Dpportwnity identification: The Search for New Ideas Opporrn wation is central fo the domain of entrepreneurship. As one researcher stated, “AT ity core entrepreneurship revolves around the questions ot why, when, and how “oppormunities for the creation of goods andl servioes in the future arise in an economy, Thus, ‘opportunity recegniion is the progenitor of both personal and soctetal wealth," "It has been argued that understancling the opportunity klentitieation process is one of the primary chal lenges within the domain of entrepreneurship research,’ To give a better perspective of this entrepreneurial seareh, this chapter is devoted to examining the creative pursuit of ideas and the innovation process, These nwo major topics are keys to unlerstanding opportunity and its development for entrepreneurs ‘The first step for any entrepreneur is the identification of a "good idea.” However, the search for good ideas is never easy, Thus, we examine the sources that ean be used in this search and how an entrepreneur can work toward the discovery of a good idea. The most important areas to be aware of are within the grasp of our own knowledge, Let us examine some of the key sources of innovative ideas, Sources of Innovative Ideas Potential entrepreneurs must alwayy be alert to the opportunities that lie in the external and internal environments in which they live, This alertness will allow an entrepreneur to create an idea from what others simply cannot recognize, The following are some of the most effec- tive sources of entrepreneurial opportunities, TRENDS ‘Trends signal shifts in the current paradigm (or thinking) of the major population, Observing trends closely will grant an entrepreneur the ability to recognize a potential opportunity. ‘Trends need to be observed in society, technology, economy, and government, Following are some examples of such trends: Societal Trends: aging demographics, health and fitness growth, senior living Technology Trends: mobile (cell phone) technology, e-commerce, Internet advances Economic Trends: higher disposable income, dual wage-carner families, performance : , | pressures - Government Trends: increased regulations, petroleum prices, terrorism UNEXPECTED OCCURRENCES These are successes or failures that, because they were unanticipated or unplanned, often prove to be a major innovative surprise to everyone. N. R. Narayana Murthy (NRN), the Joyal co him and the firm for life. He is known for his ethics ‘A regular fixture in Davos circuit, Infosys is one of the fewPP. cee Entrepreneurship avoid empeion and 1 a conclusion You # ih aries ot a h yao whow fies bow dl nwether tore ce RN's father a snare Tones: Drawing fren the learnt from his fare ee, hatmonle ere Fcan be added to make three ar le “ Vewes that one AM hs her age, NRN bel in an inconGRUITIES . rates occur wen, # HEP ON difference exists Between expectations ay AP the U.S. Post Office ‘rivakel be doings it" I earned pea vas Me what Smith fle Was * eeded:and the way. bi srituceds thus, he reared FedEx PROCESS NEEDS : These occur when an answer to a particular need is re se to these needs as “Ps exists in the markerplace—-the ¢ AP ital oem wg ‘e ovative solution, oF “painkiller” sxamples include the ereation of new medias ti medica evcgy anth foods, pharmaceutical, and time-savin innovations. TRY AND MARKET CHANGES place are caused by developn CGrancements in technology, and industry growth, Industrie and markets always gS aaaare structure, design, ot definition. An example can be found in Sa nde seinaey—hosptal care has undergone radical changes, and home health a fe health cx ia veplaced hospitalization and surgery as primary focus areas Tear even The entreprnee mes to be aware of and seize these emerging opportun ‘There are many cases of moder Saas started their enterprises. Sree nate sai ee in the environment and examples ofthe entrepreneurial opportunities with chil Bree, Se tomes sore Are re cea an ae ae ets the ware We mover ei Naukcom, came from bane Bip oie iat baenamse acta oe waa ging ac a Praga Main, follwing ih was ee ene tiek arene hie Re etete Ge ae Te ahs et tne ee . REDE 2 nee ETE ae a iad 1 diver growth. There ae mt Ve money and the market melts regis ee «0 | abled A aa ad ga ep apap eveMBRaRIRG: oe come come more complet ceca Dancin sizes the point of trying ee ee : a rin F ptoatn i aS and his mother ia cetocia pesioaty ‘one, His father wasit company along ith rend ol eacher Shantanu entrepreneui Management, Ahem, mate for the campus placeme le he was still at Sri Ram Collet aes ERP provi oe he started Basen at all at the Indian Institute schools, professional devel, schools and eventually mp Solutions in 1992. Educo#? lopment, ly moved into providing