Recognizing Opportunities and Generating Ideas (Session 3-4) [Week 2]

What is an Opportunity?

     Opportunity defined an opportunity is a favorable set of circumstances that creates a need for a new product, service or business. An opportunity has four essential qualities

chart of four opportunity essential qualities

Three ways to identify an opportunity:

Ø  Observing Trends

Ø  Solving a Problem

Ø  Finding Gaps in the Marketplace

First Approach: Observing Trends

·   Observing Trends

-   Trends create opportunities for entrepreneurs to pursue.

-   The most important trends are:

    ·   Economics forces

    ·   Social forces

    ·   Technological advances

    ·   Political action and regulatory change

-   It’s important to be aware of changes in these areas

·   Environmental Trends Suggesting Business or Product Opportunity Gaps

charts

Trend 1: Economic Forces

     Economic trends help determine areas that are ripe for new startups and areas that startups should avoid.

Example of Economic Trend Creating a Favorable Opportunity:

-   A weak economy favors startups that help consumers save money.

Trend 2: Social Forces

     Social trends alter how people and businesses behave and set their priorities.  These trends provide opportunities for new businesses to accommodate the changes.
Example of Social Trends:
-   Retire of baby boomers
-   The increasing diversity of the workplace
-   Increasing interest in health, fitness, and wellness

Trend 3: Technological Advances

     Advances in technology frequently create business oportunities.

Example of Entire Industries that have been created as the result of Technological Advances:

-  Computer Industry

-  Internet

-  Biotechnology

-  Digital Photography

     

Trend 4: Political Action and Regulatory

Company created to help other companies comply with a specific law.

Second Approach: Solving a Problem

·   Solving a Problem

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

Third Approach: Finding Gaps in the Marketplace

·   Gaps in the Marketplace

-                    A third approach to identifying opportunities is to find a gap in the marketplace. A gap in the marketplace is often created when a product or service is needed by a specific group of people but doesn’t represent a large enough market to be of interest to mainstream retailers or manufacturers. Product gaps in the marketplace represent potentially viable business opportunities.

Personal Characteristics of the Entrepreneur

     Characteristics that tend to make some people better at recognizing opportunities that others

1. Prior Experince

·               Prior Industry Experience

           · Serveral studies have shown that prior experience in an industry helps an entrepreneur recognize business opportunities.

           ·   By working in an industry, an individual may spot a market niche that is underserved.

           ·   It is also possible that by working in an industry, an individual builds a network of social   contacts who provide insights that lead to recognizing new opportunities.

2. Cognitive Factors

·               Cognitive Factors

           -  Studies have shown that opportunity recognition may be an innate skill or cognitive process.

           -   Some people believe that entrepreneurs have a “sixth sense” that allows them to see opportunities that others miss.

           -   This “sixth sense” is called entrepreneurial alertness, which is formally defined as the ability to notice things without engaging in deliberate search.

3. Social Networks

·               ·  Social Networks

               -  The extent and depth of an individual’s social network affects opportunity recognition. 

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

               -  In one survey of 65 start-ups, half the founders reported that they got their business idea through social contacts.

·               ·   Strong Tie Vs. Weak Tea Relationships

            -  All of us have relationships with other people that are called “ties.”

            -  Strong-tie relationship are characterized by frequent interaction and form between coworkers, friends, and spouses.

            -  Weak-tie relationships are characterized by infrequent interaction and form between casual acquaintances.

·               ·  Result

               ·  It is more likely that an entrepreneur will get new business ideas through weak-tie rather than strong-tie relationships.

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

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.	These 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.

4. Creativity

·         Creativity

-          Creativity 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 down into five stages, as shown on the below

Techniques For Generating Ideas

1. 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.

2. 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.

3. Library and 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.

4. Other Techniques

·               ·  Customer Advisory Boards

                    Some companies set up customer advisory boards that meet regularly to discuss needs, wants, and problems that may lead to new ideas.

·               ·  Day-In-The-Life Research

   A type of anthropological research, where the employees of a company spend a day with a customer.

Encouraging New Ideas

·       ·  Establishing a Focal Point for Ideas

          -  Some firms meet the challenge of encouraging, collecting, and evaluating ideas by designating a specific person to screen and track them—for if its everybody’s job, it may be no one’s responsibility.

          -  Another approach is to establish an idea bank (or vault), which is a physical or digital repository for storing ideas.

·         ·  Encouraging Creativity at the Firm Level

          -  Creativity is the raw material that goes into innovation and should be encouraged at the organizational and individual supervisory level.

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 often overlooked.

·         ·  Step 3

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