A strong Partner for Sustainable Development

Entrepreneurship
1st Quarter, 2nd semester AY: 2021-2022

College of Education
Agricultural Science High School
SENIOR HIGH SCHOOL
Generating Ideas: Harnessing Logic and Creativity

Learning Competencies:
The Learning Competencies that you are to learn in this Chapter are the following:
 After reading this chapter, you should be able to:
 Identify the various sources of ideas for entrepreneurial ventures
 Discuss the alternative methods for generating ideas for a new venture
 Discuss emerging trends that could be the source of new venture ideas
 Explain the factors that contribute to creative thinking
 Explain the role of creativity in generating new venture ideas
 Utilize some techniques in creative problem solving
INTRODUCTION
As discussed in the previous chapter, the entrepreneurial process involves several
stages from the preparation of a business plan to its implementation. A plan to pursue a
business usually comes from a novel idea. This business idea, in turn, is a product of
various thinking processes, including critical thinking and creative thinking.
In this chapter, we explore various activities and examples of how the use of logic
and systematic analysis-what we refer to as critical thinking-can be a means of
generating ideas for entrepreneurial ventures. Similarly, nonsystematic, discontinuous,
and lateral thinking-collectively known as creative thinking-can also inspire individuals
to introduce new products and services to the market. Aside from generating ideas,
creativity can also be used in creative problem solving.

SOURCES OF IDEAS FOR ENTREPRENELRIAL VENTURES

A number of practicing entrepreneurs and business coaches have identified a host
of sources, from which we can find business ideas. These can be categorized into four
major sources: (a) from the product, (b) from the process, (c) from the person, and (d)
from relationships.
 Entrepreneurs can source their business ideas from existing products or services. Many
entrepreneurs have introduced new products and services by differentiating them from
those currently in the market. You can differentiate a product by changing its shape, size,
color, and contents. For example, Lots'a Pizza introduced square pizzas, while Bibingkinitan
offered its smaller bite-size rice cakes. The traditional hopia, which was made of mung
beans, has been altered with the introduction of other varieties of beans and root crops as
introduced by the enterprising owners of Eng Bee Tin. More than just changing the features
of a product, successful entrepreneurs introduce new products because of their
dissatisfaction with those available in the market. This is what Karl Ulrich called annoyance-
driven innovation.' For example, Grab got market patronage in the Philippines because of
the difficulties encountered by commuters with current taxi services.
Business ideas can likewise arise from the process of production and distribution. A firm
selling pritchon, combined the process of frying and roasting pork belly. Packaging goods
into sachets and small quantities expanded the market for shampoos and even processed
cheese. Reviving the traditional way of baking pan de sal, and making it available
throughout the day established a market niche for Pan de Manila.Likewise,3N Bakery
became famous for its fried siopao, a deviation from the traditional steamed pao. In
targeting the needs of their customers, 7-Eleven introduced a 24-hour retail service.
Similarly, Julie's Bakeshop launched ambulant selling of breads by imitating ice cream and
balut vendors.
 When business ideas are sourced from the person, the individual examines his/her
interests, hobbies, skills, dreams, and even his/her travels. Aside from providing ideas for
entrepreneurial venture, personal interests can sustain a business venture at its initial stage of
operation. Many small firms producing handicrafts evolved from hobbies of owners. Similarly,
individuals who took interest in silk screen and iron-on shirt printing have transformed their
hobbies into business enterprises.
In addition, skills learned from prior employment can be a source of business ideas as
shown in several studies. For example, a number of preschools and other training institutions
were established by successful teachers. Cooks apply their popular recipes by establishing
carinderias or small restaurants. Entrepreneurs who introduced milk tea and other drinks in the
Philippines drew these business ideas from their travels in Taiwan. Many potential
entrepreneurs attend exhibitions here and abroad to get business ideas.
The last category of sources is from relations. Many Filipino-Chinese individuals sourced
their entrepreneurial ideas from families and relatives. Children of Filipino-Chinese businessmen
are usually exposed to their family businesses at an early age. Such exposure often leads to
entrepreneurial inclinations in their adult years.
