Business Idea Generation, Creative Thinking, Idea Screening and Business Plans

1. Business Idea Generation, Creative Thinking, Idea Screening and Business Plans Ken Hartviksen Will It Fly Workshop February 28, 2011

2. Agenda � Entrepreneurship II Purposeful innovation Road map from idea to commercialization Ideas vs. Opportunities Generating Ideas What to Do when momentum is lost Idea Generating Activity � Fibre is the focus Screening Ideas for opportunities

3. Characteristics of the Successful Entrepreneur

4. The Successful Entrepreneur

5. Innovation is a Purposeful Activity

6. Innovation has become a purposeful activity IDEO 3M

7. A Road Map from Idea to Successful new Business Opportunity

8. The Long Road to Success Ideas � opportunities � feasibility � business plan � implementation � evaluation � modification - management

9. Brainstorming New Product Innovations Screening Those Ideas Business Plan Implementation The Process

10. The Process - is like a funnel!

11. From Ideas to Opportunity Identifying Viable Business Opportunities

12. Business Ideas Are a �dime a dozen� Don�t fall in love with your own idea Don�t hide it under a tarp in the back yard Look before you leap (critically evaluate the potential for the business before starting) You have to screen from 100 to 1,000 different ideas before you find a true opportunity that fits you in this place and at this time. Avoid the service industry in a declining economy Avoid the retail industry in a declining economy Seek value-added, export-oriented businesses selling into growing markets

13. Idea versus Opportunity Ideas are �a dime a dozen� Opportunities are business ideas that offer the potential for a return on invested capital that more than offsets the costs of that capital on a risk-adjusted basis.

14. Ideas versus Opportunities Ideas Harvest heavy metal contaminants out of river bottoms using plants Opportunities Sell pollution solution technologies to companies under environmental cleanup orders.

15. The Ideal Opportunity (Heaven) A motivated and large market of customers prepared to pay any price for the product or service you offer Repeated purchases are necessary for customers to satisfy their demand Significant barriers of entry for any potential competitors preserving your market dominance for a long period of time Little or no capital investment required High profit margin (Selling price less cost to produce) Few employees and little demand on your time

16. Little Opportunity (Business Hell) Few customers, no repeat purchases, sporadic and unpredictable demand few barriers of entry for any potential competitors making it easy for anyone to enter the market to compete with you if you manage to develop the market Large initial and on-going capital investment required Low profit margin per unit (Selling price less cost to produce)

17. Creativity and Creative Thinking

18. Hard and Soft Thinking SOFT � often circular Non-judgmental - illogical Metaphor Dream Humour Ambiguity Play Approximate Fantasy Paradox Diffuse Hunch Generalization Child HARD � Linear critical - logical Logic Reason Precision Consistency Work Exact Reality Direct Focused Analysis Specifics Adult

19. Left-Mode (Hard-thinking) Verbal Analytic Symbolic Abstract Temporal Rational Digital Logical Linear Right-Mode (Soft-thinking) Nonverbal Synthetic Concrete Analogic Nontemporal Nonrational Spatial Intuitive Holistic Left-Mode and Right-Mode Characteristics

20. Mental Locks/Barriers to Creativity Focus on the right answer That�s not logical Follow the rules Be practical Avoid ambiguity To err is wrong Play is frivolous That�s not my area Don�t be foolish I�m not creative

21. Idea Generation

22. Generating New Business Ideas Techniques include: Group brainstorming/lateral thinking exercises Research � observation, enquiry, play, prototype, experiment Focus groups Surveys Analysis of and reflection on trends: Economy Society � social trends Technology Science Political and regulatory changes

23. Opportunities are spawned in changing circumstances chaos confusion inconsistencies lags or leads knowledge and information gaps vacuums in industry or markets Where are the opportunities?

24. Look for opportunities in the following: things that �bug� you things that bother others or stop people from doing what they want, when they want, and the price they want new advances in science and technology Solutions in one field being applied to another field look for problems that need to be solved changes in our world whether those changes be in: demography society technology science politics etc. Strategies for Spotting New Opportunities

25. When brainstorming, start to combine ideas. Use each as stepping stone to something else. Don�t be afraid to experiment. Example: Two ideas: pealing paint and gun powder ----I hate scraping old paint off the exterior of my house�..I wish sometimes that I could blast it off!!! (Of course, that would destroy the house�.but�) - maybe there is an additive that could be put in the paint before it is applied, that would allow us to trigger it�s easy removal. Importance of Lateral Thinking

26. Simile (Comparing things using �like� or �as�) Simile often give us ideas or insights that logical thinking cannot. Fibre is like glue. Different simile will give you a whole new perspective on what it is that you are examining. Fibre is like a sieve. Fibre is like gossamer. Use the insight provided by different simile to look for ideas! Example: Dolby is like a sonic laundry. It washes out all the noise or dirt from the sound without hurting the sound.

