Creativity

BS-4452

Entrepreneurship

&

SmallBusinessManagement

Bülent Şenver bsenver@turklider.org

What is an Entrepreneur?

One who creates a new business in the face of risk and uncertainty for the purpose of achieving profit and growth by identifying opportunities and assembling the necessary resources to capitalize on them.

Ch. 1: The Foundations of Entrepreneurship

1 - 2

Characteristics of Entrepreneurs

• Desire for responsibility

• Preference for moderate levels of risk – risk eliminators

• Confidence in their ability to succeed

• Determination

• Desire for immediate feedback

• High level of energy

• Future orientation – opportunity, necessity, and serial entrepreneurs

• Skilled at organizing

• Value achievement over money


1 - 3

Characteristics of Entrepreneurs

• Entrepreneurs tend to exhibit:

► A high degree of commitment

► Tolerance for ambiguity

► Flexibility

► A willingness to work hard

► Tenacity


1 - 4

Benefits of Entrepreneurship

The opportunity to:

► Create your own destiny

► Make a difference

► Reach your full potential

► Reap impressive profits

► Contribute to society and to be recognized for your efforts

► Do what you enjoy and to have fun at it


1 - 5

Drawbacks of Entrepreneurship

 Uncertainty of income

 Risk of losing your entire investment

 Long hours and hard work

 Lower quality of life until the business gets established

 High levels of stress

 Complete responsibility

 Discouragement


1 - 6

Avoiding the Pitfalls of

Small Business Failure

• Know your business in depth

• Develop a solid business plan

• Manage financial resources

• Understand financial statements

• Learn to manage people effectively

• Set your business apart from the competition

• Maintain a positive attitude


1 - 7

Putting Failure Into Perspective

• Entrepreneurs are not paralyzed by the prospect of failure.

• Failure – a natural part of the creative process.

• Successful entrepreneurs learn to fail

intelligently.


1 - 8

2 - 9

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.

Ch. 2: Inside the Entrepreneurial Mind

2 - 10

Entrepreneurship

• Entrepreneurship – the result of a disciplined, systematic process of applying creativity and

innovation to the needs and opportunities in the marketplace.

• Entrepreneurs connect their creative ideas with the purposeful action and structure of a

business.


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

• On average, new products account for 40% of companies’ sales!!

• Creativity is an important source of building a competitive advantage.

2 - 11 Ch. 2: Inside the Entrepreneurial Mind

Right-Brained,

Creative Thinkers

• Always ask: “Is there a better way?”

• Challenge custom, routine, and tradition.

• Are reflective.

• Are prolific thinkers.

• Play mental games .


Right-Brained,

Creative 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.


Right-Brained,

Creative Thinkers

• Understand that failure is a natural part of the creative process.

• Relate seemingly unrelated ideas to a problem.

• Have “helicopter skills.”


Left-Brained or

Right-Brained?

Entrepreneurship requires both left-and rightbrained thinking.

– Right-brained thinking draws on divergent reasoning, the ability to create a multitude of original, diverse ideas.

– Left-brained thinking counts on convergent reasoning, the ability to evaluate multiple ideas and to choose the best solution to a problem.


2 - 16

Barriers to Creativity

• Searching for the one “right” answer

• Focusing on “being logical”

• Blindly following the rules

• Constantly being practical

• Viewing play as frivolous


2 - 17

Barriers to Creativity

• Becoming overly specialized

• Avoiding ambiguity

• Fearing looking foolish

• Fearing mistakes and failure

• Believing that “I’m not creative”


Questions to Spur the Imagination

• Is there a new way to do it?

• Can you borrow or adapt it?

• Can you give it a new twist?

• Do you merely need more of the same?

• Do you need less of the same?



(continued)

• Is there a substitute?

• Can you rearrange the parts?

• What if you do just the opposite?

• Can you combine ideas?

• Can you put it to other uses?



(continued)

• What else could you make from this?

• Are there other markets for it?

• Can you reverse it?

• Can you eliminate it?

• Can you put it to another use?

• What idea seems impossible, but if executed, would revolutionize your business?

