Idea generation.Entrepreneur

Process of Entrepreneurship

Decision to Become an Entrepreneur

• Introduction to Entrepreneurship

Process of EntrepreneurshipDeveloping Successful Business Ideas

• Recognizing Opportunities & generating Ideas

• Feasibility Analysis

• Industry & Competitor Analysis

• Developing an Effective Business Model

Chapter

2-5

Process of EntrepreneurshipMoving from an Idea to an Entrepreneurial Firm

• Building a new Venture Team

• Assessing a new ventures financial strength & viability

• Preparing a proper ethical & legal foundation

• Writing a Business Plan

• Getting Finance or Funding

Chapter

6-10

Process of EntrepreneurshipManaging & growing an Entrepreneurial Firm

• Managing & Growing an Entrepreneurial Firm

• The importance of intellectual Property

• Preparing for & evaluating the challenges of growth

• Strategies for firm growth

• Franchising

Chapter

11-15

Part II - Developing Successful Business Ideas

Chapter 2 –

Recognizing Opportunities and Generating Ideas

Recognizing opportunities & generating ideas Buyandhold.com: Filling a Void in the Online Investing

Marketplace◦ Geoffery M. Tudisco worked for shareholder Communication

Corporation

◦ SCC worked for Dividend Reinvestment Plan.(DRIP). Enable individuals to purchase stock directly from company with investment as low as $25. The company offers service called Direct Purchase plan Clearing House .

◦ Soon after Tudisco was hired SCC made an effort to offer clearing house facility through website while partnering a company Netstockdirect.com.

◦ However when Netstock redesign a website just remove all indication that clearing house was a partner. Tudisco highlighted the issue to Peter Breen the boss. On the approval he made within 30 days a new website having all DRIP plans. One step ahead he also develop an idea of buy & hold brokerage services. Once been forwarded to the higher management both Peter Breen & Tudisco didn’t get a positive response. In response to that both have left the company and started their own company with the name “buyandhold.com” to pursue their own idea. SCC failed to recognize the idea and the people who did it get it successful as they can see the dire need of the people who would like to have save investment of $20/trade and can subscribe the service by $6.99/month.

◦ SSC has failed to realized & created an opportunity Gap which was filled by both Breen & Tudisco by generating an idea and recognizing the need of the customer.

Identifying & Recognizing Opportunities Entrepreneurs recognize an opportunity and turn it into

a successful Business. An opportunity is a Favorable set of Circumstances that

creates a need for a product, service or a business. Most entrepreneurial firms are started in either of the

ways◦ Externally Stimulated: An entrepreneur decides to launch a

firm, search for & recognize an opportunity and then starts a Business.

◦ Internally Stimulated: An entrepreneur recognized a problem or an opportunity gap and creates a business to fill it. Eg. Buyand hold.com

Opportunities for any product , service or business are always tough to find. ◦ Opportunity recognition is part art & science. Relying on instinct is

an art, while having analytical examination is science.

◦ Opportunity has 4 essential qualities 1) Attractive 2) Durable 3) Timely 4) anchored in a product service or business that creates a value to its customer.

Identifying & Recognizing Opportunities

Difference between an opportunity & Idea◦ Idea is a thought, impression or notion. It may or may not meet the criteria

of an opportunity.

Window of Opportunity◦The term “window of opportunity” is a metaphor

describing the time period in which a firm can realistically enter a new market. Once the market for a new product is established, its window

of opportunity opens, and new entrants flow in. At some point, the market matures, and the window of

opportunity (for new entrants) closes.

2 Ways to identify an opportunity

Observing Trends Solving a Problem

Observing Trends

The first approach to identifying opportunities is to observe trends & study how they create opportunities for entrepreneurs to pursue.

Economic Factors, Social Factors, Technological advances, and political and Regulatory changes are the most important trends to follow.

2 ways to handle the trends are;◦ They can study and observe them. Some are better at this than

others, depending on their personal characteristics & levels of motivation.

◦ Understand emerging trend is to purchase customized forecasts & market analysis from independent research firms.

Environmental Trends Suggesting Business or Product Opportunity Gaps

Economic ForcesState of the economy

level of disposable income consumer spending patterns

Social ForcesSocial & cultural trends demographic changes what people think is

“in”

Technological Advances

New technologies emerging technologies

New user of old technologies

Political & Regulatory Changes

New changes in Political arena

New Laws & Regulations

Business, Product or Service Opportunity

Gap

Difference between what's available & What's possible

New Business,Product and Service Idea

Environmental Trends Suggesting Business or Product Opportunity Gaps

Economic Forces: It affects consumers level of disposable income. When

incomes are high, people are most likely to spend on buying products or services that enhance their lives.

Individual sector s of the economy have a direct impact on consumer buying patterns. Eg, decrease in interest rate leads to new home construction and furniture sale. Decrease in stock market has a reverse impact of reduction in demand of new products or services.