Friends and classmates can also be sources of business ideas and partners. Some may start
their business partnership as teammates in school projects and eventually decide to put up
their businesses after graduation. One's neighborhood can also provide ideas on what to
produce. In a neighborhood where provision of regular water is a problem, an enterprising
individual may start a water filtering station with free delivery service. In the same way, busy
students and young professionals living in condominiums led to entrepreneurial ventures that
offered housecleaning and laundry services.
METHODS FOR GENERATING OR TESTING NEW IDEAS
There are several methods of generating business ideas. We will classify them into
logical thinking and creative thinking.
GENERATING BUSINESS IDEAS THROUGH LOGICAL THINKING
Logical thinking refers to the systematic and rational way of providing an answer to a
question. It is systematic since it follows steps in responding to an inquiry. It is rational
because it adheres to the rules of logic in connecting the relationships of variables and in
making conclusions. Aside from its usefulness in decision-making, logical thinking can also
be utilized in the development of a business idea. Some of the methods that use
systematic analysis in generating new ideas are statistical analysis, market analysis, SWOT
analysis, and Delphi technique.
Statistical analysis refers to a systematic analysis of data generated from a survey of
individuals. Aside from giving basic information on the population being studied, statistical
analysis can also be used for hypothesis testing on the difference of the values of certain
variables. Statistical analysis can describe the trend in the demand for a particular
product, as well as show which key socioeconomic variables can significantly influence
the change in the demand for a product.
 Related to statistical analysis is market analysis, which is undertaken to know the various
factors that affect the demand for a particular product or service. It can also determine
how certain socioeconomic and demographic groups will react to the introduction of a
new commodity or a change in existing products or services. This can be done through
surveys, interviews with key informants, and focus group discussions. Since survey methods
are very expensive and time consuming, interviews of key informants that are
knowledgeable of the market are undertaken. Through focus group discussions, the
facilitator can elicit the same general trends that would likely appear in a detailed
questionnaire. The results from these various methods of market analysis can be used by
potential entrepreneurs in introducing new products or differentiating an existing
commodity that are aligned with the preferences of targeted consumers.
SWOT (strengths, weaknesses, opportunities, threats) analysis is usually undertaken to
describe the state of competition within an industry. However, an understanding of the
strengths and weaknesses of firms, and the opportunities, and threats that they face can
also provide business ideas that an entrepreneur can pursue.
Delphi technique on the other hand, is the systematic way of generating ideas from a select
group of individuals using various rounds of consultations or sessions. In the first round, the
group is asked to list a number of responses to a given question. After treating the data on
the first round, the leading responses are given back to the respondents in the next round.
The respondents are then asked to list a shorter number of answers on the same question
based on the leading responses in the previous round. In succeeding rounds, the leading
responses are further listed and given to the respondents until the final two or three answers
are determined. For example, the question can be “What are the emerging products in the
coming decade? ”The answers generated from the Delphi technique can lead to the
identification of potential products or services.
GENERATING BUSINESS IDEAS THROUGH CREATIVE THINKING
New business ideas can also be generated through various methods of exploring
our creativity. As described in the previous chapter, creativity refers to thought
processes that do not follow systematic or analytical procedures but looks at things
from different perspectives. It uses lateral thinking, which connects ideas and
reprocesses them to formulate new ideas. More than rational thinking, creativity puts
emphasis on the role of imagination and inspiration. Some methods that use creative
thinking in identifying business ideas are brainstorming, problem inventory analysis, free
association method, and checklist method, among others.
Brainstorming refers to an unstructured discussion of a group to elicit ideas. Since the
process is unstructured, the facilitator and participants should entertain all ideas
coming from the participants, even those that are illogical and “out of this world.” After
a fixed period of discussion, the various ideas are processed and synthesized to come
out with an answer to the question posed at the start of the brainstorming session.
Problem inventory analysis is similar to brainstorming. It uses the group discussion
method to elicit ideas from participants. It is different from the usual brainstorming
because it is directed to identifying all possible problems encountered with a specific
product or service. After identifying all the possible problems and issues with the
product or service, the participants are tasked to give alternative solutions to the
problems.
Free association method is another technique used in discovering business ideas. It is a
method that has been used in psychology to elicit the unconscious thoughts of
individuals by expressing their thoughts associated with words and ideas given by the
therapist. It has several applications in different fields, including business, since it can
draw from participants ideas that are associated or linked with a given idea or word.
