Idea Generation - Entrepreneurial Development, Entrepreneurship & Small Businesses | Entrepreneurship & Small Businesses - B Com PDF Download

The foremost task of a dynamic entrepreneur is the generation of an idea that is new and appears to be worthwhile for further use. This involves a lot of creativity on the part of the entrepreneur. The business idea arises from an opportunity in the market. It originates from real demand for any product or service that an entrepreneur should have a keen and open mind to look for opportunities and generate business ideas.

While selecting a business idea, the following points need adequate consideration: 

(i) The business idea should enable the entrepreneur to utilise his technical and professional skills. If an entrepreneur has knowledge of some special manufacturing techniques, because of previous experience or otherwise, it would be easier for the entrepreneur to manage such techniques effectively.

(ii)  It should enable the use of locally available raw materials for product or service. As compared to imported materials/ local materials are easy to procure.

(iii) It should ensure making products that have a demand, but are not freely available in the market. It is potentially a good idea to start with a product that could be sold.

(iv) It should enable the entrepreneur to solve a current problem existing in the market. Products may be available in the market but they do not meet the demand fully or in a satisfactory manner. Sometimes, an existing product is used in combination with another, which is not available. Attempts to solve such market problems do give rise to business ideas.

Sources of Information for Business Ideas 

As said earlier, generation of project idea is the starting point in product development. For this, an entrepreneur can refer to potential studies prepared by different organisations. There are a number of potential studies conducted by several organisations like the National Council of Applied Economic Research (NCAER), financial institutions and other promotional organisations such as Confederation of Indian Industries (CII), etc. These may include the following: 

(a) Area studies which identify development potential of particular areas like a backward area or a district.

(b) Subsectoral studies which identify opportunities in specified subsectors (such as food processing).

(c) Resource-based studies which identify opportunities based on utilisation of natural or industrial resources such as forest-based industries, marine-based industries, industries using rubber as the main raw material, etc.

(d) Studies of the product consumption pattern of the country.

(e) Surveys of existing industrial establishments.

(f)  Import and export possibilities.

(g) Demand forecasts made by Industrial Chambers such as CII, FICCI, ASSOCHAM, etc.

Approaches to Generating Ideas 

While exploring different sources of business ideas, an entrepreneur can use the following approaches to generate ideas:

(i)  Brainstorming. It helps in generating a large number of product ideas. It should be conducted by an expert and none of the ideas mentioned should be evaluated or judged. At this stage one should not worry if the ideas are suitable or not.

(ii)  New ways of doing old things. A large number of products are being made and provided in the market using traditional methods and practices. One approaches can be to examine if these could be made by a different and newer method that would give the entrepreneur an advantage over the older methods.

(iii) Converting hobby into business. Some people are adept at doing something or the other as a hobby or for use in the house only. It is possible to use such skills to set up an enterprise. Hobbies like photography, interior decoration, fashion designing etc. are often developed as business ventures.

(iv) Improving an existing product. An existing product can be improved by using old techniques with more care or using newly developed technology.

(v) Utilising waste material. Conservation and environment protections are presently getting a lot of attention. Recycling waste or turning them into useful products are good product ideas. Presently, energy conservation products also have good potential.

Selection of Project Idea 

At this stage, all the project ideas are screened on the basis of well defined criteria to eliminate ideas which are not promising and select the best idea. While selecting the idea, the following facts should be considered:

(i) The project should be compatible with the objectives and resources of the entrepreneur. It should also match his capabilities and skills.

(ii)  The resources required for the project such as capital requirements, technical know-how, raw materials, power supply etc. must be reasonably assured.

(iii) The cost structure of the proposed project must enable it to realise reasonable returns on investment.

(iv) The effect of external environmental factors such as technological changes, state of economy, competition, etc. should be considered.

(v)  The project idea should be consistent with the government policies, licensing requirements, environmental regulations, foreign exchange regulations, etc.

Role Of Creativity And Innovation 

Entrepreneurship is the ability to create and build something from practically nothing. Fundamentally, it is creative activity manifested by initiating and building an enterprise or an organisation. It is knack of sensing an opportunity where others see chaos, contradiction, and confusion. Entrepreneurship can be viewed as n creative and innovative response to the environment and an ability to recognise, initiate mid exploit an economic opportunity.

Creativity and Innovation 

There is a popular notion that creativity is a mysterious process performed by gifted or brilliant mind. It is largely a product of sweaty trial and error. To be creative a person must work hard to generate multiple solutions. Creativity is a prerequisite for innovation and it can be developed in any individual especially when there is concern for excellence. It is an accepted fact that concern for excellence is a common trait of most of the entrepreneurs. Hence, to become an entrepreneur one should develop creativity in oneself. Creativity is defined as the ability to bring something new into existence. The emphasis is on the "ability" and not the activity of bringing something new into existence. A creative person must conceive of something new and envision how it will be useful to the society. The action for putting the conceived idea to use is another issue. Even if no effort is made to follow up the conceived new idea, the person is a creative person. 