27. Use �What if� Questions Play with the idea Challenge the rules associated with the problem Be a magician Be a child Be ambiguous�and look for the possibilities (geeh�that pen is a pen, but it could be a pointer, a digging implement or even a weapon or projectile) Go �hunting� for ideas from other fields�ideas that could be creatively applied to your field of interest. (Like Guttenberg who used the coin punch and wine press ideas to invent the printing press.) Other Creative Thinking Techniques

28. At the edges of human experience: (at extremes) when you are tired when you are at rest when you are pressed by a deadline or are stressed when you are playing when you are on vacation when you are exercising Usually NOT when you are doing routine things!!!! Try doing something differently�live your day backwards�break the routine! Necessity is the Mother of Invention�but play must be the Father! When are you open to Creativity?

29. Brainstorming

30. Requires creative thinking (soft-thinking) Here are some suggestions to improve the brainstorming process: Choose a facilitator Small groups work better than large. Freewheeling is encouraged � the wilder the idea the better. Brainstorm spontaneously, copiously No criticism, no negatives Quantity � the greater the number of ideas, the greater the likelihood of finding useful ones. Record ideas in full view Invent to the �void� Resist becoming committed to one idea Combinations and improvements are encouraged � ideas of others can be used to produce still other new ideas. Identify the most promising ideas Refine and prioritize Brainstorming

31. Reverse Brainstorming

32. Reverse Brainstorming Like brainstorming EXCEPT criticism is allowed. Ask the question: �In how many ways can this idea fail?� After you have identified everything wrong about an idea, you discuss ways to overcome these problems.

33. Brainwriting Written form of brainstorming. (Bernd Rohrbach � Method 635) Use 5 minute intervals. Works best with 6 member groups. Each group member writes three ideas on small card in each 5 minute period. The card is passed to the next adjacent person � who writes down three new ideas on the same card � who passes it to the next person�until each form has passed all participants.

34. Problem Inventory Analysis Produce a list of problems with natural fibre. Identify and discuss products in each category that have the particular problem. Example using food: Psychological: Weight � fattening � empty calories Hunger � filling � still hungry after eating Thirst � does not quench � makes one thirsty Health � indigestion � bad for teeth � keeps one awake - acidity Sensory: Taste � bitter � bland � salty - sweet Appearance � colour � unappetizing - shape Consistency/Texture � tough � dry � greasy Activities Meal Planning - forget � get tired of it Storage � run out � package would not fit Preparation � too much trouble � too many pots � never turns out Cooking � burns - sticks Cleaning � makes a mess in oven

35. Problem Inventory Analysis � Example using food�.continued: Buying Usage: Portability � eat away from home � take lunch Portions � not enough in package � creates leftovers Availability � out of season � not in supermarket Spoilage � get mouldy � gets sour Cost � expensive � takes expensive ingredients Psychological/Social Serve to company � would not serve to guests � too much last minute preparation Eating alone � too much effort to cook for oneself Self-image � made by a lazy cook � not served by a good mother

36. Checklist Method Developing a new idea through a list of related issues: Put to other uses? New ways to use as is? Other uses if modified? Adapt? What else is like this? What other ideas does this suggest? Does past offer parallel? What could I copy? Whom could I emulate? Modify? New twist? Change meaning, colour, motion, odour, form, shape? Other changes? Magnify? What to add? More time? Greater frequency? Stronger? Larger? Thicker? Extra Value? Plus ingredient? Duplicate? Multiply? Exaggerate?

37. Checklist Method � Developing a new idea through a list of related issues: Minify? What substitute? Smaller? Condensed? Minature? Lower? Shorter? Lighter? Omit? Streamline? Split up? Understated? Substitute? Who else instead? What else instead? Other ingredient? Other material? Other process? Other power? Other place? Other approach? Other tone of voice? Rearrange? Interchange components? Other pattern? Other layout? Other sequence? Transpose cause and effect? Change pact? Change schedule? Reverse

38. Checklist Method � Developing a new idea through a list of related issues: Reverse? Transpose postive and negative? How about opposites? Turn it backward? Turn it upside down? Reverse roles? Change shoes? Turn tables? Turn other cheek? Combine? How about a blend, an alloy, an assortment, an ensemble? Combine units? Combine purposes? Combine appeals? Combine ideas?

39. Free Association Developing a new idea through a chain of word associations. A word or phrase is written down � then another and another Each new word attempting to add something new to the ongoing thought process Thereby creating a chain of ideas ending with a new product idea emerging.

40. Forced Relationships Developing a new idea by looking at product combinations. Isolate the elements of the problem Find the relationships between these elements Record the relationships in an orderly form Analyze the resulting relationships to find ideas or patterns Develop new ideas from these patterns.

