HOW TO TEACH OPPORTUNITY
RECOGNITION
Frank Hoy
Paul R. Beswick Professor of Innovation &
Entrepreneurship
Worcester Polytechnic Institute
USA
DEFINITIONS
The Coleman Foundation Definition of
Entrepreneurship
Self-employment through business
ownership which has significant elements of
risk, control and reward
Other Common Definitions
Pursuit of opportunity without regard to
resources controlled
Process of creating value through unique
resource combinations that exploit
opportunity
A Philosophy of Life
•
•
•
•
a way of thinking
a way of acting
lots of different professional contexts
but also a way of approaching personal
issues, family life, community
involvement, etc.
Michael Morris
Entrepreneurship as a Lifetime
Philosophy
Attitude
- Can affect change
- There is a better
way
- Opportunities are
everywhere
- Embrace
innovation,
change & growth
- Failure is learning
Behavior
- Pursuing
opportunity
- Innovating
- Perseverance
- Guerrilla actions
- Risk management
Michael Morris
In One’s Life
- In the family
Professionally
-Entrepreneuring in
different ways over
one’s career life
cycle
- In church
activities
- In community
involvement
-In personal
relationships
- In managing
personal finances
- In dealing with
personal change
Entrepreneurial Alertness
Israel Kirzner:
The ability to see where products or services
do not exist or have emerged as valuable.
Differentiates entrepreneurs from knowledge
experts who does not see the commercial
opportunity stemming from the knowledge.
Defining Opportunity
Joseph Schumpeter:
Opportunities are “new production
functions where production =
1(choice of products, source of
supply, method of productions,
method of organization, and choice
of markets)”
Opportunity Recognition
Robert Baron:
“Opportunity recognition refers to the active,
cognitive process (or processes) through
which individuals conclude that they have
identified the potential to create something
new that has the potential to generate
economic value and that is not currently
being exploited or developed, and is viewed
as desirable in the society in which it
occurs.”
Sources of Opportunities
Peter Drucker:
Opportunity results from change
1.The unexpected – and unexpected
success, failure, or outside event;
2. An incongruity between reality as it
actually is and reality as it is assumed to
be or as it ought to be;
3. Innovation based on process need;
Sources (cont.)
4. Changes in industry structure or market
structure that come about quickly and without
warning;
5. Demographics;
6. Changes in perception, mood, and meaning;
and
7. New knowledge.
The Source
“Incubator” Organizations
Sizing up the Opportunity
Jeff Timmons:
1. What are the driving forces and competitive
vacuums creating the opportunity?
2. For whom is the opportunity desirable?
3. Is there a real need?
4. What are the economics of the opportunity?
5. What are the risk/reward trade-offs?
Educational Approaches
•
•
•
•
•
Textbooks?
Lectures?
Experiential?
Individual versus Team?
Theory versus Practice?
Tactics
•
•
•
•
•
•
Role Models
Teams
Videos
Creativity Exercises
Business Models
Pattern Recognition
One Example
McGrath & MacMillan:
Opportunity Register
•
•
•
•
•
•
•
•
•
Business concept
Related trends
Key data
Obstacles and barriers
Company position
Competition
Sources
Type
Timing
Forget Everything I’ve Said
The Corridor Principle
Questions, Comments, Criticisms?
Frank Hoy
Director, Collaborative for
Entrepreneurship & Innovation
Worcester Polytechnic Institute
100 Institute Road
Worcester, Massachusetts 01609 USA
fhoy@wpi.edu
Books
• Christensen, C. The Innovator’s Dilemma: When New Technologies
Cause Great Firms to Fail. Cambridge, MA: Harvard Business
Review Press, 1997.
• Drucker, P.F. Innovation and Entrepreneurship: Practice and
Principles. New York: Harper & Row, 1985.
• Kirzner, I. Perception, Opportunity, and Profit. Chicago: University of
Chicago Press, 1979.
• Knight, F.H. Risk, Uncertainty and Profit. Mineola, NY: Dover
Publications, 2006 (originally 1921 by Houghton Mifflin).
• Schumpeter, J. The Theory of Economic Development. Cambridge,
MA: Harvard University Press, 1934.
Videos
• Prendismo Collection, www.prendismo.com. Formerly
Cornell University e-clips. Now a subscription service.
• Stanford University, ECorner, e.g. “Linda Rottenberg:
Crazy Is a Compliment,” May 7, 2014.
• TEDGlobal, e.g. “Matt Ridley: When Ideas Have Sex,”
July 2010.
• YouTube, e.g. Elevator Pitch Winners,
https://www.youtube.com/results?search_query=elevator
+pitch+winners.
Articles
Gaglio, C.M., and Katz, J.A. The psychological basis of
opportunity identification: Entrepreneurial alertness. Small
Business Economics, 16, 95-111.
Kaish, S., and Gilad, B. Characteristics of opportunity
search for entrepreneurs versus executives: Sources,
interests, general alertness. Journal of Business Venturing,
6 (1): 45-61, 1991.
Ronstadt, R. The corridor principle. Journal of Business
Venturing, 3: 31-40, 1988.
Stevenson, H.H., and Gumpert, D.E. The heart of
entrepreneurship. Harvard Business Review, 63 (2): 85-94,
1985.
Movies
•
•
•
•
•
•
Bowfinger
Jerry Maguire
Pirates of Silicon Valley
The Full Monty
The Social Network
Tucker
Internet Sites
• Business Opportunities Weblog, www.businessopportunities.biz
• Entrepreneur Magazine, www.entrepreneur.com
• Entrepreneurship.org (Kauffman Foundation),
www.entrepreneurship.org
• Fast Company, www.fastcompany.com
• Startup Professionals,
http://www.startupprofessionals.com/
• Under30CEO, www.under30ceo.com
• U.S. Small Business Administration, www.sba.gov
Your Turn
• Connect with your neighbors
• What approach is comfortable for you?
Why?
• What approaches work for your students?
Why?
• Design the tactics for your students to
improve their abilities to identify and act on
opportunities