Entrepreneurship Development

Unit 3
Idea Generation and Evaluation
Prof. Nuzhath Khatoon
 Idea Generation
• Idea generation is a creative process that involves actively making
and developing ideas to enhance business performance.
• At idea generation sessions companies generate, refine diverse idea,
fostering a creative environment for continuous improvement.
• It aims to identify creative solution, optimize operation and drive
overall success in a straight forward and effective manner
• The goal of idea generation is to foster creativity and provide a
reservoir of diverse concepts that can fuel subsequent stages in the
innovation process.
• Uses of Idea generation
[Link] ahead in the market
2. Improving existing product /services
3. Creating new product/services
4. Enhancing problem solving abilities
Importance of Idea Generation
 Idea Generation Strategies
1- Brainstorming: The core objective of brainstorming is to stimulate the creation of
fresh and unconventional concepts within a collective of individuals
Brainstorming, while demanding resources, stands as an endeavor rich in potential.
Gathering ample materials for recording the ideas generated within team or focus
groups is essential. Embracing a low-tech approach tends to yield optimal results in
brainstorming sessions. Assemble team, pose a question, and commence the process
of documenting every thought that emerges.
2- Creative Thinking: Generating ideas, particularly innovative ideas, necessitates a dose
of creativity, which can be nurtured through specific creativity techniques like the
SCAMPER method. This creative process operates within the realms of individuals,
products, processes, and environments. In essence, creativity involves the
orchestration of ingenious individuals who conceive exceptional ideas and novel
products through a creative journey within an innovative setting.
The SCAMPER technique, encompassing Substitute, Combine, Adapt, Modify, Put to
another use, Eliminate, and Reverse, provides a structured framework to encourage
innovative thinking. By systematically applying these prompts to existing ideas or
concepts, individuals can uncover new possibilities, unexpected connections, and
novel solutions. SCAMPER offers a methodical approach to embracing creativity
within a defined structure.
3- Design Thinking: Design thinking presents itself as a dynamic approach to problem-
solving and ideation, orchestrated through the interplay of four pivotal elements:
• Focusing on Customer Centricity: Placing the user at the epicentre, design thinking
commences by delving into the user’s needs, experiences, and aspirations. This human-
centric perspective lays the foundation for the entire process.
• Interdisciplinary Collaboration: The essence of design thinking thrives within a
collaborative arena, where experts from diverse disciplines converge. This
interdisciplinary amalgamation infuses multifaceted viewpoints, enriching the ideation
process.
• Iterative Evolution: A hallmark of design thinking is its iterative nature. The process
unfolds through cycles of exploration, iteration, and refinement, fostering the evolution
of ideas and concepts in response to feedback and insights.
• Fostering Creativity: A creative environment serves as the breeding ground for design
thinking. It nurtures a space where unbridled creativity flourishes, igniting the
generation of innovative solutions.
4- Complex Opportunity Recognition Techniques: Opportunity Recognition describes
the identification of opportunities to generate growth for companies. The
different idea generation techniques of opportunity recognition are based either on
the market, the company, or the company’s environment.
5- Techniques for Recognizing Complex Opportunities: Opportunity Recognition refers to
the identification of growth-generating prospects for businesses. Various techniques
for idea generation in opportunity recognition are grounded in market dynamics,
organizational factors, and the business environment.
 Entrepreneurial Opportunities
Recognition and Evaluation
Viable business opportunity- A perceived means of generating economic value
that has not previously been explored and is not currently being exploited by
others and meets a need or desire. Central characteristics to opportunity:
1. Potential economic value – potential to generate profit.
2. Newness- A product, service or technology that did not exist before.
3. Perceived desirability- Moral and legal acceptability of the new product or
service in society
In developing a viable business opportunity, the entrepreneur will have to use
their Cognitive ability and Develop objectivity in order to be able to
recognize and deal with risks in their pursuit of the most viable opportunity.