From the process of association the group can come out with an idea or set of ideas
that can be the basis for business ventures.
Related to free association method is the checklist method. It is another creative way
of obtaining business ideas from target participants by listing all possibilities that ideas
can be connected, reprocessed, and associated with. Through the checklist method,
participants in the discussion group can be asked to list down all possible changes that
can be made with an existing product or service. A specific checklist method
developed by Alex Osborn is known as SCAMPER (Substitute, Combine, Adapt,
Magnify, Put to other use, Eliminate, and Rearrange). In this method, participants are
presented with a product or service or an idea and are asked to provide a
comprehensive list of how the product or service or idea can be replaced, mixed,
differentiated, enlarged, applied, removed, and altered.
GENERATING BUSINESS IDEAS THROUGH TRENDS IN BUSINESS ENVIRONMENT
The systematic methodologies and creative ways of generating business ideas as
discussed above are focused on the product or service or idea. But there are other
ways of generating business ideas with focus on the business environment. Some of the
methodologies used include Porter's Five Forces of competition, SWOT analysis, and
environmental scanning. These methods like market analysis, discussion, and Delphi
technique are intense in the use of logical and systematic analysis.
Based on the trends on the business environment an entrepreneur can get business
ideas from the bargaining powers of its competitors and suppliers, major shifts in
government involvement in business, sociodemographic changes, as well as
technological developments.
Given the products and services offered by competitors, one possible business idea
is to lower the selling price. As we know from the theory of demand, consumers are
encouraged to demand more of a product if its price is lower than its competitors.
However, this option may not be feasible in all cases, given that the firms in an industry
are faced with similar inputs and same prices.
 Another alternative for the firm or potential entrepreneur is to differentiate its
product from existing product lines in the industry. Product differentiation can alter the
shape, contents, and package of a product to create a brand that would establish
loyalty from its customers. Because of this brand loyalty, even if the price of the
differentiated product is higher than the current product lines in the industry, there will
still be a significant number of customers that will purchase the commodity.
The suppliers of major inputs can also provide business ideas to potential
entrepreneurs. The increase in the price of raw materials, for example, can put pressure
on firms to seek alternative types and sources of raw materials. For example, the cost of
printing packaging materials made the producer of Safeguard combine three bars into
one packaging unit instead of packing them individually. This practice reduced the
price of packaging soaps significantly and encouraged volume sales. The abundance
of water lilies along Pasig River inspired entrepreneurs to produce mats, bags, and other
handicrafts made of water lilies. Similarly, after the eruption of Mount Pinatubo in the
1990s many enterprising individuals used the lava and mud from lahar to craft figurines
and other collectibles.
Changes in government regulations can also provide impetus for new products or
services. For example, the ban on the use of plastic bags in many cities and
municipalities served as an opportunity for business opportunities to produce ecological
bags, paper bags,and other alternative packaging containers that are environmentally
friendly.
 Sociodemographic changes including smaller homes and living spaces can
provide opportunities for producers of consumer durables to produce smaller
appliances and furniture that can fit into small condominium units. Business
opportunities also abound in areas near condominiums including food services, laundry
services, cleaning services, and repair services.
Pollution in highly urbanized areas can encourage manufacturers to make air
conditioners that serve as air purifiers as well.
CREATIVITY: A NEW WAY OF LOOKING AT THINGS
The key in these sources and methods that give rise to business ideas is the role of
creativity, which is thinking beyond the systematic and rational way. Creativity can be
described as the capacity of individuals to originate new ideas from ideas the
individual has been previously exposed. The birth of a new idea is done by connecting
an idea with other ideas and transforming these connections.
 There are many ways of connecting these ideas. It can be done by comparing
them, linking them, looking at similarities and differences and looking for trends. In the
checklist method mentioned above, there are several ideas that can emerge from a
single idea. For example, a simple product like pan de sal can be replaced with pan de
lemon, pan de leche, or pan Americano.It can also be mixed with other ingredients like
in pan de coco and toasted siopao. It can also be differentiated with various flour
bases as in malunggay pandesal, kalabasa pandesal, kammote pandesal, and casava
pandesal. Interestingly. pan de sal can also be enlarged similar to a monay.
