2.01 Part 2

1. Employ entrepreneurial discovery strategies to generate feasible ideas for business ventures/products. 2.01 Part 2

2. Discuss differences between entrepreneurs and non-entrepreneurs that can aid entrepreneurs in perceiving opportunities.

3. Some characteristics commonly associated with entrepreneurs: • commitment and determination • leadership • opportunity obsession • tolerance of risk, ambiguity and uncertainty • creativity, self-reliance and ability to adapt • motivation to excel (Timmons 1994) • social nature Being social is important because “Building a company entails hiring, organizing, and inspiring a collection of people who typically need to get start-up funds from others, to buy things from other people, and, ultimately, flourish or fail together as a result of the ability to sell things to yet another group of people.” • Byers, T., Kist, H. & Sutton, R.I. (1997, October 27). Characteristics of the Entrepreneur: Social Creatures, Not Solo Heroes. Retrieved April 19, 2011, from http://www.skillcast.co.uk/documents/49.html

4. An entrepreneur also capitalizes on: • Life experiences • Person’s position in a social network • Nature of the search process a person uses • Ability to focus on the opportunities • Intelligence Perhaps most importantly, entrepreneurs also tend to be “entrepreneurially alert.” Are you always looking for new opportunities? If so, then you are more apt to see them when they arise.

5. Distinguish between scientific discovery and circumstantial discovery.

6. Scientific discovery: Occurs when a physical or technological observation is made • Circumstantial discovery: Occurs when an observation is made based on specific knowledge of time, place, or circumstance

7. Describe areas of entrepreneurial discovery.

8. Areas of Entrepreneurial Discovery • The introduction of a new good or a new quality of a good • The introduction of a new method of production • The opening of a new market • The conquest of a new source of supply of raw materials or components • The reorganization of any industry

9. Examples: • The introduction of a new product or an improved product: • MP3 player—Most common area of innovation • Note the difference in the new invention of the MP3 player from improved MP3 player with a screen

10. The introduction of a new method of production: • Henry Ford’s invention of the assembly line

11. The opening of a new market: • McDonald’s moving into China for the first time • Note that in addition to discovering the new market, this also requires an understanding of culture, laws, local buyer preferences and business practices, and a host of contact, communication, and transportation details referred to as "setting up a distribution channel."

12. The conquest of a new source of supply of raw materials or components: • Moving a shoe manufacturer from the U.S. to Mexico to access cheaper labor • Finding a new source of oil previously not discovered

13. The reorganization of any industry: • Several years ago, the U.S. government believed that one telephone company, Bell, had formed a monopoly. The company was broken up, making the way for new, smaller telephone companies to form.

14. Explain techniques that entrepreneurs can use to recognize opportunities. Examples: Analogies Pattern RecognitionExperiments Simulation of Prototypes Reverse Engineering

15. Analogies • Comparing an unfamiliar abstract idea with an already known mental image. It's like painting a picture in the listener's mind. What the utilization of analogies and comparisons does is to change the frame of reference and to force thinking in new and interesting ways. If a person is only thinking of the problem in its own terms, the number of possible solutions is very limited. By making analogies, and forced comparisons, the opportunities for new and creative solutions are multiplied many times over. • Hurlbert, W. (2006, March 2). Blog Business World: Analogies: Making the Connection. Retrieved April 12, 2011, from http://blogbusinessworld.blogspot.com/2006/03/analogies-making-connection.html

16. Pattern Recognition • Many problems can be diagnosed and remedied in a pattern-recognition mode. Like a doctor looking to diagnose an ailment, look for patterns occurring. For example, if you're always thirsty, you urinate frequently, you're losing weight, and your eyesight is blurry, you have diabetes.

17. Prototype • Definition: a 3-dimensional version of your vision http://www.realclearscience.com/cgi-bin/mt/mt-search.cgi?blog_id=2&tag=Rapid%20prototype&limit=20

18. Prototypes are Helpful to Discovery • It enables you to test and refine the functionality of your design. • Sure, your idea works perfectly in theory. It's not until you start physically creating it that you'll encounter flaws in your thinking. • That's why another great reason to develop a prototype is to test the functionality of your idea. • You'll never know the design issues and challenges until you begin actually taking your idea from theory to reality. • Monosoff, T. (2011). Entrepreneur.com. Creating a product prototype. Retrieved April 19, 2011, from http://www.entrepreneur.com/startingabusiness/inventing/inventionscolumnisttamaramonosoff/article80678.html

19. Prototypes Continued • It makes it possible to test the performance of various materials. • For example, your heart may be set on using metal—until you test it and realize that, say, plastic performs better at a lower cost for your particular application. The prototype stage will help you determine the best materials. • Monosoff, T. (2011). Entrepreneur.com. Creating a product prototype. Retrieved April 19, 2011, from http://www.entrepreneur.com/startingabusiness/inventing/inventionscolumnisttamaramonosoff/article80678.html

20. Prototypes Continued • It'll help you describe your product more effectively with your team, including your attorney, packaging or marketing expert, engineers and potential business partners. • It will encourage others to take you more seriously. • Monosoff, T. (2011). Entrepreneur.com. Creating a product prototype. Retrieved April 19, 2011, from http://www.entrepreneur.com/startingabusiness/inventing/inventionscolumnisttamaramonosoff/article80678.html

21. Reverse Engineering • Definition: examining a completed product with the intent of understanding the technology and process used in its design, manufacture, or operation • Online Ethics Center. (2006, February 16). Benchmarking and reverse engineering. Retrieved April 19, 2011, from http://www.onlineethics.org/CMS/workplace/workcases/ti-ethics/benchmarking.aspx#revers

22. Discuss ways that entrepreneurs try to distinguish themselves from their competitors.

23. Determine your product/ideas major selling advantage: • What will make a customer buy you and not a competitor? • What makes your product different from the competition? • This may be a product feature, type of service provided, etc.