41. Example of Forced Relationship Relationship/ Elements- Paper/Soap Forms Combination Idea/Pattern Adjective Papery soap Flakes Soapy paper Wash and dry travel aid Noun Paper soaps Tough paper impregnated with soap and usable for washing surfaces Verb-correlates Soaped papers Booklets of soap leaves Soap �wets� paper In coating and impregnation processes Soap �cleans� paper Suggests wallpaper cleaner

42. Collective Notebook Method Developing a new idea by group members regularly recording ideas. Use a small notebook that fits into a pocket: Record � statement of the problem, blank pages and any pertinent background data. Each group member write their own personal ideas three times each day. Give to group leader at the end of the day Group leader summarizes all material Final creative focus group discussion with all participants.

43. Attribute Listing Method Developing a new idea by looking at the positives and negatives. List the attributes of an item or problem Look at each attribute from a variety of viewpoints Originally unrelated objects can be brought together to form a new combination and possible new uses that better satisfy a need.

44. Big-Dream Approach Developing a new idea by thinking without constraints. Dream (imagine) about the problem and its solution (think big) Every possibility should be recorded and investigated without regard to the negatives involved or resources required. Ideas should be conceptualized without any constraints until an idea is developed into a workable form.

45. Parameter Analysis Developing an idea by focusing on parameter identification and creative synthesis. Parameter identification Analyze variables in the situation to determine their relative importance Important variables are the focus and others set aside Creative synthesis Relationships between parameters that describe the underlying issues are examined. Through evaluation of the parameters and relationships, one or more solutions are developed; this solution development is called creative synthesis.

46. When Momentum is Lost

47. Strategies to Regain Focus Immerse yourself in the topic Brain dump Develop a number system Have fun! Change your location Use a different technique Take a short break and do something

48. Immerse Yourself If you are developing ideas about fibre: Grab as much fibre as you can Touch it Smell it Put it together in weird combinations Talk to people who produce, use, modify fibre Explore use of fibre in all aspects of human, animal, geologic life Talk to people who use fibre Talk to people who convert fibre Talk to people who hate fibre Talk to textile experts � filter experts � basket weaving experts � art teachers � artists � engineers - contractors

49. Brain Dump Each person has to write as many ideas as they can on one filing card. Cards are thrown into a hat Cards are pulled out one at a time. Group members then have to argue why the idea is great. The key is to generate as many ideas as possible. Eventually the group can vote on the ideas they liked the most.

50. Develop a Number System Identify six possible target markets for an application of fibre: General public Boat manufacturers Chemical manufacturers Fishers Aerospace Develop a list of possible features. Coarse/soft Conductive Tensile strength Elasticity The group then has to develop as many ideas as possible using the ingredients and the target market. Repeat!

51. Idea Screening

52. Out of 100 ideas or more, there may be only one or two real opportunities. Superior business ideas that have the potential to become opportunities have 4 anchors: They create or add significant value to a customer or end user. They do so by solving a significant problem, or meeting a significant want or need, for which someone is willing to pay a premium. They therefore have a robust market, profit margin, and moneymaking characteristics. They are a good fit with the founder(s) and management team at the time and in the marketplace with a risk/reward balance. Idea Screening

53. Characteristics of the "Ideal" Business Idea � Technical feasibility � Requires no initial investment � Has a recognized, measurable market � A perceived need for the product or service is present ؠ�A dependable source of supply for the required inputs is available ؠ���� No government regulation ؠ���� Requires no labour force ؠ���� Provides 100 percent gross margin ؠ���� Buyers purchase frequently ؠ���� Receives favourable tax treatment ؠ���� Has a receptive, established distribution system ؠ���� Has great publicity value ؠ���� Customers pay in advance ؠ���� No risk of product liability

54. Purposes: fully examine the potential of an opportunity identify key success factors identify critical risk factors guide the entrepreneur in start-up raise capital The Business Plan

55. Involve all of the management team in its preparation make the plan logical, comprehensive and readable - and short as possible demonstrate commitment identify critical risks and assumptions disclose and discuss any current or potential problems in the venture identify several alternative sources of financing. Spell out the proposed deal and how investors will win. Be creative in gaining the interest of potential investors. Remember the plan is not the business. Know your targeted investor group. Let realistic market and sales projections drive the assumptions underlying the financial forecasts, rather than the reverse. Business Plan Do�s

56. Don�t have unnamed, mysterious people on the management team. Don�t make ambiguous, vague or unsubstantiated statements such as estimating sales on the basis of what the team would like to produce. Don�t describe technical products using jargon that only an expert can understand. Don�t spend money on developing fancy brochures, or other �sizzle� - instead, show the �steak� Business Plan Don�ts

57. complete short integrated prepared for the audience organized A Good Business Plan is...