Teaching Opportunity Recognition: Meeting the Challenges of Message,Method and Measurement

Abstract

The efficacy of experiential entrepreneurship education is often dependent upon students’ ability to identify a viable entrepreneurial opportunity early in the class or programme. Yet students often struggle with this process for a wide variety of reasons. Translating theory into the classroom may be considered a pathway to provide educators with the tools they need to help students enhance their opportunity recognition skills. In this article, we first review theories of opportunity recognition and challenges associated with teaching this topic. We then offer a pedagogy that addresses the content indicated by theory, a method of teaching the topic and propose an assessment structure. Within the pedagogical model provided, educators have the freedom to incorporate their preferred individual instructional tools to meet the needs of their learner audiences and to allow them to take advantage of their own personal resources.

Keywords

Opportunity recognition entrepreneurship education entrepreneurial self-regulation entrepreneurial competencies

Consider a teacher’s story. It is 9:00 am on a sunny Saturday in southwestern Florida. Twenty-six expectant faces watch me walk into the room. This is the first day of orientation for students from around the USA and the world who have come to my university to pursue a graduate degree in entrepreneurship. Some of them have already completed a career and are looking for an ‘encore.’ Some have spent a few years in business or pursuing other vocations. Most of them are recent graduates with a baccalaureate degree. Unlike the vacationers and locals who are getting ready to head to a nearby beach for the day, they are spending this beautiful day inside to learn more about what to expect during their graduate programme.

Like most entrepreneurship programmes today, this course is experiential and requires students to practise entrepreneurship during their studies. Today, they will learn that instead of a thesis or a final comprehensive exam, they will be expected to develop a business concept and ready this concept for a pitch to experts and prospective investors or strategic partners in less than 12 months. This is the reason many of these students selected this programme. That is, they hoped for the chance to pursue their entrepreneurial dream or passion. Others are here because they are convinced that becoming an entrepreneur is something they see in their future but do not know how to find their entrepreneurial path.

When the initial class discussion focuses on the rapid pace of the programme and the importance of settling into a business concept early in the programme, many of the students begin to panic. They raise the same questions semester after semester. ‘I have been advised to follow my passion, but I don’t have a passion.’ ‘What do I do, if I don’t have a business concept to pursue?’ ‘Can I work with someone else with a business idea?’ and so, it goes.

As teachers, we have observed that students who have a potentially viable opportunity against which to apply what they are learning about entrepreneurial finance, business models and strategy, learn more or at least perform at a higher level in class. They are more engaged and have gained a deeper understanding of the topics covered in class.

An idea is the beginning of a viable entrepreneurial opportunity, but that opportunity only begins to crystalise when action is required. Most entrepreneurship education programmes require students to move into practice, that is to become entrepreneurs, even when they may not have conceived a viable idea. Given this, how can entrepreneurship teachers help students enhance their ability to recognise opportunities, regardless of their own experiences and exposure?

Linking Theory and Practice

In his essay outlining a unifying educational philosophy for the discipline, Jones (2018) defines entrepreneurship education as ‘a collective of initiatives operating in universities, community colleges, vocational (or trade) schools, high schools and elementary (or primary) schools’ (p. 243). A signature aspect of the entrepreneurship discipline is a focus on linking the practice of entrepreneurship with academic theory (Ratten & Usmanij, 2021). Scholars have highlighted opportunity recognition as one of the most important abilities of successful entrepreneurs (Ardichvili et al., 2003). Educators have highlighted the importance of the student practice of opportunity recognition (Knight, 1987; Kourilsky, 1995; Solomon et al., 2002; Vesper & McMullan, 1988). Application models of key competencies of entrepreneurship have included opportunity recognition as a primary skill (Morris et al., 2013; White, 2021; White & Moore, 2016; Wing, 2006).

Entrepreneurship educators have been creative in their efforts to help students identify a creative solution to a business problem that might become an entrepreneurial opportunity. Some provide constraints that will enhance their odds of generating an idea that has market potential. Others focus on helping learners build creative problem-solving skills. Educators may also focus on building entrepreneurial mindset. Many use a combination of these approaches. However, even after years of experimentation, the discipline has not adopted a comprehensive pedagogy that allows for both the practice of opportunity recognition and assessment of learning. Nixdorff and Solomon outlined the challenge more than a decade ago in this way:

The challenge to educators will be to craft courses, programmes and major fields of study, meeting rigors of academia while keeping a reality-based focus and entrepreneurial climate in the learning experience. One demand is that they must be able to initially recognise a potential opportunity, as a precursor to further behavior. (Nixdorff & Solomon, 2007, p. 1)

Adopting the premise that a requirement of experiential entrepreneurship education is the ability to identify a prospective entrepreneurial opportunity, we attempt here to address the pedagogical and practical questions associated with experiential entrepreneurship education in a traditional academic environment. Based on the belief that entrepreneurship educators must incorporate theoretical content into their courses if they expect learners to develop the cognitive skills necessary for effective entrepreneurial decision-making (Fiet, 2000), we start by first examining several prominent models of the process of opportunity recognition in the entrepreneurship literature. We then review challenges with transferring these models into an opportunity recognition pedagogy. We conclude by sharing a pedagogy for the message, method and measurement of opportunity recognition that aligns the theory and practice of entrepreneurship with traditional academic expectations.

