COURSE CODE: ENT 101

COURSE DESCRIPTION: THE ENTREPRENEURIAL MIND

COURSE INTENDED 1. Understand the basic principle of entrepreneurship

LEARNING OUTCOMES: 2. Examine and practice critical tools, functions, concepts and
skills that are required for an entrepreneur in a small scale
business.
3. Interpret the results of environmental scanning and conduct a
feasibility study.
4. Construct a comprehensive business plan in preparation for
entrepreneurial career.

LEARNING MATERIAL
FOR WEEK NUMBER:
7
I. TITLE: Innovation: The Creative Pursuit Ideas
II. OBJECTIVES: After this lesson, you are expected to:

1. To explore the opportunity identification process

2. To define and illustrate the sources of innovation ideas for
entrepreneurs
3. To examine the role of creativity and review the major
components of the creative process: knowledge accumulation,
incubation process, idea experience, evaluation, and
implementation
4. To present ways of developing personal creativity: recognize
relationship, develop a functional perspective, use your
“brains”, and eliminate muddling mind-set

III. INTRODUCTION: This lesson will gives an overview to the opportunities of an

entrepreneur to global markets, the key challenges and the new
developments that can build their potential characteristics as an
entrepreneur. To build a global economy, there’s always a
accountability and responsibility as an entrepreneur to create a more
opportunities to their businesses.
IV. CONTENTS:

OPPORTUNITY IDENTIFICATION: THE SEARCH FOR NEW IDEAS

Opportunity identification is central to the domain of entrepreneurship. “At its core
entrepreneurship revolves around the questions of why, when, and how opportunities for the
creation of goods and services in the future arise in an economy. Thus, opportunity recognition is the
pro-genitor of both personal and societal wealth."' It has been argued that understanding the
opportunity identification process is one of the primary challenges of entrepreneurship research.

SOURCES OF INNOVATIVE IDEAS

Entrepreneurs, ever alert to opportunities that inhabit the external and internal
environments around them, often spot potential opportunities that others simply cannot recognize.
Where do they find inspiration? All of the following places:
 TRENDS

Trends signal shifts in the current paradigm (or thinking) of the major population. The close
observation of trends-whether societal, technological, economic, or governmental-and the valuable
insights that emanate therefrom constitute an abundant source of potential entrepreneurial ideas.

 Societal Trends: aging demographics, health and fitness growth, senior living
 Technology Trends: mobile (smartphone) technology, e-commerce ,Internet
advances
 Economic Trends: higher disposable incomes, dual wage-earner families,
performance pressures
 Government Trends: increased regulations, petroleum prices, terrorism

INCONGRUITIES

Incongruities exist in the gap between expectations and reality. For example, when Fred
Smith proposed overnight mail delivery, he was told, “If it were that profitable, the U.S.Post Office
would be doing it.” It turned out Smith was right. An incongruity existed between the assumption
that a new, faster level of mail service would never make economic sense, given that mail delivery
was, at the time, a three-day affair. So Smith started FedEx.

PROCESS NEEDS

Venture capitalists often refer to process needs in the marketplace as “pain” and to innovative
solutions to these needs as “painkillers.” When the need is to do something better, innovative new
medical devices, healthier foods, more effective pharmaceuticals, and time-saving devices can be the
result.

INDUSTRY AND MARKET CHANGES

Continual shifts in the marketplace caused by changes in consumer attitudes, advancements

in technology, and growth in the structure, design, or definition of markets or industries are sources
of emerging opportunity. An example can be found in the health care industry, where in-patient care
has undergone radical changes, and at-home health care and preventive medicine have replaced
hospitalization and surgery as primary focus areas.

DEMOGRAPHIC CHANGES

Changes in population size, age, education, occupation, geographic locality, and similar demo-
graphic variables often catalyze new entrepreneurial opportunities. For example, as the aver-age
population age in Florida and Arizona has increased (due largely to the influx of retirees), land
development, recreation, and health care industries all have profited.

PERCEPTUAL CHANGES

Perceptual changes in people's interpretation of facts and concepts may be intangible but
meaningful. The perceived need to be healthy and physically fit has created a demand for both health
foods and health facilities throughout the country. People's desire to better use their personal time
has been a boon to the travel industry, which, capitalizing on consumers' desires to “see the world”
while they are young and healthy, has led to increasing interest in time-share condominiums and
travel clubs.
KNOWLEDGE-BASED CONCEPTS

Inventions, which are the product of new thinking, new methods, and new knowledge, often
require the longest time period between initiation and market implementation because of the need
for testing and modification. For example, cell phone technology has advanced to include not just
phone service but cameras, Internet access, and music. This has revolutionized the way we use cell
phones today.