Ch. 2: Inside the Entrepreneurial Mind 2 - 20

Tips for Enhancing Organizational

Creativity

• Include creativity as a core company value

• Embrace diversity

• Expect creativity

• Expect and tolerate failure

• Create an organizational structure that nourishes creativity



Creativity

(continued)

• Encourage curiosity

• Create a change of scenery periodically

• View problems as opportunities

• Provide creativity training

• Provide support

• Develop a procedure for capturing ideas



Creativity

Continued

• Talk and interact with customers

• Reward creativity

• Model creative behavior

• Monitor emerging trends and identify ways your company can capitalize on them

• Hire for creativity



Creativity

Continued

• View problems as opportunities

• Incorporate fun into the work environment

• Design a work space that encourages creativity

• Look for uses for your company’s products or services in other markets


Tips for Enhancing

Individual Creativity

• Allow yourself to be creative

• Give your mind fresh input every day

• Observe the products and services of other companies, especially those in completely different markets

• Recognize the creative power of mistakes

• Notice what is missing


2 - 26

Tips for Enhancing


• Keep a journal to record your thoughts and ideas

• Listen to other people

• Listen to customers

• Talk to a child

• Do something ordinary in an unusual way


2 - 27

Tips for Enhancing


• Keep a toy box in your office

• Do not throw away seeming “bad” ideas

• Take some time off

• Be persistent


2 - 28

Tips for Enhancing


Continued

• Forget the “rules”

• Take note of your “pain points”

• Read books on stimulating creativity or take a class on creativity

• Travel - and observe

• Watch a movie


Preparation

The Creative Process

Investigation Transformation

Incubation Illumination Verification

Implementation


Preparation




Implementation


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.

– Develop your listening skills.


Preparation

Get your mind ready for creative thinking.

– Join professional or trade associations and attend their meetings.

– Eliminate creative distractions.

– Take time to discuss your ideas with other people.


Preparation




Implementation


Preparation




Implementation


Transformation

• Involves viewing both the similarities and the differences among the information collected.

• 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.


Transformation

• How can you transform information into purposeful ideas?

– Grasp the “big picture” by looking for patterns that emerge.

– Rearrange the elements of the situation.

– Use synectics, taking two seeming nonsensical ideas and combining them.

– Remember that several approaches can be successful. If one fails, jump to another.


Preparation




Implementation


Incubation



Allow your subconscious to reflect on the information collected.

– Walk away from the situation.

– Take the time to daydream.

– Relax – and play – regularly.

– Dream about the problem or opportunity.

– Work on the problem in a different environment.


Preparation




Implementation


Preparation




Implementation


Verification



Validate the idea as accurate and useful.

– Is it really a better solution?

– Will it work?

– Is there a need for it?

– If so, what is the best application of this idea in the marketplace?

– Does this product or service fit into our core competencies?

– How much will it cost to produce or to provide?

– Can we sell it at a reasonable price that will produce a profit?


Preparation




Implementation


2 - 43

Techniques for Improving the Creative Process

Brainstorming:

The goal is to create a large quantity of novel and imaginative ideas.


Brainstorming Guidelines

• Keep the group small – “Two pizza rule.”

• Make the group as diverse as possible.

• Emphasize that company rank is irrelevant.

• Have a well-defined problem, but don’t reveal it ahead of time.

• Limit the session to 40 to 60 minutes.

• Take a field trip.



• Throw logic out the window.

• Encourage all ideas from the team.

• Shoot for quantity of ideas over quality of ideas.

• Forbid criticism.

• Encourage idea “hitch-hiking.”

• Dare to imagine the unreasonable.

• Appoint a recorder.



• Get people focused on the issue by inviting participants to submit at least three ideas by email before the session takes place.

• Encourage aerobic exercise before the session.

• Use a seating pattern that encourages interaction.


Techniques for Improving the Creative

Process

• Brainstorming

– The goal is to create a large quantity of novel and imaginative ideas.

• Mind-mapping

– A graphical technique that encourages thinking on both sides of the brain, visually displays relationships among ideas, and improves the ability to see a problem from many sides.


The Mind-Mapping Process

• Start by writing down or sketching a picture symbolizing the problem or area of focus in the center of a blank page.

• Work as quickly as possible and write down every idea that comes into your mind for 20 minutes, connecting each to the central picture or words with a line.

• Don’t try to force creativity.