Entrepreneurship Education and Opportunity Recognition

Entrepreneurship as a discipline that emerged in the 1970s and 1980s under course titles in small business management. As the field began to grow, there was an emergence of classes and research that examined high-growth firms along with new venture creation processes. Early in this progression, the work of Kirzner (1974) on entrepreneurial discovery and the important role of alertness to stimuli influenced the conception of what, some decades later, became a convergence of research on the process and role of opportunity recognition in entrepreneurship. Two decades ago, Shane and Venkatraman (2000) elevated the importance of the construct when they argued that ‘without opportunities there would be no entrepreneurship’.

The word opportunity stems from Latin origin: ob (towards) and portus (port). The original term, Op-por-tu, referred to the time before ports were dredged, when the captain and crew had to wait for the tide to rise, to go into a port. Sailors used the phrase ob portus to denote the best combination of wind, current and tide to sail to port. However, the only way to capitalise on such weather conditions was if the vessel’s captain had already sighted the port of destination. Knowing the weather conditions, without knowing the destination, was useless. Therefore, a ship was in a state of opportunitas when its captain had decided where to go and knew how to get there. Like the sailor, the experiences, perceptions, network and other relevant stimuli prepare an entrepreneur for the ability to recognise and take advantage of a gap in the marketplace.

The literature on entrepreneurial opportunity recognition has relied on a variety of conceptual definitions. Most are based in this nexus of the individual, their resources and the external environment. These suggest that differences in experiences and perceptions will affect one’s ability to discover and develop entrepreneurial opportunities. For example, in his essay exploring why some people recognise opportunities, while others, under the same set of conditions, do not, Venkataraman (1997) characterised entrepreneurial opportunities as a set of ideas, beliefs and actions that enable the creation of future goods and services in the absence of current markets for them. His arguments centred on the importance of the nexus of the individual and the external environment.

The significant issue is that individuals vary in how they process and interpret statistical generalities, and these variations may have significant but systematic impact on the decision to become an entrepreneur and the relative success of the endeavour (Venkataraman, 1997, p. 125).

Entrepreneurial opportunities have been defined as ‘those situations in which new goods, services, raw materials, and organizing methods can be introduced and sold at greater than their cost of production’ (Shane & Venkataraman, 2000, p. 220). Moreover, the literature has suggested three components of the recognition of opportunities: ‘(1) sensing or perceiving market needs and/or underemployed resources, (2) recognizing or discovering a “fit” between particular market needs and specified resources, and (3) creating a new “fit” between heretofore separate needs and resources in the form of a business concept’ (Ardichvili et al., 2003, p. 109).

Most scholars agree that opportunity recognition is one of the most fundamental entrepreneurial behaviours; without it, there would be no idea to act upon and no venture to build (Shane & Venkataraman, 2000). However, the process through which opportunities are identified is not so clear. Perspectives on entrepreneurial opportunities have roots in the work of twentieth-century economists. As early as 1934, Joseph Schumpeter suggested that the role of the entrepreneur is one of being a creator of new solutions to problems in the marketplace, for example, the practice of creative destruction (Schumpeter, 1982). Four decades later, American-born economist, Israel Kirzner, suggested that entrepreneurs discover entrepreneurial opportunities that are present in the environment through the process of ‘alertness’ (Kirzner, 1974).

Today, there is still an ongoing debate regarding whether entrepreneurial opportunities are discovered or created. Based in developmental psychology, the constructionist perspective suggests that opportunities are created when entrepreneurs interpret stimuli in the external environment and apply a trial-and-error approach to give them form, whereas the discovery perspective has roots in cognitive psychology and suggests that entrepreneurs shape opportunities by linking patterns of information to identify new business opportunities (Vaghely & Julien, 2010). In their analysis of these two perspectives, Alvarez and Barney (2007) used Mount Everest as a metaphor to explain these two perspectives—‘mountain climbing’ and ‘mountain building’ (p. 11). According to the first perspective, opportunities are objective and merely waiting to be discovered through environmental scanning and data analysis. However, the creation approach, argues that opportunities do not exist and therefore must be created by the entrepreneur through an iterative learning process.

