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

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Title: Business Idea Screening and Business Plans Author: Ken Hartviksen Last modified by: Jeaneth Created Date: 7/16/1999 4:09:30 PM Document presentation format – PowerPoint PPT presentation

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Title: 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
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