The product spanx is an example of an ordinary innovation

References

Hisrich, R.D., Peters, M.P., & Shepherd, D.A. (2013). Entrepreneurship (Laureate Custom

Education). New York: McGraw-Hill Irwin.

Custom Create Edition LAUREATE EDUCATION I C

1 00 I Entrepreneurship

CREATIVITY AND THE BUSINESS IDEA

1

To identify various sources of ideas for new ventures.

2 To discuss methods available for generating new venture ideas.

3 To discuss creativity and the techniques for creative problem solving.

4 To discuss the importance of innovation.

5 To understand an opportunity analysis plan.

6 To discuss the aspects of the product planning and development process.

7 To discuss aspects of e-commerce and starting an e-commerce business.

I _ ------···- ___________ --·· _______ ___ __________ _ _ _ __ .. _______________ ~~r=~!~-~~~s~~_:_~~~~~E~~~ -+--1_0_ 1 __ _

OPENING PROFILE

FREDERICK W. SMITH

Who would think that an entrepreneur with a $10 million inheritance would need

more capital to get his company off the ground? The business world is filled with sto-

ries of companies, large and small, that started in a garage with an initial investment

of a few hundred dollars. But none of those companies needed a nationwide distribu-

tion system in place, complete with a fleet of airplanes and

trucks, before accepting its first order. And none of those

garage start-ups grew to be Federal Express.

Frederick W. Smith, a Memphis native whose father

made his fortune by founding a bus company, conceived of the idea for his air-cargo

company while studying economics at Yale University in the 1960s. The professor of one

of Smith's classes was a staunch supporter of the current system of air freight han-

dling in which a cargo package literally hitched a ride in any unused space on a passen-

ger flight. Fred Smith saw things differently and, in a paper, described the concept of

a freight-only airline that would fly all packages to one central point, where they

would then be distributed and flown out again to their destinations. This operation

could take place at night when the airports were less crowded, and, with proper logis-

tics control, the packages could be delivered the next day. Whether it was the novelty

of the idea, the fact that it went against the professor's theories, or the fact that it was

written in one night and was turned in late, the first public display of Smith's grand

idea earned him a C.

Smith's idea constituted far more than a concept for a creative term paper, however.

He had seen how the technological base of the country was changing. More compa-

nies were becoming involved in the production and use of small, expensive items such

as computers, and Smith was convinced that businesses could use his air-cargo idea to

control their inventory costs. Overnight delivery from a single distribution center to

anywhere in the country could satisfy customers' needs without a company needing a

duplicate investment in inventory to be stored in regional warehouses. Smith even

thought of the Federal Reserve Bank as a potential customer with the vast quantities

of checks that had to be delivered to all parts of the country every day. But the Vietnam

War and a family history of patriotic service intervened. Smith joined the Marine Corps

and was sent to Vietnam, first as a platoon leader and then as a pilot.

93

1 02 l Entrepreneurship

94 PART 2 FROM IDEA TO THE OPPORTUNITY

After nearly four years of service and 200 ground support missions as a pilot, he left

Vietnam, ready to start building something. He went to work with his stepfather, first

managing and subsequently purchasing a controlling interest in Arkansas Aviation

Sales, a struggling aircraft modification and overhaul shop. Difficulty in getting parts

to the shop in Little Rock, Arkansas, revived his interest in the air-cargo concept. He

commissioned two feasibility studies, both of which returned favorable results based

on a high initial investment. The key to this company would be its ability to serve a

large segment of the business community from the very beginning, and the key to the

required level of service was cash. Full of optimism, Smith went to Chicago and New

York, confident that he would be returning with basket loads of investment checks.

Progress turned out to be slower than Smith had anticipated, but through his bound-

less energy, belief in his idea, and technical knowledge of the air-freight field, he was

finally able to get enthusiastic backing (around $5 million in capital} from New Court

Securities, a Manhattan-based, Rothschild-backed venture-capital investment bank.

This commitment from New Court spurred substantial additional financing. Five other

institutions, including General Dynamics and Citicorp Venture Capital, Ltd., got involved,

and Smith went back to Memphis with $72 million. This was the largest venture-

capital start-up deal in the history of American business.

Federal Express took to the skies on March 12, 1973, to test its service. Servicing an

11-city network (extending from Dallas to Cincinnati}, it initially shipped only six pack-

ages. On the night of April17, the official start-up of Federal Express, the network had

been expanded to include 25 cities (from Rochester, New York, to Miami, Florida}, ship-

ping a total of 186 packages. Volume picked up rapid ly and service was expanded; it

looked as though Federal Express was a true overnight success. Smith's understanding

of a market need had been accurate, but he had not counted on OPEC causing a mas-

sive inflation of fuel costs just as his company was getting started. By mid-1974, the

company was losing more than $1 million a month. His investors were not willing to

keep the company going, and his relatives were suing him for mismanaging the family

fortune (nearly $10 million of Smith money had been invested}. But Smith never lost

faith in his idea and f inally won enough converts in the investment community to keep

the doors open long enough to straighten out the pricing problems caused by OPEC.

After losing $27 million in the first two years, Federal Express turned a profit of

$3.6 million in 1976. The development and growth of Federal Express were tightly regu-

lated. Because of old laws designed to protect the early pioneers of the passenger air-

line industry, Smith was required to obtain approval for operating any aircraft with a

payload in excess of 7,500 pounds. Since the major airlines-at the time, the giants of

the industry-were not ready to share the cargo market, he was not able to obtain this

needed approval and had to operate a fleet of small Falcon jets instead. While this sit-

uation worked well at start-up, by 1977 his operation had reached the capacity of

these smaller planes. Since the company was already flying several jets on the most ac-

tive routes, it did not make sense to buy more Falcons. Smith took his salesmanship to

Washington and, with the help of a grassroots Federal Express employee effort, was

able to obtain legislation creating a new class of all-cargo carriers. This gave Smith the

operating latitude he needed.

Entrepreneursh ip, Eighth Edition 1 03 --·--·· ·-···---- ·------------------ -----··· -------. ·--·-·--------·--·--·--··--·------ ---- ------·-·------- t---- -------

CHAPTER 4 CREATIVITY AND THE BUSINESS IDEA 95

Although Smith had the approval to operate large jets, he needed to find a way to

purchase them. The corporate balance sheet of the company was still a mess from early

losses, and the long-suffering early investors needed some reward . Thus, Smith took his

company public on April12, 1978, raising enough money to purchase used Boeing 727s

from ail ing passenger airlines. The investors were indeed richly rewarded, with General

Dynamics watching its $5 million investment grow to more than $40 million by the time

Federal Express was first traded on the New York Stock Exchange in December 1978.

The company continued to perform well since its public offering, combining technica l

innovation and an obsession w ith customer orientation (Federal Express was the first

company to win the Malcolm Baldrige National Qual ity Award in the service category,

and in 1994 it became the first global express transportation company to receive simul-

taneous worldwide ISO 9001 certif ication) to ensure exceptional growth.

Since 2002, with sales revenue of $20.6 bi llion and the company's first-in-its-h istory

cash dividend, FedEx has continued to grow. In the fiscal year ending in 2008, the com-

pany had grown to $38 bi llion in revenues, offering just the right mix of transporta-

tion, e-commerce, and business solutions. Fed Ex is composed of Federal Express, Fed Ex

Ground, Fed Ex Freight, Fed Ex Kinko's Office and Print Services, Fed Ex International Pri-

ority, FedEx International Priority Freight, FedEx SmartPost, FedEx Home Delivery,

FedEx Customer Critical, FedEx Trade Networks, FedEx National LTL, FedEx Supply

Chain Services, and FedEx Services. In 2008, FedEx averaged: (1) more than 7.5 million

shipments a day for express, ground, freight, and expedited delivery services; (2) more

than 290,000 employees and contractors worldwide; and (3) more than 220 countries

and territories, including every address in the United States.

The company has over 18 million Web site vis itors monthly and processes more than

5 million tracking requests daily. There are more than 20 million packages shipped via

FedEx Sh ip Manager monthly and 670 aircrafts serving more than 375 airports world-

wide. FedEx has more than 80,000 motorized vehicles for express, ground, freight, and

expedited delivery service; 725 Fed Ex World Service Centers; 1,281 Fed Ex Kinko's Office

and Print Centers; 6,505 FedEx Authorized ShipCenters; and 44,008 FedEx Drop Boxes

(including 4,979 U.S. Posta l Service locations). The firm's stock price saw a high of $109

in July 2007, up from $62 in Ju ly 2003 (though it saw a steep decl ine during the

2008/2009 recession, seeing a low of $34 in March 2009).

At the heart of Frederick Smith's success story is the creativity and uniqueness of the ini-

tial business concept. This part of the new venture creation process is perhaps the most

difficult to actualize. What specific features does the new product or service need? A wide

variety of techniques can be used to obtain the new product idea. Smith expressed his

original idea in a paper he wrote to complete a college course. For others-such as Bob

Reis of Final Technology, Inc., and Frank Perdue of Perdue Chickens-the idea came from

work experience. No matter how it occurs, a sound, unique idea for a new product (or

service), properly evaluated, is essential to successfully launching a new venture. Through-

out this evaluation, or opportunity analysis, the entrepreneur must remember that most

ideas do not provide the basis for a new venture; rather, it is important to sift through and identify those ideas that can provide such a basis so that they can be the entrepreneur's focus. A good method for doing th is is to look at trends that will occur in the next decade.

, 04 I '"'""""""h;p ~-~·--t------------- ·--------·--- ··-·-·------- -------------· --·- -·---- ·-----· --------··--------- ------

96 PART 2 FROM IDEA TO THE OPPORTUNITY

TRENDS A trend often provides one of the greatest opportunities for starting a new venture, particu- larly when the entrepreneur can be at the start of a trend that lasts for a considerable period of time. Seven trends that will provide opportunities, indicated in Table 4.1, include: green trend, clean-energy trend, organic-orientation trend, economic trend, social trend, health trend, and Web trend.

Green Trend The green sector is brimming with opportunities for entrepreneurs around the world. While today's consumers are very conscious about spending, considering the economic condi- tions, many are still willing to pay more for green products. Water is one aspect of this green trend that provides opportunities, particularly in the area of irrigation, such as recla- mation programs for golf courses and parks, smart irrigation systems, and consulting firms that increase water-use efficiency. Other business areas worth looking at include eco- friendly printing, recycling, and green janitorial services.

