The starting point of a business opportunity — an unmet need, a market inefficiency.

Firms exist to coordinate & motivate people’s economic activity. There are tremendous gains in efficiency if individuals specialise in their production activities (division of labour). But once people specialise, they become mutually dependent, because no one produces by himself all the thing he needs even to survive, let alone to prosper. In fact, in a modern economy, an individual in his job actually produces nothing that he wants personally to consume. Instead he must exchange the limited set of things he does produce for the vast variety of goods & services that he actually wants & that others make.

Coordination means that all the needed tasks are completed without pointless duplication. It seeks to ensure that all the tasks are done efficiently, by the right people in the right way, & at the right time & place.

The firm should focus on activities where it can create the most value. Nike, for example, out sources all its production, but does the product design, marketing & distribution . Benetton actually out sources the basic design work & most of the manufacturing for its products. It also relies on retail outlets that are independently owned, although selling only Benetton products, & it deals with these retailers through agents who are not Benetton employees.

3M’s motto was “make a little, sell a little”. 3M was not interested in competing in mass markets on the basis of cost. Rather it pursued niche markets, abandoning these when competition from imitators proved too intense.

Firms must develop multiple business opportunities, & to continue to grow & survive they must do this on an ongoing basis. Thus, at any given time they must have a portfolio of activities going on within the firm: Searching for new opportunities, building new businesses, running existing ones, exiting others — all may need to be done at once.

Creativity involves originality, imagining new things, seeing new patterns & connections. One has to create something distinctive that works.