ENTREPRENEURSHIP. Lecture 04 Creativity and the Business Idea. Course Website:

Transcription

1 ENTREPRENEURSHIP Lecture 04 Creativity and the Business Idea Course Website: Based on Chapter No. 04 (Hisrich, Pteters, Shepherd)

2 Trends Trends provide one of the greatest opportunities for entrepreneurs to start their new ventures. Big opportunity is when you start a trend. However, big risks are involved as well. Modern Trends that will provide opportunities include: green trend, clean-energy trend, organic-orientation trend, economic trend, social trend, health trend, and web trend. 4-2

3 Trends in the Modern Era Green Trend: People are willing to pay more for Green Products, especially in the area of irrigation, farming and agriculture. Others include eco friendly printing, recycling, cars etc. Clean Energy Trend: Generate power through solar, wind and other alternate energy sources. Organic-Orientation Trend: Especially in the food i.e. fresh fruits, vegetables, dairy products, breads, meat. Economic Trend: Due to global recession, people are now more conscious about their investments. New trends include Gardening products, Business Coaching, Debt and Credit Management, Outsourcing, Consulting etc. 4-3

4 Trends in the Modern Era Social Trend: Using Facebook, MySpace, LinkedIn offering consulting services such as on travelling, financial planning. Health Trend: Health maintenance and care, cosmetic procedures, Health Clinics, Beauty Clinics. Web Trend: minimum cost of entry, e-commerce, m- commerce (using 3G/4G) 4-4

5 Sources of New Ideas Consumers Informally monitor potential ideas and needs. Formally arrange for consumers to express their opinions. Existing Products and Services Monitoring and Evaluating the existing competitive products in the market, Analysis uncovers ways to improve offerings that may result in a new product or service. Distribution Channels Channel members can help suggest and market new products, not only they have ideas for new products but can also help market the new product or service. 4-5

6 Sources of New Ideas (cont.) Federal Government New product ideas can come in response to government regulations. Research and Development A formal endeavor connected with one s current employment. An informal lab in a basement or garage. 4-6

7 Methods of Generating New Ideas Focus Groups A moderator leads a group of 8 to 14 participants through an open, in-depth discussion in a directive or nondirective manner. An excellent method for generating and screening ideas and concepts. 4-7

8 Methods of Generating New Ideas (cont.) Brainstorming Allows people to be stimulated to greater creativity. Good ideas emerge when the brainstorming effort focuses on a specific product or market area. Rules of brainstorming: No criticism. Freewheeling is encouraged. Quantity of ideas is desired. Combinations and improvements of ideas are encouraged. 4-8

9 Methods of Generating New Ideas (cont.) Brainwriting A form of written brainstorming. Participants write their ideas on special forms or cards that circulate within the group. Problem Inventory Analysis Similar to Focus Group Discussion, but here the problems are already defined. Consumers are provided with a list of problems and are asked to identify products that have those problems. Results must be carefully evaluated 4-9

10 Creativity and Innovation Creativity the ability to develop new ideas and to discover new ways of looking at problems and opportunities; thinking new things Innovation the ability to apply creative solutions to problems or opportunities to enhance or to enrich people s lives; doing new things. 4-10

11 Entrepreneurs connect their creative ideas with the purposeful action and structure of a business. 4-11

12 Failure: Part of the Creative Process! For every 3,000 new product ideas: Four make it to the development stage. Two are actually launched. One becomes a success in the market. Creativity is an important source of building a competitive advantage. 4-12

13 Can We Learn to Be Creative? Yes! By overcoming paradigms and by suspending conventional thinking long enough to consider new and different alternatives! 4-13

14 Right-Brained, Creative Thinkers Always ask: Is there a better way? Challenge custom, routine, and tradition. Are reflective. Are thinkers. Realize that there may be more than one right answer. Know that mistakes are pit stops on the way to success. Recognize that problems are springboards for new ideas. 4-14

15 Left-Brained or Right-Brained? Entrepreneurship requires both left-and right-brained thinking. Right-brained thinking draws on divergent reasoning, the ability to create diverse ideas. Left-brained thinking counts on convergent reasoning, the ability to evaluate multiple ideas and to choose the best solution to a problem. 4-15

16 Barriers to Creativity Searching for the one right answer Focusing on being logical Blindly following the rules Constantly being practical Avoiding ambiguity Fearing looking foolish Fearing mistakes and failure Believing that I m not creative 4-16

17 The Creative Process Preparation Investigation Transformation Incubation Illumination Verification Implementation 4-17

18 Preparation Get your mind ready for creative thinking. Adopt the attitude of a lifelong student. Read a lot and not just in your field of expertise. Clip articles of interest to you and save them. Take time to discuss your ideas with other people. Join professional or trade associations and attend their meetings. Study other countries and their cultures. Travel to new places. Develop your listening skills. 4-18

19 Investigation This stage of enhancing entrepreneurial creativity involves the business owner taking time to study the problem at hand and what its various components are. 4-19

20 Transformation The information thus accumulated and acquired should then be subjected to convergent and divergent thinking which will serve to highlight the inherent similarities and differences. Two types of thinking are required: Convergent the ability to see the similarities and the connections among various and often diverse data and events. Divergent the ability to see the differences among various data and events. 4-20

21 Transformation Grasp the big picture by looking for patterns that emerge. Rearrange the elements of the situation. Remember that several approaches can be successful. If one fails, jump to another. 4-21

22 Incubation Allow your subconscious to reflect on the information collected. Walk away from the situation. Take the time to daydream. Relax Dream about the problem or opportunity. Work on the problem in a different environment. 4-22

23 Illumination This happens during the incubation stage and will often be spontaneous. The realizations from the past stages combine at this instance to form a breakthrough. 4-23