Clean-Energy Trend One of the most pressing environmental concerns of consumers is global warming with the resulting opportunities in clean energy. Many feel that the power of the 21st century will come from solar, wind, and geothermal sources. A significant factor that will accelerate this movement from coal being the power in the 19th century and oil in the 20th century is when solar costs are equal to the costs of electricity either from cost reductions and effi- ciency in solar conversion capacity and/or tax breaks for solar production and use. Smaller businesses and homeowners are a significant untapped market in this area.

Organic-Orientation Trend The organic trend is increasing significantly, particularly in the food sector, which has been accelerated by the shrinking price gap between organic and nonorganic foods. The sales growth in all organic foods including meat, dairy, fruits, vegetables, breads, and snack foods averages about 25 percent per year. Total organic nonfood sales are also growing, particularly in apparel. Oscar and Belle was started in 2007 by Anna Gustafson to provide organic apparel for babies. The baby clothing, size newborn to 2T, is distributed through retail outlets and online (oscarandbelle.com).

TABLE 4.1 Trends of the Next Decade

• Green

• Clean energy

• Organic orientation

• Economic

• Social

• Health

• Web

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'

CHAPTER 4 CREATIVITY AND THE BUSINESS IDEA 97

Economic Trend The impact of the credit crunch, bank failures, and the housing slide and foreclosures has forced consumers to be much more careful in their spending. This increase in more frugal spending provides significant opportunities in such areas as garden products, business coaching, discount retailing, credit and debt management, virtual meetings, outsourcing, and the entire do-it-yourself movement. Luxury products have not yet been significantly adversely affected.

Social Trend The social trend is evident throughout the world with more networking events and oppor- tunities occurring each week. These include the popular Facebook and My Space as well as social networking for businesses. There are also opportunities in related areas of financial planning and travel as individuals want to have the ability to be financially solvent and viable in their longer life spans and enjoy the benefits of seeing new places with their chil- dren and grandchildren. Longevity Alliance, for example, is a one-stop advisory service offering counseling in long-term care and financial planning.

Health Trend Health maintenance and concerns about health care provisions together are one of the biggest trends today that will continue in the next decade as the world population ages. This provides many opportunities for entrepreneurs, including cosmetic procedures, mind ex- pansion such as the "brain gym" of Vibrant Brains, personal health portals, point-of-care testing facilities, fitness centers, fitness toys such as the latest Fit Flops and Wii Fit periph- erals, fit food, convenient care clinics, and wellness coaches.

Web Trend The Web trend is creating many new forms of communication and purchasing, which is opening up massive opportunities for entrepreneurs. This has been driven by Web 2.0. The opportunities, with low-cost barriers to entry, are in numerous areas such as Web 2.0 consulting, blogging, online video, mobile applications (apps), and Wi-Fi apps.

An entrepreneur should carefully monitor these trends to see if any produce ideas and opportunities that make sense. He or she should also look at the many sources of ideas as well.

SOURCES OF NEW IDEAS Some of the more frequently used sources of ideas for entrepreneurs include consumers, existing products and services, distribution channels, the federal government, and research and development.

Consumers Potential entrepreneurs should continually pay close attention to potential customers. This attention can take the form of informally monitoring potential ideas and needs or formally arranging for consumers to have an opportunity to express their opinions. Care needs to be taken to ensure that the idea or need represents a large enough market to support a new venture.

I

106 I Entrepreneurship +--- -- --- --

98 PART 2 FROM IDEA TO THE OPPORTUNITY

Existing Products and Services Potential entrepreneurs should also establish a formal method for monitoring and evaluat- ing competitive products and services on the market. Frequently, this analysis uncovers ways to improve on these offerings that may result in a new product or service that has more market appeal and better sales and profit potential.

Distribution Channels Members of the distribution channels are also excellent sources for new ideas because of their familiarity with the needs of the market. Not only do channel members fre- quently have suggestions for completely new products, but they can also help in market- ing the entrepreneur's newly developed products. One entrepreneur found out from a salesclerk in a large department store that the reason his hosiery was not selling well was its color. By heeding the suggestion and making the appropriate color changes, his company became one of the leading suppliers of non brand hosiery in that region of the United States .

Federal Government The federal government can be a source of new product ideas in two ways. First, the files of the Patent Office contain numerous new product possibilities. Although the patents themselves may not be feasible, they can frequently suggest other more marketable prod- uct ideas. Several government agencies and publications are helpful in monitoring patent applications. The Official Gazette, published weekly by the U.S. Patent Office, summarizes each patent granted and lists all patents available for license or sale. Also, the Government Patents Board publishes lists of abstracts of thousands of government-owned patents; a good resource for such information is the Government-Owned Inventories Available for License. Other government agencies, such as the Office of Technical Services, assist entre- preneurs in obtaining specific product information.

Second, new product ideas can come in response to government regulations. For example, the Occupational Safety and Health Act (OSHA) mandated that first-aid kits be available in business establishments employing more than three people. The kits had to contain specific items that varied according to the company and the industry. For exam- ple, the weatherproofed first-aid kit needed for a construction company had to be differ- ent from the one needed by a company manufacturing facial cream or a company in retail trade. In response to OSHA, both established and newly formed ventures marketed a wide variety of first-aid kits. One new company, R&H Safety Sales Company, was suc- cessful in developing and selling first-aid kits that allowed companies to comply with the standards of the act.

Research and Development The largest source of new ideas is the entrepreneur's own "research and development" efforts, which may be a formal endeavor connected with one's current employment or an informal lab in a basement or garage. One research scientist in a Fortune 500 company de- veloped a new plastic resin that became the basis of a new product, a plastic molded mod- ular cup pallet, as well as a new venture-the Amolite Pallet Company, Inc.-when the Fortune 500 company was not interested in developing the idea.

'"'"'""'""hip, Eigh

AS SEEN IN BUSINESSWEEK

THE MYTH OF CREATIVITY

Creativity is in. Seminars teach employees to "think outside the box" and release their inner Picasso. Managers preach innovation, and today's rich and powerfu l prefer to describe themselves as creative heroes, valiantly besting the naysayers to bring us the radical changes that add up to progress. Richard Florida's best-selling The Rise of the Creative Class argues that societal progress increasingly comes from places like New York and San Francisco, in part be- cause those cities encourage creativity by embracing bohemian self-expression and openness to diversity in dress, speech, or even sexuality.

Despite this affirming chorus, much of the hoopla over creativity is a crock. Why? Because we are already

p to our eyeballs in it. Make no mistake: Innovation atters. Nothing is more essential for long-term eco- omic growth. But to get more innovation we may ant less, not more, creativity. The sobering truth is that the dramatic artistic

eations or intellectual insights we most admire for - eir striking "creativity" matter little for economic _ owth. Creative new clothes or music may change :.,;sh ion, but are soon eclipsed by newer fashions. _arge and lasting economic innovations, like steam

engines or cell phones, are rare and tend to be independently "invented" by many people. One less visionary would matter little.

Instead, the innovations that matter most are the millions of small changes we constantly make to our billions of daily procedures and arrangements. Such changes do not require free-spirited self- expression. Instead, people quite naturally think of changes as they go about their routine business and social lives.

What society needs is not more creativity or sugges- tions for change but better ways to encourage people to focus on important issues, identify the most promis- ing ideas, and tell the right people about them. But our deification of creativity gets in the way.

In truth, we don't need more suggestion boxes or more street mimes to fill people with a spirit of cre- ativity. We instead need to better manage the flood of ideas we already have and to reward managers for actually executing them.

Source: Reprinted from the September 23, 2006 issue of Business- Week by special permission, copyright © 2006 by The McGraw-Hill Companies, Inc. , "The Myth of Creativity," by Robin Hanson, Business Week, Issue 3991, p. 134.

METHODS OF GENERATING IDEAS

s providing

Even with such a wide variety of sources available, coming up with an idea to serve as the basis for a new venture can still pose a problem. The entrepreneur can use several methods to help generate and test new ideas, such as focus groups, brainstorming, brain writing, and problem inventory analysis .

Focus Groups Focus groups have been used for a variety of purposes since the 1950s. A moderator leads a group of people through an open, in-depth discussion rather than simply asking questions to solicit participant response. For a new product area, the moderator focuses the discussion of the group in either a directive or a nondirective manner. The group of 8 to 14 participants is stimulated by comments from each other in creatively conceptualizing and developing a new product idea to fill a market need. One company interested in the women's slipper market received its new product concept for a "warm and comfortable slipper that fits like an old shoe" from a focus group of 12 women from various socioeconomic backgrounds in the Boston area. The concept was developed into a new women's slipper that was a market success. Even the theme of the advertising message came from comments of focus group members.

99

l --·-!~8 --+· Entrepreneurship

100 PART 2 FROM IDEA TO THE OPPORTUNITY

brainstorming A group

method for obtaining new

ideas and solutions

problem inventory

analysis A method for

obtaining new ideas and

solutions by focusing on

problems

In addition to generating new ideas, the focus group is an excellent method for initially screening ideas and concepts. With the use of one of several procedures available, there- sults can be analyzed more quantitatively, making the focus group a useful method for gen- erating new product ideas. 1

Brainstorming The brainstonning method allows people to be stimulated to greater creativity by meeting with others and participating in organized group experiences. Although most of the ideas generated by the group have no basis for further development, sometimes a good idea emerges. This has a greater frequency of occurrence when the brainstorming effort focuses on a specific prod- uct or market area. When using brainstorming, these four rules should be followed:

1. No criticism is allowed by anyone in the group--no negative comments.

2. Freewheeling is encouraged-the wilder the idea, the better.

3. Quantity of ideas is desired-the greater the number of ideas, the greater the likeli- hood of the emergence of useful ideas.

4. Combinations and improvements of ideas are encouraged; ideas of others can be used to produce still another new idea.

The brainstorming session should be fun, with no one dominating or inhibiting the discussion.

A large commercial bank successfully used brainstorming to develop a journal that would provide quality information to its industrial clients. The brainstorming among finan- cial executives focused on the characteristics of the market, the information content, the frequency of issue, and the promotional value of the journal for the bank. Once a general format and issue frequency were determined, focus groups of vice presidents of finance of Fortune 1000 companies were held in three cities-Boston, Chicago, and Dallas-to dis- cuss the new journal format and its relevancy and value to them. The results of these focus groups served as the basis for a new financial journal that was well received by the market.