Cognitive approach- The knowledge structure that entrepreneurs use to make
assessments, judgments or decisions involving opportunity evaluation,
venture creation and growth. Opportunities occur from changing conditions
from technology and external environment, the entrepreneur will use his or
her cognitive skills to gather, process, evaluate, and use the information
from these changing conditions to recognize and evaluate viable
opportunities.
The role of cognitive biases and heuristics in opportunity evaluation
• Cognitive biases- Common types of mental short cuts used to make
judgments about opportunities and the business.
• Heuristics- Simplifying strategies that entrepreneurs use to manage
information and reduce uncertainty in decision making
Cognitive factors:
• Risk perception- Subjective judgement of the amount of risk inherent in a
situation.
• Overconfidence- The failure to recognize the limits of personal knowledge,
skills and experience and leads to the overestimation of one’s certainty
regarding facts.
• Planning fallacy- A cognitive aspect related to errors in planning, that is, the
tendency to believe that one can achieve more in a given period of time
than one is really is capable of.
• Belief in the law of small numbers- A judgemental bias where a small sample
of information is used to predict an outcome for a larger population.
• Illusion of control- When the entrepreneur overestimates his or her ability to
control events that are not actually within his or her control
Opportunity assessment and Evaluation
Characteristics of a successful product or service .Products/services
should have four or more of these characteristics:
− Fulfils a need or want
− Have either a niche or mass-market appeal
− Render an income and profit
− Should often be replenished or repurchased by the customer
− Compatibility with existing attitudes and beliefs and a drastic
change in the buyer's behavior should not be necessary
− Simple so that the buyer will understand it
− Be easy to communicate the results or benefits to potential users
− Should be made available to potential customers to try out without
a large risk
− Should be readily available once the buyer decides to make the
purchase
 Design thinking for finding solution
The design thinking process is a problem-solving design methodology that helps you
tackle complex problems by framing the issue in a human-centric way. The design
thinking process works especially well for problems that are not clearly defined or
have a more ambiguous goal.
• The design thinking process is not the most intuitive way to solve a problem, but the
results that come from it are worth the effort
Focus on problem solving: The design thinking process requires focusing on human needs
and behaviors, and how to create a solution to match those needs. This focus on
problem solving can help your design team come up with creative solutions for
complex problems.
Encourages collaboration and teamwork: The design thinking process cannot happen in a
silo. It requires many different viewpoints from designers, future customers, and
other stakeholders. Brainstorming sessions and collaboration are the backbone of the
design thinking process.
Foster innovation: The design thinking process focuses on finding creative solutions that
cater to human needs. This means your team is looking to find creative solutions for
hyper specific and complex problems. If they’re solving unique problems, then the
solutions they’re creating must be equally unique.
 Stages of Design Thinking
1. Empathize stage:The first stage of the design thinking process is to look at the problem you’re
trying to solve in an empathetic manner. To get an accurate representation of how the
problem affects people, actively look for people who encountered this problem previously.
Asking them how they would have liked to have the issue resolved is a good place to start,
especially because of the human-centric nature of the design thinking process.
2. Define stage: Sometimes a designer will encounter a situation when there’s a general issue, but
not a specific problem that needs to be solved. One way to help designers clearly define and
outline a problem is to create human-centric problem statements.
• A problem statement helps frame a problem in a way that provides relevant context in an easy
to comprehend way. The main goal of a problem statement is to guide designers working on
possible solutions for this problem. A problem statement frames the problem in a way that
easily highlights the gap between the current state of things and the end goal.
3. Ideate stage: This is the stage where designers create potential solutions to solve the problem
outlined in the problem statement. Use brainstorming techniques with team to identify the
human-centric solution to the problem defined like
• Standard brainstorm session: team gathers together and verbally discusses different ideas out
loud.
• Brain write: Everyone writes their ideas down on a piece of paper or a sticky note and each
team member puts their ideas up on the whiteboard.
4. Prototype stage: During the prototype phase, entrepreneur and his team
design a few different variations of inexpensive or scaled down versions of
the potential solution to the problem. Having different versions of the
prototype gives team opportunities to test out the solution and make any
refinements.