Innovation is the process of doing new things or doing old things through new techniques. While creativity relates to the ability to conceive, innovation means doing new things. Ideas have little value until they are converted into useful products or services. Innovation transforms creative ideas into useful applications. Hence, creativity is a pre-requisite to innovation. 

Stages in Creativity 

According to Schumpeter : "Entrepreneurs need ideas to pursue but ideas hardly materialise accidentally." Ideas normally pass through a long evolutionary process. In other words, ideas evolve through a creative process whereby a person with imagination germinates ideas, nurtures them and develops them successfully.This model reveals that there are five stage of the creative process:   

(a) idea germination,
(b) preparation,
(c) incubation,
(d) illumination and
(e) verification.

It should be noted that these stages are different but interrelated. In fact, in each stage a creative individual behaves differently to move an idea from the initial stage of germination to the last stage, i.e., verification.

An overview of the stages in creativity is given below: 

1. Idea Germination. The germination stage is the sowing stage of the process. History reveals that most creative ideas can be traced to an individual's interest in or curiosity about a specific problem or area of enquiry.

2. Preparation. Once a seed of curiosity has taken the shape of a focused idea, the creative person will make a thorough search for appropriate answers. If it is a problem that has to be solved, he would begin by seeking information about the problem and by looking at how others have tried to solve the same problem in the past. If it is an idea for a new product or service there is need to carry out appropriate market research. While scientists will carry out laboratory experiments, designers will start engineering new product ideas and marketeers will study consumer buying habits. An individual with an idea will thereafter think about it and concentrate his energies on rational extensions of the idea and how this can be converted into a saleable product or service.

3. Incubation. Creative people and people with vision often concentrate intensely on an idea, but, in most cases, they simply allow ideas time to grow without international effort. Most ideas evolve in the minds of people with imagination and foresight while they go about other activities. The idea once sown and given substance through preparation is put on back-burner. This means that the subconscious mind is given enough time to assimilate information collected from diverse sources.

Incubation is a stage of mulling it over while the subconscious intellect controls the whole creative process. This is, no doubt, a crucial aspect of creativity because when imaginative people consciously focus on a problem, they behave rationally in their search for systematic solutions. In this context, one may refer to the art of synectics which means a joining together of different and often unrelated ideas. This means that when a person has consciously worked to resolve a problem without success, allowing it to incubate in the subconscious mind will often lead to a resolution.

4. Illumination. Illumination occurs when a certain idea resurfaces as a realistic creation. Most creative people normally pass through numerous cycles of preparation and incubation, searching fur full meaning of the idea. When a cycle of creative behaviour fails to result in a catalytic event, the cycle is repeated until the idea takes shape or disappears. This stage is most crucial for entrepreneurs because ideas by themselves carry little practical living in a world of illusion from creative people who find a way to creative value.

5. Verification. An idea illuminated in the mind of an individual still has little meaning until verified as realistic and useful. The significance of entrepreneurial effort lies in the fact that it is essential to translate an illuminated idea into a verified, realistic and useful application. In fact, verification refers to the development stage of refining knowledge into application. During this stage, many ideas will be rejected as they do not appear to be fruit-bearing or having practical relevance. It is often found that a good idea has already been developed or the eager entrepreneur finds that competitors already exist in the market. Inventors often face such a situation when they seek patent protection only to discover similar inventions already registered.

Innovation and Invention 

Innovation implies doing new things or doing things that are already being done in new ways. It may occur in the following forms: 

(i) Introducing a new manufacturing process that has not yet been tested and commercially exploited.

(ii)  Introduction of a new product with which the consumers are not familiar or  introducing a new quality in an existing product.

(iii)  Locating a new source of raw material or semi-finished product that was not exploited  earlier.

(iv) Opening a new market, hitherto unexploited, where the company products were not  sold earlier.

(v)  Developing a new combination of means of production. 

Shumpeter has made a distinction between ‘an innovator’ and ‘an inventor’. An inventor discovers new methods and new materials. On the other hand, an innovator is one who utilises or applies inventions and discoveries to produce newer and better quality goods that give greater satisfaction to tin- consumers and higher profits to the entrepreneur. An inventor produces ideas and an innovator implements them for economic gain. An inventor adds to the knowledge of the society while an innovator adds to their satisfaction by means of newer and better products and services. It is an innovator who commercially exploits an invention.