CHAPTER
3
Creating
Opportunity
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CHAPTER OBJECTIVES
• Use design thinking approaches to understand
opportunity.
• Understand the nature of creativity and the
creativity process.
• Learn how to develop creative skills.
• Experience how to find and frame problems.
• Understand the innovation process and the
types of innovation.
© 2020 Cengage Learning®. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
CREATING OPPORTUNITY
• Ideas are a commodity; everyone has them.
• What distinguishes entrepreneurs from others who
have ideas is that they know how to extract value
from those ideas and turn them into opportunities
that have commercial potential.
• Fundamentally, that is the difference between an idea and
an opportunity.
• An opportunity can turn into a business.
© 2020 Cengage Learning®. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
DESIGN THINKING (slide 1 of 3)
• Design thinking is a process and approach
that looks at the world from the customer’s
perspective.
• It can be thought of as groups of related
activities that move from inspiration (creativity)
to ideation (opportunity development) to
implementation (innovation and
commercialization).
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FIGURE 3.1
Entrepreneurship and the Elements of
Design Thinking
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DESIGN THINKING (slide 2 of 3)
• In its most simplistic definition, design thinking
uses techniques and tools to:
1.
2.
3.
4.
Define a problem.
Create and consider multiple options.
Refine those options through iteration.
Settle on a winning solution.
© 2020 Cengage Learning®. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
DESIGN THINKING (slide 3 of 3)
• At the heart of design thinking is a deep
understanding, or empathy, with what people
(customers) want.
• That level of empathy requires entrepreneurs to embed
themselves in the world of the customers they are trying to
serve so they can see needs from the customer’s perspective.
• A number of characteristics other than empathy are
associated with design thinkers, including:
•
•
•
•
Integrative thinking.
Optimism.
Experimentation.
Collaboration.
© 2020 Cengage Learning®. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
3.1
CREATIVITY AND INSPIRATION
(slide 1 of 2)
• Creativity, the ability to use your imagination to come
up with original ideas, enables entrepreneurs to
differentiate their businesses from competitors so that
customers will notice them.
• Creativity is the basis for invention, which is
discovering something that did not exist previously,
and innovation, which is finding a new way to do
something or improving on an existing product or
service.
• Creativity is also fundamental to problem-solving.
© 2020 Cengage Learning®. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
3.1
CREATIVITY AND INSPIRATION
(slide 2 of 2)
• The creative process is difficult to study because it generally deals
with a person’s internal thought processes, which are often not
apparent even to the person being studied.
• One of the earliest descriptions of the creative process came from
Wallas, who identified four stages in the creative process:
1.
2.
3.
4.
Preparation – looking at a problem from a variety of perspectives.
Incubation – letting the problem lie in the subconscious for a time.
Illumination – the discovery of a solution.
Verification – bringing the idea to an outcome.
• A more recent and very insightful view of the creative process
comes from Norman Seeff, who identified seven stages that
individuals or teams go through as they move from the beginnings
of an idea to the fulfillment or final outcome.
© 2020 Cengage Learning®. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
FIGURE 3.2
The Seven Stages of
the Creative Process
Source: Adapted from Norman Seeff Productions.
© 2020 Cengage Learning®. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
3.1a Challenges to Creativity (slide 1 of 2)
• Creativity tends to occur naturally if one lets it,
but entrepreneurs often unintentionally erect
roadblocks that prevent them from following
the creative path.
• These roadblocks are generally of two main types:
1. Environmental.
2. Personal.
© 2020 Cengage Learning®. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
3.1a Challenges to Creativity (slide 2 of 2)
Environmental Challenges
• One of the biggest contributors to lowered productivity is
multitasking.
Personal Challenges
• The need for ideas to be acceptable or seem rational to others is
a significant roadblock for many entrepreneurs.
• To increase your confidence as a creative individual, take the
following actions:
• Set manageable goals that create small wins when they’re achieved.
• Spend time learning everything you can about your new business
idea to reduce some of the risk of entrepreneurship and build
confidence.
• Learn when to stop improving on an idea or planning a business and
start moving into action mode.
© 2020 Cengage Learning®. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
TABLE 3.1
Developing Creative Skills (slide 1 of 2)
Design a creative
environment.
Minimize distractions.
Spend time in quiet contemplation—make thinking a
habit.
Pay attention to where you are when you feel creative.
Move out of your comfort zone to try new things.
Log ideas.
Maintain a journal of thoughts and ideas.
