A strong Partner for Sustainable Development

Entrepreneurship
1st Quarter, 2nd semester AY: 2021-2022

College of Education
Agricultural Science High School
SENIOR HIGH SCHOOL
Generating Ideas: Harnessing Logic and Creativity

Learning Competencies:
The Learning Competencies that you are to learn in this Chapter are the following:
 After reading this chapter, you should be able to:
 Identify the various sources of ideas for entrepreneurial ventures
 Discuss the alternative methods for generating ideas for a new venture
 Discuss emerging trends that could be the source of new venture ideas
 Explain the factors that contribute to creative thinking
 Explain the role of creativity in generating new venture ideas
 Utilize some techniques in creative problem solving
INTRODUCTION
As discussed in the previous chapter, the entrepreneurial process involves several stages from the
preparation of a business plan to its implementation. A plan to pursue a business usually comes from a
novel idea. This business idea, in turn, is a product of various thinking processes, including critical
thinking and creative thinking.
In this chapter, we explore various activities and examples of how the use of logic and systematic
analysis-what we refer to as critical thinking-can be a means of generating ideas for entrepreneurial
ventures. Similarly, nonsystematic, discontinuous, and lateral thinking-collectively known as creative
thinking-can also inspire individuals to introduce new products and services to the market. Aside from
generating ideas, creativity can also be used in creative problem solving.

SOURCES OF IDEAS FOR ENTREPRENELRIAL VENTURES

A number of practicing entrepreneurs and business coaches have identified a host of sources, from
which we can find business ideas. These can be categorized into four major sources: (a) from the product,
(b) from the process, (c) from the person, and (d) from relationships.
 Entrepreneurs can source their business ideas from existing products or services. Many entrepreneurs
have introduced new products and services by differentiating them from those currently in the market. You
can differentiate a product by changing its shape, size, color, and contents. For example, Lots'a Pizza
introduced square pizzas, while Bibingkinitan offered its smaller bite-size rice cakes. The traditional hopia,
which was made of mung beans, has been altered with the introduction of other varieties of beans and root
crops as introduced by the enterprising owners of Eng Bee Tin. More than just changing the features of a
product, successful entrepreneurs introduce new products because of their dissatisfaction with those available
in the market. This is what Karl Ulrich called annoyance-driven innovation.' For example, Grab got market
patronage in the Philippines because of the difficulties encountered by commuters with current taxi services.
Business ideas can likewise arise from the process of production and distribution. A firm selling
pritchon, combined the process of frying and roasting pork belly. Packaging goods into sachets and small
quantities expanded the market for shampoos and even processed cheese. Reviving the traditional way of
baking pan de sal, and making it available throughout the day established a market niche for Pan de
Manila.Likewise,3N Bakery became famous for its fried siopao, a deviation from the traditional steamed pao.
In targeting the needs of their customers, 7-Eleven introduced a 24-hour retail service. Similarly, Julie's
Bakeshop launched ambulant selling of breads by imitating ice cream and balut vendors.
 When business ideas are sourced from the person, the individual examines his/her interests, hobbies, skills,
dreams, and even his/her travels. Aside from providing ideas for entrepreneurial venture, personal interests can
sustain a business venture at its initial stage of operation. Many small firms producing handicrafts evolved from
hobbies of owners. Similarly, individuals who took interest in silk screen and iron-on shirt printing have
transformed their hobbies into business enterprises.
In addition, skills learned from prior employment can be a source of business ideas as shown in several
studies. For example, a number of preschools and other training institutions were established by successful
teachers. Cooks apply their popular recipes by establishing carinderias or small restaurants. Entrepreneurs who
introduced milk tea and other drinks in the Philippines drew these business ideas from their travels in Taiwan.
Many potential entrepreneurs attend exhibitions here and abroad to get business ideas.
The last category of sources is from relations. Many Filipino-Chinese individuals sourced their
entrepreneurial ideas from families and relatives. Children of Filipino-Chinese businessmen are usually exposed
to their family businesses at an early age. Such exposure often leads to entrepreneurial inclinations in their adult
years.
Friends and classmates can also be sources of business ideas and partners. Some may start their business
partnership as teammates in school projects and eventually decide to put up their businesses after graduation.
