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INTRODUCTION TO BUSINESS IDEA

Every new business, new product or service and new marketing approach has
started with an idea. Generating new ideas can be a very burdensome task.
Putting them into practice can be much harder. Once an idea strikes, a person
has to fill in all the details of what he wants to achieve and how he is going to
achieve it.

A good idea is nothing more than a tool in the hands of an entrepreneur.


Finding a good idea is the first step in the task of converting an
entrepreneur’s creativity into an opportunity.

The importance of the idea is often over-rated, usually at the expense of


under- emphasizing the need for products or services, or both, which can be
sold in enough quantity to real customers.

Further, the new business that simply bursts from a flash of brilliance is rare.
What is usually necessary is a series of trial – and – error iterations, or
repetitions, before a crude and promising product or service fits with what the
customer is willing to pay for. For example, Howard Had made forty
different metal skis before he finally made the model that worked
consistently. With surprising frequency, major businesses are built around
totally different products than those originally envisioned.

There are three major hurdles to overcome before any idea can come to
fruition:
1) Identify a problem,
2) Idea generation,
3) Idea selection.
Categories of Idea Selection
The idea selection usually centers around the following broad categories:

1) Product where the entrepreneur has firsthand manufacturing experience.

2) Product where the entrepreneur has the marketing work experience with
the particular product.

3) Product which is perceived as highly profitable.

4) Product where government has banned imports.

5) Product where the export demand is high and with good margins.

6) The raw material requirement of an existing nearby big unit.

7) The location advantage of raw material/ other resources.

8) The products encouraged by the government agencies.

9) Products on which government declares subsidies, incentives, other


industrial/ financial benefits.

10) Products where there is demand growth.


 While discussing about generation of ideas for the new enterprise, the
project stages are to be discussed. The district phases are:
1) Pre- project phase which consist of idea stage, concept stage, product
development stage and test marketing stage and
2) Commercialization phase and product life cycle which includes
introduction phase, growth phase, maturity phase and decline phase.
Any project goes through pre-project detailed above, wherein the evaluation
is made at each stage and only stage- wise dimensional and poses problems.
It is necessary to examine and analyze the nature and extent of problem and
to choose the best of the ideas.

Idea Generation
Idea generation stage is the first step in any entrepreneurial activity. As many
as new product ideas are developed in idea stage. Impractical ideas are
dropped. Ideas which employ the maximum of available resources be taken
up for further evaluation. The ideas should take care of customer
requirements.

• Type of need
• Timing of need
• Competitive way to satisfy the need
• Perceived benefits and risks
• Price versus performance
• Market size and potential
• Payment capacities of customer
• How you meet the competition from existing or substitute product/s?

Business idea generation is a search for opportunities for new avenues of


growth in business. As per peter Drucker the opportunities are of three types:

1) Additive Opportunities: Here better and intense utilization of existing


resources is called for from the decision makers. This also means changes in
production and marketing strategies.
2) Complementary Opportunities: Bring new ideas in existing products or
bring in value addition or changes desired in the market. Here character of
business is likely to change the risk in business increases.
3) Breakthrough Opportunities: New product, new areas, new technologies
bring in fundamental ideas. Breakthrough changes structure, strategies and
business character. The element of risk is the highest and is combined with
highest gains in case of success.

The following steps are involved in searching and selecting business idea:

1) Creating business ideas.


2) Study and process the ideas.
3) Select the best idea.

The ideas are generated from various sources and put for preliminary
evaluation and testing. Once the business ideas are generated, study,
screening and testing of these ideas is done based on the entrepreneur’s own
experience or with the help of experts in the field.

Creativity and Innovation in Idea Generation


The terms creativity and innovation are often used to mean the same thing,
but each has a unique connotation. Creativity is “the ability to bring
something new into existence. This definition emphasizes the “ability,” not
the “activity,” of bringing something new into existence. A person may
therefore conceive of something new and envision how it will be useful, but
not necessarily take the necessary action to make it a reality. Innovation is the
process of doing new things. This distinction is important. Ideas have little
value until they are converted into new products, services, or processes.
Innovation, therefore, is the transformation of creative ideas into useful
applications, but creativity is a prerequisite to innovation.

Creativity is the ability to bring something new into existence. Innovation is


the translation of an idea into application, which has a commercial value.
Creativity is a prerequisite for innovation. It can be develops new alternatives
and offers innovative solutions.

