Entrepreneurship & Creativity_Sirsanath Banerjee

Table of Contents

Sr. No. Particulars Page No.1 Introduction 22 Team Formation 2

Herrmann Brain Dominance Instrument 3Team Profile 4

3 Creative Problem Solving and Entrepreneurial Thinking 43.1 The Kirk’s Space model 54 The Ingenuity™ Process 7

4.1 Phase 1 – Define 7Snapshot of Survey Result 7Flow of thoughts to arrive at problem 9

4.2 Phase 2- Discover 9Innovativeness vs. Success (Kleinschmidt and R. G. Cooper, 1991) 10Idea generation 11

4.3 Phase 3 – Determine 124.3.1 Pugh Method 12

Rough sketch of the supply chain of In-Difference 145 Business Plan 15

5.1 Process Flow 155.2 Technology: 3D Imaging Software - An Unique Selling Point 155.3 Size of Opportunity 175.4 Financial Plan 19

5.4.1 Profit & Loss Statement - Snapshot 195.4.2 Balance Sheet -Snapshot 205.5 Marketing Plan 215.6 Competitor Analysis 226 Investor Pitch 24

6.1 Returns to Investor 246.2 Summary of Financials 257.0 Conclusion 258.0 References 269.0 Appendix 29

Prepared by: Sirsanath Banerjee; Student ID Number: 014803; MBA: NUBS-UNMC Page | 1

INDIVIDUAL REPORT

1.0 Introduction

The entrepreneurial foresight which facilitates impulsive learning leads to an entrepreneur being rewarded by unforeseen gains because of following a latent feeling which is caused by alertness to opportunities. (Kirzner, 1973)

The Timmons Model explains entrepreneurial process as one that begins with an opportunity (not business plan, money, team or networks) and then carves the opportunity into a prospective venture by assembling a team and accumulating the requisite resources to commence a venture that exploits the opportunity. With these cornerstones in mind, we commenced on our journey to form an enterprising venture (‘in-difference’) that could help to fill an existing gap in the market by using the “Ingenuity Process”. (Kirkham, Mosey and Binks, 2013)

Some researchers argue that entrepreneurial projects are thought up by the entrepreneur himself instead of sought by the market itself (White, 1999:93). Although we recognized the role of imagination for the prediction of future markets and believed some entrepreneurs can indeed ‘cause the change’ (Schumpeter, 1934), we tend to agree more with the ideas presented by Ardichvili, Cardozo, & Ray. (2003) that the entrepreneur’s imaginative work includes identifying the needs of the market through watchful investigations and resource apportionment.

2.0 Team Formation


While some researchers argue that potentials of creativity exist in all individuals (Taylor & Sacks, 1981; Torrance, 2000), others believe that assessment of individuals & interventions such as instructions, trainings, etc. can facilitate individuals to intensify their degree of imaginative potentials. (Neethling, 2000; Selby et. al., 2004). In other words, most persons in the class have diverse dominant thinking styles and a Herrmann Brain Dominance Instrument (HBDI) survey was carried out in class in order to identify the analytical (Type A), organized (Type B), caring (Type C) and imaginative (Type D) kind of persons to enable us to form homogeneous or heterogeneous teams (Treffinger & Isaken,1985).

Post the survey results, five participants of the MBA cohort formed a heterogeneous team comprising of Sirsanath Banerjee (C,D); Alwyn Koay Chee Hua (C,B); Kuah Shen Yang (B,A); Lim Shing Loo (C,D) and Lee Ling Kim (D,C).

Following is a graphical representation of the HBDI scores of each team member in the survey:

It was a logical decision made by the group to appoint the person with the highest average score in all areas of thinking preferences the CEO of the venture.

Our team had a natural blend of extremely talented individuals with varied backgrounds and experiences which helped us tremendously in putting together the nuts and bolts required to make this venture a success.


The following table captures the backgrounds of each of the members of the team and the roles allotted to each one of them in the venture:

We tried to leverage on our academic & work experiences to ensure that the right person to handle the right job and this fusion of thinking predilections brings out the best in all of us. Research supports creativity is promoted through collective recognition by way of harnessing knowledge carried by members; lively commitment in collective learning and sharing of information (Sung & Choi 2012).

3.0 Creative Problem Solving and Entrepreneurial Thinking

Creativity is the capability to arrive at artefacts or ideas that are new, valuable and have an element of incredulity. The three forms of creativity include generating unusual combinations of usual ideas, forming exploratory creativity and change of perception in the minds of people Boden, M.A. (2004). While creativity has been said to be the result of a combinatorial process


Epstein, R., Skinner (1991), creativity also plays an important part in the identification of an opportunity (Dimov, 2010).

