Business Idea Generation, Creative Thinking, Idea Screening and Business Plans

1
Business Idea Generation, Creative Thinking,
Idea Screening and Business Plans

• SIFE Lakehead 2009

2
Agenda Entrepreneurship II

• Characteristics of successful entrepreneurs
• Ethics and entrepreneurship
• Purposeful innovation
• Road map from idea to commercialization
• Ideas vs. Opportunities
• Generating Ideas
• What to Do when momentum is lost
• Idea Generating Activity
• Screening Ideas for opportunities

3
Characteristics of the Successful Entrepreneur
4
The Successful Entrepreneur
5
Ethics and Entrepreneurship
6
Ethics and Entrepreneurship

• Bill Gates, Melinda Gates, and Warren Buffet at
  a press conference on Monday in New York. Buffet
  recently announced his intention to give roughly
  31 billion to the Gates Foundation. (AP Photo)
• Measures of success
• Bill Gates and Warren Buffett want their
  charitable billions to be spent wisely. So how is
  the effectiveness of philanthropic aid actually
  measured?
• By Drake Bennett    July 2, 2006
• When it was announced that Warren Buffett had
  pledged roughly 31 billion-the majority of his
  fortune-to the Bill Melinda Gates Foundation,
  the fact that the world's second-richest man had
  entrusted his philanthropic legacy to an existing
  foundation instead of starting one under his own
  name only added to the public acclaim. But
  Buffett said he was simply following what has
  always been one of his tenets investing in
  companies whose managers he trusted, and letting
  them run the business. I've got some people who
  I say can give it away better than I can," he
  said of the Gateses on Monday.

Corporate Philanthropy
7
Innovation is a Purposeful Activity
8
Innovation has become a purposeful activity

• IDEO
• 3M

9
A Road Map from Idea to Successful new Business
Opportunity
10
The Long Road to Success

• Ideas opportunities feasibility business
  plan implementation evaluation modification
  - management

Ideas
Feasibility Screening (Proof of concept followed
by Financial viability screening)
Opportunities
Business Plan
Implementation (financing, resourcing)
Evaluation
11
The Process

• Brainstorming New Product Innovations
• Screening Those Ideas
• Business Plan
• Implementation

12
The Process - is like a funnel!
Creative / Soft-Thinking (Right
Brain) - brainstorm new product
innovations Logical / Hard-Thinking (Left
Brain) - formal business planning (opportunity
screening, market forecasts, financial forecasts)
13
From Ideas to Opportunity

• Identifying Viable Business Opportunities

14
Business Ideas

• Are a dime a dozen
• Dont fall in love with your own idea
• Dont hide it under a tarp in the back yard
• Look before you leap (critically evaluate the
  potential for the business before starting)
• You have to screen from 100 to 1,000 different
  ideas before you find a true opportunity that
  fits you in this place and at this time.
• Avoid the service industry in a declining economy
• Avoid the retail industry in a declining economy
• Seek value-added, export-oriented businesses
  selling into growing markets

15
Idea versus Opportunity

• Ideas are a dime a dozen
• Opportunities are business ideas that offer the
  potential for a return on invested capital that
  more than offsets the costs of that capital on a
  risk-adjusted basis.

16
Ideas versus Opportunities

• Ideas
• Harvest heavy metal contaminants out of river
  bottoms using plants

• Opportunities
• Sell pollution solution technologies to companies
  under environmental cleanup orders.

17
The Ideal Opportunity (Heaven)

• A motivated and large market of customers
  prepared to pay any price for the product or
  service you offer
• Repeated purchases are necessary for customers to
  satisfy their demand
• Significant barriers of entry for any potential
  competitors preserving your market dominance for
  a long period of time
• Little or no capital investment required
• High profit margin (Selling price less cost to
  produce)
• Few employees and little demand on your time

18
Little Opportunity (Business Hell)

• Few customers, no repeat purchases, sporadic and
  unpredictable demand
• few barriers of entry for any potential
  competitors making it easy for anyone to enter
  the market to compete with you if you manage to
  develop the market
• Large initial and on-going capital investment
  required
• Low profit margin per unit (Selling price less
  cost to produce)

19
Creativity and Creative Thinking
20
Hard and Soft Thinking

• SOFT often circular
• Non-judgmental - illogical
• Metaphor
• Dream
• Humour
• Ambiguity
• Play
• Approximate
• Fantasy
• Paradox
• Diffuse
• Hunch
• Generalization
• Child

• HARD Linear
• critical - logical
• Logic
• Reason
• Precision
• Consistency
• Work
• Exact
• Reality
• Direct
• Focused
• Analysis
• Specifics
• Adult

