Entrepreneurship And Innovation

1. ENTREPRENEURSHIPENTREPRENEURSHIP
ANDAND
INNOVATION:INNOVATION:
3.

2. 3.1 THE INNOVATION 3.1 THE INNOVATION
CONCEPT:CONCEPT:
Innovation is the specific tool of entrepreneurs, the Innovation is the specific tool of entrepreneurs, the
means by which they exploit change as an means by which they exploit change as an
opportunity for a different business or a different opportunity for a different business or a different
service. It is capable of being presented as a service. It is capable of being presented as a
discipline, capable of being learned, capable of discipline, capable of being learned, capable of
being practiced. Entrepreneurs need to search being practiced. Entrepreneurs need to search
purposefully for the sources of innovation, the purposefully for the sources of innovation, the
change and their symptoms that indicate change and their symptoms that indicate
opportunities for a successful innovation. And opportunities for a successful innovation. And
they need to know and to apply the principles of they need to know and to apply the principles of
successful innovation.successful innovation.

3. 3.1 THE INNOVATION CONCEPT:3.1 THE INNOVATION CONCEPT:
(Continued)(Continued)
A business opportunity, therefore, is the chance to do A business opportunity, therefore, is the chance to do
something differently and the better. An innovation is the something differently and the better. An innovation is the
way of doing something differently and better. Thus an way of doing something differently and better. Thus an
innovation is the means of exploiting a business opportunity. innovation is the means of exploiting a business opportunity.
Innovation has a different meaning in economics. All goods Innovation has a different meaning in economics. All goods
(whether physical products or services) are regarded as being (whether physical products or services) are regarded as being
made up of three factors: nature raw materials, physical and made up of three factors: nature raw materials, physical and
mental labor and capital (money). An innovation is a new mental labor and capital (money). An innovation is a new
combination of these three things. Entrepreneurs, as combination of these three things. Entrepreneurs, as
innovators, are people who create new combinations of these innovators, are people who create new combinations of these
factors and then present to the market for assessment by factors and then present to the market for assessment by
consumers. This is a technical conceptualization of what is consumers. This is a technical conceptualization of what is
innovation is about. It does not give the practicing innovation is about. It does not give the practicing
entrepreneur much of a guide to what innovation to make, or entrepreneur much of a guide to what innovation to make, or
how to make it, but it should warn that innovation is a much how to make it, but it should warn that innovation is a much
broader concept then just inventing new products. It also broader concept then just inventing new products. It also
involves bringing them to market. Some important areas in involves bringing them to market. Some important areas in
which valuable innovation might be made will be discussed which valuable innovation might be made will be discussed
below.below.

4. NEW PRODUCTS:NEW PRODUCTS:
One of the most common forms of innovation is One of the most common forms of innovation is
the creation of new product. The new product may the creation of new product. The new product may
exploit an established technology or it may be the exploit an established technology or it may be the
outcome of a whole new technology. The new outcome of a whole new technology. The new
product may offer a radically new way of doing product may offer a radically new way of doing
something it may simply be an existing theme. something it may simply be an existing theme.
David Packard built scientific instrumentation David Packard built scientific instrumentation
and information processing business umpire, and information processing business umpire,
Hewlett Packard, based on advanced scientific Hewlett Packard, based on advanced scientific
developments. developments.

5. NEW PRODUCTS:NEW PRODUCTS:
(Continued)(Continued)
Products are not simply a physical tool for achieving Products are not simply a physical tool for achieving
particular ends. They can also have a role to play in particular ends. They can also have a role to play in
satisfying emotional needs. Branding is an important satisfying emotional needs. Branding is an important
aspect of this. A brand name reassures the consumer, aspect of this. A brand name reassures the consumer,
draws ready-made associations for them and provides a draws ready-made associations for them and provides a
means of making a personal statement. The possibility of means of making a personal statement. The possibility of
innovations being made through branding should not be innovations being made through branding should not be
overlooked. The English entrepreneur, Richard Branson, overlooked. The English entrepreneur, Richard Branson,
for example, has been active in using the virgin brand for example, has been active in using the virgin brand
name on a wide variety of product areas following its name on a wide variety of product areas following its
initial success in the airline business. To date, it has been initial success in the airline business. To date, it has been
used to create a point of difference on, among other used to create a point of difference on, among other
things, record labels, soft drinks and personal finance things, record labels, soft drinks and personal finance
products.products.