24. Discuss stages of entrepreneurial processes.

25. Discovery • The term ‘discovery’ has the connotation of literally removing the cover from something that already exists. I do not intend that meaning here. Here, discovery is synonymous with ‘invention’, but I don’t use that term because it is too much associated with technological invention, while I want to denote the emergence of new technology, organization and knowledge generally. – Bart Nooteboom, Tilburg University Nooteboom, B. (2005, April 25). Entrepreneurial roles along a cycle of discovery [CentER Discussion Paper No. 2005-43]. April 11, 2011, from http://ssrn.com/abstract=706902

26. Discovery • Entrepreneurial discovery is the oil that enables the market mechanism to operate and adapt so smoothly. • Entrepreneurial discovery occurs when a market participant notices what others have overlooked. Leithner, C. (2004, December 15). Entrepreneurship and intelligent investing. Retrieved April 11, 2011, from http://www.quebecoislibre.org/04/041215-5.htm

27. Example Warren Buffett discovered a lucrative opportunity (one of the first of many in his long and successful career) when he worked at Graham-Newman Corp. Mr. Buffett recalls that “Rockwood & Co., a Brooklyn based chocolate products company of limited profitability, had adopted [Last In First Out] inventory valuation in 1941 when cocoa was selling for $0.50 per pound. In 1954, a temporary shortage of cocoa caused the price to soar to over $0.60. Consequently Rockwood wished to unload its valuable inventory quickly. But if the cocoa had simply been sold off, the company would have owed close to a 50% tax on the proceeds. The 1954 Tax Code came to the rescue. It contained an arcane provision that eliminated the tax otherwise due on LIFO profits if inventory was distributed to shareholders as part of a plan reducing the scope of a corporation’s business. Rockwood decided to terminate one of its businesses, the sale of cocoa butter, and said 13 million pounds of its cocoa bean inventory was attributable to that activity. Accordingly, the company offered to repurchase its stock in exchange for the cocoa beans it no longer needed, paying 80 pounds of beans for each share. “For several weeks I busily bought shares, sold beans, and made periodic stops at Schroeder Trust to exchange stock certificates for warehouse receipts. The profits were good and my only expense was subway tokens.” Leithner, C. (2004, December 15). Entrepreneurship and intelligent investing. Retrieved April 11, 2011, from http://www.quebecoislibre.org/04/041215-5.htm

28. Evaluation “This evaluation of the opportunity is perhaps the most critical element of the entrepreneurial process, as it allows the entrepreneur to assess whether the specific product or service has the returns needed compared to the resources required. This evaluation process involves looking at the length of the opportunity, its real and perceived value, its risks and returns, its fit with the personal skills and goals of the entrepreneur, and its uniqueness or differential advantage in its competitive environment.” Hisrich, R. D., Peters, M. P., & Shepherd, P. D. (n.d.). http://www.sbaer.uca.edu/publications/entrepreneurship/pdf/01.pdf. Retrieved June 11, 2012, from Small Business Advancement National Center: http://sbaer.uca.edu/

29. Exploitation • The use or utilization, especially for profit • The exploitation of newly discovered oil fields. • Selfish utilization • He got ahead throughthe exploitation of his friends. • The combined, often varied, use of public-relations and advertising techniquesto promote a person, movie, product, etc. • An entrepreneur will identify market opportunities and use innovative approaches to exploit them. www.dictionary.com

30. Exploitation Continued • Entrepreneurs are opportunity-driven. Opportunity comes from changes in the environment, and one central characteristic of entrepreneurs is that they excel at seeing patterns of change. • Entrepreneurs are not resource-driven; while the manager asks, "Given the resources under my control, what can I achieve?" the entrepreneur asks "Given what I want to achieve, what resources do I need to acquire?" • It is the entrepreneur's drive to acquire resources in order to exploit opportunities that creates the high correlation between entrepreneurship and economic growth. http://en.wikibooks.org/wiki/Getting_Started_as_an_Entrepreneur/Opportunity/Entrepreneurship_Is

31. Activity Work in a group with two or three classmates to conduct research to identify five entrepreneurial discoveries and the areas of entrepreneurial discovery for each. Develop a profile of each entrepreneur, and compare their characteristics to determine their shared or similar traits that probably aided them in making the entrepreneurial discovery. Determine the techniques that the entrepreneurs used to recognize the opportunities. Record your findings, and as a group, present them to the class for discussion.