21
Left-Mode and Right-Mode Characteristics

• Left-Mode
• (Hard-thinking)
• Verbal
• Analytic
• Symbolic
• Abstract
• Temporal
• Rational
• Digital
• Logical
• Linear

• Right-Mode
• (Soft-thinking)
• Nonverbal
• Synthetic
• Concrete
• Analogic
• Nontemporal
• Nonrational
• Spatial
• Intuitive
• Holistic

Source Betty Edwards, Drawing on the Right
Side of the Brain
22
Mental Locks/Barriers to Creativity

1. Focus on the right answer
2. Thats not logical
3. Follow the rules
4. Be practical
5. Avoid ambiguity
6. To err is wrong
7. Play is frivolous
8. Thats not my area
9. Dont be foolish
10. Im not creative

23
Idea Generation
24
Generating New Business Ideas

• Techniques include
• Group brainstorming/lateral thinking exercises
• Research observation, enquiry, play, prototype,
  experiment
• Focus groups
• Surveys
• Analysis of and reflection on trends
• Economy
• Society social trends
• Technology
• Science
• Political and regulatory changes

There is opportunity in change, chaos,
complacency and even boredom.
25
Where are the opportunities?

• Opportunities are spawned in
• changing circumstances
• chaos
• confusion
• inconsistencies
• lags or leads
• knowledge and information gaps
• vacuums in industry or markets

26
Strategies for Spotting New Opportunities

• Look for opportunities in the following
• things that bug you
• things that bother others or stop people from
  doing what they want, when they want, and the
  price they want
• new advances in science and technology
• Solutions in one field being applied to another
  field
• look for problems that need to be solved
• changes in our world whether those changes be in
• demography
• society
• technology
• science
• politics
• etc.

27
Importance of Lateral Thinking

• When brainstorming, start to combine ideas. Use
  each as stepping stone to something else. Dont
  be afraid to experiment.
• Example
• Two ideas pealing paint and gun powder
• ----I hate scraping old paint off the exterior of
  my house..I wish sometimes that I could blast it
  off!!! (Of course, that would destroy the
  house.but)
• - maybe there is an additive that could be put in
  the paint before it is applied, that would allow
  us to trigger its easy removal.

28
Simile (Comparing things using like or as)

• Simile often give us ideas or insights that
  logical thinking cannot.
• Fibre is like glue.
• Different simile will give you a whole new
  perspective on what it is that you are examining.
• Fibre is like a sieve.
• Fibre is like gossamer.
• Use the insight provided by different simile to
  look for ideas!
• Example Dolby is like a sonic laundry. It
  washes out all the noise or dirt from the sound
  without hurting the sound.

29
Other Creative Thinking Techniques

• Use What if Questions
• Play with the idea
• Challenge the rules associated with the problem
• Be a magician
• Be a child
• Be ambiguousand look for the possibilities
  (geehthat pen is a pen, but it could be a
  pointer, a digging implement or even a weapon or
  projectile)
• Go hunting for ideas from other fieldsideas
  that could be creatively applied to your field of
  interest. (Like Guttenberg who used the coin
  punch and wine press ideas to invent the printing
  press.)

30
When are you open to Creativity?

• At the edges of human experience (at extremes)
• when you are tired
• when you are at rest
• when you are pressed by a deadline or are
  stressed
• when you are playing
• when you are on vacation
• when you are exercising
• Usually NOT when you are doing routine things!!!!
• Try doing something differentlylive your day
  backwardsbreak the routine!
• Necessity is the Mother of Inventionbut play
  must be the Father!

31
Brainstorming
32
Brainstorming

• Requires creative thinking (soft-thinking)
• Here are some suggestions to improve the
  brainstorming process
• Choose a facilitator
• Small groups work better than large.
• Freewheeling is encouraged the wilder the idea
  the better.
• Brainstorm spontaneously, copiously
• No criticism, no negatives
• Quantity the greater the number of ideas, the
  greater the likelihood of finding useful ones.
• Record ideas in full view
• Invent to the void
• Resist becoming committed to one idea
• Combinations and improvements are encouraged
  ideas of others can be used to produce still
  other new ideas.
• Identify the most promising ideas
• Refine and prioritize

33
Reverse Brainstorming
34
Reverse Brainstorming

• Like brainstorming EXCEPT criticism is allowed.
• Ask the question
• In how many ways can this idea fail?
• After you have identified everything wrong about
  an idea, you discuss ways to overcome these
  problems.

35
Brainwriting

• Written form of brainstorming. (Bernd Rohrbach
  Method 635)
• Use 5 minute intervals.
• Works best with 6 member groups.
• Each group member writes three ideas on small
  card in each 5 minute period.
• The card is passed to the next adjacent person
  who writes down three new ideas on the same card
  who passes it to the next personuntil each
  form has passed all participants.