digital om INDUS: Continual shifts in the market is suich ay AS consumer people, but the quest ete, Sh iran hn should always be onto antans els that all companies start wih perks Aeeaee a of setting up People as good as the entrepreneur oF" company. Educomp, Shantanu is still in charge, DEMOGRAPHIC CHANGES These arise from trend Po, gt : rend changes i 3s, and similar factors en Pebulation, age, education. i i , occupations, 8 entrepreneurial i around 25 years Tein abhi shifts are iy ie bee ee this county Gt uae are important and often ae a 3 Sh and‘brings them to @ situation where they can think better and think to be i has become a land of opportunities. literacy and lack of educ tise to new opportunities for entrepreneurs to set up teaching and skill-developmen NIIT started about three decades ago to provide skills in infor technology, Educa and health sectors have hecome new industries. Opening up of new sche d colleges and ‘other education and skill-development centers has become the order of the day. The case study on Butterfly Fields, given in the entrepreneurial case analysis section of the book, shows how Butterfly Fields started developing learning skills among high schoo! student, Other educational initiatives started by MBAs from Indian Institutes of Management have also given rise to new enterprises. jon and skill base have given ops PERCEPTUAL CHANGES ‘These are changes that occur in people's interpretation of facts and concepts. Perceptual changes are intangible but meaningful. Perception can cause major shifts in ideas to take place. The current fitness craze, caused by the perceived need to be healthy and physically fit, has created a demand for both health foods and health facilites throughout the country. ‘Another example is people’s desire to better use their personal time. As a result, the travel industry has capitalized on consumers’ current need to “see the world” while they are young and healthy, and time-share condominiums and travel clubs have increased. Jay Gupta’s story of “The Loot” illustrates these perceptual changes. At a time when branded apparel retail was taking flight in India, Jay Gupta sat behind a desk at retail franchise outlets and watched several people walking in but very few of them actually buying anything. That is when he realized that although the business had a lot of potential customers, they did not convert into sales. And then he decided to bridge the gap between the average Mumbaikar’s desire to own a brand and his unwillingness to spend on it. From this observation, The Loot ‘was born, According to him, “While most retail stores are looking at reducing cost, we at ‘The Loot are looking at using this opportunity to reach out to people who need stores like The Loot to shop at.” Jay is no stranger to success and passed on his views on how to attain it saying, “The idea hhas to be stemmed out of customer needs and wants. There has to be enough market poten- tial for the business. I also think personal observation and experience should be put to use in building up the idea and the target audience should be kept in mind.” Dealing with con- flicts arising from competition from unorganized retailers has not been easy. Jay feels that unorganized retailers get better deals from vendors than they. “We are yet to establish an identity which will be at par with them even though we consume larger volumes,” he says. However, to beat the competition, The Loot built traffic by introducing %99 and 149 mer- chandise and increasing value of bill with schemes like Buy 1 Get 1 Free. It also introduced its own private labels—“Eccentrics” and “Bus Stop”—as a strategy to fight the lack of avail- ability of the running sizes. With over a 100 stores within 4 years of the inception of the ‘company, The Loot happens to be the fastest growing chain of multi-brand discount stores. The concept was well accepted and appreciated by both the customers and business associ- ates. Soon there was multiplication of the stores and The Loot has set up over 110 stores ee 3,00,000 sq. ft. retail carpet area) in 75 cities and 20 states throughout _ KNOWLEDGE-BASED CONCEPTS "These are the basis forthe creation or development of something brand new. Inventions are they are the product of new thinking, new methods, and new knowledge. ‘require the longest time period between initiation and market for testing and modification. For example, today’s cll o include not just phone service but cameras, Internet the way we use different technologies today. Bio- c is today one of the largest biotechnologyYR Ertrepreneursnip } cen do wonder Kirn bred om ew bine of essing ole Kea ‘chosen to do business im a virgin field, leading the biotechnology revolution Ind the forefront. She touever arent in social creser and constenty devopancee. "oy ne ro struggle anal ne has to believe in oneself,” says Kiran She gives her time o a number 9 local government and other national and international projects. Kiran believes both in hay. ing ideas and in the determination to carry ideas through. “The fast buck and greed elemen, have to go away. One has to work for the joy of creating something.”