2. What is An Opportunity?
(1 of 2)
• Opportunity Defined
– An opportunity is a favorable set of circumstances
that creates the need for a new product, service, or
business idea.
• Difference between an opportunity and an idea.
– An idea, as we defined it, is “Something imagined or
pictured in the mind”. The difference is that an idea
may or may not represent an opportunity.
2-2
3. What is An Opportunity?
(1 of 2)
• Most entrepreneurial firms are started in one
of two ways:
• Some firms are internally stimulated. An entrepreneur
decides to start a firm, searches for and recognizes an
opportunity, then starts a business.
• Other firms are externally stimulated. An entrepreneur
recognizes a problem or an opportunity gap and creates
a business to fill it.
2-3
I am not sure that there is much of a difference here
other than whether the business was founded before or
after the opportunity is recognized.
4. What is an Opportunity?
(2 of 2)
2-4
An opportunity has four essential qualities
5. Here is another perspective from the high- tech
industry.
• Research and Development by Firms
– Science Push approaches suggest that innovation
proceeds linearly:
Scientific discovery inventionmanufacturing marketing
– Demand Pull approaches argued that innovation
originates with unmet customer need:
Customer suggestions invention manufacturing
– Most current research argues that innovation is not so
simple, and may originate from a variety of sources and
follow a variety of paths.
2-5
This is very true in
industry.
6. Window of Opportunity
• Window of Opportunity
– The term “window of opportunity” is a metaphor
describing the time period in which a firm can realistically
enter a new market.
• Once the market for a new product is established, its window of
opportunity opens, and new entrants flow in.
• At some point, the market matures, and the window of opportunity
(for new entrants) closes.
2-6
7. Window of Opportunity
• Window of Opportunity
– The term “window of opportunity” is a metaphor
describing the time period in which a firm can realistically
enter a new market.
• Once the market for a new product is established, its window of
opportunity opens, and new entrants flow in.
• At some point, the market matures, and the window of opportunity
(for new entrants) closes.
2-7
10. First Approach: Observing Trends
(1 of 2)
• Observing Trends
– The first approach to identifying opportunities is to observe
trends and study how they create opportunities for
entrepreneurs to pursue.
– There are two ways that entrepreneurs can get a handle on
changing environmental trends:
• They can carefully study and observe them.
• They can purchase customized forecasts and market analyses from
independent research firms.
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11. First Approach: Observing Trends
(2 of 2)
2-11
Environmental Trends Suggesting Business or
Product Opportunity Gaps
12. Trend 1: Economic Forces
• Economic Forces
– Economic forces affect consumers’ level of disposable
income.
– When studying how economic forces affect opportunities,
it is important to evaluate who has money to spend and
who is trying to cut costs.
• An increase in the number of women in the workforce and their
related increase in disposable income is largely responsible for the
number of boutique clothing stores targeting professional women
that have opened in the past several years.
• Many large firms are trying to cut costs. Entrepreneurs have taken
advantage of this trend by starting firms that help other firms
control costs.
2-12
13. Trend 1: Economic Forces
• Economic Forces
– Economic forces affect consumers’ level of
disposable income.
Given today’s poor economy and assuming the
recovery takes 3 – 5 years, what business
opportunities can you think of?
2-13
14. Trend 2: Social Forces
(1 of 2)
• Social Forces
– Changes in social trends provide openings for new
businesses on an ongoing basis.
– The continual proliferation of fast-food restaurants, for
example, isn’t happening because people love fast food. It
is happening because people are busy, and have disposable
income.
– Similarly, the Sony Walkman was developed not because
consumers wanted smaller radios but because people
wanted to listen to music while on the go.
2-14
15. Trend 2: Social Forces
(2 of 2)
2-15
Examples of Social Forces That Allow For New
Business Opportunities
• Family and work patterns.
• The aging of the population.
• The increasing diversity in the workplace.
• The globalization of industry.
• The increasing focus on health care and fitness.
• The proliferation of computers and the
Internet.
• The increase in the number of cell phone users.
• New forms of entertainment.
16. Trend 2: Social Forces
(2 of 2)
2-16
Examples of Social Forces That Allow For New
Business Opportunities
What social changes might we see as a result of
Obama being elected president?
Are there potential business opportunities as a
result of these changes, if they occur?
17. Trend 3: Technological Advances
• Technological Advances
– Given the rapid pace of technological change, it is vital that
entrepreneurs keep on top of how new technologies affect
current and future business opportunities.
– Entire industries have emerged as the result of
technological advances.
• Examples include the computer industry, the Internet,
biotechnology, and digital photography.
– Once a new technology is created, new businesses form to
take the technology to a higher level.
• For example, RealNetworks was started to add audio capability to
the Internet.
2-17
18. Trend 3: Technological Advances
• Technological Advances
– What are the new emerging technologies that might
provide new business opportunities?
