Chapter 4

Creativity and

the Business Idea

McGraw-Hill/Irwin Copyright © 2013 by The McGraw-Hill Companies, Inc. All rights reserved.

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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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Learning Objectives

• To understand an opportunity assessment plan

• To discuss the aspects of the product planning and development process

• To discuss aspects of e-commerce and starting an e-commerce business

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Table 4.1 - Trends of the Next Decade

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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

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Sources of New Ideas

• Distribution channels• Help suggest and market new products

• Federal government• Taking cue from pending patents • Ideas evolve in response to government

regulations• Research and development• Formal endeavor connected with one’s current

employment

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Methods of Generating New Ideas

• Focus groups• 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

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Methods of Generating New Ideas

• Quantity of ideas is desired• Combinations and improvements of ideas are

encouraged

• Brain writing• Form of written brainstorming

• Problem inventory analysis• Obtaining new ideas and solutions by focusing on

problems• Used to test a new product idea

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Creative Problem Solving

• Method for obtaining new ideas focusing on the given parameters

• Can be stifled by perceptual, cultural, emotional, and organizational factors

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Table 4.3- Creative Problem-Solving Techniques

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Creative Problem Solving

• Brainstorming• Reverse brainstorming• Group method for obtaining new ideas by focusing

on the negative aspects• Care must be taken to maintain group morale

• Gordon method• Developing new ideas when the individuals are

unaware of the problem

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Creative Problem Solving

• Ensures that solutions are not clouded by preconceived ideas and behavioral patterns

• Checklist method• Developing a new idea through a list of related

issues• Free association• Developing a new idea through a chain of word

associations

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Creative Problem Solving

• Forced relationships• Developing a new idea by looking at product

combinations• Focused on generating ideas from relationship

patterns between elements of a problem• Collective notebook method• Developing a new idea by group members

regularly recording ideas

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Creative Problem Solving

• Attribute listing• Developing a new idea by looking at the positives

and negatives• Big-dream approach• Developing a new idea by thinking without

constraints• Parameter analysis• Developing a new idea by focusing on parameter

identification and creative synthesis

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Figure 4.1 - Illustration of Parameter Analysis

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Innovation

• Types of innovation• Breakthrough• Extremely unique innovations that establish the

platform on which future innovations can be developed• Should be protected by patents, trademarks, and

copyrights

• Technological• Advancements in the product/market area• Needs to be protected

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Innovation

• Ordinary• 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

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Innovation

• Defining a new innovation (product or service)• Newness of a product can be attributed to:• Consumer concept • Change in the package or container• Modifications in the appearance of the product

(industrial market)

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Innovation

• Classification of new products• Consumer’s viewpoint• Determines newness in terms of its effect• Degree of newness depends on:

• Level of behavioral change or new learning required by the consumer

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Figure 4.3 - Continuum for Classifying New Products

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Innovation

• Firm’s viewpoint• An innovative entrepreneurial firm should:

• Make a distinction between new products and new markets• New products - Defined in terms of amount of improved

technology• Market development - Based on the degree of

segmentation

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Figure 4.4 - New Product Classification System

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Figure 4.5 - A Model of the Opportunity Recognition Process

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Product Planning and Development Process

• Product life-cycle: Stages each product goes through from introduction to decline

• Product planning and development process: Stages in developing a new product

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Product Planning and Development Process

• Evaluation criteria• Market opportunity• Competition• Marketing system• Financial factors• Production factors

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Figure 4.6 - The Product Planning and Development Process

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E-commerce and Business Start-up

• Offers entrepreneurs an opportunity to be creative and innovative

• Factors that facilitate growth• Widespread use of personal computers• Adoption of intranets in companies • Acceptance of the Internet as a business

communications platform• Faster and more secure systems

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E-commerce and Business Start-up

• Using E-commerce creatively• An entrepreneur has to decide whether he or she

will run the Internet operations:• Within the company or outsource these operations to

Internet specialists

• Integrate front-end and back-end operations• Integrate customer orders, with distribution

channels and manufacturing capabilities• Allow flexibility for specific customer orders

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E-commerce and Business Start-up

• Web sites• Important features include:• Ease of use• Search capability• E-mail response system• Speed• Compatibility with different browsers and platforms

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E-commerce and Business Start-up

• Tracking customer information• Provides personalized one-to-one marketing• Laws protecting the privacy of individuals should

be followed

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E-commerce and Business Start-up

• Doing E-Commerce as an entrepreneurial company • Essential criteria• Economic and convenient delivery of products• Products should cater to a wide market • Feasibility of shipping outside own geographical

location• Significant cost reductions • Ability to economically draw customers to its Web site