Business Idea Generation Creative Thinking Idea Screening and

Business Idea Generation, Creative Thinking, Idea Screening and Business Plans SIFE Lakehead 2009

Agenda – Entrepreneurship II Characteristics of successful entrepreneurs Ethics and entrepreneurship Purposeful innovation Road map from idea to commercialization Ideas vs. Opportunities Generating Ideas What to Do when momentum is lost Idea Generating Activity Screening Ideas for opportunities

Characteristics of the Successful Entrepreneur

The Successful Entrepreneur Passion for the Business Product/customer focus The Successful Entrepreneur Tenacity Despite Failure Execution Intelligence

Ethics and Entrepreneurship

Ethics and Entrepreneurship Bill Gates, Melinda Gates, and Warren Buffet at a press conference on Monday in New York. Buffet recently announced his intention to give roughly $31 billion to the Gates Foundation. (AP Photo) Measures of success Bill Gates and Warren Buffett want their charitable billions to be spent wisely. So how is the effectiveness of philanthropic aid actually measured? By Drake Bennett | July 2, 2006 When it was announced that Warren Buffett had pledged roughly $31 billion-the majority of his fortune-to the Bill & Melinda Gates Foundation, the fact that the world's second-richest man had entrusted his philanthropic legacy to an existing foundation instead of starting one under his own name only added to the public acclaim. But Buffett said he was simply following what has always been one of his tenets: investing in companies whose managers he trusted, and letting them run the business. ``I've got some people who I say can give it away better than I can, " he said of the Gateses on Monday. Corporate Philanthropy

Innovation is a Purposeful Activity

Innovation has become a purposeful activity IDEO 3 M

A Road Map from Idea to Successful new Business Opportunity

The Long Road to Success Ideas – opportunities – feasibility – business plan – implementation – evaluation – modification - management Ideas Opportunities Feasibility Screening (Proof of concept followed by Financial viability screening) Business Plan Implementation (financing, resourcing) Evaluation

The Process Brainstorming New Product Innovations Screening Those Ideas Business Plan Implementation

The Process - is like a funnel! Creative / Soft-Thinking (Right Brain) - brainstorm new product innovations Logical / Hard-Thinking (Left Brain) - formal business planning (opportunity screening, market forecasts, financial forecasts)

From Ideas to Opportunity Identifying Viable Business Opportunities

Business Ideas Are a ‘dime a dozen’ Don’t fall in love with your own idea Don’t hide it under a tarp in the back yard Look before you leap (critically evaluate the potential for the business before starting) You have to screen from 100 to 1, 000 different ideas before you find a true opportunity that fits you in this place and at this time. ◦ Avoid the service industry in a declining economy ◦ Avoid the retail industry in a declining economy ◦ Seek value-added, export-oriented businesses selling into growing markets

Idea versus Opportunity Ideas are “a dime a dozen” Opportunities are business ideas that offer the potential for a return on invested capital that more than offsets the costs of that capital on a risk-adjusted basis.

Ideas versus Opportunities Ideas Harvest heavy metal contaminants out of river bottoms using plants Opportunities Sell pollution solution technologies to companies under environmental cleanup orders.

The Ideal Opportunity (Heaven) A motivated and large market of customers prepared to pay any price for the product or service you offer Repeated purchases are necessary for customers to satisfy their demand Significant barriers of entry for any potential competitors preserving your market dominance for a long period of time Little or no capital investment required High profit margin (Selling price less cost to produce) Few employees and little demand on your time

Little Opportunity (Business Hell) Few customers, no repeat purchases, sporadic and unpredictable demand few barriers of entry for any potential competitors making it easy for anyone to enter the market to compete with you if you manage to develop the market Large initial and on-going capital investment required Low profit margin per unit (Selling price less cost to produce)

Creativity and Creative Thinking

Hard and Soft Thinking HARD – Linear critical - logical Logic Reason Precision Consistency Work Exact Reality Direct Focused Analysis Specifics Adult SOFT – often circular Non-judgmental - illogical Metaphor Dream Humour Ambiguity Play Approximate Fantasy Paradox Diffuse Hunch Generalization Child