• Prototypes are often tested by other designers, team members outside of
the initial design department, and trusted customers or members of the
target audience. Having multiple versions of the product gives team the
opportunity to tweak and refine the design before testing with real users.
During this process, it’s important to document the testers using the end
product. This will give valuable information as to what parts of the solution
are good, and which require more changes.
5. Test: After testing different prototypes out with teasers, team should have
different solutions for how product can be improved. The testing and
prototyping phase is an iterative process—so much so that it’s possible that
some design projects never end.
• After designers take the time to test, reiterate, and redesign new products,
they may find new problems, different solutions, and gain an overall better
understanding of the end-user
 Idea Evaluation
Idea evaluation is as simple as assessing and analyzing different ideas or initiatives to
determine which ones are worth pursuing. It’s simple, but it doesn't mean it's easy.
• Several factors need to be considered during the evaluation process, such as how a
specific idea should be evaluated (because not all of them can be evaluated using
the same approach) or which stage of evaluation it’s at.
• Ideas that aim to improve upon existing products are usually assessed based on
standard metrics, like return on investment (ROI) and market size. These metrics
provide a solid foundation for understanding the potential impact of an idea within
the business’s current operations.
• But when it comes to truly innovative ideas - the ones that bring about significant
changes instead of minor improvements - it can be challenging to evaluate them
with the same metrics.
• That’s because these metrics cannot always capture the true potential of
groundbreaking ideas.
The Importance of an Idea Evaluation Process
• It helps you improve ideas and prepare them for implementation
• It helps you stay on brand and meet company objectives
• It helps you keep a transparent ideation process
 Entrepreneurial Outlook
• The entrepreneurial outlook is the mindset that drives
individuals to take risks, think creatively, and identify
opportunities for growth. This outlook is essential for
entrepreneurs as they navigate the challenges of starting
and growing a business.
• Entrepreneurs of the future will be empowered by digital
transformation. The growing importance of e-commerce
and online marketplaces will create new opportunities
for businesses to reach a global audience. Remote work
and virtual collaboration will become the norm, providing
flexibility and cost savings
 Value Proposition Design
• A value proposition is a simple statement that summarizes why a
customer would choose your product or service. It communicates the
clearest benefit that customers receive by giving you their business.
Every value proposition should speak to a customer’s challenge and
make the case for your company as the problem-solver.
• A great value proposition may highlight what makes you different from
competitors, but it should always focus on how customers define your
value. Likewise, conversations around brand strategy and taglines
should stem from a value proposition, but they aren’t one and the
same.
• The value proposition is the element of strategy that looks outward at
customers, at the demand side of the business. Strategy is
fundamentally integrative, bringing the demand and supply sides
together
Value Proposition Canvas
 Customer Insight
• Customer insight, or consumer insight, is the
understanding and interpretation of customer data,
behaviors and feedback into conclusions that can be
used to drive actions that improve product
development and customer support.
• Insights are the actionable motivations behind the
wants and needs of customers that can be used to
guide the evolution of features, development of new
products and creation of consumer benefits. Collecting
customer insights attempts to align customers' needs
with a company's business goals.
 The Importance of Customer Insight
Customer insights serve as the compass guiding businesses to make informed decisions,
evolve their offerings and resonate deeply with their target audience.
Strategic decision-making. By delving into the motivations, preferences and pain points of
customers, businesses can make strategic decisions that align with market demand.
Whether it's launching a new product or pivoting a marketing strategy, insights ensure
actions are rooted in data-driven understanding.
Risk mitigation. Venturing into the unknown can be a costly gamble for businesses. Customer
insights act as a safety net, reducing the risks associated with investments, be it in product
development or market expansion.
Enhanced engagement. Understanding customer behavior and preferences helps businesses
tailor their messaging, products and services. This personalized approach
deepens customer engagement and fosters loyalty.
