ENTREPRENEURSHIP

CREATIVITY AND THE BUSINESS IDEA

Asst. Prof. Zeynep Merve ÜNAL

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 Learning Objectives
• To identify various sources of ideas for new ventures.
• To discuss methods for generating new venture ideas.
• To discuss creativity and creative problem‐solving techniques.
• To discuss the importance of innovation.
• To understand and be able to develop an opportunity
assessment plan.
• To discuss the aspects of the product planning and development
process.

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 SOURCES OF NEW IDEAS
Some of the more fruitful sources of ideas for entrepreneurs
include:
consumers,
existing products and services,
distribution channels,
research and development.

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 Consumers
• Potential and nascent entrepreneurs should always pay close
attention to potential customers. This can take the form of
informally monitoring potential ideas and needs or formally
arranging for consumers to have an opportunity to express their
opinions.
• The idea or need has to have a large enough market to support a
new venture.

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 Existing Products and Services
• Potential entrepreneurs should also establish a method for
monitoring and evaluating competitive products/services on the
market. Frequently, this analysis uncovers ways to improve on these
offerings that may result in a new product/service that has more
market appeal and sales and profit potential.
• Sam Walton, founder of Walmart, would frequently visit competitive
stores focusing not on what the competitive store did badly, but
rather on what they did very well, so he could implement a version of
these ideas at Walmart. Jameson Inns established a policy whereby
the manager of each of its inns (hotels) reported weekly on
competitive hotels and their prices in their market areas.

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 Distribution Channels
• Members of the distribution channels are also excellent sources
for new ideas reflecting their familiarity with the needs of the
market. Not only do channel members frequently have
suggestions for completely new products, but they can also help
in marketing the entrepreneur’s newly developed products.
• One entrepreneur found out from a salesclerk in a large
departmental store that the reason his hosiery (çorap) was not
selling well was its color. By heeding the suggestion and making
the appropriate color changes, his company became one of the
leading suppliers of non‐brand hosiery in that region of the
United States.

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 Research and Development
• The largest source of new ideas is the entrepreneur’s own
“research and development” efforts, which may be a formal
endeavor connected with one’s current employment or an
informal one in a basement or garage.
• One research scientist in a Fortune 500 company developed a
new plastic resin that became the basis of a new product, a
plastic molded modular cup pallet, as well as a new venture—the
Arnolite Pallet Company, Inc.—when the Fortune 500 company
was not interested in developing the idea and released it to the
entrepreneur.

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 METHODS OF GENERATING IDEAS
• Even with a wide variety of sources available, coming up with an
idea to serve as the basis for a new venture can still pose a
problem, particularly since the idea is the basis for the business.
• The entrepreneur can use several methods to help generate and
test new ideas, such as focus groups, brainstorming,
brainwriting, and problem inventory analysis.

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 Focus Group
• Focus groups have been used for a variety of purposes since the
1950s. In a focus group, a moderator leads a group of people through
an open, in‐depth discussion rather than simply asking questions to
solicit participant response. For a new product area, the moderator
focuses the discussion of the group in either a directive or a
nondirective manner. The group of frequently 8–14 participants is
stimulated by comments from each other in creatively conceptualizing
and developing a new product/service idea to fill a market need.
• The focus group is an excellent method for initially screening ideas
and concepts. The results can be analyzed more quantitatively,
making the focus group an even more useful method for generating
new product ideas.

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 Brainstorming
• The brainstorming method stimulates people to be creative by meeting with
others and participating in an organized group experience. Although most of the
ideas generated by the group have no basis for further development, sometimes a
good idea emerges.
• When using brainstorming, four rules need to be followed:
• 1. No criticism is allowed by anyone in the group—no negative comments.
• 2. Freewheeling (serbest bir biçimde) is encouraged—the wilder the idea, the
better.
• 3. Quantity of ideas is desired—the greater the number of ideas, the greater the
likelihood of the emergence of useful ideas.
• 4. Combinations and improvements of ideas are encouraged; ideas of others can
be used to produce still another new idea.

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 Brainwriting
• Brainwriting is a form of written brainstorming. It was created by Bernd
Rohrbach at the end of the 1960s under the name Method 635 and differs
from classical brainstorming by giving participants more time to think than
in a brainstorming session, where the ideas are expressed spontaneously.
• Brainwriting is a silent, written generation of ideas by a group of people.
The participants write their ideas on special forms or cards that circulate
within the group, which usually consists of six members. Each group
member generates and writes down three ideas during a five‐minute
period. The form is passed on to the adjacent person who writes down
three new ideas, and so on, until each form has passed all participants. A
leader monitors the time intervals and can reduce or lengthen the time
given to participants according to the needs of the group.

