Chapter 5 (P1-Roma)

INNOVATION: THE CREATIVE PURSUIT OF IDEAS

- OPPORTUNITY IDENTIFICATION: THE SEARCH OF NEW IDEAS

Entrepreneurial opportunity - it is opportunity identification is central to the domain of
entrepreneurship. At its core entrepreneurship revolves around the questions of why,
when,. and how opportunities for the creation of goods and services in the future arise in an
economy. Thus, opportunity recognition is the progenitor of both personal and societal
wealth. It has been argued that understanding the opportunity identification process is one
of the primary challenges of entrepreneurship research.

Source of Innovative Ideas

Entrepreneurs, ever alert to opportunities that inhabit the external and internal
environments around them, often spot potential opportunities that others simply cannot
recognize.

1. TRENDS
Trends signal shifts in the current paradigm (or thinking) of the major population. The close
observation of trends whether societal, technological, economic governmental and the
valuable insights that emanate there from constitute an abundant source of potential
entrepreneurial ideas.
Societal Trends: aging demographics, health and fitness growth, senior living
Technology Trends: mobile (cell phone) technology, e-commerce, Internet advances
Economic Trends: higher disposable incomes, dual wage-earner families, performance
pressures
Government Trends: increased regulations, petroleum prices, terrorism.

2. UNEXPECTED OCCURIENCES
Successes or failures because they were unanticipated or unplanned, often prove to be
major sources of innovation.

3. INCONGRUITES
Incongruities exist in the gap between expectation and reality.
For example, when Fred Smith proposed overnight mail delivery he was told, "I f it were
that profitable , the U.S. Post Office would be doing it.'

4. PROCESS NEEDS
Venture capitalists often refer to process needs in the marketplace as “pain” and to
innovative solutions to these needs as “paink illers
When the need is to do something better, innovative new medical devices, healthier foods,
more effective pharmaceuticals, and time-saving devices can be the result.
Venture capitalists often refer to process needs in the marketplace as “pain” and to
innovative solutions to these needs as “paink illers
When the need is to do something better, innovative new medical devices, healthier foods,
more effective pharmaceuticals, and time-saving devices can be the result.

INDUSTRY AND MARKET CHANGES

Continual shifts in the marketplace caused by changes in consumer attitudes,
advancements in technology and growth in the structure, design, or definition of markets or
industries are sources of emerging opportunity.
 An example can be found in the health care industry where in-patient care has undergone
radical changes, and at-home health care and preventive medicine have replaced
hospitalization and surgery as primary focus areas.

- Demographic Changes
Changes in population size, age, education, occupation, geographic locality, and similar
demographic variables often catalyze new entrepreneurial opportunities.

- Perceptual changes
Perceptual changes in people's interpretation of facts and concepts may be intangible but
meaningful.
The perceived need to be healthy and physically fit has created a demand for both health
foods and health facilities throughout the country.
People's desire to better use their personal time has been a born to the travel industry
which, capitalizing on consumers desires to "see the world” while they are young and
healthy, has led to increasing interest in time-share condominiums and travel clubs.

Knowledge and Learning Process

Once sources of ideas are recognized, entrepreneurs must use their existing knowledge
base, acquired through work, experience, and education, to hone ideas into actual
opportunities.
General industry knowledge, prior market knowledge, prior customer understanding,
specific interest knowledge, or any previous knowledge helps entrepreneurs to distill
unusual sources of innovative ideas into potential opportunities.

-Entrepreneurs blend imaginative and creative thinking with a systematic, logical process
ability. This combination is a key to successful innovation. In addition, potential
entrepreneurs are always looking for unique opportunities to fill needs or wants. They sense
economic potential in business problems by continually asking' what if?“ or why not ? They
develop an ability to see, recognize, and create opportunity where others find only
problems.