Application of various dishes and spreads produces pandesal with adobo, pandesal
with asado, pandesal with tana pan de sal with cheese, pandesal with pineapple jam.
When salt is removed and replaced with milk it becomes pandeleche. With lemon
extract the result is pan de lemon. You can add more to this list on how to alter a simple
pandesal.
You can differentiate any good or service depending on your creativity. Some
individuals are hesitant to explore their creativity because they have this notion that
creativity is inborn. But many scholars, psychologists, and business coaches have been
telling us that creativity can be learned and developed. You must be a keen observant
of everything. Look at ways on how something can be viewed from a different
perspective. Watch out for things and aspects of a good or service that can be
improved or altered. Connect your ideas with other observations you have made
before.
 Some creativity coaches have recommended a number of measures to improve
someone's creativity. Foremost is the quest to learn from a variety of sources on things
that may interest the individual. This wealth of information can be part of stock
knowledge that the 'individual can draw upon in subsequent activities. There is also
need for a place and time for the individual to think, reflect, meditate, or even dream.
These quiet moments may induce brilliant and creative ideas that may be useful for
business ventures. In addition, since creative ideas occur in a splash, in a dream, or in an
unexpected event or place, make sure you have a notebook or a handy computer
where you can write down these ideas. Otherwise, it may be difficult to recall these
precious creative moments. Avoid editing or rejecting any idea. Be open to all
possibilities and develop the art of connecting ideas. An individual's stock knowledge
can be a useful reference in the process of linking ideas. By mixing and remixing these
ideas, the individual can come out with new ideas in the synthesis.
FACTORS THAT INFLUENCE CREATIVITY
Given the various sources and methods of generating creative ideas, as well as the
mechanisms in developing creativity, scholars have synthesized these into key factors
affecting creativity, which can be grouped into four categories: (a) problem solving
factors, (b) motivational factors, (c) situational factors, and(d) organizational factors.
 To a great extent, a creative person is someone who wants to provide an answer to a
problem. An individual who is not satisfied with existing products and services may think of
creative ideas to improve them or to simply differentiate these products and services. Ability
to solve problems, in turn, is influenced by the knowledge of the individual, the extent of his
experience, and his level of education. Thus, exposures to a variety of situations are learning
experiences that an individual can draw lessons from in solving problems. These exposures
can be obtained through reading print and electronic materials, traveling, observing
everything around you, work experience, and various forms of training.
Related to problem solving ability is the motivation of an individual. A creative individual
is usually a highly motivated person. Some people just complain about the discomfort of
existing products and services but do not bother to do anything about it. But a motivated
individual is willing to do something to address these dissatisfactions. Thus, a motivated
person plans ahead and, more importantly, is willing to take risks. Included in his plan are
measures that would address the uncertainties, and his response to adversaries that may
serve as threats.
Beyond personal factors, the creativity of individuals is manifested when they are
confronted with concrete situations. A creative person is an action person since he knows
how to implement his plan. But implementing the plan requires that the individual must have
the necessary skills in interacting with others, and the ability to manage time under pressure.
Creativity surfaces when the eagerness to implement a plan is tempered by the ability of an
individual to convince others to cooperate with him in implementing the plan. However, an
innovative product from a creative idea should also be produced within a reasonable time.
Otherwise, it may be overtaken by other competitive products in the market.
 Another set of external factors that can enhance creativity are organizational
factors, which include, among others, management support, risk taking incentives,
flexible rules, degrees of freedom, and positive evaluation. A creative person thrives in
an environment that is nurturing and not threatening. An organization with foresight and
that is forward looking can attract creative individuals since it has an appetite for risks
than a company that emphasizes short-term profits. Creative persons are also
encouraged when the work place does not focus on rules but on outputs.
Some scholars believe that mere presence of factors identified previously is not
enough for creativity to emerge and flourish. There is a need to balance the interactions
of all these factors into a complex system so that they all converge toward creativity.
Sternberg and Lubart (1999) refer to this convergence as the confluence approach to
creativity. The confluence approach implies that all the factors in each category must
be balanced in their interactions, and at the same time all the categories must be
balanced in their interactions as well. Such multiple and complex interactions of factors
will move toward creativity. This approach of combining both personal and
environmental factors makes the study of creativity more complicated.