* Kiran recognized the inher portal of icrchnology and worked relendesly with a dediated band of pope ‘whom she selected and developed. “Kiran has that ability to spot an opportunity miles away, Td ot checgks cas" Te bam bugs Flas Manone’ SAW ae gay cael” ‘great entrepreneur. A creative mind par excellence, combined with keen organizing capacity, she has given this country an entirely new area to develop and scope to compete in the inter. national arena Inia has the capacity to produce hundreds and thousands of researchers in biology, genetics, biochemical engineering, agricultural and food sciences, and environmental CROs in biotechnology are akin to software development companies in infotech.”” These concepts were not thought possible just five years ago; some examples of these innovation sources are presented in Table 5.1. The Process of Knowledge and Learning ‘Once the sources of ideas are recognized, entrepreneurs must use their existing knowledge ‘base to identify an actual opportunity; that knowledge serves as the basis for interacting ‘with the new experience. This knowledge base could take the form of general industry ‘Knowledge, prior market knowledge, prior customer understanding, specific interest knowl- ‘edge, or any previous knowledge that helps the entrepreneur to better identify opportuni- ties.* Every prospective entrepreneur needs to use his or her previous knowledge base to fexerpret the uargual sources of fanovative ideas into a potential opporcunity. Thus, each RES epee chy alebl othe appoint reoseation reoce entrepreneurs must learn from their experiences as well. Researcher Andrew eas HaP eae Wapato eat and watering cetxton and Kaw ‘edge through the learning process. His research lent credence to theories about the cognitive ability of individuals to transform information into recognizable opportunities.” How an indi- ‘vidual entrepreneur acquires, processes, and learns from prior knowledge that he or she hasAfrica: Opportunities or Peril ue to civil unrest in parts of Africa, © Ecobank; a banking group; ECP invested $12 milion, leading to 6 $36 million return at the end of seven ‘years Societe International de Plantations O'Heveas, 3 tuber exporter; ECP invested $14.8 million and cashed out for $48.1 million two years later. With Africa's economy growing 4 os ECP emphasizes that its investors are experienced “peace tessa ay laegorn st in working with international businesses, so the risk is aes rene 9 and somewhat mitigated by their prior knowindge; however, se to adjust are well positioned as the climate 15-41 sntraprendurs’ drive to sdcced and the lack of paren te PENS " available capital have created an ideal environment FE ‘Emerging Capital Partners (ECP), a private equity jo, ts; however, — oportunities where others saw only disaster has given nen eo emenin tram Marc Gunther, “tavesoment m Afric Foren, Reeves 18, 2008,CHAPTER 6 Creativity and Innovation Redefining problems: This is the ability to redefine a problem in the clearest and simplest manner possible, often breaking the-problem into its constituent parts, so that it becomes easier to arrive at a solution, Indicators of Creativity The following are accepted indicators of creativity and innovativeness, These criteria are used in performance appraisals and in creating innovation-centric organizational cultures, + Coming up with numerous ideas and solutions when faced with a problem + Looking for new ways of doing things * Demonstrating original thinking. Thinking in a creative and unconventional way * Being quick to adopt innovations and approve innovations into workable solutions ‘+ Showing enough flexibility and willingness to revise one’s earlier views + Being able to elaborate on a project with relevant details Itis important to recognize the role of creative thinking in the innovative process. Creativ- ity is the generation of ideas that results in the improved efficiency or effectiveness of a 2 ‘Two important aspects of creativity exist: process and people. The process is goal ori- ‘ented; it a esgued to attain a solution to a problem. The people are the resources that iia Work, work, work. This is a simple but accurate exhortation with which to conclude vation principles. It takes work—not genius or mystery—to innovate successfully” poor soars