Creative Problem-solving

One of the earliest models of entrepreneurial opportunity recognition was proposed by Hills et al. (1999). These authors applied a creative problem-solving approach to help students develop ideas for business concepts that may prove to be entrepreneurial opportunities. Based on the work of psychologists, Wallas (1926) and Csikszentmihalyi (1996), Hills et al. suggested four stages in the process of entrepreneurial opportunity recognition: preparation, incubation, insight and evaluation. In his informative essay on how advertisers can generate more creative ideas, Young (1940) offered a similar five-stage model for generating ideas. Expanding on the preparation stage, Young identified two types of raw material—general and specific—as important to the process. He included a stage of thoughtful connections prior to the incubation stage.

Personal Characteristics, Networks and Prior Knowledge

Favouring the constructionist or creation camp, Ardichvili et al. (2003) argued that ‘while elements of opportunities may be “recognized”, opportunities are made, not found’ (p. 106). This research also supports an integrated, iterative perspective. Their model of opportunity identification is based in development theory and includes a process that involves alertness, information asymmetry and prior knowledge; social networks; personality traits, including optimism and self-efficacy and creativity; and type of opportunity. This model assumes that entrepreneurs come to the process with certain personality characteristics, their social network and some prior knowledge. Armed with these, it is the level of entrepreneurial alertness that then allows them to enter a process of perception, discovery and creation that provides a pathway to the development and evaluation of opportunities. This process is moderated by the type of opportunity under consideration which they classify into four categories based on value sought and value creation capabilities. These four types of opportunities are as follows: dreams, problem-solving, technology transfer and business formation.

DeTienne and Chandler (2004) identified four ways that entrepreneurs identify opportunities: active search, passive search, fortuitous discovery and creation. Within this context, the authors proposed a model for helping learners build opportunity recognition competencies via passive search. Highlighting the challenges of applying theoretical models to classroom learning, the authors attempted to design a model that would be customised for and by each learner. To reach this end, the authors proposed that students need to creatively assess the environment and then identify opportunities that relate to their own individual knowledge corridors. Thus, an opportunity for one aspiring entrepreneur may not be identified by another. Building on the work of Epstein (1996), the authors identified a four-step process for teaching opportunity recognition: securing or capturing ideas; expanding or broadening one’s understanding of ideas; exposing ideas to diverse circumstances and uncertainty; and challenging oneself through failure.

Riquelme (2013) offered one of the few empirical studies of opportunity identification. Their quantitative study includes 240 entrepreneurs from Kuwait and used multiple regression analyses to identify the relative importance of four factors: cognition, social capital, environmental development and personality. Their findings indicated that the process of opportunity recognition begins with the organisation of prior knowledge by entrepreneurs who have confidence in themselves and use social networks to help them to recognise opportunities based on changes in the external environment.

Cognition and Information Processing

Applying a cognition lens to better understand how entrepreneurs identify opportunities, Baron (2006) described the mental process of ideation that leads to opportunity recognition. Based in the three conceptual premises of the process of engaging actively in the search for opportunities, alertness and prior knowledge of an industry or field, Baron suggests that the process of opportunity recognition is one of ‘connecting the dots’ or finding connections between what were earlier considered unrelated patterns among events or trends external to them. Moreover, this process tends to follow one or both of two common cognitive models. These include idealising prototypes to recognise patterns among prior unrelated elements or comparing existing examples to combine unrelated elements.

Baron provides three suggestions for how to enhance individual entrepreneurial opportunity recognition based in this model. First, by looking for opportunities where they are most likely to occur, that is, to focus where major changes are occurring in the external environment and then to evaluate how these are significantly impacting business. Second, he suggests that to increase the odds of recognising entrepreneurial opportunities, one should increase their exposure to a broad range of experiences. Third, exposure to a wide variety of business concepts that vary in quality can lead to a greater ability to evaluate business ideas.

Based on a study of 10 small and medium-sized enterprises (SMEs), Vaghely and Julien (2010) offer a model of opportunity recognition that applies a developmental psychology approach based in an entrepreneurial information processing framework. Their model suggests that entrepreneurs rely on algorithmic information processing and heuristics to identify new business opportunities. More specifically, entrepreneurs evaluate information they find in the environment and combine those with intuition to find new solutions to marketplace problems.

Iterative Learning

In their study of the role of learning in opportunity recognition, Lumpkin and Lichtenstein (2005) looked at the impact of three types of organisation learning—behavioural, cognitive and action—in the creative problem-solving process. Their two-phase model of opportunity recognition suggests that organisational learning may enhance outcomes in both the discovery and the creation phase of the new venture creation process.

Reviewing the limitations of previous studies, Fast (2021) offered what she referred to as a ‘more holistic’ approach to the process of opportunity recognition. Choosing to include both entrepreneurs and intrapreneurs and a range of conditions present in small start-ups as well as large organisations, Fast (2021) identified 23 variables of the process, of which 12 were not included in previous studies. The primary contribution of her model is the process of reframing the opportunity until the ‘real opportunity’ emerged.

