This course will explore the earlier stages of the entrepreneurial venture process across four modules. The modules will examine the nature of growth and error in entrepreneurial settings and how to manage resources in those settings. In addition, the modules will explore the emergence and existence of entrepreneurial opportunities, the formulation of ideas in relation to those opportunities, and how those opportunities and ideas influence entrepreneurial phenomena. Finally, the course modules will focus on how business concepts underlie compelling entrepreneurial missions that provide guidance to the evolution of a venture’s business model and future strategic planning.
Where Do Entrepreneurial Ideas Come From?
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From the course by University of Illinois at Urbana-Champaign
Entrepreneurship I: Laying the Foundation
114 ratings
University of Illinois at Urbana-Champaign
114 ratings
Course 5 of 7 in the Specialization Innovation: From Creativity to Entrepreneurship
From the lesson
Module 1: Introduction to Entrepreneurship
This module is focused on how an innovator can get started on his or her entrepreneurial journey.
Meet the Instructors
Thomas E. ParkinsonVisiting Professor
University of Illinois College of Business
Welcome back. In this lesson,
I'm going to talk with you about opportunity recognition.
Where do good ideas for new ventures come from?
Here's my word cloud for this lesson,
it should give you some clues.
Customers, markets, and personal experiences are keys.
Let's come back to our definition of entrepreneurship:
the discovery, evaluation, and exploitation of opportunities.
It starts with discovery.
Colleen DiBaise starts off her book,
Start a Successful Business:
Expert Advice to Take your Startup from Idea to Empire,
with the five most common sources of ideas for entrepreneurs.
A daily life or work experience, an emerging trend,
a specific market gap,
a drive to help others in new ways,
and a special skill or expertise that the founder has.
What most of these have in common is that they stem from experience.
The founder's personal experience in his or her daily life,
the founders understanding of a market that allows him or her to
spot gaps or understand the likely impact of emerging trends,
and the skills that the founder has developed that can be
adapted to help others or address customer needs.
Most successful entrepreneurs do have experience,
which perhaps suggests that it's a good thing that this course is being offered as part
of an online MBA program rather than as a course for undergraduates.
In a Kauffmann Foundation survey of tech company founders,
the median age of the founders when they started their companies was 39.
Twice as many of the founders were over 50 as we're under 25.
And, 92 percent of them had
bachelor's degrees and almost a third of them had master's degrees.
The stereotype of the founder who dropped out of
college to launch a tech unicorn may be just that.
In an older survey of Inc. 500 entrepreneurs. William Bygrave found that
more than 80 percent of the founders got
their new venture ideas in their own or a related industry.
Again personal experience is the source of new venture ideas.
Entrepreneurs who have first-hand experience
can have a better understanding of customer needs.
In order to solve a customer's problem it's helpful to understand that problem fully,
and what better way to gain
an understanding than to have dealt with that problem yourself.
What's more, having firsthand experience usually means that you'll have
a better understanding of the solutions that others are offering
and why they do or don't work well for customers.
Experience can also help you make better business and revenue model assumptions.
What price my customers be willing to pay for a solution?
What costs are likely to be involved in delivering that solution?
Finally, having experience in an industry should mean
that you can more easily find a market entry point,
through contacts with people you know, and who know you.
Starting a successful new venture can also be, at least in
part, a matter of being in the right place at the right time.
Or perhaps, I could say a matter of being in the wrong place at the right time
because two of the most common triggering events for
entrepreneurs are job losses and job dissatisfaction.
Sometimes it takes a shove from behind for an entrepreneur to
decide that now is the time to pursue that startup idea.
Going back to school,
a move to a new town,
marriage or divorce, having kids, or having your kids leave the nest.
These can all be events that encourage someone to consider
starting a new business as a viable career option.
The same is true for personal or business challenges,
if you've been dealing with a problem for
some time and you've been thinking there's got to be
a better way then you're much more likely to take up
the challenge of a new business when you finally find that better way.
But, good ideas don't always happen by themselves.
Brainstorming is an important part of the design thinking process that
many innovators and entrepreneurs use to develop solutions to problems.
It starts with documenting everything you know about
a task you need to complete or a problem you need to solve.
Are you alone? Or are there others like you who have the same tasks
problems, needs and wants?
Where are new technologies or trends happening
that could exacerbate or alleviate the problem?
Then it involves thinking up a wide range of alternative solutions.
Design thinking has involved as a methodology that
designers, innovators, and entrepreneurs use to identify opportunities.
It's a solution focused and action-oriented approach,
meaning that the emphasis is on
identifying and testing a wide range of potential solutions
rather than relying on the conventional wisdom surrounding a market need.
