1. RECOGNIZING OPPORTUNITY
CHAPTER THREE

2. New Ventures Fundamental realities
Most new ventures are works in process and works of art
Most business plans are obsolete at the printer
Speed, adroitness of reflex, and adaptability are crucial
The key to succeeding is failing quickly and recouping quickly

3. New Ventures Fundamental realities
Success is highly situational, depending on time, space, context, and stakeholders
The best entrepreneurs specialize in making “new mistakes” only
Starting a company is much harder than it looks, or you think it will be; but you can last a lot longer and do more than you think if you do not try to do it solo

4. Sources of New Venture Ideas

5. Ideas as Tools
Finding a good idea is the first step in the process of converting an entrepreneur’s creativity into an opportunity.
The new business that simply bursts from a flash of brilliance is rare.
Usually a series of trail-and-error iterations is necessary before a promising product or service fits what the customer is willing to pay for.
Starting a business is very much a series of fits and starts, brainstorms and barriers.

6. The Great Mousetrap Fallacy
Ralph Waldo Emerson helped create the great mousetrap fallacy.
It is often assumed that success is possible if an entrepreneur can just come up with a new idea.
But ideas are inert and worthless.
Only 1-3% of investment ideas receive financing.

7. Contributors to the Fallacy
Oversimplified accounts of the ease with which such ventures as Xerox, IBM, and Polaroid made their founders wealthy contribute to the fallacy
Inventors may underestimate the importance of what it takes to make a business succeed.
Contributing to the fallacy is the inventor’s psychological ownership of the invention rather than the business venture.
Another source of the fallacy lies in a technical and scientific orientation: a desire to do it better.

8. Idea an Opportunity? Attractive Timely Durable
Is anchored in a product or service, which creates or adds value for its buyer or end user.
Timely
The “window of opportunity” must be open and remain open long enough.
Durable
Also, having the best idea first is not a guarantee of success.
Unless having the best idea also includes the capacity to preempt other competitors, the first does not necessarily mean most viable.

9. Where are Opportunities Born?
Technology sea change
Moore’s Law
Metcalf’s Law
Disruption
Market sea change
Value chain disruption/obsolescence/vulnerability
Deregulation

10. Moore’s Law & Peter Drucker’s Postulate
Moore’s Law—the power of the computer chip will double every eighteen months at constant price—is actually being exceeded by modern chip technology.
Peter Drucker’s Postulate states that a tenfold increase in the productivity of any technology results in economic discontinuity. (radical innovation)
These innovations have led to creation of major new inventions and technologies.

11. Gilder’s & Metcalf’s Law
Gilder’s Law – the total bandwidth of communication systems triples every twelve months. New developments seem to confirm that bandwidth availability will continue to expand at a rate that supports Gilder's Law.
Robert Metcalf's law states that the "value" or "power" of a network increases in proportion to the square of the number of nodes on the network. In other words, if you have four nodes, or computers, on a network, say, an office intranet, its "value" would be four squared (4^2), or 16.
If you added on addition node, or PC, then the value would increase to 25 (5^2).

12. Ideas versus Opportunities: Search for Sea Changes

13. New Product/Service Ideas Sources
Technological Trends
Gene Therapy
Nanotechnology
Wireless Technology
Who will have the next great idea?!

14. How to Continuously Uncover and Evaluate Entrepreneurial Opportunities
IRRITATION/PLEASURE
SURPLUS/SHORTAGE
Boston
London
Galveston
LIMITS
MARKET INEFFICIENCY
IMPORT/EXPORT
- GEOGRAPHIC
- INDUSTRIAL
COPYCAT

15. Creativity Little is really know about the process
Attributes of people considered creative?

16. The Nature of Creativity
What is known about creativity:
Function perspective- it is the production of novel and useful ideas.
Outcome perspective- it generates valuable, useful products and services, procedures and processes.
It occurs at both an individual and a group level.
It is a matter of choice on the part of the person involved.
Creativity as a process
Time is an important variable
Creativity is NOT a linear process but is iterative and chaotic

17. PATTERN RECOGNITION Is not logical, linear and additive
Intuitive and inductive
The creative linking (or cross association) of two or more in-depth “chunks” of experience, know-how, and contacts.
“50,000 chunks” of experience

18. Risk Propensity
Prospect Theory

19. An Exercise
CONNECTIONS

20. The Invention Process

21. Challenges to Creativity
No time for creativity
No confidence
No creative skills

22. Removing the Roadblocks
Start with the familiar
Identify a problem and solve it
Use your personal network
Make time for creativity and innovation
Think in opposites

23. Taking Advantage of a Disconnect
A Paper Airplane