An excellent example of the application of such creativity into entrepreneurial thinking is that of Schumpeter’s entrepreneur. The Schumpeter’s entrepreneur identified problems, turned them into opportunities and created economic value by converting these opportunities into businesses using creativity (Schumpeter, 1934).

However, the number of available opportunities are overwhelming and hence it becomes important for “filtration of opportunities” from a range of identified ones (Long and McMullan 1984) in order to ensure economic logic (Schumpeter, 1934). This is where it is imperative to align the entrepreneur’s skills, knowledge, experience and other resources with needs of the market in order to filter opportunities for committed pursuit.

3.1 The Kirk’s Space model

The Kirk’s Space model which is a component of “creative problem solving” (Kirkham et al., 2011) is one such model which focuses on the initial stage of any innovation process. The “creative problem solving model” was earlier explained by Wallas G. (1926) on the foundations of preparation, incubation, illumination and verification. Thereafter works such as ‘Techniques of Producing Ideas’ by James Webb Young and “bisociation theory of how creativity works” by Arthur Koestler provided futher insights into the subject. The ‘Ingenuity Model Approach’ that we have adopted for the purpose of this venture is a more evolved version of this model which separates divergent & convergent thinking, allows time for reflection and prescribes three distinct phases: a) “Define” a problem/opportunity, b) “Discover” alternatives, c) “Determine” the best choice from the alternatives.

The Kirk’s Space model methodology is graphically described as follows:


Our team discovered more than 50 problems but listed only about 35 after initial filtering of the problems we found to have merit. Most of the balance 15 problems that were not listed were global problems such as development of transportation between India and Pakistan, disarmament of arms from American households, etc. that would need research of more than 1 week and were hence naturally beyond our scope.


Cooper, R.G. (2001) suggests that the “true innovation” is different from the standard new product development endeavors of conventional enterprises and an essential value proposition is what the industry needs. However it is very difficult to achieve in today’s matured markets where most products are commoditized. Therefore, we focused on finding the existing demands of the market within these problems/opportunities in order to identify the idea where we could add substantial value.

4.0 The Ingenuity™ Process

While it is a common perception that economists are in a position to offer meaningful insights into the process of venture creation as “firm” (Evans 1949, Leibenstein 1968, Baumol 1968, Leff 1979) which is a very commonly used unit for analyzing economic principles, Penrose (1980) argues that economists are generally more concerned with the aggregate behavior of firms instead of individual firms. Subsequently, both researchers of entrepreneurship & organizations (Kirchoff 1991, Bull and Willard 1993, Low and Macmillan 1988 and Katz & Gartner 1988) as well as economists (Nelson & Winter 1982, Buchanan 1982, Loasby 1982, Kirzner 1979) have emphasized on the need of further research in the process of venture creation.

One such model was prepared by Kirkham et. al (2011) at The University of Nottingham Institute for Enterprise & Innovation which was introduced to us to be used as a tool for the venture creation exercise. The distinct phases that this module follows are defining a problem, discovering potential solutions and determining the best solution.


4.1 Phase 1 - Define

The problem of clothes that we buy online but do not fit us well was one which appealed to all the team members as all of us had experienced this problem in the past. While each member of our team agreed that ill-fitting clothes is a real & continuing problem for online shoppers, the result of our primary research (survey of over 67 respondents) revealed that 77% of the respondents acknowledge the importance of fitting apparel when bought online and 42% agree that it is difficult to find fitting clothes online.

Adding the savings that manufacturers would make on account of minimizing returns and the effective cutting edge imagery technology to measure the perfect fit of online shoppers, we had an interesting business case to work on which got us all excited.


Brainstorming on the red card as a team enables us to answer key questions such as who has the problem, what is the problem, when does the problem occur, if the problem is complex, can it be broken, can we have sub-goals to the problem, what are the consequences of a partial solution, what is our understanding of the problem, how does the problem manifest itself, what are the root causes of the problem, what is the impact of the problem and what are the criteria to succeed.


4.2 Phase 2- Discover

The next phase focused on generation of multiple solutions to the identified problem. During this stage, the ember card is utilized to explain the problem & construct a strategy to tackle the same. We were expected to do broad-based thinking using analogies & non-obvious ideas.

