Creativity and The Business Idea

CREATIVITY AND THE BUSINESS IDEA
LEARNING OBJECTIVES
1. To identify various sources of ideas for new ventures.

2. To discuss methods available for generating new venture ideas.
3. To discuss creativity and the techniques for creative problem solving.
METHODS OF GENERATING NEW IDEAS

Even with the wide variety of sources available, coming up with an idea to serve as the
basis for the new venture can still be a difficult problem.
The entrepreneur can use several methods to help generate and test new ideas, including
focus groups, brain storming and problem inventory analysis.
Focus groups
Group of individuals providing information in a structured format is called a focus group.
The group of 8 to 14 participants is simulated by comments from other group members in
creatively conceptualizing and developing new product idea to fulfill a market need.
Brainstorming
A group method of obtaining new ideas and solutions is called brainstorming. The
brainstorming method for generating new ideas is based on the fact that people can be
stimulated to greater creativity by meeting with others and participating with organized
group experiences. Although most of the ideas generated from the group have no basis
for further development, often a good idea emerges.
Problem inventory analysis

Problem inventory analysis uses individuals in a manner that is similar to focus groups to
generate new product ideas. However instead of generating new ideas themselves,
consumers are provided with a list of problems in a general product category. They are
then asked to identify and discuss products in this category that have the particular
problem. This method is often effective since it is easier to relate known products to
suggested problems and arrive at a new product idea then to generate an entirely new idea
by itself.
CREATIVE PROBLEM SOLVING

Creative problem solving is a method for obtaining new ideas focusing on the problem
parameters.
Brainstorming
The first technique, brainstorming, is probably the most well-known and widely used for
both creative problem solving and idea generation. It is an unstructured process for
generating all possible ideas about a problem within a limited time frame through the
spontaneous contribution of participants. All ideas, no matter how illogical, must be
recorded, with participants prohibited from criticizing or evaluating during the
brainstorming session.
Reverse brainstorming
Similar to brainstorming, but criticism is allowed and encouraged as a way to bring out
possible problems with the ideas.
Gordon method
Gordon method is a method of developing new ideas when the individuals are unaware of
the problem. In this method the entrepreneur starts by mentioning a general concept
associated with the problem. The group responds with expressing a number of ideas.
Checklist method
Developing a new idea through a list of related issues is checklist method of problem
solving.
Free association method
Developing a new idea through a chain of word association is free association method of
problem.
Forced relationship
Forced relationship is the process of forcing relationship among some product
combination. It is technique that asks questions about objects or ideas in an effort to
develop a new idea.
Collective notebook method

It is method in which ideas are generated by group members regularly recording ideas.
Heuristics
It is method of developing a new idea through a thought process progression.
Scientific method
This is a more structured method of problem solving, including principles and rules for
concept formation, making observations and experiments, and finally validating the
hypothesis.
Value analysis
Value analysis is developing a new idea by evaluating the worthiness of aspects of the
idea.
Attribute listing
This is an idea finding technique that requires the entrepreneur to list the attributes of an
item or problem and then look at each from a variety of viewpoints.
Matrix charting
Matrix charting is a systematic method of searching for new opportunities by listing
important elements for the product area along two axis of chart and then asking questions
regarding each of these elements.
Big dream approach

Developing a new idea by thinking about constraints is big-dream approach of problem
solving.
Parameter analysis
Parameter analysis is developing a new idea by focusing on parameter identification and
creative synthesis.
Synectics
Synectics is a creative process that forces individuals to solve problems through one of
four similar mechanisms: personal, direct, symbolic and fantasy. This forces participants
to consciously apply preconscious mechanisms through the use of similarities in order to
solve problems.
PRODUCT PLANNING AND DEVELOPMENT PROCESS

This refining process- the product planning and development process – is divided in to
five major stages. Idea stage, concept stage, product development stage, test marketing
stage and commercializing; it result in the product life cycle.
Establishing evaluation criteria

At each stage of product planning and development process, criteria for evaluation need
to be established.
These criteria should be broad, yet quantitative enough to screen the product carefully in
the particular stage of development. Criteria should be developed to evaluate the new
product in terms of market opportunity, competition the marketing system, financial
factors and production factors. A market opportunity and adequate market demand must
exist. Current competing producers, prices, and policies should be evaluated in their
impact on market share.
The new product should be compatible with existing management capabilities. The
product should be able to be supported by and contribute to the company’s financial
structure. The compatibility of new product’s production requirements with existing
plant, machinery, and personnel should be determined.
Entrepreneurs should formally evaluate an idea throughout its evolution.

