Recognizing Opportunities and Generating Ideas Part II Chapter

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Recognizing Opportunities and Generating Ideas Part II Chapter 2 Modified from: Barringer & Ireland

Recognizing Opportunities and Generating Ideas Part II Chapter 2 Modified from: Barringer & Ireland (2006)

Personal Characteristics of the Entrepreneur Characteristics that tend to make some people better at

Personal Characteristics of the Entrepreneur Characteristics that tend to make some people better at recognizing opportunities than others Prior Experience Social Networks Cognitive Factors Creativity

Prior Industry Experience l Prior industry experience helps entrepreneurs recognize opportunities because An individual

Prior Industry Experience l Prior industry experience helps entrepreneurs recognize opportunities because An individual may spot a market niche that is underserved l Can build a network of social contacts who provide insights that lead to new opportunities l Technical term: The Corridor Principle l

Cognitive Factors Opportunity recognition may be an innate skill or cognitive process l Entrepreneurs

Cognitive Factors Opportunity recognition may be an innate skill or cognitive process l Entrepreneurs may have a “sixth sense” so they see opportunities that others miss l l This “sixth sense” is called entrepreneurial alertness l The ability to notice things without engaging in deliberate search

Social Networks l Characteristics of one’s social network affects opportunity recognition and venture development

Social Networks l Characteristics of one’s social network affects opportunity recognition and venture development Network Tie Refers to any relationship you have with another person You

Important Network Characteristics l Certain network ties characteristics associated with better outcomes (e. g.

Important Network Characteristics l Certain network ties characteristics associated with better outcomes (e. g. , more opportunities recognized, better performance, etc. ) l Network Size l Network Tie Strength l Strong Ties l Weak Ties

Network Size You Large Network characterized by many ties 1. 2. 3. 4. Benefits

Network Size You Large Network characterized by many ties 1. 2. 3. 4. Benefits of Larger Networks Very helpful in early stages of venture development More opportunities identified Better firm performance Network growth You Small network characterized by few ties Benefits of Smaller Networks 1. Helpful in later stages of venture development i. Provides a more parsimonious group of “helpers” later on

Network Tie Strength: Strong Ties Mom Dad You Spouse In depicting a “network map”,

Network Tie Strength: Strong Ties Mom Dad You Spouse In depicting a “network map”, strong ties are indicated by short lines from the focal actor to the connecting strong tie partner. Best Friend Strong-ties: characterized by frequent interactions between coworkers, friends, and spouses Benefits of Strong Ties 1. Generally trustworthy 2. Provides depth of information 3. Usually helpful in early-stage funding Drawbacks of Strong Ties • Provide access to redundant information • Provide access to similar or redundant contacts (e. g. , no help in expanding an actor’s network)

Network Tie Strength: Weak Ties In depicting a “network map”, weak ties are indicated

Network Tie Strength: Weak Ties In depicting a “network map”, weak ties are indicated by long, dotted, lines from the focal actor to the connecting weak tie. You Weak-ties: characterized by infrequent interactions between acquaintances Drawbacks of Weak Ties • May be difficult to sort through information • Over time tend to become strong ties • Sometimes difficult to create relationship with (requires cues of legitimacy) Benefits of Weak Ties 1. Provide unique perspectives 2. Helpful for identifying opportunities 3. Helps entrepreneurs expand their network

Creativity l l l Creativity is the process of generating a novel AND useful

Creativity l l l Creativity is the process of generating a novel AND useful idea. Opportunity recognition may be, at least in part, a creative process. Per the text, for an individual, the creative process can be broken down into five stages (next slide)

Creativity Evolutionary View of 2. 2 Creativity and Idea Figure Generation Five-Steps to Generating

Creativity Evolutionary View of 2. 2 Creativity and Idea Figure Generation Five-Steps to Generating Creative Ideas Variation 1 3 2 4 6 Retention 5 Evaluation and Selection

4 Techniques For Generating Ideas Brainstorming l Focus Groups l Surveys l Other Techniques

4 Techniques For Generating Ideas Brainstorming l Focus Groups l Surveys l Other Techniques l

Technique 1: Brainstorming l Used to generate a large number of ideas/ solutions quickly

Technique 1: Brainstorming l Used to generate a large number of ideas/ solutions quickly l Typically involves a group of people and is targeted to a specific topic l Can generate more ideas than traditional meetings because usually when an idea is suggested, the group immediately starts to evaluating it l Rules for a brainstorming session: l No criticism l Promotes people offering more ideas than they otherwise might l Freewheeling is encouraged l The session should move quickly l Leap-frogging is encouraged

Technique 2: Focus Group l Are used for a variety of purposes and can

Technique 2: Focus Group l Are used for a variety of purposes and can be used to help generate new business ideas l Gathering of 5 -10 people, selected based on common characteristics relative to the issues being discussed l Groups led by a trained moderator who tries to gain insight into why people feel they way they do about the issue

Technique 3: Surveys l Is a method of gathering information from a sample of

Technique 3: Surveys l Is a method of gathering information from a sample of individuals l The sample is a fraction of the population of interest l l This class is a sample of the entire UD student population and even a smaller sample of the entire university-student population within the US The most effective surveys select a “random” portion of the population l Every person in the population of interest should have the same probability of being selected to participate in the survey l l This class is not a random sample of the UD student population l l Using a random sampling procedure allows us to feel more confident in the information we gather from the survey If we put every UD student name in a hat a selected 30 out of the hat, that would be a random selection of the UD student population If we put every university student’ name in the US in a hat and picked 100 out of the hat, that would be a random sample of the US university population Can also use a random numbers table from MS Excel Surveys can help to gain information about people’s perceptions, needs, and problems related to potential new product, service, and business ideas

Technique 4: Other Techniques l Customer Advisory Boards l l Regular meetings of a

Technique 4: Other Techniques l Customer Advisory Boards l l Regular meetings of a sample of a company’s customers to discuss needs, wants, and problems Day-In-The-Life Research l The employees of a company spend a day with a customer A type of anthropological research l Can watch customers using the firm’s offerings l l l Have to be careful of the “Hawthorne Effect” The employee can actually practice using the firm’s offerings as a customer would

Initial Steps for Protecting Ideas l Step 1 l l l Step 2 l

Initial Steps for Protecting Ideas l Step 1 l l l Step 2 l l Secure the idea (e. g. , password protect, put in safe, etc. ) Step 3 l l l Put idea in a tangible form (e. g. , enter into a physical idea logbook or computer disk) Include the date when the idea was first conceived Avoid inadvertent or voluntary disclosures Doing so could forfeit the right to claim exclusive rights to it Other, more formal, steps l Copyright, Trademarks, Patents, etc. l Discussed in more detail in Chapter 8