Optimized return on investment (ROI). Insights lead to smarter investments. By focusing
resources on areas that resonate most with customers, businesses can ensure a
better ROI.
Bridging the expectation-reality gap. Every business aspires to meet, if not exceed, customer
expectations. Yet, there's often a chasm between what customers desire and what
businesses offer. This is where customer insight can play a pivotal role. Customer insight
typically ensures that the voice of the customer is not just heard but acted upon, fostering
an ecosystem where both businesses and their customers thrive
 Idea Development
• Idea development/optimization is a step-by-step
process through which a pool of ideas is refined by
identifying the specific elements of an idea that
create the greatest impact. Idea development is
simply about implementing different ways of
exploring ideas and composing solutions that best
solve the problem in the most effective manner
• Stages of Idea Development: The four phases
include: Inspiration, Incubation, Illumination and
Implementation.
 Stages of Idea Development
Inspiration Phase: This is when creator/developer comes up with an idea
and will likely have more than one to consider. In order to flesh out an
idea and settle on the most relevant idea, one can implement certain
guiding strategies
Incubation Phase: At this phase, a creator is able to create a plan on how
to develop their idea, understand the best app or methods to use to
make the idea a reality, as well as determine the best
opportunities/industries or context to implement the idea.
Illumination Phase: This is the processing/evaluation phase where the
creator is able to assess their idea in reference to the plan developed in
phase two. They are able to identify weaknesses and work on how best
to mitigate them by conducting a critical assessment of their ideas.
Implementation Phase: At this stage the creator develops what they have
already assessed, what you know the market/context is ready for, and
what will be usable.
 Product/Service Feasibility Analysis
Product/service feasibility analysis is an assessment of the overall
appeal of the product or service being proposed. Although there are
many important things to consider when launching a new venture,
nothing else matters if the product or service itself doesn’t sell.
There are two components to product/service feasibility analysis:
product/service desirability and product/service demand.
Product/Service desirability: The first component of product/service
feasibility is to affirm that the proposed product or service is
desirable and serves a need in the marketplace.
Product/Service demand: The second component of product/service
feasibility analysis is to determine if there is demand for the product
or service. Three commonly utilized methods for doing this include
(1) talking face-to-face with potential customers, (2) utilizing online
tools and (3) library, Internet, and gumshoe research
 Industry& Competition Analysis
Industry analysis—also known as Porter’s Five Forces Analysis—is a very useful tool
for business strategists. It is based on the observation that profit margins vary
between industries, which can be explained by the structure of an industry.
• The Five Forces primary purpose is to determine the attractiveness of an industry.
However, the analysis also provides a starting point for formulating strategy and
understanding the competitive landscape in which a company operates.
Porter’s Five Forces Analysis: The framework for the Five Forces Analysis consists of
these competitive forces:
Industry rivalry (degree of competition among existing firms)—intense competition
leads to reduced profit potential for companies in the same industry
Threat of substitutes (products or services)—availability of substitute products will
limit your ability to raise prices
Bargaining power of buyers—powerful buyers have a significant impact on prices
Bargaining power of suppliers—powerful suppliers can demand premium prices and
limit your profit
Barriers to entry (threat of new entrants)—act as a deterrent against new
competitors
 Industry analysis as a tool to develop a
competitive strategy

Industry analysis enables a company to develop a competitive strategy

that best defends against the competitive forces or influences them
in its favour. The key to developing a competitive strategy is to
understand the sources of the competitive forces. By developing an
understanding of these competitive forces, the company can:
• Highlight the company’s critical strengths and weaknesses (SWOT
analysis)
• Animate its position in the industry
• Clarify areas where strategic changes will result in the greatest
payoffs
• Emphasize areas where industry trends indicate the greatest
significance as either opportunities or threats
 Environmental Analysis
• An environmental analysis, or environmental scanning, is a strategic tool you
can use to find all internal and external elements that may affect an
organization's performance. Internal components indicate the business's
strengths and weaknesses, while the external components indicate the
opportunities and threats outside the organization.