One's neighborhood can also provide ideas on what to produce. In a neighborhood where provision of regular
water is a problem, an enterprising individual may start a water filtering station with free delivery service. In the
same way, busy students and young professionals living in condominiums led to entrepreneurial ventures that
offered housecleaning and laundry services.
METHODS FOR GENERATING OR TESTING NEW IDEAS
There are several methods of generating business ideas. We will classify them into logical thinking and
creative thinking.
GENERATING BUSINESS IDEAS THROUGH LOGICAL THINKING
Logical thinking refers to the systematic and rational way of providing an answer to a question. It is
systematic since it follows steps in responding to an inquiry. It is rational because it adheres to the rules of
logic in connecting the relationships of variables and in making conclusions. Aside from its usefulness in
decision-making, logical thinking can also be utilized in the development of a business idea. Some of the
methods that use systematic analysis in generating new ideas are statistical analysis, market analysis, SWOT
analysis, and Delphi technique.
Statistical analysis refers to a systematic analysis of data generated from a survey of individuals. Aside from
giving basic information on the population being studied, statistical analysis can also be used for hypothesis
testing on the difference of the values of certain variables. Statistical analysis can describe the trend in the
demand for a particular product, as well as show which key socioeconomic variables can significantly
influence the change in the demand for a product.
 Related to statistical analysis is market analysis, which is undertaken to know the various factors that
affect the demand for a particular product or service. It can also determine how certain socioeconomic and
demographic groups will react to the introduction of a new commodity or a change in existing products or
services. This can be done through surveys, interviews with key informants, and focus group discussions.
Since survey methods are very expensive and time consuming, interviews of key informants that are
knowledgeable of the market are undertaken. Through focus group discussions, the facilitator can elicit the
same general trends that would likely appear in a detailed questionnaire. The results from these various
methods of market analysis can be used by potential entrepreneurs in introducing new products or
differentiating an existing commodity that are aligned with the preferences of targeted consumers.
SWOT (strengths, weaknesses, opportunities, threats) analysis is usually undertaken to describe the state of
competition within an industry. However, an understanding of the strengths and weaknesses of firms, and the
opportunities, and threats that they face can also provide business ideas that an entrepreneur can pursue.
Delphi technique on the other hand, is the systematic way of generating ideas from a select group of
individuals using various rounds of consultations or sessions. In the first round, the group is asked to list a
number of responses to a given question. After treating the data on the first round, the leading responses are
given back to the respondents in the next round. The respondents are then asked to list a shorter number of
answers on the same question based on the leading responses in the previous round. In succeeding rounds,
the leading responses are further listed and given to the respondents until the final two or three answers are
determined. For example, the question can be “What are the emerging products in the coming decade? ”The
answers generated from the Delphi technique can lead to the identification of potential products or services.
GENERATING BUSINESS IDEAS THROUGH CREATIVE THINKING
New business ideas can also be generated through various methods of exploring our creativity. As
described in the previous chapter, creativity refers to thought processes that do not follow systematic or
analytical procedures but looks at things from different perspectives. It uses lateral thinking, which
connects ideas and reprocesses them to formulate new ideas. More than rational thinking, creativity puts
emphasis on the role of imagination and inspiration. Some methods that use creative thinking in
identifying business ideas are brainstorming, problem inventory analysis, free association method, and
checklist method, among others.
Brainstorming refers to an unstructured discussion of a group to elicit ideas. Since the process is
unstructured, the facilitator and participants should entertain all ideas coming from the participants, even
those that are illogical and “out of this world.” After a fixed period of discussion, the various ideas are
processed and synthesized to come out with an answer to the question posed at the start of the
brainstorming session.
Problem inventory analysis is similar to brainstorming. It uses the group discussion method to elicit
ideas from participants. It is different from the usual brainstorming because it is directed to identifying
all possible problems encountered with a specific product or service. After identifying all the possible
problems and issues with the product or service, the participants are tasked to give alternative solutions
to the problems.
Free association method is another technique used in discovering business ideas. It is a method that has
been used in psychology to elicit the unconscious thoughts of individuals by expressing their thoughts
associated with words and ideas given by the therapist. It has several applications in different fields,
including business, since it can draw from participants ideas that are associated or linked with a given
idea or word. From the process of association the group can come out with an idea or set of ideas that can
be the basis for business ventures.
