To explore how ideas fit within the opportunity identification process To define and illustrate the sources of opportunity for entrepreneurs To identify the four models of market opportunity: competition, innovation, alertness and social need To examine the role of creativity and to review the major components of the creative process: knowledge accumulation, incubation process, idea evaluation and implementation To present ways of developing personal creativity: recognise relationships, use lateral thinking, use your ‘brains’, think outside the box, identify arenas of creativity and work in creative climates To introduce how innovation can inspire opportunity through invention, extension, duplication and synthesis To review some of the major misconceptions associated with innovation and to define the 10 principles of innovation To consider the challenges and changing dynamics of social and sustainability innovation

1. Models for spotting
entrepreneurial opportunities

3. Chapter 6
Opportunity and the creative
pursuit of innovative ideas

4. ‘Imagine a world in which everything is
so intelligently designed that human
activity generates a delightful,
restorative ecological footprint.’
William McDonough,
The Natural Advantage of Nations
Your viewpoint?
?

5. Objectives
1. To explore how ideas fit within the opportunity identification process
2. To define and illustrate the sources of opportunity for entrepreneurs
3. To identify the four models of market opportunity: competition,
innovation, alertness and social need
4. To examine the role of creativity and to review the major components
of the creative process: knowledge accumulation, incubation
process, idea evaluation and implementation
5. To present ways of developing personal creativity: recognise
relationships, use lateral thinking, use your ‘brains’, think outside the
box, identify arenas of creativity and work in creative climates
6. To introduce how innovation can inspire opportunity through
invention, extension, duplication and synthesis
7. To review some of the major misconceptions associated with
innovation and to define the 10 principles of innovation
8. To consider the challenges and changing dynamics of social and
sustainability innovation

6. But first
Come up with the worst
ideas for a start-up that
you can think of.?

7. Ideas and the search for opportunity
Do entrepreneurs have ESP?
• Do entrepreneurs have some kind of extra-sensory
perception (ESP) to be able to see what others
cannot see over the horizon!?
• Opportunity is central to entrepreneurship.
• Both opportunity creation and opportunity recognition
are fundamental to value creation.
• Innovation in its purest sense refers to newness.
• But . . . just because something is new does not
mean it will automatically create value.

8. Sources of innovative ideas
• How to take advantage of ideas that create opportunities ?
• Trends
• Unexpected occurrences
• Incongruities
• Process needs
• Industry and market changes
• Demographics
• Perceptual changes
• Knowledge based concepts

9. Sources of innovative ideas

10. 1. Competition
2. Innovation
3. Alertness
4. Social
Models for spotting
entrepreneurial opportunities

11. Starting with a
‘static economy’
• Balance between supply and
demand
• Each competitor maintains
market share
• No new competitors to disrupt
the economy
• This market is ripe for
entrepreneurial opportunity!

12. Model 1: Competition
• Entrepreneur identifies
opportunities where
– demand is sufficiently high to be able to
obtain a high selling price while
– being aware of opportunities to obtain
goods and services at low buying prices.
• Also known as ‘arbitrage’: purchasing
low and selling high
• New opportunities replace existing
companies or drive them out of
business.
Attributed to Richard Cantillon,
first entrepreneurship economist

13. • Disrupts existing markets
and create new ones
• Disrupts equilibrium
• Creates demand
• Cannibalises existing
businesses and causes
losses in an economy, but
overall output is increased.
Model 2: Innovation
First elaborated by Joseph
Schumpeter (1883-1950

14. • Opportunities are already ‘out there’
waiting to be discovered.
• But the entrepreneur recognises
them due to superior knowledge of
the market, industry, technology
and/or networks.
• The entrepreneur has the advantage
of seeing things differently
Model 3: Alertness
Joseph von Mises,
popularised by Kirzner

15. • Social innovation seeks to satisfy needs unlikely
to be satisfied by the market.
• Uses market-based opportunities to address a
social problem
• Market-based solution to address a social
problem.
• Customers, suppliers or workforce are different
• Venture has a social mission be it an
environmental purpose, animal welfare etc.
• What are some examples of social
innovations . . .?
•
Model 4: Social need
Replace at
2nd pages

16. Examples of
social innovations
• Community-centred planning
• Emissions trading
• Fair trade
• Habitat conservation
• International labour standards
• Microfinance
• Socially responsible investing
• Supported employment

17. Being creative
How can you
become more
creative? What
are some
concrete ways
you have
practised?
?

18. Developing your entrepreneurial
capacity: Four phases
• Phase 1: Background or knowledge
accumulation: Entrepreneurs practise the
creative search for background knowledge
• Phase 2: The mind incubation process:
Subconscious mulls over the tremendous
amounts of information
• Phase 3: The idea experience: A bolt out
of the blue
• Phase 4: Evaluation and implementation:
Reworking of ideas to put them into final
form

19. • Seeking out a wide variety of
perspectives on a situation
• Enhanced by reading widely,
interacting with others,
travelling to new places,
recording what is learnt and
taking the time to research
Phase 1:
Background
or knowledge
accumulation

20. • Allowing the subconscious to
work through the information
collected in Phase 1
• Enhanced by engaging in
routine activities, regular
exercise, play (e.g. board
games and puzzles),
meditation and reflection
Phase 2:
The mind
incubation
process

21. • The ‘eureka factor’ or when the
light bulb comes on in cartoons,
which can occur at any time
• Enhanced by daydreaming about
the project, practicing hobbies,
working in a relaxed
environment, setting aside the
problem, and keeping a notebook
Phase 3:
The idea
experience

22. • Requires courage, self-
discipline and perseverance
• Enhanced by increasing
energy levels, knowing the
business planning process,
testing the idea with smart
people and viewing problems
as challenges
Phase 4:
Evaluation
and
implementation

23. Entrepreneurial
imagination and creativity
• To see opportunities,
entrepreneurs blend imaginative
and creative thinking with a
systematic, logical process
ability
• Asking ‘what if…?’ and ‘why
not…?’.
• Seeing opportunities where
others see problems.