Role of creative thinking

-It is important to recognize the role of creative thinking in the innovative process.
Creativity is the generation of ideas that results in the improved efficiency or effectiveness
of a system.
Two important components of creative problem solving are process and people.
Process is goal oriented; it is designed to attain a solution to a problem. People are the
resources that determine the solution.
The process remains the same, but the approach that people take toward problem solving
varies: sometimes they will adapt a solution, and other times they will formulate a highly
innovative solution

-The nature of Creative Process

Creativity is a process that can be developed and improved. Everyone is creative to some
degree. However, as is the case with many abilities and talents (athletic, artistic, etc.), some
individuals have a greater aptitude for creativity than others.
Also, some people have been raised and educated in an environment that encouraged
them to develop their creativity.They have been taught to think and act creatively. For
others, the process is more difficult because they have not been positively reinforced; if they
are to be creative, they must learn how to implement the creative process.

Chapter 5 (P2- Morales

Innovation: The Creative Pursuit of Ideas

Creativity is not some mysterious and rare talent reserved for a select few. It is a distinct
way of looking at the world that is often illogical. The creative process involves seeing
relationships among things that others have not seen necessary but a structured and
focused chaos.

The creative process has four commonly agreed-on phases or steps. Most experts agree on
the general nature and relationships among these phases, although they refer to them by a
variety of names. Experts also agree that these phases do not always occur in the same
order for every creative activity. For creativity to occur, chaos is necessary but a structured
and focused chaos.

PHASE 1: BACKGROUND OR KNOWLEDGE ACCUMULATION

Successful creations are generally preceded by investigation and information gathering.

This usually involves extensive reading, conversations with others working in the field,
attendance at professional meetings and workshops, and a general absorption of
information relative to the problem or issue under study. Additional investigation in both
related and unrelated fields is sometimes involved.

PHASE 2: THE INCUBATION PROCESS

Creative individuals allow their subconscious to mull over tremendous amounts of

information gathered during the preparation phase. This incubation process often occurs
while they are
engaged in activities totally unrelated to the subject or problem. It happens even when they
are sleeping. This accounts for the advice frequently given to a person who is frustrated by
what appears to be an unsolvable problem

PHASE 3: THE IDEA EXPERIENCE

This phase of the creative process is often the most exciting, because it is when the idea or
solution the individual is seeking is discovered. Sometimes referred to as the "eureka
factor”, this phase is also the one the average person incorrectly perceives as the only
component of creativity. Sometimes the idea appears as a bolt out of the blue. Slowly but
surely, the person begins to formulate the solution. Because it is often difficult to determine
when the incubation process ends and the idea experience phase begins, many people are
unaware of moving from Phase 2 to Phase 3.

PHASE 4: EVALUATION AND IMPLEMENTATION

This is the most difficult step of a creative endeavor and requires a great deal of courage,
self-discipline, and perseverance. Successful entrepreneurs can identify ideas that are
workable and that they have the skills to implement. More important, they do not give up
when they run into temporary obstacles. Often they will fail several times before they
successfully develop their best ideas. In some cases, entrepreneurs will take the idea in an
entirely different direction or will discover a new and more workable idea while struggling to
implement the original one.

DEVELOPING YOUR CREATIVITY

 RECOGNIZING RELATIONSHIPS

- Many inventions and innovations are a result of the inventor's ability to see new and
different relationships among objects, processes, materials, technologies, and people. If you
wish to
improve your creativity, it helps to look for different or unorthodox relationships among the
elements and people around you. This activity involves perceiuing in a relational mode
Creative people seem to be intuitively awarc of this phenomengn and have developed a
talent for recognizing new and different relationships.

 DEVELOPING A FUNCTIONAL PERSPECTIVE

If expanded, the principle of perceiving in a relational mode helps develop a functional

perspective toward things and people. A creative person tends to view things and people in
terms of how they can satisfy his or her needs and help complete a project. If you wish to
become more innovative and creative, you need to visualize yourself in complementary
relationships to the things and people of the world. You must begin to look at things and
people in nonconventional ways and from a different perspective.