• After a brief rest, begin to integrate the ideas into a mind map.


Techniques for Improving the Creative

Process

 Force Field Analysis

 A useful technique for evaluating the forces that support and oppose a proposed change.

 Three columns:

 Center: Problem to be addressed

 Left: Driving forces

 Right: Restraining forces

 Score each force (-1 to +4) and add them.


Sample Force Field Analysis


2 - 51

Protecting Your Ideas

• Patent – a grant from the Patent and

Trademark Office to the inventor of product, giving the exclusive right to make, use, or sell the invention for 20 years from the date of filing the patent application.


The Six Steps to a Patent

6. File the patent application

5. Complete the patent application

4. Study search results

3. Search existing patents

2. Document the device

2 - 52

1. Establish the invention’s novelty



• Trademark – any distinctive word, symbol, design, name, logo, slogan, or trade dress a company uses to identify the origin of a product or to distinguish it from other goods on the market.

• Servicemark – the same as a trademark except that it identifies the source of a service rather than a product.



• Copyright – an exclusive right that protects the creators of original works of authorship such as literary, dramatic, musical, and artistic works.

• Copyrighted material is denoted by the symbol ©.


Protecting Intellectual Property

• The primary weapon an entrepreneur has to protect patents, trademarks, and copyrights is the legal system.

• Before engaging in a legal battle consider:

► Can the opponent afford to pay if you win?

► Do you expect to win enough to cover your legal costs?

► Can you afford the loss of time, money, and privacy involved?


Characteristics of Patents, Trademarks, and Copyrights

Ch. 2: Inside the Entrepreneurial Mind 2 - 56

Conclusion

• The creative process is a tenant of the entrepreneurial experience.

• Success, and even survival itself, requires entrepreneurs to tap their creativity.

• The seven steps of the creative process transform an idea into a business reality.

• Creativity results in value, and value provides a competitive advantage.

• Entrepreneurs protect their creative ideas with patents, trademarks, servicemarks, and copyrights to sustain a competitive edge.

2 - 57


3 - 58

A Major Shift . . .

From financial capital to intellectual capital

– Human

– Structural

– Customer

Ch. 3: Business Model and Strategic Plan

Strategic Management

• Is crucial to building a successful business.

• Involves developing a game plan to guide a company as it strives to accomplish its mission, goals, and objectives, and to keep it on its desired course.

3 - 59 Ch. 3: Business Model and Strategic Plan

Strategic Management and

Competitive Advantage

• Developing a strategic plan is crucial to creating a sustainable competitive advantage, the aggregation of factors that sets a company apart from its competitors and gives it a unique position in the market that is superior to its competition.

• Example: Whole Foods


Building a Competitive Advantage

• Consider five aspects of a small company:

1.

Products they sell

2.

Service they provide

3.

Pricing they offer

4.

Way they sell

5.

Values to which they are committed


Key: Core Competencies

• Unique set of capabilities a company develops in key areas, such as superior quality, customer service, innovation, team-building, flexibility, responsiveness, and others that allow it to vault past competitors.

– They are what a company does best.

– Best to rely on a natural advantage (often linked to a company’s “smallness”).

• Example: Pizza Fusion


3 - 63

Building a Sustainable

Competitive Advantage

Capabilities

Lessons learned

Core competencies

Sustainable competitive advantage

Superior value for customers

Skills


3 - 64

Strategic Management Process

Step 1 Develop a vision and translate it into a mission statement

Step 2 Assess strengths and weaknesses

Step 3 Scan environment for opportunities and threats

Step 4 Identify key success factors


Strategic Management Process

(continued)

Step 5 Analyze competition

Step 6 Create goals & objectives

Step 7 Formulate strategies

Step 8 Translate plans into actions

Step 9 Establish accurate controls

Ch. 3: Business Model and Strategic Plan 3 - 65

Step 1: Develop a Vision and

Create a Mission Statement

• Vision – the result of an entrepreneur’s dream of something that does not exist yet and the ability to paint a compelling picture of that dream for everyone to see.

• A clearly defined vision:

► Provides direction

► Determines decisions

► Inspires people

► Allows for perseverance in the face of adversity


Step 1: Develop a Vision and

Create a Mission Statement

• Addresses question: “What business are we in?”

