Creativity and the Business Idea Chapter 4 Creativity and the Business Idea McGraw-Hill/Irwin Copyright © 2013 by The McGraw-Hill Companies, Inc. All rights reserved.

Learning Objectives To identify various sources of ideas for new ventures To discuss methods available for generating new venture ideas To discuss creativity and the techniques for creative problem solving To discuss the importance of innovation

Learning Objectives To understand an opportunity assessment plan To discuss the aspects of the product planning and development process To discuss aspects of e-commerce and starting an e-commerce business

Table 4.1 - Trends of the Next Decade

Sources of New Ideas Consumers Existing products and services Entrepreneurs should: Formally or informally monitor potential ideas Ensure that the idea represents a large enough market to support a new venture Existing products and services Formally monitor and evaluate competitive products and services on the market

Sources of New Ideas Distribution channels Federal government Help suggest and market new products Federal government Taking cue from pending patents Ideas evolve in response to government regulations Research and development Formal endeavor connected with one’s current employment

Methods of Generating New Ideas Focus groups Open in-depth discussion led by a moderator Brainstorming Group method for obtaining new ideas and solutions Rules of brainstorming No criticism Freewheeling is encouraged

Methods of Generating New Ideas Quantity of ideas is desired Combinations and improvements of ideas are encouraged Brain writing Form of written brainstorming Problem inventory analysis Obtaining new ideas and solutions by focusing on problems Used to test a new product idea

Creative Problem Solving Method for obtaining new ideas focusing on the given parameters Can be stifled by perceptual, cultural, emotional, and organizational factors

Table 4.3- Creative Problem-Solving Techniques

Creative Problem Solving Brainstorming Reverse brainstorming Group method for obtaining new ideas by focusing on the negative aspects Care must be taken to maintain group morale Gordon method Developing new ideas when the individuals are unaware of the problem

Creative Problem Solving Ensures that solutions are not clouded by preconceived ideas and behavioral patterns Checklist method Developing a new idea through a list of related issues Free association Developing a new idea through a chain of word associations

Creative Problem Solving Forced relationships Developing a new idea by looking at product combinations Focused on generating ideas from relationship patterns between elements of a problem Collective notebook method Developing a new idea by group members regularly recording ideas

Creative Problem Solving 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

Figure 4.1 - Illustration of Parameter Analysis

Innovation Types of innovation Breakthrough Technological Extremely unique innovations that establish the platform on which future innovations can be developed Should be protected by patents, trademarks, and copyrights Technological Advancements in the product/market area Needs to be protected

Innovation Ordinary Extend technological innovation into a better product or service or one that has a different market appeal Result of market analysis and pull and not technological push

Innovation Defining a new innovation (product or service) Newness of a product can be attributed to: Consumer concept Change in the package or container Modifications in the appearance of the product (industrial market)

Innovation Classification of new products Consumer’s viewpoint Determines newness in terms of its effect Degree of newness depends on: Level of behavioral change or new learning required by the consumer

Figure 4.3 - Continuum for Classifying New Products

Innovation Firm’s viewpoint An innovative entrepreneurial firm should: Make a distinction between new products and new markets New products - Defined in terms of amount of improved technology Market development - Based on the degree of segmentation

Figure 4.4 - New Product Classification System

Figure 4.5 - A Model of the Opportunity Recognition Process

Product Planning and Development Process Product life-cycle: Stages each product goes through from introduction to decline Product planning and development process: Stages in developing a new product

Product Planning and Development Process Evaluation criteria Market opportunity Competition Marketing system Financial factors Production factors

Figure 4.6 - The Product Planning and Development Process

E-commerce and Business Start-up Offers entrepreneurs an opportunity to be creative and innovative Factors that facilitate growth Widespread use of personal computers Adoption of intranets in companies Acceptance of the Internet as a business communications platform Faster and more secure systems

E-commerce and Business Start-up Using E-commerce creatively An entrepreneur has to decide whether he or she will run the Internet operations: Within the company or outsource these operations to Internet specialists Integrate front-end and back-end operations Integrate customer orders, with distribution channels and manufacturing capabilities Allow flexibility for specific customer orders

E-commerce and Business Start-up Web sites Important features include: Ease of use Search capability E-mail response system Speed Compatibility with different browsers and platforms

E-commerce and Business Start-up Tracking customer information Provides personalized one-to-one marketing Laws protecting the privacy of individuals should be followed

E-commerce and Business Start-up Doing E-Commerce as an entrepreneurial company Essential criteria Economic and convenient delivery of products Products should cater to a wide market Feasibility of shipping outside own geographical location Significant cost reductions Ability to economically draw customers to its Web site