Chapter 4: Creativity and the Business Idea

Trends
A trend is a change or development toward something new or different.
A trend often provides a great opportunity to start a business. Specially, when the entrepreneur is at the start of a
trend it works as a precious opportunity.

1. Green Trend
Green sector is a big opportunity in which investment can be made. This sector has a lot of potential as it is
responsible for providing food to people and raw material to firms. Many entrepreneurs have invested in green
sector and it has been a top trend in entrepreneurship.

2. Clean Energy Trend

As the problem of pollution is becoming more and more serious, the people of the world are giving more importance
to clean energy over traditional energy. Therefore, the investment in clean energy has also become an important
trend.

3. Organic Orientation
The demand for organic products is increasing day by day. As people are becoming more and more aware of the
dirtiness of production process in factories, they are becoming more oriented towards organic commodities.
Moreover, the advantages of the organic products have further increased their demand by people.

4. Economic Trend
An economic trend may be a trend that involves producing goods that are cheap. Because of competition, it has
become a trend to produce goods at minimum costs. Therefore, the entrepreneurs are investing in new and up to
date technologies to decrease their costs.

5. Social Trend
A social trend is a trend in social media. Nowadays consumers are influenced by online trends; therefore, it provides
an opportunity to start a business in product which is trending on social media. Moreover, a social trend may also
mean a new fashion that is becoming popular in the society.

6. Health Trend
Health maintenance and concerns about health-care provisions together are one of the biggest trends which provide
many opportunities to entrepreneurs. As world’s population ages, it requires health services. So this is an area in
which the investment will be profitable.

7. Web Trend
Web trends are similar to social trends with slight difference. While social trends are on social media, web trends are
trends in blogger community. These trends are also a type of signal to the entrepreneurs to invest in a specific area.

8. Types of Limitation Strategies

Limitations are the hurdles in the way of entrepreneurial process. A successful entrepreneur knows how to deal with
these hurdles. Various strategies are used to overcome limitations and achieve entrepreneurial goal.

9. Managing Newness
Newness is like a double edged sword. On the one hand, newness represents something rare, which can help
differentiate a firm from its competitors.
On the other hand, newness creates a number of challenges for entrepreneurs.
Thus it is the responsibility of an entrepreneur to consider how to deal with this newness.

Sources of New Ideas

1. Consumers
Consumers are most important source of ideas. Entrepreneurs pay close attention to potential customers and their
preferences. Thus by focusing on consumers, an entrepreneur can find new ideas to invest.

2. Existing Products and Services

An entrepreneur should closely analyse the existing products in the market. In this way they will be able to improve
the existing products that have more sales and profit potential. This will give rise to a new product.

3. Distribution Channels
Member of the distribution channels are also an excellent sources for new ideas because they are familiar with the
needs of the market. Not only they can give suggestions for new products but can also help in marketing these new
products.

4. Federal Government
The federal government can also be a source of new product ideas in two ways. First, the files of the Patent Office
contain numerous new product possibilities. From Patent Office, entrepreneurs can find ideas about products that
can be launched based on newly invented technology or product.
Second, the federal government makes laws that make the use of something necessary. As a result a new market
emerges generating opportunity for potential entrepreneurs.

5. Research and Development

The largest source of new ideas is the entrepreneur’s own “research and development” efforts. By researching, the
entrepreneur may find gaps in the market. He may supply products that are not available in the market. He may also
take advantage of over demand of a product.

Methods of Generating Ideas

Even with a wide variety of sources available, coming up with an idea to serve as the basis of a new venture can be a
problem. The entrepreneur can use several methods to help generate and test new ideas.

1. Focus Groups
Focus groups are groups of individuals providing information in a structured format. In a focus group, a moderator
leads a group of people through an open, in depth discussion and tries to generate ideas. The group of 8-14
participants is frequently stimulated by comments from each other. In addition to generating new ideas, the focus
group is an excellent method for initially screening ideas and concepts.

2. Brainstorming
Brainstorming is a group method for obtaining new ideas and solutions. In brainstorming, a group of people have a
meeting in which they all put forward as many ideas and suggestions as they can think of. In brainstorming, no
criticism is allowed while freewheeling is encouraged because the wilder the idea, the better it is. Quantity of ideas is
desired; the greater the number of ideas, the greater the likelihood of the emergence of useful ideas. Combinations
and improvements of ideas are encouraged; ideas of others can be used to produce still another new idea.
3. Brain-writing
Brain writing is a form of written brainstorming. This method differs from classical brainstorming by giving
participants more time to think than in brainstorming session, where the ideas are expressed spontaneously. Brain
writing is a silent, written generation of ideas by a group of people. The participants write their ideas on special
forms or cards that circulate within the group which usually consists of six members. Each group member generates
and writes down three ideas during a five-minute period. The form is passed on to the adjacent person who writes
down three new ideas, and so on, until each form has passed all participants.