 USING THE BRAIN

The right brain hemisphere helps an individual understand analogies, imagine things, and
synthesize information. The left brain hemisphere helps the person analyze, verbalize, and
use rational approaches to problem solving. Although these two brain hemispheres process
information differently and are responsible for different brain activities and skills they are
integrated through a group of connecting nerve fibers called the corpus callosum.

Chapter 5 (P3-Gregorio)

THE ENTREPRENEURIAL PROCESS

 DEVELOPING CREATIVITY BRAINSTORMING

 OPPOSITE ATTRACT THINKUBATE

 TRIGGER GREAT IDEAS CONNECT

 ALWAYS CELEBRATE FAILURE MAKE ‘EM LAUGH

 SWEART IT REMEMBER YOUR WILDEST DREAM

ARENAS OF CREATIVITY

1. Idea creativity – thinking up a new idea or concept, such as an idea for a new product or
service or a way to solve a problem.

2. Material creativity – inventing and building a tangible object such as a product, an

advertisement, a report, or a photograph.

3. Organizational creativity – organizing people or projects and coming up with a new

organizational form or approach to structuring things.

4. Relationship creativity – an innovative approach to achieving collaboration, cooperation,

and win-win relationship with others. The person who handles a difficult situation well or
deals with a particular person in an especially effective manner is being creative in an
relationship or one-on-one context.

5. Event creativity – producing an evet such as an awards ceremony, team outing, or annual
meeting. The creativity here also encompasses décor, ways in which people are involved
sequence of happenings, settings, and so forth.

6. Inner creativity – changing one’s inner self; being open to new approaches to how one
does things and thinking about oneself in different ways; achieving a change of heart or
finding a new perspective or way to look at things that is significant departure from how
one has traditionally looked at them

7. Spontaneous creativity – acting in a spontaneous or spur-of-the-moment manner, such as

coming up with a witty response in a meeting, an off-the-cuff speech, a quick and
simple way to settle dispute, or an innovative appeal when trying to close a sale.

THE CREATIVE CLIMATE

- Creativity is most likely to occur when the business climate is right. No enterprise will have
creative owners and managers for long if the right climate is not established and nurtured.

THE FOLLOWING ARE SOME IMPORTANT CHARACTERISTICS

OF THIS CLIMATE:

-A trustful management that does not over control employees

-Open channels of communication among all business members
-Considerable contact and communication with outsiders
-A large variety of personality types
-A willingness to accept change
-An enjoyment in experimenting with new ideas
-Little fear of negative consequences for making a mistake
-The selection and promotion of employees on the basis of merit

INNOVATION AND THE ENTREPRENEUR

Innovation is the process by which entrepreneurs convert opportunities (ideas) into

marketable solutions. It is the means by which they become catalysts for change.
TYPES OF INNOVATION
(Four basic types of innovation exist.)

1. Invention – the creation of a new product, services, or process often one that is novel or
untried.

2. Extension – the expansion of a product, service, or process already in existence. Such as

concepts make a different application of a current idea.

3. Duplication – the replication of an already existing product, service, or process.

4. Synthesis – the combination of existing concepts and factors into a new formulation. This
involves taking a number of ideas or items already invented and finding a way that they can
form a new Application

THE MAJOR MISCONCEPTION OF INNOVATION

- The entire concept of innovation conjures up many thoughts and misconceptions; it seems
that everyone has an opinion as to what innovation entails.

- Innovation is planned and predictable.

-Technical specifications must be thoroughly prepared.
-Innovations relies on dreams and blue-sky ideas.
-Big projects will develop better innovations than smaller ones.
- Technology is the driving force of innovation success.

PRINCIPLES OF INNOVATION (THE MAJORE MOTIVATION PRINCIPLES ARE AS FOLLOW:)

Be action oriented – innovator always must be active and searching for new ideas,
opportunities, or source of innovation

Make the product, process, or service simple and understandable. – people must readily
understand how the innovations works.

Make the product, process, or service customer-based – innovators always must keep the
customer in mind.

Start small – they should begin small and then build and develop, allowing for planned
growth and proper expansion in the right manner and the right time.

