www.bradford.ac.uk/management

Market Opportunity RecognitionMarket Opportunity Recognition

Creativity

Characterized by originality and expressiveness; imaginative

Imagination

The formation of a mental image of something that is neither perceived as real nor present to the senses.

Idea

Something, such as a thought or conception, that potentially or actually exists in the mind as a product of mental activity.

Opportunity

A favourable or advantageous circumstance or combination of circumstances.

DefinitionsDefinitions

Imagination is more important than knowledge…

Albert Einstein (1879-1955)

Creative v Logical ThinkingCreative v Logical Thinking

LogicalCreative

Seeks questions

Diverges

Explores different views

Restructures

Seeks ways an idea might help

Welcomes discontinuous leaps

Welcomes chance intrusions

Open ended

Seeks answers

Converges

Asserts best or right view

Using existing structure

Says when an idea will not work

Uses logical steps

Focuses on what is relevant

Closed

InnovationInnovation

•New Product

•New method of doing the same product

•New Source of Raw materials

•New Market

•New way of organising your business

“The single biggest cause of failure is not lack of money

but that you haven’t come up with

something that the world wants.”

Larry C.Farrell

Is the process by which entrepreneurs convert opportunities into marketable ideas. It is the means by which they become catalysts for change.

Conception + Invention + Exploitation

Drucker’s Sources of Innovative OpportunityDrucker’s Sources of Innovative Opportunity

• The unexpected. Success IBM. Failure Jacket Potatoes

• The incongruity. Possible v Actual. Overnight Delivery.

• Process needs. Sugar free products. Caffeine free.

• Changes in industry/market structure. Digital Cameras

PLUS

• Demographic changes. Age profile

• Changes in perception, mood or meaning. Fashion

• New knowledge. Mobile phones.

• INVENTION - totally new, product or service [Airplane, Light bulb, Telephone]

• EXTENSION – New use or different application of existing product or service [McDonalds, Holiday Inn]

• DUPLICATION – Creative replication of an existing concept [Pizza Hut, Virgin]

• SYNTHESIS – Combining into a new formulation [Internet Cafes]

Types of InnovationTypes of Innovation

HBDI Herrmann Brain Dominance InstrumentHBDI Herrmann Brain Dominance Instrument

• Opportunity Defined– An opportunity is a favorable set of circumstances

that creates the need for a new product, service, or business idea.

– Most entrepreneurial firms are started in one of two ways:

• Some firms are internally stimulated. An entrepreneur decides to start a firm, searches for and recognizes an opportunity, then starts a business.

• Other firms are externally stimulated. An entrepreneur recognizes a problem or an opportunity gap and creates a business to fill it.

What is an Opportunity?What is an Opportunity?

An opportunity has four essential qualities

What is an Opportunity?What is an Opportunity?

Window of Opportunity & Life CycleWindow of Opportunity & Life Cycle

$100M

$50M

$25M

$3M$1M

Time (years)

Start up HighGrowth

Maturity Stability

Win

dow

of o

ppor

tuni

ty

Three Classic Life CyclesThree Classic Life Cycles

500

100

25

51

1 2 3 4 5 6 7 8 9 10

High potential firm

Foundation firm

Lifestyle firm

In $

Mill

ions

Years

Three Ways to Identify An Opportunity

Observing TrendsObserving Trends

Environmental Trends Suggesting Business or Product Opportunity Gaps

First Approach: Observing Trends

Environmental ScanningEnvironmental Scanning

Scanning: Detect Changes

Monitoring: Track Events Affecting Business

Forecasting: Making Plausible Projections

Assessing: ‘What does it all mean?’

• Trends identify emerging needs..

• SEEDTIP analysis– Societal/sociological trends– Economic trends– Environmental/Ecological trends – Demographic trends– Technological trends– International trends– Political/Legal trends

• When two or more trends come together…

Trend AnalysisTrend Analysis

[Café society]

[Life coaches]

[Ecotourism]

[In home care]

[VOIP]

[China/India emerging]

[Health & Safety]

http://www.trendhunter.com/trends/interactive-wallpaper-sl2010-allyearlong-calendar

http://www.springwise.com/

Exploit trendsExploit trends

• 24 hour society• ‘Money rich, time poor’• Demographic change: age, urban living,

growth patterns• Environmental issues• Globalisation• Legislation• Desire for ‘gadgets’• Communication

Solving a ProblemSolving a Problem

Second Approach: Solving a Problem

Sometimes identifyingopportunities simply

involves noticing a problemand finding a way to

solve it.

These problems can bepinpointed through observing

trends and through more simplemeans, such as intuition,serendipity, or chance.

Some business ideas are clearlyinitiated to solve a problem.

For example, Symantec Corp. created Norton antivirus

software to guard computersagainst viruses.

Solving a ProblemSolving a ProblemBusinesses Created to Solve a Problem

• Left xmas shopping too late, couldn’t find last minute Left xmas shopping too late, couldn’t find last minute gadgets GADGET SHOPgadgets GADGET SHOP

• Market opportunity to sell mobile phones directMarket opportunity to sell mobile phones direct

CAR PHONE WAREHOUSECAR PHONE WAREHOUSE• Wife crying because of seven days wait for new glassesWife crying because of seven days wait for new glasses

VISION EXPRESSVISION EXPRESS• Passion for making scents and lotions turned intoPassion for making scents and lotions turned into

JO MALONEJO MALONE

How entrepreneurs found ideas

Create Curiosity – Open Mind & Observation of Circumstances

Finding Gaps in the MarketplaceFinding Gaps in the Marketplace

• Gaps in the Marketplace– A third approach to identifying opportunities is to find a

gap 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.

• This is the reason that small clothing boutiques and specialty shops exist.

• The small boutiques, which often sell designer clothes or clothing for hard-to-fit people, are willing to carry merchandise that doesn’t sell in large enough quantities for Wal-Mart, GAP, or JC Penney to carry.

Third Approach: Finding Gaps in the Marketplace

Personal Characteristics of the EntrepreneurPersonal Characteristics of the Entrepreneur

Characteristics that tend to make some people better at recognizing opportunities than others

Prior Experience Social Networks

Cognitive Factors Creativity

Social Capital - Per LovgrenSocial Capital - Per Lovgren

Network of Management Consultants

ManagementConsultants

Foundry Consultants

Network ofProfessors ofEngineering

Birley & Muzyka (2000:45)

Who Do You Know?Who Do You Know?

YOU

Tutors Family

Staff

Advisors

OtherStudentsWork

Colleagues

Friends

Professional Contacts

Sources Of IdeasSources Of Ideas

– Insights - experience in profession or industry 43%– Challenge - could do better 15%– Unfilled/overlooked niche in marketplace 11%– Systematic search for business opportunities 7%– Brainstorm - cannot explain it 5%– Hobby or vocational interest 3%

Source: Entrepreneurship, John G Burch

Unlocking ValueUnlocking Value

Unlocking Unlocking Personal ValuePersonal Value

Ideas

Opportunities

Ventures

Personality

Motivation & Drivers

Ability to Learn

Capabilities

Know How & Expertise

Relationships & Contacts

Rae (1999)

What Kind of Business Should I Start?What Kind of Business Should I Start?

• Start with what you know.• Do what you love. • Don’t reinvent the wheel, just make it better• Focus on a niche• Consider the franchising option• Know what sets you apart from the competition• Imitate an existing product• Buy an existing business• Become and agent or distributor• Sell your services as a consultant• More…?

• Above all take your time

Source: entrepreneur.com