Left-Mode and Right-Mode Characteristics Left-Mode (Hard-thinking) Right-Mode (Soft-thinking) Verbal Analytic Symbolic Abstract Temporal Rational Digital Logical Linear Nonverbal Synthetic Concrete Analogic Nontemporal Nonrational Spatial Intuitive Holistic Source: Betty Edwards, “Drawing on the Right Side of the Brain”

Mental Locks/Barriers to Creativity 1. 2. 3. 4. 5. 6. 7. 8. 9. 10. Focus on the right answer That’s not logical Follow the rules Be practical Avoid ambiguity To err is wrong Play is frivolous That’s not my area Don’t be foolish I’m not creative

Idea Generation

Generating New Business Ideas Techniques include: Group brainstorming/lateral thinking exercises Research – observation, enquiry, play, prototype, experiment Focus groups Surveys Analysis of and reflection on trends: Economy Society – social trends Technology Science Political and regulatory changes There is opportunity in change, chaos, complacency and even boredom.

Where are the opportunities? Opportunities are spawned in ◦ ◦ ◦ ◦ changing circumstances chaos confusion inconsistencies lags or leads knowledge and information gaps vacuums in industry or markets

Strategies for Spotting New Opportunities Look for opportunities in the following: u things that ‘bug’ you u things that bothers or stop people from doing what they want, when they want, and the price they want u new advances in science and technology u Solutions in one field being applied to another field u look for problems that need to be solved u changes in our world whether those changes be in: ý ý ý demography society technology science politics etc.

Importance of Lateral Thinking When brainstorming, start to combine ideas. Use each as stepping stone to something else. Don’t be afraid to experiment. Example: Two ideas: pealing paint and gun powder ----I hate scraping old paint off the exterior of my house…. . I wish sometimes that I could blast it off!!! (Of course, that would destroy the house…. but…) - maybe there is an additive that could be put in the paint before it is applied, that would allow us to trigger it’s easy removal.

Simile (Comparing things using ‘like’ or ‘as’) Simile often give us ideas or insights that logical thinking cannot. Fibre is like glue. Different simile will give you a whole new perspective on what it is that you are examining. Fibre is like a sieve. Fibre is like gossamer. Use the insight provided by different simile to look for ideas! Example: Dolby is like a sonic laundry. It washes out all the noise or dirt from the sound without hurting the sound.

Other Creative Thinking Techniques Use “What if” Questions Play with the idea Challenge the rules associated with the problem Be a magician Be a child Be ambiguous…and look for the possibilities (geeh…that pen is a pen, but it could be a pointer, a digging implement or even a weapon or projectile) Go “hunting” for ideas from other fields…ideas that could be creatively applied to your field of interest. (Like Guttenberg who used the coin punch and wine press ideas to invent the printing press. )

When are you open to Creativity? At the edges of human experience: (at extremes) ◦ ◦ ◦ when when you you you are are are tired at rest pressed by a deadline or are stressed playing on vacation exercising Usually NOT when you are doing routine things!!!! Try doing something differently…live your day backwards…break the routine! Necessity is the Mother of Invention…but play must be the Father!

Brainstorming

Brainstorming Requires creative thinking (soft-thinking) Here are some suggestions to improve the brainstorming process: 1. 2. 3. 4. 5. Choose a facilitator Small groups work better than large. Freewheeling is encouraged – the wilder the idea the better. Brainstorm spontaneously, copiously No criticism, no negatives 6. Quantity – the greater the number of ideas, the greater the likelihood of finding useful ones. 7. Record ideas in full view 8. Invent to the “void” 9. Resist becoming committed to one idea 10. Combinations and improvements are encouraged – ideas of others can be used to produce still other new ideas. ◦ ◦ Identify the most promising ideas Refine and prioritize

Reverse Brainstorming

Reverse Brainstorming Like brainstorming EXCEPT criticism is allowed. Ask the question: “In how many ways can this idea fail? ” ◦ After you have identified everything wrong about an idea, you discuss ways to overcome these problems.

Brainwriting Written form of brainstorming. Method 635) (Bernd Rohrbach – Use 5 minute intervals. Works best with 6 member groups. ◦ Each group member writes three ideas on small card in each 5 minute period. ◦ The card is passed to the next adjacent person – who writes down three new ideas on the same card – who passes it to the next person…until each form has passed all participants.

