Chapter 2

Focus Group

A focus group is a gathering of five to ten people, who have been selected based on their common characteristics relative to the issues being discussed. These groups are led by a trained moderator, who uses the internal dynamics of the group environment to gain insight into why people feel the way they do about a particular issue. Although focus groups are used for a variety of purposes, they can be used to help generate new business ideas.

Finding 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 Product gaps in the marketplace represent potentially viable business opportunities

Technological advances

Advances in technology frequently create business opportunities.Once a technology is created, products often emerge to advance it.

Opportunity

An opportunity is a favorable set of circumstances that creates a need for a new product, service, or business

Four Essential qualities of an Opportunity

Attractive Timely Durable Anchored

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

Other Techniques

Customer Advisory Boards Some companies set up customer advisory boards that meet regularly to discuss needs, wants, and problems that may lead to new ideas. Day-In-The-Life Research A type of anthropological research, where the employees of a company spend a day with a customer

Business or Product Opportunity Gaps

Economic Forces Social Forces Technological Advances Political and regulatory changes

Encouraging New Ideas

Establishing a Focal Point for Ideas Some firms meet the challenge of encouraging, collecting, and evaluating ideas by designating a specific person to screen and track them—for if it's everybody's job, it may be no one's responsibility. Another approach is to establish an idea bank (or vault), which is a physical or digital repository for storing ideas. Encouraging Creativity at the Firm Level Creativity is the raw material that goes into innovation and should be encouraged at the organizational and individual supervisory level.

Internet Research

If you are starting from scratch, simply typing "new business ideas" into a search engine will produce links to newspapers and magazine articles about the "hottest" new business ideas. If you have a specific topic in mind, setting up Google mail alerts will provide you with links to a constant stream of newspaper articles, blog posts, and news releases about the topic. Targeted searches are also useful.

Brainstorming

Is a technique used to generate a large number of ideas and solutions to problems quickly. A brainstorming "session" typically involves a group of people, and should be targeted to a specific topic. Rules for a brainstorming session: No criticism. Freewheeling is encouraged. The session should move quickly. Leap-frogging is encouraged.

Political Action and Regulatory Changes

Laws to protect the environment have created opportunities for entrepreneurs to start firms that help other firms comply with environmental laws and regulations. Political action and regulatory changes also provide the basis for opportunities.Company created to help other companies comply with the law.

Library Research

Libraries are an often underutilized source of information for generating new business ideas. The best approach is to talk to a reference librarian, who can point out useful resources, such as industry-specific magazines, trade journals, and industry reports. Simply browsing through several issues of a trade journal or an industry report on a topic can spark new ideas.

Three ways to define a opportunity

Observing Trends Solving a Problem Finding Gaps in the Market place

Personal Characteristics of the Entrepreneur

Prior experience Cognitive factors Social Networks Creativity

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

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. A problem facing the U.S. and other countries is finding alternatives to fossil fuels. A large number of entrepreneurial firms, like this wind farm, are being launched to solve this problem.

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.

Social Networks

The extent and depth of an individual's social network affects opportunity recognition. People who build a substantial network of social and professional contacts will be exposed to more opportunities and ideas than people with sparse networks. 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.)Nature of Strong-Tie Vs. Weak-Tie Relationships Strong-tie relationships are characterized by frequent interaction and form between coworkers, friends, and spouses. Weak-tie relationships are characterized by infrequent interaction and form between casual acquaintances. Result It is more likely that an entrepreneur will get new business ideas through weak-tie rather than strong-tie relationships. (See next slide.)

Weak-Tie Relationships

These relationships, which form between casual acquaintances, are not as apt to be between like-minded individuals, so one person may say something to another that sparks a completely new idea

Strong-Tie Relationships

These relationships, which typically form between like-minded individuals, tend to reinforce insights and ideas that people already have

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.

Social Forces

trends alter how people and businesses behave and set their priorities. These trends provide opportunities for new businesses to accommodate the changes.

Economic Forces

trends help determine areas that are ripe for new start-ups and areas that start-ups should avoid.