Chapter 2 - Generating and screening ideas

Question 1

Creativity

Answer 1

Torrance defines creativity as the capacity to detect gaps, propose various solutions to problem solving, produce novel ideas or recombine them to
understand the relationships between ideas. Creativity, on the other hand, is the action of conceiving something original or unknown, without taking it to the marketplace.

Question 2

Definition of creativity continued

Answer 2

The generation of a new product or idea, being an original invention

The conception of an improved product or idea, being a re-elaboration

The co-design or co-creation of an idea, product or service.

Question 3

Latin term for creativity

Answer 3

Creo

Question 4

Imagine

Answer 4

The ability to imagine often takes the form of envisioning an action or idea by using one’s senses to articulate a thought. Within the idea generation phase, being able to conceptualise a thought through forming images, concepts or linking ideas that are not present in reality, allows an individual the space to form a picture of what, where or how their idea can function and be successful. In so doing, an individual makes use of interchangeable processes such as perception and reasoning to construct a solution which can be translated into reality and as Ainsworth-Land (1982) states, is central to idea formation and creativity

Question 5

Innovation

Answer 5

Innovation is thus the implementation or development of something new, and deriving economic benefit from it. Innovation describes a new or enhanced idea or a transformation in something that exists or an improvement in a process of events

Question 6

Summary of creativity

Answer 6

In summary, creativity can be defined as the thoughts and action taken by an individual or groups of individuals to bring about a new or alternative solution to a demand or need to establish something different. Imagination is at the centre of creativity, where the individual is able to visualise the real or impossible. Within this reality, idea generation flourishes, allowing solutions to be developed to overcome problems.

Question 7

Challenges to creativity thinking

Answer 7

1. Low self-esteem - This occurs when the individual does not believe that he/she has the ability to add value to products, processes or others by being able to construe a fresh product or
   idea.
2. Being in an environment which limits creative thought - There are many environments in South Africa which do not nurture the space for
   creative talent to surface or exist.
3. Fear of failure - Failure can also be linked to losing face and the stigma that goes along with
   letting down co-workers, clients, friends, employees and their families.
4. Fear of risk taking - One of the central characteristics of a true entrepreneur is a willingness to take calculated risks. These risks may be at both personal and financial levels.
5. Mismatch between brief and intended outcome
6. Time pressure - Ideally, idea generation takes place in an environment in which there is no time limit placed on individuals and they are able to think the process through at their
   own speed.

Question 8

Factors that enable creative thinking

Answer 8

1. Ability to recognise the holistic nature of specific problems - Entrepreneurs need to be aware that they have to have a ‘big picture’ orientation
   when defining problems so that they are able to provide an all-encompassing
   solution to a stated problem.
2. Ability to perceive a problem or idea - There are occasions when thinking about a particular problem will offer an
   immediate solution.
3. Making assumptions based on available information - In many instances, entrepreneurs will have access to information that they can
   use to their advantage. This would include data collected from legitimate sources,
   personal experience and networks.
4. Basing decisions on a hunch or premonition
5. Ethical circumstances - There might be occasions where individuals have to make a choice about whether
   or not to become involved in a particular activity which does or does not resonate
   with their personal morals and ethics.

Possible ways of dealing with such situations include:
Training and further self-development
Mentoring by other entrepreneurs
Discussion and focus groups.

Question 9

Financial considerations

Answer 9

Being able to provide the financial collateral needed

Having access to traditional financial resources, such as commercial banks

Being able to access alternative financial resources, such as angel investors

Being able to bootstrap their finances

Personal credit worthiness

The ability to repay financial commitments within the specified period.

Question 10

Cultural considerations

Answer 10

Encourage everyone to participate freely when asked to contribute

Encourage everyone to listen to each other without criticism

Encourage everyone to ask questions and challenge ideas thus moving away from the belief that exemplary behaviour entails not questioning instructions
or behaviour, as well as not challenging ideas

Learn from older colleagues and question their ideas without putting them down

Acknowledge the value of diversity and the contribution that each individual brings to the table

Encourage people from different races/ethnic groups to work together

Encourage persons from different races/ethnic groups to report to each other.

Question 11

Emotional intelligence

Answer 11

Emotional
intelligence is the ability to recognise your own and other people’s emotional
awareness, and how this could influence their behaviour and thinking.

Question 12

Creativity myths

Answer 12

1. Not everyone is creative
2. Creativity cannot occur under pressure
3. Creative types are crazy, artistic types
4. Creativity skills cannot be acquired
5. Groups are more creative than individuals
6. Business ideas will bring you instant wealth and fortune
7. Desperation fuels good ideas

Question 13

Creativity characteristics

Answer 13

Proposition 1: Nurture a creative, conducive working environment aimed at
achieving the organisation’s values and objectives.