24 Verification This is where the entrepreneur attempts to ascertain whether the creativity of thought and the action of innovation are truly effective as anticipated. It may involve activities like simulation, piloting, prototype building, test marketing, and various experiments. 4-24

25 Implementation This is where the product of creativity and innovation is made into a reality and it's what defines the difference between inventors and entrepreneurs. 4-25

26 Methods for Creative Problem Solving Reverse Brainstorming A group method that focuses on the negative aspects of a product, service, or idea as well as ways to overcome these problems. Criticism is allowed, the focus is to identify all the aspects through which an idea can fail Care must be taken to maintain group morale. Gordon Method Method for developing new ideas when the individuals are unaware of the problem. Solutions are not clouded by preconceived ideas and behavioral patterns. Starts with a general concept, ideas are floated, then actual problem is revealed and solutions are finalized. 4-26

27 Creative Problem Solving (cont.) Free Association Developing a new idea through a chain of word associations. Forced Relationships Developing a new idea by looking at product combinations. Collective Notebook Method Developing a new idea by group members regularly recording ideas. A small notebook (that fits in the pocket) containing the problem statement, some blank pages and any background data is distributed to participants. At the end of a week, the note books are handed over to a central coordinator, who then finalizes the best ideas and possible suggestions. 4-27

28 Innovation Innovation is considered key to economic development of any company, region of a country or country itself. As technologies change, old products are replaced by the new ones 4-28

29 Innovation Types of Innovation Breakthrough Innovation Fewest number of innovations. Establishes the platform on which future innovations in an area are developed. Should be protected by patents, trademarks, and copyrights. Steam Engine, Computer, Airplane, Automobile, Internet Technological Innovation Occurs more frequently; not at the same level of breakthrough inventions. Offers advancements in the product/market area. Needs to be protected. Desktop Computers, Laptops, Jet Planes 4-29

30 Innovation (cont.) Ordinary Occurs most frequently. Extends a technological innovation into a better product or service or one that has a different market appeal. Usually come from market analysis and pull, not technology push. Flavors of Food Items, Clothing 4-30

31 Defining a New Innovation (Product or Service) Newness can be: In the consumer concept. A change in the package or container. Slight changes or modifications in the appearance of the product. (Industrial market) Companies also add products to their product line that are already marketed by other companies; products are new to the manufacturer but not the consumer. 4-31

32 Classification of New Products from a Consumer s Perspective Consumer s Viewpoint Continuous innovations. Dynamically continuous. Discontinuous innovations. This approach is consistent with the marketing philosophy that satisfaction of consumer needs is fundamental to a venture s existence. 4-32

33 Classification of New Products Continuous innovations: requires relatively minor changes in behavior(s) that are unimportant for consumers. Example: Consumer Goods, WIFI, Computer Software (Windows Updates) Dynamically continuous: The development of new products that are different from previously available products but that do not strikingly change buying or usage patterns. Thus the company remains in the same product and markets but continues to improve the products. This needs to be done dynamically (to save time and increase effectiveness). Examples Mobile Phones, Tablets etc. Discontinuous innovations: Discontinuous innovations cause a paradigm shift in science or technology and/or the market structure of an industry. Discontinuous innovations disrupt established routine and may even require a very different set of capabilities and new behavior patterns. Example: Internet (ability to send s instead of postal s) OR the shift from Cassette tapes to CD Player to Mp3 Players to IPoDs! 4-33

34 Classification of New Products from an Organizational Perspective Firm s Viewpoint Distinction can be made between new products and new markets. Situations with a new technology and a new market are the most complicated and pose the highest degree of risk. 4-34

35 Figure New Product Classification System 4-35

36 Product Planning and Development Process Establishing Evaluation Criteria Criteria should be established at each stage of the product planning and development process. It should be all-inclusive and quantitative in nature. Criteria should evaluate the idea in terms of: Market opportunity. Competition. Marketing system. Financial factors. Production factors. 4-36

37 The Product Planning and Development Process 4-37

38 Product Planning and Development Process (cont.) Idea Stage Promising ideas should be identified and impractical ones eliminated. Systematic market evaluation Determine the need for the new idea as well as its value to the company. Concept Stage Refined idea is tested to determine consumer acceptance which can be measured through the conversational interview method. 4-38

39 Product Planning and Development Process (cont.) Product Development Stage Consumer reaction to the product/service is determined. A consumer panel is given a product sample and preference is determined through methods such as multiple brand comparisons, risk analysis, etc. Test Marketing Stage Increases certainty of successful commercialization. Actual sales reflect consumer acceptance. 4-39

40 E-commerce and Business Start-up E-commerce offers entrepreneurs an opportunity to be creative and innovative. Factors that facilitate high-growth in electronic commerce: Widespread use of personal computers. Adoption of intranets in companies. Acceptance of the Internet as a business communications platform. Faster and more secure systems. 4-40

41 E-commerce and Business Start-up (cont.) Using E-Commerce Creatively Entrepreneurs have to decide whether to: Run Internet operations within the company. Outsource these operations to Internet specialists. Use e-commerce packages provided by software companies. The integration of front-end and back-end operations represents the greatest challenge for doing Internet business. 4-41

42 E-commerce and Business Start-up (cont.) Web Sites Ease of use. Structure and organization of information. Search capability. response system. Speed. Compatibility with different browsers and platforms. 4-42

43 E-commerce and Business Start-up (cont.) Tracking Customer Information Electronic databases track the activity of the industry, segment, and company. It supports personal marketing targeted at individual clients. Care must be taken to follow the laws protecting the privacy of individuals. Care must be taken to follow the laws protecting the privacy of individuals. 4-43