RECOGNIZING OPPORTUNITIES AND GENERATING IDEAS
A. The Difference Between Opportunities and Ideas
An opportunity is a favorable set of circumstances that creates a need for a new product, service, or business. An entrepreneur recognizes a problem or an opportunity gap and creates a business to address the problem or fill the identified gap. Identifying a product, service or business opportunity that isn't merely a different version of something already available is difficult. The key to opportunity recognition is to identify a product or service that people need and are willing to buy, not one that entrepreneur wants to make and sell. For an entrepreneur to capitalize on an opportunity, its window of opportunity. The term window opportunity is a metaphor describing the time period in which a firm can realistically enter a new market. As the market grows, firms enter and try to establish a profitable position.
An idea is a though, an impression, or a notion. Many entrepreneurial ventures fail not because the entrepreneurs that launched them didn't work hard, but rather because there was no real opportunity to begin with.
An idea is a though, an impression, or a notion. Many entrepreneurial ventures fail not because the entrepreneurs that launched them didn't work hard, but rather because there was no real opportunity to begin with.
B. Three Ways to Identify Opportunities
- Observing Trends
The most important trends to follow are economic trends, social trends, technological advances, and political action and regulatory changes. Michael Yang, the founder of Become.com, a comparison shopping site, who believes that keen observation skills and a willingness to stay on top of changing environmental trends are key attributes of successful entrepreneur.
- Economic Forces:
A week economy provides business opportunities to start-ups that help consumers and businesses save money. When studying how economic forces affect business opportunities, it is important to evaluate who has money to spend and what they spend it on.
- Social Forces:
An understanding of the impact of social forces on trends and how they affect new product, service, and business ideas is a fundamental piece of the opportunity recognition puzzle. Changes in social trends alter how people and businesses behave and how they set their priorities. Entrepreneurs have launched businesses for the purpose of starting social networks that cater to specific niches.
- Technological Advances:
Advances in technology frequently dovetail with economic and social changes to create opportunities. Technological advances also provide opportunities to help people perform everyday tasks in better or more convenient ways. For example, OpenTable.com is a website that allows users to make restaurant reservations online and now covers most of the United States. Another aspect of technological advances is that once a technology is created, products often emerge to advance it.
- Political Action and Regulatory Changes:
Political action and regulatory changes also provide the basis for business ideas. Political change also engenders new business and product opportunities. For example, global political instability and the threat of terrorism have resulted in many firms becoming more security-conscious. these companies need new products and services to protect their customers and employees.
- Solving Problem
Problems can be recognized by observing the challenges that people
encounter in their daily lives and through more simple means, such as
intuition, serendipity, or chance.
"Every problem is brilliantly disguised opportunity" -John Gardner-
Many companies have been started by people who have experienced a problem
in their own lives, and then realized that the solution to the problem
represented a business opportunity. Advances in technology often result in
problems for people who can't use the technology in the way it is sold to the
masses. For example, some older people find traditional cell phones hard to
use. To solve these problems, GreatCall, Inc. is producing a cell phone called
the Jitterbug, which is designed specifically for older users.
If you're having difficulty solving a particular problem, one technique that is
useful is to find an instance where a similar problem was solved and then apply
that solution to your problem. Some business ideas are gleaned by recognizing
problems that are associated with emerging trends.
- Finding Gaps in the Marketplace
Gaps in marketplace are the third source of business opportunities. Product
gaps in the marketplace represent potentially viable business opportunities. A
common way that gaps in the marketplace are recognized is when people become
frustrated because they can't find a product or service that they need and
recognize that other people feel the same way.
A related technique for generating new business opportunities is to take an
existing product or service and create a new category by targeting a completely
different target market. This approach essentially involves creating a gap and
filling it.
The most important trends to follow are economic trends, social trends, technological advances, and political action and regulatory changes. Michael Yang, the founder of Become.com, a comparison shopping site, who believes that keen observation skills and a willingness to stay on top of changing environmental trends are key attributes of successful entrepreneur.