Brainwriting Brainwriting is a form of written brainstorming. It was created by Bernd Rohrbach at the end of the 1960s under the name Method 635 and differs from classical brainstorming by giving participants more time to think than in brainstorming sessions, where the ideas are expressed spontaneously. Brain writing is a silent, written generation of ideas by a group of people. The participants write their ideas on special forms or cards that circulate within the group, which usually consists of six members. Each group member generates and writes down three ideas during a five-minute period. The form is passed on to the adjacent person, who writes down three new ideas, and so on, until each form has passed all participants. A leader monitors the time intervals and can reduce or lengthen the time given to participants according to the needs of the group. In a variation of this idea-generation method, the par- ticipants are located at their own workplaces and the sheets are rotated by e-mail; in this case, the time interval can be longer.2

Problem Inventory Analysis Problem inventory analysis uses individuals in a manner that is analogous to focus groups to generate new product ideas. However, instead of generating new ideas themselves, con- sumers are provided with a list of problems in a general product category. They are then asked to identify and discuss products in this category that have the particular problem.

I --·- _____ ____ _ __________ --· ----·- ---·· _________ -----~~~-=-p_re_n~u_rs_hip, E~~~~~~~ + 1 09 -- ----

CHAPTER 4 CREATIVITY AND THE BUSINESS IDEA 101

TABLE 4.2 Problem Inventory Analysis

:fermny· A"'L1illi.1w ..RI9fity" l L"'Y'P .P.JS,vt:holqpicai/Social

A. Taste A. Meal planning A. Portability A. Serve to

=-:.:ening • Bitter • Forget Eat away company

Bland Get tired of it from home • Would not • • • Take lunch serve to • Salty B . Storage guests

- B. Appearance • Run out B. Portions • Too much Color Package • Not enough last-minute • •

ungry would not fit in package preparation • Unappetizing eating c. Preparation • Creates B. Eating alone • Shape leftovers

• Too much • Too much c. Consistency/ trouble c. Availability effort to cook texture

Out of for oneself • Tough • Too many • season

"' es one pots and pans • Depressing ---sty • Dry • Not in when • Never turns prepared for • Greasy out supermarket

D. Spoilage just one

- estion D. Cooking c. Self-image • Gets moldy --- ' or • Burns • Made by a • Goes sour - • Sticks lazy cook

?eps one E. Cleaning E. Cost • Not served by z rue • Expensive a good • Makes a mess

ity in oven Takes mother

• Smells in expensive refrigerator ingredients

..,.,..._...,.run<.,l of Marketing by Edward M. Tauber. Copyright © 1975 by American Marketing Association (AMA-Chicago). Reproduced with permission ting Association via Copyright Clearance Center.

This method is often effective since it is easier to relate known products to suggested prob- lems and arrive at a new product idea than to generate an entirely new product idea by it- self. Problem inventory analysis can also be used to test a new product idea.

An example of this approach in the food industry is illustrated in Table 4.2. One of the most difficult problems in this example was in developing an exhaustive list of problems, such as weight, taste, appearance, and cost. Once a complete list of problems is developed, individuals can usually associate products with the problem.

Results from product inventory analysis must be carefully evaluated as they may not ac- tually reflect a new business opportunity. For example, General Foods 's introduction of a compact cereal box in response to the problem that the available boxes did not fit well on the shelf was not successful, as the problem of package size had little effect on actual pur- chasing behavior. To ensure the best results, problem inventory analysis should be used pri- marily to identify product ideas for further evaluation.

CREATIVE PROBLEM SOLVING Creativity is an important attribute of a successful entrepreneur. Unfortunately, creativ- ity tends to decline with age, education, lack of use, and bureaucracy. Creativity gener- ally declines in stages, beginning when a person starts school. It continues to deteriorate

~1~ ~ 1 Entrepreneurship

102 PART 2 FROM IDEA TO THE OPPORTUNITY

creative problem solving

A method for obtaining

new ideas focusing on the

parameters

reverse brainstonning

A group method for

obtaining new ideas

focusing on the negative

TABLE 4.3 Creative Problem-Solving Techniques

• Brainstorming • Forced relationships

• Reverse brainstorming • Collective notebook method

• Brainwriting • Attribute listing method

• Gordon method • Big-dream approach

• Checklist method • Parameter analysis

• Free association

through the teens and continues to progressively lessen through ages 30, 40, and 50. Also, the latent creative potential of an individual can be stifled by perceptual, cultural, emotional, and organizational factors. Creativity can be unlocked and creative ideas and innovations generated by using any of the creative problem-solving techniques indicated in Table 4.3. 3

Brainstorming The first technique, brainstorming, is probably the most well known and widely used for both creative problem solving and idea generation. In creative problem solving, brainstorm- ing can generate ideas about a problem within a limited time frame through the sponta- neous contributions of participants. A good brainstorming session starts with a problem statement that is neither too broad (which would diversify ideas too greatly so that nothing specific would emerge) nor too narrow (which would tend to confine responses).4 Once the problem statement is prepared, 6 to 12 individuals are selected to participate. To avoid in- hibiting responses, no group member should be a recognized expert in the field of the prob- lem. All ideas, no matter how illogical, must be recorded, with participants prohibited from criticizing or evaluating during the brainstorming session.

Reverse Brainstorming Reverse brainstorming is similar to brainstorming, except that criticism is allowed. In fact, the technique is based on finding fault by asking the question, "In how many ways can this idea fail?" Since the focus is on the negative aspects of a product, service, or idea, care must be taken to maintain the group's morale. Reverse brainstorming can be effectively used before other creative techniques to stimulate innovative thinking. 5 The process usually involves the identification of everything wrong with an idea, followed by a discussion of ways to overcome these problems. Reverse brainstorming almost always produces some worthwhile results as it is easier for an individual to be critical about an idea than to come up with a new idea.

Gordon Method Gordon method Method The Gordon method, unlike many other creative problem-solving techniques, begins with for developing new ideas group members not knowing the exact nature of the problem. This ensures that the solu- when the individuals are tion is not clouded by preconceived ideas and behavioral pattems.6 The entrepreneur starts unaware of the problem by mentioning a general concept associated with the problem. The group responds by

expressing a number of ideas. Then a concept is developed, followed by related concepts, through guidance by the entrepreneur. The actual problem is then revealed, enabling the group to make suggestions for implementation or refinement of the final solution.

'"'""''"'""h;p, E;ghth fd;t;oo I 111 - ·---~-- --·--· · ····~-- - -- - ---- -- ------ --- ------------- ---- ---- ----- ---- - ·------·-- -- --- --- ----- ------------------------------ ----~- - ---------

.hecklist method

Developing a new idea

through a list of related

issues

f! association

~-eloping a new idea .=ongh a chain of word

~tions

m relationships eloping a new idea by

..ding at product - ations

CHAPTER 4 CREATIVITY AND THE BUSINESS IDEA 103

Checklist Method

In the checklist method, a new idea is developed through a list of related issues or sugges- tions. The entrepreneur can use the list of questions or statements to guide the direction of developing entirely new ideas or concentrating on specific "idea" areas. The checklist may take any form and be of any length. One general checklist is as follows: 7

• 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, color, motion, odor, form, shape? Other changes?

• Magnify? What to add? More time? Greater frequency? Stronger? Larger? Thicker? Extra value? Plus ingredient? Duplicate? Multiply? Exaggerate?

• Minify? What substitute? Smaller? Condensed? Miniature? 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 track? Change schedule?

• Reverse? Transpose positive and negative? How about opposites? Turn it backward? Tum 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?

Free Association

One of the simplest yet most effective methods that entrepreneurs can use to generate new ideas is free association. This technique is helpful in developing an entirely new slant to a problem. First, a word or phrase related to the problem is written down, then another and another, with each new word attempting to add something new to the ongoing thought processes, thereby creating a chain of ideas ending with a new product idea emerging.

Forced Relationships

Forced relationships, as the name implies, is the process of forcing relationships among some product combinations. It is a technique that asks questions about objects or ideas in an effort to develop a new idea. The new combination and eventual concept is developed through a five-step process:8

1. Isolate the elements of the problem.

2. Find the relationships between these elements.

3. Record the relationships in an orderly form.

4. Analyze the resulting relationships to find ideas or patterns.

5. Develop new ideas from these patterns.

Table 4.4 illustrates the use of this technique with paper and soap.

Collective Notebook Method

In the collective notebook method, a small notebook that easily fits in a pocket-{;ontaining a statement of the problem, blank pages, and any pertinent background data-is distributed. Participants consider the problem and its possible solutions, recording ideas at least once, but

112 I ,,. ... ,~'"""'· __,__......_ _____ -~------~~------------·-~· -------------- -- ··-- --------------------------------

AS SEEN IN BUS/NESSWEEK

HOW TO PRODUCE BIG IDEAS ON DEMAND

What if we told you that you could come up with a great idea anytime you wanted?

We'll go further. We can show you how not only to summon new and innovative concepts on command but also to teach your people the same skill. This may sound like an infomercial (''Order our revolutionary system within the next 20 minutes, and we'll throw in a set of steak knives absolutely free"), but it's true.

The five techniques outlined below have one thing in common: They free your brain to let your best ideas flow.

As it is, you undoubtedly have too much on your mind. When you're driving during rush hour, you are too busy dealing with traffic to notice the scenery and enjoy the ride. The following practices eliminate mental traffic and help you liberate the great ideas inside you that are desperately trying to get out.

1. Shower your way to creativity. Yep, it's absolutely true. There is a scientific theory that water hitting your head helps trigger the synapses and that's why people get great ideas in the shower. But we think it's simpler than that: The ideas occur because you are not making an effort to think. You aren't worried about anything. You are not stressed. Hence some of your best thinking occurs.

2. Sleep on it. Remember how your mom used to say, "Why don't you sleep on it, honey?" when you were wrestling with a big issue? Well, when

it comes to big ideas and problem solving, Mother really does know best. The next time you want to solve a major challenge or be unusually brilliant, think about it in bed. Don't push your- self to figure out the answer before you fall asleep. Instead, just go through the issues at hand and tell yourself that you will have the answer in the morning. In our experience, this technique amplifies the power of the shower, because there are even fewer distractions to occupy your mind when you are asleep.

You can employ an alternate version of this while awake. The next time you can't think of a name, date, or important fact, just tell yourself aloud, "I will not think about this for a while, and the answer will come to me." This technique clears the traffic in your mind and lets your sub- conscious go to work. Your answer will often pop into your head the moment you stop "thinking about it."

