Creativity and The Business Idea

Creativity and the Business Idea
McGraw-Hill/Irwin Entrepreneurship, 7/e
Copyright 2008 The McGraw-Hill Companies, Inc. All rights reserved.
Creativity & Innovation

Creativity is the ability to develop
new ideas and to discover new ways of looking at problems & opportunities.
Innovation is the ability to apply
creative solutions to those problems & opportunities to enhance or to enrich peoples lives
Creativity = Ideas
Creativity involves generating something from
nothing
Creative ideas springs up from the most
unexpected places
What an idea!!!!
But not valued in Business until implemented!!!
Innovation = Ideas + Action

Entrepreneurship is the result of a disciplined,
systematic process of applying creativity & innovation to needs & opportunities in the marketplace Millions of people come up with creative ideas for new or different products & services; most of them, 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 constant process that relies on creativity, innovation & application in the marketplace
Creativity should be accompanied with Innovation!!

Entrepreneurs succeed by thinking and doing
new 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
Trends
Green Trend
Clean-Energy Trend
Organic-Orientation Trend
Trends (continued)
Social Trend
Health Trend
Web Trend
Sources of New Ideas

Consumers
(1 of 2)
Informal monitoring of potential ideas and needs. Formally arrange for consumers to express their opinions.
Existing products and services

Analysis uncovers ways to improve offerings that may result in a new product or service.
Distribution channels
Channel members can help market the newly developed products.
Sources of New Ideas

Federal government
(2 of 2)
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 own research and development efforts. May be:
A formal endeavor connected with ones current employment. An informal lab in a basement or garage.
Methods of Generating New Ideas

Focus groups
(1 of 2)
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 for further development, sometimes a good idea emerges.
Methods of Generating New Ideas

2)
(2 of
Brainwriting is similar to Brainstorming; it is a form 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.
Creative Problem Solving

Creativity: an important attribute of a successful entrepreneur.
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, and organizational factors.
Creative Problem-Solving Techniques
<<Insert Table 5.2>>

Brainstorming
(1 of 3)
Used in creative problem solving and idea generation. Creative problem solving: a method for obtaining new ideas focusing on the parameters.
Reverse brainstorming
A group method for obtaining new ideas focusing on the negative.
Brainwriting
Form of written brainstorming. It is a silent, written generation of ideas by a group of people.

Gordon method
(2 of 3)
Method for developing new ideas when the individuals are unaware of the problem.
Checklist method
Developing a new idea through a list of related issues.
Free association
Developing a new idea through a chain of word associations.
Forced relationships
Developing a new idea by looking at product combinations
Illustration of Forced Relationship Techniques
<<Insert Table 5.3>>

Collective Notebook Method
(3 of 3)
Developing a new idea by group members regularly recording ideas.
Attribute Listing
Developing a new idea by looking at the positives and negatives.
Big-Dream Approach
Developing a new idea by thinking without constraints.
Parameter Analysis
Developing a new idea by focusing on parameter identification and creative synthesis.
Illustration of Parameter Analysis
<<Insert Figure 5.1>>
Types of Innovation
Breakthrough
(1 of 2)
Fewest innovations. Establishes the platform on which future innovations in 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.
Types of Innovation
Ordinary
(2 of 2)
Occurs most frequently. Usually come from market analysis and pull not technology push.
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 line that are already marketed by other companies.
Classification of New Products: Consumers Viewpoint

Continuum proposed by Thomas Robertson is based on the disrupting influence that use of the product has on established consumption patterns.
Continuous innovations Dynamically continuous Discontinuous innovations
Continuum for Classifying New Products
Continuous Innovations
Dynamically Continuous Innovations
Discontinuous Innovations
(Least disrupting influence on established consumption patterns)
(Some disrupting influence on established consumption patterns)
(Involves the establishment of new consumption patterns and the creation of previously unknown products)
Figure 5.3
Classification of New Products: From a Firms Viewpoint

Firm may need to classify its new products on some similar dimensions.
Distinction can be made between new products and new markets.
Situation of new technology and new market:

Most complicated and difficult. Has the highest degree of risk.
New Product Classification System
A Model of the OPPORTUNITY RECOGNITION Process
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 four sections:

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.
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 competitive products/services most similar in filling the identified market need.
This indicates its unique selling propositions (USP).
Entrepreneur needs to reevaluate if the idea does not have at least 35 unique selling propositions.
The Market and the Opportunity