Related to free association method is the checklist method. It is another creative way of obtaining
business ideas from target participants by listing all possibilities that ideas can be connected,
reprocessed, and associated with. Through the checklist method, participants in the discussion group can
be asked to list down all possible changes that can be made with an existing product or service. A
specific checklist method developed by Alex Osborn is known as SCAMPER (Substitute, Combine,
Adapt, Magnify, Put to other use, Eliminate, and Rearrange). In this method, participants are presented
with a product or service or an idea and are asked to provide a comprehensive list of how the product or
service or idea can be replaced, mixed, differentiated, enlarged, applied, removed, and altered.
GENERATING BUSINESS IDEAS THROUGH TRENDS IN BUSINESS ENVIRONMENT
The systematic methodologies and creative ways of generating business ideas as discussed above are
focused on the product or service or idea. But there are other ways of generating business ideas with focus
on the business environment. Some of the methodologies used include Porter's Five Forces of
competition, SWOT analysis, and environmental scanning. These methods like market analysis,
discussion, and Delphi technique are intense in the use of logical and systematic analysis.
Based on the trends on the business environment an entrepreneur can get business ideas from the
bargaining powers of its competitors and suppliers, major shifts in government involvement in business,
sociodemographic changes, as well as technological developments.
Given the products and services offered by competitors, one possible business idea is to lower the
selling price. As we know from the theory of demand, consumers are encouraged to demand more of a
product if its price is lower than its competitors. However, this option may not be feasible in all cases,
given that the firms in an industry are faced with similar inputs and same prices.
 Another alternative for the firm or potential entrepreneur is to differentiate its product from existing
product lines in the industry. Product differentiation can alter the shape, contents, and package of a
product to create a brand that would establish loyalty from its customers. Because of this brand loyalty,
even if the price of the differentiated product is higher than the current product lines in the industry, there
will still be a significant number of customers that will purchase the commodity.
The suppliers of major inputs can also provide business ideas to potential entrepreneurs. The increase
in the price of raw materials, for example, can put pressure on firms to seek alternative types and sources
of raw materials. For example, the cost of printing packaging materials made the producer of Safeguard
combine three bars into one packaging unit instead of packing them individually. This practice reduced
the price of packaging soaps significantly and encouraged volume sales. The abundance of water lilies
along Pasig River inspired entrepreneurs to produce mats, bags, and other handicrafts made of water lilies.
Similarly, after the eruption of Mount Pinatubo in the 1990s many enterprising individuals used the lava
and mud from lahar to craft figurines and other collectibles.
Changes in government regulations can also provide impetus for new products or services. For
example, the ban on the use of plastic bags in many cities and municipalities served as an opportunity for
business opportunities to produce ecological bags, paper bags,and other alternative packaging containers
that are environmentally friendly.
 Sociodemographic changes including smaller homes and living spaces can provide opportunities for
producers of consumer durables to produce smaller appliances and furniture that can fit into small
condominium units. Business opportunities also abound in areas near condominiums including food
services, laundry services, cleaning services, and repair services.
Pollution in highly urbanized areas can encourage manufacturers to make air conditioners that serve
as air purifiers as well.
CREATIVITY: A NEW WAY OF LOOKING AT THINGS
The key in these sources and methods that give rise to business ideas is the role of creativity, which
is thinking beyond the systematic and rational way. Creativity can be described as the capacity of
individuals to originate new ideas from ideas the individual has been previously exposed. The birth of a
new idea is done by connecting an idea with other ideas and transforming these connections.
 There are many ways of connecting these ideas. It can be done by comparing them, linking them,
looking at similarities and differences and looking for trends. In the checklist method mentioned above,
there are several ideas that can emerge from a single idea. For example, a simple product like pan de sal
can be replaced with pan de lemon, pan de leche, or pan Americano.It can also be mixed with other
ingredients like in pan de coco and toasted siopao. It can also be differentiated with various flour bases as
in malunggay pandesal, kalabasa pandesal, kammote pandesal, and casava pandesal. Interestingly. pan de
sal can also be enlarged similar to a monay. Application of various dishes and spreads produces pandesal
with adobo, pandesal with asado, pandesal with tana pan de sal with cheese, pandesal with pineapple jam.
