Chapter 6

2. Chapter 6 Opportunity and the creative pursuit of innovative ideas

3. Your viewpoint? ‘Imagine a world in which everything is so intelligently designed that human activity generates a delightful, restorative ecological footprint.’ William McDonough, The Natural Advantage of Nations ? NASA Expedition 23 crew

4. Objectives • To explore how ideas fit within the opportunity identification process • To define and illustrate the sources of opportunity for entrepreneurs • To identify the four models of market opportunity: competition, innovation, alertness and social need • To examine the role of creativity and to review the major components of the creative process: knowledge accumulation, incubation process, idea evaluation and implementation • To present ways of developing personal creativity: recognise relationships, use lateral thinking, use your ‘brains’, think outside the box, identify arenas of creativity and work in creative climates • To introduce how innovation can inspire opportunity through invention, extension, duplication and synthesis • To review some of the major misconceptions associated with innovation and to define the 10 principles of innovation • To consider the challenges and changing dynamics of social and sustainability innovation

5. But first ? Come up with the worst ideas for a start-up that you can think of. Andrew McCluskey, licenced under CC Attribution 2.0 creativecommons.org/licenses/by/2.0/

6. Ideas and the search for opportunity: Do entrepreneurs have ESP? • Do entrepreneurs have some kind of extrasensory perception (ESP) to be able to see what others cannot see over the horizon? • Opportunity is central to entrepreneurship. • Both opportunity creation and opportunity recognition are fundamental to value creation. • Innovation in its purest sense refers to newness. • But …just because something is new does not mean it will automatically create value. r. nialbradshaw, licenced under CC Attribution 2.0 creativecommons.org/licenses/by/2.0/

7. Sources of innovative ideas • How to take advantage of ideas that create opportunities • Trends • Unexpected occurrences • Incongruities • Process needs • Industry and market changes • Demographics • Perceptual changes • Knowledge-based concepts Duncan Hull, licenced under CC Attribution 2.0 creativecommons.org/licenses/by/2.0/

8. Models for spotting entrepreneurial opportunities

9. Starting with a‘static economy’ • Balance between supply and demand • Each competitor maintains market share • No new competitors to disrupt the economy • This market is ripe for entrepreneurial opportunity!

10. Used under CC Attribution 3.0 Unported creativecommons.org/licenses/by/3.0/deed.en Model 1: Competition Attributed to Richard Cantillon, first entrepreneurship economist • Entrepreneur identifies opportunities where: • demand is sufficiently high to be able to obtain a high selling price while being aware of opportunities to obtain goods and services at low buying prices. • Also known as ‘arbitrage’: purchasing low and selling high. • New opportunities replace existing companies or drive them out of business.

11. Model 2: Innovation First elaborated by Joseph Schumpeter (1883 – 1950 • Disrupts existing markets and create new ones • Disrupts equilibrium • Creates demand • Cannibalises existing businesses and causes losses in an economy, but overall output is increased.

12. Model 3: Alertness Joseph von Mises, popularised by Kirzner • Opportunities are already ‘out there’ waiting to be discovered. • But the entrepreneur recognises them due to superior knowledge of the market, industry, technology and/or networks. • The entrepreneur has the advantage of seeing things differently.

13. Model 4: Social need • Social innovation seeks to satisfy needs unlikely to be satisfied by the market. • Uses market-based opportunities to address a social problem. • Market-based solution to address a social problem. • Customers, suppliers or workforce are different. • Venture has a social mission, be it an environmental purpose, animal welfare etc. • What are some examples of social innovations?

