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Chapter 5

The Opportunity:

Creating, Shaping,

Recognising, Seizing

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Think Big Enough

Difference between:

Growth and equity entrepreneurs.

Traditional small business owner.

Entrepreneurs think:

BIGGER

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Opportunity Through a Zoom Lens

Opportunity recognition process is: Complex

Subtle

Situational

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Transforming Caterpillars into

Butterflies

Turning ideas into opportunities.

Highly dynamic.

Work of art.

No set formula.

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New Ventures

Fundamental realities Most new ventures are works in process and

works of art.

Most business plans are obsolete at the

printer. Speed, adroitness of reflex, and adaptability

are crucial.

The key to succeeding is failing quickly and

recouping quickly.

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New Ventures

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Fundamental realities Success is highly situational, depending on

time, space, context, and stakeholders.

The best entrepreneurs specialise in makingnew mistakes only.

Starting a company is much harder than itlooks, or you think it will be; but you can last alot longer and do more than you think if you donot try to do it solo.

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When is an Idea an Opportunity?

Create or add significant value to a customeror end user.

Solve a significant problem, remove a seriouspain point, or meeting a significant want orneed.

Have a robust market, margin andmoneymaking characteristics.

Share a good fit with founder(s) andmanagement team at the time and

marketplace long with an attractive risk-reward balance.

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Search for Sea Changes

We look for ideas that will change the waypeople live or work.

Arthur Rock Venture capitalist

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Opportunity Recognition

Possessing information necessary to identifyan opportunity.

Cognitive style necessary to exploitopportunity.

Role of context in mediating both.

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The Experience Factor

Experience vital in looking at new ventureideas.

Ability to recognise a pattern and opportunitywhile it is still taking shape patternrecognition.

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Enhancing Creative Thinking

Used in recognising opportunities. Can be learned or enhanced.

Living/thinking tends to be defined byothers/institutions.

Impact of social pressures.

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Brainstorming Rules

Define your purpose. Choose participants.

Choose a facilitator.

Brainstorm spontaneously, copiously.

No criticisms, no negatives.

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Brainstorming Rules

Record ideas in full view. Invent to the void.

Resist becoming committed to one idea.

Identify the most promising ideas.

Refine and prioritise.

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Evaluating

Criteria for evaluating venture opportunity: Industry and market

Economics

Harvest issues Competitive advantage issues

Management team issues

Personal criteria

Strategic differentiation

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Screening Opportunities

Opportunity focus: Point of departure for screen opportunities

NOT: Strategy

Finance/spread sheet

Company value/ownership issues

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Gathering Ideas (1)

Sources: Existing businesses

Franchises

Patents

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Gathering Ideas (2)

Product licensing

Corporations

Not for profit research institutes

Universities

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Industry and Trade Contracts

Customers

Distributors and wholesalers

Competitors

Former employers Professional contacts

Consulting

Networking

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Shaping an Opportunity

Data about: Market characteristics

Competition

Inverse relationship between data availability

and real potential of an opportunity.

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Issues of Data Gathering

Sorting the wheat from the chaff (or the usefulfrom the not useful).

Conflicting information.

Reliability and validity of information. Ethical versus legal.

Means versus ends.

How far wouldYOU go in the hunt forinformation?

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Sources

Guides and company information in the publicdomain.

Internet (issues of validity and reliability ofsites).

Journal articles (includes all media not justacademic sources).

Statistics (but remember lies, damned lies,and statistics).

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Other Sources

Trade associations

Employees

Consulting firms

Market research firms Key members of the supply/value chain

Public filings

Networks

Other