Creativity and the business idea

CREATIVITY AND THE BUSINESS
IDEA
Entrepreneurship

TRENDS
 A Trend provides great opportunities for starting a new venture
 Seven trends that provide opportunities are:
1. Green Trend 2. Clean Energy
3. Organic Orientation 4. Economic
5. Social 6. Health
7. Web Trend
Chapter: Creativity and the business idea
Source: Entrepreneurship by Hisrich, Peters & Shepherd

SOURCES OF NEW IDEAS
 Consumers
 Existing Products and Services
 Distribution Channels
 Federal Government
 Research & Development

METHODS OF GENERATING NEW IDEAS
 Even with the wide variety of sources available, coming
up with an idea to serve as the basis for the new venture
can still be a difficult problem.
 The entrepreneur can use several methods to help
generate and test new ideas, including focus groups, brain
storming and problem inventory analysis.
 Focus groups
 Brainstorming
 Problem inventory

METHODS OF GENERATING NEW IDEAS (Continued)
 Focus groups
 Group of individuals providing information in a
structured format is called a focus group.
 The group of 8 to 14 participants is simulated by
comments form other group members in
creatively conceptualizing and developing new
product idea to fulfill a market need.

 Brainstorming
 A group method of obtaining new ideas and solutions is
called brainstorming.
 The brainstorming method for generating new ideas is
based on the fact that people can be stimulated to
greater creativity by meeting with others and
participating with organized group experiences.
 Although most of the ideas generated from the group have
no basis for further development, often a good idea
emerges.

 Problem inventory analysis
 Problem inventory analysis uses individuals in a manner that
is analogous to focus groups to generate new product ideas.
 However instead of generating new ideas themselves,
consumers are provided with a list of problems in a general
product category.
 They are then asked to identify and discuss products in this
category that have the particular problem.

 Problem inventory analysis (Continued)
 This method is often effective since it is easier to
relate known products to suggested problems and arrive
at a new product idea then to generate an entirely new
idea by itself.

Creative problem solving is a method for obtaining new
ideas focusing on the parameters. The following are the
most popular creative problem solving methods:
Brainstorming Reverse brainstorming
Synectics Gordon method
Checklist Free association method
Forced relationship Collective notebook method
Heuristics Scientific method
Value analysis Attribute listing
Matrix charting Big dream approach
Parameter analysis
CREATIVE PROBLEM SOLVING

 Brainstorming
 The first technique, brainstorming, is probably the most well known and
widely used for both creative problem solving and idea generation.
 It is an unstructured process for generating all possible ideas about a
problem within a limited time frame through the spontaneous contribution of
participants.
 All ideas, no matter how illogical, must be recorded, with participants
prohibited from criticizing or evaluating during the brainstorming session.
CREATIVE PROBLEM SOLVING (Continued)

 Reverse brainstorming
 Similar to brainstorming, but criticism is allowed and encouraged as a
way to bring out possible problems with the ideas.
 Synectics
 Synectics is a creative process that forces individuals to solve
problems through one of four analogy mechanisms:i.e personal,
direct, symbolic and fantasy.
 This forces participants to consciously apply preconscious mechanisms
through the use of analogies in order to solve problems.

 Gordon method
 Gordon method is a method of developing new ideas when the
individuals are unaware of the problem.
 In this method the entrepreneur starts by mentioning a general
concept associated with the problem.
 The group responds with expressing a number of ideas.
 Checklist method
 Developing a new idea through a list of related issues is checklist
method of problem solving.

 Free association method
 Developing a new idea through a chain of word association is free
association method of problem.
 Forced relationship
 Forced relationship is the process of forcing relationship among some
product combination. It is technique that asks questions about objects
or ideas in an effort to develop a new idea.
 Collective notebook method
 It is method in which ideas are generated by group members regularly
recording ideas.

 Heuristics
 It is method of developing a new idea through a thought process progression.
Scientific method
 This is a more structured method of problem solving, including principles and
rules for concept formation, making observations and experiments, and finally
validating the hypothesis.
Value analysis
 Value analysis is developing a new idea by evaluating the worth of aspects of
ideas.

Attribute listing
 This is an idea finding technique that requires the entrepreneur to list the
attributes of an item or problem and then look at each from a variety of
viewpoints.
Matrix charting
 Matrix charting is a systematic method of searching for new opportunities
by listing important elements for the product area along two axis of chart
and then asking questions regarding each of these elements.

Big dream approach
 Developing a new idea by thinking about constraints is big-dream
approach of problem solving.
 Parameter analysis
 Parameter analysis is developing a new idea by focusing on parameter
identification and creative synthesis.

Once idea emerges from idea sources or creative
problem solving, they need further development and
refinement in to final product or service to be offered.
This refining process- the product planning and
development process – is divided in to five major stages.
Idea stage, concept stage, product development stage,
test marketing stage and commercializing; it result in
the product life cycle.
PRODUCT PLANNING AND DEVELOPMENT PROCESS

Establishing evaluation criteria
 At each stage of product planning and development process, criteria
for evaluation need to be established.
 These criteria should be broad, yet quantitative enough to screen the
product carefully in the particular stage of development.
 Criteria should be developed to evaluate the new product in terms of
market opportunity, competition the marketing system, financial
factors and production factors.
 A market opportunity and adequate market demand must exist.
(Continued)

Establishing evaluation criteria (Continued)
 Current competing producers, prices, and policies should be evaluated
in their impact on market share.
 The new product should be compatible with existing management
capabilities. The product should be able to be supported by and
contribute to the company’s financial structure.
 The compatibility of new product’s production requirements with
existing plant, machinery, and personnel should be determined.
 Entrepreneurs should formally evaluate an idea throughout its
evolution.
(Continued)