3. Engage in mind-mapping. Purging is a great way to make new connections and create bigger ideas. Have a tough challenge to solve? Get a giant piece of paper (write small if you can't find one). In each quarter of the paper, write a keyword related to the challenge. For example, if you want to plan a cool family vacation, you might write the words "destinations," "trans- portation," "memories," and "kids." Then, in no

TABLE 4.4 Illustration of Forced Relationship Technique

104

Elements: Paper and Soap

Forms Relationship/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

Source: William E. Souder and Robert W. Ziegler, "A Review of Creativity and Problem Solving Techniques," Research Man- agement (July 1975), p. 37.

particular order, begin to brainstorm any word that comes to mind when you th ink of each of the key- words. For example, for "Transportation": plane, train, automobile, John Candy, pillows, sleep, sleeping bag, tent, treehouse, memories, dreams, daydreams, smells, popcorn, movies, adventure, pirates, islands, Swiss Family Robinson. Eventually, you will begin to make connections, and ideas that unify the key aspects of your goal will pop off the page. Strive for as many words as you can, and don't judge the words. Judging is looking at the traffic when you are driving-it keeps you from coming up with ideas. Eliminate the traffic.

You can employ this simple technique your- self or do it in groups to loosen up your team. Imagine how much fun you'll have explaining to your family how you came up with the idea of renting a tree house for your vacation in Costa Rica.

4. Schedule your daydreaming. We all have a time of day when our brains work the best. For many, it is first thing in the morning, before rush hour. Unfortunately, the CrackBerry addiction has many of us checking our e-mail just when our brains are the most capable of creating. The moment you check your e-mail, voice mail, or to-do list, you have hijacked your imagination. You have created a mental traffic jam. Do yourself a favor and schedule daydreaming. Unplug during the time that you know you do your best thinking and find a place that makes you feel energized. A lot of people love the local coffee shop. The buzz of conversation, the smells, colors, and energy

eate a safe haven for the mind to wander. Some refer the library or the park. Whichever it is, go

· ere. Let your mind wander.

Entrepreneurship, Eighth Edition 113

5. Yuk it up. Laughing is another great way to liberate your brain. Often consciously doing silly-seeming things will get the creative juices flowing. Spin a top. Get an ice cream cone.

As you test these five techniques, you'll find some work better than others. If it turns out you really do get your best ideas in the shower, be conscious of the circumstances under which they occurred. What was the water temperature like? How long had you been in there? What time was it? Replicate the experience.

You'll find the effort worthwhile. "The bottom line is that gifted performers are almost always made, not born, and that the journey to superior performance is for neither the faint of heart nor the impatient," says Rand Stagen, senior partner of Stagen, a manage- ment consulting firm that specializes in helping mid- market companies scale. "Just as in sports, becoming an elite performer in business requires struggle, sacri- fice, and honest (often painful) self-assessment. De- pending on the scope and difficulty of the skill to be learned, it will take months and probably years to achieve a high level of proficiency or mastery."

Learning how to implement these approaches is often what separates a brilliant thinker from a cre- ative want-to-be. Really. At first, you may feel si lly, but we promise they will work.*

TRY THIS! In the next week, try each of these techniques, one each day. Come up with at least one idea from each method.

*Source: Reprinted from December 16, 2008 issue of Business Week by special permission, copyright© 2008 by The McGraw-Hill Companies, Inc., ''How to Produce Big Ideas on Demand," by G. Michael Maddock and Raphael Louis Vit6n, www.businessweek.cornlmanaging/ content/dec2008/ca20081216_ 497312.htrn.

preferably three times, a day. At the end of a week, a list of the best ideas is developed, along with any suggestions. 9 This technique can also be used with a group of individuals who record their ideas, giving their notebooks to a central coordinator who summarizes all the ma- terial and lists the ideas in order of frequency of mention. The summary becomes the topic of a final creative focus group discussion by the group participants.

Attribute Listing Attribute listing is an idea-finding technique that requires the entrepreneur to list the attrib- utes of an item or problem and then look at each from a variety of viewpoints. Through this process, originally unrelated objects can be brought together to form a new combination and possible new uses that better satisfy a need. 10

105

114 I '""'''"'""h;p ~~~ ~"--~--+------· ------·- --· -··-------------··----·-·-····- ·--·-·-------·· ·-·-·---------·----·----·----·· ··---· ··-·-·-·---- ·-------- --

106 PART 2 FROM IDEA TO THE OPPORTUNITY

FIGURE 4.1 Illustration of Parameter Analysis

I ! Technology I observation ~ I

big-dream approach

Developing a new idea by

thinking without

constraints

parameter analysis

Developing a new idea by

focusing on parameter

identification and creative

synthesis

Market Need

l Need analysis

I

~

Parameter Analysis

Parameter identification

Step 1 t: Creative synthesis Step 2

The Invention Process

Big-Dream Approach

t±: I Realization 1

Invention which meets the need

The big-dream approach to corning up with a new idea requires that the entrepreneur dream about the problem and its solution-in other words, think big. Every possibility should be recorded and investigated without regard to all the negatives involved or the re- sources required. Ideas should be conceptualized without any constraints until an idea is developed into a workable form. 11

Parameter Analysis A final method for developing a new idea-parameter analysis-involves two aspects: pa- rameter identification and creative synthesis.l2 As indicated in Figure 4.1, step one (para- meter identification) involves analyzing variables in the situation to determine their relative importance. These variables become the focus of the investigation, with other variables being set aside. Mter the primary issues have been identified, the relationships between parameters that describe the underlying issues are examined. Through an evaluation of the parameters and relationships, one or more solutions are developed; this solution develop- ment is called creative synthesis.

INNOVATION Innovation is the key to the economic development of any company, region of a country, or country itself. As technologies change, old products decrease in sales and old industries dwindle. Inventions and innovations are the building blocks of the future of any economic unit. Thomas Edison reportedly said that innovative genius is 1 percent inspiration and 99 percent perspiration.

Types of Innovation There are various levels of innovation based on the uniqueness of the idea. As indicated in Figure 4.2, there are three major types of innovation, in decreasing order of uniqueness: break- through innovation, technological innovation, and ordinary innovation. As you would expect, the fewest innovations are of the breakthrough type. These extremely unique innovations often establish the platform on which future innovations in an area are developed. Given that they are often the basis for further innovation in an area, these innovations should be protected as much

'""''""""h;p, E;ghth Ed;t;oo I 115 - --- ---- --------- - --------+- ------

CHAPTER 4 CREATIVITY AND THE BUSINESS IDEA 107

FIGURE 4.2 Innovation Chart

+T-- Breakthrough innovation

Number of Events

as possible by strong patents, trade secrets, and/or copyrights (see Chapter 6). Breakthrough innovations include such ideas as: penicillin, the steam engine, the computer, the airplane, the automobile, the Internet, and nanotechnology. One person in the field of nanotechnology who invents elegant solutions to engineering problems is Chung-Chiun Liu, a professor and direc- tor of the Center for Micro and Nano Processing at Case Western Reserve University. Dr. Liu is a world expert on sensor technology and invents and builds nano sensor systems for automo- tive, biomedical, commercial, and industrial applications. Despite publishing a majority of his inventions, Dr. Liu still holds 12 patents in electrochemical and sensor technology, many of which have been licensed. One of his inventions is the technology for an electrochemical sen- sor system that can transmit findings to a nearby receiver. One of these nano devices can ana- lyze the condition of motor oil from inside an engine. Another nano device can measure blood glucose levels. One of his latest nano inventions can detect black mold in homes, hidden bombs, illegal drugs, and termites; this technology is presently being commercialized through a licensing agreement with Development Corporation.

The next type of innovation-technological innovation-occurs more frequently than breakthrough innovation and in general is not at the same level of scientific discovery and advancement. Nonetheless, these are very meaningful innovations, as they do offer ad- vancements in the product/market area. As such, they usually need to be protected. Such in- novations as the personal computer, the flip watch for containing pictures, voice and text messaging, and the jet airplane are examples of technological innovations.

Analiza, Inc. , a twelve-year-old bioscience company, invented, developed, and sells a system that allows drug manufacturers to quickly screen chemical compounds for the ones most suitable for new drugs. This automated discovery workstation simultaneously tests many different drug compounds, identifying the compounds most suitable for a new drug based on how the human body is likely to react to the compound. The company is further exploring other technological innovations such as an advanced blood test product for diagnosing cancer, a product for extending the shelf life of blood platelets, and a pregnancy test for cows.

The final type of innovation-ordinary innovation-is the one that occurs most frequently. These more numerous innovations usually extend a technological innovation into a better

116 Entrepreneurship ' ~ ----·----- -- ·------·------------ -------- ------- ---·----- ---- ---------------------------------------------------------

108 PART 2 FROM IDEA TO THE OPPORTUNITY

product or service or one that has a different- usually better-market appeal. These innova- tions usually come from market analysis and pull, not technology push. In other words, the market has a stronger effect on the innovation (market pull) than the technology (technology push). One ordinary innovation was developed by Sara Blakely, who wanted to get rid of un- sightly panty lines. To do this, she cut off the feet of her control-top panty hose to produce footless panty hose. Investing her total money available ($5,000), Sara Blakely started Spanx, an Atlanta-based company, which in five years had annual earnings of $20 million.

Similarly, Martha Aarons, the second flutist of the Cleveland Symphony, practices a 5,000-year-old Hindu system of physical and spiritual exercise. One of the exercises- the Downward Facing Dog-requires a "sticky mat" in order to prevent the gloves and slippers from sliding. Not wanting to carry the mat along with her instrument on trips, Martha Aarons invented gloves and slippers with a gripping substance. She is now in the process of commercializing her skid-free slippers and gloves.

Defining a New Innovation (Product or Service) One of the dilemmas faced by entrepreneurs is defining a "new" product or identifying what is actually new or unique in an idea. Fashion jeans became very popular even though the concept of blue jeans was not new. What was new was the use of names such as Sassoon, Vanderbilt, and Chic on the jeans. Similarly, Sony made the Walkman one of the most popular new products of the 1980s, although the concept of cassette players had been in existence for many years.

In these examples, the newness was in the consumer concept. Other types of products, not necessarily new in concept, have also been defined as new. When coffee companies in- troduced naturally decaffeinated coffee, which was the only change in the product, the ini- tial promotional campaigns made definite use of the word new in the copy.

