WHAT IS AN OPPORTUNITY?
An opportunity is an avenue of activity that is both actionable and has the potential to provide value to an entrepreneur and to customers.
Opportunities are the first real stage of any entrepreneurial venture, and they are the stock-in-trade of serious entrepreneurs. The specific criteria that define opportunities differentiate them from ideas.
The Difference Between Ideas and Opportunities
A common misconception is that the idea for a new business has inherent worth.
This worth is presumably based on the money-making potential of the business. The reality, however, is that ideas do not have inherent worth.
To gain worth—to be transformed into an opportunity—an idea must be developed into an avenue of action that produces value.
An idea exists only on paper; an opportunity is actionable and has a clear path to success. Ideas often come from a desire to create value but can only be considered opportunities when value can be created for both the entrepreneur and customers.
Where Do Opportunities Come From?
Ideas come and go in a flash and often seemingly from nowhere.
Opportunities, however, require careful consideration and cultivation. Because different people have different lived experiences, access to different information, different sets of resources, and different perspectives, the specific approach that is best varies from person to person.
Engaged, structured, and disciplined searches for opportunities that fit their unique skills and experience—known as an entrepreneurial thumbprint—is one of the ways that entrepreneurs can cultivate opportunities.
Using this approach, entrepreneurs who seek out new opportunities focus on solutions to existing problems rather than looking for new knowledge or ideas. The simpler the solution, the better.
Simpler solutions have a higher chance of success. Simpler solutions are easier to execute, and they are easier to convey to potential customers.
In the same way that each person’s lived experience is theirs and theirs alone, different people have access to different information.
This asymmetric distribution of information can be a source of opportunity. What might be merely a good idea for one entrepreneur may be an opportunity for another based on the information they have access to and the nature of their entrepreneurial thumbprint.
Change is both healthy and inevitable. Change can generate opportunities in two distinct ways:
- Change makes it possible to do things that haven’t been done before.
- Change makes it possible to do something in a more valuable way.
In some cases, external change can be the catalyst that transforms an idea into an opportunity.
Opportunities can come from the process of effectuation. Effectuation is best described as the opposite of causation.
Effectuation is the process used to identify entrepreneurial opportunities when the future is unknown or unpredictable. Instead of starting with a goal in mind and assembling resources to meet that goal, effectuation starts with the resources on hand and builds a goal based on those resources.
For example, a chef who is planning a menu will determine which dishes she wants to make, then purchase the ingredients.
This would be a causal approach to making a meal. If you are at home and you decide to make a dish out of the ingredients you have on hand, you are taking an effectual approach.