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 Problem Inventory Analysis
• Problem inventory analysis uses individuals in a manner analogous to focus
groups to generate new product ideas. However, instead of generating new
ideas themselves, consumers in the group are provided with a list of
problems in a general product category. They are then asked to identify and
discuss products in this category that have the particular problem.
• This method is often effective since it is easier to relate known products to
suggested problems and arrive at a new product idea than to generate an
entirely new product idea by itself. Problem inventory analysis can also be
used to test a new product idea.

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 CREATIVE PROBLEM SOLVING
• While creativity is an important attribute of a successful
entrepreneur, unfortunately, creativity tends to decline with age,
education, lack of use, and bureaucracy.
• Creativity generally declines in stages, beginning when a person
starts school. It continues to deteriorate through the teens and
continues to progressively decrease through ages 30, 40, and 50.
• Also, the latent creative potential of an individual can be stifled
by perceptual, cultural, emotional, and organizational factors.
Creativity can be unlocked and creative ideas and innovations
generated by using any of the creative problem‐solving
techniques..

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 Creative Problem‐Solving Techniques

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 Brainstorming
• In creative problem solving, brainstorming can generate ideas about a
problem within a short time frame through the spontaneous
contributions of participants. A good brainstorming session starts with
a problem statement that is neither too broad (which would diversify
ideas too greatly so that nothing specific would emerge) nor too
narrow (which would tend to confine responses). Once the problem
statement is prepared, usually 8–12 individuals are selected to
participate. To avoid inhibiting responses, no group member should
be a recognized expert in the problem area. All ideas, no matter how
illogical, need to be recorded, with participants prohibited from
criticizing or evaluating during the brainstorming session.

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 Reverse Brainstorming
• Reverse brainstorming is similar to brainstorming, except that criticism is
allowed. In fact, the technique is based on finding fault by asking such
questions as “In how many ways can this idea fail?” Since the focus is on the
negative aspects of a product, service, or idea, care needs to be taken to
maintain the group’s morale. Reverse brainstorming can be effectively used
better than other creative techniques to stimulate innovative thinking.
• The process usually involves the identification of everything wrong with an
idea, followed by a discussion of ways to overcome these problems. Reverse
brainstorming almost always produces some worthwhile results as it is
easier for an individual to be critical about an idea than to come up with a
new idea itself.

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 Gordon Problem
• The Gordon method, unlike many other creative problem‐solving
techniques, begins with group members not knowing the exact nature of
the problem. This ensures that the solution is not clouded by preconceived
ideas and behavioral patterns.
• The entrepreneur starts by mentioning a general concept associated with
the problem. The group responds by expressing a number of ideas. Then a
concept is developed, followed by related concepts, through guidance by
the entrepreneur. The actual problem is then revealed, enabling the group
to make suggestions for implementation or refinement of the final solution.

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 Checklist Method
• In the checklist method, a new idea is developed through a list of related
issues or suggestions. The entrepreneur can use the list of questions or
statements to guide the direction of developing entirely new ideas or
concentrating on specific “idea” areas. The checklist may take any form and
be of any length. One general checklist is:
• 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, color, motion, odor, form, shape?
Other changes?
• Magnify? What to add? More time? Greater frequency? Stronger? Larger?
Thicker? Extra value? Plus ingredient? Duplicate? Multiply? Exaggerate?

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 Free Association
• One of the simplest methods that entrepreneurs
can use to generate new ideas is free association.
• This technique is particularly helpful in
developing an entirely new slant to a problem.
First, a word or phrase related to the problem is
written down, then another and another, with
each new word attempting to add something
new to the ongoing thought processes, thereby
creating a chain of ideas ending with a new
product/service idea emerging.

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 Forced Relationships
• Forced relationships, as the name implies, is the process of
forcing relationships among some product combinations. It is a
technique that asks questions about objects or ideas in an effort
to develop a new idea. The new combination and eventual
concept is developed through a five‐step process:
• 1. Isolate the elements of the problem.
• 2. Find the relationships between these elements.
• 3. Record the relationships in an orderly form.
• 4. Analyze the resulting relationships to find ideas or patterns.
• 5. Develop new ideas from these patterns.

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 Illustration of Forced Relationship Technique

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 Attribute Listing
• Attribute listing is an idea‐finding technique that has the
entrepreneur list the attributes of an item or problem and then
look at each from a variety of viewpoints. Through this process,
originally unrelated objects can be brought together to form a
new combination and possibly a new product/service that better
satisfies a need.

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 Big Dream Approach
• The big‐dream approach to coming up with a new idea requires
that the entrepreneur dream about the problem and its solution;
that is, the entrepreneur should think big. Every possibility
should be recorded and investigated without considering any
negatives involved or the resources required. Ideas should be
conceptualized without any constraints until an idea is developed
into a workable form.

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 Parameter Analysis
• A final method for developing a new idea—parameter analysis—
involves two aspects: parameter identification and creative
synthesis.