From Theory to Pedagogy

There are several challenges entrepreneurship educators face as they attempt to translate theory into pedagogy, generally and specifically. These challenges fall into three categories: message or the content that we teach, method, that is, how to teach and measurement, or determining meaningful outcomes for students. The design of a pedagogy for teaching any subject matter requires a deep understanding of the current knowledge of a subject and the ability to translate what is known about a subject into an experience in the classroom. This can be especially challenging when the literature has not developed a widely accepted model of practice in a subject, as in the case of opportunity recognition. Second, because entrepreneurship education is experiential in nature, any pedagogy that intends to educate the learner on the subject must be one that engages the student in the practice of the subject. Engagement implies that the learner must participate willingly and fully in the process for learning to occur. Third, creating a learning environment for assessment of learning has been and continues to be a challenge in entrepreneurship education, even more so when talking about opportunity recognition.

Challenge 1: Message

We identify three problems with translating content related to opportunity recognition theories into a pedagogy for students. First, one might conclude from theoretical models that a single perspective cannot fully explain the process. That is, the process of opportunity recognition is one of both creation and discovery, as well as both behaviours and cognitive activity. Theories on the process have evolved from general theories of basic creative problem-solving to more fine-grained models of behaviour and thought that are based in effectuation, cognition and learning. Moreover, studies of opportunity recognition have varied in terms of how they define and measure opportunity recognition. In their review of 56 articles on the topic, Hansen et al. (2011) found 49 conceptual definitions and 36 operational definitions. Among the 49, only 2 definitions included some aspect of solving a marketplace problem (Alsos & Kaikkonen, 2002; Chandler et al., 2003). The remainder were focused on idea generation and the ability to innovatively combine resources.

Second, the current models of opportunity recognition do not offer direction for educators on the earliest stages of opportunity recognition. Educators in the entrepreneurship field often complain that every student wants to start a restaurant or bar because this is what they know. Student problem-solvers are often at a disadvantage due to their limited experiences and perceptions; a lack of context. They struggle with finding an addressable market problem, and when they do, they often make assumptions based on very limited information. Yet, Albert Einstein is reported to have once said, ‘If I were given one hour to save the planet, I would spend 55 minutes defining the problem and five minutes resolving it’.

The initial definition and articulation of a problem will have an impact on the design of the solution which in turn is strongly affected by the assumptions made regarding the problem. Theories of opportunity recognition offer little regarding this phase of the process. Hills et al. (1999) allude to this process during the preparation phase of their model when they discuss intentional and unintentional information gathering and processing. Baron (2006) includes constructs such as entrepreneurial alertness, perceptions and interpretation of information. Others include similar elements in their theoretical models. Yet, there is limited or no attention given to the steps involved in problem definition and the fine-grained details of making assumptions based on available information in the literature.

Psychologists agree on the importance of problem definition and assumption setting in the creative problem-solving process. Consider the following example provided by Pretz et al. (2003) to demonstrate the impact of assumptions in one’s ability to produce a solution for even ordinary problems.

You have a jug full of lemonade and a jug full of iced tea. You simultaneously empty both jugs into one large vat, yet the lemonade remains separate from the iced tea. How could this happen? At first, this puzzle is difficult. You imagine two pitchers of refreshing drinks being poured into a common vessel and wonder how they could not mix. (It is safe to assume that the lemonade and iced tea have similar densities). However, if you change your mental representation of the lemonade and iced tea, you see that frozen drinks could be easily poured into the same vat without mixing. Though the problem itself does not specify the state of the drinks, most people assume that they are liquid, as is usually the case. But this constraint is simply an assumption. Of course, this puzzle is a fairly trivial one. But in life, we often make unwarranted assumptions in our everyday problem solving. Such assumptions can interfere with our ability to discover a novel solution to an ordinary problem. (Pretz et al., 2003, p. 5)

Problem-solving can be described as a cycle that begins with identifying the problem and developing a mental representation of it (Bransford & Stein, 1993; Hayes, 1989; Sternberg, 1986). Psychologists also suggest that here are two types of problems: those that are well-defined, and others that are thought to be ill-defined (Pretz et al., 2003). A well-defined problem is one where the goals, path to solution and even the obstacles to the solution are clearly based in the information available. An ill-defined problem, on the other hand, is one where the solution is not so clear. Ill-defined problems are the big, fuzzy ones that require significant work at the problem definition stage to outline a solution. Furthermore, Pretz et al. (2003) suggest that for every problem, there are three required phases to solution—problem finding, problem definition and problem representation. A pedagogy for teaching this process of opportunity recognition to novice learners needs to include lessons on the importance and impact of this phase and on building skills associated with clear problem definition and assumption setting.

