Creativity and the Business Idea

1
Creativity and the Business Idea

• Learning objectives
• Sources of ideas for new ventures
• The creative process
• Methods for generating new ideas
• Opportunity recognition
• Screening evaluating opportunities

2
Sources of new ideas

• Industry and market changes
• Value chain disruption/obsolescence
• (De)regulation
• Societal changes
• Demographic changes
• Changes in ways we live, learn, work, etc.
• Technological change
• Internet
• Access to new knowledge, new thinking, new
  methods
• Changes in perception
• Incongruities gap between expectations and
  needs
• Process needs
• Unexpected occurrences

3
Where do entrepreneurs get their ideas from?

• Replicated or modified an idea encountered
  through previous employment (70)
• Discovered serendipitously (20)
• Built temp job into business (7), wanted as a
  consumer (6), read about industry (4),
  developed family members idea (2)
• Swept into the PC revolution (5)
• Discovered through systematic research (4)
• (REF Bhide, 1994 HBR. Source 100 founders of
  1989 Inc. 500 fastest growing companies)

4
Innovative ideas begin with an eye
5
Creativity process according to IDEO (Tom
Kelley, The Art of Innovation, 2001)

• Understand the market, the customer, the
  technology, the problem, perceived constraints
• Observe real people in real-life situations to
  find out what makes them tick
• what confuses them, what they like, what they
  hate, where they have latent needs not addressed
  by current products or services
• Visualize new-to-world market concepts
  customers who will use them
• brainstorming intensive
• physical model, poster board, video
• Evaluate refine prototypes in quick iterations
  no idea is so good that it cant be improved
• Implement the new concept for commercialization

6
Methods for generating new ideas

• Brainstorming
• The best way to get a good idea is to get a lot
  of ideas
• - Linus Pauling
• Other methods
• Focus groups
• Problem inventory analysis

7
How to enhance creativity Brainstorming Rules

• Define your purpose
• Choose participants
• Choose a facilitator
• Brainstorm spontaneously
• No criticisms, no negatives
• Record ideas in full view
• Resist becoming committed to one idea
• Identify the most promising ideas
• Refine and prioritize

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Creative problem solving

• Brainstorming
• Reverse brainstorming
• Checklist functional approach
• Free association
• Forced relationships

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Opportunity recognition

• An idea vs an opportunity
• An Idea abstract, may or may not be feasible
• An opportunity an idea that is attractive,
  durable, timely, anchored in a product/service
  that adds value to customers

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Opportunity screening

• Add value to customer, solve a significant
  problem
• Market size
• Market growth
• Margin, money making
• Good fit with team

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Evaluating opportunity

• Industry and market
• Competitive advantage issues
• Economics
• Harvest issues
• Management team
• Personal criteria
• Strategic differentiation

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Industry and Market

• Market need?
• Value added hi/low?
• Customers reachable?
• Product life durable/perishable?
• Market structure fragmented/concentrated?
  Emerging/mature?
• Market size?
• Market share?
• Growth rate?
• Cost structure?

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Porters 5 forces

• Threat of new entrants (entry barriers?)
• Threat of substitutes
• Rivalry among firms in industry
• Customers Bargaining Power
• Suppliers B.P.

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Competitive advantage issues

• Barriers to entry
• Proprietary technology potential?
• Response/lead time
• Legal, contractual advantage?
• Contacts / networks
• People A team?
• Costs (viz a viz rivals) sustainable?
• Control over costs, prices (BP of suppliers,
  customers)

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Economics of new venture

• Profits after tax durable/fragile?
• ROI potential hi/low?
• Sales growth?
• Capital requirements?
• RD/Capital exp?
• WC requirements?
• Time to BE cash flow/ PL

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Management Team

• Fit with founders
• Risk-reward balance