We were given ‘post-it’ notes and were asked to generate as many ideas as possible within a stipulated timeline. This involved creative thinking and we witnessed a point of saturation after crossing 60 possible solutions. It was at this point of time when I proposed my team members (in the capacity of the CEO of the venture) to mingle with colleagues of other teams to gather fresh ideas which would benefit our venture immensely. It was also important to promote a culture of tolerance and openness to all kinds of ideas as ours was a whole-brain group.


This was in line with the arguments provided by Kleinschmidt and R. G. Cooper (1991) that the worst performing ideas were ones that were moderately innovative while the highly innovative as well as non-innovative products performed relatively well:

We were soon appreciating divergent ideas in line with Koestler’s (1975) view on the subject which states that creative mind was that the most fertile area of the human mind for incubation was somewhere between full awakening and sleep. This is the region where the disciplined thoughts are not yet hard enough to block the dreamlike fluidity of creativity.


The following photograph captures some of our solutions put up on the wall for further discussions:

Only when we were satisfied that we had produced adequate new concepts to solve the problem and explored as many permutations & combinations of these ideas as possible, we decided to move to the next phase.


4.3 Phase 3 - Determine

In order to select the most suitable solution out of all the possible solutions that we had listed, we decided to use qualitative & quantitative tools (such as The Pugh Method). At this stage, the green card encourages us to categorize the ideas, narrow down to few workable ideas, compare the options & select the best-suited solution.

We narrowed down the list of possible solutions to the following before using the Pugh method to select one:

The Pugh Method is typically used as tool for convergent thinking that enables us to systematically remove flaws in the selected idea. We chose the ranking matrix over the advantage/disadvantage matrix find the best solution to the problem.

4.3.1 Pugh Method


From the above matrix, Solution 2 emerged as the clear winner based on the criteria listed above.


The above figures are the difference between the score of our venture vis-à-vis competitors & not score of the competitors by themselves.


5.0 Business Plan

This section briefly covers the Business Plan of the new venture as presented to the investor.

5.1 Process Flow

In-difference is thus an online aggregator that would use the online platform to sell apparel from leading brands such as Zara, H&M, etc. to fit-sensitive customers.

5.2 Technology: 3D Imaging Software – An Unique Selling Point

The USP of in-difference is the use of a unique software that converts the regular web cam of a computer/tablet/phone into a 3D imaging device that captures accurate measurements of the online shoppers & shares the same with the manufacturers. The online shopper simply needs to spin once in front of the camera. This way online shoppers will be able to capture & share their

exact measurements from the comfort of their homes.


This way, in-difference will create a database of measurements of our online shoppers which they can share with the ones they love and shop on their behalf too.

At the same time, manufactures will be convinced to invest in 3D printing technology as customized apparel (within reasonable timelines) is the future of apparel retail. This way the size of each apparel is customized for each individual instead of forcing online shoppers to fit themselves into the regular ‘S’, ‘M’ and ‘L’ sizes that are currently offered by manufacturers.

5.3 Size of Opportunity


5.4 Financial Plan


We plan to work on a profit sharing model where the manufacturer pays us a commission on each unit that is sold through our e-commerce website. This way we do not mark-up any cost to the online shopper and work on a commission based model.


5.5 Marketing Plan

We plan to utilize the social media for our marketing efforts and introduce innovative tools such as gamification, “share your size on facebook”, etc. to enable robust growth within a few years of incubation our venture. The introduction of the “shop together” feature which allows consumers and their friends to share shopping information.

5.6 Competitor Analysis


We searched for enterprises in similar business and found the following to be our closest competitors:


6.0 Investor Pitch

This section briefly captures the key interests of the investor.

6.1 Returns to Investor


7.0 Conclusion

It was through relentless combined efforts of the team that we were able to succeed in the business pitch of in-difference. I personally felt that the Ingenuity model ignited the virtue of creativity in all team members irrespective of their position in the HBDI survey. A firm believer of entrepreneurship being a quality since birth, I was often skeptical about studies that claimed that various methods can be used to alter personal values suchas creativity (Schwartz & Inbar-Saban, 1988; Ball-Rokeach, Rokeach, & Grube, 1984). However, this assignment compelled me to think that the reasonably stable dispositions of individual value systems can still be disrupted by challenges such as these which spark the virtue of entrepreneurial innovation in all of us.