• The mission is a written expression of how the company will reflect an entrepreneur’s values, beliefs, and vision – more than just “making money.”

• Serves as a “strategic compass.”

• Examples: Chick-fil-A, Google


3 - 68

Step 1: Develop a Vision and

Create a Mission Statement

• Elements of a mission statement:

– Purpose of the company: What are we in business to accomplish?

– Business we are in: How are we going to accomplish that purpose?

– Values of the company: What principles and beliefs form the foundation of the way we do business?


Step 2: Assess Company Strengths and Weaknesses

• Strengths

– Positive internal factors a company can draw on to accomplish its mission, goals, and objectives.

• Weaknesses

– Negative internal factors that inhibit a company’s ability to accomplish its mission, goals, and objectives.


3 - 70

Step 3: Scan for Opportunities and Threats

• Opportunities

– Positive external factors the company can exploit to accomplish its mission, goals, and objectives.

• Threats

– Negative external factors that inhibit the firm's ability to accomplish its mission, goals, and objectives.


Competitive

The Power of External

Market Forces

Technological

Economic

3 - 71

Political and

Regulatory


Social and

Demographic

Identifying and Managing Threats


Step 4: Identify

Key Success Factors

 Key success factors (KSFs): factors that determine the relative success of market participants.

 The keys to unlocking the secrets of competing successfully in a particular market segment.

 Example: Five Guys Burgers and Fries


Identifying Key Success Factors

2.

3.

4.

5.

1.

List the skills, characteristics, and core competencies that your business must possess to be successful in its market segment.

Key Success Factor How Your Company Rates

Low 1 2 3 4 5 6 7 8 9 10 High

Low 1 2 3 4 5 6 7 8 9 10 High

Low 1 2 3 4 5 6 7 8 9 10 High

Low 1 2 3 4 5 6 7 8 9 10 High

Low 1 2 3 4 5 6 7 8 9 10 High

Conclusions:


Step 5: Analyze Competitors

• NFIB study: Small business owners believe they operate in a highly competitive environment and the level of competition is increasing.

• Yet, 97 percent of all U.S. businesses do not systematically track the progress of their key competitors.


Small Business Success Index


3 - 77

Competitor Analysis

• Direct competitors

– Offer the same products and services

– Customers often compare prices, features and deals among these competitors when they shop

• Significant competitors

– Offer some of the same or similar products or services

– Product or service lines overlap but not completely

• Indirect competitors

– Offer same or similar products in only a small number of areas


3 - 78


Analyzing key competitors allows an entrepreneur to:

► Avoid surprises from existing competitors’ new strategies and tactics.

► Identify potential new competitors and the threats they pose.

► Improve reaction time to competitors’ actions.

► Anticipate rivals’ next strategic moves.



Techniques do not require unethical behavior:

► Monitor industry and trade publications.

► Talk to customers and suppliers.

► Debrief employees, especially sales representatives and purchasing agents.

► Attend trade shows and conferences and study competitors’ sales literature.

► Watch for competitor’s employment ads.

► Conduct patent searches for patents competitors have filed.

► Get EPA reports for the factories of competing manufacturers.

► Monitor direct competitors via social media



(continued)

Techniques do not require unethical behavior:

► Learn about the kinds of equipment and raw materials competitors are importing from the Journal of Commerce

Port Import Export Reporting Service.

► Buy competitors’ products and “benchmark” them.

► Get competitors’ credit reports.

► Check out the reports publicly-held competitors must file with the SEC.

► Investigate UCC reports.

► Check out the resources in your local library.

► Use the Internet to learn more about competitors.

► Visit competing businesses to observe their operations.


Competitive Profile Matrix


3 - 82

Is Setting Goals & Objectives

Really Important?

“Would you tell me, please, which way I ought to go from here?” said Alice.

“That depends a good deal on where you want to get to,” said the Cheshire cat.

“I don’t much care where.…” said Alice.

‘Then it doesn’t matter which way you go,” said the cat.

Lewis Carroll’s

Alice in Wonderland


Step 6: Create Company Goals and Objectives

• Goals: Broad, long-range attributes to be accomplished.

• “BHAGs”

• Objectives: More detailed, specific targets of performance that are:

► Specific

► Measurable

► Assignable

► Realistic (yet challenging)

► Timely

► Written down


What Makes an Effective BHAG?