Addresses the size and the characteristics of the market.
Market data should be collected for at least three years. Can be done through gathering as much secondary (published) data as possible.
Entrepreneur can determine if the market is large enough and suitable to warrant time and effort required to further develop a business plan and actually enter the market.
Entrepreneur and Team Assessment

Entrepreneur and the entrepreneurial team need to be assessed.
Atleast one person on the team needs to have experience in the industry area of the new idea.
Allows the entrepreneur to determine if he is really suited to successfully move his idea into the market.
The Next Steps

Steps need to be identified and put in sequential order. Time and money needed for each step needs to be determined. If the idea cannot be self-financed, then sources of capital need to be identified.
PRODUCT PLANNING AND DEVELOPMENT PROCESS

Divided into five major stages:
Idea stage. Concept stage. Product development stage. Test marketing stage. Commercialization.
Establishing Evaluation Criteria

Criteria for evaluation need to be established at each stage of the product planning and development process. Criteria should be:
All inclusive and quantitative to screen the product carefully. Established to evaluate the new idea in terms of:
Market opportunity Competition Marketing system Financial factors Production factors.
The Product Planning and Development Process (1 of 3)
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.
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 repeat purchases, or intensity of preference analysis.
Test marketing stage
Increases certainty of successful commercialization. Provides actual sales results, which indicate the acceptance level of consumers.
E-commerce and Business Start-up

E-commerce offers entrepreneurs an opportunity to be creative and innovative.
Factors that facilitate a high-growth in electronic commerce:

Widespread use of personal computers. Adoption of intranets in companies. Acceptance of the Internet as a business communications platform. Faster and more secure systems.
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 ecommerce.
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.
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 and platforms. Should appear in all marketing materials.
Tracking Customer Information

Database:
Tracks activity of the:
Industry. Segment. Company.
Supports personal marketing targeted at individual clients.
Should be able capture customer attention with customized one-to-one marketing.
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 cost reductions. Company must possess the ability to economically draw customers to its Web site.

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Creativity and the Business Idea

McGraw-Hill/Irwin Entrepreneurship, 7/e

Copyright 2008 The McGraw-Hill Companies, Inc. All rights reserved.

Creativity & Innovation

Creative ideas springs up from the most

But not valued in Business until implemented!!!

Innovation = Ideas + Action

Creativity should be accompanied with Innovation!!

new things or old things in new way

Sources of New Ideas

Existing products and services

Sources of New Ideas

Research and development

Methods of Generating New Ideas

Methods of Generating New Ideas

Brainwriting is similar to Brainstorming; it is a form of written brainstorming.

Creative Problem Solving

Creative Problem-Solving Techniques

<<Insert Table 5.2>>

Creative Problem-Solving Techniques

Creative Problem-Solving Techniques

Illustration of Forced Relationship Techniques

<<Insert Table 5.3>>

Creative Problem-Solving Techniques

Developing a new idea by group members regularly recording ideas.

Illustration of Parameter Analysis

<<Insert Figure 5.1>>

Defining a New Innovation (Product or Service)

In the industrial market:

Classification of New Products: Consumers Viewpoint

Continuum for Classifying New Products

Dynamically Continuous Innovations

(Least disrupting influence on established consumption patterns)

(Some disrupting influence on established consumption patterns)

Classification of New Products: From a Firms Viewpoint

Situation of new technology and new market:

New Product Classification System

<<Insert Figure 5.4>>

A Model of the OPPORTUNITY RECOGNITION Process

<<Insert Figure 5.5>>

Opportunity Analysis Plan

A typical opportunity analysis plan has four sections:

The Idea and Its Conception

The Market and the Opportunity

Entrepreneur and Team Assessment

The Next Steps

PRODUCT PLANNING AND DEVELOPMENT PROCESS

Establishing Evaluation Criteria

The Product Planning and Development Process (1 of 3)

<<Insert Figure 5.6>>

The Product Planning and Development Process (2 of 3)

The Product Planning and Development Process (3 of 3)

Product development stage

Test marketing stage

E-commerce and Business Start-up

Factors that facilitate a high-growth in electronic commerce:

Using E-Commerce Creatively

Another option is to use the packages for ecommerce.

Components of Internet Commerce