SCORE Cincinnati

Innovation, in a business context, is generally thought of as the product or application of creativity. Peter F. Drucker suggests that innovation “is the specific instrument of entrepreneurship.”

Mr. Drucker further suggests that there are seven sources of innovative opportunity. Four of these relate to a specific industry or service sector: the unexpected; the incongruous; process needs; and structural change. The other three relate to the human and economic environment: demographics; changes in perception, mood, and meaning; and new knowledge.

Let us observe some of these factors at work in a coffee shop venture. The unexpected factor in the success of gourmet coffee shops is the willingness of the consumer to spend two or three times the cost of a generic cup of coffee for exotic, flavored or brand-name coffee. An incongruity is the popularity of fat-free desserts (”healthy” indulgence) to go with that coffee. The structural change in the industry is the emergence of franchises.

Environmental changes have also contributed to this phenomenon. As the “baby-boomer” generation has aged, the preferred place to meet has moved from the bar to the health club to the coffee shop.

Let us consider information about some current trends to see if we can relate them to potential opportunities in the context of Professor Drucker’s categories. For each, see if you can possibly find a niche on which to build a business:

• The unexpected The International Association for Financial Planning is observing a rapid  (to the point of unexpected) increase in calls requesting referrals for financial planners. A spokesperson for the IAFP says, “People are realizing that financial planning is not just for retirement or saving for a child’s college education; it’s for all stages of a person’s life.”
• The incongruous Many Americans are feeling pressed for time, incongruously wishing to lead simpler, easier lives without giving up those activities that take the most time and effort. The opportunity lies in offering personal time-saving products and services that relieve these people of tasks that they find less than fulfilling, not worth the time, or unpleasant.
• Process needs Individuals and businesses are spending unprecedented sums of money to acquire the education, training and skills necessary to remain competitive in a rapidly evolving marketplace, creating opportunities in consulting and training.
• Structural change The health-care industry will flourish because of an aging population, myriad technological advances and people’s expectations of readily available medical care. One of the industry’s fastest growing segments is home-based health care, which is well-suited for entrepreneurs because of its ease of entry.
• Demographics The aging population referred to possesses a combination of leisure time and discretionary funds that makes them a great market for new ventures in services relating to their comfort and recreational needs.
• Changes in perception, mood and meaning The amount of money that citizens and businesses spend on security products and services is growing rapidly; the preferred method for many forms of purchase is increasingly becoming the Internet.
• New knowledge The new smart phones have created opportunities, almost becoming computers with the right software.