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 Parameter Analysis
• Step 1 (parameter identification) involves analyzing variables in
the situation to determine their relative importance. These
variables become the focus of the investigation, with other
variables being set aside. After the primary issues have been
identified, the relationships between parameters that describe
the underlying issues are examined. Through an evaluation of
the parameters and relationships, one or more solutions are
developed; this solution development is called creative synthesis.

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 INNOVATION
• Innovation is the key to the economic development of any
company, region of a country, or country itself. As technologies
change, older products/services decrease in sales and old
industries dwindle. Inventions and innovations are the building
blocks of the future of any economic unit. Thomas Edison
reportedly said that innovative genius is 1 percent inspiration
and 99 percent perspiration.

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 Types of Innovations
• There are various levels of the degree of innovation based on the
uniqueness of the idea.
• There are three major types of innovation, in decreasing order of
uniqueness: breakthrough innovation, technological innovation, and
ordinary innovation.

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 Breakthrough Innovations
• As you would expect, the fewest innovations are of the
breakthrough type. These extremely unique innovations often
establish the platform on which future innovations in an area are
developed. Given that they are often the basis for further
innovation in an area, these innovations are usually protected by
strong patents, trade secrets, and/or copyrights. Breakthrough
innovations include such ideas as penicillin, the steam engine,
the computer, the airplane, the automobile, the Internet, and
nanotechnology.

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 Technical Innovations
• Technological innovation—occurs more frequently than
breakthrough innovation and in general is not at the same level
of scientific discovery and advancement. Nonetheless, these are
very meaningful innovations, as they do offer advancements in
the product/service/market area. As such, they usually need to
be protected. Such innovations as the personal computer, the flip
watch for containing pictures, voice and text messaging, and the
jet airplane are examples of technological innovations.

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 Ordinary Innovation
• Ordinary innovation—is the one that occurs most frequently.
These more numerous innovations usually extend an existing
innovation into a better product or service or one that has a
different—usually better—market appeal. These innovations
usually come from market analysis and pull, not technology
push.
• In other words, the market has a stronger effect on the
innovation (market pull) than the technology (technology push).

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 Defining a New Innovation (Product or Service)
• Sony made the Walkman one of the most popular new products of
the 1980s, although the concept of cassette players had been in
existence for many years.
• the newness was in the consumer concept. Other types of products,
not necessarily new in concept, have also been defined as new. When
coffee companies introduced naturally decaffeinated coffee, which
was the only change in the product, the initial promotional campaigns
made strong use of the word new in the copy.
• In the industrial market, firms may call their products “new” when
only slight changes or modifications have been made in the
appearance of the product.

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 OPPORTUNITY RECOGNITION
• Some entrepreneurs need the ability to recognize a business
opportunity; this is fundamental to the entrepreneurial process
as well as growing a business. A business opportunity represents
a possibility for the entrepreneur to successfully fill a large
enough unsatisfied need that enough sales and profits result.
There has been significant research done on the opportunity
recognition process and several models developed.

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 A Model of the Opportunity Recognition Process

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 PRODUCT PLANNING AND DEVELOPMENT PROCESS
• Once ideas emerge, they need further development and
refinement. This refining process— the product planning and
development process—is divided into five major stages: idea
stage, concept stage, product development stage, test marketing
stage, and commercialization, which starts the product life cycle.

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 Establishing Evaluation Criteria
• These criteria should be all‐inclusive and quantitative enough to
screen the product carefully in the particular stage of
development. So a go forward or stop the decision process can
be made. Criteria should be established to evaluate the new idea
in terms of market opportunity, competition, the marketing
system, and financial and development factors.

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 Idea Stage
• Promising new product/service ideas should be identified and
impractical ones eliminated in the idea stage, allowing maximum
use of the company’s resources. One evaluation method
successfully used in this stage is the systematic market
evaluation checklist, where each new idea is expressed in terms
of its chief values, merits, and benefits.

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 Concept Stage
• After a new product/service idea has passed the evaluation
criteria in the idea stage, it should be further developed and
refined through interaction with consumers.
• In the concept stage, the refined idea is tested to determine
consumer acceptance. Initial reactions to the concept are
obtained from potential customers or members of the
distribution channel when appropriate. One method of
measuring consumer acceptance is the conversational interview
in which selected respondents are exposed to statements that
reflect the physical characteristics and attributes of the
product/service idea.

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 Product Development Stage
• In the product development stage, consumer reaction to the
physical product/service is determined. One tool frequently used
in this stage is the consumer panel, in which a group of potential
consumers is given product samples. Participants keep a record
of their use of the product and comment on its virtues and
deficiencies.

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 Test Marketing Stage
• This last step in the evaluation process, the test marketing stage,
provides actual sales results, which indicate the acceptance level
of consumers. Positive test results indicate the degree of
probability of a successful product launch and company
formation.

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