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New Business Ventures Session #3: Opportunity Recognition. BALAGOPAL VISSA INSEAD 1, Ayer Rajah Avenue Singapore 138676 --- Office: (65) 67995382 Hand phone: (65) 94244573 Email: balagopal.vissa@insead.edu.

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slide1

New Business Ventures

Session #3: Opportunity Recognition

BALAGOPAL VISSA

INSEAD

1, Ayer Rajah Avenue

Singapore 138676

---

Office: (65) 67995382

Hand phone: (65) 94244573

Email: balagopal.vissa@insead.edu

These notes are intended to support class discussions. They should not be considered a comprehensive set of issues to be dealt with.

frog rosbif key takeaways
Frog & Rosbif Key takeaways…..
  • Creating a new venture from scratch is a process – what you do and how you do it are more crucial than your personality or cultural background
  • Opportunities are like diamonds in the rough – need to be polished thru hard work
  • Luck matters a great deal – but on the other hand, fortune favors the prepared!!
  • It always takes longer than you think – so persistence pays
today s session how do entrepreneurs pursue opportunity
Today’s session – How do entrepreneurs pursue opportunity
  • Discuss the Opportunity Assessment Sheet exercise & Readings
  • Lecture on what is generalizable
  • Invited Speaker:

Darran Nathan

Chief Strategy Officer (Project Proteus)

    • How his team is pursuing an opportunity in reconfigurable computing
    • His personal journey as an entrepreneur
what s the difference between an idea and a business opportunity
What’s the difference between an idea and a business opportunity?

An attractive business opportunity consists of

  • A great business concept
  • Large potential market
  • Technically feasible product
  • Protectable IPR
pursuing opportunity is a subjective process
Pursuing Opportunity is a subjective process

Three sources of subjectivity

  • Perception
  • Ability
  • Motivation
perceiving opportunity analogous to signal detection
Perceiving Opportunity analogous to signal detection

Interpretation of a noisy signal is dependent on stocks of prior knowledge

Ultimate outcome

Decision to act on the opportunity

avoiding type i ii errors requires
Avoiding Type I & II errors requires….

Immersion in operational details which

  • Accrues slowly (albeit reliably) through prior experience or
  • Can be acquired rapidly (albeit less reliably) through vicarious learning
self knowledge is equally important
“Self Knowledge” is equally important …
  • Do you have the needed abilities (e.g. social networks, team building skills etc.) to execute?
  • Are you truly motivated to pursue this activity?
so is it a good opportunity for you
So, is it a good opportunity for you?

Perception

Motivation

Seriously pursue an opportunity when:

You perceive it

and

Have the ability to exploit it – or get a partner who does –

and

Are motivated to pursue it

Ability

points to ponder
Points to Ponder…
  • An idea or invention is not a business opportunity
  • Pursuing opportunity is a subjective process – lookout for type I or II errors
  • Always ask the question – Why is this a great opportunity for me?
what s knight got to do with it
What’s Knight got to do with it?

Source: Dew & Sarasvathy(2003)

contrasting effectual vs predictive reasoning
Predictive Reasoning

The goal to be attained is well understood and clear

 Focus your attention on the best / most creative means to attain the goal

Effectual Reasoning

The goal to be attained is not clear

 Focus attention on the means at your disposal. Ask the question: What possible goals can I achieve with these means

Contrasting effectual Vs predictive reasoning
difference in underlying logic
Predictive Reasoning

To the extent that we

can predict the future,

we can control it.

Effectual Reasoning

To the extent that we

can control the future,

we don’t need to

predict it.

Difference in underlying logic
effectual reasoning core principals
Effectual Reasoning – core principals
  • Leverage contingencies (as opposed to executing a pre-determined plan)
  • Build parternerships (as opposed to competitor analysis)
  • Focus on affordable loss (as opposed to expected return)

source: Sarasvathy (2001)

effectual reasoning the process
Effectual reasoning – the process
  • Lives and breathes execution
  • A coherent story binds people together and makes sense of their actions
  • The set of means and their effects get reconfigured till some effects coalesce into a clear goal
key takeaways
Key Takeaways
  • Pursuing opportunity entails dealing with an uncertain future
  • Two different ‘rational’ ways of dealing with uncertainty – Predictive and Effectual
  • Effectual thinking likely requires more creativity than predictive thinking
preview of next session session 4 5 acg case
Preview of next session(Session #4 & #5) – ACG case
  • Venture design choices concerning
    • Business Model design
    • Market Entry
  • Immerse yourself in the operational details and link above choices to the P&L of ACG