Opportunity Recognition… Value, Trend Analysis, &

Design Thinking

Dr. Robert McNameeAcademic Director, Innovation & Entrepreneurship Institute

Assistant Professor, Strategic Management Department

If you enjoy these topics check out…• SGM 0827. Creativity & Organizational Innovation• SGM 3501. Entrepreneurial & Innovative Thinking

What do you sell??

• Companies sell products / services

• Companies [should] create / provide / sell value!!– Understanding how your company creates value, and

looking for ways to add more value, are critical elements in developing a competitive strategy.

– Michael Porter discussed this in his influential 1985 book "Competitive Advantage," in which he first introduced the concept of the value chain.

– Focuses on systems and how inputs are changed into the outputs purchased by consumers

What is Value?

• Value (customer / consumer POV)– What does s/he do and need?– What problems does s/he need to solve?– What improvements does s/he look for?– What does s/he value?

• Value is subjective…vs.

vs.

Discussion – Examples of Value• Automotive Industry – What value is provided by a car?

– Get you from place A to place B… • “in style”… • reliably & safely… • maybe with a number of other people or lots of stuff…

– Maybe while giving you an exciting “driving experience” or entertaining you on the way…

– Creates a semi-private mobile space—a home away from home…

• Telecommunication – What value is provided by a mobile phone?– Connects you to others across town / around the world– Clear signal / no dropped calls / rapid support– Offers entertainment options (“packages”)– Simple billing

Value Chain Activities

$25,000$2.36 / kg $2,600 / lb

A set of activities that an organization carries out to create value for its customers

Value Created – Cost to Create that Value = Margin / Profit

Think about all the activities that are involved

in turning an egg into a chicken sandwich

Or cocoa beans into

truffles & then into a $25k

dessert…

Recognizing Opportunities & Generating Ideas

Creative idea is a new connection between concepts, methods, outcomes, etc… that provides potential value …for an existing problem/need in a new or improved way …for a new problem/need/opportunity

Opportunity (Probortunity): Needs, wants, problems, & challenges Favorable set of circumstances that creates a demand

for a new product, service, business, or other innovation

An idea-opportunity match offers promise if… Attractive (your idea is better than other options) Durable (the need will be around for a while) Timely (you are in the ‘window of opportunity’) Associated with creating value for consumer / customer

(Someone will buy it / delivers substantially more value than corresponding costs)

Opportunities vs. Ideas…• You can “kill” an idea but you can never kill an opportunity!!!

– If you have identified a valid need (opportunity), this need still remains even if your idea turns out to impractical or unfeasible…

– If you have identified an attractive opportunity spend the time to diverge (consider multiple ideas) and evaluate / evolve your ideas.

• On the other hand an opportunity is not the same as an innovative idea – beware of flying cars & time machines!– We all know it would be great to have a flying car

• Be realistic -- others have identified the opportunity before• We don’t have a cost-effective, technologically-feasible solution

– Ask yourself – what makes this solvable now (and by me)?– If you are not sure an idea is technologically / cost feasible…

• Either work hard to figure out if it is feasible / practical• Or move on to think about other opportunities

ACTIVE SEARCH / PROBLEM SOLVING(e.g., Design Thinking)

PRIOR KNOWLEDGE + SOCIAL NETWORKS

ENTREPRENEURIALALERTNESS (e.g., Trends)

It has been said that all new

ideas come from outside of ourselves

Opportunity Recognition

Prior Knowledge & Social Networks (not Facebook)

• Strong Ties– Those you know well / see frequently– Often similar to you– Triadic Closure

• You get to know the people your close friends know well• Creates tight cliques w/ redundant knowledge

• Weak Ties– People you don’t know well / don’t see often– Source of new perspectives, ideas, knowledge (& jobs)– Brokerage > Innovation Opportunity

• When a person connect two disconnected networks

Entrepreneurial Alertness• Opportunities

– Unexpected Occurrences • Unexpected Successes as well as Failures

– Incongruities• When things don’t match up (gaps)

– Process Needs• When something just does not work• We will look at process innovation (but also products)

– Changes in Perception• If you can see things from a different angle you may

come up with some unique ideas

Drucker: Discipline of Innovationhttp://mis.postech.ac.kr/class/MEIE780_AdvMIS/2012%20paper/Part1%20(Pack1-3)/01_intro/1-2)%20The%20Discipline%20of%20Innovation.pdf

Entrepreneurial Alertness• Opportunities

– Industry / Market Changes • Industries and Markets evolve

– Demographic Changes• Millenials, Baby Boomers, etc…

– New Knowledge / Technologies• Stand on the shoulders of giants (e.g., $9 bike, $50 tablet)

• One IMPORTANT take away– Innovation can be systematic and requires hard work– “Know when to research and when to brainstorm”

Obvious opportunities are

frequently no longer opportunities

Drucker: Discipline of Innovationhttp://mis.postech.ac.kr/class/MEIE780_AdvMIS/2012%20paper/Part1%20(Pack1-3)/01_intro/1-2)%20The%20Discipline%20of%20Innovation.pdf

PEST, PESTLE, etc…

• Political• Economic• Social• Technological• [Legal]• [Environmental]

These are high level macro trends that affect all industries…

http://www.youtube.com/watch?v=YFUMZ_o6l2s

Active Problem Solving…Design Thinking

• Tim Brown & IDEO…

“…imbues the full spectrum of innovation activities with a human-centered design ethos…”

“…powered by a thorough understanding, through direct observation, of what people need and want in their lives”

How Design Thinking Happens…

• “The myth of creative genius is resilient: We believe that great ideas pop fully formed out of brilliant minds, in feats of imagination well beyond the abilities of mere mortals…”

• In reality innovation is “…the result of hard work augmented by a creative human-centered discovery process and followed by iterative cycles of prototyping, testing, and refinement.

http://www.youtube.com/watch?v=JkHOxyafGpE

Design Thinking Mindsets…

http://dschool.stanford.edu/wp-content/uploads/2011/03/BootcampBootleg2010v2SLIM.pdf

Ready, Fire, Aim

Design Thinking Process