Aim high – innovators should aim high for success by seeking a niche in the marketplace

Try/test/revise – innovator always should follow the rule of try, test, and revise. This helps
work out any flaws in the product, process, or service

Lean from failures – innovations does not guarantee success. More important, failure often
give rise to innovations

Follow a milestone schedule – every innovators should follow a schedule that indicated
milestone accomplishments
Reward heroic activity – this principle applies more to those involved in seeking and
motivating others to innovate. Innovative activity should be rewarded and given the proper
amount of respect.

Work, work, work – this is a simple but accurate exhortation with which to conclude the
innovation principle. It takes work not genius or mystery to innovate successfully.

Chapter 6 (P1-Ranises)
THE ENTREPRENEURIAL PROCESS

Facing Your Fears!

The inner journey to the creation of an entrepreneurial venture can be even more fearful
than the external process of developing a business plan and searching for capital building up
the courage to quit a job and start a new venture can sound easy and yet pose enormous
emotional challenges when the actual events are about to unfold.
- One consultant, Suzanne Mulvehill—author of Employee to Entrepreneur and host of her
own radio talk show-suggests particular strategies to follow when confronting the
emotional challenges of entrepreneurial start-ups. She coined the term Emotional
Endurance to signify the inner strength that is needed to make the jump from job to
venture.

Following are a few of the more significant strategies that may help entrepreneurs move
through the emotional journey.

1. Say yes to your yearning – In other words acknowledge the desire you are experiencing
to venture out on your own. It all begins with accepting the possibility that it could happen.
2. Visualize your success – Creating a vision of what could be may be a powerful motivator
to what will be it is important to write down this vision so it has tangible reality in this early
stage
3. Evaluate your beliefs– On a sheet of paper, list all of your beliefs about money,
business, and yourself. Then, in a similar column, write down how you would like to view
money, business, and yourself Compare these Beliefs and decide how far apart they are
and why.
4. Do what you love – There is no replacement for passion What you love is what will drive
you to succeed, even in the tough times Develop your business ideas around the types of
things that you absolutely love to do
5 Get educated – Avoid the myth that education saps out any desire to be an entrepreneur.
That may have been true 20 years ago but we have come a long way in our approaches to
business education Entrepreneur- ship education is the hottest subject in universities
worldwide Remember, knowledge is power.
6. Eliminate excuses – Whenever you hear yourself make an excuse for not doing
something, write it down and examine it later. Become aware of common excuses you may
be using that have no real foundation. Turn your “I cant's into open-ended questions that
allow you to explore the possibilities rather than shut the door
7. Know that there is no “right time.” Waiting for the proverbial perfect time is a trap that
many people fall into, only to find later that time passed them by. The only guarantee we
have about time is that it continues on, with or without us Rather than wait, you need to
proactively move on your idea.

8. Start small – It is always better to be realistic and reach for what you can accomplish in
the near future. The longer-term future may hold greater things for the venture, but at the
beginning you need to avoid being overwhelmed

9. Answer the “what ifs.”–Stop for a moment and write down all of the “what ifs that you
question yourself with. See if you can begin to logically answer the questions It’s amazing
how much courage will be gained by analyzing these contingencies

10. Ask for help – Reach out and find help. The maverick entrepreneur is a myth of the past.
Today, there is so much assistance available if you are willing to seek it out. Ignorance is not
asking questions; rather, ignorance is being arrogant enough to think you have all the
answers

The results of this investigation provide a basis for deciding whether a new venture is
feasible from a technical point of view.

MARKETABILITY
- Assembling and analyzing relevant information about the marketability of a new
venture are vital for judging its potential success. Three major areas in this type of analysis
are (1) investigating the full market potential and identifying customers (or users) for the
goods or service, (2) analyzing the extent to which the enterprise might exploit this
potential market, and (3) using market analysis to determine the opportunities and risks
associated with the venture. To address these areas, a variety of informational sources must
be found and used.