Go back to your journal periodically for inspiration.
Put the familiar in a
new context.
Look for opportunity in the places you frequent.
Pick a product and come up with new applications for it.
Identify a negative event (i.e., economic downturn) and
brainstorm why it may be a positive.
© 2020 Cengage Learning®. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
TABLE 3.1
Developing Creative Skills (slide 2 of 2)
Take advantage of
your personal
network.
Who in your network can connect you with people
doing very different things from what you’re doing?
Visualize something.
Try visualizing what the world might look like in 50
years based on what you know today but not limiting
what is possible.
Do you have a diverse network of people who can
connect you to new communities of people?
Entrepreneurs need networks for every aspect of their
businesses.
Visualize where a technology like mobile phone or
social networking is going and what that might look like
in the future.
© 2020 Cengage Learning®. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
3.1b Tools for Creativity and Inspiration
(slide 1 of 3)
• When generating new ideas, follow these rules
of thumb:
• If you’re in a group, start by generating ideas
individually first.
• Initially, go for quantity of ideas over quality of
ideas.
• Capture every idea no matter how outlandish it may
seem on the surface.
• Piggyback on ideas by taking several ideas and
creating new combinations and modifications, but
do this only after first generating ideas at the
individual level.
© 2020 Cengage Learning®. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
3.1b Tools for Creativity and Inspiration
(slide 2 of 3)
Brainwriting
• Brainwriting is a form of brainstorming that is
often used to make sure that everyone on the
team feels comfortable offering up ideas.
• There are a number of ways the exercise can
be accomplished, but essentially, it’s about
getting ideas down on Post-it® notes and then
organizing the ideas and creating themes,
followed by putting together ideas that don’t
normally go together.
© 2020 Cengage Learning®. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
3.1b Tools for Creativity and Inspiration
(slide 3 of 3)
Visualization
• Visualization is being able to paint a picture of
what you’re seeing through graphics and
words that also reveal patterns in the masses
of ideas you generate.
Journey Mapping
• Journey mapping depicts all of the touch points
a company has with a customer from
purchases to end of product life.
© 2020 Cengage Learning®. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
FIGURE 3.3
The Journey Map
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3.2 OPPORTUNITY/IDEATION
(slide 1 of 3)
• Opportunity is the intersection of an idea and a
customer.
• Research on entrepreneurial opportunity has
identified two fundamental theories to explain
how opportunities happen:
1. Discovery theory.
2. Creation theory.
© 2020 Cengage Learning®. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
3.2 OPPORTUNITY/IDEATION
(slide 2 of 3)
• Discovery theory sees opportunity arising from
shifts in external factors in the market or
industry, such as regulation, technological
changes, and changes in customer preferences.
• Entrepreneurs tend to be better at discovering or
recognizing opportunity when they see it due to
alertness or awareness.
• Alertness is a combination of a number of attributes, such
as:
• Risk preference (how much risk you can tolerate).
• Cognitive differences (how you learn versus how others learn).
• Information asymmetries (what the entrepreneur knows
that others do not).
© 2020 Cengage Learning®. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
3.2 OPPORTUNITY/IDEATION
(slide 3 of 3)
• With creation theory, entrepreneurs create
opportunities via their actions, reactions, and
experiments around new products, services,
and business models.
• Creation theory allows for the fact that there are no
“seeds” for opportunities in the industry/market
environment.
• If there are seeds, they lie within the entrepreneur, so
these types of opportunities do not exist outside the mind
of the entrepreneur.
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3.3 FIND AND FRAME THE PROBLEM
• Once you have generated a number of ideas or
problems, there is a natural tendency to want to kill the
“crazy” ideas quickly and rush to judgment on the best
ideas.
• Both of these actions will ensure that the right problem gets
lost in the scramble.
• To avoid this mistake, try the following techniques:
• Use the principle of affirmative judgment, which is simply
looking for the strengths or positive aspects of a problem first.
• Use a set of predefined criteria to establish standards for the
selection of the best problem definition.
• Don’t come to conclusions too quickly, especially if they are
based solely on your personal experience.
© 2020 Cengage Learning®. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
3.3a Restate the Problem
• Two simple words, “how” and “why,” can often
break the logjam created by a problem
statement that may be too narrow or too broad.
• An effective problem statement has four
components:
1. A “how” question.
2. An answer to who is responsible for dealing with
the problem.
3. An action verb, which represents the positive
course of action anticipated.