36
Problem Inventory Analysis

• Produce a list of problems with natural fibre.
• Identify and discuss products in each category
  that have the particular problem.
• Example using food
• Psychological
• Weight fattening empty calories
• Hunger filling still hungry after eating
• Thirst does not quench makes one thirsty
• Health indigestion bad for teeth keeps one
  awake - acidity
• Sensory
• Taste bitter bland salty - sweet
• Appearance colour unappetizing - shape
• Consistency/Texture tough dry greasy
• Activities
• Meal Planning - forget get tired of it
• Storage run out package would not fit
• Preparation too much trouble too many pots
  never turns out
• Cooking burns - sticks
• Cleaning makes a mess in oven

37
Problem Inventory Analysis

• Example using food.continued
• Buying Usage
• Portability eat away from home take lunch
• Portions not enough in package creates
  leftovers
• Availability out of season not in supermarket
• Spoilage get mouldy gets sour
• Cost expensive takes expensive ingredients
• Psychological/Social
• Serve to company would not serve to guests
  too much last minute preparation
• Eating alone too much effort to cook for
  oneself
• Self-image made by a lazy cook not served by
  a good mother

38
Checklist Method

• Developing a new idea through a list of related
  issues
• Put to other uses? New ways to use as is? Other
  uses if modified?
• Adapt? What else is like this? What other ideas
  does this suggest? Does past offer parallel?
  What could I copy? Whom could I emulate?
• Modify? New twist? Change meaning, colour,
  motion, odour, form, shape? Other changes?
• Magnify? What to add? More time? Greater
  frequency? Stronger? Larger? Thicker? Extra
  Value? Plus ingredient? Duplicate? Multiply?
  Exaggerate?

39
Checklist Method

• Developing a new idea through a list of related
  issues
• Minify? What substitute? Smaller? Condensed?
  Minature? Lower? Shorter? Lighter? Omit?
  Streamline? Split up? Understated?
• Substitute? Who else instead? What else
  instead? Other ingredient? Other material?
  Other process? Other power? Other place? Other
  approach? Other tone of voice?
• Rearrange? Interchange components? Other
  pattern? Other layout? Other sequence?
  Transpose cause and effect? Change pact? Change
  schedule?
• Reverse

40
Checklist Method

• Developing a new idea through a list of related
  issues
• Reverse? Transpose postive and negative? How
  about opposites? Turn it backward? Turn it
  upside down? Reverse roles? Change shoes? Turn
  tables? Turn other cheek?
• Combine? How about a blend, an alloy, an
  assortment, an ensemble? Combine units? Combine
  purposes? Combine appeals? Combine ideas?

41
Free Association

• Developing a new idea through a chain of word
  associations.
• A word or phrase is written down then another
  and another
• Each new word attempting to add something new to
  the ongoing thought process
• Thereby creating a chain of ideas ending with a
  new product idea emerging.

42
Forced Relationships

• Developing a new idea by looking at product
  combinations.
• Isolate the elements of the problem
• Find the relationships between these elements
• Record the relationships in an orderly form
• Analyze the resulting relationships to find ideas
  or patterns
• Develop new ideas from these patterns.

43
Example of Forced Relationship

• Relationship/ Elements- Paper/Soap
• Forms Combination Idea/Pattern
• Adjective Papery soap Flakes
• Soapy paper Wash and dry travel aid
• Noun Paper soaps Tough paper impregnated with
  soap and usable for washing surfaces
• Verb-correlates Soaped papers Booklets of soap
  leaves
• Soap wets paper In coating and impregnation
  processes
• Soap cleans paper Suggests wallpaper cleaner

44
Collective Notebook Method

• Developing a new idea by group members regularly
  recording ideas.
• Use a small notebook that fits into a pocket
• Record statement of the problem, blank pages
  and any pertinent background data.
• Each group member write their own personal ideas
  three times each day.
• Give to group leader at the end of the day
• Group leader summarizes all material
• Final creative focus group discussion with all
  participants.

45
Attribute Listing Method

• Developing a new idea by looking at the positives
  and negatives.
• List the attributes of an item or problem
• Look at each attribute from a variety of
  viewpoints
• Originally unrelated objects can be brought
  together to form a new combination and possible
  new uses that better satisfy a need.

46
Big-Dream Approach

• Developing a new idea by thinking without
  constraints.
• Dream (imagine) about the problem and its
  solution (think big)
• Every possibility should be recorded and
  investigated without regard to the negatives
  involved or resources required.
• Ideas should be conceptualized without any
  constraints until an idea is developed into a
  workable form.

