CHAPTER 6

DEVELOPING A
BUSINESS PLAN:
IDEATION, CREATIVITY
AND INNOVATION
Ideas are the beginning points of all fortunes
 
IDEATION

• Ideation-the beginning of business endeavor

• Prior to commencement of formal planning, development and actually
getting in to the business venture, there has to be an idea. In short,
business begins with ideation. In fact, the thought of entrepreneurship in
the context of putting up and managing a self-owned business is a great
and wonderful idea by itself. A prospective entrepreneur must convince
himself and believe or realize that being an owner-manager of the business
(no matter how small) can lead to riches and economic prosperity as other
successful entrepreneurs has done it. The thought that establishing a
business for himself will in the long-term lead him to independence and
detach himself from lifelong subservience and exploitation by employers.
Where to get Ideas?

There are some specific sources that can be of help to you like the
following:
1. Trade journals
2. Trade associations
3. Conventions, exhibits, trade shows, and consumer shows
4. Country or government affairs
5. Product catalogs
6. Consumer magazines
7. “Opportunity” magazines
Where to get Ideas?

8. Government publication
9. Directories
10. Old advertisements
11. Import/export bulletins
12. Current events and announcement
13. Trends and fashion
14. Club/Society meeting/functions, etc.
15. Social encounters
16. Pedestrians observation
17. Deliberate search
In their book entitled “The Entrepreneurs Complete Sourcebook”,
Authors A. W. Hiam and K.W. Olander suggested the following as
options for sourcing business ideas:
1. Draw from personal interest or hobbies
2. Look around for limitations in existing products or services
3. Make a wish list
4. Think of new and different ways to use existing products
5. Take a close look at the social scene and how it is changing
6. Consider technological advances and how they affect currently available
products.
7. Think of possible spin-offs from existing products or services that might be
developed
8. Look at currently established business
9. Consider the features of particular products
What is an idea that is worth a business?
• The idea that is worth a business should be one that has a market
now and in the future.
The idea could be either a product, a service, system, etc. which could
fall in any of the following categories:
1. Need/want driven
2. Time-saving-driven
3. Money-savings
4. Unique or incorporating a strong competitive advantage
5. Linked to personal interest, preferably passion
6. Linked to personal talent, ability, or specialized knowledge
7. Can improve one’s earning/income potentials
8. Contribute to solving socio-economic problem
9. Can satisfy basic and extreme needs of
• As Orcullo (2004) is saying idea is a simple four-letter word but for a
person who knows how to use it, it can move mountains.
• Simple as it is, developing and nurturing an idea into something worth
a business is easier said than done. Alex Osborn, the originator of the
word brainstorming, advises that the more ideas a person produces,
the more original and better quality ideas one will find among them.
The statistics assessments of ideas show that the most original ideas in
brainstorming will appear after 60-80 ideas.
Evaluating an idea
• While it was earlier postulated that ideation is the beginning of a business, a wrong choice of
idea could be the cause of the failure of the business itself. Hence, a prospective entrepreneur
has to carefully examine or evaluate which idea will bring brighter promises in terms of profit
potentials. Kimberly Stansell suggests the following tips on evaluating ideas to make business
out of it.
1. Don’t let your ideas follow money-let money follow your ideas
2. See yourself as a problem solver
3. Use research as a weapon against failure
4. Make sure your idea has longevity
5. Take a risk on your own ideas
6. Test your idea against the past, present and future
7. Know the idiosyncrasies of your market (Who can judge the prospects and the impacts or future of the
business but the market or the customers of the entrepreneur. Instead of being Narcissistic or self-centered
and strongly biased about your own ideas, have a feel or be in constant touch with your market as to their
needs, wants, biases, purchasing power, and all those factors that affect the buying process. Remember:
The life of the business depends on how the ideas, products or services essentially depend on the
partnership between the market and the entrepreneur)
• 
PROTECTING YOUR IDEAS/LEGAL ISSUES FOR THE ENTREPRENEUR

What is Intellectual Property?