Other old products have simply been marketed in new packages or containers but have been identified as new products by the manufacturer. When soft drink manufacturers intro- duced the can, some consumers viewed the product as new, even though the only difference from past products was the container. The invention of the aerosol can is another example of a change in the package or container that added an element of newness to old, established products, such as whipped cream, deodorant, and hair spray. Flip-top cans, plastic bottles, aseptic packaging, and the pump have also contributed to a perceived image of newness in old products. Some firms, such as detergent manufacturers, have merely changed the colors of their packages and then added the word new to the package and their promotional copy.

Panty hose are another product that has undergone significant marketing strategy changes. L'eggs (a division of Hanes Corporation) was the first to take advantage of super- market merchandising, packaging, lower prices, and a new display.

In the industrial market, firms may call their products "new" when only slight changes or modifications have been made in the appearance of the product. For example, improvements in metallurgical techniques have modified the precision and strength of many raw materials that are used in industrial products, such as machinery. These improved characteristics have led firms to market products containing the new and improved metals as "new." Similarly, each new version of Microsoft Word usually includes only minor improvements.

In the process of expanding their sales volume, many companies add products to their product line that are already marketed by other companies. For example, a drug company that added a cold tablet to its product line and a long-time manufacturer of soap pads that entered the dishwasher detergent market both advertised their products as new. In both cases the product was new to the manufacturer but not new to the consumer. With the in- creased emphasis on diversification in the world economy, this type of situation is quite

Entrepreneurship, Eighth Edition 1 117 ---··- -----~-------------- --------------------------- --- --------------------- ----------------- --- ----

CHAPTER 4 CREATIVITY AND THE BUSINESS IDEA 109

common today. Firms are constantly looking for new markets to exploit to increase profits and make more effective use of their resources. Other firms are simply changing one or more of the marketing mix elements to give old products a new image.

Classification of New Products

New products may be classified from the viewpoint of either the consumer or the firm. Both points of view should be analyzed by the entrepreneur since both the ability to estab- lish and attain product objectives and consumer perception of these objectives can deter- mine the success or failure of any new product.

From a Consumer's Viewpoint There is a broad interpretation of what may be labeled a new product from the consumer's viewpoint. One attempt to identify new products classifies the degree of newness according to how much behavioral change or new learning is required by the consumer to use the product. This technique looks at newness in terms of its effect on the consumer rather than whether the product is new to a company, is packaged differently, has changed physical form, or is an improved version of an old or existing product.

The continuum proposed by Thomas Robertson and shown in Figure 4.3 contains three categories based on the disrupting influence that use of the product has on established con- sumption patterns. Most new products tend to fall at the "continuous innovations" end of the continuum. Examples are annual automobile style changes, fashion style changes, package changes, or product size or color changes. Products such as compact discs, the Sony Walkman, and the iPod tend toward the "dynamically continuous" portion of the continuum. The truly new products, called "discontinuous innovations," are rare and require a great deal of new learning by the consumer because these products perform either a previously unfulfilled func- tion or an existing function in a new way. The Internet is one example of a discontinuous inno- vation that has radically altered our society's lifestyle. The basis for identifying new products according to their effect on consumer consumption patterns is consistent with the marketing philosophy that "satisfaction of consumer needs" is fundamental to a venture's existence.

From a Firm's Viewpoint The innovative entrepreneurial firm, in addition to recognizing the consumer's perception of newness, may also find it necessary to classify its new products on some similar dimensions. One way of classifying the objectives of new products is shown

FIGURE 4.3 Continuum for Classifying New Products

Continuous Innovations

1 I

(Least disrupting influence on established

consumption patterns)

Dynamically Continuous Innovations

I I

(Some disrupting influence on established

consumption patterns)

Discontinuous Innovations

J I

(Involves the establishment

of new consumption patterns and the

creation of previously unknown products)

Source: Adapted from Thomas Robertson, "The Process of Innovation and the Diffusion of Innovation," Journal of Marketing (January 1967), pp. 14-19.