For a market feasibility analysis, general sources would include the following:

-General economic trends – Various economic indicators such as new orders,” inventories,
and consumer spending
-Market data – customers, customer demand patterns (e.g., seasonal variations in demand
governmental regulations affecting demand)
-Pricing data – caner of prices for the same, complementary, and substitute product; base
prices; and discount structures
-Competitive data – major competitors and their competitive strength

At this point, it is important note the value of marketing research in the overall assessment
and evaluation of new venture.

The approach clearly illustrates the need to evaluate each segment of the venture before
initiating the business or presenting it to capital sources.

To at in undemanding feasibility analysis, Appendix 6A includes a template used for

complete feasibility plan. This template has a question-and-answer format that allows
entrepreneurs to consider important arguments before moving forward with an idea.
Venture capitalists generally agree that the risks in any entrepreneurial venture are you,
your management team, and any apparent fundamental flaws in your venture idea.
Therefore, you need to make a reasonable evaluation of these risks.
THE CONTEMPORARY METHODOLOGIES FOR VENTURE EVALUATION

- With newer movements taking shape in the ever changing entrepreneurial world,
the following sections highlight some of the more contemporary methodologies being
utilized for concept assessment and new venture evaluation. From design methods to lean
start up procedures, the fast paced entrepreneurial environment is demonstrating newer
methods to enhance venture concepts though development.

The Design Methodology

Design is now a hot topic in the business world. The demand is becoming so great
that Universities are now building programs that take a general approach to design rather
than concentrating it in just technical schools like architecture and engineering Mirroring
the general design approach of companies like IDEO that tackle problems in industries
ranging from medicine to consumer products, Stanford University has founded an Institute
of Design is known as the d school and the Rotman School of Management at the University
of Toronto has built a curriculum hosed on the power of design in business. The goal of such
programs in to train future business leaders to incorporate design thinking into their general
practices much like PG and Microsoft, who have embraced design methods. This
methodology can be a vital source of assessment for entrepreneurs and their early stage
venture concepts.

DESIGN AND LEARN

Design it a learning process that shapes and converts ideas into form, whether that
is a plan of action, an experience, or a physical thing” Designers often begin the search for
viable solutions through the iterative process of learning the language, issues, critical success
factors, and constraints inherent in the domains of interest, Mistakes and failures along the
why are to be seen as opportunities to learn and adopt
. As a result, knowledge of and credibility within the ventures domain are increased
Researchers Michael G. Goldsby, Donald

F. Kuratko, and Thomas Nelson believe that design methodology provides specific learning
mechanism important for covering ideas into form. For example:

*Learning from qualitative research including impartial observations of stakeholders

related to the problem, participatory involvement with said stakeholders regarding the
problem, and immersion in available secondary research.

*Learning from prototyping a prototype (physical representation of the venture captures

the essence of an idea in a form that can be shared with others for communication and
feedback that closes the gap between concept and reality.

*Learning from feedback this feedback is on the efficacy of the venture idea and need not
be complicated. First impressions and instincts provide honest observations that can be used
in shaping future versions of the venture concept
DESIGN DEVELOPMENT
The design development methodology utilizes skills we all possess but are generally
ignored due to more conventional problem solving practices. Traditional methods have
relied on rational and analytical techniques while design relies on intuition, recognition, and
emotion While most businesses tend to focus on traditional dimensions of product,
performance, or price, latent needs are where the design methodology focuses. Latest
needs are often found in the areas of safety, reuse, sustainability, personalization, or
convenience.
Design Methodology take an initial concept idea and develops a proof of concept that
elicits feedback from relevant stakeholders. To accomplish this, several criteria must be met
including concept feasibility, concept desirability, and concept viability. The design method
converts ideas into form by integrating what is desirable from a user's point of view with
what is technically and economically viable.

Proof of Comp feasibility focuses on whether a potential venture concept can be produced
or is functionally possible.

Proof of Concept desirability focuses on whether a potential venture concept is desirable to

customers form, function, aesthetics, and on behavior are considered

Proof of concept Viability focuses on whether the venture concept can produce viable
financial outcomes.