THE KNOWLEDGE AND LEARNING PROCESS

Once sources of ideas are recognized, entrepreneurs must use their existing knowledge base,
acquired through work, experience, and education, to hone ideas into actual opportunities. General
industry knowledge, prior market knowledge, prior customer understanding, specific interest
knowledge, or any previous knowledge helps entrepreneurs to distill unusual sources of innovative
ideas into potential opportunities.

In addition to simply having a particular experience in their knowledge base, entrepreneurs

must be able to learn from their experiences as well. Researcher Andrew C. Corbett has identified the
importance of acquiring and transforming information, knowledge, and experience through the
learning process. His research lends credence to theories about the cognitive ability of individuals to
transform information into recognizable opportunities.' How an individual entrepreneur acquires,
processes, and learns from prior knowledge is critical to the opportunity identification process. With
that in mind, we next examine the imagination and creativity needed to transform experiences into
entrepreneurial insight and know-how.

ENTREPRENEURIAL IMAGINATION AND CREATIVITY

Entrepreneurs blend imaginative and creative thinking with a systematic, logical process
ability. This combination is a key to successful innovation. In addition, potential entrepreneurs are
always looking for unique opportunities to fill needs or wants. They sense economic potential in
business problems by continually asking, “What if...?”or “ Why not ...?”They develop an ability to see,
recognize, and create opportunity where others find only problems. It has been said that the first rule
for developing entrepreneurial vision is to recognize that problems are to solutions what demand is
to supply. Analysis that blends creative thinking with systematic inquiry such that problems are
looked at from every possible angle is a hallmark of the entrepreneurial imagination. What is the
problem? Whom does it affect? How does it affect them? What costs are involved? Can it be solved?
Would the marketplace pay for a solution? Entrepreneurs continually and imaginatively cycle
through these types of questions.

THE ROLE OF CREATIVE THINKING

It is important to recognize the role of creative thinking in the innovative process. Creativity
is the generation of ideas that result in the improved efficiency or effectiveness of a system.

Two important components of creative problem solving are process and people. Process is
goal oriented; it is designed to attain a solution to a problem. People are the resources that determine
the solution. The process remains the same, but the approach that people take toward problem
solving varies: Sometimes they will adapt a solution, and at other times they will formulate a highly
innovative solution?

One study examined the validity of these two approaches for distinguishing innovative
entrepreneurs from adaptive entrepreneurs and found their application very effective. Thus,
understanding the problem-solving orientation of individuals helps develop their creative abilities.
THE NATURE OF THE CREATIVE PROCESS

Creativity is a process that can be developed and improved.' Everyone is creative to some
degree. However, as is the case with many abilities and talents (athletic, artistic, etc.), some
individuals have a greater aptitude for creativity than others. Also, some people have been raised and
educated in an environment that encouraged them to develop their creativity. They have been taught
to think and act creatively. For others, the process is more difficult because they have not been
positively reinforced; if they are to be creative, they must learn how to implement the creative
process.

Many people incorrectly believe that only geniuses can be creative." Most peoples wrongly
assume that some people are born creative whereas others are not and that only gifted or highly
intelligent person is capable of generating creative ideas and insight, real barriers to creative thinking
are sometimes the inadvertent “killer phrases" that we routinely use in our communications.

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 that others have not seen (e.g., the use of USB flash drives, known a thumb drives, to
store or transfer data)."

PHASE 1:BACKGROUND OR KNOWLEDGE ACCUMULATION

Successful creations are generally preceded by investigation and information gathering. The usually
involves extensive reading, conversations with others working in the field, attendance at professional
meetings and workshops, and a general absorption of information relative the problem or issue
under study. Additional investigation in both related and unrelated field is sometimes involved. This
exploration provides the individual with a variety of perspectives on the problem, and it is
particularly important to the entrepreneur, who needs a base understanding of all aspects of the
development of a new product, service, or business venture

People practice the creative search for background knowledge in a number of wars Some of the most
helpful are to (1) read in a variety of fields; (2) join professional groups and associations; (3) attend
professional meetings and seminars; (4) travel to new places (5) talk to anyone and everyone about
your subject; (6) scan magazines, newspapers, and journals for articles related to the subject; (7)
develop a subject library for future reference (8) carry a small notebook and record useful
information; and (9) devote time to purse natural curiosities.