4. Problem Inventory Analysis

It is a method for obtaining new ideas and solutions by focusing on problems. In this method, consumers are
provided with a list of problems and are asked to identify and discuss products that have those particular problems.

Creative Problem Solving

1. Brainstorming
The first technique, brainstorming, is probably the most well-known and widely used both for creative problem
solving and in idea generation. In creative problem solving, brainstorming can generate ideas about a problem within
a short time frame through the spontaneous contributions of participants. A good brainstorming session starts with
a problem statement that is neither too broad nor to narrow. Once the problem statement is prepared, usually 8-12
individuals are selected to participate. All ideas matter and criticism is not allowed during the brainstorming session.

2. Reverse Brainstorming
It is a group method for obtaining new ideas focusing on the negative. Reverse brainstorming is similar to
brainstorming except that criticism is allowed. The process usually involves the identification of everything wrong
with an idea, followed by a discussion to overcome these problems.

3. Gordon Method
It is a method for developing new ideas when the individuals are unaware of the problem. It begins with group
members not knowing the exact nature of the problem. The entrepreneur starts by mentioning a general concept
associated with the problem and the group responds by expressing number of ideas to solve the problem.

4. Checklist Method
It is a method for developing a new idea through a list of related issues or suggestions. The entrepreneur can use the
list of questions or statements to guide the direction of developing entirely new ideas or concentrating on specific
idea areas.

5. Free Association
It is a method for developing new idea through a chain of word associations. First, a word or phrase related to the
problem is written down, then another and another, with each new word attempting to add something new to the
on-going thought process, thereby creating a chain of ideas ending with a new product idea emerging.

6. Forced Relationships
‘Forced relationships’ is the process of forcing relationships among some product combinations. It is a method of
developing a new idea by looking at product combinations. It is a technique that asks questions about objects or
ideas in an effort to develop a new idea.

7. Collective Notebook Method

In the collective notebook method, a small notebook that easily fits in a pocket—containing a statement of the
problem, blank pages, and any pertinent background data—is distributed. Participants consider the problem and its
possible solutions, recording ideas at least once, but preferably three times, a day. At the end of a week, a list of the
best ideas is developed, along with any suggestions.

8. Attribute Listing
It is method for developing a new idea by looking at the positives and negatives. Attribute listing is an idea-finding
technique in which the entrepreneur lists the attributes of an item or problem and then looks at each from a variety
of viewpoints. Through this process, originally unrelated objects can be brought together to form a new combination
and possibly a new product/service that better satisfies a need.

9. Big-Dream Approach
It is a method for developing a new idea by thinking without constraints. The big-dream approach requires that the
entrepreneur dream about the problem and its solution; that is, the entrepreneur should think big. Every possibility
should be recorded and investigated without considering any negatives involved or the resources required. Ideas
should be conceptualized without any constraints until an idea is developed into a workable form.

10. Parameter Analysis

It is a method for developing a new idea by focusing on parameter identification and creative synthesis. Parameter
identification involves analysing variables in the situation to determine their relative importance. After identification,
the relationships between parameters are examined. Through evaluation of parameters and relationships, the
solutions are developed.

Innovation
Innovation is the key to economic development of any company, region of a country, or country itself. As
technologies change, older products/services decrease in sales and old industries dwindle. Inventions and
innovations are the building blocks of the future of any economic unit. Three major types of innovation are given
below.

1. Breakthrough Innovation
The Breakthrough Innovations are extremely unique and they happen less frequently. These innovations establish
the platform on which future innovations in an area are developed. These innovations are usually protected by
strong patents, trade secrets and/or copyrights. Breakthrough innovations include such ideas as penicillin, the steam
engine, the computer, the airplane, the automobile, the internet, and nanotechnology.

2. Technological Innovation
Technological Innovation occurs more frequently than breakthrough innovation and in general is not at the same
level of scientific discovery and advancement. However, they are very meaningful as they offer advancements in the
product/service/market area. Such innovations as personal computer, the flip watch for containing pictures, voice
and text messaging and the jet airplane are examples of technological innovations.

3. Ordinary Innovation
Ordinary Innovation is the one that occurs most frequently. These more numerous innovations usually extend an
existing innovation into a better product or service or one that has a different market appeal. These innovations
usually come from market analysis; therefore, market has very strong effect on this type of innovation.

Defining a New Innovation (Product or Service)

One of the dilemmas faced by entrepreneurs is defining a new product or service or identifying what is actually new
or unique in an idea. Most of the times firms change label or packaging of their products and advertise them as new,
but the inner product is the same without any change. Firms use this tactic to increase their profits or to sell more
products. Thus from consumer point of view, it is a new product but it is actually not.

In the industrial market, firms may call their products ‘new’ when only slight changes or modifications have been
made in the appearance of the product. In the process of expanding their sales volume, many companies add
products to their product line that are already marketed by other companies. Such products are new for firms but
not for the consumer.

