4. creativity and the business idea

7/30/2019 4. Creativity and the Business Idea

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Creativity and the Business Idea

McGraw-Hill/IrwinEntrepreneurship, 7/e Copyright 2008 The McGraw-Hill Companies, Inc. All rights reserved.


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Creativity & Innovation

Creativity is the ability to developnew ideas and to discover new waysof looking at problems &opportunities.

Innovation is the ability to applycreative solutions to those problems

& opportunities to enhance or toenrich peoples lives


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Creativity = Ideas

Creativity involves generating something from

nothing

Creative ideas springs up from the mostunexpected places


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What an idea!!!!

But not valued in Business until implemented!!!


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Innovation = Ideas + Action

Entrepreneurship is the result of a disciplined,systematic process of applying creativity &innovation to needs & opportunities in themarketplace

Millions of people come up with creative ideas fornew or different products & services; most ofthem, however, never do anything with them

Entrepreneurs are those who connect their

creative ideas with the purposeful action &structure of a business

Thus successful entrepreneurship is a constantprocess that relies on creativity, innovation &

application in the marketplace


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Creativity should be accompanied with Innovation!!

Entrepreneurs succeed by thinking and doingnew things or old things in new way

Having a great new idea is not enough;transforming the idea into a tangible product,service or business venture is the essential next

step


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Trends

Green Trend

Clean-Energy Trend

Organic-Orientation Trend


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Social Trend

Health Trend

Web Trend

Trends (continued)


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Sources of New Ideas (1 of 2)

Consumers Informal monitoring of potential ideas and needs.

Formally arrange for consumers to express theiropinions.

Existing products and services

Analysis uncovers ways to improve offerings thatmay result in a new product or service.

Distribution channels Channel members can help market the newlydeveloped products.


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Sources of New Ideas (2 of 2)

Federal government Files of the Patent Office contain numerous new

product possibilities.

New product ideas can come in response to

government regulations.

Research and development

Largest source of new ideas is the entrepreneurs ownresearch and development efforts. May be:

A formal endeavor connected with ones currentemployment.

An informal lab in a basement or garage.


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Methods of Generating New Ideas (1 of 2)

Focus groups Moderator focuses discussion of the group in a

directive or nondirective manner.

An excellent method for initially screening ideas and

concepts.

Brainstorming

Allows people to be stimulated to greater creativity. Though most ideas generated have no basis forfurther development, sometimes a good idea

emerges.


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Methods of Generating New Ideas (2 of2)

Brainwriting is similar to Brainstorming; it is aform of written brainstorming.

Problem inventory analysis

Analogous to focus groups.

Can be used to test a new product idea.

Results must be carefully evaluated as they may not

actually reflect a new business opportunity.


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Creative Problem Solving

Creativity: an important attribute of a successfulentrepreneur.

Creativity tends to decline with:

Age, education, lack of use, and bureaucracy.

Latent creative potential of an individual can be

stifled by perceptual, cultural, emotional, andorganizational factors.


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Creative Problem-Solving Techniques


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Creative Problem-Solving Techniques (1 of 3)

Brainstorming Used in creative problem solving and idea

generation. Creative problem solving: amethod for obtaining

new ideas focusing on the parameters. Reverse brainstorming

A group method for obtaining new ideas focusing onthe negative.

Brainwriting Form of written brainstorming. It is a silent, written generation of ideas by a group of

people.


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Gordon method Method for developing new ideas when the

individuals are unaware of the problem.

Checklist method

Developing a new idea through a list of relatedissues.

Free association Developing a new idea through a chain of word

associations. Forced relationships

Developing a new idea by looking at productcombinations


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Illustration of Forced Relationship

Techniques


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Collective Notebook Method Developing a new idea by group members regularly

recording ideas.

Attribute Listing

Developing a new idea by looking at the positivesand negatives.

Big-Dream Approach Developing a new idea by thinking without

constraints. Parameter Analysis

Developing a new idea by focusing on parameteridentification and creative synthesis.


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Illustration of Parameter Analysis


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Types of Innovation (1 of 2)

Breakthrough Fewest innovations.

Establishes the platform on which future innovationsin an area are developed.

E.g. penicillin, steam engine, computer.

Technological

Not at the same level of scientific discovery and

advancement as breakthrough inventions. Offer advancements in the product/market area.

E.g. personal computer, voice and text messaging.


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Types of Innovation (2 of 2)

Ordinary Occurs most frequently.

Usually come from market analysis and pull nottechnology push.


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Defining a New Innovation

(Product or Service)

Newness can be: In the consumer concept.

Change in the package or container.

Change in colors of packages.

In the industrial market:

Products are called new when only slight changes

or modifications have been made in its appearance.

Companies also add products to their product linethat are already marketed by other companies.


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Classification of New Products:

Consumers Viewpoint

Continuum proposed by Thomas Robertson isbased on the disrupting influence that use of theproduct has on established consumption patterns.