24. The nature of the creative process
‘Human creativity [is]
the key factor in our
economy and society …
we now have an
economy powered by
human creativity.
Creativity … is now the
decisive source of
competitive
advantage’.
Richard Florida
Your creative potential is something
that can be developed and improved.
Creativity is not some mysterious and
rare talent reserved for a select few.
It is a distinct way of looking at the
world that is often illogical.
The creative process involves seeing
relationships among things others
have not seen.

25. Exercise: Can you think of the
most common ‘idea stoppers’?
• Here are some examples in
English.
– ‘Naah.’
– ‘Can’t’ (said with a shake of the head
and an air of finality).
– ‘That’s the dumbest thing I’ve ever
heard.’
• Give some examples in
another language!
? In the United States, these
devices became known as a
"Denver boot" because Denver
the first in the country them.

26. Exercise: Can you think of the
most common ‘idea stoppers’
• ‘Naah.’
• ‘Can’t’ (said with a shake of the head and an air
of finality).
• ‘That’s the dumbest thing I’ve ever heard.’
• ‘Yeah, but if you did that . . .’ (poses an extreme
or unlikely disaster case).
• ‘We already tried that – years ago.’
• ‘We’ve done all right so far; why do we need
that?’
• ‘I don’t see anything wrong with the way we’re
doing it now.’
• ‘That doesn’t sound too practical.’
• ‘We’ve never done anything like that before.’
• ‘Let’s get back to reality.’
• ‘We’ve got deadlines to meet – we don’t have
time to consider that.’
• ‘It’s not in the budget.’
• ‘Are you kidding?’
• ‘Let’s not go off on a tangent.’
• ‘Where do you get these weird ideas?’

27. How to develop your creativity?
• Lateral thinking – purposefully generate
new ideas
• Vertical thinking – following logical steps
• Think outside the box – challenge
assumptions
• Recognise relationships
• Go with the flow
• Use your brains
Albert Einstein statue
in his birthplace in Ulm,
Germany

29. Thinking outside the box
• Understand the problem
• Play a child
• Play an external observer
• Disassemble the problem
• Reframe
• Imagine the opposite

30. Recognising relationships
• Seeing new and different
relationships among objects,
processes, materials, technologies
and people
• Look for different or unorthodox
relationships among the elements
and people around you
Australia II's Winged Keel totally changed
our view about America's Cup racing.

31. Using your brains
The right brain hemisphere helps understand analogies, imagine things and synthesise
information. The left brain hemisphere helps analyse, verbalise and use rational approaches
to problem solving.

32. Ways to develop left- and right hemisphere skills

33. People are inherently creative
• Idea creativity
• Material creativity
• Organisation creativity
• Relationship creativity
• Event creativity
• Inner creativity
• Spontaneous creativity

34. Creating the right setting
for creativity
• Trustful management
• Open channels of communication
• Considerable contact and communication with
outsiders
• Variety of personality types
• Willingness to accept change
• Enjoyment in experimenting with new ideas
• Little fear of negative consequences
• The use of techniques that encourage ideas
• Sufficient financial, managerial, human, and
time resources
"Total Transportation Play Town Rug"
by kidcarpet.com

35. Innovation and the entrepreneur
Inventive
process
Entrepre-
neurial
process
• Innovation is the
combination of an
inventive process and
an entrepreneurial
process to create new
economic value for
defined stakeholders’
–Kevin Hindle

36. The innovation process
• The process by which entrepreneurs convert
opportunities (ideas) into marketable
solutions.
• The means by which entrepreneurs become
catalysts for change.
• Most innovations result from a conscious,
purposeful search for new opportunities

37. Disruptive technologies

38. Cristensen’s theory of
disruptive technologies
• A lower performance or
less expensive product
that starts at the bottom of
the market ultimately
displaces the market
incumbents.

39. Four basic types of innovation
• Totally new product, service or processInvention
• New use or different application of existing
product, service or processExtension
• Creative replication of an existing conceptDuplication
• Combination of existing concepts and
factors into a new formulation or useSynthesis

40. Innovation
in action
New Zealand's Gibbs Aquada
was designed from the ground
up to perform well on land and
in water.

41. Major misconceptions about innovation
• Innovation is planned and predictable.
• Technical specification must be thoroughly
prepared.
• Innovation relies on dreams and blue sky ideas.
• Bigger projects will develop better innovations.
• Technology is the driving force of success.

42. Follow these principles to learn innovation
• Be action oriented
• Make the product, process or
service simple and
understandable
• Make the product, process or
service customer-based
• Start small
• Aim high
• Try/test/revise
• Learn from failures
• Follow a milestone schedule
• Reward heroic activity
• Work, work, work

43. Is climate change so irreversible
that entrepreneurs cannot tackle it?
• Entrepreneurs have already
created solutions:
– protecting against chemical and
nuclear accidents
– stemming the spread of disease
– stopping disasters and pandemics.
• Do we believe that runaway
climate change might defy
entrepreneurs’ history of positive
innovation?

44. Innovations that caused global
warming and innovations that
could save us

45. Key concepts
(close your books)
1. What is the difference between
‘creativity’ and ‘innovation’?
2. How many of the ‘principles of
innovation’ can you recall?
(There are 10 in all.)
?

46. Key concepts
• Opportunity identification
– Variety of sources, including disruptive technologies
• Creativity
– Varying aptitude, but can be developed
– Four phases and a range of techniques
• Innovation
– Four types and ten principles
– Concepts include cradle-to-cradle and social innovation