I 118 l Entrepreneurship

~~~~--- ··-·-· --+-·--·-·---· ·-·-··· ---------------·--·· -- -----·-·· ·· -·-·- ····-------------------·-----··- ·····------·--· -----------------------

110 PART 2 FROM IDEA TO THE OPPORTUNITY

FIGURE 4.4 New Product Classification System

Market Technology Newness------------------------...... Newness I

1

--. J Product j No Technological 1 Objectives j Change

Improved Technology New Technology

j Nomarketchange 1

I I Reformation

Change in formula or physical product to optimize costs and quality

Replacement Replace existing product with new one based on improved technology

I I

Strengthened market I Remerchandising I Improved product Product life extension Increase sales to Improve product's Add new similar products I existing customers utility to customers to line; serve more

i customers based on new

I technology

New market I New use Market extension Diversification Add new segments Add new segments Add new markets with that can use present modifying present new products developed

products from new technology L

. products

in Figure 4.4. In this figure, an important distinction is made between new products and new markets (i.e., market development). New products are defined in terms of the amount of im- proved technology, whereas market development is based on the degree of new segmentation.

The situation in which there is new technology and a new market is the most compli- cated and difficult-and it has the highest degree of risk. Since the new product involves new technology and customers that are not now being served, the firm will need a new and carefully planned marketing strategy. Replacements, extensions, product improvements, reformulations, and remerchandising involve product and market development strategies that range in difficulty depending on whether the firm has had prior experience with a sim- ilar product or with the same target market.

OPPORTUNITY RECOGNITION Some entrepreneurs have the ability to recognize a business opportunity, which is fundamen- tal to the entrepreneurial process as well as growing a business. A business opportunity rep- resents a possibility for the entrepreneur to successfully fill a large enough unsatisfied need that enough sales and profits result. There has been significant research done on the oppor- tunity recognition process and several models developed. 13 One model that clearly identifies the aspects of this opportunity recognition process is indicated in Figure 4.5.

As is indicated, recognizing an opportunity often results from the knowledge and expe- rience of the individual entrepreneur and, where appropriate, the entrepreneurial business. This prior knowledge is a result of a combination of education and experience, and the rel- evant experience could be work related or could result from a variety of personal experi- ences or events. The entrepreneur needs to be aware of this knowledge and experience and have the desire to understand and make use of it. The other important factors in this process are entrepreneurial alertness and entrepreneurial networks. There is an interaction effect between entrepreneurial alertness and the entrepreneur's prior knowledge of markets and customer problems. Those entrepreneurs who have the ability to recognize meaningful business opportunities are in a strategic position to successfully complete the product plan- ning and development process and successfully launch new ventures.

I _______________ ------------· ------------------ ____________ :~t~:_p~:_n:_u~ship,~i-gh_thEditloo ____ + 119

life cycle The

from introduction

e

planning and

CHAPTER 4 CREATIVITY AND THE BUSINESS IDEA 111

FIGURE 4.5 A Model of the Opportunity Recognition Process

Education Prior knowledge of markets and

,-------. customer c- problems

! Outcome: Experience t--- Entrepreneurial

~ successful alertness 1------+ opportunity

l i ,..--. recognition

Personal Work Networks experiences experience 1--

Source: From Alexander Ardichvili and Richard N. Cardozo, "A Model of the Entrepreneurial Opportunity Recognition Process," Journal of Enterprising Culture 8, no. 2 (June 2000). Reprinted with permission of World Scientific Publishing Co, Inc.

Each and every innovative idea and opportunity should be carefully assessed by the global entrepreneur. One good way to do this is to develop an opportunity analysis plan, which is discussed in Chapter 5.

PRODUCT PLANNING AND DEVELOPMENT PROCESS Once ideas emerge from idea sources or creative problem solving, they need further devel- opment and refinement. This refining process- the product planning and development process- is divided into five major stages: idea stage, concept stage, product development stage, test marketing stage, and commercialization; it results in the start of the product life cycle (see Figure 4.6). 14

Establishing Evaluation Criteria At each stage of the product planning and development process, criteria for evaluation need to be established. These criteria should be all-inclusive and quantitative enough to screen the product carefully in the particular stage of development. Criteria should be established

FIGURE 4.6 The Product Planning and Development Process

Product Test I

Idea Concept development marketing Commercialization stage stage stage stage stage Product life cycle

c: 2 - c: (ij

/~ ~ .Q ·e

C3 Q) 'E ::J E "' Q) "='"' ~

-c Q) E- Q) 1ii o E e 1ii o.!ll 1ii ~~ c. 0 ~ ::J ::J ::J ·-- ::J CIS (ij 0 Ill (ij :§ (ij E c: (ij Q) > .0 > > > Ill CIS > 32 CIS Ill a::: Introduction Growth Maturity Decline w -' "0 w w C/)Q_ w

--

Source: From Marketing Decisions for New and Mature Products, 2nd edition, by Robert D. Hisrich and Michael P. Peters, 1991. Reprinted by permission of Pearson Education, Inc., Upper Saddle River, NJ.

l 120 +- Entrepreneurship

:....;;._-~----:._.._...,__ ---·--·--------------------- ----- ·---- ----------------------------------·-·--------

$ ETHICS

LEADERSHIP IS ABOUT DOING, NOT SAYING

Those plaques on the walls! Those inspiring mottos! Companies have wasted millions of dollars and count- less hours agonizing over buzzwords and slogans that are hung on walls. There is a clear assumption that people's behavior will change because the pronounce- ments on plaques are "inspirational" or certain words "integrate our strategy and values." There is an implicit hope that when people-especially managers-hear great words, they will start to exhibit great behavior.

Sometimes these words or phrases morph as people try to keep up with the latest trends in corporate- speak. A company may begin by striving for "customer satisfaction," then advance to "total customer satisfac- tion," and then finally reach the pinnacle of "customer delight."

ENRON TALKED A GOOD GAME But this obsession with words belies one very large problem: There is almost no correlation between the words on the wall and the behavior of leaders. Every company says it wants "integrity," "respect for peo- ple," "quality," "customer satisfaction," "innovation," and "return for shareholders." Sometimes companies get creative and toss in something about "commu- nity" or "suppliers." But since the big messages are all basically the same, the words quickly lose meaning for employees.

Enron is a great example. Before the energy con- glomerate's collapse in 2001, I had the opportunity to review Enron's values during a meeting with its sen- ior management team. I was shown a wonderful video on Enron's ethics and integrity. I was greatly impressed by the high-minded beliefs the company espoused and the care that was put into the video. Examples of Enron's good deeds in the community and the professed character of Enron's executives were particularly noteworthy.

It was one of the most smoothly professional pre- sentations on ethics and values that I have ever seen. Clearly, Enron spent a fortune "packaging" these wonderful messages. It didn't really matter. Despite the lofty words, a number of Enron's top executives either have been indicted or are in jail.

J&J ADHERES TO ITS CREDO The situation couldn't be more different at Johnson & Johnson (JNJ), where I had the opportunity to work with that company's top 2,000 leaders. The pharma- ceutical company is famous for its "Credo," which was written many years ago and reflects the sincere values of the leaders of the company at that time. The J&J Credo could be considered rather quaint by today's standards. It contains several old-fashioned phrases, such as "must be good citizens-support

to evaluate the new idea in terms of market opportunity, competition, the marketing system, financial factors, and production factors.

112

A market opportunity in the form of a new or current need for the product idea must ex- ist. The determination of market demand is by far the most important criterion of a pro- posed new product idea. Assessment of the market opportunity and size needs to consider the following: the characteristics and attitudes of consumers or industries that may buy the product, the size of this potential market in dollars and units, the nature of the market with respect to its stage in the life cycle (growing or declining), and the share of the market the product could reasonably capture.

Current competing producers, prices, and marketing efforts should also be evaluated, particularly in terms of their impact on the market share of the proposed idea. The new idea should be able to compete successfully with products/services already on the market by having features that will meet or overcome current and anticipated competition. The new idea should have some unique differential advantage based on an evaluation of all compet- itive products/services filling the same consumer needs.

The new idea should have synergy with existing management capabilities and market- ing strategies. The firm should be able to use its marketing experience and other expertise in this new product effort. For example, General Electric would have a far less difficult time

d works and charities -and bear our fair share of es" and "maintain in good order the property

--a we are privileged to use." Like most values state- -e ts, it conveyed a great message, but it had none

e slick PR packaging that Enron's did. Yet, even with its less-powerful language and

ingly dated presentation, the J&J Credo works- :: · arily because over many years, the company's -a agement has taken its values seriously. J&J exec-

es have consistently challenged themselves and :- loyees not just to understand the values, but to ; ibit them in their day-to-day behavior. Whenever

~ nducted leadership training for J&J, one of its -ost senior executives would spend many hours with _ ery class. The executive's task was not to talk about

pensation or other perks of J&J management; it ?.S to discuss living the company's values.

y partner, Howard Morgan, and I completed a of more than 11,000 managers in eight major

- ~rations. We looked at the impact of leadership ::~ lopment programs in changing executive behav- ::-. As it turns out, each of the eight companies had - ··erent values and different words to describe ideal :: ership behavior.

ut these differences in words made absolutely no - = erence in determining the way leaders behaved. : e company spent thousands of hours composing

e right words to express its view of how leaders ld act-in vain. I am sure that the first draft

- d have been just as useful. In our study we d that leaders who took training and feedback

seriously, made a personal commitment to improve- ment, and followed up with their co-workers became more effective. Leaders who just listened to the talk but took no action or made no commitment im- proved no more than those who hadn't even heard the talk.

ACTIONS SPEAK LOUDEST Companies that do the best job of living up to their values and developing ethical employees, including managers, recognize that the real cause of success-or failure-is always the people, not the words. Rather than wasting time on reinventing words about desired leadership behavior, companies should ensure that leaders get (and act upon} feedback from employees- the people who actually observe this behavior. Rather than wasting time on changing performance appraisal forms, leaders need to learn from employees to ensure that they are providing the right coaching.

Ultimately, our actions will say much more to employees about our values and our leadership skills than our words ever can. If our actions are wise, no one will care if the words on the wall are not perfect. If our actions are foolish, the wonderful words posted on the wall will only make us look more ridiculous.

Source: Reprinted from the December 2007 issue of Business Week by special permission, copyright© 2007 by The McGraw-Hill Com- panies, Inc., "Leadership Is About Doing, Not Saying," by Marshall Goldsmith, www. businessweek.com/managing/content/dec2007/ ca2007124_971542.htm?chan=careers_managing+your+team+ page_leadership+development.

adding a new lighting device to its line than Procter & Gamble. Several factors should be considered in evaluating the degree of fit: the degree to which the ability and time of the present sales force can be transferred to the new product; the ability to sell the new product through the company's established channels of distribution; and the ability to "piggyback" the advertising and promotion required to introduce the new product.

The proposed product/service idea should be able to be supported by and contribute to the company's financial well-being. The manufacturing cost per unit, the marketing ex- pense, and the amount of capital need to be determined along with the break-even point and the long-term profit outlook for the product.

The compatibility of the new product's production requirements with existing plant, ma- chinery, and personnel should also be evaluated. If the new product idea cannot be inte- grated into existing manufacturing processes, more costs such as plant and equipment are involved which need to be taken into account. All required materials for the production of the product need to be available and accessible in sufficient quantity.

When dealing with competition and competitive situations, concerns regarding ethics and ethical behavior frequently arise, as indicated in the Ethics box.

Entrepreneurs need to be concerned with formally evaluating an idea throughout its evo- lution. Care must be taken to be sure the product can be the basis for a new venture. This

113

I

122 I Entrepreneurship -+---- ---- ----- -- -- --·--· ---·---- ---

114 PART 2 FROM IDEA TO THE OPPORTUNITY

idea stage First stage in

product development

process

concept stage Second

stage in product

development process

can be done through careful evaluation that results in a go or no-go decision at each of the stages of the product planning and development process: the idea stage, the concept stage, the product development stage, and the test marketing stage.

Idea Stage Promising new product/service ideas should be identified and impractical ones eliminated in the idea stage, allowing maximum use of the company's resources. One evaluation method successfully used in this stage is the systematic market evaluation checklist, where each new idea is expressed in terms of its chief values, merits, and benefits. Consumers are presented with clusters of new product/service values to determine which, if any, new product/service alternatives should be pursued and which should be discarded. A company can test many new idea alternatives with this evaluation method; promising ideas can be further developed and resources not wasted on ideas that are incompatible with the market's values.

