IDEAS AND MORE IDEAS Week 3 Dr. Thomas Webb BA 346 Chapter 4 – Ideas and Creativity From Ideas to Feasibility • Great list of places to look for ideas. • Scamper – from ideas to opportunities. This is a great tool you will be able to use in future. • Avoid the pitfalls – a good list. • Testing the Feasibility – excellent outline in 4.4 and example at end of chapter • Some GREAT resources on creativity: – “Here’s an Idea…,” Taylor – “A Whack on the Side of the Head,” Oech. – Boak Sells has great ideas – “Ten Ways to Restore……” – Other references in notes. Chapter 5-6 – Part time or Full time? It all depends! • Chapter 5. The mini case raises the type of ethical issues part timers often face. • Chapter 6. Some great examples and stories. • Five way to get into business – a good list with good information. – Start one – Buy one – Franchise – Inherit – Get your foot in the door. • Ways to increase chances of success – great, read it! • Do diligence and valuation – great, read it! SCAMPER From ideas to opportunities – a great methodology! • S Substitute – Substitute one part of product for something else. • C Combine – Take two ideas not usually linked an see if they’ll work together. • A Adapt – Make a variation of the product or service. • M Magnify or modify – Make one part larger or smaller. • P Put in other uses – Are there other uses • E Eliminate – Can you cut out part of product or one aspect • R Rearrange – Can it be done in a different order or reversed? One More! Look in the holes, the niches, the ends of a product, service, a channel, a price. There are often great opportunities there. Avoid the Pitfalls Major mistakes made even by the big guys! • Identifying the wrong problem • Judging ideas too quickly • Stopping with the first good ideas • Failing to get the “bandits on the train” and ask for support • Obeying rules that don’t exist [or shouldn’t exist] Testing The Feasibility What do you have to know about the idea! • The Product & Market. Will enough people buy it? [customer and markets] • Competition. Can you beat or get around the competition? • Financials. Can you price it and produce it to make a profit? • People. Do you have the people to make it successful? • Plan. Do you have a strategy to succeed? Outline [4.4] is one you should keep. The feasibility study at the end of the chapter is excellent. These are not exactly the same as the book [product, industry/market, financial feasibility, plan] Here’s An Idea: Let Everyone Have Ideas William Taylor • What is the story? • Why does it work? Free market concept The less structure the better Flexibility • What does it tell us about creativity in an organization. The top doesn’t necessarily know better Experience doesn’t always work No one has a monopoly. just because they are “important” • What do the sites tell us about friendship? – http://www.ritesolutions.com/home.html – http://www.innocentive.com/ Roger van Oech A Whack On The Side Of The Head! • You will be able to use it. Haven’t been in an organization that didn’t want to increase creativity and have some forums to do it. • What are the mental locks? – There is a right answer – That is not logical – Follow the rules – Be practical – BSAINXLEATNTEARS – To err is wrong – Play is frivolous – That isn’t my area – Don’t be foolish – I’m not creative • Name a big error you made. What are the beneficial consequences for you? • Name a troublesome situation you face. List 3 “what if” statements. “Nothing clouds your mind like dogma” Roger van Oech “Think Sideways.” Edward deBono Roger van Oech A Whack On The Side Of The Head! Remove six letters and come up with a common food most of you eat. You have 30 seconds! BSAINXLEATNTEARS Roger van Oech A Whack On The Side Of The Head! Remove six letters and come up with a common food most of you eat. You have 30 seconds! BSAINXLEATNTEARS Roger van Oech A Whack On The Side Of The Head! Remove six letters and come up with a common food most of you eat. You have 30 seconds! BSAINXLEATNTEARS BANANA DeBono’s Elevator Problem “Think Sideways” People are waiting too long for the elevator and everyone complains. They get a group together to propose solutions. They suggest: 1. Speed up elevators 2. Have them stop at only certain floors 3. Stagger working hours 4. Put in a new elevator 5. Install mirrors around entrances to all elevators. 1-4 are traditional solutions. 