CREATIVE PROBLEM SOLVING
Creative problem solving(CPS) is a procedure of answering a problem with
mechanisms and techniques incorporating creativity. Scientific method is also a
procedure in answering a problem with the use of rational thinking. However, the
solution under CPS may not be as clear cut as in solving problem using scientific or
systematic methods.
One procedure of creative problem solving is the one developed by Sidney Parnes
and Alex Osborn (1950). It is differentiated from other CPS since it uses divergent
thinking processes and convergent thinking mechanisms in various stages of seeking a
solution. The two important stages in CPS that extensively use divergent and
convergent thinking processes are problem identification and selection of solution. In
identifying the problem, for example, CPS will require divergent thinking processes of
enumerating possible problems, subproblems, issues, and challenges. After which a
convergent process will be undertaken to evaluate the merits and appropriateness of
various candidates. The convergent processes end up with the selection of the
problem. These divergent and convergent thinking processes are likewise applied in the
selection of the appropriate solution to the problem at hand.
 The following six steps are followed in the Osborn-Parnes model. They look very
simple and easy to do, but each stage requires various creative processes.
1. Setting the objective. This involves the identification of an objective that an individual
wishes to achieve. This stage can become cumbersome since the individual has to
differentiate an objective from a variety of goals, challenges, issues, and problems. Such
differentiation may involve creative processes.
For example, an initial tentative objective may be stated as to provide financial
assistance to poor households. Since there are many reasons for helping the poor
financially, what is then the underlying reason for such provision? Is it to make households
secure food or to have access to education or to start a small business? If it is to start a
small business, what then are reasons why you want the poor to start a small business?
Do you want them to be financially independent or to get out of poverty, or do you
want them to engage in activities beyond illegal gambling? After a series of questioning
the initial objective has been revised to how to make the poor individuals get out of
illegal gambling as their source of income.
2. Revisiting the objective. This stage involves the search for studies, reports, analyses,
and papers related to the objective set. Related to our final objective above, the review
of studies should focus on how to delink the poor from jueteng and other forms of illegal
gambling. The search cannot be confined with the library or the net. It can involve
interviews with key informants and experts on the field on significance of the objective
and its relevance. Aside from an inquiry on its significance and relevance, you may want
to know at this stage which part of the objective still needs to be pursued.
3. Identifying the problem. Based on the objective set and the review of related studies,
the individual has a clearer view on what problem to pursue. This process, as mentioned
earlier, may involve divergent thinking processes in seeking the possible issues,
challenges, and problems that may emerge from the objective set. In identifying the
problem related to the objective of getting the poor out of illegal gambling as a source
of income, there is a need to explore possible problems and challenges that may arise.
Once the possible problems, challenges, and issues have been identified, the
convergent process of evaluating the options can provide the individual a single
problem to be solved. For example, after a series of divergent and convergent thinking
processes the problem identified is how to reverse consequences of the dependence
of poor individuals on jueteng on their work habits.
4. Looking for a solution. Once the problem has been identified, another series of
divergent thinking of generating ideas for the solution of the problem is needed. Given
the problem identified, there is a need to generate various options on how to reverse
the consequences of dependence of poor individuals on jueteng on their work habits.
Some of the alternatives can be providing financial assistance to the poor, training the
poor to learn skills to make them employable, employing them in the public works
projects of the government, and many more.
5. Selecting a solution. Once enough options are given from the divergent thinking
process, a convergent evaluation process of weighing the significance, relevance, and
feasibility of these options is undertaken. For example, after a series of assessment, the
solution chosen is the employment of the poor in government-sponsored public works
projects.
6. Accepting the solution. In our chosen problem, we have selected a solution. The
chosen option is the employment of workers in public work projects including road
repairs, street cleaning, and maintaining public schools, parks, and markets. This option
was chosen as a solution because it provides legitimate employment opportunities to
the poor. In addition, it brings back the dignity of work as the poor individuals realize
their contributions in improving the physical infrastructure of their community.
These convergent divergent processes used in our hypothetical example have been
discussed previously in various creative methods such as brainstorming, checklist
method, free association method, and problem inventory analysis. In our simple
example above, we have shown that solving a problem can be done creatively using
the six stages of the Osborn-Parnes model.