entrepreneurship as a Lifetime Philosophy Attitude Can affect change There is a better way Opportunities are everywhere Embrace innovation, change & growth Failure is learning In One’s Life In the family In church activities In community involvement In personal relationships In managing personal finances In dealing with personal change Professionally -Entrepreneuring in different ways over one’s career life cycle Behavior Pursuing opportunity Innovating Perseverance Guerrilla actions Risk management Michael Morris

Entrepreneurial Alertness Israel Kirzner: The ability to see where products or services do not exist or have emerged as valuable. Differentiates entrepreneurs from knowledge experts who does not see the commercial opportunity stemming from the knowledge.

Defining Opportunity Joseph Schumpeter: Opportunities are “new production functions where production = 1(choice of products, source of supply, method of productions, method of organization, and choice of markets)”

Opportunity Recognition Robert Baron: “Opportunity recognition refers to the active, cognitive process (or processes) through which individuals conclude that they have identified the potential to create something new that has the potential to generate economic value and that is not currently being exploited or developed, and is viewed as desirable in the society in which it occurs.”

Sources of Opportunities Peter Drucker: Opportunity results from change 1.The unexpected – and unexpected success, failure, or outside event; 2. An incongruity between reality as it actually is and reality as it is assumed to be or as it ought to be; 3. Innovation based on process need;

Sources (cont.) 4. Changes in industry structure or market structure that come about quickly and without warning; 5. Demographics; 6. Changes in perception, mood, and meaning; and 7. New knowledge.

“Incubator” Organizations The Source “Incubator” Organizations

Sizing up the Opportunity Jeff Timmons: 1. What are the driving forces and competitive vacuums creating the opportunity? 2. For whom is the opportunity desirable? 3. Is there a real need? 4. What are the economics of the opportunity? 5. What are the risk/reward trade-offs?

Educational Approaches Textbooks? Lectures? Experiential? Individual versus Team? Theory versus Practice?

Tactics Role Models Teams Videos Creativity Exercises Business Models Pattern Recognition

One Example McGrath & MacMillan: Opportunity Register Business concept Related trends Key data Obstacles and barriers Company position Competition Sources Type Timing

Forget Everything I’ve Said The Corridor Principle

Questions, Comments, Criticisms? Frank Hoy Director, Collaborative for Entrepreneurship & Innovation Worcester Polytechnic Institute 100 Institute Road Worcester, Massachusetts 01609 USA fhoy@wpi.edu

Books Christensen, C. The Innovator’s Dilemma: When New Technologies Cause Great Firms to Fail. Cambridge, MA: Harvard Business Review Press, 1997. Drucker, P.F. Innovation and Entrepreneurship: Practice and Principles. New York: Harper & Row, 1985. Kirzner, I. Perception, Opportunity, and Profit. Chicago: University of Chicago Press, 1979. Knight, F.H. Risk, Uncertainty and Profit. Mineola, NY: Dover Publications, 2006 (originally 1921 by Houghton Mifflin). Schumpeter, J. The Theory of Economic Development. Cambridge, MA: Harvard University Press, 1934.

Videos Prendismo Collection, www.prendismo.com. Formerly Cornell University e-clips. Now a subscription service. Stanford University, ECorner, e.g. “Linda Rottenberg: Crazy Is a Compliment,” May 7, 2014. TEDGlobal, e.g. “Matt Ridley: When Ideas Have Sex,” July 2010. YouTube, e.g. Elevator Pitch Winners, https://www.youtube.com/results?search_query=elevator+pitch+winners.

Articles Gaglio, C.M., and Katz, J.A. The psychological basis of opportunity identification: Entrepreneurial alertness. Small Business Economics, 16, 95-111. Kaish, S., and Gilad, B. Characteristics of opportunity search for entrepreneurs versus executives: Sources, interests, general alertness. Journal of Business Venturing, 6 (1): 45-61, 1991. Ronstadt, R. The corridor principle. Journal of Business Venturing, 3: 31-40, 1988. Stevenson, H.H., and Gumpert, D.E. The heart of entrepreneurship. Harvard Business Review, 63 (2): 85-94, 1985.

Movies Bowfinger Jerry Maguire Pirates of Silicon Valley The Full Monty The Social Network Tucker

Internet Sites Business Opportunities Weblog, www.business-opportunities.biz Entrepreneur Magazine, www.entrepreneur.com Entrepreneurship.org (Kauffman Foundation), www.entrepreneurship.org Fast Company, www.fastcompany.com Startup Professionals, http://www.startupprofessionals.com/ Under30CEO, www.under30ceo.com U.S. Small Business Administration, www.sba.gov

Your Turn Connect with your neighbors What approach is comfortable for you? Why? What approaches work for your students? Why? Design the tactics for your students to improve their abilities to identify and act on opportunities