CHP2-ECI (2) PDF: The Difference Between Idea & Opportunity

The Difference Between Idea & Opportunity An opportunity is a favorable set of circumstances that creates a need for a new product, service, or business. An idea is a thought, an impression, or a notion. An idea may or may not meet the criteria of an opportunity. This is a critical point because ma...

The Difference Between Idea & Opportunity An opportunity is a favorable set of circumstances that creates a need for a new product, service, or business. An idea is a thought, an impression, or a notion. An idea may or may not meet the criteria of an opportunity. This is a critical point because many entrepreneurial ventures fail not because the entrepreneurs that launched them didn’t work hard, but rather because there was no real opportunity to begin with. Before getting excited about a business idea, Four Essential Qualities of an it is crucial to understand whether the idea Opportunity fills a need and meets the criteria for an opportunity. The Difference Between Idea & Opportunity Before getting excited about a business idea, it is crucial to understand whether the idea fills a need and meets the criteria for an opportunity. https://pas-wordpress-media.s3.amazonaws.com/content/uploads/2015/09/shutterstock_314069150.jpg Business Opportunity An entrepreneur recognizes a problem or an opportunity gap and creates a business to address the problem or fill the identified gap. For an entrepreneur to capitalize on an opportunity, its window of opportunity must be open. The term window of opportunity is a metaphor describing the time period in which a firm can realistically enter a new market. Product Life Cycle Three Ways to Identify Opportunities There are three approaches entrepreneurs use to identify an opportunity their new venture can choose to pursue. Three Ways to Identify an Opportunity Three Ways to Identify Opportunities: 1-Observing Trends - The most important trends to follow are economic trends, social trends, technological advances, and political action and regulatory changes. - As an entrepreneur or potential entrepreneur, it’s important to remain aware of changes in these areas. - Question: Discuss and elaborate on the various trends you observe in market.  Three Ways to Identify Opportunities Observing Trends Environmental Trends Suggesting Business or Product Opportunity gaps Three Ways to Identify Opportunities Observing Trends  Economic Forces Understanding economic trends is very helpful in determining areas that are ripe for new business ideas, as well as areas to avoid. For example, when the economy is strong, people have more money to spend and are willing to buy discretionary products and services that enhance their lives. In contrast, when the economy is weak, not only do people have less money to spend, they are typically more reluctant to spend the money they have. Three Ways to Identify Opportunities Observing Trends  Economic Forces Practice! Due to improved economic performance, what do you think if the Omani workers salaries increased? Disposable income? Number of Coffee shops? Number of boutique and fashion shops? Number of fitness centers? Number of beauty salons?  Three Ways to Identify Opportunities Observing Trends  Social Forces An understanding of the impact of social forces on trends and how they affect new product, service, and business ideas is a fundamental piece of the opportunity recognition puzzle. Often, the reason that a product or service exists has more to do with satisfying a social need than the more transparent need the product fills. For example, The proliferation of fast-food restaurants, for example, isn’t primarily because of people’s love of fast food, but rather because of  Three Ways to Identify Opportunities Observing Trends  Social Forces Changes in social trends alter how people and businesses behave and how they set their priorities. These changes affect how products and services are built and sold. Here is a sample of the social trends that are currently affecting how individuals behave and set their priorities: Aging of the population. An increasing focus on health and wellness. The increasing diversity of the workforce. Increased participation in social networks.  Three Ways to Identify Opportunities Observing Trends  Social Forces Growth in the use of mobile devices An increasing focus on health and wellness Emphasis on clean forms of energy, including wind, solar, biofuels, and others Continual migration of people from small towns and rural areas to cities Desire for personalization (which creates a need for products and services that people can tailor to their own tastes and needs)  Three Ways to Identify Opportunities Observing Trends  Social Forces Practice! Due to an increase in health and wellness, what do you think will happen to the following? Life expectancy? Number of fitness centers? Number of nutrition centers? Number of sport clubs? Organic food and beauty products shops? Three Ways to Identify Opportunities Observing Trends  Technological Advances Advances in technology frequently dovetail with economic and social changes to create opportunities. For example, there are many overlaps between an increased focus on health and wellness and technology. Wearable devices, like the Fitbit Flex and the Jawbone Up, help people maintain a healthy lifestyle by monitoring their movements and sleep.  Three Ways to Identify Opportunities Observing Trends  Technological Advances Another aspect of technological advances is that once a technology is created, products often emerge to advance it. For example, Rokit is a high-end mobile accessories company that makes smartphone cases, headphones, portable USB device chargers and Bluetooth speakers. Rokit wouldn’t exist if it weren’t for the advent of the smartphone industry  Three Ways to Identify Opportunities Observing Trends  Political Action & Regulatory Changes Political and regulatory changes also provide the basis for business ideas. For example, new laws often spur start-ups that are launched to take advantage of their specifications.  