BUSINESS OPPORTUNITY IDENTIFICATION

Shiv Kothari
Ahmedabad Management Asso/EDI

Contents
Individual Characteristics that lead to Opportunity Recognition Factors Affecting Opportunity Recognition

Entrepreneurial Alertness Information asymmetry and prior knowledge; Discovery versus purposeful search; Social networks; Personality traits, including risk-taking, optimism and self efficacy, and creativity. Active Search

Pattern Recognition
Pattern recognition plays a central role in opportunity identification:
Opportunity emerge from a complex pattern of changing conditions they come into existence at a point in time because of juxtaposition of conditions which did not exist previously Recognition of Opportunity depends, in part, on individual cognitive structures framework developed from experiences that provide the cognitive basis for Connecting Dots into pattern suggestive of new business opportunities

Opportunity recognition
Opportunities develop as individuals shape elemental ideas into full-blown business plans. Opportunity recognition appears to include three distinct processes:
(1) sensing or perceiving market needs and/or underemployed resources (2) recognizing or discovering a fit between particular market needs and specified resources, (3) creating a new fit between heretofore separate needs and resources in the form of a business concept.

Recognition of opportunities depends, in part, on individual cognitive structures - frameworks developed from experience that provide the cognitive basis for connecting the dots into patterns suggestive of new business opportunities

Factors affecting Opportunity Recognition

Entrepreneurial Alertness Information asymmetry and prior knowledge; Discovery versus purposeful search; Social networks; Personality traits, including risk-taking, optimism and self efficacy, and creativity. Active Search

Entrepreneurial Alertness
A set of perceptual and information processing skills Any recognition of opportunity by a prospective entrepreneur is preceded by a state of heightened alertness to information. Definition - a propensity to notice and be sensitive to information about objects, incidents, and patterns of behaviour in the environment, with special sensitivity to maker and user problems, unmet needs and interests, and novel combinations of resources. More alert to new opportunities and use information differently

Alertness
Opportunities often recognized by people not engaged in active search Abundant natural curiosity and a broad range of interests is helpful Related to cognitive capacities such as high intelligence and creativity

The Alert Individual

Perceive the market environment correctly Identify the true driving forces and critical factors Infer the real relational dynamics among these elements

Alertness Schema
*** What is really going on here Be Objectively Accurate What are Three Other Ways to See/Think About This What is Everyone Else Doing What is The Opposite Of this

*** Anything that is/could be seen as unusual, unexpected, anomalous *** How Can I make money

Information asymmetry and prior knowledge

Tend to notice information that they know. Prior knowledge triggers recognition of the value of the new information. Three major dimensions of prior knowledge are important to the process of entrepreneurial discovery:

Personal Interest Domain know how and expertise Process Related Knowledge Market related knowledge, Ways to serve markets, and Customer related knowledge.

Prior knowledge access to appropriate information

Information gathered through rich and varied life experience Leveraging a rich and varied network of contacts and associates

Social Networks
Entrepreneurs who have extended networks identify significantly more opportunities Social network includes the entrepreneurs

inner circle (the set of people with whom an entrepreneur has long-term, Stable relationships, (they are not partners in the venture), action set (people recruited by the entrepreneur to provide necessary resources for the opportunity), partnerships (start-up team members),and a network of weak ties (a network used to gather general information that could lead to identifying an opportunity or to answering a general question)

Personality traits, including risk-taking, optimism and self efficacy, and creativity.
Perceived self-efficacy leads to optimism and a higher propensity to see opportunities rather than threats in any given situation. Successful entrepreneurs discover opportunities that others do not see.

Active Search
Entrepreneurs are more likely to engage in active search for opportunities Focused in a particular domain: rely more heavily on personal contacts and specialized publications than on sources of general information

Pattern Recognition in Opportunity Recognition

Thanks for your participation!

Email: kotharishiv@gmail.com