Many entrepreneur took advantage of this trend in coming ahead while bringing new ideas in filling this economic despondency. They provided consultancy or make their own firm to give solutions or provided with product or services to fill the gap eg; is the online marketplace by developing web solution to buy & sell products or services.

Environmental Trends Suggesting Business or Product Opportunity Gaps

Social Forces: An understanding of the impact of social forces on

trends & how they affect new product, services and business ideas is a fundamental piece of the opportunity recognition puzzle.

Example for this will be love of the people for fast food restaurants is because they are busy with their work have less time. Introduction of sony walkman is not because people wanted smaller radios but in actual they wanted to listen music while on the move. Some of the recent social trends that allow for new opportunities are;◦ Family & work patterns, the aging of the population, increasing

diversity in the workplace, globalization of industry, increasing focus on health care and fitness, use of internet & computers, massive use of cell phones, new forms of music's & other types of entertainment.

Environmental Trends Suggesting Business or Product Opportunity Gaps

Technological Advances: Acquiring the pace of technological changes it is

important for the entrepreneurs to foresee the opportunities lies with the technological advances.

Example of real networks was created to add video capabilities to the internet, which took the internet era into the next level.

Advances in technology frequently dovetail with economic and social changes to create opportunities.

Creation of cell phone is a technological achievement but it was motivated by an increasingly mobile population that found many advantages to having the ability to communicate with its coworkers, customers, friends and families from anywhere.

Environmental Trends Suggesting Business or Product Opportunity Gaps

Political Action & Regulatory Changes:

Political & Regulatory changes also provide the basis for opportunities. For example New laws create opportunity for entrepreneurs to start firms to help companies comply with these laws.

Act of terrorism today have created an opportunity for data base designer firms to work for those companies, hotels or Government organizations to save & protect their secret data's somewhere on the servers where their interest can be served. This expands the backup data industry

Environmental Trends Suggesting Business or Product Opportunity Gaps

Changing Environmental Trend

• Economic Trend• Teenagers with more

cash & disposal Income• Increased Interest in the

stock Markets

• Social Trend• Increasing job

preoccupation by working parents or families

• Interest in Health care

• Technological Trend

• Development of the Internet services

• Political & Regulatory Trends

• Development of new laws

Resulting New Business, Product & service

opportunity

• Economic Trend• Designer cloths, compact

discs, DVD players, games console

• Online Brokerage services, stock research, Magazine

• Social Trend• Restaurants

microwavable dinners, food delivery system

• Fitness Centers• Technological

Trends• Ecommerce, Improved

Supply Chain Management

• Political & Regulatory Trends

• Back up Data base development

Companies that Resulted

• Economic Trend• Gap, Banana republic,

MTV saga, Palm• Buyandhold.com, the

street.com, motley fool.

• Social Trend• McDonalds, KFC, Pizza

Hut, Burger King• Fitness Equipment,

Curves Int.• Technological

Trends• Yahoo, Amazon, aoline,

Chem Connect• Political &

Regulatory Trends

• Prima tech

How Are Opportunities Identified?(1 of 1)

2-16

Second Approach: Solving a Problem

Sometimes identifyingopportunities simply

involves noticing a problemand finding a way to

solve it

These problems can bepinpointed through observing

trends and through more simplemeans, such as intuition,

serendipity, or chance

Some business ideas are clearlyinitiated to solve a problem

For example, Symantec Corp. created Norton antivirus

software to guard computersagainst viruses

2-17

Second Approach: Solving a Problem2 of 2

• A problem facing the U.S. and other countries is finding alternatives to fossil fuels.• A large number of entrepreneurial firms, like this wind farm, are being launched to solve this problem.

Solving a Problem

Sometimes identifying opportunities simply involves noticing a problem & finding a way to solve it. These problems can be pinpointed though observing trends & through more simple means, such as intuition or chance.

There are many problems that have yet to be solved. Some business ideas just emerged from the recognition of

problems in emerging trends. Example of Norton antivirus to rid computer for viruses,

while McAfee develop software's to save computers from hackers.

Rob Glaser 1995 sees the problem of No way to play audio & video on the internet have developed software while seeing the opportunity & business resulted is Real networks. Same is the case with Jerry Yang while seeing the need of organize directory of favorite websites come with an idea of yahoo.com

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Third Approach: Finding Gaps in the Marketplace2 of 2

Product gaps in the marketplace

represent potentially viable

business opportunities.

Specific Example

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.

Personal Characteristics of Entrepreneur Researchers have identified several characteristics

that tend to make some people better at recognizing opportunities than others.

Opportunity Recognition refers to the process of perceiving the possibility of a profitable new business, product or services.

Characteristics are;◦ Prior Experience

◦ Cognitive Factor

◦ Social Networks

◦ Creativity

Personal Characteristics of EntrepreneurPrior Experience

◦ Several studies shows that prior experience in an industry helps entrepreneurs recognize business opportunities.