The third problem with current models is that most do not demonstrate the ongoing nature of the process. According to Van Der Vleuten (1996), the development of a skill involves learning each of its components, while growth is defined as a repetitive process that results from repeated practice of the skill. According to Ericsson (2003), deliberate practice is a key component in learning skills associated with complex problem-solving. Fast (2021) recognises this process with her iterative learning model but concludes her model with either abandonment or opportunity recognition. Most others also treat opportunity recognition as an outcome that concludes the process. Entrepreneurship literature has begun to define entrepreneurship as a practice (Teague et al., 2021; White, 2021). Similarly, a pedagogy for opportunity recognition would benefit from adopting a deliberate practice theory of entrepreneurship.

Challenge 2: Learner Motivation

The recognition of an entrepreneurial opportunity is usually a complex problem. According to psychologists, in the case of complex problem-solving, knowledge alone is not enough. To solve a complex problem, motivation and personal resourcefulness are required to undertake the challenge and to persist until a solution is reached (Zimmerman & Campillo, 2003). As a special case of complex problem-solving, an effective pedagogy for teaching opportunity recognition will require addressing issues of curiosity, adaptability and the ability to think flexibly. To reach this end requires the deep engagement of the learner.

As most educators have learnt, in a typical learning environment, the level of engagement among students will vary. At one end are the students who will become immediately and deeply immersed. This is the learning response we all deeply crave where the student owns their learning and develops a form of ‘self-authorship’ with their learning experience (Magolda, 2008). At the other end of the spectrum, we may find students who outrightly reject learning as they disengage from the learning experience (Dean & Jolly, 2012). In the middle are a wide variety of responses to learning that may include modest engagement or some resistance to learning opportunities. The reasons for these differing levels of engagement are many and are often invisible to the instructor.

Experiential entrepreneurship education is a special case of learning that may have even more significant outcomes from disengaged learners. When a learner is not fully engaged in the early stages of the process, they will meet with continued challenges throughout the course or programme. This is especially true when the learning experience involves the need to identify an addressable marketplace problem for which they can design a potential entrepreneurial opportunity. Moreover, entrepreneurship education programmes, courses and exercises often employ team assignments or peer learning where the active disengagement of just one student in the team often leads to negative consequences for all others.

While the decision to engage is, in the end, a choice the student makes, the instructor plays an important role by providing a learning environment that is conducive to engagement. In his definition of student engagement, George Kuh, former director of the National Survey of Student Engagement (NSSE), makes this dual responsibility clear. Student engagement can be defined as ‘the time and energy students devote to educationally sound activities inside and outside of the classroom, and the policies and practices that institutions use to induce students to take part in these activities’ (Kuh, 2003). A student’s engagement can be affected by factors that range from student interest in the subject and student readiness to learn (Svinicki & Dixon, 1987) to emotional response to the subject or instructor (Zull, 2002) to cognitive dissonance based in social identity (Dean & Jolly, 2012). Some of these can be addressed within the design of the pedagogy, while others cannot and are best addressed on an individual student basis.

Based on a comparison of expert versus novice complex problem-solvers, psychologists identified issues of self-regulation and context as key factors in their skill acquisition differences (Zimmerman & Campillo, 2003). To address these differences, they suggest a social cognitive-based theory of complex problem-solving that can address the issues associated with student engagement in designing a pedagogy for opportunity recognition. Social cognitive theory is based in a triatic reciprocal causation model (Bandura, 1986) that suggests that learning occurs in a social context with a dynamic interaction among person, environment and behaviour. Based on this model, Zimmerman and Campillo (2003) offer a model for teaching novice problem-solvers that encourages self-regulation and that leads to a stronger likelihood of ownership of the learning process. Their model includes three cyclical self-regulatory phases: forethought, performance and self-reflection (see Figure 1).

Forethought includes two steps: task analysis and self-motivation beliefs. Task analysis includes helping students set goals and plan for the process. Self-motivation beliefs include addressing issues of self-efficacy, expectations for outcomes, clarifying the value of the process and goal orientation, that is, helping the student clarify what they can learn from the experience.

Performance addresses issues of self-control and self-observation. Self-control requires self-instruction and self-education, visualising outcomes, attention focusing and strategies for completing tasks. Here, students are encouraged to experiment and work towards finding strategies, rituals and/or routines that help them reach their goals. This phase involves considering outcomes of those efforts. It is one of self-observation where instructors can help students to establish self-recording and self-experimentation practices. Students can be encouraged to verbalise and record the successes and challenges of their efforts. For example, students might be asked to keep a journal of their work that includes notes on challenges, disruptions and efforts they are making to increase their focus and concentration.