5 is lateral thinking. They did 5 and it worked! People became preoccupied with looking at themselves and others so they didn’t notice the wait. The problem was more impatience vs. lack of elevators! SCAMPER – LET’S TRY IT! From ideas to opportunities – a great methodology! • S Substitute • C Combine • A Adapt • M Magnify or modify • P Put in other uses • E Eliminate • R Rearrange • S Dig in the dirt Baby Boomers, SBA Minor in Bus.,Pets, Dating Services, Fitness, Bars, Sports, Entertainment SO! There are ideas out there Lots of them Find out which ones are any good! Where did the ideas come from? How different are they really? • AltiTunes,Amy Wolf Entrepreneurial alertness – walking through airport and saw an opportunity • Auntie Anne’s Pretzels Serendipity, just tried to make an improvement. • Stroller Strides, Lisa Entrepreneurial Alertness – two needs combined • Dippin Dots, Kurt Jones Science background and a yearn to invent. Where did the ideas come from? What would a SCAMPER looks like then and now? • AltiTunes,Amy Wolf To start – Adapt Ideas for now – Combine? Modify? Gap? • Auntie Anne’s Pretzels To start – Substitute, adapt, modify Ideas for now – Substitute? Put to other uses? • Stroller Strides, Lisa To start – Adapt, combine Ideas for now – Gap? Rearrange? • Dippin Dots, Kurt Jones To Start – Substitute, adapt, modify Idea for now – Elminate,? Reverse? Lyle Wong Wants to be a millionaire! He started very young and has been doing little ventures since he was very young. He has no idea what he is going to do. How do we develop a plan for him? Lyle Wong - The almost millionaire! • What constitutes being a millionaire? Sell a business, profit generated, net worth on balance sheet? • What are some of the characteristics of a venture that will get him there? Growth, multiplier, expandability • How can we define an opportunity if he was a student here at PSU? Who has a need that is big enough? What is going on that is big enough? What areas to look in? A service, a product, production, distribution, sales? A store, an office, a plant, the internet? Lyle Wong - The almost millionaire! Where do we look? • Food • Drink • Entertainment • Events • Classes • Books • Dating • Cheating • Real Estate • A product gadget S C A M P E R + Substitute Combine Adapt Modify Put to other Eliminate Rearrange Get in the Uses Dirt Lyle Wong - The almost millionaire! What did he do! • Identified a problem – unsold tickets to events. It was very common for arenas and events to hold unsold tickets the day of the event. • He decided to offer to sell those tickets for a discount plus commission, using a computer in his dorm room. • He set up a system and worked out the bugs • He expanded it to cover virtually an public event that was not sold out within 24-48 hours of show time. • This was a win/win for everyone. He almost made it! Dave Kapell – Poetry in Motion From Serendipity to Success in 1000 steps! The Keys to his success • Serendipity • Entrepreneurial Alertness • Took it out • Went to the experts • Did it in steps. Dave Kapell – Poetry in Motion From Serendipity to Success in 1000 steps! • How did he discover whether his idea would work? Serendipity, entrepreneurial alertness and he took it out. • How did he evaluate whether it could be successful? He took it out, he went to people in the know. • What other opportunities are there – Substitute – Combine – Adapt – Modify – Put into other uses – Eliminate – Rearrange – Search for a hole. Product Market Matrix for Poetry in Motion EXISTING PRODUCTS NEW PRODUCTS EXISTING Market Penetration Product Development MARKETS Sizes Other puzzles Distribution Other magnet pieces Color Affirmation stuff Words Word games Leave off the words Leave off the magnets NEW Market Development Diversification MARKETS Dogs Poetry in motion Seniors Magnetic relationships Mentally ill Small business owners Homework for students Medicine Religious The Grande General Store How do you go about figuring how much it is worth and whether you ought to buy it? • Where do you look for valuation? Lots of places, what did you find? • What questions should be asked on the financials? Why sales are up so much? Where is the owner paid from? Who did the valuation? What personal expenses are in the income statements • What are some of the other due diligence questions to ask Inspection Competition External factors such as zoning Law suites Suppliers Key employees. The Grande General Store How do you go about figuring how much it is worth and whether you ought to buy it? I looked under lots of headings. The one that worked was Valuation Rules of Thumb. Finally lots of entries. Rules of Thump are mostly for the “smell test”. http://www.bizstats.com/rulesofthumb.htm http://www.mergers-acquisitions.com/valu.html#thumb http://www.bizbuysell.com/guide/s_value_1.htm http://www.dinkytown.net/java/BusinessValuation.html http://www.sba.gov/idc/groups/public/documents/wi_milwaukee/wi_ salebusiness.pdf http://www.sba.gov/idc/groups/public/documents/mi_detroit/mi_busi ness-valuation-methods.pdf http://www.valuadder.com/index.html The Grande General Store What is “Due Diligence”? • Investigation to see: If you are getting the truth To find out what is really going on To look for hidden plusses and minuses. • A large part financial [audit, tax returns, accountant] Income statements what is in and not in Balance sheet valuations, especially intangible assets Cash Flow and profitability • But every aspect should be included in analysis. Misrepresentations of seller, why for sale really, key employees, etc. Litigation, land title, environmental issues. External factors – competition, suppliers, city/zoning, etc. SO! Think Sideways!