It is also important to determine the need for the new idea as well as its value to the company. If there is no need for the suggested product, its development should not be continued. Similarly, the new product/service idea should not be developed if it does not have any benefit or value to the firm. To accurately determine the need for a new idea, it is helpful to define the potential needs of the market in terms of timing, satisfaction, alternatives, benefits and risks, future expectations, price-versus-product performance features, market structure and size, and economic conditions. A form for helping in this need determination process is indicated in Table 4.5. The factors in this table should be evaluated not only in terms of the characteristics of the potential new product/service but also in terms of the new product/service's competitive strength relative to each factor. This comparison with competitive products/services will indicate the proposed idea's strengths and weaknesses.

The need determination should focus on the type of need, its timing, the users involved with trying the product/service, the importance of controllable marketing variables, the overall market structure, and the characteristics of the market. Each of these factors should be evaluated in terms of the characteristics of the new idea being considered and the aspects and capabilities of present methods for satisfying the particular need. This analysis will in- dicate the extent of the opportunity available.

In the determination of the value of the new product/service to the firm, financial scheduling- such as cash outflow, cash inflow, contribution to profit, and return on investment- needs to be evaluated in terms of other product/service ideas as well as invest- ment alternatives. With the use of the form indicated in Table 4.6, the dollar amount of each of the considerations important to the new idea should be determined as accurately as possible so that a quantitative evaluation can be made. These figures can then be revised as better information becomes available and the product/service continues to be developed.

Concept Stage After a new product/service idea has passed evaluation in the idea stage, it should be further developed and refined through interaction with consumers. In the concept stage, the refined idea is tested to determine consumer acceptance. Initial reactions to the concept are obtained from potential customers or members of the distribution channel when appropriate. One method of measuring consumer acceptance is the conversational interview in which selected respondents are exposed to statements that reflect the physical characteristics and attributes of the product/service idea. Where competing products (or services) exist, these statements can also compare their primary features. Favorable as well as unfavorable product features

I

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CHAPTER 4 CREATIVITY AND THE BUSINESS IDEA 115

TABLE 4.5 Determining the Need for a New Product/Service Idea

Factor

Type of Need

Continuing need

Declining need

Emerging need

Future need

Timing of Need

Duration of need

Frequency of need

Demand cycle

Position in life cycle

Competing Ways to Satisfy Need

Doing without

Using present way

Modifying present way

Perceived Benefits/Risks

Utility to customer

Appeal characteristics

Customer tastes and preferences

Buying motives

Consumption habits

Price versus Performance Features

Price-quantity relationsh ip

Demand elasticity

Stability of price

Stability of market

Market Size and Potential

Market growth

Market trends

Market development requirements

Threats to market

Availability of Customer Funds

General economic conditions

Economic trends

Customer income

Financing opportunities

Aspects Competitive Capabilities

New Product Idea Capability

Source: From Marketing Decisions for New and Mature Products, 2nd edition, by Robert D. Hisrich and Michael P. Peters, 1991. Reprinted by permission of Pearson Education, Inc., Upper Saddle River, NJ.

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116 PART 2 FROM IDEA TO THE OPPORTUNITY

TABLE 4.6 Determining the Value of a New Product/Service Idea

Value Consideration

Cash Outflow

R&D costs

Marketing costs

Capita l equipment costs

Other costs

Cash Inflow

Sales of new product

Effect on additional sales of existing products

Salvageable value

Net Cash Flow

Maximum exposure

Time to maximum exposure

Duration of exposure

Total investment

Maximum net cash in a single year

Profit

Profit from new product

Profit affecting additional sales of existing products

Fraction of total company profit

Relative Return

Return on shareholders' equity (ROE)

Return on investment (ROI)

Cost of capital

Present value (PV)

Discounted cash flow (DCF)

Return on assets employed (ROA)

Return on sales

Compared to Other Investments

Compared to other product opportunities

Compared to other investment opportunities

Cost (in$)

Source: From Marketing Decisions for New And Mature Products, 2nd edition, by Robert D. Hisrich and Michael P. Peters, 1991. Reprinted by permission of Pearson Education, Inc., Upper Saddle River, NJ.

can be discovered by analyzing consumers' responses, with the favorable features then be- ing incorporated into the new product/service.

Features, price, and promotion should be evaluated for both the concept being studied and any major competing products by asking the following questions:

How does the new concept compare with competitive products/services in terms of quality and reliability?

,,~,,~'""h''· Eighth""'·" I 12s -~-··--------·---------- ~--- ----- -·--·-- -- ---- -- --- ----- -- -- ----------------- - --- ---------~---~--.......<

_ roduct development

"7llge Third stage in product development

process

~st marketing stage

Final stage before

commercialization in ?roduct development

process

CHAPTER 4 CREATIVITY AND THE BUSINESS IDEA 117

Is the concept superior or deficient compared with products/services currently available in the market?

Is this a good market opportunity for the firm?

Similar evaluations should be done for all the aspects of the marketing strategy.

Product Development Stage In the product development stage, consumer reaction to the physical product/service is determined. One tool frequently used in this stage is the consumer panel, in which a group of potential consumers is given product samples. Participants keep a record of their use of the product and comment on its virtues and deficiencies. This technique is more applicable for product ideas and works for only some service ideas.

The panel of potential customers can also be given a sample of the product and one or more competitive products simultaneously. Then one of several methods-such as multiple brand comparisons, risk analysis, level of repeat purchases, or intensity of preference analysis-can be used to determine consumer preference.

Test Marketing Stage Although the results of the product development stage provide the basis of the final market- ing plan, a market test can be done to increase the certainty of successful commercialization. This last step in the evaluation process, the test marketing stage, provides actual sales results, which indicate the acceptance level of consumers. Positive test results indicate the degree of probability of a successful product launch and company formation.

E-COMMERCE AND BUSINESS START -UP Throughout the evaluation process of a potential new idea as well as in the development of marketing strategy, the role of e-commerce needs to be continually assessed. E-commerce of- fers the entrepreneur the opportunity to be very creative and innovative. Its increasing importance is indicated in the continually increasing amount of both business-to-business and business-to-consumer e-commerce sales. E-commerce (Internet spending) continues to in- crease on an annual basis. According to comScore Networks, total Internet spending (including travel) reached $214.4 billion in 2008, an increase of 7 percent over the total spending in 2007. This 7 percent growth rate, however, reflects the economic recession, as 2008 exhibited the lowest increase in e-commerce spending since 2001, when comScore Networks began follow- ing consumer online spending. The $214.4 billion was composed of $130.1 billion nontravel spending and $84.3 billion travel spending. Video games, consoles, and accessories together constituted one of the fastest-growing categories, up 29 percent over 2007.

Other categories that experienced a significant increase in 2008 sales over 2007 sales included sport and fitness (25 percent); event tickets (13 percent); consumer electronics (9 percent); and apparel and accessories (4 percent). Travel's increase to $84.3 billion in 2008 had risen 9 percent-from $77.3 billion in 2007.

Factors that facilitated the high growth of electronic commerce on a business-to- consumer or business-to-business basis are still in existence today: widespread use of personal computers, the adoption of intranets in companies, the acceptance of the Internet as a business communications platform, and faster and more secure systems. Numerous benefits-such as access to a broader customer base, lower information dissemination costs, lower transaction costs, and the interactive nature of the Internet-will continue to expand the volume of e-commerce.

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118 PART 2 FROM IDEA TO THE OPPORTUNITY

Using E -Commerce Creatively Electronic commerce is increasingly used by existing corporations to extend their marketing and sales channels, as well as being the basis for some new ventures. The Internet is espe- cially important for small and medium-sized companies, as it enables them to minimize marketing costs while reaching broader markets. An entrepreneur starting an Internet com- merce venture needs to address the same strategic and tactical questions as any other entre- preneur. Additionally, some specific issues of doing business online need to be addressed due to the new and perpetually evolving technology used in Internet commerce. An entre- preneur has to decide whether he or she will run the Internet operations within the company or outsource these operations to Internet specialists. In the case of in-house operations, com- puter servers, routers, and other hardware and software as well as support services such as Web site information have to be maintained. Alternatively, there are numerous possibilities for outsourcing the Internet business. The entrepreneur can hire Web developers to design the company's Web pages and then upload them on the server maintained by the Internet service provider. In this case, the entrepreneur's main task is to regularly update the infor- mation on the Web pages. Another option is to use the packages for e-commerce available from different software companies. The correct decision between in-house operations or out- sourcing depends on the size of the Internet-related business, particularly where Internet operations are the company's primary business, and the relative costs of each alternative.

The two major components of Internet commerce are front-end and back-end opera- tions. Front-end operations are encompassed in the Web site's functionality. Search capa- bilities, shopping cart, and secure payment are only a few examples. The biggest mistake made by many companies on the Internet is believing that an attractive, interactive Web site will secure success; this leads to underestimating the importance of back-end operations. Seamless integration of customer orders should be developed, with distribution channels and manufacturing capabilities that are flexible enough to handle any specific customer's desire. The integration of front-end and back-end operations represents the greatest chal- lenge for doing Internet business and at the same time provides the opportunity for developing a sustained competitive advantage.

Web Sites The use of Web sites by entrepreneurial firms has been increasing at a significant rate. About 90 percent of small businesses today have operating Web sites. However, the major- ity of small businesses and entrepreneurs feel that they do not have the technical capability to build and operate quality Web sites.

One of the keys to a good Web site is ease of use. In a 2008 ranking by Forrester of 114 Web sites according to usefulness, ease of use, and enjoyability, Barnes & Noble was ranked num- ber one, followed by USAA, Borders, Amazon, Costco, and Hampton Inn/Suites.

In developing a Web site, an entrepreneur needs to remember that a Web site is a com- munication vehicle and should address the following questions: Who is the audience? What are the objectives for the site? What do you want the consumers to do upon visiting the site? Is the Web site an integral part of the venture's total communications program? In ad- dressing these questions, the entrepreneur needs to structure the Web site and organize the information to effectively engage the target market. This requires that the material be fresh, with new material added on a regular basis. The material should be interactive to engage the individual. And, of course the Web site needs to be known and as visible as possible.

One of the most important features of every Web site is search capability. It should be easy to find information about the products and services that a company offers over the

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Internet. This function can be accomplished through an advanced search tool, site map, or subject browsing. Other functions that should be available on every e-commerce Web site are shopping cart, secure server connection, credit card payment, and a customer feedback feature. Shopping cart is software that accepts product orders and automatically calculates and totals customers' orders based on the product availability information. Orders and other sensitive customer information should be transferred only through secure servers. Another important feature of the Web site is an e-mail response system that allows customers to send their feedback to the company.

There are three characteristics of successful Web sites: speed, speed, and speed. Addition- ally, a Web site should be easy to use, customized for specific market target groups, and com- patible with different browsers. Ease of use goes hand in hand with speed; if visitors find Web pages easy to navigate, then they will be able to quickly find products, services, or informa- tion. One of the greatest advantages of the Internet is the simplicity of customization of the Web site content for different market segments. It should also take into consideration the international nature of the Internet and any nontargeted segments. For example, if a company is not planning to sell products beyond the U.S. border, then it should clearly indicate on its Web site thatit is shipping its products only within the United States. If, on the other hand, the company is targeting international markets as well, then issues of translation and cultural adaptation need to be considered. As for the technical aspects, the designer should ensure that the Web site works properly in different browsers and platforms that are used by Internet visitors. Once the Web site is operational, it is important that it appears in all marketing mate- rials, including business cards, company letterhead, and of course company advertising.

