Recognizing Opportunities and

Generating Ideas （02）

Vitamin is Important,
But⁕⁕⁕⁕
At is core entrepreneurship revolves around the
questions of why, when and how opportunities for the
creation of goods and services in the future arise in an
economy.
Venkataraman (1997)
Learning Objectives
2.1 Explain the difference between opportunities and ideas.
2.2 Describe the three general approaches entrepreneurs use to
identify opportunities.
2.3 Discuss the personal characteristics of entrepreneurs that
contribute to their ability to recognize business opportunities.
2.4 Identify and describe techniques entrepreneurs use to
generate ideas.
Opportunity and Ideas
• Idea is a thought, an impression, or notion.
• Opportunity is an idea that has the qualities of being attractive,
durable, and timely and is anchored in a product or service that
creates value for its buyers or end-users.
 Comparison between Ideas and Opportunities
Parameters Ideas Opportunities
System Abstract Concrete
Frame Can happen any Have specific
time frame and location
Action It exists in your Requires action
mind
Chance Not a chance It’s a chance
Clear Clear Not Clear
 Some examples for Ideas and Opportunities
Ideas
1. The average American eats out
4 times per week.
2. If an animal is pregnant for
longer than 22 months, there is a
chance that it will give birth to
twins or triplets.
3. One in every five children has a
mental disorder, such as ADHD or
depression.
4. You can’t see your ears without
looking into a mirror.
5. The first time you drink alcohol,
it’s more likely that you’ll become
addicted than if you wait until
adulthood to start drinking.
Opportunities
1. The average American will
spend about $5,500 on their home
in 2018.
2. There are 1.6 billion people
around the world that live without
access to electricity.
3. By 2030, it’s estimated that
there will be 3 billion more people
living in urban areas than at
present.
4. In 2017, the United States
imported over $800 million worth
of furniture from China.
5. It takes an average of six
months for a house to go up for
sale once it has been put on the
market.
Three Ways to Identify
Opportunities
First Approach: Observing Trends
• Observing Trends
– Trends create opportunities for entrepreneurs to pursue.
Trend 1: Economic Forces
Economic trends help determine areas that are ripe for new
start-ups and areas that start-ups should avoid.

Status Factors

Depression Inflation

Recession Exchange Rate

Recovery Employment

Prosperity Disposable Income

Trend 2: Social Forces
Social trends alter how people and businesses behave and set
their priorities. These trends provide opportunities for new
businesses to accommodate the changes.
Examples of Social Trends
• Aging of the population.
• The increasing diversity of the population.
• Millennials entering the workforce.
• Growth in the use of mobile devices.
• An increasing focus on health and wellness.
China’s Internationalization and the Rising Coffee Market
Trend 3: Technological Advances
Advances in technology frequently create business
opportunities.
Examples of Entire Industries that Have Been Created as
the Result of Technological Advances
• Computer industry
• Internet
• Biotechnology
• Digital photography
Trend 4: Political Action and
Regulatory Changes
Political and regulatory changes also provide the basis for
opportunities.
Second Approach: Solving a Problem
• 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.
– Many companies have been started by people who have
experienced a problem in their own lives, and then realized
that the solution to the problem represented a business
opportunity.
 “Floating School”

Floating schools are exactly what their name suggests,

they are schools floating on water, typically on a boat. They
are essential to providing year-round education in regions
where rainy seasons and flooding often disrupt the school
year for the most vulnerable children. Floating schools have
proved to be incredibly effective in providing an
uninterrupted education in places like Bangladesh, Nigeria
and Colombia where extreme weather often makes getting
an education more difficult.
别说是大人们的上班工作，就连小孩子的读书问题也只能
被搁置。很多农村的孩子需要步行长距离进入市区才能上
学，然而洪水隔绝了这一切。为了改变这个局面，孟加拉
国内开始出现一种非常奇特的教学模式--浮动学校。

当地的企业家和建筑师穆罕默德·雷兹万带领一批支援人士在
2002年的时候开始在该国东北部的Chalambeel，一个31.5％
的人口生活在贫困线以下，儿童根本与上学无缘的地区开始
试点。
 经过十多年的发展，这个由一开始
在河边村庄进行试点的项目已经发
展成今天由国内的非营利性组织进
行运营的项目。目前已经在全国拥
有50多条船，游走在不同的贫穷
村庄，在这些贫穷的地方得到所有
民众的支持。

随着这种“浮动学校”的显著成就，孟加
拉国内出现多种不同类型的浮动船只，最
令人瞩目的便是浮动医疗船只。这些船只
会在贫穷的河边村庄里游走，让没有能力
走出村庄看病的人得到志愿医生的医疗。
Which media platform do you like best?
What’s bothering you?
Do you have any approach to this bothering?
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.
Personal Characteristics of the
Entrepreneur
Characteristics that tend to make some people better at
recognizing opportunities than others.

Industry
Cognitive Factor
Experience

Entrepren
eur

Social Networks Creativity

Prior Industry Experience
• Prior Industry Experience
– Studies have shown that prior experience in an industry
helps an entrepreneur recognize business opportunities.
▪ 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.
 Leijun’s Experience
Senior Student Three Colors Company (Chinese Card)
1992- 2000 Kingsoft (R & D Manager/ Vice
President/ Managing Director)
2002- 2007 Kingsoft (CEO/ Chairman of the Board)
2010- 2021 Xiaomi Technology
2021- Xiaomi Private Equity Fund
Cognitive Factors
• Cognitive Factors
– Studies have shown that opportunity recognition may be an
innate skill or cognitive process.
– Cognition refers to mental process, including attention,
remembering, producing and understanding language,
solving problems, and making decision.
Social Networks
• 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.
– Research results suggest that between 40% and 50% of
people who start a business got their idea via a social
contact.
• Strong-Tie Vs. Weak-Tie Relationships
– All of us have relationships with other people that are called
“ties.” (See next slide.)
• Nature of Strong-Tie Vs. Weak-Tie Relationships
– Strong-tie relationships 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.
Why weak-tie relationships lead to more new business ideas than
strong-tie relationships
Strong-Tie Relationships
These relationships, which
typically form between like-
minded individuals, tend to
reinforce insights and ideas
that people already have.
Weak-Tie Relationships
These 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.
Developing your social networks

1) Read in a variety of fields.