Self-evaluation and recording in the performance phase can provide a pathway to the third phase of self-reflection. Here, students contemplate the outcomes of their efforts and make decisions regarding how to proceed. These include self-judgement and self-reaction. The former involves reviewing the notes and efforts of the second phase, comparing them to their goals and determining causal relationships. That is, did the efforts made in the performance phase help reach the goals established in the goal-setting stage? The latter involves making decisions about whether the outcomes are as expected or whether the strategies or the goals need to be adjusted. In entrepreneurship, this is often referred to as a ‘pivot’.

Challenge 3: Measurement

One of the greatest challenges for entrepreneurship educators attempting to incorporate lessons on opportunity recognition is measuring and assuring learning outcomes. Theory has established that opportunity recognition is a messy, iterative process that is unique to each individual learner. This alone makes assessment a challenge. But the problem with measuring in this case is confounded by the time frame of educational programming. Opportunities are only recognised after they have been given time to be realised in the marketplace. While there are always some exceptional examples of students who can truly demonstrate market viability while they are students, most of them will not. The short-term nature of educational programmes is in direct conflict with the longer-term assessment needs of the topic.

Some efforts have been made to assess student learning in opportunity recognition. For example, in their study of 130 senior-level students, DeTienne and Chandler (2004) measured successful opportunity recognition in terms of the quantity of ideas and the innovativeness of ideas generated. While both measures may be proven to produce innovative ideas, neither of them truly demonstrates that a particular idea, whether innovative or not, will become an opportunity in the marketplace. But does an innovative idea always represent an entrepreneurial opportunity? What about the many cases of innovations that were too early for market acceptance? Or technically unfeasible? Or were lacking in market demand or need? Measuring innovation in education may be important in certain circumstances but it is not a full measure of entrepreneurial opportunity.

Foss and Klein (2020) provide an answer to these questions and an argument that can provide a basis for the design of a pedagogy and assessment model for opportunity recognition. Suggesting that the debate and discussion in the entrepreneurship literature regarding opportunity recognition has added little additional insight into entrepreneurship and has ‘…potential harmful effects on entrepreneurship research, teaching and practice’ (p. 368), the authors suggest the construct be abandoned altogether. Instead, they offer a framework that moves from beliefs to actions to results (BAR). The BAR framework is one that is based in uncertainty and judgement. As opposed to the Shane and Venkataraman’s (2000) definition, where an opportunity is defined via situational elements, the BAR framework is based on a definition of entrepreneurial opportunities that suggests opportunities can only be recognised ex post, that is, when the outcomes prove them to be viable. When entrepreneurs speak of entrepreneurial opportunities, they are referring to beliefs about possible outcomes. When scholars use the term, they are referring to a business concept or plan that may or may not turn out as the entrepreneur imagines.

Perhaps, the call to eliminate opportunity recognition as a construct is a valuable contribution to the scholarship of entrepreneurship. That is not the focus of this article. However, what is relevant to this discussion is that within their argument is a strong case for measuring skills associated with opportunity recognition. That is, as entrepreneurship educators, we cannot fully measure the outcome of opportunity recognition within the time frame of a course or programme, but instead, we can measure the knowledge, skills and attitudes that have been identified as present among those who have demonstrated competency in opportunity recognition.

Competency-based education (CBE) is a framework for designing and implementing education that focuses on the desired performance capabilities of the learner within this broad definitional context (White & Moore, 2016). Designing pedagogy based on competencies is not new. Introduced by David McClelland in the early 1970s, competencies were recognised as significant predictors of employee performance and success and were traditionally more associated with training than education (White et al., 2016). CBE has been and is currently being utilised in a variety of fields from healthcare to aviation and has, in recent years, been identified as a tool for addressing assessment challenges in experiential entrepreneurship education programmes (White et al., 2016).

A competency can be described as the capability of applying or using knowledge, skills, abilities, behaviours and personal characteristics to successfully perform in a selected domain (White et al., 2016). The power of CBE in fields where experience and practice are required for higher-level learning lies in its focus on performance. Application processes include three steps: deconstructing the knowledge, skills and attitudes necessary for successful performance in a specific domain; building a competency structure based on these; and using this structure as a model for the design of message, method and measurement in a teaching environment (White & Moore, 2016).

Designing a New Pedagogy for Opportunity Recognition

To address the challenges presented by the problem of developing a pedagogy based on theories of opportunity recognition, we suggest an integrated approach that deconstructs the elements of the opportunity recognition process, incorporates methods of addressing student engagement and allows for measurement of competencies in three areas: skills and attitudes necessary for research and define addressable marketplace problems, the ability to design potential entrepreneurial opportunities and resilience to execute past failure via iterative learning. We label these three stages: research and define; create and design; and evaluate and learn (see Figure 2).

SEE: Research and Define

Based on the premise that opportunity recognition is a special case of complex problem-solving, we begin with a focus on researching and defining addressable marketplace problems. The knowledge, skills and attitudes for this stage fall into two topical areas: research methodology and problem representation.