47
Parameter Analysis

• Developing an idea by focusing on parameter
  identification and creative synthesis.
• Parameter identification
• Analyze variables in the situation to determine
  their relative importance
• Important variables are the focus and others set
  aside
• Creative synthesis
• Relationships between parameters that describe
  the underlying issues are examined.
• Through evaluation of the parameters and
  relationships, one or more solutions are
  developed this solution development is called
  creative synthesis.

48
When Momentum is Lost
49
Strategies to Regain Focus

• Immerse yourself in the topic
• Brain dump
• Develop a number system
• Have fun!
• Change your location
• Use a different technique
• Take a short break and do something

50
Immerse Yourself

• If you are developing ideas about fibre
• Grab as much fibre as you can
• Touch it
• Smell it
• Put it together in weird combinations
• Talk to people who produce, use, modify fibre
• Explore use of fibre in all aspects of human,
  animal, geologic life
• Talk to people who use fibre
• Talk to people who convert fibre
• Talk to people who hate fibre
• Talk to textile experts filter experts basket
  weaving experts art teachers artists
  engineers - contractors

51
Brain Dump

• Each person has to write as many ideas as they
  can on one filing card.
• Cards are thrown into a hat
• Cards are pulled out one at a time.
• Group members then have to argue why the idea is
  great.
• The key is to generate as many ideas as possible.
• Eventually the group can vote on the ideas they
  liked the most.

52
Develop a Number System

• Identify six possible target markets for an
  application of fibre
• General public
• Boat manufacturers
• Chemical manufacturers
• Fishers
• Aerospace
• Develop a list of possible features.
• Coarse/soft
• Conductive
• Tensile strength
• Elasticity
• The group then has to develop as many ideas as
  possible using the ingredients and the target
  market.
• Repeat!

53
An Exercise in Brainstorming and Word Association

• Learning from Nature

54
Nature and Natural Fibre

• Universe
• Galaxy
• Solar System
• Planet
• Star/sun
• Earth
• Water
• Minerals
• Fire
• Flora
• Fauna

55
Nature and Natural Fibre

• Insect use of fibre
• Plant use of fibre
• Invertebrate use of fibre
• Animal use of fibre
• Birds
• Mammals
• Reptile
• Fish
• Saprophitic use of fibre

56
Idea Screening
57
Idea Screening

• Out of 100 ideas or more, there may be only one
  or two real opportunities.
• Superior business ideas that have the potential
  to become opportunities have 4 anchors
• They create or add significant value to a
  customer or end user.
• They do so by solving a significant problem, or
  meeting a significant want or need, for which
  someone is willing to pay a premium.
• They therefore have a robust market, profit
  margin, and moneymaking characteristics.
• They are a good fit with the founder(s) and
  management team at the time and in the
  marketplace with a risk/reward balance.

58
Characteristics of the "Ideal" Business Idea

• Ø Technical feasibility
• Ø Requires no initial investment
• Ø Has a recognized, measurable market
• Ø A perceived need for the product or service is
  present
• Ø  A dependable source of supply for the required
  inputs is available
• Ø      No government regulation
• Ø      Requires no labour force
• Ø      Provides 100 percent gross margin

• Ø      Buyers purchase frequently
• Ø      Receives favourable tax treatment
• Ø      Has a receptive, established distribution
  system
• Ø      Has great publicity value
• Ø      Customers pay in advance
• Ø      No risk of product liability

59
The Business Plan

• Purposes
• fully examine the potential of an opportunity
• identify key success factors
• identify critical risk factors
• guide the entrepreneur in start-up
• raise capital

60
Business Plan Dos

• Involve all of the management team in its
  preparation
• make the plan logical, comprehensive and readable
  - and short as possible
• demonstrate commitment
• identify critical risks and assumptions
• disclose and discuss any current or potential
  problems in the venture
• identify several alternative sources of financing.

• Spell out the proposed deal and how investors
  will win.
• Be creative in gaining the interest of potential
  investors.
• Remember the plan is not the business.
• Know your targeted investor group.
• Let realistic market and sales projections drive
  the assumptions underlying the financial
  forecasts, rather than the reverse.

61
Business Plan Donts

• Dont have unnamed, mysterious people on the
  management team.
• Dont make ambiguous, vague or unsubstantiated
  statements such as estimating sales on the basis
  of what the team would like to produce.
• Dont describe technical products using jargon
  that only an expert can understand.

• Dont spend money on developing fancy brochures,
  or other sizzle - instead, show the steak

62
A Good Business Plan is...

• complete
• short
• integrated
• prepared for the audience
• organized