MBA Dissertation Richard Dellabarca Page 8 1.

3 Opportunity Recognition In terms of entrepreneurship, and the entrepreneurial process, the phenomenon of opportunity recognition is critical8 in that a major step in any entrepreneurial venture creation process is the recognition of the opportunity by the entrepreneur9. To a degree, definitions of entrepreneurship have increasingly focused on opportunity as existing at the heart of our understanding of the phenomenon10 (although for this to be valid, it assumes that the entrepreneur actually then continued on to create the venture). This can be understood when we reflect on some of the most successful serial entrepreneurs of our time, such as Richard Branson (Virgin Group of Companies) and Stelios Haji-Ioannou (Easygroup), who have built their enterprises by being opportunity focused. They start with what the customers and market want, and do not lose sight of this. Opportunity recognition was perhaps best defined by Christensen, Madsen, & Petersen11 as perceiving a possibility for new profit through (a) the founding and formation of a new venture, or (b) the significant improvement of an existing venture. From this broad definition opportunity recognition can be considered as an activity that can occur both prior to establishment of a firm, and also post founding of a firm (throughout the life of the firm, and throughout the life of the entrepreneur)12. Within the definition are two concepts, an idea and an entrepreneurial opportunity, that lead to the possibility for new profit which need to be distinguished. An idea for a business does not necessarily equate to an entrepreneurial opportunity, although it is always at the heart of an opportunity13 as an idea is the first step in the process of creating an opportunity. Therefore scholars suggest we can think of the idea as a stepping-stone that leads to an opportunity.

A myriad of other factors must exist to support that idea culminating in an observable customer demand for it to become an entrepreneurial opportunity. An entrepreneurial opportunity has the qualities of being attractive, durable, and timely and is anchored in products or services that create or add value for buyers or end users. Given this distinction, and empirical studies conducted by themselves and others, Singh, Hills & Lumpkin therefore suggest opportunity recognition is a process rather than a onetime eureka experience14. This suggestion is explored in the literature review and interviews with Cambridge serial entrepreneurs that follow. In order to appreciate the boundaries of the opportunity recognition process, it is perhaps useful to understand those activities that may be considered to sit on the periphery of the process, but that are not part of opportunity recognition. These include: The circumstances, incentives, triggers (although these may prompt ideas) or motivated propensity1 5 that drive an individual to embark on opportunity recognition in order to pursue entrepreneurial opportunities; and Post identifying a viable entrepreneurial opportunity, whether the entrepreneur actually pursues the opportunity, and if so, the acquisition of new resources or effective management of existing resources in order to exploit the opportunity 1.4 Importance of Opportunity Recognition to both Individuals and Firms Given the assertion above that it is at the heart entrepreneurship, the topic of opportunity recognition is not only important to the individual entrepreneur, but also to any company, profit seeking enterprise, or indeed not-for -profit organisation seeking to innovate, evolve, expand, or improve in the provision of any products and/or services they may provide. The issue for these entities is that in and of itself, opportunity recognition is not an organisational process16 rather it is individuals within an organisation whose entrepreneurial activities contribute to the innovativeness of the company. Therefore for an organization to be more entrepreneurial first requires that its members act on more opportunities. Before acting on opportunities they must first see the opportunities. Seeing

more possible opportunities increases the chances of finding appropriate ones to pursue. It is therefore vital for these organisations who are seeking to increase their entrepreneurial potential to understand how individuals recognise opportunities, so they in turn can provide the infrastructure to support (or avoid inhibiting) the perception of opportunities by their employees17.