Research methodology includes three lessons based on building knowledge and/or skills and two lessons on attitude development. The former includes the design and planning of research, including setting goals and identifying potential challenges; protocol operationalisation, including sources of information and methods for addressing challenges; and interpretation of findings, including methods for analysis and organisation. To help students succeed in this phase, attitudes of curiosity and conscientiousness are critical. Students face two great challenges in this stage. First, many stop their efforts during problem identification at the first potential issue they see in the marketplace. Moreover, there is a tendency to stop researching based on one or two sets of data, that is, they do not seek out contradictory data that could provide a deeper insight into the problem. More specifically, they often miss the true problem, focusing instead on symptoms. Second, students are often limited in their experiences and must often work harder to collect enough information to form an insight that could lead to an addressable and meaningful marketplace problem. Discussions about the role of diligence and curiosity in this process, and self-reflection exercises on both, can be valuable at this stage.

Before a student can move on to the creation of a viable solution to the problem they identified, they need to be able to articulate the problem in a way that provides them with direction. Problem definition impacts the solution selected. At this stage, there are two lessons of utmost importance. The first is to learn and apply the skills associated with writing a good problem statement. These include articulating the condition in detail that can be improved upon and a specific gap that can be addressed. Second, an attitude of intellectual honesty is valuable at this stage. Researchers have long recognised that science and the academy would not advance without this important component (Wilson, 2018). According to White (2021):

intellectual honesty might be defined simply as a focus on seeking the truth, even when it doesn’t agree with your own personal beliefs. It means not lying to oneself, not pretending to know the truth when you don’t. It means not omitting relevant facts purposely and it means giving credit to sources of information where possible. (p. 61)

Discussions and self-reflection on intellectual honesty can be valuable to students at this stage.

DO: Create and Design

Once students have articulated an addressable marketplace problem, the task is to combine the information gleaned from their research with their prior knowledge (both general and specific to the problem) and skills (both related and unrelated to the problem), and then to identify a prospective solution to the problem. Design methodologies and other skills associated with ideation can be useful here to help students build a solution that has the potential to fill the gap identified in the marketplace. Throughout the process, students should be encouraged to record assumptions they are making as they develop a creative solution.

Building on theories of creative problem-solving, we include a focus on the incubation phase of the process. Developing practices that can help learners build mental clarity (Wallas, 1926) is important. To address this in the classroom, one might include discussions and reflection exercises that can help learners reduce distractions, bring on flow (Csikszentmihalyi, 1996) and enhance insight (Young, 1940). These methods vary and are highly personalised and are meant to provide the rest and freedom the mind needs to make cognitive connections discussed by Baron (2006).

REPEAT: Evaluate and Learn

Once a creative solution has been developed, the learner can then move to the third phase, an iterative learning process, where the focus is on gaining even greater insight through feedback from domain experts, coaches and mentors, and field trials and tests. Including this phase in the process is not new for most entrepreneurship educators. Many include assignments that include customer interviews and gaining feedback as a methodology to help students refine their business concepts. What we add is two important attitudinal elements to the learning model: coachability and resilience.

We address the element of coachability first. While most educators understand the importance of having their students work with experts in the field, they do not include specific lessons regarding their role in the process. Topics such as responsibility, accountability and reciprocity of relationships can be very useful at this stage. Moreover, helping a student understand how to process and utilise conflicting advice from coaches can be critical as learners seek out input from experts.

The second element, resilience, is one that has taken on significant interest in recent years. Iterative learning requires the ability to remain adaptable and flexible in mindset. Responding effectively to a mistaken assumption can be challenging at any stage of the process. Time invested and early signs of success often make it difficult, if not impossible, to accept the fact that a creative output is not feasible. Resilience can be thought of as the ability to bounce back after failure or adversity. In the special case of identification of an entrepreneurial opportunity, it is very easy to ‘fall in love’ with a solution and become immobilised when a significant change is required. Lessons related to the frequency with which failure occurs and the value of failing early in process to minimise sunk resources can be valuable for learners. At this point, they often need to revisit the previous stages: reviewing and adding to the research, considering whether the problem as articulated stands and what is needed in the redesign. In other words, the feedback nature of the pedagogy we provide gives students a pathway to remain resilient as they continue to pursue a viable opportunity.

Four-stage Approach for Teaching Opportunity Recognition

To design a course or curriculum around the lessons in this pedagogy, we suggest a four-stage approach based on a self-regulation model for creative problem-solving proposed by Zimmerman and Campillo (2003). The four steps include observation, emulation, modelling, and self-regulation. Studies have shown that learners who followed this four-step process were more motivated and had higher problem-solving skills than those who skipped steps (Kitsantas et al., 2000; Zimmerman & Kitsantas, 1997, 1999).