Firms are constantly looking for new markets to enter to increase profits and make more effective use of their
resources. Other firms are changing one or more of the marketing mix elements to give old products a new image.

Classification of New Products

New products may be classified from the viewpoint of either the consumer or the firm.

From a Consumer’s Viewpoint

To identify a new product from consumer’s point of view is by looking how much behavioural change or new
learning is required by the consumer to use the product. This technique looks at newness in terms of its effect on the
consumer rather than whether the product is new to a company.

There are three categories for innovations based on which we can see their influence on established consumption
patterns. Continuous innovations have least disrupting influence on established consumption patterns. Dynamically
continuous innovations have some disrupting influence on established consumption patterns. Discontinuous
innovations involve the establishment of new consumption patterns and the creation of previously unknown
products.

From a Firm’s Viewpoint

The innovative entrepreneurial firm, in addition to recognizing the consumer’s perception of newness, should also
classify its new products on some other dimensions. From a firm’s point of view there is an important distinction
between new technology and new markets. Whether the product uses new technology or is launched in a new
market, it will be considered as new from a firm’s point of view.

A situation in which there is new technology and a new market is the most complicated and difficult and has the
highest degree of risk. Since the new product involves new technology and customers that are now being served, the
firm will need a new and carefully planned market strategy.

Opportunity Recognition
The ability to recognize the opportunity is fundamental to the entrepreneurial process as well as growing business. A
business opportunity represents a possibility for the entrepreneur to successfully fill a large enough unsatisfied need
that results enough sales and profits.

One model for opportunity recognition process indicates that recognizing an opportunity often results from the
knowledge and experience of the individual entrepreneur. This prior knowledge is a result of a combination of
education and experience.

The other important factors in this process are entrepreneurial alertness and entrepreneurial networks. Those
entrepreneurs who have the ability to recognize meaningful business opportunities are in a strategic position to
successfully complete the product planning and development process and successfully launch new ventures. Each
and every innovative idea and opportunity should be carefully assessed by the global entrepreneur.
Product Planning and Development Process
Once the ideas emerge, they need further development and refinement. This process is divided into five major
stages which are following.

Establishing Evaluation Criteria

At each stage of the product planning and development process, criteria for evaluation needs to be established.
Criteria should be established to evaluate the new idea in terms of market opportunity, competition, the marketing
system, and financial and development factors.

The determination of market demand is by far the most important criterion. Competing products/services, prices,
and marketing efforts should also be evaluated. Entrepreneurs need to be concerned with formally evaluating an
idea throughout its evolution.

Four Stages of the product planning and development process are given below:

1. Idea Stage
While developing a new product, ideas should be identified and impractical ones should be eliminated. One
evaluation method successfully used in this stage is the systematic market evaluation checklist, where each new idea
is expressed in terms of its chief values, merits, and benefits. In this stage, the need for the new idea as well as its
value to the company is also determined.

2. Concept Stage
In the concept stage, the refined idea is tested to determine consumer acceptance. Initial reactions to the concept
are obtained from potential customers or members of the distribution channel. One method of measuring consumer
acceptance is the conversational interview in which selected respondents are exposed to statements that reflect the
physical characteristics and attributes of the product idea.

3. Product Development Stage

In the product development stage, consumer reaction to the physical product is determined. One tool frequently
used in this stage is the consumer panel, in which a group of potential consumers is given product samples.
Participants keep a record of their use of the product and comment on its virtues and deficiencies.

4. Test Marketing Stage

A market test is done to increase the certainty of successful commercialization. The last step in 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.

E-Commerce and Business Start-Up

E-Commerce offers the entrepreneur the opportunity to be very creative and innovative. E-commerce is growing on
annual basis. Factors that facilitated the high growth of e-commerce include the widespread use of personal
computers, the acceptance of internet as a business communication platform and faster and more secure systems.

Using E-Commerce Creatively

Electronic commerce is increasingly used by corporations to extend their marketing and sales channels, and as the
basis for some new ventures. For small businesses, it is especially important as it enables them to minimize
marketing costs while reaching broader markets. While using e-commerce, the entrepreneur must be prepared to
identify the full range activities on the front and back end. Front-End activities include everything that the customer
actually sees and interacts with including User Experience (UX) and User Interface (UI). Back-End activities include IT
infrastructure such as servers, site security, and hosting etc.
Tracking Customer Information
In any business, information is very important which can be obtained from electronic databases. Electronic
databases track the activity of the industry, segment, and company. It also supports personal marketing targeted at
individual clients. However, care must be taken to follow the laws protecting the privacy of individuals.

Doing E-Commerce as an Entrepreneurial Company

The decision to develop a Web site and an e-commerce site for your business is essential today. However, every
product or service must possess several characteristics in order to be successful online. First, the products should be
able to be delivered economically and conveniently. Second, the product has to be interesting for a large number of
people and be able to be distributed outside its own geographical location. Third, online operations have to be cost
effective, easy to use, and secure.