Opportunity Recognition… Value, Trend Analysis, & Design Thinking Dr. Robert McNamee

Academic Director, Innovation & Entrepreneurship Institute Assistant Professor, Strategic Management Department If you enjoy these topics check out… • SGM 0827. Creativity & Organizational Innovation • SGM 3501. Entrepreneurial & Innovative Thinking

What do you sell??

• Companies sell products / services • Companies [should] create / provide / sell value!!

– Understanding how your company creates value, and looking for ways to add more value, are critical elements in developing a competitive strategy. – Michael Porter discussed this in his influential 1985 book "

Competitive Advantage

," in which he first introduced the concept of the value chain.

– Focuses on systems and how inputs are changed into the outputs purchased by consumers

What is Value?

• Value (customer / consumer POV) – What does s/he do and need?

– What problems does s/he need to solve?

– What improvements does s/he look for?

– What does s/he value?

• Value is subjective… vs.

vs.

Discussion – Examples of Value

• Automotive Industry – What value is provided by a car?

– Get you from place A to place B… • “in style”… • reliably & safely… • maybe with a number of other people or lots of stuff… – Maybe while giving you an exciting “driving experience” or entertaining you on the way… – Creates a semi-private mobile space—a home away from home… • Telecommunication – What value is provided by a mobile phone?

– Connects you to others across town / around the world – Clear signal / no dropped calls / rapid support – Offers entertainment options (“packages”) – Simple billing

Value Chain Activities

  A set of

activities

that an organization carries out to create value for its customers

Value Created – Cost to Create that Value = Margin / Profit

Think about all the activities that are involved in turning an egg into a chicken sandwich Or cocoa beans into truffles & then into a $25k dessert…

$2.36 / kg $2,600 / lb $25,000

   Recognizing Opportunities & Generating Ideas Creative idea is a methods, outcomes, etc… that provides potential value  new connection between concepts, …for an existing problem/need in a new or improved way  …for a new problem/need/opportunity Opportunity (Probortunity):  Needs, wants, problems, & challenges  Favorable set of circumstances that creates a demand for a new product, service, business, or other innovation An idea opportunity match offers promise if…  Attractive (your idea is better than other options)    Durable (the need will be around for a while) Timely (you are in the ‘window of opportunity’) Associated with creating value for consumer / customer (Someone will buy it / delivers substantially more value than corresponding costs)

Opportunities vs. Ideas…

• You can “kill” an idea but you can never kill an opportunity!!!

– If you have identified a valid need (opportunity), this need still remains even if your idea turns out to impractical or unfeasible… – If you have identified an attractive opportunity spend the time to diverge (consider multiple ideas) and evaluate / evolve your ideas.

• On the other hand an opportunity is not the same as an innovative idea – beware of flying cars & time machines!

– We all know it would be great to have a flying car • Be realistic -- others have identified the opportunity before • We don’t have a cost-effective, technologically-feasible solution – Ask yourself – what makes this solvable now (and by me)?

– If you are not sure an idea is technologically / cost feasible… • Either work hard to figure out if it is feasible / practical • Or move on to think about other opportunities

ACTIVE SEARCH / PROBLEM SOLVING (e.g., Design Thinking) It has been said that all new ideas come from outside of ourselves

Opportunity Recognition

ENTREPRENEURIAL ALERTNESS (e.g., Trends) PRIOR KNOWLEDGE + SOCIAL NETWORKS

Prior Knowledge & Social Networks

(not Facebook) • Strong Ties – Those you know well / see frequently – Often similar to you – Triadic Closure • You get to know the people your close friends know well • Creates tight cliques w/ redundant knowledge • Weak Ties – People you don’t know well / don’t see often – Source of new perspectives, ideas, knowledge (& jobs) – Brokerage > Innovation Opportunity • When a person connect two disconnected networks

Entrepreneurial Alertness

• Opportunities – Unexpected Occurrences • Unexpected Successes as well as Failures – Incongruities • When things don’t match up (gaps) – Process Needs • When something just does not work • We will look at process innovation (but also products) – Changes in Perception • If you can see things from a different angle you may come up with some unique ideas Drucker: Discipline of Innovation http://mis.postech.ac.kr/class/MEIE780_AdvMIS/2012%20paper/Part1%2 0(Pack1-3)/01_intro/1-2)%20The%20Discipline%20of%20Innovation.pdf

Entrepreneurial Alertness

• Opportunities – Industry / Market Changes • Industries and Markets evolve – Demographic Changes • Millenials, Baby Boomers, etc… – New Knowledge / Technologies

Obvious opportunities are frequently no longer opportunities

• Stand on the shoulders of giants (e.g., $9 bike, $50 tablet) • One IMPORTANT take away – Innovation can be systematic and requires hard work – “Know when to research and when to brainstorm” Drucker: Discipline of Innovation http://mis.postech.ac.kr/class/MEIE780_AdvMIS/2012%20paper/Part1%2 0(Pack1-3)/01_intro/1-2)%20The%20Discipline%20of%20Innovation.pdf

PEST, PESTLE, etc… • Political • Economic • Social • Technological • [Legal] • [Environmental]

These are high level macro trends that affect all industries… http://www.youtube.com/watch?v=YFUMZ_o6l2s

Active Problem Solving… Design Thinking

• Tim Brown & IDEO… “…imbues the full spectrum of innovation activities with a human centered design ethos…” “…powered by a thorough understanding, through direct observation, of what people need and want in their lives”

How Design Thinking Happens…

• “The myth of creative genius is resilient: We believe that great ideas pop fully formed out of brilliant minds, in feats of imagination well beyond the abilities of mere mortals…” • In reality innovation is “…the result of hard work augmented by a creative human-centered discovery process and followed by iterative cycles of prototyping, testing, and refinement.

http://www.youtube.com/watch?v=JkHOxyafGpE

Design Thinking Mindsets…

http://dschool.stanford.edu/wp content/uploads/2011/03/BootcampBootleg2010v2SLIM.pdf

Ready, Fire, Aim

Design Thinking Process