INTRODUCTION TO ENTREPRENEURSHIP

2. Opportunities and Ideas

 Opportunity vs Idea

Is a thought, an
An Idea
impression or a
notion
 What is an Opportunity?

An opportunity is a
favorable
Opportunity Defined set of circumstances that
creates a need for a new
product, service, or
business.
 What is an Opportunity?
Four Essential Qualities of an Opportunity

Source: Barringer, B. R., & Ireland, D. R. (2019). Entrepreneurship: Successfully Launching New Ventures. In Pearson (6th ed.). Pearson.
 Three Ways to Identify an Opportunity

Source: Barringer, B. R., & Ireland, D. R. (2019). Entrepreneurship: Successfully Launching New Ventures. In Pearson (6th ed.). Pearson.
https://www.youtube.com/watch?v=_TgumDkb1Pw 6
 First Approach: Observing Trends
Environmental Trends Suggesting Business
or Product Opportunity Gaps

Source: Barringer, B. R., & Ireland, D. R. (2019). Entrepreneurship: Successfully Launching New Ventures. In Pearson (6th ed.). Pearson.
 First Approach: Observing Trends

• Observing Trends
– Trends create opportunities for entrepreneurs to pursue.
– The most important trends are:
• Economic forces
• Social forces
• Technological advances
• Political and regulatory change
– It’s important to be aware of changes in these areas.

Source: Barringer, B. R., & Ireland, D. R. (2019). Entrepreneurship: Successfully Launching New Ventures. In Pearson (6th ed.). Pearson.
 Trend 1: Economic Forces

Example of Economic Trend

Creating a Favorable Opportunity
Economic trends help
determine areas that are • A weak economy favors
ripe for new start-ups and start-ups that help consumers
areas that start-ups save money.
should avoid. • An example is GasBuddy.com,
a company started to help
consumers save money on gas.

Source: Barringer, B. R., & Ireland, D. R. (2019). Entrepreneurship: Successfully Launching New Ventures. In Pearson (6th ed.). Pearson.
 Water ATMs are automated water dispensing units, which provide communities with 24/7
Water ATM safe water access. They are solar powered and cloud connected, thus enabling remote
tracking of the water quality and of each pay per use transaction.
 Trend 2: Social Forces

Examples of Social Trends

Social trends alter how • Aging of the population.
people and businesses • The increasing diversity of
behave and set their the workplace.
priorities. These trends • Increased participation in
provide opportunities for social networks.
• Growth in the uses of mobile
new businesses to
devices.
accommodate the • An increasing focus on health
changes. and wellness.

Source: Barringer, B. R., & Ireland, D. R. (2019). Entrepreneurship: Successfully Launching New Ventures. In Pearson (6th ed.). Pearson.
 Trend 3: Technological Advances

Examples of Entire Industries

Advances in technology that Have Been Created as the
frequently create Result of Technological
Advances
business opportunities.
• Computer industry
• Internet
• Biotechnology
• Digital photography

Source: Barringer, B. R., & Ireland, D. R. (2019). Entrepreneurship: Successfully Launching New Ventures. In Pearson (6th ed.). Pearson.
 Trend 3: Technological Advances

Example: H20Audio
Once a technology is
An example is H20Audio, a
created, products often company started by four
emerge to advance it. former San Diego State
University students, that
3D Metal printing, makes waterproof housings
Sensing city, neuro and earbuds for the Apple
iPhone.
marketing

Source: Barringer, B. R., & Ireland, D. R. (2019). Entrepreneurship: Successfully Launching New Ventures. In Pearson (6th ed.). Pearson.
Kata.ai
Artificial
Intelligence

14
 Trend 4: Political Action and Regulatory
Changes
General Example
Political action and Laws to protect the
regulatory changes also environment have created
provide the basis for opportunities for entrepreneurs
opportunities. to start firms that help other
firms comply with
environmental laws and
regulations.

Source: Barringer, B. R., & Ireland, D. R. (2019). Entrepreneurship: Successfully Launching New Ventures. In Pearson (6th ed.). Pearson.
 Trend 4: Political Action and Regulatory
Changes
Specific Example

Company created to help OSHA is a government agency

that formulates and enforces
other companies comply safety, health, and
with the law. environmental regulations for
the workplace. Safety
Compliance Company was
started to help other companies
comply with OSHA regulations.

Source: Barringer, B. R., & Ireland, D. R. (2019). Entrepreneurship: Successfully Launching New Ventures. In Pearson (6th ed.). Pearson.
 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 change.
– 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.

Source: Barringer, B. R., & Ireland, D. R. (2019). Entrepreneurship: Successfully Launching New Ventures. In Pearson (6th ed.). Pearson.
 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.