14. Examples of social innovations • Community-centred planning • Emissions trading • Fair trade • Habitat conservation • International labour standards • Microfinance • Socially responsible investing • Supported employment greensefa, licenced under CC Attribution 2.0 creativecommons.org/licenses/by/2.0/

15. Being creative ? • How can you become more creative? • What are some concrete ways you have practised? Missy Schmidt, licensed under CC Attribution 2.0 creativecommons.org/licenses/by/2.0/

16. Developing your entrepreneurial capacity: four phases • Phase 1: Background or knowledge accumulation: Entrepreneurs practise the creative search for background knowledge • Phase 2: The mind incubation process: Subconscious mulls over the tremendous amounts of information • Phase 3: The idea experience: A bolt out of the blue • Phase 4: Evaluation and implementation: Reworking of ideas to put them into final form

21. Entrepreneurial imagination and creativity • To see opportunities, entrepreneurs blend imaginative and creative thinking with a systematic, logical process ability • Asking ‘What if …?’ and ‘Why not …?’. • Seeing opportunities where others see problems.

22. The nature of the creative process Your creative potential is something that can be developed and improved. Creativity is not some mysterious and rare talent reserved for a select few. It is a distinct way of looking at the world that is often illogical. The creative process involves seeing relationships among things others have not seen. ‘Human creativity [is] the key factor in our economy and society … we now have an economy powered by human creativity. Creativity … is now the decisive source of competitive advantage.’ Richard Florida

23. How to develop your creativity • Lateral thinking – purposefully generate new ideas • Vertical thinking – following logical steps • Think outside the box – challenge assumptions • Recognise relationships • Go with the flow • Use your brain

24. Lateral and verticalthinking breaking out of the concept prisons of old ideas

25. Thinking outside the box • Understand the problem • Play a child • Play an external observer • Disassemble the problem • Reframe • Imagine the opposite

26. Recognising relationships • Seeing new and different relationships among objects, processes, materials, technologies and people • Look for different or unorthodox relationships among the elements and people around you

27. Using your brains The right brain hemisphere helps understand analogies, imagine things and synthesise information. The left brain hemisphere helps analyse, verbalise and use rational approaches to problem solving.

28. Ways to develop left- and right-hemisphere skills

29. People are inherently creative • Idea creativity • Material creativity • Organisation creativity • Relationship creativity • Event creativity • Inner creativity • Spontaneous creativity

30. Creating the right setting for creativity Wesley Fryer, licenced under CC Attribution 2.0 creativecommons.org/licenses/by/2.0/, cropped from original • Trustful management • Open channels of communication • Considerable contact and communication with outsiders • Variety of personality types • Willingness to accept change • Enjoyment in experimenting with new ideas • Little fear of negative consequences • The use of techniques that encourage ideas • Sufficient financial, managerial, human and time resources ‘Total Transportation Play Town Rug’ by kidcarpet.com

31. Innovation and the entrepreneur • ‘Innovation is the combination of an inventive process and an entrepreneurial process to create new economic value for defined stakeholders’ – Kevin Hindle

32. The innovation process • The process by which entrepreneurs convert opportunities (ideas) into marketable solutions. • The means by which entrepreneurs become catalysts for change. • Most innovations result from a conscious, purposeful search for new opportunities

33. Disruptive technologies

34. Four basic types of innovation

35. Innovation in action New Zealand’s Gibbs Aquada was designed from the ground up to perform well on land and in water.

36. Is climate change so irreversible that entrepreneurs cannot tackle it? • Entrepreneurs have already created solutions: • protecting against chemical and nuclear accidents • stemming the spread of disease • stopping disasters and pandemics. • Do we believe that runaway climate change might defy entrepreneurs’ history of positive innovation? LucAleria, licensed under CC Attribution 3.0 creativecommons.org/licenses/by/3.0/deed.en

37. Innovations that caused global warming and innovations that could save us

38. Key concepts ? (Close your books.) • What is the difference between ‘creativity’ and ‘innovation’? • How many of the ‘principles of innovation’ can you recall?(There are 10 in all.)

39. Key concepts • Opportunity identification • Variety of sources, including disruptive technologies • Creativity • Varying aptitude, but can be developed • Four phases and a range of techniques • Innovation • Four types and 10 principles • Concepts include cradle-to-cradle and social innovation