Continuous innovations

Dynamically continuous

Discontinuous innovations


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Continuum for Classifying New Products

Continuous

Innovations

DynamicallyContinuous

Innovations

Discontinuous

Innovations

(Least disruptinginfluence on established

consumption patterns)

(Some disruptinginfluence on

establishedconsumption

patterns)

(Involves theestablishment of new

consumption patternsand the creation ofpreviouslyunknown products)

Figure 5.3


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Classification of New Products:

From a Firms Viewpoint

Firm may need to classify its new products onsome similar dimensions.

Distinction can be made between new products andnew markets.

Situation of new technology and new market:

Most complicated and difficult.

Has the highest degree of risk.


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New Product Classification System


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A Model of the

OPPORTUNITY RECOGNITION Process


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Opportunity Analysis Plan

An opportunity analysis plan is not a business plan. It focuses on the idea and the market (the

opportunity) for the idea.

A typical opportunity analysis plan has foursections: Description of the idea and its competition. Assessment of the domestic and international market

for the idea. Assessment of the entrepreneur and the team. Discussion of the steps needed to make the idea the

basis for a viable business venture.


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The Idea and Its Conception

Create a prototype or schematic of the product. Identify and list all competitive companies in the

product (service) market space.

Compared with at least three competitiveproducts/services most similar in filling theidentified market need.

This indicates its unique selling propositions (USP).

Entrepreneur needs to reevaluate if the idea doesnot have at least 35 unique selling propositions.


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The Market and the Opportunity

Addresses the size and the characteristics of themarket.

Market data should be collected for at least threeyears.

Can be done through gathering as much secondary(published) data as possible.

Entrepreneur can determine if the market is largeenough and suitable to warrant time and effortrequired to further develop a business plan andactually enter the market.


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Entrepreneur and Team Assessment

Entrepreneur and the entrepreneurial team need tobe assessed.

Atleast one person on the team needs to haveexperience in the industry area of the new idea.

Allows the entrepreneur to determine if he is reallysuited to successfully move his idea into the

market.


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The Next Steps

Steps need to be identified and put in sequentialorder.

Time and money needed for each step needs to bedetermined.

If the idea cannot be self-financed, then sources ofcapital need to be identified.


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PRODUCT PLANNING AND DEVELOPMENT

PROCESS Divided into five major stages:

Idea stage. Concept stage.

Product development stage.

Test marketing stage.

Commercialization.


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Establishing Evaluation Criteria

Criteria for evaluation need to be established ateach stage of the product planning anddevelopment process.

Criteria should be:

All inclusive and quantitative to screen the productcarefully.

Established to evaluate the new idea in terms of: Market opportunity

Competition Marketing system Financial factors Production factors.


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The Product Planning and

Development Process (1 of 3)


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Idea stage Promising new product/service ideas should be

identified. Impractical ones eliminated. Evaluation method systematic market

evaluation checklist.

Concept stage Refined idea is tested to determine consumer

acceptance. Consumer acceptance can be measured through

the conversational interview method.


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Product development stage Determines consumer reaction to the physical

product/service. A tool frequently used consumer panel. Consumer preference is determined through:

multiple brand comparisons, risk analysis, level of repeatpurchases, or intensity of preference analysis.

Test marketing stage Increases certainty of successful commercialization. Provides actual sales results, which indicate the

acceptance level of consumers.


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E-commerce and Business Start-up E-commerce offers entrepreneurs an

opportunity to be creative and innovative.

Factors that facilitate a high-growth in electroniccommerce: Widespread use of personal computers.

Adoption of intranets in companies. Acceptance of the Internet as a business

communications platform. Faster and more secure systems.


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Using E-Commerce Creatively Entrepreneurs starting an Internet commerce

venture need to address the same strategic and

tactical questions as any other entrepreneur.

Entrepreneurs have to decide to: Run Internet operations within the company, or

Outsource these operations to Internet specialists.

Another option is to use the packages for e-commerce.


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Components of Internet Commerce Two major components of Internet commerce are:

Front-end operations.

Back-end operations.

Integration of front-end and back-end operations

represents the greatest challenge for doing Internet

business. provides the opportunity for developing a sustained

competitive advantage.


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Web Sites Keys to a good Web site:

Ease of use

Structure and organization of information Visibility Search capability E-mail response system

Speed. Technical aspects

Should work properly in different browsers andplatforms.

Should appear in all marketing materials.


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Tracking Customer Information Database:

Tracks activity of the:

Industry. Segment.

Company.

Supports personal marketing targeted at individual

clients.

Should be able capture customer attention withcustomized one-to-one marketing.

D i E C E t i l


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Doing E-Commerce as an Entrepreneurial

Company

To do business through the Internet:

Products should be delivered economically and

conveniently. Products need to interest a wide market

Company must be ready to ship the product outside

its own geographical location.

Online operations have to bring significant costreductions.

Company must possess the ability to economicallydraw customers to its Web site.

4. creativity and the business idea

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