Problem Inventory Analysis Produce a list of problems with natural fibre. Identify and discuss products in each category that have the particular problem. Example using food: ◦ Psychological: Weight – fattening – empty calories Hunger – filling – still hungry after eating Thirst – does not quench – makes one thirsty Health – indigestion – bad for teeth – keeps one awake - acidity ◦ Sensory: Taste – bitter – bland – salty - sweet Appearance – colour – unappetizing - shape Consistency/Texture – tough – dry – greasy ◦ Activities Meal Planning - forget – get tired of it Storage – run out – package would not fit Preparation – too much trouble – too many pots – never turns out Cooking – burns - sticks Cleaning – makes a mess in oven

Problem Inventory Analysis … Example using food…. continued: ◦ Buying Usage: Portability – eat away from home – take lunch Portions – not enough in package – creates leftovers Availability – out of season – not in supermarket Spoilage – get mouldy – gets sour Cost – expensive – takes expensive ingredients ◦ Psychological/Social Serve to company – would not serve to guests – too much last minute preparation Eating alone – too much effort to cook for oneself Self-image – made by a lazy cook – not served by a good mother

Checklist Method Developing a new idea through a list of related issues: ◦ Put to other uses? New ways to use as is? Other uses if modified? ◦ Adapt? What else is like this? What other ideas does this suggest? Does past offer parallel? What could I copy? Whom could I emulate? ◦ Modify? New twist? Change meaning, colour, motion, odour, form, shape? Other changes? ◦ Magnify? What to add? More time? Greater frequency? Stronger? Larger? Thicker? Extra Value? Plus ingredient? Duplicate? Multiply? Exaggerate?

Checklist Method … Developing a new idea through a list of related issues: ◦ Minify? What substitute? Smaller? Condensed? Minature? Lower? Shorter? Lighter? Omit? Streamline? Split up? Understated? ◦ Substitute? Who else instead? What else instead? Other ingredient? Other material? Other process? Other power? Other place? Other approach? Other tone of voice? ◦ Rearrange? Interchange components? Other pattern? Other layout? Other sequence? Transpose cause and effect? Change pact? Change schedule? ◦ Reverse

Checklist Method … Developing a new idea through a list of related issues: ◦ Reverse? Transpose postive and negative? How about opposites? Turn it backward? Turn it upside down? Reverse roles? Change shoes? Turn tables? Turn other cheek? ◦ Combine? How about a blend, an alloy, an assortment, an ensemble? Combine units? Combine purposes? Combine appeals? Combine ideas?

Free Association Developing a new idea through a chain of word associations. ◦ A word or phrase is written down – then another and another ◦ Each new word attempting to add something new to the ongoing thought process ◦ Thereby creating a chain of ideas ending with a new product idea emerging.

Forced Relationships Developing a new idea by looking at product combinations. 1. 2. 3. 4. Isolate the elements of the problem Find the relationships between these elements Record the relationships in an orderly form Analyze the resulting relationships to find ideas or patterns 5. Develop new ideas from these patterns.

Example of Forced Relationship/ Combination Elements- Paper/Soap Idea/Pattern Adjective Papery soap Soapy paper Flakes Wash and dry travel aid Noun Paper soaps Tough paper impregnated with soap and usable for washing surfaces Verb-correlates Soaped papers Soap “wets” paper Soap “cleans” paper Booklets of soap leaves In coating and impregnation processes Suggests wallpaper cleaner Forms

Collective Notebook Method Developing a new idea by group members regularly recording ideas. ◦ Use a small notebook that fits into a pocket: Record – statement of the problem, blank pages and any pertinent background data. Each group member write their own personal ideas three times each day. Give to group leader at the end of the day Group leader summarizes all material Final creative focus group discussion with all participants.

Attribute Listing Method Developing a new idea by looking at the positives and negatives. ◦ List the attributes of an item or problem ◦ Look at each attribute from a variety of viewpoints ◦ Originally unrelated objects can be brought together to form a new combination and possible new uses that better satisfy a need.

