Opportunity Recognition… Value, Trend Analysis, & Design Thinking Dr. Robert McNamee Academic Director, Innovation & Entrepreneurship Institute Assistant Professor, Strategic Management Department If you enjoy these topics check out… SGM Creativity & Organizational Innovation SGM Entrepreneurial & Innovative Thinking

What do you sell?? Companies sell products / services Companies [should] create / provide / sell value!! –Understanding how your company creates value, and looking for ways to add more value, are critical elements in developing a competitive strategy. –Michael Porter discussed this in his influential 1985 book "Competitive Advantage," in which he first introduced the concept of the value chain.Competitive Advantage –Focuses on systems and how inputs are changed into the outputs purchased by consumers

What is Value? Value (customer / consumer POV) –What does s/he do and need? –What problems does s/he need to solve? –What improvements does s/he look for? –What does s/he value? Value is subjective… vs.

Discussion – Examples of Value Automotive Industry – What value is provided by a car? –Get you from place A to place B… “in style”… reliably & safely… maybe with a number of other people or lots of stuff… –Maybe while giving you an exciting “driving experience” or entertaining you on the way… –Creates a semi-private mobile space—a home away from home… Telecommunication – What value is provided by a mobile phone? –Connects you to others across town / around the world –Clear signal / no dropped calls / rapid support –Offers entertainment options (“packages”) –Simple billing

Value Chain Activities $25,000$2.36 / kg$2,600 / lb A set of activities that an organization carries out to create value for its customers Value Created – Cost to Create that Value = Margin / Profit A set of activities that an organization carries out to create value for its customers Value Created – Cost to Create that Value = Margin / Profit Think about all the activities that are involved in turning an egg into a chicken sandwich Or cocoa beans into truffles & then into a $25k dessert…

Recognizing Opportunities & Generating Ideas  Creative idea is a new connection between concepts, methods, outcomes, etc… that provides potential value  …for an existing problem/need in a new or improved way  …for a new problem/need/opportunity  Opportunity (Probortunity):  Needs, wants, problems, & challenges  Favorable set of circumstances that creates a demand for a new product, service, business, or other innovation  An idea-opportunity match offers promise if…  Attractive (your idea is better than other options)  Durable (the need will be around for a while)  Timely (you are in the ‘window of opportunity’)  Associated with creating value for consumer / customer (Someone will buy it / delivers substantially more value than corresponding costs)

Opportunities vs. Ideas… You can “kill” an idea but you can never kill an opportunity!!! –If you have identified a valid need (opportunity), this need still remains even if your idea turns out to impractical or unfeasible… –If you have identified an attractive opportunity spend the time to diverge (consider multiple ideas) and evaluate / evolve your ideas. On the other hand an opportunity is not the same as an innovative idea – beware of flying cars & time machines! –We all know it would be great to have a flying car Be realistic -- others have identified the opportunity before We don’t have a cost-effective, technologically-feasible solution –Ask yourself – what makes this solvable now (and by me)? –If you are not sure an idea is technologically / cost feasible… Either work hard to figure out if it is feasible / practical Or move on to think about other opportunities

ACTIVE SEARCH / PROBLEM SOLVING (e.g., Design Thinking) PRIOR KNOWLEDGE + SOCIAL NETWORKS ENTREPRENEURIAL ALERTNESS (e.g., Trends) It has been said that all new ideas come from outside of ourselves Opportunity Recognition

Prior Knowledge & Social Networks (not Facebook) Strong Ties –Those you know well / see frequently –Often similar to you –Triadic Closure You get to know the people your close friends know well Creates tight cliques w/ redundant knowledge Weak Ties –People you don’t know well / don’t see often –Source of new perspectives, ideas, knowledge (& jobs) –Brokerage > Innovation Opportunity When a person connect two disconnected networks

Entrepreneurial Alertness Opportunities –Unexpected Occurrences Unexpected Successes as well as Failures –Incongruities When things don’t match up (gaps) –Process Needs When something just does not work We will look at process innovation (but also products) –Changes in Perception If you can see things from a different angle you may come up with some unique ideas Drucker: Discipline of Innovation 0(Pack1-3)/01_intro/1-2)%20The%20Discipline%20of%20Innovation.pdf

Entrepreneurial Alertness Opportunities –Industry / Market Changes Industries and Markets evolve –Demographic Changes Millenials, Baby Boomers, etc… –New Knowledge / Technologies Stand on the shoulders of giants (e.g., $9 bike, $50 tablet) One IMPORTANT take away –Innovation can be systematic and requires hard work –“Know when to research and when to brainstorm” Obvious opportunities are frequently no longer opportunities Drucker: Discipline of Innovation 0(Pack1-3)/01_intro/1-2)%20The%20Discipline%20of%20Innovation.pdf

PEST, PESTLE, etc… Political Economic Social Technological [Legal] [Environmental] These are high level macro trends that affect all industries…

Active Problem Solving… Design Thinking Tim Brown & IDEO… “…imbues the full spectrum of innovation activities with a human-centered design ethos…” “…powered by a thorough understanding, through direct observation, of what people need and want in their lives”

How Design Thinking Happens… “The myth of creative genius is resilient: We believe that great ideas pop fully formed out of brilliant minds, in feats of imagination well beyond the abilities of mere mortals…” In reality innovation is “…the result of hard work augmented by a creative human-centered discovery process and followed by iterative cycles of prototyping, testing, and refinement.

Design Thinking Mindsets… content/uploads/2011/03/BootcampBootleg2010v2SLIM.pdf

Ready, Fire, Aim

Design Thinking Process