By Davies Zhai - Jetek Staff
Three Ways to Identify an Opportunity
Observing Trends
Solving a Problem
Finding Gap in the Marketplace
Second Approach: Solving a Problem
Sometimes identifying opportunities simply involves noticing a problem and finding a way to solve it. These problems can be pinpointed by observing trends and through more simple means, such as intuition, serendipity, or chance. Many companies have been started by people who have experienced a problem in their own lives, and then realized that the solution to the problem represented a business opportunity.
Third Approach: Finding Gaps in the Marketplace
A third approach to identifying opportunities is to find a gap in the marketplace. A gap in the marketplace is often created when a product or service is needed by a specific group of people but doesn’t represent a large enough market to be of interest to mainstream retailers or manufacturers.
What Personal Characteristics Help The Entrepreneur to Identify Entrepreneurial Opportunities?
Characteristics that tend to make some people better at recognizing opportunities than others
Creativity
Cognitive Factors
Prior Industry Experience
Social Networks
Creativity
Creativity is the process of generating a novel or useful idea. Opportunity recognition may be, at least in part, a creative process. For an individual, the creative process can be broken
down into five stages, as shown on the next slide.
Cognitive Factors
Studies have shown that opportunity recognition may be an innate skill or cognitive process. Some people believe that entrepreneurs have a “sixth sense” that allows them to see opportunities that others miss. This “sixth sense” is called entrepreneurial alertness, which is formally defined as the ability to notice things without engaging in deliberate search.
Prior Industry Experience
By working in an industry, an individual may spot a market niche that is underserved. It is also possible that by working in an industry, an individual builds a network of social contacts who provide insights that lead to recognizing new opportunities.
It is also important to note that anecdotal evidence suggests that people outside an industry can sometimes enter it with a new set of eyes, and as a result, innovate in ways that people with prior experience might find difficult.
Social Networks
The extent and depth of an individual’s social network affect opportunity recognition. People who build a substantial network of social and professional contacts will be exposed to more opportunities and ideas than people with sparse networks. Research results suggest that between 40% and 50% of people who start a business got their idea via social contact.
Strong-Tie Vs. Weak-Tie Relationships
All of us have relationships with other people that are called “ties.”. Strong-tie relationships are characterized by frequent interaction and form between coworkers, friends, and spouses. Weak-tie relationships are characterized by infrequent interaction and form between casual acquaintances. It is more likely that an entrepreneur will get new business ideas through weak-tie rather than strong-tie relationships.
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