When salt is removed and replaced with milk it becomes pandeleche. With lemon extract the result is pan
de lemon. You can add more to this list on how to alter a simple pandesal.
You can differentiate any good or service depending on your creativity. Some individuals are
hesitant to explore their creativity because they have this notion that creativity is inborn. But many
scholars, psychologists, and business coaches have been telling us that creativity can be learned and
developed. You must be a keen observant of everything. Look at ways on how something can be viewed
from a different perspective. Watch out for things and aspects of a good or service that can be improved
or altered. Connect your ideas with other observations you have made before.
 Some creativity coaches have recommended a number of measures to improve someone's creativity.
Foremost is the quest to learn from a variety of sources on things that may interest the individual. This
wealth of information can be part of stock knowledge that the 'individual can draw upon in subsequent
activities. There is also need for a place and time for the individual to think, reflect, meditate, or even
dream. These quiet moments may induce brilliant and creative ideas that may be useful for business
ventures. In addition, since creative ideas occur in a splash, in a dream, or in an unexpected event or place,
make sure you have a notebook or a handy computer where you can write down these ideas. Otherwise, it
may be difficult to recall these precious creative moments. Avoid editing or rejecting any idea. Be open to
all possibilities and develop the art of connecting ideas. An individual's stock knowledge can be a useful
reference in the process of linking ideas. By mixing and remixing these ideas, the individual can come out
with new ideas in the synthesis.
FACTORS THAT INFLUENCE CREATIVITY
Given the various sources and methods of generating creative ideas, as well as the mechanisms in
developing creativity, scholars have synthesized these into key factors affecting creativity, which can be
grouped into four categories: (a) problem solving factors, (b) motivational factors, (c) situational factors,
and(d) organizational factors.
 To a great extent, a creative person is someone who wants to provide an answer to a problem. An
individual who is not satisfied with existing products and services may think of creative ideas to improve them
or to simply differentiate these products and services. Ability to solve problems, in turn, is influenced by the
knowledge of the individual, the extent of his experience, and his level of education. Thus, exposures to a
variety of situations are learning experiences that an individual can draw lessons from in solving problems.
These exposures can be obtained through reading print and electronic materials, traveling, observing
everything around you, work experience, and various forms of training.
Related to problem solving ability is the motivation of an individual. A creative individual is usually a
highly motivated person. Some people just complain about the discomfort of existing products and services but
do not bother to do anything about it. But a motivated individual is willing to do something to address these
dissatisfactions. Thus, a motivated person plans ahead and, more importantly, is willing to take risks. Included
in his plan are measures that would address the uncertainties, and his response to adversaries that may serve as
threats.
Beyond personal factors, the creativity of individuals is manifested when they are confronted with concrete
situations. A creative person is an action person since he knows how to implement his plan. But implementing
the plan requires that the individual must have the necessary skills in interacting with others, and the ability to
manage time under pressure. Creativity surfaces when the eagerness to implement a plan is tempered by the
ability of an individual to convince others to cooperate with him in implementing the plan. However, an
innovative product from a creative idea should also be produced within a reasonable time. Otherwise, it may
be overtaken by other competitive products in the market.
 Another set of external factors that can enhance creativity are organizational factors, which include,
among others, management support, risk taking incentives, flexible rules, degrees of freedom, and
positive evaluation. A creative person thrives in an environment that is nurturing and not threatening. An
organization with foresight and that is forward looking can attract creative individuals since it has an
appetite for risks than a company that emphasizes short-term profits. Creative persons are also encouraged
when the work place does not focus on rules but on outputs.
Some scholars believe that mere presence of factors identified previously is not enough for creativity
to emerge and flourish. There is a need to balance the interactions of all these factors into a complex
system so that they all converge toward creativity. Sternberg and Lubart (1999) refer to this convergence
as the confluence approach to creativity. The confluence approach implies that all the factors in each
category must be balanced in their interactions, and at the same time all the categories must be balanced
in their interactions as well. Such multiple and complex interactions of factors will move toward
creativity. This approach of combining both personal and environmental factors makes the study of
creativity more complicated.