It encourages creativity in order to identify potential value creating innovations.
And, it involves engaging with customers to test and refine
solutions before committing significant resources to implementing them.
For all of these reasons, design thinking is very
compatible with the lean startup approach to entrepreneurship.
Design thinking is essentially a four-step process.
It starts with defining a problem as comprehensively as possible.
Then, it involves using teamwork to come up with many potential solutions.
There are no bad ideas,
out of the box thinking is encouraged at this point.
The next step, is to select one or more of the potential solutions,
refine them, and test them with customers.
Listening to the customers is critical.
You may go through several iterations of testing,
listening to customers, and refining the solution based on their feedback.
Finally, it involves picking a winner from among the most promising solutions,
committing resources to it,
and executing on a strategy to deliver it.
Here's a design thinking exercise for all of you:
Think of a problem that you face on a regular basis,
either at work or in your personal life.
Define the problem as completely as possible what does the problem cost you in money,
in time, or in some other less tangible costs, such as negative feelings or discomfort.
With a group of colleagues, preferably coming from diverse backgrounds,
brainstorm to identify several potential solutions to the problem.
Narrow the list down to three or four that seem most feasible.
Then test each of the proposed solutions,
both yourself and with other people you know who have the same or similar problems.
Repeat the process, refining the solution each
time based on the feedback you've received.
Then, select the solution that seems most likely
to be accepted by the largest number of people who have the problem.
Identify the resources, financial and otherwise,
that will be necessary in order to fully develop and deliver the solution.
Once you've done that, identified a customer problem and
defined the potential solution, you have the beginnings of a value proposition.
In general, most business to consumer, or B2C, value propositions
deliver value to customers in one of four ways.
By helping the customers save money.
By helping them save time.
By helping them enhance their status in some way.
Or, by helping them gain some sort of personal fulfillment.
These last two value propositions can be pretty
fuzzy, and that's because consumers are people.
Sometimes they make decisions that are hard to understand.
What's the value proposition behind a Rolex watch when a Time X tells time just as well.
Business to business value propositions can be a little clearer,
although you have to keep in mind that business buying decisions are made by people too.
Most of the time you'd expect to see that
a B2B value proposition will help the customer make more money,
help the customers save money,
help the customer save time,
or help the customer reduce a risk that threatens the business in some way.
An example of this last value proposition might be an insurance policy,
or a process that helps the business comply with a regulatory requirement.
Speaking of regulations, changes in government regulations can often drive
the development of new products or services that become entrepreneurial opportunities.
So can demographic changes like the aging of the US population.
Changes within an industry, like changes in value or supply chains
and distribution channels, can often create opportunities for new businesses too.
Moore's law, the observation that
computer processing power roughly doubles every year, has made
it possible for countless hardware and software companies
to bring new products and services to market.
Disruptive technologies, like driverless cars, will create opportunities for
new projects ranging from traffic management systems to smart parking meters.
It's also common for entrepreneurial ideas to
come from looking at new ways to segment a market.
If you can segment a market to identify
the customers who have the greatest and the most immediate need for
a solution, you may be able to profit by delivering
a high-end, or a customized solution, that the broader market would never pay for.
Or, you can identify products or services that have been successful in
certain industries or geographic regions and bring them to new industries or regions.
Like a pod hotel that provides cheap but tiny accommodations.
Originally popular in Japan, now being introduced with
some tweaks to make them a bit more acceptable in places like New York City.
Let's wrap this lesson up by discussing the type of self-assessment
that you should do before you embark on your own entrepreneurial journey.
I'd encourage each of you to take stock of your personal aspirations.
What do you really want to achieve?
What sort of lifestyle are you seeking for yourself and your family?
What level of income do you need or aspire to?
What type of company do you dream of building?
A nice, solid lifestyle or family business?
Or a fast growth company that'll be sold to the highest bidder within a few years?
And, what's your personal tolerance for risk?
Can you personally manage the risk, or will
the sleepless nights take too much of a toll on you and your family?
You should also be asking yourself if you're the right person for the job.
Would you hire yourself for the position?
Or would you look for someone else who has
more industry experience or product development expertise?
Do you have the access to your target market that you'll need in order to be successful?
Can you build and lead the kind of team that you'll need?
Can you raise the money and assemble
the other resources that the business will need in order to grow?
If your answers to most of these questions are yes, then you may have a decent shot.
You'll want to surround yourself with a strong team of people with complimentary skills.
In our next lesson we'll talk about how best to communicate
your vision in order to enlist the support you're going to need.
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