◦ Normally entrepreneurs develop new business, product or services ideas while working in the same industry.

◦ By working in an industry an individual may spot a market niche that is underserved. Example of buyandhold.com by Tudisco is based on prior experience.

◦ Once an entrepreneur starts a firm new venture opportunities became apparent. This is called the corridor principle.

Personal Characteristics of EntrepreneurCognitive Factors

◦ Opportunity recognition may be an innate skill or a cognitive process.

◦ Entrepreneurs have entrepreneurial alertness which is the ability to notice things without engaging in deliberate search.

◦ Research finding says for alertness some times it needs purposeful efforts & sometimes its happen by innate skills.

◦ In other words entrepreneurs may be better than others at sizing up the marketplace & inferring the likely implication.

Personal Characteristics of EntrepreneurSocial Networks

◦ The extent & depth of an individuals social networks affects opportunities recognition.

◦ People who build a substantial network of social & professional contacts will be exposed to more opportunities & ideas than people with sparse networks.

◦ This exposure can lead to new business starts.◦ Network entrepreneurs identifies more opportunities than

solo entrepreneurs but were less likely to be recognized as alert or creative as they work in networks rather than a single entity.

◦ Entrepreneurs normally got good ideas through weak tie relationships rather than strong tie relationships. Reason is that people you met every day or like minded individuals have similar ideology. While one can get a good idea even through a discussion with those whom we never give special attention in life, like servants, gardener, electrician.

Social Networks(3 of 3)

2-24

Strong-Tie Relationships

Weak-Tie Relationships

These relationships, which typically form between like minded individuals, tend to reinforce insights and ideas that people already

have

The relationships, which form between casual

acquaintances, are not as apt to be between like-minded individuals, so one person may say

something to another that sparks a completely

new idea

Why weak-tie relationships lead to more new business ideas than strong-tie relationships

Personal Characteristics of EntrepreneurCreativity

◦ It is the process of generating a novel or useful idea. ◦ Opportunity recognition may be, at least in part, a creative

process.◦ For an individual the creative process can be broken into

five stages. Preparation

Preparation is the background experience & knowledge that an entrepreneur brings to the opportunity recognition

Incubation Stage in which a person considers an idea or think about a problem

Insight It’s a flash of recognition- when the solution to a problem is seen or an

idea is born Evaluation

Idea is subjected to scrutiny & analyzed for its viability Elaboration

Creative idea is put into a final form the details are worked out and the idea is transformed into something of value. In case of new business here business plan is normally been written.

Personal Characteristics of Entrepreneur

Preparation

Incubation

Insight

Evaluation

Elaboration

Opportunity Recognition Process

Environmental TrendsEconomic Factor

Social FactorTechnological Advances

Political & regulatory Changes

Personal Characteristics of an Entrepreneur

Prior ExperienceCognitive FactorsSocial Networks

Creativity

Business, Product or service

opportunity Gap

New Business Product &

Service Ideas

Techniques for Generating Ideas

In general, Entrepreneurs identify more ideas than opportunities because many ideas are typically generated to find the best way to capitalize on an opportunity.

Brainstorming: used to generate a number of ideas quickly, not used for analysis or decision making.

Focus Group: 5 to 10 people together for generating new business idea

Surveys: gathering information through a sample of individuals

Other Techniques: Customer advisory Board

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Techniques For Generating Ideas

Brainstorming Focus Groups

Library andInternet Research

2-30

Brainstorming

Brainstorming◦ Is a technique used to generate a large number of

ideas and solutions to problems quickly.◦ A brainstorming “session” typically involves a group

of people, and should be targeted to a specific topic.◦ Rules for a brainstorming session:

No criticism. Freewhelling is encouraged. The session should move quickly. Leap-frogging is encouraged.

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Focus Groups

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.

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Library and Internet Research1 of 3

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.

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Libraries and Internet Research 2 of 3

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

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Library and Internet Research3 of 3

Internet Research◦ If you are starting from scratch, simply typing “new

business ideas” into a search engine will produce links to newspapers and magazine articles about the “hottest” new business ideas.

◦ If you have a specific topic in mind, setting up Google or Yahoo! e-mail alerts will provide you to links to a constant stream of newspaper articles, blog posts, and news releases about the topic.

◦ Targeted searches are also useful.

Protecting Ideas From Being Lost or Stolen

Step 1◦ The idea should be put in a tangible form such as

entered into a physical idea logbook or saved on a computer disk, and the date the idea was first thought of should be entered.

Step 2◦ The idea should be secured. This may seem like an

obvious step, but is one that is often overlooked.Step 2

◦ Avoid making an inadvertent or voluntary disclosure of an idea, in a manner that forfeits the right to claim exclusive rights to it.

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Case Study Assignment No. 2Case 2.2

◦Align Technology: Making Braces More Bearable (Pg 48)

◦www.invisalign.com