CREATIVE PROBLEM SOLVING
Creative problem solving(CPS) is a procedure of answering a problem with mechanisms and
techniques incorporating creativity. Scientific method is also a procedure in answering a problem with the
use of rational thinking. However, the solution under CPS may not be as clear cut as in solving problem
using scientific or systematic methods.
One procedure of creative problem solving is the one developed by Sidney Parnes and Alex Osborn
(1950). It is differentiated from other CPS since it uses divergent thinking processes and convergent
thinking mechanisms in various stages of seeking a solution. The two important stages in CPS that
extensively use divergent and convergent thinking processes are problem identification and selection of
solution. In identifying the problem, for example, CPS will require divergent thinking processes of
enumerating possible problems, subproblems, issues, and challenges. After which a convergent process
will be undertaken to evaluate the merits and appropriateness of various candidates. The convergent
processes end up with the selection of the problem. These divergent and convergent thinking processes
are likewise applied in the selection of the appropriate solution to the problem at hand.
 The following six steps are followed in the Osborn-Parnes model. They look very simple and easy to
do, but each stage requires various creative processes.
1. Setting the objective. This involves the identification of an objective that an individual wishes to
achieve. This stage can become cumbersome since the individual has to differentiate an objective from a
variety of goals, challenges, issues, and problems. Such differentiation may involve creative processes.
For example, an initial tentative objective may be stated as to provide financial assistance to poor
households. Since there are many reasons for helping the poor financially, what is then the underlying
reason for such provision? Is it to make households secure food or to have access to education or to start a
small business? If it is to start a small business, what then are reasons why you want the poor to start a
small business? Do you want them to be financially independent or to get out of poverty, or do you want
them to engage in activities beyond illegal gambling? After a series of questioning the initial objective has
been revised to how to make the poor individuals get out of illegal gambling as their source of income.
2. Revisiting the objective. This stage involves the search for studies, reports, analyses, and papers related
to the objective set. Related to our final objective above, the review of studies should focus on how to
delink the poor from jueteng and other forms of illegal gambling. The search cannot be confined with the
library or the net. It can involve interviews with key informants and experts on the field on significance of
the objective and its relevance. Aside from an inquiry on its significance and relevance, you may want to
know at this stage which part of the objective still needs to be pursued.
3. Identifying the problem. Based on the objective set and the review of related studies, the individual has
a clearer view on what problem to pursue. This process, as mentioned earlier, may involve divergent
thinking processes in seeking the possible issues, challenges, and problems that may emerge from the
objective set. In identifying the problem related to the objective of getting the poor out of illegal gambling
as a source of income, there is a need to explore possible problems and challenges that may arise.
Once the possible problems, challenges, and issues have been identified, the convergent process of
evaluating the options can provide the individual a single problem to be solved. For example, after a
series of divergent and convergent thinking processes the problem identified is how to reverse
consequences of the dependence of poor individuals on jueteng on their work habits.
4. Looking for a solution. Once the problem has been identified, another series of divergent thinking of
generating ideas for the solution of the problem is needed. Given the problem identified, there is a need to
generate various options on how to reverse the consequences of dependence of poor individuals on
jueteng on their work habits. Some of the alternatives can be providing financial assistance to the poor,
training the poor to learn skills to make them employable, employing them in the public works projects of
the government, and many more.
5. Selecting a solution. Once enough options are given from the divergent thinking process, a convergent
evaluation process of weighing the significance, relevance, and feasibility of these options is undertaken.
For example, after a series of assessment, the solution chosen is the employment of the poor in
government-sponsored public works projects.
6. Accepting the solution. In our chosen problem, we have selected a solution. The chosen option is the
employment of workers in public work projects including road repairs, street cleaning, and maintaining
public schools, parks, and markets. This option was chosen as a solution because it provides legitimate
employment opportunities to the poor. In addition, it brings back the dignity of work as the poor
individuals realize their contributions in improving the physical infrastructure of their community.
These convergent divergent processes used in our hypothetical example have been discussed
previously in various creative methods such as brainstorming, checklist method, free association method,
and problem inventory analysis. In our simple example above, we have shown that solving a problem can
be done creatively using the six stages of the Osborn-Parnes model.