Three Ways to Identify Opportunities Solving a Problem The second approach to identifying opportunities is to recognize problems and find ways to solve them. Problems can be recognized by observing the challenges that people encounter in their daily lives and through more simple means, such as intuition, serendipity, or chance. EXAMPLE, One of the most pressing problems facing the United States and other countries like European countries is finding alternatives to fossil fuels. A large number of entrepreneurial firms are being launched to take on this  Three Ways to Identify Opportunities Solving a Problem Practice! What do you think the problem behind the existence of MarkeetEx?  Three Ways to Identify Opportunities Finding Gaps in the Market Gaps in the marketplace are the third source of business opportunities. There are many examples of products that consumers need or want that aren’t available in a particular location or aren’t available at all. A common way that gaps in the marketplace are recognized is when people become frustrated because they can’t find a product or service Rogan Café, Misfat Al Abryeen, Al Hamra, that they need and recognize that Oman other people feel the same way.  Three Ways to Identify Opportunities Finding Gaps in the Market Product gaps in the marketplace represent potentially viable business opportunities. For example, Tish Cirovolo realized that there were no guitars on the market made specifically for women. To fill this gap, she started Daisy Rock guitars, a company that makes guitars just for women. Daisy Rock guitars are stylish, come in feminine colors, and incorporate design features that accommodate a woman’s smaller hand and build. In a related Personal Characteristics of Entrepreneurs: that contribute to opportunity recognition The Opportunity Recognition Process Personal Characteristics of Entrepreneurs: that contribute to opportunity recognition Researchers have identified several characteristics that tend to make some people better at recognizing opportunities than others. 1- Prior experience 2- Cognitive factors 3- Social networks 4- Creativity The Opportunity Recognition Process  Personal Characteristics of Entrepreneurs: that contribute to opportunity recognition Prior experience Cognitive factors Social networks Creativity -It helps -May be an innate -People who build a - is the process of entrepreneurs skill or a cognitive substantial network generating a novel recognize business process. of social and or useful idea. opportunities. professional This innate skill is contacts will be -teams of -working in an called exposed to more entrepreneurs industry, an entrepreneurial opportunities and working within a individual may spot alertness, which is ideas company are a market niche that formally defined as sources of creativity is underserved. the ability to notice -40 percent and 50 for their firm. things without percent of those engaging in who start deliberate search. businesses got their ideas through social contacts.  Five Steps to generating Creative Ideas For an individual, the creative process can be broken into five stages, as shown in the below figure. Pg 58 Five Steps to generating Creative Ideas  Five Steps to generating Creative Ideas Preparation is the background, experience, and knowledge that an entrepreneur brings to the opportunity recognition process. Incubation is the stage during which a person considers an idea or thinks about a problem; it is the “mulling things over” phase. Insight is the flash of recognition when the solution to a problem is seen or an idea is born. It is sometimes called the “eureka” experience. Evaluation is the stage of the creative process during which an idea is subjected to scrutiny and analyzed for its viability. Elaboration is the stage during which the creative idea is put into a final form: The details are worked out and the idea is transformed into something of value, such as a new product, service, or business concept. Techniques for Generating Ideas Brainstorming Is simply the process of generating several ideas about a specific topic. A brainstorming “session” typically involves a group of people, and should be targeted to a specific topic. The session is not used for analysis or decision making—the ideas generated during a brainstorming session need to be filtered and analyzed, but this is done later. The session should moves quickly and criticism is not allowed.  Techniques for Generating Ideas Focus Groups Is a gathering of 5 to 10 people who are selected because of their relationship to the issue being discussed. Involve a group of people who are familiar with a topic, are brought together to respond to questions, and shed light on an issue through the give-and-take nature of a group discussion. work best as a follow-up to brainstorming, when the general idea for a business has been formulated—such as casual electronic games for adults—but further refinement of the idea is needed.  Techniques for Generating Ideas Library & Internet Research Libraries are often an underutilized source of information for generating business. The best approach to utilizing a library is to discuss your general area of interest with a reference librarian, who can point out useful resources, such as industry-specific magazines, trade journals, and industry reports. Internet research is also important. If you are starting from scratch, simply typing “new business ideas” into Google will produce links to newspaper and magazine articles about the “hottest” and “latest” new business idea.  Techniques for Generating Ideas Customer Advisory Board Some companies set up customer advisory boards that meet regularly to discuss needs, wants, and problems that may lead to new ideas. Day-In-The-Life Research A type of anthropological research, where the employees of a company spend a day with a customer. Some companies routinely sends teams of testers to the homes and businesses of its users to see how its products are working and to seek insights for new product ideas.  Techniques for Generating Ideas Day-In-The-Life Research