• An environment analysis considers trends and high-level factors, such as
interest rates, and how they might change a company's business. These reviews
can help companies assess market attractiveness and create better strategies
for the future.
Purpose of environmental Analysis
• Forecasting the future
• Identifying threats and allowing them to develop a strategy for response
• Helping achieve business objectives
• Forming effective strategies and marketing programs for a business
• Improving organizational performance
 PESTLE Analysis
The PESTLE analysis, sometimes abbreviated to PEST, is a common method for conducting an environmental analysis.
Organizations use this to look at factors that may impact the profitability of their business. PESTLE stands for the
following factors:
Political: Political factors examine the country's current political situation. This often involves evaluating to see if the
government is stable or likely to change soon. Political factors to consider include: Tax laws, Government policies,
Trade restrictions and Corruption
Economical: When conducting an environmental analysis, businesses often look at economic factors, or the current state
of the economy. This allows them to design strategies based on the direction the economy appears to be going. For
instance, if the unemployment rates are low, a business may assume the economy is in a good condition and consider
opening another branch. Other economic factors to consider in your review rate, Inflation rate, Foreign exchange
rate and Credit accessibility
Social: Social factors are the attitudes a country has that may impact business. For instance, in some cultures, individuals
eat a diet based on their religion. This may affect the sales of certain foods in that area. Some examples of social
factors include: Family structure, Gender roles, Distribution of wealth and Education level
Technological: Technological factors include advancements and innovations that may change how a company conducts
business. For some businesses, this may positively impact their processes by utilizing automation to speed up
creation. However, technology may also replace some job positions. Technological factors to consider in your analysis
include: New discoveries or product launches Rate of technological advances, Consumer access to technology and
Technology incentives
Legal: Legal factors look at legislative changes that may impact the environment of a business. When regulatory bodies
set new regulations for a particular industry, such as healthcare, it may impact that industry. Some legal factors to be
aware of include: Health and safety regulations. Patent infringements, Product regulations and Employment laws
Environmental: Environmental factors look at how the geographical location may affect a business. Certain conditions in a
given area may impact trade. Environmental factors to consider in your review are: Weather conditions. Waste
disposal laws, Energy consumption regulations and Environmental policies
 Financial Feasibility Analysis
• Financial analysis may be defined as the process of
obtaining relevant information about a project to ascertain
its financial viability. Firstly, before going deep into the
financial side, some other key steps need to be noted
down.
• Estimation of total capital outlay (investment outlay)
involved in the project;
• Estimation of operating costs; and
• Estimation of operating revenue(sales).
The purpose of financial analysis is to find out whether the
project is attractive enough to secure funds needed for its
various activities and whether the project will generate
enough income to achieve its undertaken objective.
Financial feasibility analysis covers the following aspects:
Cost analysis: This is concerned with the estimation and evaluation of the expected cost of
production. It covers the analysis of future costs, opportunity costs, incremental costs,
imputed costs, interest costs, depreciation, taxes, etc. Cost analysis provides a relevant
base for cost structure
Pricing: This is concerned with price determination strategy. The estimated price gives the
expected demand for the product. So price should be determined judiciously. The price
should be competitive as well. The price is determined considering relevant factors
including the elasticity of demand.
Financing: Financial feasibility includes the determination of requirements of funds and the
capital in sources of funds. It also includes the determination of ways to utilize the funds.
After calculating the expected rate of return, it should be compared with the cost to
make the optimum debt-equity mix. relating to the projects under consideration.
Income and expenditure: This is concerned with the estimation of income and expenditure
relating to the projects under consideration. This gives the entrepreneur an idea about
the cost of production and expected profit.
Capital budgeting: Capital budgeting is concerned with the allocation of funds among the
available investment opportunities. Before allocating funds, it is necessary to estimate
the cash inflows (benefits) and outflows (costs) of the projects. After determining cash
flows the entrepreneur can find out whether it is profitable or not to invest funds in
projects by applying certain appraisal criteria.
Techniques of Financial Analysis