Textbook Reference: Entrepreneurship, 8th edition by R.H. Hisrich, M.P.

Peters a
nd D.A. Shepherd, Mc Graw Hill Irwin, Copyright 2010. Chapter 4: Creativity and
the Business Idea
Sources of New Ideas 1. Consumers & Current Customers. 2. Existing Products and
Services. 3. Distribution Channels. 4. Government. U. S. Patent Office, Official
Gazette, lists all patents available for license or sale. New product ideas can
come in response to government regulations. 5. Research & Development METHODS O
F GENERATING IDEAS Focus Groups Groups of consumers provide information in a str
uctured format. A moderator leads the group (8-14 people) through an open discus
sion to solicit participant response about new products. This is also an excelle
nt method to initially screen ideas and concepts. Brainstorming A group method f
or obtaining new ideas and solutions. Allows people to be stimulated to greater
creativity by meeting with others and participating with the following rules; 1.
No criticism is allowed and no negative comments. 2. Freewheeling is encouraged
-the wilder the idea the better. 3. Quantity of ideas is desired. The greater th
e number the greater the likelihood of useful ideas. 4. Combinations and improve
ments of ideas are encouraged. Problem Inventory Analysis A method of obtaining
new ideas and solutions by focusing on problems. Usually the focus is on a gener
al product category that has a particular problem. Results must be carefully eva
luated as they may not actually reflect a new business opportunity. CREATIVE PRO
BLEM SOLVING 1. Brainstorming. 2. Reverse Brainstorming if focusing on the negat
ive. 3. Brain writing provides time for participants to think about the idea. It
is a silent written generation of ideas by a group of people. 4. Gordon Method.
Participants are now aware of the exact nature of the problem. A general concep
t associated with the problem is presented and the group responds expressing a n
umber of ideas. Prevents preconceived ideas and behavioral pattern. 5. Checklist
Method. New idea is developed through a list of related issues or suggestions.
The entrepreneur guides the direction of developing new ideas through the list.
The checklist may take any form and be of any length. 6. Free Association is dev
eloping new ideas through a chain of word association. 7. Forced Relationships.
Creating new ideas by looking at product combinations. Isolate the elements of t
he problem. Find the relationships between these elements. Record the relationsh
ips in an orderly form. Analyze the resulting relationships to find ideas or pat
terns. Develop new ideas from these patterns. 8. Collective Notebook Method. Car
ry a small notebook with the problem written down. Consider the problem and reco
rd ideas and possible solutions 1-3 times per day. By the end of the week you sh
ould have a list of ideas along with suggestions. A central coordinator will org
anize each notebook and puts ideas in order of frequency mentioned. 9. Attribute
Listing. List the attributes of the item or problem. Look at each from a variet
y of viewpoints. Originally unrelated objects can be brought together to form ne
w combinations. 10. Big Dream Approach. Think without constraints. Think big! Ev
ery possibility should be recorded and investigated without regard to negatives
involved or resources required. Ideas should be conceptualized without constrain
ts until an idea is developed into a workable form. 11. Parameter Analysis. Anal
yze variables in the situation to determine their relative importance. The relat
ionships between the parameters that described the underlying issues are examine
d. Through this evaluation one or more solutions are developed and this called c
reative synthesis. INNOVATION This is the key to the economic development of any
company. Types of Innovation 1. Breakthrough Innovation. Create extremely uniqu
e innovation that establishes the platform on which future items in this area ar
e developed. (Ex. Dr. Liu) 2. Technological Innovation. Occurs more frequently a
nd is not at the same level of scientific discovery. They are meaningful innovat
ions and need to be protected. (Ex. Laptop Computers) 3. Ordinary Innovation. Oc
cur more frequently and usually extend technological innovation into a better pr
oduct or service. Ex. Sara Blakely inventing Spanx) Defining a New Innovation Id
entifying what is new or unique in an idea is a dilemma. ( New fashion jeans) It
may be called new when only slight modifications have been made.

To expand sales volume, some companies add products already marketed by other co
mpanies and market them as new. Firms are always looking for new markets to expl
oit in order to increase profits and make more effective use of their resources.