First, students are introduced to the opportunity recognition process by observing opportunity recognition in others. With a curated discussion, entrepreneurship educators can use podcasts, stories or guest speakers as models at each stage of the process. While many educators may already use these tools, it is important that they address each of the key steps in the opportunity recognition process from problem definition and representation to assumptions and ideation, iterative learning and feedback. Second, students can emulate the process via a case study model. In this phase, students are provided with a scenario and then given the opportunity to review data and information and identify opportunities as if they were the key player in the situation—again, addressing each of the phases in the process with discussion and reflection exercises. Third, students model the process with constraints provided by the professor. In this case, limits may be imposed on information provided, industry classification or outcome expected. For example, an assignment might ask students to create a new board game that helps high schoolers build skills associated with math or art. By imposing limits, students can practise the techniques within boundaries. Fourth, students learn to self-regulate by adopting the process to develop a concept of their own within the much broader context of the real world. (see Figure 3)

We include in this pedagogy the application of a competency structure to guide assessment of learning. Applying CBE to measure learning within the context of this pedagogical model is straightforward. Lessons identified in the model are reduced to a spreadsheet. Educators design lessons and assignments for each lesson. Measures of performance are then identified. We suggest that while there may be consensus on the topics to be included, entrepreneurship educators should be free to develop lessons and evaluation measures unique to their learner audience. An example of the general framework we suggest is outlined in Table 1.

Table 1.

Assessment Example for Opportunity Recognition

Assessment of learning—opportunity recognition
Learning Goals	Topics	Assignment Type	Observes	Emulates	Models	Self-regulates
Research + define	Research goals and planning	Knowledge + application
	Protocols operationalisation	Knowledge + application
	Interpreting findings	Knowledge + application
	Components of a problem statement	Knowledge + application
	Curiosity	Attitude
	Conscientiousness	Attitude
Create + design	Ideation	Application
	Design method	Application
	Finding connections	Application
	Assumption building and recording	Knowledge + application
	Gaining mental clarity	Attitude
Evaluate + learn	Interviewing skills	Knowledge + application
	Feedback from experts	Application
	Feedback from prospective customers	Application
	Coachability	Attitude
	Resilience	Attitude

Source: The authors.

Note: E = Exceeds expectations; M = meets expectations; B = below expectations; N/A = data not available.

Contributions and Conclusion

We began this article with a goal of creating a pedagogy that may assist students with sometimes painful, and almost always, challenging process of identifying a viable entrepreneurial opportunity to use as a test case during their entrepreneurship education. Furthermore, we highlighted the challenge imposed on this process when attempting to transfer theory to the classroom. Based on our analysis, we offer a pedagogy that addresses the message (or content) that the theory indicates, a method of teaching that can help to enhance learning and propose a method for assessment. Within the pedagogical model provided, educators have the freedom to incorporate their individual instructional tools to meet the needs of their learner audience and to allow them to take advantage of their own personal teaching resources. We believe this pedagogy offers several important contributions to the field of entrepreneurship education.

First, we believe that this pedagogy fills an important gap in the entrepreneurship education literature. In their study on the impact of locus of control on aspiring entrepreneurs’ ability to recognise opportunities, Asante and Affum-Osei (2019) identified self-efficacy as a key factor in entrepreneurial intention. Further, McGee et al. (2009) suggested that an individual’s entrepreneurial search self-efficacy may be enhanced through education and training. In this article, we offer a method for building entrepreneurial search self-efficacy through iterative learning based in multiple practices. In entrepreneurship education studies, students lacking a viable potential opportunity upon which to practise are often at a disadvantage and may disengage from the learning process. This model may offer a solution to this challenge.

Second, this pedagogy is comprehensive and offers a unique perspective by integrating theory from three distinct disciplines: entrepreneurship, psychology and education. The pedagogy we propose incorporates theories of opportunity recognition, self-regulation, situated cognition and competency-based learning.

Figure 1.

Source: Zimmerman and Campillo (2003, p. 239).

Figure 2.

Source: The authors.

Figure 3.

Source: The authors.

Third, we offer a comprehensive model that addresses the unique challenges of message, method and measurement in learning to develop skills, abilities and attitudes associated with successful opportunity recognition. In doing so, we highlight and address two problems educators frequently face with teaching opportunity recognition today. Specifically, we emphasise on foundational learning in the earliest stages of problem definition and problem statement to help students identify viable marketplace problems earlier in the educational process. This can help avoid frustration and potential disengagement of students. We also offer a model for a practice that can be adapted to the short-term nature of education and meet the assessment needs of academic institutions.

Footnotes

Declaration of Conflicting Interests

The authors declared no potential conflicts of interest with respect to the research, authorship and/or publication of this article.

Funding

The authors received no financial support for the research, authorship and/or publication of this article.

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