• Intellectual property is any patents, trademarks, copyrights, or trade
secrets held by the entrepreneur.
• This represents important assets to the entrepreneur and should be
understood even before engaging the services of an attorney. Too often
entrepreneurs, because of their lack of understanding of intellectual
property, ignore important steps that they should have taken to protect
these assets.
Patent
• Patents: Grants holder protection from others making, using, or
selling similar idea. It is a contract between the government and
inventor. In exchange for disclosure of the invention, the government
grants the inventor exclusivity regarding the invention for a specified
amount of time. At the end of this time, the government publishes
the invention and it becomes part of the public domain. Patent is
granted to any person who “invents or discovers any new and usable
process, machine, manufacture, or composition of a matter, or any
new and useful improvements.
Trademarks
• Trademarks is a distinguishing word, name, or symbol used to identify a
product.
• A trademark may be a word, symbol, design, or some combination of such,
or it could be a slogan or even a particular sound that identifies the source
or sponsorship of certain goods or services. Unlike the patent, trademark
can last indefinitely, as long as the mark continues to perform its indicated
function. The trademark is given an initial 20-years registration with 20-
years renewable terms. In the fifth to six year, the registration is required
to file an affidavit with the PTO indicating that the mark is currently in
commercial use. If no affidavit is filed, the registration is canceled.
Copyrights
• Copyrights is a right given to prevent others from printing,
copying, or publishing any original works of authorship.
• A copyright protect original works of authorship. The protection in a
copyright does not protect the idea itself, and thus it allows someone
else to use the idea or concept in different manner. The copyright law
has become especially relevant because of the tremendous growth of
the use of the Internet, especially to download music, literary work,
pictures, and videos, to name a few.
Trade secrets
• Trade secrets is Protection against others revealing or disclosing
information that could be damaging to business.
• In certain instance, the entrepreneur may prefer to maintain an idea
or process as confidential and to sell or license it as a trade secret.
The trade secret will have a life as long as the idea or process remains
a secret. Employees involving in working with an idea or process may
be asked to first sign a confidential information agreement that will
protect against their giving out the trade secret either while an
employee or after leaving the organization.
Today, there is a tendency to take the opposite view that the more information entrusted to
employees, the more effective and creative employees can be. The argument is that
employees cannot be creative unless they have a complete understanding of what is going on in
the business.
1. To try to control this problem, entrepreneur should consider some of the ideas listed below:
2. Train employees to refer sensitive questions to one person.
3. Provide escorts for all office visitors
4. Avoid discussing business in public places.
5. Keep important travel plans secret.
6. Control information that might be presented by employees at conferences or published in
journals.
7. Use simple security such as locked file cabinets, passwords on computers where necessary
8. Have employees and consultants sign nondisclosure agreements.
9. Debrief departing employees on any confidential information.
10. Avoid faxing any sensitive information.
11. Mark documents confidential when needed.
 MANAGEMENT OF INTELLECTUAL PROPERTY

Licensing
Licensing is a contractual agreement giving right to others to use intellectual
property in return for royalty of fee.
• Licensing may be defined as an arrangement between two parties, where one party has
proprietary right over some information, process, or technology protected by a patent,
trademark, or copyright. This arrangement, specified in a contract, requires the
licensee to pay a royalty or some other specified sum to the holder of the proprietary
rights (licensor) in return for permission to copy the patent, trademark, or copyright.
Product Safety and Liability
• Product Safety and Liability is a responsibility of a company to meet any legal
specifications regarding a new product covered by the consumer product safety
Act.
Contract
• Contracts is a legally binding agreement between two parties
The entrepreneur, in starting a new venture, will e involved in a number
of negotiations and contracts with vendors, landlords, and clients. A
contract is a legally enforceable agreement between two or more
parties as long as certain conditions are met.
ENTREPRENEURSHIP CREATIVITY