This can be done by:


1) Adding Product Features: A job which is hard to do can be made easier
for example electric mixers and grinders have dramatically reduced the
labour expended in Indian Kitchens. Another example is that of the Courier
service which has almost threatened the functioning of the Indian Postal
Service.
2) Cutting Cost: The entrepreneur can change the expensive product for
example the prices of computers and cell phones have come down drastically,
3) Simplifying operations: Through creative distribution and financing for
example these days’ loans for washing machines, televisions are given by the
seller many a times.

Creative Process
Clearly, action by itself has no meaning; it is of little value to simply “do
things” without having inspiration and direction. Entrepreneurs need ideas to
purse and ideas seldom materialize accidentally.

Ideas usually evolve through a creative process whereby imaginative people


germinate ideas, nurture them, and develop them successfully. A model of
the creative process is shown in figure:

Idea Incubation: Verification:


Preparation: Illumination:
Generation: Subconscious Application
Conscious Recognition
The seeding assimilation or test to
search for of idea as
stage of a of prove idea
knowledge being
new idea information has value
Rationalization feasible
Recognition Fantasizing Validation

Stages in the Creative Process


Various labels have been applied to stages in the creative process, but most
social scientists agree on five stages that we label as idea germination,
preparation, incubation, illumination, and verification. In each stage, a
creative individual behaves differently to move an idea from the seed stage of
germination to verification, behavior varies greatly among individuals and
their ideas:

1) Idea Germination: The germination stage is a seeding process. It is not


like planning seed as a farmer does to grow com, but more like the natural
seeding that occurs when pollinated flower seeds, scattered by the wind, find
fertile ground to take root. Exactly how an idea is germinated is a mystery; it
is not something that can be examined under a microscope. However, most
creative ideas can be traced to an individual’s interest in or curiosity about a
specific problem or area of study.
2) Preparation: Once a seed of curiosity has taken as a focused idea, creative
people embark on a conscious search for answers. If it is a problem they are
trying to solve, then they begin an intellectual journey, seeking information
about the problem and how others have tried to resolve it. If it is an idea for a
new product or service, the business equivalent is market research. Inventors
will set up laboratory experiments, designers will begin Engineering new
product ideas, and marketers will study consumer buying habits.
3) Incubation: Individuals sometimes concentrate intensely on an idea, but,
more often, they simply allow ideas time to grow without intentional effort.
We all have heard about the brilliant, sudden “flashes” of genius, but few
great ideas come from thunderbolts of insight. Most evolve in the minds of
creative people while they go about other activities. The idea, once seeded
and given substance though preparation, is rut on a back burner; the
subconscious mind is allowed time to assimilate information.

4) Illumination: The fourth stage, illumination, occurs when the idea


resurfaces as a realistic creation. The fixable of the thunderbolt is captured in
this moment of illumination-even though the often long and frustrating years
of preparation and incubation have been forgotten.
Illumination may be triggered by an opportune incident.
The important point is that most creative people go through many cycles of
preparation and incubation searching for that incident as a catalyst to give
their idea full meaning. When a cycle of creative behavior does not result in a
catalytic event, the cycle is repeated until the idea blossoms or dis. This stag
is critical for entrepreneurs because ideas by themselves, have little meaning.
5) Verification: An idea once illuminated in the mind of an individual still
has little meaning until verified as realistic and useful.
Entrepreneurial effort is essential to translate an illuminated idea into a
verified, realistic and useful application. Verification is the development
stage of refining knowledge into application. This is often tedious and
requires perseverance by an individual committed to finding a way to
“harvest” the practical results of his or her creation. During this stage, many
ideas fall by the wayside as they prove to be impossible or to have little
value. More often, a good idea has already been developed, or the aspiring
entrepreneur finds that competitors already exist. Inventors quite often come
to this harsh conclusion when they seek to patient their products only to
discover similar inventions registered.

Components of the Creative Process


The creative process has three district components:

1) Motivation: Initial motivation which provides stimulus for processing


information and exploring alternative solutions.

2) Skills in the Task domain: The extent of the knowledge, talents and
technical skills of the entrepreneur will help in his search for solutions, pin
pointing an idea and verifying the idea.
3) Skills in Creative thinking: These will help him to visualize different
solutions, generating a number of alternatives, se divergent uses of a single
idea etc. to come up with a workable idea or plan.

Elements of the Good Idea Generation Process


It seems incongruous that good idea generation can be a process or that a
process may lead to insight. However, it you examine the behavior of people
who regularly generate good ideas- such as creative in advertising you will
find that common patterns of behavior do emerge and it is possible to make
insight more likely.

Some elements of the good idea generation process are:

1) Creativity is often triggered by the need to solve a problem: People who


generate good ideas tend to clearly identify the problem through a tangible
process. They will look at a problem from various perspectives, create
multiple definitions of it and ask many others to contribute to the precise
nature and basic qualities of the problem as they see it.