A good example of Web site development and operation is Transition Networks Inc. (www.transition.com). The Minneapolis-based company is in the high-technology business of marketing local area network (LAN) hardware. The company had these goals for its Web site: help control collateral costs, provide a mechanism for easily accessible product and technol- ogy training for resellers, provide a mechanism for getting to know resellers better, and pro- vide company exposure to end users of the company's products. To meet these goals, Transi- tion Networks designed a Web site that is multilayered. The site is interactive in the test procedure with the participant getting immediate feedback concerning responses given. The site is coordinated in both content and graphics with other marketing communications of the company, with the front page of the site updated weekly to draw people and give them a rea- son to revisit. The content of the site is updated every two weeks with at least one new item.

Tracking Customer Information Electronic databases support the strategy of personalized one-to-one marketing. The data- base can not only track activity of the industry, segment, and company but also support personal marketing targeted at individual clients. The motivation for tracking customer information is to capture customer attention with customized one-to-one marketing. Care must be taken in doing this to follow the laws protecting the privacy of individuals.

Doing E-Commerce as an Entrepreneurial Company The decision to go online for the first time and develop an e-commerce site for your busi- ness needs to be a strategic one and should be based on several factors. First, the products should be able to be delivered economically and conveniently. Fresh fruits and vegetables for individual consumers are not very appropriate for online sales and long-distance deliv- eries. Second, the product has to be interesting for a large number of people and the com- pany must be ready to ship the product outside its own geographical location. Third, online

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IN REVIEW

SUMMARY

operations have to bring significant cost reductions compared with the present brick-and- mortar operations. The fourth factor reflects the company's ability to economically draw customers to its Web site.

Conflict between traditional and online marketing channels (channel conflict) arises be- cause of disagreements between manufacturers and retailers, which eventually lead into a hostile, competing position of once-partnering companies. Partners in supply chains have to focus on their core competencies and outsource the noncore activities. When introduc- ing the competing distribution channels, companies have to weigh the costs and benefits of that decision while taking into account the loss of existing business.

The starting point for any successful new venture is the basic product or service to be of- fered. This idea can be generated internally or externally through various techniques.

The possible sources of new ideas range from the comments of consumers to changes in government regulations. Monitoring the comments of acquaintances, eval- uating the new products offered by competitors, becoming familiar with the ideas contained in previously granted patents, and becoming actively involved in research and development are techniques for coming up with a good product idea. In addition, there are specific techniques entrepreneurs can use to generate ideas. For example, a better understanding of the consumer's true opinions can be gained from using a focus group. Another consumer-oriented approach is problem inventory analysis, through which consumers associate particular problems with specific products and then develop a new product that does not contain the identified faults.

Brainstorming, a technique useful in both idea generation and problem solving, stimulates creativity by allowing a small group of people to work together in an open, nonstructured environment. Other techniques useful in enhancing the creative process are checklists of related questions, free association, idea notebooks, and the "big- dream" approach. Some techniques are very structured, while others are designed to be more free form. Each entrepreneur should know the techniques available.

Once the idea or group of ideas is generated, the planning and development process begins. If a large number of potential ideas has been uncovered, the ideas must be screened and evaluated to determine their appropriateness for further devel- opment. Ideas showing the most potential are then moved through the concept stage, the product development stage, the test marketing stage, and finally into commercial- ization. The entrepreneur should constantly evaluate the idea throughout this process to be able to successfully launch the venture.

RESEARCH TASKS

c 1. Choose a product or technology. Interview five consumers who buy that product and ask them what major problems they have with the product (or what major things they dislike about it). Then ask them to describe the attributes of the "perfect product" that would satisfy all their needs and replace the existing product. Next, interview the represent atives of five companies that offer the product and ask them what they believe are the major problems customers experience with their product. Come up with some futuristic solutions.

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CHAPTER 4 CREATIVITY AND THE BUSINESS IDEA 121

2. Obtain a patent of a technology (e.g., go to the patent office Web site) and come up with 10 creative uses of the technology.

3. Choose three different products that you might be interested in purchasing and that are sold on the Internet. For each product, visit three Web sites and go through the process as if you were going t o actually purchase the product. Which Web site was the best? Why? Which was the worst? Why? If you could create the perfect Web site, what features would it have?

... ASS DISCUSSION

1. Take the following problem statement and brainstorm solutions. Be prepared to present your three most "creative" solutions. Problem statement: "Customers too frequently use an airline and fly to a destination only to find out that their luggage has not arrived."

2. Choose a product and use the checklist method to develop new ideas. Be prepared to discuss your product and the three most creative ideas generated.

3. Do you think that the Internet can be a source of advantage for one firm over other firms or do you think that it is a necessity just to be able to compete? Be prepared to justify your answer.

ELECTED READINGS

Anonymous. (June 2008). Can America Keep Its Competitive Edge? The Economist.com. Available from: Global Agenda. Business View. London: The Economist Newspaper Limited, 3. www.economist.com/business/displaystory.cfm?story_id=1 1482838.

The anonymous author of this article critiques an April 2008 report released by the Brookings Institute and the Information Technology & Innovation Foundation, two Washington, D.C., think tanks. Home to Benjamin Franklin, Eli Whitney, the Wright brothers, and Jonas Salk, the United States has prided herself on her track record of entrepreneurial inventiveness. The U.S. business climate-historically conducive to protecting intellectual property rights and nurturing adventurers-will stagnate without increased federal funding for inventors, according to the think-tank fore- cast. The author disagrees with this solution, citing as an example the small surgical technology firm that displaced the now-defunct Bear Stearns on the S&P.

Barrett, Mike; and Mark Simmonds. (January 1, 2009). Creativity on Tap. Training Jour- nal, pp. 34-38.

Two British marketing coaches authored a four-part series about coupling business processes with personal development. The article is packed with illustrations, graphs, and tables demonstrating the inextricable link between a person's social interac- tions and his or her creativity. Cooperative teams have the potential to incubate the most revolutionary innovations; powerful is the team whose members are commu- nicative, receptive, and at ease with each other. The authors attempt to pin down the ephemeral subtleties that can help or hinder a group's collective productivity. Through several anecdotal examples, the authors package the key ingredients nec- essary for a fruitful group endeavor.

Baucus, Melissa S.; William I. Norton, Jr.; David A. Baucus; and Sherrie E. Human. (2008). Fostering Creativity and Innovation without Encouraging Unethical Behavior. Journal of Business Ethics, vol. 81 , no. 1, pp. 97-115. Available from: ABI/INFORM Global. Accessed March 11, 2009, Document ID: 1502952361.

The principal author of this article is an entrepreneurship professor at the University of Louisville. Interested in scandals in the business sector; the author-in this

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END NOTES

article-illustrates the ethical dilemma inherent in contemporary innovation and creativity models. Every MBA go-getter and corporate pedant knows the cliche recipe for success: buck the system, rock the boat, think outside the box, throw caution to the wind, defy the odds, eliminate "can't" from the vocabulary, take no prisoners, etc. The article includes empirical research data suggesting this puffy rhetoric is ineffective and outdated; businesses want employees to toe the line.

Hamel, Gary. (February 2009). Moon Shots for Management. Harvard Business Review, vol. 87, no. 2, pp. 91-98.

This article details the results of a study conducted by the Silicon Valley's Manage- ment Lab. Founded by professors from the London Business School and funded in part by UBS, the Management Lab collaborates with corporations to design original management strategies. In May 2008, the Lab organized an effort to describe a plan for managers in the next century. The "moon shots" to which the author refers are objectives for tomorrow's business managers. Among these aspirations are impera- tives to better maximize employees' talents and resourcefulness.

Harrison, Sam. (January 1, 2009). Be Inspired to Innovate. Communication World, pp. 17-20.

The author of this article compares entrepreneurial innovators to gamblers at a Las Vegas casino. Just as intelligent blackjack or baccarat players devise strategies to improve their chances of a winning hand, so can entrepreneurs train their brain- storming process for optimal success. The author purports, human creativity is not haphazard; entrepreneurs can develop a mechanism to effectively nurture and channel their bright ideas in order to beat bankruptcy and stave off insolvency, for example. Mr. Harrison, in his article, provides a five-step guide to sharpening the focus of the mind's eye to achieve practical results.

Newman, Rick. (September 25, 2006). Lessons from the Rule Breakers: These "Maver- icks" at Work Use Fresh Thinking to Win at Business. U.S. News & World Report.

Rick Newman, journalist for U.S. News & World Report, in this article reviews yet an- other addition to the how-to-succeed-in-business literature: Mavericks at Work: Why the Most Original Minds in Business Win by William Taylor and Polly LaBarre. Published in 2006, the book includes profiles of 32 entrepreneurs of note; these "mavericks," as the title suggests, have gone against the grain of traditional busi- ness norms and been rewarded with success. Rick Newman condenses the book into five key tips for would-be innovators stuck in the 9-to-5 grind.

Petersen, Chris. (October 22, 2008). Inspiring Creativity: The Big Ideas. U.S. Business Review, pp. 8-9. Available from: Schofield Media ltd. Accessed March 11, 2009. www.usbusi ness-review.com/content/view/1 07 4/31/.

This article is a brief exploration into the whys and wherefores of business produc- tivity, which, opines the author, is closely related to business creativity. Though creativity and productivity are equally important to the successful functioning of the business, enforcing employee creativity is a decidedly more elusive task. The author illustrates four insightful guidelines for motivating imagination and boost- ing a business's creativity quotient.

1. For an in-depth presentation on focus group interviews in general and quanti- tative applications, see "Conference Focuses on Focus Groups: Guidelines, Re- ports, and 'the Magic Plaque,"' Marketing News (May 21, 1976), p. 8; Keith K. Cox, James B. Higginbotham, and John Burton, "Application of Focus Group Interviews in Marketing," Journal of Marketing 40, no. 1 (January 1976), pp. 77-80; and Robert D. Hisrich and Michael P. Peters, "Focus Groups: An

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CHAPTER 4 CREATIVITY AND THE BUSINESS IDEA 123

Innovative Marketing Research Technique," Hospital and Health Service Administration 27, no. 4 (July-August 1982), pp. 8-21.

2. Knut Holt, "Brainstorming-From Classics to Electronics," Journal of Engineer- ing Design 6, no. 1 (1996), pp. 77-84.

3. A discussion of each of these techniques can be found in Robert D. Hisrich and Michael P. Peters, Marketing Decisions for New and Mature Products (Columbus, OH: Charles E. Merrill, 1984), pp. 131-46; and Robert D. Hisrich, "Entrepreneurship and lntrapreneurship: Methods for Creating New Companies That Have an Impact on the Economic Renaissance of an Area," in Entrepreneurship, lntrapreneurship, and Venture Capital (Lexington, MA: Lexington Books, 1986), pp. 77-104.

4. For a discussion of this aspect, see Charles H. Clark, Idea Management: How to Motivate Creativity and Innovation (New York: AMACOM, 1980), p. 47.

5. For a discussion of this technique, see J. Geoffrey Rawlinson, Creative Thinking and Brainstorming (New York: John Wiley & Sons, 1981 ), pp. 124, 126; and W. E. Souder and R. W. Ziegler, "A Review of Creativity and Problem-Solving Techniques," Research Management 20 (July 1977), p. 35.

6. This method is discussed in J. W. Haefele, Creativity and Innovation (New York: Van Nostrand Reinhold, 1962), pp. 145-47; Sidney J. Parnes and Harold F. Harding (eds.), A Source Book for Creative Thinking (New York: Charles Scribner's Sons, 1962), pp. 307-23; and Souder and Ziegler, "A Review of Creativity and Problem- Solving Techniques," pp. 34-42.

7. Alex F. Osborn, Applied Imagination (New York: Scribner Book Companies, 1957), p. 318.

8. Rawlinson, Creative Thinking, pp. 52-59. 9. For a thorough discussion of the collective notebook method, see J. W. Haefele,

Creativity and Innovation, p. 152. 10. Parnes and Harding, A Source Book for Creative Thinking, p. 308. 11. For a discussion of this approach, see M. 0. Edwards, "Solving Problems Cre-

atively," Journal of Systems Management 17, no. 1 (January-February 1966), pp. 16-24.

12. The procedure for parameter analysis is thoroughly discussed in Yao Tzu Li, David G. Jansson, and Ernest G. Cravalho, Technological Innovation in Educa- tion and Industry (New York: Reinhold, 1980), pp. 26-49, 277-86.

13. For some examples of this research and models, see Lenny Herron and Harry J. Sapienza, "The Entrepreneur and the Initiation of New Venture Launch Activi- ties," Entrepreneurship: Theory and Practice (Fall 1992), pp. 49-55; C. M. Gaglio and R. P. Taub, "Entrepreneurs and Opportunity Recognition," Babson Research Conference (May 1992), pp. 136-47; L. Busenitz, "Research on Entrepreneurial Alertness," Journal of Small Business Management 34, no. 4 (1996), pp. 35-44; S. Shane, "Prior Knowledge and Discovery of Entrepreneurial Opportunities," Organizational Science 11, no. 4 (2000), pp. 448-69; Hean Tat Keh, Maw Der Foo, and Boon Chong Lim, "Opportunity Evaluation under Risky Conditions: The Cognitive Process of Entrepreneurs," Entrepreneurship: Theory and Prac- tice (Winter 2002), pp. 125-48; and Noel J. Lindsay and Justin Craig, "A Frame- work for Understanding Opportunity Recognition," Journal of Private Equity (Winter 2002), pp. 13-25.

14. For a detailed description of this process, see Robert D. Hisrich and Michael P. Peters, Marketing Decisions for New and Mature Products (Columbus, OH: Charles E. Merrill, 1991), pp. 157-78.