• Creativity, innovation and entrepreneurism are inseparable. Creativity

is an essential part of innovativeness. As pointed out by Lampikoski
and Emden, creativity is the starting point of a process which, when
skillfully managed, brings an idea into innovation.
Environmental stimulating to creativity
1. Freedom. Freedom in deciding what to do or how to accomplish the task; a sense of control over one’s
own work ideas.
2. Good Project management. A manager serves as a good role model, is enthusiastic, has good
communication skills, protects the project team from outside distractions and interference, matches tasks
to workers skills and interests, and sets of clear direction without managing too tightly.
3. Sufficient resources. Access to necessary resources, including facilities, equipment, information, funds
and people.
4. Encouragement. Management enthusiasm for new ideas, creating an atmosphere free of threatening
evaluation.
5. Various organizational characteristics. A mechanism for considering new ideas a corporate climate
marked by cooperation and collaboration across levels and divisions, an atmosphere where innovation is
prized and failure is not fatal.
6. Recognition. A general sense that creative work will receive appropriate feedback, recognition and
reward.
7. Sufficient time. Time to think creatively about the problem, to explore different perspectives rather than
having to impose an already-determine approach.
8. Challenging. A sense of challenge arising from intriguing nature of the problem itself or its importance to
the organization
9. Pressure. A sense of urgency that is internally generated from competition as a personal sense of
challenge.
10. Outside organizations. From a general desire to accomplish something important.
Environmental obstacles to creativity
If there is an environment conducive to stimulating creativity, Professor Amabile also cited various environmental
obstacles to creativity and these are as follows:
1. Various organizational characteristics. Inappropriate reward system in the organization; excessive red tape; a
corporate climate marked by a lack of cooperation across divisions and levels; little regard for innovation in
general.
2. Constraint. Lack of freedom in deciding what to do or how to accomplish the task; a lack of sense of control
over one’s own work and ideas.
3. Organizational disinterest. A lack of organizational support, interest, or faith in a project; a perceived apathy
toward any accomplishments coming from the project.
4. Poor project management. A manager who is unable to set clear direction, who has poor technical or
communication skills, who controls too tightly, or who allows distraction and fragmentation of the team’s efforts.
5. Evaluation. Inappropriate or inequity evaluation and feedback systems, unrealistic expectations; an
environmental focused on criticism and external evaluations.
6. Insufficient resources. A lack of appropriate facilities, equipment, materials, funds, people.
7. Time pressure. Insufficient time to think creativity about the problem; too great a workload within unrealistic
time frame; high frequency of “fire-fighting”
8. Overemphasis on status quo. Reluctance of managers or coworkers to change their way of doing things; an
unwillingness to take risks.
9. Competition. Interpersonal or intergroup competition within the organization fostering a self-defensive attitude.
THE CONCEPT OF INNOVATION

• Essentially, innovation is doing something different. It could be

introducing either something new or different, even if it is old enough.
Innovativeness is a characteristic of an individual, team, organization
or even a nation. Innovativeness is a capacity to create ideas and
develop them to usable products or services.
Measures to stimulate innovation and creativity

The following are proven situations and scenarios in the workplace to be one that
encourages individual creativity and innovation:
1. Tolerance of risk. Allow experimentation without fear of any consequences.
2. Tolerance of risk. Law external control
3. Low division of labor. Narrowly defined jobs.
4. Acceptance of ambiguity. Emphasis on objectivity constraints creativity.
5. Tolerance to conflict. Encourage diversity of opinions
6. Tolerance of the impractical. Impractical ideas are not stifled.
7. Focus on ends rather than means. Having clear goals.
8. All-channel communication
9. Lateral flow of communication
Creativity and innovation can also be stimulated through any of the following
strategies and motivational efforts.
• Encourage; don’t nitpick. Keep in mind that there is no shortage of good idea,
workable ideas, but that there’s a tremendous shortage to receptivity of ideas.
• Be not judgmental. Harshly critical people destroy creativity and initiative.
• Help shy people. Some of the best ideas come from shy people.
• Stimulate curiosity. Create an environment where it is okay to ask questions.
• Create necessity. Human beings have an amazing ability to innovate their way
out of seemingly impossible situations.
• Allow time for fray. Certain highly creative people need solitary time to do
their best thinking.
• Catalyze group problem solving. It is essential to capture the creativity of
multiple minds thrashing out together. Brainstorming and other group activities
produces extraordinary results.
End