CHAPTER 3

Chapter 4
Creativity
and
the Business Idea

McGraw-Hill/Irwin Copyright © 2013 by The McGraw-Hill Companies, Inc. All rights reserved.
 Learning Objectives
• To identify various sources of ideas for new
ventures
• To discuss methods available for generating
new venture ideas
• To discuss creativity and the techniques for
creative problem solving
• To discuss the importance of innovation

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 Table 3.1 - Trends of the Next Decade
Green Consumers are very conscious about their spending habits,
they are willing to pay for green products
 green trend- eg: water, eco-friendly printing recycling
Clean-Energy  One of the most pressing environmental concerns is clean
energy
Power of 21st century (solar, wind and geothermal sources)
Organic-orientation  Increasing significantly, particularly in the food sector

Economic  Credit card, bank failures, and the housing slide has forced
consumers to be much more careful in their spending
Social  Networking events and opportunities (facebook, myspace,
linkedln etc)
Health  Health maintenance and health care provision provides
opportunities including cosmetic procedures, fitness centres etc

Web (Internet)  Creating many new forms of comm. and puchasing

eg: blogging, online video, mobile application (apps)
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 Sources of New Ideas
• Consumers
• Entrepreneurs should:
• Formally or informally monitor potential ideas
• Ensure that the idea represents a large enough market
to support a new venture
• Existing products and services
• Formally monitor and evaluate competitive products and
services on the market
• This analysis will uncover ways to examine new products or
services that has more market appeal and better sales and
profit potential

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 Sources of New Ideas
• Distribution channels
• Help suggest and market new products
• Help in marketing entrepreneur's newly developed products
• Federal government
• Taking cue from pending patents
• Ideas evolve in response to government regulations
• eg: OSHA mandated that first-aid kit be available in business
establisments employing more than 3 people
• Research and development
• Largest source of new ideas is the entrepreneur's own
'RnD'
• Formal endeavor connected with one’s current
employment
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Methods of Generating New Ideas
• Focus groups
• Group of individuals providing information in a structured
format
• Open in-depth discussion led by a moderator
• Brainstorming
• Group method for obtaining new ideas and solutions
• Rules of brainstorming
 No criticism
 Freewheeling is encouraged
 Quantity of ideas is desired
 Combinations and improvements of ideas are encouraged

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 Methods of Generating New Ideas
• Brain writing
• Form of written brainstorming
• Silent, written of ideas by a group of people
• Ideas are written on a card that circulate within the group
• Problem inventory analysis
• Obtaining new ideas and solutions by focusing on problems
• Identify and discussed products that have the
particular problem
• Used to test a new product idea
• Effective to use primarily in identifying products ideas
for further evaluation

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 Innovation
As technologies change, old products decrease
in sales and old industries dwindle.
Inventions and innovations are the building blocks
of the future of any economic unit

Types of innovation
Breakthrough innovation

Technological innovation

Ordinary innovation

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 Innovation
• Breakthrough
• Extremely unique innovations that establish the
platform on which future innovations can be developed
• Should be protected by patents, trademarks, and
copyrights
• E.g. Penicillin, steam engine, airplane, nanotechnology
etc.
• Technological
• Occurs more frequently than breakthrough innovation
• Offer advancements in the product/service/market
areas
• Needs to be protected (eg; personal computer, voice
and text messaging)
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 Innovation
• Ordinary
• Occurs more frequently than breakthrough &
technological innovations
• Extend technological innovation into a better product
or service or one that has a different market appeal
• Result of market analysis and pull and not technological
push
• The market has a stronger effect on the innovation
(market pull) than the technology (technology push)
• E.g. Gloves & slippers with gripping substance

© 2014 by McGraw-Hill Education.  This is proprietary material solely for authorized instructor use. Not authorized for sale or distribution in any manner.  This document
may not be copied, scanned, duplicated, forwarded, distributed, or posted on a website, in whole or part.  4-*
 Market Pull & Technology Push

• A technology push implies that a new invention is

pushed through R&D, production and sales functions
onto the market without proper consideration of
whether or not it satisfies a user need. In contrast,
an innovation based upon market pull has been
developed by the R&D function in response to an
identified market need.

© 2014 by McGraw-Hill Education.  This is proprietary material solely for authorized instructor use. Not authorized for sale or distribution in any manner.  This document
may not be copied, scanned, duplicated, forwarded, distributed, or posted on a website, in whole or part. 
 Innovation
Defining a new innovation (product or service)
• Newness of a product can be attributed to:
• Consumer concept
• Products not necessarily new in concept have also defined as
new
• eg ; when coffee companies introduces naturally decaffeinated
coffee which was only change in the product the initial
promotion campaigns made definite use of the word new
• Change in the package or container
• eg ; flip-top cans, pump bottle, glass jar and so on
• Modifications in the appearance of the product (industrial market)

© 2014 by McGraw-Hill Education.  This is proprietary material solely for authorized instructor use. Not authorized for sale or distribution in any manner.  This document
may not be copied, scanned, duplicated, forwarded, distributed, or posted on a website, in whole or part.  4-*
© 2014 by McGraw-Hill Education.  This is proprietary material solely for authorized instructor use. Not authorized for sale or distribution in any manner.  This document
may not be copied, scanned, duplicated, forwarded, distributed, or posted on a website, in whole or part.