3 - 85

Step 7: Formulate Strategies

Strategy - a road map of the actions an entrepreneur draws up to achieve a company’s mission, goals, and objectives.

It is the company’s game plan for gaining a competitive advantage.


3 - 86

Step 7: Formulate Strategies

Three basic strategies:

Strategy?

Cost

Leadership

Differentiation

Focus


Three Strategic Options


3 - 88

Cost Leadership

• Goal: to be the low-cost producer in the industry (or market segment).

• Low-cost leaders have advantages:

► Reaching buyers who buy on the basis of price

► The power to set the industry’s price floor.


Cost Leadership

• Cost Leadership works well when:

► Buyers are sensitive to price changes.

► Competing firms sell the same commodity products.

► A company can benefit from economies of scale.

• Example: Dollar General


Differentiation

• Company seeks to build customer loyalty by positioning its goods or services in a unique or different fashion.

• Idea is to be special at something customers value.

• Key: Build basis for differentiation on a distinctive competence, something that the small company is uniquely good at doing in comparison to its competitors.

• Examples: Vosges-Haut Chocolate, Ice Hotel, and

Indigenous Designs


3 - 91

Focus

• Company selects one or more customer segments in a market, identifies customers’ special needs, wants, or interests, and then targets them with a product or service designed specifically for them.

• Strategy builds on the differences among market segments.

• Rather than try to serve the total market, the company focuses on serving a niche (or several niches) within that market.

• Example: Batteries Plus


3 - 92

Step 8: Translate Strategies into Action Plans

 Survey of senior executives: Companies achieved only 63% of the results in their strategic plans.

 Create projects by defining:

► Purpose

► Scope

► Contribution

► Resource requirements

► Timing


Step 9: Establish Accurate Controls

• Plan establishes the standards against which actual performance is measured.

• Entrepreneur must:

► Identify and track key performance indicators.

► Take corrective action.


Balanced Scorecards

• A set of measurements unique to a company that includes both financial and operational measures.

• Gives managers a quick, yet comprehensive, picture of a company’s overall performance.


Balanced Scorecards

Five Perspectives:

1. Customer: How do customers see us?

2. Internal Business: At what must we excel?

3. Innovation and Learning: Can we continue to improve and create value?

4. Financial: How do we look to shareholders?

5. Corporate Citizenship: Do we meet our responsibility to society as a whole, the environment, the community, and other external stakeholders?


Balanced Scorecard


Conclusion

The strategic planning process:

► Begins with the nine steps.

► Becomes more efficient each time.

► Teaches entrepreneurial discipline for a higher chance of survival.


3 - 97

Creativity

What is an Entrepreneur?

Benefits of Entrepreneurship

Putting Failure Into Perspective

Creativity and Innovation

Entrepreneurship

Barriers to Creativity

Barriers to Creativity

Questions to Spur the Imagination

Questions to Spur the Imagination

Questions to Spur the Imagination

The Creative Process

The Creative Process

Preparation

Preparation

The Creative Process

The Creative Process

Transformation

Transformation

The Creative Process

Incubation

The Creative Process

The Creative Process

Verification

The Creative Process

Brainstorming Guidelines

Brainstorming Guidelines

Brainstorming Guidelines

The Mind-Mapping Process

Sample Force Field Analysis

Protecting Your Ideas

The Six Steps to a Patent

Protecting Your Ideas

Protecting Your Ideas

Conclusion

A Major Shift . . .

Strategic Management

Building a Competitive Advantage

Key: Core Competencies

Building a Sustainable

Competitive Advantage

Strategic Management Process

Strategic Management Process

Step 2: Assess Company Strengths and Weaknesses

Identifying and Managing Threats

Step 5: Analyze Competitors

Small Business Success Index

Competitor Analysis

Step 5: Analyze Competitors

Step 5: Analyze Competitors

Competitive Profile Matrix

What Makes an Effective BHAG?

Step 7: Formulate Strategies

Step 7: Formulate Strategies

Three Strategic Options

Cost Leadership

Cost Leadership

Differentiation

Focus

Balanced Scorecards

Balanced Scorecards

Balanced Scorecard

Conclusion

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