Idea Stage
Promising new product ideas should be identified and impractical ones eliminated in the
idea stage allowing maximum use of company’s resources. In the systematic market
evaluation checklist method, each new product idea is expressed in terms of its chief
values, merits, and benefits. This technique can be used to determine which new products
should be pursued.
The company should also determine the need for the new product and its value to the
company. Need determination should focus on the type of need, its timing, the users
involved, the importance of marketing variables, and the overall market structure and
characteristics. In determining the product’s value to the firm, financial scheduling
should be evaluated.
Concept Stage
In the concept stage the refined idea is tested to determine consumer acceptance without
manufacturing it.
One method of testing is the conversational interview in which respondents are exposed
to statements that reflect attributes of the product. Features, price, and promotion should
be evaluated in comparison to major competitors to indicate deficiencies or benefits. The
relative advantages of the new product versus competitors should be determined.
Product Development Stage

In this stage, consumer reaction is determined, often through a consumer panel. The panel
can be given samples of the product and competitors’ products to determine consumer
preference. Participants keep the record of their use of product and comment on its
virtues and deficiencies.
The panel of consumers is also given a sample of product and one or more competitive
product simultaneously. One test product may already be on the market, whereas the
other test product is new.
Test Marketing Stage

Although the results of product development stage provide the basis of the final
marketing plan, the market test can be done to increase the certainty of successful
commercialization. The last step in the evaluation process, the test marketing stage,
provides actual sales results which indicate the acceptance level of consumers. Positive
test results indicate the degree of probability of a successful product launch and company
formation.
E-COMMERCE AND BUSINESS START-UP AND GROWTH
The Internet
The Internet started in the 1970s with a U.S. Defense Department program named ARPA.
In the early 1990s the concept of World Wide Web pages was developed. The Internet is
a channel for the creation of profitable companies.
Electronic business (e-business) is any process that a business organization conducts over
a computer-mediated network.
Electronic commerce (e-commerce) is any transaction completed over a computer-
mediated network that involves the transfer of ownership or rights to use goods or
services.
Factors that facilitate the growth of ecommerce are:-
 The widespread use of personal computers.
 The adoption of intranets in companies.
 The acceptance of the Internet as a business communications platform.
Starting an E-Commerce Company

The Internet is especially important for small and medium-sized companies as it lets them
minimize marketing costs while reaching broader markets.
An entrepreneur starting an Internet commerce venture needs to address many of the
same strategic and tactical questions as other companies plus some specific online issues.
One decision is whether to run the Internet operations within the company or outsource
these operations. If handled in-house, expensive equipment and software have to be
maintained. There are numerous possibilities for outsourcing the Internet business.
The two major components of Internet commerce are front-end and back-end
operations.
Front-end operations are encompassed in the website’s functionality, such as search
capabilities, shopping cart, and secure payment.
Back-end operations involve integrating customer orders with distribution channels and
manufacturing capabilities.
Website
A website is an online connection between the company and its customers and can be
developed in-house or outsourced.
There are several important features of every website.
 Each website should have search capabilities.
 Other functions include shopping cart, secure server connection, credit card
payment, and customer feedback features.
 Orders and other sensitive customer information should be transferred only
through secure servers.
 An Internet company should also obtain a merchant account, which will allow the
acceptance of major credit cards.
A successful website has three characteristics:
Short download time should be the primary concern of website developers.
 A website should be easy to use
 Customized for specific market target groups
 Compatible with different browsers.
If the company is targeting international markets, then translation and cultural adaptation
need to be considered. Probably the most difficult aspect of setting up an online business
is advertising and promoting the web pages.
A company can advertise its website through search engines, banner ads, e-mail, and
classifieds. Banner ads can be targeted to the exact audience of the firm. The entrepreneur
should collect e-mail addresses from customers for targeted e-mail campaigns.
The Internet offers many low-cost or free services for small businesses, including Internet
access, unlimited e-mail accounts, online calendar, instant messaging, and online
conference rooms.
Tracking Customer Information

Electronic databases support personal marketing targeted at individual clients. The online
company can capture customers’ information in many ways.
Relationships and Endorsements by Other Companies

The company needs to establish strong connections with other companies in the supply
chain to create an end-to-end value stream. The entrepreneur should protect its
innovations and its relationship with other companies. Another type of relationship is
endorsements by prominent Internet companies and associations. Participation in
merchant networks can bring needed credibility.
Doing E-Commerce as an Entrepreneurial Company
The decision to go online should be made on a case-by-case basis. The products should
be able to be delivered economically and conveniently. The product has to be interesting
for a large number of people.
Online operations have to bring significant cost reductions compared with brick-and-
mortar operations.
The company must have the ability to economically draw customers to its website.
Conflict between traditional and online marketing channels can lead to a hostile,
competing position of once partnering companies.

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1. To identify various sources of ideas for new ventures.

METHODS OF GENERATING NEW IDEAS

Problem inventory analysis

CREATIVE PROBLEM SOLVING

Collective notebook method

Big dream approach

PRODUCT PLANNING AND DEVELOPMENT PROCESS

Establishing evaluation criteria

Entrepreneurs should formally evaluate an idea throughout its evolution.

Product Development Stage

Test Marketing Stage

Starting an E-Commerce Company

Tracking Customer Information

Relationships and Endorsements by Other Companies

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