2) Problems require intense investigation: People who generate good ideas


intensely investigate the problem using various knowledge bases and
information sources. This allows frame breaking, reduces path dependency
and parochialism and allows the intellectual cross- pollination that gets
people thinking in new directions.

3) Forced productivity: People who come up with good ideas force


themselves to produce ideas without evaluating those ideas. They will
separate creative from critical thinking and simply bash out ideas using a
variety of techniques. Common methods involve linking to diverse objects
and concepts, vertical and lateral thinking techniques. They will regularly
maximize the size and quality of their idea pool. This patterns the mind into
seeking answers and triggers cognitive activity at multiple levels.

4) Seek stimuli: People who think of good ideas seek out stimuli from novel,
diverse and numerous sources. The range of stimuli is infinite and this tends
to suit people who have or benefit from a lifelong interest and curiosity in
many subjects.

5) Constant conscious thought: People who generate good ideas constantly


think about the problem at all times. Often they describe themselves as
incapable of thinking of anything else, no matter what distractions may be
present. Hence the common occurrence of descriptions such as “obsessed,”
“single- minded” ”preoccupied,” “compulsive,” “ consumed,” “captivated,”
“infatuated,” “absorbed,” “immersed,” “possessed,” “hooked” and so forth.

6) Engagement in rest and unrelated activities: People who generate good


ideas will allow for rest and engagement in unrelated activities, which allow
unconscious processes to take over. It is at this point that insight is common
in something completely unrelated.

7) Incubation: Following intense cognitive activity, it may be that the


problem is set aside. A solution may present itself at any point thereafter.

Sources of Idea Generation


1) Consumers: A new venture or an existing organization have to
constantly update and meet the requirements of the customer in view of
the fact that customer is the fountain head of business and he is the one
who keeps it going.
Interaction with the customers and observation of, customer reacting
gives choices of ideas for new opportunities.

Data and consumer requirements, consumer complaints, preferences be


studied and catalogued in a systematic manner to arrive at qualitative
data for decision making. Surveys are conducted initially for a limited
number of products and targeted section of consumers to enable an
entrepreneur to limit the range of products. The consumer surveys will
be able to give data of availability of similar products in the market,
competition in the market, popularity of the products, substitution that
are being used and what a consumer expects from a range of products.

Changing tastes of consumers has brought in fast foods. For example,


Noodles were introduced in India in early 80’s nestle targeted school
children of class I to IV and distributed free samples. These children
built up the noodle taste and market in India.

2) Existing Companies: The products manufactured by the existing


companies give a broad view of the competition, the volume of market,
price trends and demand patterns. The existing company data also gives
the profitable line of business, the scare areas and the best
manufacturing trends of the product. The analysis of the printed
catalogues, annual reports give an idea of demand pattern, segment-
wise profitability and strategies being adopted by the industry for
marketing their products.

Development in other nations regarding thee consumer trends,


consumer behavior and fashion statements generates ideas to know the
“in things” in the market. It is well known that the products as on date
that sell in developed countries become the products of tomorrow in
development nations. An entrepreneur hence has to keep in touch with
the developments in the markets in developed nations. Entrepreneur
visits foreign countries, foreign companies and their markets to search
new products, services, processes and trends.

The study existing companies has considerable influence on the


generation and selection of ideas:

i) Export potential
ii) The Government Incentives
iii) High profit areas
iv) Products where demands exceed supply
v) Scarce areas where demand is good
vi) Ideas for new products or services where government incentives and
subsidies are readily available.

The new ideas are generated from the input requirements of various
existing companies, and especially so, if they are imported items. New
ideas are also generated from observation of the nature of competition,
the attitude of the competitors regarding particular products or certain
market areas and comparing the price positioning and quality of similar
products.

3) Existing Products and Services: Detailed observation and analysis


of market requirements of the existing products germinate new business
ideas in the area of:

i) Products which give specific advantages to customers,


ii) Products with value addition,
iii) Products with value addition,
iv) Product for which government extends consider growth areas and
extends industrial facilities and incentives,
v) Products where imports and banned or restricted by government
policies,
vi) Products where manufacturing raw- materials are readily available
such as mining and metallurgical units,
vii) Products where large infrastructure is made available by the mother
unit for the ancillary or in case of service units the industrial parks are
developed for specific products. The example is that of software parks,
export zones and the like.

Business ideas can be generated from creative approach to the existing


products such as review of the product designs, applying stat of
technologies for manufacture, use of new materials and adding value to
the end users or customers.