PHASE 2: THE INCUBATION PROCESS

Creative individuals allow their subconscious to mull over tremendous amounts of

information gathered during the preparation phase. This incubation process often occurs while they
are engaged in activities totally unrelated to the subject or problem. It happens even when they are
sleeping. This accounts for the advice frequently given to a person who is frustrated by what appears
to be an unsolvable problem: “Why don't you sleep on it?” Getting away from a problem and letting
the subconscious mind work on it allows creativity to spring forth. Some of the most helpful steps to
induce incubation are to (1) engage in routine, “mindless” activities (cutting the grass, painting the
house), (2) exercise regularly, (3) play (sports, board games, puzzles), (4) think about the project or
problem before falling asleep, (5) meditate or practice self-hypnosis, and (6) sit back and relax on a
regular basis.
 PHASE 3: THE IDEA EXPERIENCE

This phase of the creative process is often the most exciting because it is when the idea or
solution the individual is seeking is discovered. Sometimes referred to as the “eureka factor,” this
phase is also the one the average person incorrectly perceives as the only component of creativity.

Following are ways to speed up the idea experience: (1) daydream and fantasize about your
project, (2) practice your hobbies, (3) work in a leisurely environment (e.g., at home instead of at the
office), (4) put the problem on the back burner, (5) keep a notebook at bedside to record late-night
or early-morning ideas, and (6) take breaks while working.

PHASE 4: EVALUATION AND IMPLEMENTATION

This is the most difficult step of a creative endeavor and requires a great deal of courage, self-
discipline, and perseverance. Successful entrepreneurs can identify ideas that are work-able and that
they have the skills to implement. More important, they do not give up when they run into temporary
obstacles. Often they will fail several times before they successfully develop their best ideas. In some
cases, entrepreneurs will take the idea in an entirely different direction or will discover a new and
more workable idea while struggling to implement the original one.

DEVELOPING YOUR CREATIVITY

You can do a number of things to improve your own creative talents; one of the most helpful
is to become aware of some of the habits and mental blocks that stifle creativity. Of course, as with
most processes, your development will be more effective if you regularly practice exercises designed
to increase your creative abilities. The following section is designed to improve your awareness of
some of the thought habits that limit your creativity and assist you in developing a personalized
creativity improvement program.

RECOGNIZING RELATIONSHIPS
Many inventions and innovations are a result of the inventor's ability to see new and different
relationships among objects, processes, materials, technologies, and people. Examples range widely
and include (1) adding fruit juice to soft drinks to create Slice, (2) combining combustion engine
 technology with the wheel to create the automobile, and (3) using a 330-pound defensive
football player as a running back and pass receiver.

. This activity involves perceiving in a relational mode. You can develop this talent by viewing
things and people as existing in a complementary or appositional relationship with other things and
people. Simply stated. Things and people exist in the world in relation to other things and people.
Creative people seem to be intuitively aware of this phenomenon and have developed a talent for
recognizing new and different relationships. These relationships often lead to visions that result in
new ideas, products, and services, In order to develop the ability to recognize new relationships you
must practice perceiving in a relational mode.

DEVELOPING A FUNCTIONAL PERSPECTIVE

If expanded, the principle of perceiving in a relational mode helps develop a functional

perspective toward things and people. A creative person tends to view things and people in terms of
how they can satisfy needs and help complete a project. For example, a homemaker who cannot find
a screwdriver often will use a butter knife to tighten a loose screw, or a cereal manufacturer will add
fruit to its product to create a new product line that appeals to a health-conscious market.

ARENAS OF CREATIVITY
The reality is that people often do not recognize when or how they are being creative.
Furthermore, they fail to recognize the many opportunities for creativity that arise within their jobs
on a daily basis. Creativity researcher William Miller argues that people often do not recognize when
they are being creative, and they frequently overlook opportunities to be creative. He suggests that
the path to creativity begins by first recognizing all of the ways in which we are or can be creative.
People in organizations can channel their creativity into seven different arenas:

 Idea creativity: thinking up a new idea or concept, such as an idea for a new product or
service or a way to solve a problem.
 Material creativity: inventing and building a tangible object such as a product,
advertisement, report, or photograph.
 Organization creativity: organizing people or projects and coming up with a new
organizational form or approach to structuring things. Examples could include organizing a
project, starting a new type of venture, putting together or reorganizing a work group, and
changing the policies and rules of a group.
 Relationship creativity: an innovative approach to achieving collaboration, cooperation,
and win-win relationships with others. The person who handles a difficult situation well or
deals with a particular person in an especially effective manner is being creative in a
relationship or one-on-one context.
 Event creativity: producing an event such as an awards ceremony, team outing, or annual
meeting. The creativity here also encompasses decor, ways in which people are involved,
sequence of happenings, setting, and so forth.
 Inner creativity: changing your inner self; being open to new approaches to how you do
things and thinking about yourself in different ways; achieving a change of heart or finding a
new perspective or way to look at things that is a significant departure from how you have
traditionally looked at them.
 Spontaneous creativity: acting in a spontaneous or spur-of-the-moment manner, such as
coming up with a witty response in a meeting, an off-the-cuff speech, a quick and simple way
to settle a dispute, or an innovative appeal when trying to close a sale.
THE CREATIVE CLIMATE
Creativity is most likely to occur when the business climate is right. No enterprise will have
creative owners and managers for long if the right climate is not established and nurtured. Following
are some important characteristics of this climate:

 A trustful management that does not over control employees

 Open channels of communication among all business members
 Considerable contact and communication with outsiders
 A large variety of personality types
 A willingness to accept change
 An enjoyment in experimenting with new ideas
 Little fear of negative consequences for making a mistake
 The selection and promotion of employees on the basis of merit

INNOVATION AND THE ENTREPRENEUR

Innovation is a key function in the entrepreneurial process. Researchers and authors in the
field of entrepreneurship agree, for the most part, with renowned consultant and author Peter E.
Drucker about the concept of innovation: “Innovation is the specific function of entrepreneurship... It
is the means by which the entrepreneur either creates new wealth-producing resources or endows
existing resources with enhanced potential for creating wealth.”

Innovation is the process by which entrepreneurs convert opportunities (ideas) into market-
able solutions. It is the means by which they become catalysts for change. We demonstrated in the
earlier parts of this chapter that the innovation process starts with a good idea. The origin of an idea
is important, and the role of creative thinking may be vital to that development. A major difference
exists between an idea that arises from mere speculation and one that is the product of extended
thinking, research, experience, and work. More important, a prospective entrepreneur must have the
desire to bring a good idea through the development stages. Thus, innovation is a combination of the
vision to create a good idea and the perseverance and dedication to remain with the concept through
implementation.

THE INNOVATION PROCESS

Most innovations result from a conscious, purposeful search for new opportunities. This
process begins with the analysis of the sources of new opportunities. Drucker has noted that, because
innovation is both conceptual and perceptual, would-be innovators must go out and look, ask, and
listen. Successful innovators use both the right and left sides of their brains. They look at figures. They
look at people. They analytically work out what the innovation has to be to satisfy the opportunity.
Then they go out and look at potential product users to study their expectations, values, and needs.

Most successful innovations are simple and focused. They are directed toward a specific,
clear, and carefully designed application. In the process, they create new customers and markets.
Today's mobile technology (smartphones) is a good example. Although this technology is highly
sophisticated, it has become easy to use and appeals to a specific market niche: people who want
their technology all in one and on the go.
 TYPES OF INNOVATION

Four basic types of innovation exist (see Table 5.6). These extend from the totally new to
modifications of existing products or services. Following are the four types, in order of originality

Invention: the creation of a new product, service, or process-often one that is novel or
untried. Such concepts tend to be “revolutionary.”

Extension: the expansion of a product, service, or process already in existence. Such concepts
make a different application of a current idea.

Duplication: the replication of an already existing product, service, or process. The

duplication effort, however, is not simply copying but adding the entrepreneur's own creative touch
to enhance or improve the concept and beat the competition.

Synthesis: the combination of existing concepts and factors into a new formulation. This
involves taking a number of ideas or items already invented and finding a way that the! Can form a
new application.

THE MAJOR MISCONCEPTIONS OF INNOVATION

The entire concept of innovation conjures up many thoughts and misconceptions; it seems
that everyone has an opinion as to what innovation entails. In this section, we outline some of the
commonly accepted innovation misconceptions and provide reasons why these are misconceptions
and not facts.

Innovation is planned and predictable. This statement is based on the old concept that
innovation should be left to the research and development (R&D) department under a planned
format. In truth, innovation is unpredictable and may be introduced by anyone.

Technical specifications must be thoroughly prepared. This statement comes from the
engineering arena, which drafts complete plans before moving on. Thorough preparation is good, but
it sometimes takes too long. Quite often, it is more important to use a try/test/ revise approach.

Innovation relies on dreams and blue-sky ideas. As we have demonstrated in this chapter, the
creative process is extremely important to recognizing innovative ideas. However, accomplished
innovators are very practical people and create from opportunities grounded in reality-not
daydreams.
 Technology is the driving force of innovation success. Technology is certainly one source for
innovation, but it is not the only one. As we outlined earlier in this chapter, numerous sources exist
for innovative ideas; technology is certainly a driving factor in many innovations, but it is not the only
success factor. Moreover, the customer or market is the driving force behind any innovation. Market-
driven or customer-based innovations have the highest probability of success.