Big-Dream Approach Developing a new idea by thinking without constraints. ◦ Dream (imagine) about the problem and its solution (think big) ◦ Every possibility should be recorded and investigated without regard to the negatives involved or resources required. ◦ Ideas should be conceptualized without any constraints until an idea is developed into a workable form.

Parameter Analysis Developing an idea by focusing on parameter identification and creative synthesis. 1. Parameter identification Analyze variables in the situation to determine their relative importance Important variables are the focus and others set aside 2. Creative synthesis Relationships between parameters that describe the underlying issues are examined. Through evaluation of the parameters and relationships, one or more solutions are developed; this solution development is called creative synthesis.

When Momentum is Lost

Strategies to Regain Focus Immerse yourself in the topic Brain dump Develop a number system Have fun! Change your location Use a different technique Take a short break and do something

Immerse Yourself If you are developing ideas about fibre: ◦ Grab as much fibre as you can ◦ ◦ Touch it Smell it Put it together in weird combinations Talk to people who produce, use, modify fibre Explore use of fibre in all aspects of human, animal, geologic life Talk to people who use fibre Talk to people who convert fibre Talk to people who hate fibre Talk to textile experts – filter experts – basket weaving experts – art teachers – artists – engineers - contractors

Brain Dump Each person has to write as many ideas as they can on one filing card. Cards are thrown into a hat Cards are pulled out one at a time. Group members then have to argue why the idea is great. The key is to generate as many ideas as possible. Eventually the group can vote on the ideas they liked the most.

Develop a Number System Identify six possible target markets for an application of fibre: Develop a list of possible features. ◦ ◦ ◦ General public Boat manufacturers Chemical manufacturers Fishers Aerospace ◦ ◦ Coarse/soft Conductive Tensile strength Elasticity The group then has to develop as many ideas as possible using the ingredients and the target market. Repeat!

An Exercise in Brainstorming and Word Association Learning from Nature

Nature and Natural Fibre Universe Galaxy Solar System Planet Star/sun Earth Water Minerals Fire Flora Fauna

Nature and Natural Fibre Insect use of fibre Plant use of fibre Invertebrate use of fibre Animal use of fibre Birds Mammals Reptile Fish Saprophitic use of fibre

Idea Screening

Idea Screening Out of 100 ideas or more, there may be only one or two real opportunities. Superior business ideas that have the potential to become opportunities have 4 anchors: 1. They create or add significant value to a customer or end user. 2. They do so by solving a significant problem, or meeting a significant want or need, for which someone is willing to pay a premium. 3. They therefore have a robust market, profit margin, and moneymaking characteristics. 4. They are a good fit with the founder(s) and management team at the time and in the marketplace with a risk/reward balance.

Characteristics of the "Ideal" Business Idea ØTechnical feasibility ØRequires no initial investment ØHas a recognized, measurable market ØA perceived need for the product or service is present Ø A dependable source of supply for the required inputs is available Ø No government regulation Ø Requires no labour force Ø Provides 100 percent gross margin Ø Buyers purchase frequently Ø Receives favourable tax treatment Ø Has a receptive, established distribution system Ø Has great publicity value Ø Customers pay in advance Ø No risk of product liability

The Business Plan Purposes: ◦ ◦ ◦ fully examine the potential of an opportunity identify key success factors identify critical risk factors guide the entrepreneur in start-up raise capital

Business Plan Do’s Involve all of the management team in its preparation make the plan logical, comprehensive and readable - and short as possible demonstrate commitment identify critical risks and assumptions disclose and discuss any current or potential problems in the venture identify several alternative sources of financing. Spell out the proposed deal and how investors will win. Be creative in gaining the interest of potential investors. Remember the plan is not the business. Know your targeted investor group. Let realistic market and sales projections drive the assumptions underlying the financial forecasts, rather than the reverse.

Business Plan Don’ts Don’t have unnamed, mysterious people on the management team. Don’t make ambiguous, vague or unsubstantiated statements such as estimating sales on the basis of what the team would like to produce. Don’t describe technical products using jargon that only an expert can understand. Don’t spend money on developing fancy brochures, or other ‘sizzle’ - instead, show the “steak”

A Good Business Plan is. . . complete short integrated prepared for the audience organized