1. Entrepreneurship and Negotiation3
Cognitive Foundations of Entrepreneurship: Creativity and Opportunity Recognition

2. “When written in Chinese the word crisis is composed of two characters
“When written in Chinese the word crisis is composed of two characters. One represents danger and the other represents opportunity.”
--John F. Kennedy, 1959
Chinese character wēi
Chinese character jī
(in simplified form)

3. Why are some successful?

4. Right Person, Right Place, Right Time
Better access to crucial information—information helpful in recognizing opportunities or formulating new ideas
Better able to utilize information—to combine it or interpret in ways that reveal the opportunities overlooked by others

5. Three Key Processes
Idea generation
Creativity
Opportunity recognition

6. A Cognitive Perspective
Human cognition—the mental processes through which we
Acquire information
Enter it into storage
Transform it
Use it to accomplish a wide range of tasks

7. Ideas
Occur when individuals use existing knowledge they have gained (and retained) from their experience to generate something new—thoughts they did not have before.

8. The Raw Materials
The raw materials for new ideas and for recognizing opportunities are present in the cognitive systems of specific persons as a result of their life experience.
Unique experience Knowledge Idea generation

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

10. Mental Frameworks
Mental scaffolds help us to understand new information and to integrate it (often in original ways)—with information we already possess

11. Types of Frameworks
Schemas—cognitive frameworks representing our knowledge and assumptions about specific aspects of the world
Example
self-schema
I am a Japanese (self-identity)
I am a wife (a role I play)
person-schema
George Bush is American (identity)
He is the American president (a role he plays)
Prototypes—abstract, idealized mental representations that capture the essence of a category of objects
Many or most instances possess each characteristic features
e.g. the ability to fly is typical of birds, but it is not a defining feature of a bird (ostrich can not fly)

12. Example of Prototypes
Divide the following items into the category of fruits and the category of vegetables: apples, carrots, tomatoes, cauliflower, oranges, pumpkin, cucumber

13. Mental Shortcuts If you can't find a solution, change the rules.
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
If you can't find a solution, change the rules.
Comment: Remember that there are no no-win scenarios.

14. Mental Shortcuts (cont)
When you have several things you could be doing and don't know which to do: Just do any one of them!
Comments: If you cannot decide between two or more possibilities, then there is a good chance that the differences don't matter. However, most people begin to hesitate in this kind of situation. If you are conscious of this, you can just choose one choice randomly or according to some standard method.

15. 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

16. Creativity Original and unexpected Appropriate or useful
Items or ideas produced are both
Original and unexpected
Appropriate or useful

17. 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

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

19. 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

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

21. Successful Intelligence
Practical
Intelligence
Analytic
Intelligence
Successful
Intelligence
Success
Creative
Intelligence

22. 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

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

24. 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

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

26. Signal Detection Theory
Actual Presence of Opportunity
Yes No
HIT
Opportunity present and recognized
FALSE ALARM
Opportunity not present, but judged to be present
MISS
Opportunity is present, but not judged to be present
CORRECT REJECTION
Opportunity not present and judged to be absent
Yes
Judgment About Presence No

27. Regulatory Focus Theory
Promotion focus—attain positive outcomes
Prevention focus—avoid negative outcomes
Successful entrepreneurs adopt a mixture of these two perspectives

28. Increasing Opportunity Recognition
Build a broad, rich knowledge base
Organize your knowledge
Increase your access to information
Create connections between the knowledge you have
Build your practical intelligence
Temper eagerness for hits with wariness of false alarms