8.0 References

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9.0 Appendix

Sales Assumption (units unless otherwise defined)


January February March April May June JulyYear Growth 20% 5% 4% 4% 4% 10% 5%

Year 1 - - - 30 100 500 1,000 Year 2 197% 20,000 5,000 4,000 4,000 4,000 10,000 5,000

Year 3 100% 40,000 10,000 8,000 8,000 8,000 20,000 10,000

Year 4 100% 80,000 20,000 16,000 16,000 16,000 40,000 20,000

Year 5 75% 140,000 35,000 28,000 28,000 28,000 70,000 35,000

Year 6 43% 200,000 50,000 40,000 40,000 40,000 100,000 50,000

August September October November December Total MarginYear 4% 4% 10% 10% 20% 100% ($)

Year 1 5,000 10,000 2,000 5,000 10,000 33630 33630Year 2 4,000 4,000 10,000 10,000 20,000 100000 100000Year 3 8,000 8,000 20,000 20,000 40,000 200000 200000Year 4 16,000 16,000 40,000 40,000 80,000 400000 400000Year 5 28,000 28,000 70,000 70,000 140,000 700000 700000Year 6 40,000 40,000 100,000 100,000 200,000 1000000 1000000

Detailed Financial Analysis

FINANCIAL PERFORMANCEParameters 2015 2016 2017 2018 2019 2020(Rs.in Lacs) Provisional Projected Projected Projected Projected ProjectedNo of months 12 12 12 12 12 12Total operating income (TOI) 33630.00 100000.00 200000.00 400000.00 700000.00 1000000.00EBIDTA -106333.00 -63710.00 -11031.00 126415.90 333607.49 540518.24EBIDTA/TOI (%) -316.2% -63.7% -5.5% 31.6% 47.7% 54.1%Interest 11500.00 8625.00 6468.75 4851.56 3638.67 2729.00Depreciation 400.00 400.00 400.00 400.00 400.00 400.00Operating Profit (OP) -118233.00 -72735.00 -17899.75 121164.34 329568.82 537389.24Non-operating Income 0.00 0.00 0.00 0.00 0.00 0.00PBT -118233.00 -72735.00 -17899.75 121164.34 329568.82 537389.24PAT -94586.40 -58188.00 -14319.80 96931.47 263655.06 429911.39PAT/TOI (%) -281% -58% -7% 24% 38% 43%Net Cash Accruals (NCA) -94186.40 -57788.00 -13919.80 97331.47 264055.06 430311.39Gross fixed assets 300000.00 300000.00 300000.00 300000.00 371843.20 804347.70Net fixed assets 290000.00 288000.00 285600.00 282720.00 351107.20 779464.50Paid up share capital 50000.00 50000.00 50000.00 50000.00 50000.00 50000.00Tangible Networth (TNW) -29000.00 112812.00 98492.20 195423.67 259078.72 688990.11Exposure in subsidiaries /Group Cos. 10000.00 10000.00 10000.00 10000.00 10000.00 10000.00· Investments 10000.00 10000.00 10000.00 10000.00 10000.00 10000.00· Loans and advances 0.00 0.00 0.00 0.00 0.00 0.00Adjusted TNW (ATNW) -39000.00 102812.00 88492.20 185423.67 249078.72 678990.11Other non current assets 10000.00 10500.00 11025.00 11576.25 12155.06 12762.82Long term debt (LTD) 300000.00 159188.00 162157.80 54448.80 53338.60 40000.00Short term debt (STD) 16000.00 25000.00 35000.00 45000.00 52000.00 65000.00Working Capital Bank Finance 110000.00 110000.00 110000.00 110000.00 110000.00 110000.00Total Debt 426000.00 294188.00 307157.80 209448.80 215338.60 215000.00Total Debt /ATNW -10.92 2.86 3.47 1.13 0.86 0.32LTD/ ATNW -7.69 1.55 1.83 0.29 0.21 0.06Total Outside Liabilities (TOL) 459000.00 316188.00 329157.80 230448.80 236338.60 236000.00TOL/TNW -15.83 2.80 3.34 1.18 0.91 0.34TOL/ ATNW -11.77 3.08 3.72 1.24 0.95 0.35