Source: Barringer, B. R., & Ireland, D. R. (2019). Entrepreneurship: Successfully Launching New Ventures. In Pearson (6th ed.). Pearson.
1-19
 Third Approach:
Finding Gaps in the Marketplace

Specific Example
Product gaps in the Tish Cirovolv realized there
marketplace represent were no guitars on the
potentially viable market made specifically for
business opportunities. females. To fill this gap, she
started Daisy Rock Guitars, a
company that makes guitars
just for women and girls.
Personal Characteristics of the Entrepreneur

Characteristics that tend to make some people better

at recognizing opportunities than others

Prior Experience Cognitive Factors

Social Networks Creativity

Source: Barringer, B. R., & Ireland, D. R. (2019). Entrepreneurship: Successfully Launching New Ventures. In Pearson (6th ed.). Pearson.
 Prior Experience

• Prior Industry Experience

– Several 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.

Source: Barringer, B. R., & Ireland, D. R. (2019). Entrepreneurship: Successfully Launching New Ventures. In Pearson (6th ed.). Pearson.
 Cognitive Factors

• Cognitive Factors
– Studies have shown that opportunity recognition may be
an innate skill or cognitive process.
– Some people believe that entrepreneurs have a “sixth
sense” that allows them to see opportunities that others
miss.
– This “sixth sense” is called entrepreneurial alertness,
which is formally defined as the ability to notice things
without engaging in deliberate search.

Source: Barringer, B. R., & Ireland, D. R. (2019). Entrepreneurship: Successfully Launching New Ventures. In Pearson (6th ed.). Pearson.
 Social Networks
• Social Networks
– The extent and depth of an individual’s social network
affects opportunity recognition.
– 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.)

Source: Barringer, B. R., & Ireland, D. R. (2019). Entrepreneurship: Successfully Launching New Ventures. In Pearson (6th ed.). Pearson.
 Most ideas come through Weak-Tie
Relationships

Strong-Tie Relationships Weak-Tie Relationships

These relationships, which These relationships, which
typically form between like- form between casual
minded individuals, tend to acquaintances, are not as
reinforce insights and ideas apt to be between like-
that people already have. minded individuals, so one
person may say something
to another that sparks a
completely new idea.

Source: Barringer, B. R., & Ireland, D. R. (2019). Entrepreneurship: Successfully Launching New Ventures. In Pearson (6th ed.). Pearson.
 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.

Source: Barringer, B. R., & Ireland, D. R. (2019). Entrepreneurship: Successfully Launching New Ventures. In Pearson (6th ed.). Pearson.
 Creativity

Five Steps to Generating Creative Ideas

Preparation:
Background, experience, knowledge
50-90% of startup ideas emerge from prior work
experience

Source: Barringer, B. R., & Ireland, D. R. (2019). Entrepreneurship: Successfully Launching New Ventures. In Pearson (6th ed.). Pearson.
 Creativity

Five Steps to Generating Creative Ideas

Incubation
Person considers / thinks about a problem -
sometimes consciously or unconsciously

Source: Barringer, B. R., & Ireland, D. R. (2019). Entrepreneurship: Successfully Launching New Ventures. In Pearson (6th ed.). Pearson.
 Creativity

Five Steps to Generating Creative Ideas

Insight
Flash of recognition - when solution is seen /
idea is born
Sometimes pushes back to preparation stage or
forward to evaluation stage

Source: Barringer, B. R., & Ireland, D. R. (2019). Entrepreneurship: Successfully Launching New Ventures. In Pearson (6th ed.). Pearson.
 Creativity

Five Steps to Generating Creative Ideas

Evaluation
Scrutinize, analyze the viability of the idea

Source: Barringer, B. R., & Ireland, D. R. (2019). Entrepreneurship: Successfully Launching New Ventures. In Pearson (6th ed.). Pearson.
 Creativity
2 of 2

Five Steps to Generating Creative Ideas

Elaboration
Work out the details, turn idea into a business
concept, product, service or a business plan

Source: Barringer, B. R., & Ireland, D. R. (2019). Entrepreneurship: Successfully Launching New Ventures. In Pearson (6th ed.). Pearson.
Personal Characteristics of the Entrepreneur
Characteristics that tend to make some people better
at recognizing opportunities than others

Prior Experience Cognitive Factors

Social Networks Creativity

Source: Barringer, B. R., & Ireland, D. R. (2019). Entrepreneurship: Successfully Launching New Ventures. In Pearson (6th ed.). Pearson.
 Full View of the Opportunity Recognition Process

Depicts the connection between an awareness of emerging

trends and the personal characteristics of the entrepreneur

Source: Barringer, B. R., & Ireland, D. R. (2019). Entrepreneurship: Successfully Launching New Ventures. In Pearson (6th ed.). Pearson.
Adapted from:
Chapter 2: Recognizing Opportunities and Generating Ideas
Chapter 12: Importance of Intellectual Property
Bruce R. Barringer & R. Duane Ireland. 2016. Introduction to Entrepreneurship, 5th edition. Essex:
Pearson Education Ltd.

Other references: