Chapter 5

Creativity and the

Business Idea

McGraw-Hill/Irwin
Entrepreneurship, 7/e

Copyright 2008 The McGraw-Hill Companies, Inc. All rights reserved.

Creativity & Innovation

Creativity is the ability to develop new

ideas and to discover new ways of looking

at problems & opportunities

Innovation is the ability to apply creative

solutions to those problems & opportunities

to enhance or to enrich peoples lives

Creativity is thinking new things & innovation

is doing new things

Entrepreneurs succeed by thinking and doing

new things or old things in new way

Having a great new idea is not enough;
transforming the idea into a tangible product,
service or business venture is the essential
next step
Leadership expert Warren Bennis says.
todays successful companies live and die
according to the quality of their ideas

Creativity
Creativity involves generating something from

nothing
Creative ideas springs up from the most
unexpected places

Edwin Land, one of Americas most

prolific inventors, credits his three year
old daughter with the idea of the Polaroid
instant camera

Entrepreneurship is the result of a disciplined,

systematic process of applying creativity &

innovation to needs & opportunities in the
marketplace
Millions of people come up with creative ideas for
new or different products & services; most of them,
however, never do anything with them
Entrepreneurs are those who connect their creative
ideas with the purposeful action & structure of a
business
Thus successful entrepreneurship is a constant
process that relies on creativity, innovation &
application in the marketplace

3000 new product ideas, 4 make it to

development stage, 2 are actually launched &

Sources of New Ideas

(1 of 2)

Consumers
Informal & formal monitoring of potential ideas and

needs- express their opinions.

Idea & need represents a large enough market to
support new venture .
Existing Companies

Potential (Entpr & Intraprnrs) should also establish a

formal method for monitoring & evaluating

competitive products & services on the market

Distribution channels
Channel members-Excellent source of new ideas

bcoz of their familiarity with the needs of the market

Help in marketing the newly developed products
Example: salesclerks suggesting entrpr changing
color of product

Sources of New Ideas

(2 of 2)

Federal government
Files of the Patent Office contain numerous new

product possibilities.
Suggest more marketable product ideas
Official Gazette, published summarize list of patents for
license or sale

New product ideas can come in response to

government regulations. (OSHA- eliminating unsafe

WCs in industry)
Research and development
Largest source of new ideas is the entrepreneurs

own research and development efforts. May be:

A formal endeavor connected with ones current

employment.
An informal lab in a basement or garage.

Methods of Generating New Ideas

Focus groups
number of group members from 6-12
Moderator focuses discussion of the group in a

directive or nondirective manner.

Co. womens slipper-concept of warm &
comfortable slipper thats fits and old shoe 12
women focus group
An excellent method for initially screening ideas
and concepts.
Brainstorming
A Group method for obtaining new ideas &

solutions

Brainstorming

Conti....

4 Rules should be followed

1.No criticism is allowed by anyone in the group
2.Freewheeling is encouraged-wilder the idea the better
3.Quantity of ideas is desired- greater the no. 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
Example: Bank to develop journal for industrial client
Xcitics of market-information content- frequency of issue
promotional value ( issues discussed)

Focus group and brainstorming is

different in the sense that FG is
structured or moderated...while BS is not
a debate or discussion like that....its
people giving lots of ideas without
criticism allowed

Methods of Generating New Ideas

(2

ofProblem
2)
inventory analysis
Instead of generating new ideas themselves consumers

provided with list of problems in general product

category
Then asked to identify & discuss products in this
category that have particular problem
Can be used to test a new product idea.
Effective method since its easier to relate known
products to suggested problems & arrive at a new
product idea than to generate an entirely new product
idea by itself
Results must be carefully evaluated as they may not
actually reflect a new business opportunity.
Table
5.1
?associates particular problems
Consumers

with specific products & then develop a new

product that do not contain the identified

Creative Problem Solving

Creativity: an important attribute of a successful

entrepreneur.

Creativity tends to decline with:

Age, education, lack of use, and bureaucracy.

Creative Problem-Solving
Techniques

<<Insert Table 5.2>>

Creative Problem-Solving Techniques

(1 of 3)

Brainstorming
Used in creative problem solving and idea

generation.
Creative problem solving: a method for
obtaining new ideas
Spontaneous contribution of participants
Problem statement-neither too broad nor too
narrow
Avoid inhibiting responses
NO group member should be expert in field of
problem
Ideas even if illogical, must be recorded
Prohibit criticizing OR evaluating during BS
session

 Reverse brainstorming

A group method for obtaining new

ideas focusing on the negative.

Finding fault by asking questions in
how many possible ways can the idea
flop
Maintain group morale
Stimulate innovative thinking
Often involves identification of
everything wrong with an ideafollowed by discussion how to
overcome these problems

 Brainwriting
Form of written brainstorming.
It is a silent, written generation of ideas

by a group of people.
This sheet can b passed around on email as well
Pass the sheet around reach its owner
The only thing wrong with it is that there
is no excitement of verbal discussion

Creative Problem-Solving Techniques

(2 of 3)
Gordon method

Method for developing new ideas when the

individuals are unaware of the problem.

u dont give away too much detail about the
problem
headline would be i wish there was
something v cud do about the bad colors in my
TV screen Or Latest trends in fashion world
Checklist method
Developing a new idea through a list of related issues.

Product Planning & Development

Process
Establishing Evaluation Criteria
Criteria for evaluation need to be established at

each stage of the product planning and

development process.
Criteria should be:
All inclusive and quantitative to screen the product

carefully.
Established to evaluate the new idea in terms of:
Market opportunity
Competition
Marketing system
Financial factors
Production factors.

Need for the product idea must exist

Market opportunity
Characteristics & attitudes of consumers
that might buy the product, size & nature of
market
Shareproducers,
of that market
that
product could
competing
prices,
& marketing
policies
should capture
be evaluated
Product should be able to compete successfully
Competition
with products already on the market by having
features that will meet or overcome current or
anticipated
competition
New product
should be compatible with
existing management capabilities &
Marketing system
marketing strategies
Firm should be able to use its marketing
experience & other expertise in this new
product effort
product
should
be able
to less
be supported
by &
Example:
GE would
have
difficult time
contribute
to Co.
financial
structure
adding a new
kitchen
appliance
to its line than
Financial factors
Break
P&G even point & Long term profit outlook for
product need to be determined

Production

if the new product idea cannot be integrated into

existing manufacturing processes, not only is the
factors.
new idea is less positive- but new plan & production

Product Planning and Development

Process
Divided into five major stages:
Idea stage.
Concept stage.
Product development stage.
Test marketing stage.
Commercialization.

The Product Planning and

Development Process (1 of 3)

<<Insert Figure 5.6>>

The Product Planning and

Development Process (2 of 3)
Idea stage
Promising new product/service ideas should

be identified.
Impractical ones eliminated.
Evaluation method systematic market
evaluation checklist.
Concept stage
Refined idea is tested to determine consumer

acceptance.
Consumer acceptance can be measured
through the conversational interview method.

The Product Planning and

Development Process (3 of 3)
Product development stage
Determines consumer reaction to the physical

product/service.
A tool frequently used consumer panel.
Consumer preference is determined through:

multiple brand comparisons, risk analysis, level of repeat

purchases, or intensity of preference analysis.

Test marketing stage

Increases certainty of successful commercialization.
Provides actual sales results, which indicate the

acceptance level of consumers.

Positive test results indicate probability of
successful product launch

E-commerce and Business

Start-up
E-commerce offers entrepreneurs an

opportunity to be creative and innovative.

Factors that facilitate a high-growth in

electronic commerce:
Widespread use of personal computers.
Adoption of intranets in companies.
Acceptance of the Internet as a business

communications platform.
Faster and more secure systems.

Using E-Commerce Creatively

Entrepreneurs starting an Internet commerce

venture need to address the same strategic and

tactical questions as any other entrepreneur.
Internet
operationscompany
Entrepreneurs have to decide to:
primary
Run Internet operations within the company,business
or
Availability
Outsource these operations to Internet
of resources
specialists.
web
professional

Another option is to use the packages for e-

commerce.

Components of Internet
Commerce
Two major components of Internet

commerce are:
Front-end operations.
Back-end operations.

Integration of front-end and back-end

operations
represents the greatest challenge for doing

Internet business.
The biggest
mistake of many companies
provides the opportunity for developing a
onsustained
the internet
is believing that an
competitive advantage.
attractive & interactive website will secure
success- leads to underestimating imp of

Web Sites- connection btw Co & its

Indicat
or of
Customers professio
legitim

nal
acy
design
Shoppin
Web
Keys to a good Web site:
g cartdesign
er
Ease of use ( info product /servicescredit
)
card
Structure and organization of information
payment
Secure
Visibility
s
servers
Search capability
https
Advertise E-mail response system
search
Speed.
engines,
banner ads,
Technical aspects
email
Should work properly in different browsers and
Secure
platforms.
servers
Should appear in all marketing materials.
https

Tracking Customer
Information
Database:

Tracks activity of the:

Industry.
Segment.
Company.
Supports personal marketing targeted at

individual clients.
Should be able capture customer attention

with customized one-to-one marketing.

Doing E-Commerce as an Fresh

Entrepreneurial
fruits &
Company
vegitable
s?

To do business through the Internet:

Products should be delivered economically and

conveniently.
Products need to interest a wide market
Company must be ready to ship the product outside its

own geographical location.

Online operations have to bring significant cost

reductions-as compare to brick & mortar

operation
Company must possess the ability to
economically draw customers to its Web site.

Summary
Starting point successful Co.-

product/Service they offer

Sources of ideas ranges comments of
consumers TO changes in Govt regulations
Monitoring comments of Consumers
Evaluating new products offered by
competitors
Familiar with the ideas contained in
previously granted patents

 Becoming actively involved in R&D

Specific techs entrepreneur use to generate

ideas

Focus group-BrainstormingProblem inventory analysis

After idea generation the planning and

developing process begins

Large number ideas screened/ evaluated
Potential ideas moved- concept, product
development, test marketing,
commercialization stage