Total Current Assets 20000.00 20500.00 21025.00 21576.25 22155.06 22762.82Total Current Liabilities 159000.00 157000.00 167000.00 176000.00 183000.00 196000.00Net working capital -139000.00 -136500.00 -145975.00 -154423.75 -160844.94 -173237.18Current ratio 0.13 0.13 0.13 0.12 0.12 0.12ROCE (%) -35.94% -20.88% -3.74% 41.33% 88.99% 67.18%ROE (%) -189.17% -116.38% -28.64% 193.86% 527.31% 859.82%Interest cover -7.19 -5.70 -1.15 21.06 73.57 158.68Term debt/ NCA -3.36 -3.19 -14.16 1.02 0.40 0.24DSCR 0.00 -2.14 -0.27 2.59 5.55 7.96Average DSCR 3.38Inventory Days 0.00 0.00 0.00 0.00 0.00 0.00Debtors Days 108.53 36.50 18.25 9.13 5.21 3.65Creditors Days 349.85 23.38 10.09 2.73 1.62 1.15Without considering non current liabilitiesRatio 2015 2016 2017 2018 2019 2020Total Non current Liabilities 0.00 0.00 0.00 0.00 0.00 0.00Total Debt /ATNW -10.92 2.86 3.47 1.13 0.86 0.32Term debt/ NCA -3.36 -3.19 -14.16 1.02 0.40 0.24Leverage

Particulars 2015 2016 2017 2018 2019 2020TOL 459000.00 316188.00 329157.80 230448.80 236338.60 236000.00TNW -29000.00 112812.00 98492.20 195423.67 259078.72 688990.11ATNW -39000.00 102812.00 88492.20 185423.67 249078.72 678990.11TOL/ TNW -15.83 2.80 3.34 1.18 0.91 0.34TOL/ ATNW -11.77 3.08 3.72 1.24 0.95 0.35Other Ratios

Particulars 2015 2016 2017 2018 2019 2020Sales / TNW -1.16 0.89 2.03 2.05 2.70 1.45Current Assets / TNW -0.69 0.18 0.21 0.11 0.09 0.03NWC / TNW 4.79 -1.21 -1.48 -0.79 -0.62 -0.25ROCE -0.36 -0.21 -0.04 0.41 0.89 0.67Movement of NWC

Particulars 2016 2017 2018 2019 2020 2021Long term sources 202000.00 5369.80 99811.47 267111.06 434058.59 752227.32Long term uses 199500.00 14844.80 108260.25 273532.22 446450.86 78302.01Surplus / deficit 2500.00 -9475.00 -8448.78 -6421.16 -12392.27 673925.31Opening balance -139000.00 -136500.00 -145975.00 -154423.75 -160844.94 -173237.18Closing balance -136500.00 -145975.00 -154423.75 -160844.94 -173237.18 0.00Cash flow

Particulars 2016 2017 2018 2019 2020Cash from operating activities -63710.00 -11031.00 126415.90 333607.49 540518.24Changes in working capital -11000.00 0.00 -1000.00 0.00 0.00Income tax -14547.00 -3579.95 24232.87 65913.76 107477.85Total Cash from operating activities -60163.00 -7451.05 101183.03 267693.73 433040.39Cash from investing activities 1100.00 1475.00 1928.75 -69366.01 -429365.06Cash from financing activities 59563.00 6501.05 -102560.56 -197748.87 -3067.60Net cash generated 500.00 525.00 551.22 578.84 607.73Opening balance 10000.00 10500.00 11025.00 11576.25 12155.06Closing balance 10500.00 11025.00 11576.22 12155.09 12762.79Return on Capital Employed Particulars 2015 2016 2017 2018 2019ROCE (%) -35.9% -20.9% -3.7% 41.3% 89.0%

SWOT Analysis of In-difference:


• STRENGTH

• Team with empathy for the problem in hand

• Boundary less (global location)

• Time saving

• Price/product comparison

• No time constraints

• Cost effective

• Direct communication with consumer

• Improved customer interaction

• Flexible target market segmentation

• Simple and easier exchange of information

• Lowers transaction cost

• Easy arrangement of products

• Faster buying procedure

• No physical company set up

• Easy and interractive shopping experience

• Low operating cost

• Mobile platform

• With FA on board (patent), reduces rivalry

• No physical contact for measurements

• WEAKNESS

• Security

• Fake websites

• Fraud

• Fewer discounts and bargaining

• Long delivery timing

• No idea about quality and physical condition of the product

• Limitation of products Lack of personal services

• More shipping cost


• Limited exposure

• Limited advertising

• Customer’s satisfaction

• Opportunity

• Diverse array of apparel brands

• Unique product category

• With globalization, expands reach of customers and retailers

• Growing number of population

• increase in spending power

• Changing trends

• New technology

• Wide business growth

• Cut down on local competition

• Advertising

• Threats

• More e-commerce emerging

• Online fraud cases

• Global internet breakdown/ virus

• Online data security breach

• Revolutionin current technology in image capturing

• Global economic downturn

• Changes in environment, law and regulation


Entrepreneurship & Creativity_Sirsanath Banerjee

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