- Economic Forces:
A week economy provides business opportunities to start-ups that help consumers and businesses save money. When studying how economic forces affect business opportunities, it is important to evaluate who has money to spend and what they spend it on.
- Social Forces:
An understanding of the impact of social forces on trends and how they affect new product, service, and business ideas is a fundamental piece of the opportunity recognition puzzle. Changes in social trends alter how people and businesses behave and how they set their priorities. Entrepreneurs have launched businesses for the purpose of starting social networks that cater to specific niches.
- Technological Advances:
Advances in technology frequently dovetail with economic and social changes to create opportunities. Technological advances also provide opportunities to help people perform everyday tasks in better or more convenient ways. For example, OpenTable.com is a website that allows users to make restaurant reservations online and now covers most of the United States. Another aspect of technological advances is that once a technology is created, products often emerge to advance it.
- Political Action and Regulatory Changes:
Political action and regulatory changes also provide the basis for business ideas. Political change also engenders new business and product opportunities. For example, global political instability and the threat of terrorism have resulted in many firms becoming more security-conscious. these companies need new products and services to protect their customers and employees.
- Social Forces:
An understanding of the impact of social forces on trends and how they affect new product, service, and business ideas is a fundamental piece of the opportunity recognition puzzle. Changes in social trends alter how people and businesses behave and how they set their priorities. Entrepreneurs have launched businesses for the purpose of starting social networks that cater to specific niches.
- Technological Advances:
Advances in technology frequently dovetail with economic and social changes to create opportunities. Technological advances also provide opportunities to help people perform everyday tasks in better or more convenient ways. For example, OpenTable.com is a website that allows users to make restaurant reservations online and now covers most of the United States. Another aspect of technological advances is that once a technology is created, products often emerge to advance it.
- Political Action and Regulatory Changes:
Political action and regulatory changes also provide the basis for business ideas. Political change also engenders new business and product opportunities. For example, global political instability and the threat of terrorism have resulted in many firms becoming more security-conscious. these companies need new products and services to protect their customers and employees.
Problems can be recognized by observing the challenges that people
encounter in their daily lives and through more simple means, such as
intuition, serendipity, or chance.
"Every problem is brilliantly disguised opportunity" -John Gardner-
Many companies have been started by people who have experienced a problem
in their own lives, and then realized that the solution to the problem
represented a business opportunity. Advances in technology often result in
problems for people who can't use the technology in the way it is sold to the
masses. For example, some older people find traditional cell phones hard to
use. To solve these problems, GreatCall, Inc. is producing a cell phone called
the Jitterbug, which is designed specifically for older users.
If you're having difficulty solving a particular problem, one technique that is
useful is to find an instance where a similar problem was solved and then apply
that solution to your problem. Some business ideas are gleaned by recognizing
problems that are associated with emerging trends.
Gaps in marketplace are the third source of business opportunities. Product
gaps in the marketplace represent potentially viable business opportunities. A
common way that gaps in the marketplace are recognized is when people become
frustrated because they can't find a product or service that they need and
recognize that other people feel the same way.
A related technique for generating new business opportunities is to take an
existing product or service and create a new category by targeting a completely
different target market. This approach essentially involves creating a gap and
filling it.
C. Personal Characteristics of the Entrepreneur
- Prior
ExperiencePrior experience in an industry helps entrepreneurs recognize business opportunities. By working in an industry, it is possible that while working in a particular area, an individual builds a network of social contacts in that industry that may provide insights that lead to opportunities.Although prior experience is important in an industry in most instances, there is anecdotal suggesting that people outside an industry can sometimes enter it with a new set of eyes, and as a result innovate in ways that people with prior experience might find difficult.
- Cognitive Factors
Opportunity recognition may be an innate skill or a cognitive process. There are some who think 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.
Alertness is largely a learned skill, and people who have more knowledge of an area tend to be more alert to opportunities in that area than others. - Social Networks
People who build a substantial network of social and professional contacts will be exposed to more opportunities and ideas than people with spares networks. The researchers found that network entrepreneurs identified significantly more opportunities than solo entrepreneurs, but were less likely to describe themselves as being particularly alert or creative.