- Simply put, a successful design process is made evident by a proof of concept that pro
vides evidence that a product or solution can be made, that it is desirable to customers,
and that it makes financial sense. It is largely up to the discretion of designers as to what
feedback, learning, and suggestion they choose to use in iterative versions of solutions.
Consequently, designers make judgment calls as to when good, better, or best solutions are
reached. Gestalt moments of insight and understanding affect the process and indicate
when a concept is ready for implementation

Design-Centered Entrepreneurship
Researchers Michael G. Goldsby, Donald F. Kuratko, Matthew R. Marvel, and
Thomas Nelson, have introduced the concept of design-centered entrepreneurship with a
conceptual model. In essence, the entrepreneur applies design methods in four action
stages of developing an opportunity Ideation involves taking action and learning that
culminates in a venture concept for further development. The prototyping stage addresses
the technical issues of the concept, and ensures that a feasible product or service can be
made and delivered. The market engagement action stage refines the concept for the
customer, as well as contributing to the acquisition of knowledge, or learning, from early
users. The business model action stage completes the development at the opportunity by
identifying the varying components of the model that will need to be in place for the
concept to be financially viable. Once the entrepreneur has developed a business concept
that appears pears feasible, desirable, and viable, start-up activities bring about the
fulfillment of the opportunity
The Lean Start-Up Methodology
Similar to design methodology, the learn Start Up methodology provides a scientific
approach to creating early venture concepts and delivers a desired product to customers
hands faster. Its philosophy originates from the Japanese concept of lean manufacturing,
which seeks to increase value creating practices and eliminate wasteful practices. The Lean
Start- Up methodology begins with the premise that every new venture is a grand
experiment that attempts to answer questions such as “Should this venture be created and
Will it be a sustainable business?

The Lean Start-Up methodology was first developed in 2011 by Eric Ries, founder of
IMVU Inc. as way to prevent waste in start ups and ensure that the business plan remains a
living document. The hard truth is that matter how much search is conduct and, how many
surveys are developed, and how great you create your financial predictions, your new
venture concepts will still be based on certain assumptions. It is critical that these
assumptions either be validated and or discarded as anon as possible. Reducing waste, in the
Lean Start- Up methodology, is minimizing the time and effort that goes into an incorrect
hypothesis by putting a lean-focused process on the development of your product or
service. As Rive states in his bestselling book, work smarter, not harder. Today, Steve Blank,
who is recognized for developing the Customer Development methodology, which launched
the Lean Start-up movement, along with Jerry Engel at the University of California Berkeley,
have created an entire course for educators known as the Leas Launchpad.”

KEY LEAN STARTUP KEY TERMINOLOGY

-Minimum viable Product (MVP The goal of producing an MVP is so get started
learning as soon as possible. This is the version of the product that enables a full rum on the
feedback up with a minimum of effort.

The Three A’s of Metrics

Actionable report mat demonstrate clear cause and effect.
Accessible report man be clear to entrepreneurs who are supposed to own them to
guide their decision-making
Auditable, entrepreneurs need the ability so spot check the data with mal
customers and the report mechanisms should not be too complex.

Pivot
A structured course correction designed to test a new fundamental hypothesis
about the product, strategy, and engine of growth. The decision whether to pivot or
persevere should be evaluated after each build-measure-learn feedback loop for the
hypotheses tested during that cycle.

Build-measure-Learn Feedback Loop

Think of this as applying the scientific method to your start-up. To begin, identify
which hypotheses to tem the value hypothesis and the growth hypothesis are always a and
place to start). The build stage consists of developing the MVP few this cycle. The must
critical section of the loop is ensuring you are measuring the correct thing. Do the
development efforts lead to real progress. This is when the three A’s of metrics come in
handy. The final stage in the cycle, learn, requires the entrepreneur take a hand look at their
sales and determine whether a pivot is repaired.

Validated Learning is defined as a process in which one learns by trying out an initial des and
then measuring it to validate the effect. Each rest of an idea is a single deration in a larger
process of many iterations whereby something is learnt and then applied to succeeding test.