 Idea Stage
 Promising new product ideas should be identified and impractical ones
eliminated in the idea stage allowing maximum use of company’s
resources.
 In the systematic market evaluation checklist method, each new
product idea is expressed in terms of its chief values, merits, and
benefits.
 This technique can be used to determine which new products should
be pursued.
(Continued)

 Idea Stage (Continued)
 The company should also determine the need for the new product and
its value to the company.
 Need determination should focus on the type of need, its timing, the
users involved, the importance of marketing variables, and the overall
market structure and characteristics.
 In determining the product’s value to the firm, financial scheduling
should be evaluated.
(Continued)

 Concept Stage
 In the concept stage the refined idea is tested to determine
consumer acceptance without manufacturing it.
 One method of testing is the conversational interview in which
respondents are exposed to statements that reflect attributes of the
product.
 Features, price, and promotion should be evaluated in comparison
to major competitors to indicate deficiencies or benefits.
 The relative advantages of the new product versus competitors
should be determined.
(Continued)

 Product Development Stage
 In this stage, consumer reaction is determined, often through a
consumer panel.
 The panel can be given samples of the product and competitors’
products to determine consumer preference.
 Participants keep the record of their use of product and comment on
its virtues and deficiencies.
 The panel of consumers is also given a sample of product and one or
more competitive product simultaneously.
 One test product may already be on the market, whereas the other
test product is new.
(Continued)

Test Marketing Stage
 Although the results of product development stage provide the
basis of the final marketing plan, the market test can be done to
increase the certainty of successful commercialization.
 The last step in the evaluation process, the test marketing stage,
provides actual sales results which indicate the acceptance level of
consumers.
 Positive test results indicate the degree of probability of a
successful product launch and company formation.
(Continued)

The Internet
 The Internet started in the 1970s with a U.S. Defense Department
program named ARPA.
 In the early 1990s the concept of World Wide Web pages was
developed.
 The Internet is a channel for the creation of profitable companies.
 Electronic business (e-business) is any process that a business
organization conducts over a computer-mediated network.
E-Commerce and Business Start-Up and Growth

The Internet (Continued)
 Electronic commerce (e- commerce) is any transaction completed
over a computer-mediated network that involves the transfer of
ownership or rights to use goods or services.
 Factors that facilitate the growth of e- commerce are:
 The widespread use of personal computers.
 The adoption of intranets in companies.
 The acceptance of the Internet as a business communications
platform.
(Continued)

Starting an E-Commerce Company
 The Internet is especially important for small and medium-sized
companies as it lets them minimize marketing costs while reaching
broader markets.
 An entrepreneur starting an Internet commerce venture needs to
address many of the same strategic and tactical questions as other
companies plus some specific online issues.
 One decision is whether to run the Internet operations within the
company or outsource these operations.
 If handled in-house, expensive equipment and software have to be
maintained.
(Continued)

Starting an E-Commerce Company (Continued)
 There are numerous possibilities for outsourcing the Internet business.
 The two major components of Internet commerce are front-end and
back- end operations.
 Front-end operations are encompassed in the website’s functionality,
such as search capabilities, shopping cart, and secure payment.
 Back-end operations involve integrating customer orders with
distribution channels and manufacturing capabilities.
(Continued)

 Website
 A website is an online connection between the company and its
customers and can be developed in-house or outsourced.
 There are several important features of every website.
 Each website should have search capabilities.
 Other functions include shopping cart, secure server connection,
credit card payment, and customer feedback features.
(Continued)

 Website (Continued)
 Orders and other sensitive customer information should be transferred
only through secure servers.
 An Internet company should also obtain a merchant account, which
will allow the acceptance of major credit cards.
 A successful website has three characteristics: speed, speed, and
speed.
 Short download time should be the primary concern of website
developers.
(Continued)

 Website (Continued)
 A website should be easy to use, customized for specific market target
groups, and compatible with different browsers.
 If the company is targeting international markets, then translation and
cultural adaptation need to be considered.
 Probably the most difficult aspect of setting up an online business is
advertising and promoting the web pages.
 A company can advertise its website through search engines, banner
ads, e-mail, and classifieds.
 Banner ads can be targeted to the exact audience of the firm.
(Continued)

 The entrepreneur should collect e-mail addresses from customers for
targeted e-mail campaigns.
 The Internet offers many low-cost or free services for small
businesses, including Internet access, unlimited e-mail accounts,
online calendar, instant messaging, and online conference rooms.
(Continued)

 Tracking Customer Information
 Electronic databases support personal marketing targeted at
individual clients.
 The online company can capture customers’ information in many
ways.
 The U.S. government has generally maintained a policy of
noninvolvement with Internet regulation, but the Federal Trade
Commission has also pressed for new laws to protect minors.
(Continued)

 Relationships and Endorsements by Other Companies
 The company needs to establish strong connections with other
companies in the supply chain to create an end-to-end value
stream.
 The entrepreneur should protect its innovations and its relationship
with other companies.
 Another type of relationship is endorsements by prominent Internet
companies and associations.
 Participation in merchant networks can bring needed credibility.
(Continued)

 Doing E-Commerce as an Entrepreneurial Company
 The decision to go online should be made on a case-by-case basis.
 The products should be able to be delivered economically and
conveniently.
 The product has to be interesting for a large number of people.
 Online operations have to bring significant cost reductions compared
with brick-and-mortar operations.
(Continued)

 Doing E-Commerce as an Entrepreneurial Company
(Continued)
 The company must have the ability to economically draw customers
to its website.
 Conflict between traditional and online marketing channels can lead
to a hostile, competing position of once partnering companies.
(Continued)

Creativity and the business idea

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