Opportunity and the

Concept Summary

In the field of observation, chance only favors minds

which are prepared.
Louis Pasteur

“Every problem is an opportunity.”

Vinod Khosla
 Opportunity
• An entrepreneur identify and evaluate
opportunities while striving to find one that
fits their capabilities, interests, and resources.
• An opportunity is a favorable juncture (point
in time) of circumstances with a good chance
for success or progress.
– There is timeliness to every opportunity
• It is the job of the entrepreneur to locate new
ideas and to put them into action.
 Identify and select a valuable
opportunity
• Great opportunities are often disguised as difficult
problems
– “A problem well stated is a problem half solved” – Charles
Kettering
• Critical juncture
– Choice of an opportunity
– Decision to act or not act on a good potential opportunity
• Select the opportunity that affords the best chance of
success within the context of the marketplace
• Prepare a business summary for the venture
• Test the new venture with potential investors,
employees, and customers
Six steps to acting as an entrepreneur
Identifying the Opportunity

Determining the Entrepreneur’s

capabilities and interests

Evaluating the opportunity

Deciding to act on the opportunity

or look elsewhere

Writing a summary of the concept

Testing the summary and the

concept with potential customers
and investors
 Types of Opportunity
• Opportunity Pull:
– the size of the opportunity attracts opportunity seekers to
attempt to exploit it.
– Example:
• A drug to mitigate the effect of Alzheimer’s disease.

• Capability Push:
– a new technology or capability causes a search for new
applications.
– Example:
• Digital Television
 Categories of Opportunity
• Increasing the value of a product or a service
• New applications of existing means or technologies
• Creating mass markets
• Customization for individuals
• Increasing reach
• Managing the supply chain
• Convergence of industries
• Process innovation
• Increasing the scale of the firm
 Finding a good opportunity
• Serendipity—making useful discoveries by accident e.g.
microwave oven, flash freezing process
• Discontinuity in culture, society, or markets
• Combination of customer segment, technology and
competencies, and applications
• Entrepreneur - adds value to the opportunity by
creating a response to a good opportunity
– Identifies customer, required technology, and application
to create a solution
• Needs relevant passion to solve the problem as well as
the capability
• Best match of opportunity, capabilities, and interest
(passion)
 Sources of discontinuities
• Society
– Aging society
– Lifelong education
– Food and population
– Regulation
• Technology
– Innovation
– Disruptive technologies
– New knowledge
• Markets
– Deregulation
– Supply chain disruption
What kinds of changes to anticipate?
• Technological changes
– new methods of production, distribution
• Sociological change
– market changes due to demographic, lifestyle, or
trend changes
• Competitive changes
– competitive landscape changes due to new
entrants, lower prices, more aggressive marketing
 Social and cultural trends
• Aging of the baby-boom generation
• Increasing diversity of the people in a region
• Two-working-parent families
• Rising middle class of developing nations
• Changing role of religious organizations
• Changing role of women in society
• Pervasive influence of media— television,
DVDs, internet
 Trends and opportunities
• Life science: Genetic engineering, genomics,
biometrics
• Information technology: Internet, wireless
device, cloud computing
• Food preservation: Improved distribution of
food
• Video gaming: Learning, entertainment
• Speech recognition: Interface between
computers and people
Trends and opportunities (Contd.)
• Security devices and systems: Identification
devices, baggage checkers, protective clothes
• Nanotechnology: Devices 100 nanometers or
less for drug delivery, biosensors
• Renewable energy: Solar cells and wind
turbines
• Fuel cells: Electrochemical conversion of
hydrogen or hydrocarbon fuels into electric
current
Trends and opportunities (Contd.)
• Superconductivity: Energy savings on utility
power lines
• Designer enzymes: Protein catalysts that
accelerate chemical reactions in living cells for
consumers and health products
• Cell phones: Communications and computing
• Software security: Blocking unsolicited e-mail
(spam), preventing “phishing”
• Robots: Teams of small coordinated robots for
monitoring and safety functions
 Global technology penetration
• Mobile and Internet usage penetration
• Application of a new technology in one industry
to another one
• Convergence of the Internet and mobile phone
usage
• Significant opportunities ahead
– Emerging markets
– Wireless societies
– Wired societies
– Best of both worlds
• Convergence of medical and robotic technology
– Helps surgeons improve precision and accuracy
 Characteristics of an attractive
opportunity
• Timely—a current need or problem
• Solvable—a problem that can be solved in the
near future with accessible resource
• Important—the customer deems the problem or
need important
• Profitable—the customer will pay for the solution
and allow the enterprise to profit
• Context—a favorable regulatory and industry
situation
 Selecting good opportunities
• Only one or two very good opportunities are
needed in a lifetime.
• Invest less time, money, and effort in the venture
than it will be worth in one or two years.
• Calculate the probability of a large return in four
years.
• Do not count on making a high-priced sale of
your firm to the public or another company.
• Carry out a solid analysis of the current and
expected conditions of the industry where the
opportunity resides
Selecting good opportunities (Contd.)
• If the opportunity is selected and turns out
unfavorably, can you exit with minor losses?
• Does this opportunity provide a potential for a
long-term success, or is it a fad? Go to where
the potential future gains are significant.
• Can the management team execute the
strategy selected for this opportunity?
• Will the customer enable your firm to profit
from this venture?
 Evaluating an opportunity
• Utility function, U = f(Y,I,W,R,O)
– A function of income, independence, work effort, risk,
other working conditions
• The opportunity cost of an action is the value
(cost) of the forgone alternative action
• Put together a good management team that can
execute the strategy for the opportunity
• quality of the opportunity
– market assessment
– feasibility of implementation
– differentiation of the product
 Evaluating An Opportunity
Characteristics of
• Positive attitudes Entrepreneurial Teams
• Acceptance of risk and demanding effort
• Capabilities matching the needs 100% • Timeliness
• Willing to make the commitment • Favorable industry
• Passionate about the opportunity conditions
• Future conditions
50% appear favorable

50% 100% Characteristics

100% 0% 50%
of the Context
Resources

• Novelty of the product

50% • Potential for sustainable long-
• Capable of securing
access to the human, term success
financial, and physical • Potential for good ROI
resources required by the 100% • Potential for a growing market
• Good risk-versus-reward balance
opportunity Characteristics of • Customers are known and
the Opportunity responsive
 Evaluating An Opportunity
• An opportunity exists within its industry and
market context
• Given the context, a new venture can achieve
a good fit to match the opportunity with
– Team competencies
– Resources,
– Strategy
– Execution
 The seven domains of attractive
opportunities

Both markets and industries must be examined on the macrolevel and the microlevel
 Process of evaluating an opportunity
• Capabilities: consistent with the capabilities,
knowledge, and experience of the team members
• Novelty: significant novel, proprietary, or
differentiating qualities. Does it create significant value
for the customer—enough so that the customer wants
the product and will pay a premium for it?
• Resources: attract the necessary financial, physical,
and human resources consistent with the magnitude of
the venture
• Return: Is the expected return of the venture
consistent with the risk of the venture?
• Commitment: Are they passionate about the venture?
 Finding the Right Opportunity
• Timely An Attractive
• Solvable
Opportunity
• Important
• Profitable
• Favorable Context

The
Sweet
• Like to do the tasks Spot
• Skilled at the needed
• Like the challenge tasks
• Committed to do what is
necessary
Interests,
Passions,
Commitment Capabilities & Skills
 Decision matrix

Actual quality of opportunity

Poor Very good

Act False choice Loss Excellent choice 

Decision Hit

Do not Act Correct rejection  Missed opportunity

Save resources 
Lost chance