Evolution of new products and services is one of the business functions


and be organized effectively for growth of new ideas.

The automobiles selling companies taking up service contracts. Oil


companies adding new fuel additives or lubricants like Balmer Lawrie
Lubricant, Indian Oil Corporation and Hindustan Petroleum Company
Limited Engine oils are examples in this category.

4) Substitutions; Use of new materials of construction, new processes


alternate use of items to new areas is called substitution.

i) Shortage of few raw materials leads to search for substitution


materials.

Use of PVC pipes in electrical lines and water lines is common


example of substitution. In olden days there were cast spun pipes, then
came thin walled pipes now taken over by PVC pipes.

ii) Scarcity of imported materials, proprietary items, patented spares


and components also lead to substitution work. In developing country
like India import substitution work yields ideas for new equipment’s,
new parts and new materials as business.

For example, poly Vinyl Chloride (PVC) doors, chairs, tables are
substitution of wooden materials. Aluminum cast parts in place of steel
parts in two wheelers and automobiles. Replacement of Gel Ink in ball
point pens in place of thee conventional ink idea gave a large business.

ii) Middleman: The different category of middlemen who provide


useful ideas for new projects can be categorized as under:

i) Contractors and Middlemen in the value Chain: they are involved


with manufacturing, handling, transportation, storage and allied
activities connected with manufacturing and are also in constant touch
with the changes in market, further processing units and customers. The
generation of ideas from this segment will be helpful to supplement and
rationalize/ focus on few ideas.

ii) Media and Trade magazines: Print and electronic media have
emerged as fertile sources as fertile sources of project ideas. Television
show the trends in consumer preference fashion segments and life
styles. The trade and professional magazines give the details and
statistics of growth areas of markets and investment opportunities. The
professional magazines also give the trends and developments in any
particular field of specialization.

iii) Research Institutes: regular research data, bulletins are good sources
of information for developing new project ideas. Correspondence with
the research institutes or correspondence and search for thee relevant
data may crystallize useful project ideas. Government research
institutes and departments also publish industry data or periodical
changes in the economic structure of the society, trends of growth of
economy which are used for generation of new ideas.

iv) Technology Suppliers: In global markets consultants, market


research agencies and technology suppliers play an important role in
providing ideas for new products, new processes and data for sunrise
products. The specialization and experience of global markets and
consumption patterns give consultants a better appreciation and
generation of new ideas.

iii) Channels of suppliers and marketers: The middlemen in


marketing and purchases, namely agents, distributors, whole-sellers,
retailers, suppliers, quality assessors know the pulse of markets. They
provide valuable market information and intelligence in the fast
changing and turbulent business environment. They provide vital
information and intelligence in the changing and turbulent business
environment. They provide vital information broadly in the area of:

i) Sources of raw materials and price components


ii) Size and nature of demand for product and services
iii) Volume, cost, price relationships
iv) Substitution materials and comparison
v) Leading players and small players in the market for the range of
products
vi) Degree of competition
vii) Demand supply position
viii) Sectorial growth patterns arid seasonal variations in demand
ix) Growth areas
x) Geographical distribution of demand and supply
xi) Data of existing competitors and product data
xii) Customer profiles and preferences
xiii) Emerging products and services
Advice of professional experts like dealers, commercial consultants,
bank managers, advertisers generate new business ideas. Systematic
data collection from middlemen gives new business ideas.

iv) Research and development: organization has to provide resources,


necessary infrastructure for generating new enthusiastic about the
innovations.

Help is taken by large research and development establishment outside


with collaborative arrangements to search new business avenues.

With the globalization enough to merit more attention.

For example, Sony Walkman was a result of Sony research and


Development of Sony Corporation. It was integrated marketing team
approach that developed Walkman. Development of fiberglass
components, glass coated valves are research and Development idea
examples.

v) Government policies: Government of India and all State


Governments have sponsored different organizations to help
entrepreneurs in search, coordination and evaluation of business ideas.

The five year plans, industry policy resolutions and incentive schemes
from time to time help an entrepreneur in choosing business ideas.

Government organizations also arrange industry trade fairs and


exhibitions and arrange theme seminars to attract industries and
channelize the national resources for better productivity. An
entrepreneur gets chance to see the products that are displayed in the
exhibitions, get information about new product/ processes/ markets and
discuss with people from different organizations regarding:
i) Meeting buyers and sellers,
ii) Getting the feel of the market and assessing the trends regarding
demand and supply position of new products.
iii) The market competition in the area,
iv) Evaluating the criteria like quality, quality. Price and substitute
materials available for the product,
v) Develop personal contracts with different people involved in the
product or its value chain.

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