Opportunity Recognition &
Generation of Ideas
What is An Opportunity?
• An opportunity is a favorable of circumstances
that creates a need for a new product, service
or business.
An opportunity has four essential qualities:
• Attractive
• Durable
• Timely
• Anchored in a product, service, or business
that crates or adds value for its buyer or end
user.
Three Ways to Identify an Opportunity
• Observing Trends
• Solving a Problem
• Finding Gaps in Market Place
First Approach: Observing Trends
• Observing Trends
• Trends create opportunities for entrepreneurs to pursue.
• The most important trends are:
Economic forces.
Social forces.
Technological advances.
Political action and regulatory change.
– It’s important to be aware of changes in these areas.
Second Approach: Solving a Problem
• Solving a Problem
– Sometimes identifying opportunities simply involves
noticing a problem and finding a way to solve it.
– These problems can be pinpointed through observing
trends and through more simple means, such as intuition,
serendipity, or change.
• A problem facing by many countries is finding alternatives to
fossil fuels.
• A large number of entrepreneurial firms, like wind farm, are
being launched to solve this problem.
Third Approach: Finding Gaps in the
Marketplace
• A Gap in the Marketplace is often created when a product or
service is needed by a specific group of people but doesn’t
represent a large enough market to be of interest to
mainstream retailers or manufacturers.
• Product gaps in the marketplace represent potentially viable
business opportunities.
Ex.
In 2000 Tish Cirovolv realized there were no guitars on the
market made specifically for women. To fill this gap, she
started Daisy Rock Guitars, a company that makes guitars just
for women.
Personal Characteristics of the
Entrepreneur
• Prior Industry Experience
By working in an industry, an individual may spot a market niche that is underserved.
It is also possible that by working in an industry, an individual builds a network of social
contacts who provide insights that lead to recognizing new opportunities.
• Cognitive Factor
Some people believe that entrepreneurs have a “sixth sense” that allows them
to see opportunities that others miss. This “sixth sense” is called
entrepreneurial alertness, which is formally defined as the ability to notice
things without engaging in deliberate search.
• Social Networks
The extent and depth of an individual’s social network affects opportunity
recognition.
People who build a substantial network of social and professional contacts will
be exposed to more opportunities and ideas than people with sparse networks.
• Strong Tie Vs. Weak Tie Relationships
– All of us have relationships with other people that are called “ties.”
Creativity
Creativity is the process of generating a novel or useful
idea.
Opportunity recognition may be, at least in part, a creative
process.
For an individual, the creative process can be broken down
into five stages, as shown on the next slide.
Five-Steps to Generating Creative Ideas
• Preparation
• Incubation
• Insight: B. Idea conceived, problem solved
• Evaluation
• Elaboration
Techniques For Generating Ideas
Brain Storming:
• Is a technique used to generate a large number of ideas and
solutions to problems quickly.
– A brainstorming “session” typically involves a group of
people, and should be targeted to a specific topic.
– Rules for a brainstorming session:
• No criticism.
• Freewheeling is encouraged.
• The session should move quickly.
• Leap-frogging is encouraged.
• Focus Group
A focus group is a gathering of five to ten people, who
have been selected based on their common characteristics
relative to the issues being discussed.
These groups are led by a trained moderator, who uses the
internal dynamics of the group environment to gain insight
into why people feel the way they do about a particular
issue.
Although focus groups are used for a variety of purposes,
they can be used to help generate new business ideas.
Library and Internet Research
• Library Research
Libraries are an often underutilized source of information
for generating new business ideas.
The best approach is to talk to a reference librarian, who
can point out useful resources, such as industry-specific
magazines, trade journals, and industry reports.
Simply browsing through several issues of a trade journal
or an industry report on a topic can spark new ideas.
• Internet Research
– If you are starting from scratch, simply typing “new
business ideas” into a search engine will produce links to
newspapers and magazine articles about the “hottest” new
business ideas.
– If you have a specific topic in mind, setting up Google or
Yahoo! e-mail alerts will provide you to links to a constant
stream of newspaper articles, blog posts, and news releases
about the topic.
– Targeted searches are also useful.
Other Techniques
• Customer Advisory Boards
– Some companies set up customer advisory boards that meet
regularly to discuss needs, wants, and problems that may lead
to new ideas.
• Day-In-The-Life Research
– A type of anthropological research, where the employees of a
company spend a day with a customer.