Relationships with other people are called ties. An entrepreneur will get a new business idea through a weak-tie than a strong-tie relationship, because strong-tie relationships, which typically form between like-minded individuals, tend to reinforce insights and ideas the individuals already have. - Creativity
Creativity is the process of generating a novel or useful data. Teams of entrepreneurs working within a company are sources of creativity for their firm.
5 steps to generating creative ideas:
- Preparation:
is the background, experience, and knowledge that an entrepreneur brings to the opportunity recognition process.
- Incubation:
is the stage during which a person considers an idea or thinks about a problem.
- Insight:
is the flash of recognition when the solution to a problem is seen or an idea is born.
- Evaluation:
is the stage of the creative process during which an idea is subjected to scrutiny and analyzed for its viability.
- Elaboration:
is the stage during which the creative idea is put into a final form. In the case of a new business, this is the point at which a business plan is written.
D. Techniques for
Generating Ideas
1. Brainstorming
In general, brainstorming is simply the process of generating several ideas
about a specific topic. In a formal brainstorming session, the leader of the
group asks the participants to share their ideas. One person shares an idea,
another person reacts to it, another person reacts to the reaction, and so
on.
Brainstorming session dedicated to generating new business ideas are often
less formal. An individual's imaginations the only limiting factor to
brainstorming. Asking student to complete a bug report is a popular techniques that
is used in classroom to teach brainstorming.
2. Focus Group
A focus group is a gathering of 5 to 10 people who are selected because their relationship to the issue being discussed. Focus groups usually work best as a follow-up to brainstorming, when the general idea for a business has been formulated. Usually, focus groups are conducted by trained moderators. The moderator's primary goals are to keep the group "focused" and to generate lively discussion. Much of the effectiveness of a focus group session depends on the moderator's ability to ask questions and keep the discussion on track.
A focus group is a gathering of 5 to 10 people who are selected because their relationship to the issue being discussed. Focus groups usually work best as a follow-up to brainstorming, when the general idea for a business has been formulated. Usually, focus groups are conducted by trained moderators. The moderator's primary goals are to keep the group "focused" and to generate lively discussion. Much of the effectiveness of a focus group session depends on the moderator's ability to ask questions and keep the discussion on track.
3. Library and Internet
Research
Libraries are often an underutilized source of information for generating business ideas. The best approach to utilizing a library is to discuss your general area of interest with a reference librarian.
Internet research is also important. If you are starting from scratch, simply typing "new business ideas" into Google will produce links to newspaper and magazine articles about the "hottest" and "latest" new business ideas.
Libraries are often an underutilized source of information for generating business ideas. The best approach to utilizing a library is to discuss your general area of interest with a reference librarian.
Internet research is also important. If you are starting from scratch, simply typing "new business ideas" into Google will produce links to newspaper and magazine articles about the "hottest" and "latest" new business ideas.
4. Other Techniques
Some companies set up customer advisory boards that meet regularly to discuss needs, wants, and problems that may lead to new ideas. Other companies conduct varying forms of anthropological research, such as day-in-the-life research. The company routinely sends teams of testers to the homes and businesses of its users to see how its products are working and to seek insights for new product ideas.
Some companies set up customer advisory boards that meet regularly to discuss needs, wants, and problems that may lead to new ideas. Other companies conduct varying forms of anthropological research, such as day-in-the-life research. The company routinely sends teams of testers to the homes and businesses of its users to see how its products are working and to seek insights for new product ideas.
E. Encouraging the
Development of New Ideas
- Establishing
a Focal Point for Ideas
Idea bank is a physical or digital repository for storing ideas. An example of an idea bank would be a password-protected location on a firm's intranet that is available only to qualified employees.
- Encouraging
Creativity at the Firm Level
Creativity is the raw material that goes into innovation. Creativity is typically thought of as an individual attribute, it can be encouraged or discouraged at the firm level. The extent to which an organization encourages and rewards creativity affects the creative output of its employees.
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