2) Join professional groups and associations.

3) Attend Professional meetings and Seminars.

4) Travel to new places.

5) Talk to anyone and every one about your subjects.

6) Scan Magazines, newspapers and journals for articles

related to the subject.

7) Develop a subject library for future reference.

Creativity
• Creativity
– Creativity is the process of generating a novel or useful
idea.
– 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.
 Incubation: Forsythe
Preparation: repairing
gave a friend 20$ to
iPhone might be a
design a flyer and began
promising idea for a
putting the flyer around
business opportunity
the campus.

ICRAKED

Insight: ICRAKED could Evaluation and

be replicated on college Elaboration: Partner/
campus. Itechs/ insurance….
Full View of the Opportunity
Recognition Process
• Depicts the connection between an awareness of emerging
trends and the personal characteristics of the entrepreneur.
Techniques for Generating Ideas
• Brainstorming
• Focus Groups
• Library and Internet Research
Brainstorming
• Brainstorming
– Is 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.
– Rules for a brainstorming session:
▪ No criticism.
▪ Freewheeling is encouraged.
▪ The session should move quickly.
▪ Leap-frogging is encouraged.
How to plan an optimum class?
Focus Groups
• Focus Group
– Focus groups involve a group of people who are familiar
with a topic, are brought together to respond to questions,
and who are able to shed light on an issue through the
give-and-take nature of group discussions.
– They work best as a follow-up to brainstorming, when the
general idea for a business has been formulated but further
refinement of the idea is needed.
Library and Internet Research
• Library Research
– Libraries are an often underutilized source of information for
generating new business ideas.
– The best approach is to talk to a reference librarian, who can
point out useful resources, such as industry-specific
magazines, trade journals, and industry reports.
– Simply browsing through several issues of a trade journal or
an industry report on a topic can spark new ideas.
• Internet Research
– If you are starting from scratch, simply typing “new business
ideas” into a search engine will produce links to newspaper
and magazine articles about the “hottest” and “latest” new
business ideas.
– If you have a specific topic in mind, setting up Google mail
alerts will provide you with links to a constant stream of
newspaper articles, blog posts, and news releases about the
topic.
– Targeted searches are also useful.
Other Techniques
• Customer Advisory Boards
– 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.
Chapter Summary
• LO1. An idea is a thought, an impression, or a notion. An opportunity is an idea that has
the qualities of being attractive, durable, and timely and is anchored in a product or service
that creates value for its buyers or end-users. Not all ideas are opportunities. Once an
opportunity is recognized, a window open, and the market to fill the opportunity grows. At
some point, the market matures and becomes saturated with competitors, and the window
of opportunity closes.

• LO2. Observing trends, solving a problem, and finding gaps in the marketplace are the
three general approaches entrepreneurs use to identify a business opportunity. Economic
forces, social factors, technology advances, and political action and regulatory changes are
the four environmental trends that are most instrumental in creating opportunities.
Through the second approach, entrepreneurs identify problems that they and others
encounter in various part of the lives and then go about developing a good or a service that
is intended to solve the identified problem. Carefully observing people and the actions they
take is an excellent way to find problems that, when solved, would create value for a -
 -customer. Finding gaps in the marketplace is the third way to spot an opportunity.
Typically, the way that this works is that an entrepreneur recognizes that some people are
interested in buying more specialized products, such as guitars that are made for left-
handed players or scissors for people who are dominant left-handers.

• LO3. Over time, research results and observations of entrepreneurs in action indicate that
some people are better at recognizing opportunities than others. Prior experience, cognitive
factors, social networks and creativity are the main personal characteristics researchers
have identified and that observation indicates tend to make some people better at
recognizing business opportunities than others.

• LO4. Entrepreneurs use several techniques for the purpose of identifying ideas for products
or services. Brainstorming is one of these. More specifically, brainstorming is a technique
used to quickly generate a large number of ideas and solutions to problems. On reason to
conduct brainstorming is to generate ideas that might represent product, services, or
business opportunities. A focus group, a second technique entrepreneurs use, is a
gathering of 5 to 10 persons who have been selected on the basis of their common
characteristics relative to the issue being discussed. One reason to conduct a focus group-
 -is to generate ideas that might represent product, services, or business opportunities.
Careful and extensive searches of a physical library’s holdings and of internet sites are a
third technique. Here, the entrepreneur uses an open mind to search in a large number of
information and data to see if she or he can identify a problem that could be solved by
creating an innovative product or service.

• LO5. Entrepreneurs and their firms engage in several actions to encourage the
development an retention of business ideas. Creativity is central to a firm’s efforts to
innovate; as such, firms take actions to nurture creativity. More specifically, entrepreneurs
encourage creativity at the firm level through both organizational and individual
supervisory level facilitators of creativity. Examples of organizational level facilitators of
creativity include listening attentively for the purpose of acknowledging and supporting
ideas early in their development and protecting people who make honest mistakes and
commit to learning from them. Ideas flowing from the exercise of creativity are stored in
an idea bank, which is a physical or digital repository for storing ideas generated
throughout an entrepreneurial venture.