Classification of New Products May be classified from the viewpoint of the consu
mer or the firm. Consumer: 1. Some viewed according to how much behavioral chang
e or new learning is required by the consumer to use the product. 2. Most new pr
oducts fall into the continuous innovations continuum. (Ex would be automobiles mo
del.) 3. Dynamically Continuous portion of the continuum would be items like the i
Pod. 4. Discontinuous Innovations are rare. Require a great deal of new learning b
y the consumer and perform a previously unfulfilled function. Example would be t
he internet. Firm's Viewpoint 1. Must recognize what the consumer perceives as new
. 2. New Product Classification System 3. New technology and new markets is the
most complex. 4. The firm will need new carefully planned marketing strategies.
5. The difficulty level will depend on the firms experience with similar product
s.
OPPORTUNITY RECOGNITION Fundamental to the entrepreneurial process is recognizin
g business opportunity. The opportunity represents a possibility for the entrepr
eneur to successfully fill a large enough unsatisfied needs that enough sales an
d profits result. Recognition comes from the knowledge and experience of the ind
ividual entrepreneur. The entrepreneur needs to be aware of this knowledge and e
xperience and have the desire to understand and make use of it. Must have entrep
reneurial alertness and entrepreneurial networks.
Opportunity Analysis Plan 1. A description of the idea and its competition. 2. A
n assessment of the domestic market and international market for the idea. 3. An
assessment of the entrepreneur and the team. 4. A discussion of the steps neede
d to make the idea the basis for a variable business venture. PRODUCT PLANNING &
DEVELOPMENT PROCESS 1. The product life cycle is the stages each product goes t
hrough from introduction to decline. 2. The development process is the steps in
bringing a new product to market. 3. The new idea should have synergy with exist
ing management capabilities and marketing strategies. 4. The proposed product sh
ould be able to be supported by and contribute to the company's financial well bei
ng. 5. The new product should be compatible with existing plant, machinery and p
ersonnel.
6. Concerns regarding ethics and ethical behavior when dealing with competition
frequently arise and should be assessed. Stages 1. Idea Stage. The initial stage
of development that identifies promising new ideas and eliminates impractical o
nes. Must determine the need for the new idea and its value to the firm. 2. Conc
ept Stage. The refined idea is tested to determine consumer acceptance. 3. Produ
ct Development Stage. Reaction by the consumers to the product. Review for multi
plicity in the market, risk analysis, level of repeat purchases, and intensity o
f preference. 4. Test Marketing Stage. Provides actual sales results which will
indicate the acceptance level of the consumers. E-COMMERCE AND BUSINESS START-UP
The role of e-commerce must be assessed. Offers the entrepreneur the opportunit
y to be creative and innovative. What would be the level of business to business
and business to consumer sales? The acceptance of the internet as a business pl
atform has increased the potential for this marketing. The interactive nature of
the Internet will continue to expand the volume of e-commerce. Using E-Commerce
Creatively Small firms can minimize marketing costs through internet while reac
hing larger markets. Support for servers and transaction must be maintained. You
can outsource this process and eliminate payroll costs. Front end operations ar
e encompassed in the Web sites functionality. Must be interactive and easy to us
e. The back end operation is the seamless integration of customers orders and di
stribution channels. Web Sites The use of Web sites has been increasing at a sig
nificant rate. However, a majority of small business owners and entrepreneurs do
not believe they have the technical capability to create and maintain a site. F
ocus on your core competencies and outsource the non-core activities. The key to
a good site is ease of use. Speed! Speed! Speed! A Web site is a communication
vehicle and should address; 1. Who is the audience? 2. What are the objectives o
f the site? 3. What do you want consumers to do upon entering the site? 4. Is th
e site an integral part of the firms overall communication program? The material
should be interactive to engage the consumer. It should be easy to find informa
tion about the product and firm. This requires that the material be fresh with n
ew material added daily. Need a shopping cart. Secure server connection for cust
omer privacy. Need to be able to accept credit cards. Need a customer feedback f
eature. Email response system to keep customers aware of their orders, thank you
, and keep informed of new occurrences. Needs to track customer information.