Today’s Objectives

1. COEUR - BCMBusiness Creativity ModuleOpportunity Recognition and the Screening ProcessCarolyn McNicholasAberdeen Business School, RGU

2. Today’s Objectives • Understand where business ideas come from • Understand how to perform an initial high level screening / evaluation of business opportunities • Understand the influence of the external environment • Take away action – screening checklist

3. Idea formulation Opportunity Recognition Pre-start Planning and Preparation Entry and Launch Post-entry Development Business Creation & Start-up ProcessAdapted from Deakins (2006)

4. where can you find BIGIDEAs?

5. Sources of Ideas • Every day problems / needs / complaints • E.g. Sports Division / Cisco / Netflix • Personal experience • Work, home, education, skills and talents • Hobbies and interests • Lifestyle entrepreneurs • Newspapers, magazines, media • Other countries • Deliberate Search • Business Opportunity Profiles • On-line databases • Patents and licensing • Factors of Change

6. Pizza Express Case Study • Founded Peter Boizot – 1965 • Influenced by Italian and German experiences - pizzaiolos • Formed an exclusive alliance with London’s only mozzarella maker • By 2003 over 300 outlets in UK, Ireland, Spain and France

7. Organisational / Sectoral The unexpected (event or success or failure) The incongruity – between what actually happens and plan The inadequacy in underlying processes The changes in industry or market structure External Demographic changes Changes in perception, mood and meaning New knowledge (both scientific and non scientific) Drucker’s 7 Sources of Innovative Opportunities Last is most difficult, least reliable and least predictable

8. Opportunity Recognition • Converting an idea into a business opportunity is the key element of the process of business creation • Entrepreneurs are attuned to opportunity • Opportunity must take priority over innovation • Opportunities are generated by change

9. Opportunity has Four Essential Qualities - Barringer and Ireland, 2006 • Attractive • Durable • Timely http://www.youtube.com/watch?v=ckLJVLhxzDA&feature=player_embedded • Anchored in product/service which adds value to buyer/end user “I never perfected an invention that I did not think about in terms of the service it might give others... I find out what the world needs, then I proceed to invent” Thomas Edison Wow products /services such as the Dyson vacuum cleaner and the bar and massage service in Virgin Upper Class, Amazon

10. One Product is Not Enough! • Dyson vacuum cleaner took 5 years and 5,127 prototypes • First product, G-Force, sold for $2000 each in Japan • Vacuums, washing machines, Airblade hand dryer (sales $6 billion worldwide), Air Multiplier

11. Window of Opportunity Varies Internet Search Engines • 1995 – Yahoo • Quickly followed by Lycos, Excite, AltaVista, etc • 1998 – Google (advanced technology)

12. Ideas not Innovative Opportunities • Sinclair C5 • E-stamps and Stamps.com • Tartan tanks

13. Evaluating Idea / Opportunity • Must be a clearly defined market need • Customer analysis, segments, motivations, unmet needs, gaps in market • Idea needs to be economically viable • Market attractiveness e.g. size? growth? trends? entry barriers? • Profit potential? • Resources needed / available? • Technical feasibility • Competitive advantage / USP • Competitor analysis • Fit with your personal / company objectives / experiences / core competencies • Timing must be right – window of opportunity • Risks / threats – Environmental analysis

14. What to look for • Limitations of what’s currently available • Trends and changes (beware fads) • Something new and different • Unfilled niche • Technological advances • Speed to market

15. Conclusions • Generating ideas and new products is easy - but you need customers and markets • The real challenge is converting ideas into a business opportunity • The better you understand your consumer the better your chances of winning in the market place • Evaluation and assessment of markets is key to developing business ideas and new products and services

16. References • Trott, P 2008 Innovation management and New Product Development 4th ed. Harlow:Prentice Hall • Deakins, D and Freel, M. 2009.Entrepreneurship and Small Firms. 5th Edition, McGraw Hill. • Drucker, Peter F. Innovative and Entrepreneurship, Practice and Principles. Harper & Row, Publishers, Inc. 1985 • Burns, P 2007 Entrepreneurship and Small Business 2nd ed. Palgrave • Barringer, B & Ireland, D 2006 Entrepreneurship: Successfully Launching New Ventures 2nd ed. Prentice Hall • Kotter, J.P 1997 The New Rules. Simon & Schuster . • Franke, N, von Hippel, E & Schreier, M 2006 Finding commercially attractive user innovations: A test of lead user theory. Journal of Product Innovation Management. V.23 pp301-315 • Venkataraman, S., and Shane, S., (2000) The Promise of Entrepreneurship as A Field of Research, Academy of Management Review, V. 25 (1) pp217-226. • Cooper, R (1985) Selecting Winning new product projects; using the NewProd system. Journal of Product Innovation Managment v2 0034-44 • http://www.startups.co.uk/ • http://www.ifm.eng.cam.ac.uk/ctm/idm/cases/

17. COEUR - BCMBusiness Creativity ModuleScreening ChecklistCarolyn McNicholasAberdeen Business School, RGU

18. Screening Check List – Market Factors

19. Screening Check List – Competitive Advantage?

20. Screening Check List – Management Capability

21. Screening Check List – Resources / Economics

22. Screening Check List – Other

23. Summary • Need to tailor checklist to individual idea • Seeking • Large and growing market • Reachable customers • An innovative product which adds value • Right window of opportunity • Assess whether to abandon, reform or enhance the idea