– What are the industries that will be impacted by these
technologies?
2-18
19. Trend 4: Political and
Regulatory Changes
• Political and Regulatory Changes
– Political and regulatory changes provide the basis for new
business opportunities.
• For example, laws that protect the environment have created
opportunities for entrepreneurs to start firms that help other firms
comply with environmental laws and regulations.
• Similarly, many entrepreneurial firms have been started to help
companies comply with the Sarbanes-Oxley Act of 2002. The act
requires certain companies to keep all their records, including
e-mail messages and electronic documents, for at least five years.
2-19
20. Trend 4: Political and
Regulatory Changes
• Political and Regulatory Changes
– What recent political and regulatory events have created
business opportunities?
– What are these opportunities?
2-20
21. 2-21
Technology
Trend 3
Greater use of
Computers at home
PO: 10 RI: 3
Social/Cultural
Trend 2
More leisure time
and travel
PO:9 RI: 2
Opportunity
Internet based
Travel services
Value 48
Challenge
Decline in use
Of travel agents
Value 48
New Ideas
Online travel sites
(Expedia, Travelocity)
Value 48
Social/Cultural
Trend 2
More leisure time
and travel
PO:9 RI: 2
Technology
Trend 3
Greater use of
Computers at home
PO: 10 RI: 3
New idea generation
using multiple trends
22. Second Approach: Solving a Problem
(1 of 2)
2-22
Second Approach: Solving a Problem
Sometimes identifying
opportunities simply
involves noticing a problem
and finding a way to
solve it.
These problems can be
pinpointed through observing
trends and through more simple
means, such as intuition,
serendipity, or chance.
Some business ideas are clearly
initiated to solve a problem.
For example, Symantec Corp.
created Norton antivirus
software to guard computers
against viruses.
24. Second Approach: Solving a Problem
(2 of 2)
2-24
Businesses Created to Solve a Problem
heelcuffs
25. Third Approach: Finding Gaps in the
Marketplace
• Gaps in the Marketplace
– A third approach to identifying opportunities is to find a
gap in the marketplace.
– A gap in the marketplace is often created when a product or
service is needed by a specific group of people but doesn’t
represent a large enough market to be of interest to
mainstream retailers or manufacturers.
• This is the reason that small clothing boutiques and specialty
shops exist.
• The small boutiques, which often sell designer clothes or clothing
for hard-to-fit people, are willing to carry merchandise that doesn’t
sell in large enough quantities for Wal-Mart, GAP, or JC Penney to
carry.
2-25
This can also happen in industry – niche
markets
26. Personal Characteristics of the Entrepreneur
2-26
Characteristics that tend to make some people better
at recognizing opportunities than others
Prior Experience Social Networks
Cognitive Factors Creativity
27. Prior Industry Experience
• Prior Industry Experience
– Several studies have shown that prior experience in an
industry helps an entrepreneur recognize business
opportunities. There are several explanations for this.
• By working in an industry, an individual may spot a market niche
that is underserved.
• It is also possible that by working in an industry, an individual
builds a network of social contacts who provide insights that lead
to recognizing new opportunities.
2-27
28. Cognitive Factors
• Cognitive Factors
– Studies have shown that opportunity recognition may be an
innate skill or cognitive process.
– Some people believe that entrepreneurs have a “sixth
sense” that allows them to see opportunities that others
miss.
– This “sixth sense” is called entrepreneurial alertness, which
is formally defined as the ability to notice things without
engaging in deliberate search.
2-28
29. Social Networks
(1 of 3)
• Social Networks
– The extent and depth of an individual’s social network
affects opportunity recognition.
– People who build a substantial network of social and
professional contacts will be exposed to more opportunities
and ideas than people with sparse networks.
– In one survey of 65 start-ups, half the founders reported
that they got their business idea through social contacts.
• Strong-Tie Vs. Weak-Tie Relationships
– All of us have relationships with other people that are
called “ties.” (See next slide.)
2-29
30. Social Networks
(2 of 3)
• Nature of Strong-Tie Vs. Weak-Tie Relationships
– Strong-tie relationship are characterized by frequent
interaction and form between coworkers, friends, and
spouses.
– Weak-tie relationships are characterized by infrequent
interaction and form between casual acquaintances.
• Result
– It is more likely that an entrepreneur will get new business
ideas through weak-tie rather than strong-tie relationships.
(See next slide.) – Hmmmmmm – Very interesting.
2-30
31. Social Networks
(3 of 3)
2-31
Strong-Tie Relationships Weak-Tie Relationships
These relationships, which
typically form between like-
minded individuals, tend to
reinforce insights and ideas that
people already have.
The relationships, which form
between casual acquaintances,
are not as apt to be between
like-minded individuals, so one
person may say something to
another that sparks a completely
new idea.