4. The target or desired outcome.
© 2020 Cengage Learning®. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
TABLE 3.2
Problem Statement: How can we sell
more mobile ultrasound devices?
Why do we want to sell more MUDs? Because our overall MUD sales are
down.
Why are our MUD sales down?
Because our customers aren’t buying.
Why aren’t our customers buying?
Because we have too much
competition.
Why do we have too much
competition?
Because we’re not introducing anything
new.
Why aren’t we introducing anything
new?
Because we’re behind in our product
development.
Final Problem Statement: “How can we speed up our product development
process?
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3.3b Identify Attributes
• Attribute identification is a simple technique
that has the entrepreneur breaking down a
problem into its various elements and then
generating new approaches or modifications
for each element.
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3.3c Force Fitting
• Some of the best ideas come from connecting
things that normally don’t go together.
• Force fitting involves taking a random object,
thinking about its characteristics, and then
forcing those characteristics to apply to the
problem statement you’re dealing with.
© 2020 Cengage Learning®. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
3.4 DEVELOP SOLUTIONS
(slide 1 of 2)
• Identifying the right problem is the most
challenging aspect of the problem-solving
process because it’s important to get the
problem right from the start so that time and
money won’t be wasted on the wrong solution.
• The same techniques used to generate and
focus ideas related to a problem can be
employed to generate and focus potential
solutions.
© 2020 Cengage Learning®. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
3.4 DEVELOP SOLUTIONS
(slide 2 of 2)
• Criteria often play a more critical role in the
identification of solutions because normally there are
constraints in the form of costs, skills, and timeframes
that must be taken into consideration.
• Criteria can be explicit and more formal such as time limits,
budget constraints, and the like.
• They can also be implicit: criteria that may not have been
specifically identified but that are known to be part of what
must be considered in any decision about a solution—such
things as intuition, team culture, preferences, prejudices, and
perspectives often based on previous experience.
© 2020 Cengage Learning®. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
INNOVATION AND
3.5
COMMERCIALIZATION
• The process of innovation extracts value from
an idea—value that someone will pay for.
• In the 1930s, economist Joseph Schumpeter
identified five categories of innovation that are
still relevant today:
1. A new product or substantial change in an existing
product.
2. A new process.
3. A new market.
4. New sources of supply.
5. Changes in industrial organization.
© 2020 Cengage Learning®. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
3.5a Commercialization (slide 1 of 2)
• Commercialization is the process that moves an innovation from
the laboratory to the market by executing on a business strategy.
Research
• Any commercialization process starts with research.
• Various things you must conduct research on include:
• The industry.
• The market you’re going after.
• Any intellectual property protections or regulatory requirements you
will have to meet.
• The customer.
• The business model.
• Business design.
© 2020 Cengage Learning®. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
3.5a Commercialization (slide 2 of 2)
Outcomes
• The research you do will inform the decisions you
make about your business, and those decisions will
drive your startup capital requirements as well as
revenue sources and cost drivers.
Execution
• Your research will guide two critical decisions:
1. The makeup of the management team.
2. Market timing.
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FIGURE 3.4
The Innovation and
Commercialization Process
© 2020 Cengage Learning®. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
3.5b Incremental versus
Disruptive Innovation
• In general, innovations can be categorized into
two broad groups:
1. Incremental innovations.
• Incremental innovation improves on an existing
technological or product base, often to create
differentiation in the market.
• Example: The Apple iPad.
2. Disruptive or radical innovations.
• Disruptive or radical innovations obsolete previous
technology or ways of doing things.
• Examples: The Internet, the birth control pill, and artificial
intelligence.
© 2020 Cengage Learning®. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
TABLE 3.3
Some Sources of
Innovation (slide 1 of 2)
Customers
Needs and suggestions for improvements or new
products and services.
Online News Sources
and Magazines
Reveal trends and needs in the market.
Observation
Sitting in an airport or other highly trafficked area and
observing the challenges people face.
Demographic shifts
The increasing Latino population or people moving to
the Sun Belt states.
© 2020 Cengage Learning®. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
TABLE 3.3
Some Sources of
Innovation (slide 2 of 2)
New government
laws and regulations
The new federal tax laws and the need for businesses
and individuals to understand and comply with their
requirements.
Emerging industries
Mobile and wearable devices, autonomous vehicles,
3D printing.
Trends
The Internet of Things (IoT), cybersecurity, blockchain,
data analytics.
Business operations
New processes that reduce costs and speed up
operations.
© 2020 Cengage Learning®. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.