Proposition 2: Channel employees’ creativity to align with the organisation’s
goals so that the generation of products, services and processes are not only
innovative, but profitable for the business, creating competitive advantage.

Proposition 3: Create conditions where employees can seek directed
expression and self-fulfilment without unnecessary control mechanisms and
conformity to rules.

Question 14

Generating ideas

Answer 14

Identify opportunities in the market by
examining the way individuals are able to identify a need or gap in the market.

The entrepreneur can identify gaps in the market by using the following techniques to understand the environment:

1. Brainstorming
2. Solving a problem that exists
3. Analysing trends, such as:
   - Changes in the business environment
   - Unfulfilled customer needs
   - Changes in consumer demand
   - Product weakness and failure.

Question 15

Delphi technique

Answer 15

Delphi Technique. Here, individuals are put through at least two formal rounds of questions and answers focused on a specific problem.

Question 16

Nominal Group technique

Answer 16

The Nominal Group Technique
which requires group members to evaluate a problem. Their evaluation is
compared with that of other groups. Similar responses are eliminated as the group
ranks the solutions in a way that suits the outcome they desire.

Question 17

Idea generation process

Answer 17

1. Analyse the problem - Analyse the problem or need required.
   Gather information to understand the nature of the problem.
   Consult as many sources as possible to enrich your knowledge of what is
   required.
2. Generate ideas - Generate ideas to match the purpose of the identified need
   The main activity is to provide as many potential solutions as possible.
   These solutions can range from being simple to highly complex.
   Potential solutions could vary between completely new ideas or incremental changes to existing ideas.
   It is important to note that an idea can be a business idea, opportunity, process or result in a service or product. The outcome can therefore be
   tangible or intangible in nature.
3. Screen ideas - Develop assessment criteria.
   Measure ideas against criteria.
   Analyse each idea in terms of its workability and practicality.
   Select the most suitable idea from the options created.
4. Establish the feasibility of an idea - Demand for an idea
   Competitive advantage
   Suppliers and raw materials
   Profitability
   Financial requirements (that is, a sales and cost forecast to establish how
   much money is needed)
   Personal requirements.
5. Obtain funding - Obtain funding to explore an idea if the amount required is beyond one’s personal financial resources.
   Family, friends and banks are all potential funding sources.
   Request seed funding, personal loans or borrowed funds.
   Develop a business plan to support your search for funding.
6. Establish the viability of the idea - Work out how viable the idea is.
   If you are producing a specific item, then develop a prototype to test design
   features.
   Determine whether the industry is in a declining stage or showing signs of being overtraded
7. Pilot idea - Test the product, service oridea.
   To do this, put the idea into the marketplace and monitor preliminary customer reactions.
   One can also test the idea by setting up a test group with a specific audience or
   user group.
8. Feedback loop - Use the piloting process to then make changes to the design or process.
   Document changes so that future adjustments to the core innovative idea can be incorporated into its features

Question 18

Government tenders

Answer 18

When the government puts out a tender, this means that it asks the public for price offers to do work or supply goods. Therefore, the person or company has to provide the goods or services in the manner agreed to and at the price offered; and the government must pay the agreed price at the agreed time.

Question 19

Private tenders

Answer 19

Private Sector tenders are usually from large business such as the major banks, large retailers, and large telecommunication companies.

Question 20

Screening ideas

Answer 20

There are many filters which can be used to screen ideas. During screening, you will filter out those ideas that:

• Do not fit in with what you know
• Do not fit in with your personal preferences (such as where you would like to live or work)
• Have obvious competitors or already exist.

Question 21

Feasibility

Answer 21

Feasibility involves testing the remaining ideas to select the one or two that you will implement. This can be done through a number of different assessments:
1. Market assessment

2. Income evaluation
3. Taxation measurement
4. Fixed and variable costs
5. Market environment - They include market share, market size, market characteristics and market pricing
6. Market share - Depending on how much market share is available, a new idea could capture and
   dominate the entire market or a significant part of the market
7. Market size - Ideally, the idea would fall within a high-volume, high-potential, growing market so that the number of people needing it is maximised
8. Market characteristics - These are some of the many market characteristics which can help to differentiate a new product from existing ones:
   - Superior packaging
   - Better distribution channels
   - Reduced or limited competition for same or similar product in the market
   - Ease of entry into the market
   - Existence of a market which is not complex
9. Market pricing - This would
   include researching the cost of establishing the business, which would include both the variable and fixed costs associated with it.

Question 22

Practical business considerations

Answer 22

Start small. This means that you need to keep the business idea which you have as simple as possible.

Identify what processes or phases you need to take into account.

Be careful not to spend too much money on developing the idea before conducting some level of feasibility analysis

Try to develop your business idea in an area or industry in which you already have knowledge and experience so that you can build from an existing base.

Look carefully at the networks and alliances you have and consider how you can use them as a resource pool