Chapter 3 Discovering / Creating Social Entrepreneurial Opportunities

Opening Discussion Read the case of Muhammad Yunus and Grameen Bank and answer the following questions:  What social entrepreneurial opportunity did Muhammad Yunus identify in mid-1970s?  What converging factors eventually led to the discovery of the opportunity?

Chapter Outline Define opportunity. How are social entrepreneurial opportunities different? How are social entrepreneurial opportunities discovered? A two-stage model of the opportunity discovery process.

Define Opportunity There is little consensus on the definition and nature of entrepreneurial opportunities. There are two philosophical views of entrepreneurial opportunity:  The discovery view: opportunities exist objectively; they are formed by exogenous shocks caused by imperfections in a market or industry.  The creation view: opportunities do not exist objectively, but rather are created through the enactment process between an entrepreneur and the environment.

The Nature of Opportunity in Social Entrepreneurship Opportunities in social entrepreneurship are socially constructed. Opportunities tend to be created rather than discovered. “Despite popular sayings, attractive entrepreneurial opportunities do not come knocking at the door fully formed. Nor are they out there, like lost treasures, simply waiting to be discovered by the lucky or observant. Rather, they have to be conceived, developed, and refined in a dynamic, creative, and thoughtful process.” —Guclu, Dees, and Anderson (2002)

Types of Opportunities Creating a new or improved product, service, or program Introducing a new or improved strategy or operating method Reaching a new market, serving an unmet need Tapping into a new source of supply or labor Establishing a new industrial or organizational structure through mergers, spinoffs, alliances, and other contractual arrangements Framing new terms of engagement with clients, consumers, suppliers, funders, or employees Developing new funding structures

How Are Social Entrepreneurial Opportunities Different? Opportunities in social entrepreneurship differ from their counterparts in commercial entrepreneurship in the following ways:  Focus. The focus of a social entrepreneurial opportunity is on creating social value rather than making a profit.  Context. A social entrepreneurial opportunity is deeply embedded in the local context.  Stakeholders. The discovery or creation of a social entrepreneurial opportunity often happens in collectives and involves a wider array of stakeholders than for a commercial entrepreneurial opportunity.

The Two-Phase Model of the Opportunity Recognition Process

Phase One: Idea Generation During this phase, the generation of a promising idea results from the interplay of three important factors:  Social needs  Social assets  Pattern recognition

Social Needs and Social Assets Social needs: the gaps between socially desirable conditions and the existing reality:  Changes in social needs can open up new possibilities and inspire the development of promising new ideas.  However, an unmet social demand alone does not form a viable opportunity unless a social entrepreneur finds an innovative and feasible way to meet the demand.  Moreover, in some cases the demand is unformed and thus nonexistent in an articulated form. Social assets: tangible and intangible assets in a community:  A good understanding of the scope and level of these resources is key to developing promising ideas that aim at addressing social needs.

Pattern Recognition This is the cognitive process through which individuals identify meaningful patterns in complex arrays of events or trends. Opportunities are identified when entrepreneurs “connect the dots” between seemingly unrelated events or trends and then detect patterns in these connections suggestive of new products or services.

Factors Contributing to Pattern Recognition How do we learn to be better at recognizing different patterns that could eventually lead to an opportunity? Prior research suggests the following factors:  Active information search  Alertness  Prior experience  Social networks

Phase Two: Opportunity Assessment During this phase, entrepreneurs assess recognized opportunities to judge their attractiveness for further development. There are two useful models to consider:  Model 1 contains three key criteria: Social value potential Market potential Sustainability potential  Model 2 contains five key criteria: Pervasiveness Relevance Urgency Accessibility Radicalness We will dig deeper into opportunity assessment in Ch 4!

Another Approach to Solve Problems

Idea Creation

Five-Steps to Generating Creative Ideas

Discussion Consider the two models of opportunity assessment on the “Phase Two” slide, and answer the following questions:  How do the two models differ?  How do the two models complement each other?  How can we improve the two models?