Why weak-tie relationships lead to more new business ideas
than strong-tie relationships
32. Creativity
(1 of 2)
• Creativity
– Creativity is the process of generating a novel or useful
idea. It is also the process of generating an innovation from
a new idea. So, I have changed our definition to “Creativity
is the process of generating and converting an idea into an
innovation.”
– Opportunity recognition may be, at least in part, a creative
process.
– For an individual, the creative process can be broken down
into five stages, as shown on the next slide.
2-32
33. Creativity
(2 of 2)
2-33
Five Steps to Generating Creative Ideas
It is my belief that the Eureka moment may be the
result of subconscious thinking.
34. Full View of the Opportunity
Recognition Process
2-34
Depicts the connection between an awareness of emerging trends and
the personal characteristics of the entrepreneur
35. Techniques For Generating Ideas
2-35
Brainstorming Focus Groups
Surveys Other Techniques
•User groups
•Trade shows
•Suppliers
36. Brainstorming
(1 of 2)
• Brainstorming
– Is a technique used to generate a large number of ideas and
solutions to problems quickly.
– A brainstorming “session” typically involves a group of
people, and should be targeted to a specific topic.
– Rules for a brainstorming session:
• No criticism.
• Freewheeling is encouraged.
• The session should move quickly.
• Leap-frogging is encouraged.
2-36
37. Brainstorming
(2 of 2)
• Brainstorming (continued)
– There are two reasons brainstorming generates ideas that
might not arise otherwise:
• Because no criticism is allowed, people are more likely to offer
ideas than they would in a traditional setting.
• Brainstorming sessions can generate more ideas than a traditional
meeting because brainstorming focuses on creativity rather than
evaluation.
– In most meetings, one person suggests an idea, and immediately the
rest of the group begins evaluating it. This happens because most
people are better at criticizing ideas than they are at suggesting new
ones.
2-37
38. Focus Groups
• Focus Group
– A focus group is a gathering of five to ten people, who
have been selected based on their common characteristics
relative to the issues being discussed.
– These groups are led by a trained moderator, who uses the
internal dynamics of the group environment to gain insight
into why people feel they way they do about a particular
issue.
– Although focus groups are used for a variety of purposes,
they can be used to help generate new business ideas.
2-38
39. Surveys
(1 of 2)
• Survey
– A survey is a method of gathering information from a
sample of individuals. The sample is usually just a fraction
of the population being surveyed.
• The most effective surveys sample a “random” portion of the
population, meaning that the sample is not selected haphazardly or
only from people who volunteer to participate.
• The quality of survey data is determined largely by the purpose of
the survey and how it is conducted.
– Surveys generate new product, service, and business ideas
because they ask specific questions and get specific
answers.
2-39
40. Surveys
(2 of 2)
2-40
Example of a suspect survey technique
Self-Selected Opinion Poll Result
Most call-in television
surveys or magazine write-in
polls are highly suspect
because the participants
represent what’s called a
self-selected opinion poll.
Most people who take the time
to participate in a self-selected
opinion poll do so because
their have either strong
positive or strong negative
feels about the a particular
product or topic.
41. Other Techniques
• Customer Advisory Boards / User Groups
– 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.
• Trade Shows
• Suppliers
2-41
42. Encouraging New Ideas
• Establishing a Focal Point for Ideas
– Some firms meet the challenge of encouraging, collecting,
and evaluating ideas by designating a specific person to
screen and track them—for if its everybody’s job, it may be
no one’s responsibility.
– Another approach is to establish an idea bank (or vault),
which is a physical or digital repository for storing ideas.
• Encouraging Creativity at the Firm Level
– Creativity is the raw material that goes into innovation and
should be encouraged at the organizational and individual
supervisory level.
2-42
43. Organizational Communication
2-43
SOURCE: Adopted from Richard L. Daft and Richard M. Steers, Organizations; A Micro-Macro Approach, 538 Copyright
1986 by Scott, Foresman and Company, Used by permission.
45. Protecting Ideas From Being Lost or Stolen
• Step 1
– The idea should be put in a tangible form such as entered
into a physical idea logbook or saved on a computer disk,
and the date the idea was first thought of should be entered.
• Step 2
– The idea should be secured. This may seem like an
obvious step, but is one that is often overlooked.
• Step 3
– Avoid making an inadvertent or voluntary disclosure of an
idea, in a manner that forfeits the right to claim exclusive
rights to it.
2-45
One of the concepts you will be introduced to in the course is the Product Life Cycle. This basically states that, over time, the sales of a given product/service follow a somewhat predictable path. When a product is first being introduced into a market, the process may be slow and gradual. The growth stage represents the time when sales curve up steeply. In maturity, sales continue to grow, then start to level off, and then begin to decline. Clearly, in the decline phase, sales of the product are starting to decline.
Disposable Income: Income remaining after deduction of taxes and social security charges, available to be spent or saved as one wishes.