6. NEW SERVICES:NEW SERVICES:
A service is an act which is offered to undertake a A service is an act which is offered to undertake a
particular task or solve a particular problem. Services are particular task or solve a particular problem. Services are
open to the possibilities of new ideas and innovation just as open to the possibilities of new ideas and innovation just as
much as physical products. For example, the American much as physical products. For example, the American
entrepreneur, Frederick smith, created the multi-million entrepreneur, Frederick smith, created the multi-million
dollar international business, federal express, by releasing dollar international business, federal express, by releasing
a better way of moving parcels between people.a better way of moving parcels between people.
Like physical products, services can be supported by the Like physical products, services can be supported by the
effective use of branding. In fact, it is beneficial to stop effective use of branding. In fact, it is beneficial to stop
thinking about “products” and “services” as distinct types thinking about “products” and “services” as distinct types
of business and to recognize that all offerings have product of business and to recognize that all offerings have product
and service aspects. This is important because it is possible and service aspects. This is important because it is possible
to innovate by adding a “customer service” in component to innovate by adding a “customer service” in component
to a physical product to make it more attractive to the user. to a physical product to make it more attractive to the user.
Similarly, developments in products technology allow new Similarly, developments in products technology allow new
service concepts to be innovated.service concepts to be innovated.

7. NEW PRODUCTION TECHNIQUES:NEW PRODUCTION TECHNIQUES:
Innovation can be made in the way in which a product Innovation can be made in the way in which a product
is manufactured. Again, this might be by developing is manufactured. Again, this might be by developing
an existing technology or by adopting a new an existing technology or by adopting a new
technological approach. A new production technique technological approach. A new production technique
provides a sound basis for success if it can be made to provides a sound basis for success if it can be made to
offer the end-user new benefits. It must either allow offer the end-user new benefits. It must either allow
them to obtain the product at lower cost, or to be them to obtain the product at lower cost, or to be
offered a product of higher or more consistent offered a product of higher or more consistent
quality, all to be given a better service in the supply of quality, all to be given a better service in the supply of
the product.the product.
Production is not about just technology. Increasingly Production is not about just technology. Increasingly
new production “philosophies” such as just-in-time new production “philosophies” such as just-in-time
supply (JIT) and total quality management (TQM) supply (JIT) and total quality management (TQM)
are providing platforms for profitable innovation.are providing platforms for profitable innovation.

8. NEW MEANS OF INFORMING THE NEW MEANS OF INFORMING THE
CUSTOMER ABOUT THE PRODUCT:CUSTOMER ABOUT THE PRODUCT:
People will only use a product or service if they know People will only use a product or service if they know
about it. Demand will not exist if the offering is not about it. Demand will not exist if the offering is not
properly promoted to them. Promotion consists of properly promoted to them. Promotion consists of
two parts: a message, what is said, and a means, the two parts: a message, what is said, and a means, the
route by which that message is delivered. Both the route by which that message is delivered. Both the
message and the means present latitude for message and the means present latitude for
inventiveness in the way they are approached. inventiveness in the way they are approached.
Communicating with costumers can be expensive and Communicating with costumers can be expensive and
entrepreneurs especially when their ventures are in entrepreneurs especially when their ventures are in
an early stage, rarely have the resources to invest in an early stage, rarely have the resources to invest in
high profile advertising and public relation high profile advertising and public relation
campaigns. Therefore, they are encouraged to campaigns. Therefore, they are encouraged to
develop new means of promoting their products.develop new means of promoting their products.

9. MULTIPLE INNOVATION:MULTIPLE INNOVATION:
An entrepreneurial venture does not have An entrepreneurial venture does not have
to restrict itself to just one innovation or to restrict itself to just one innovation or
even one type of innovation. Success can be even one type of innovation. Success can be
built on a combination of innovations: for built on a combination of innovations: for
example, a new product delivered in a new example, a new product delivered in a new
way with a new message.way with a new message.

10. IMPORTANCEIMPORTANCE
OFOF
INNOVATION INNOVATION
FORFOR
ENTREPRENEURSHIP:ENTREPRENEURSHIP:
3.2

11. ORGANIZATION FOR INNOVATION: ORGANIZATION FOR INNOVATION:
CORPORATE ENTREPRENEURSHIPCORPORATE ENTREPRENEURSHIP
W.D. Guth and A. Ginsberg defined corporate W.D. Guth and A. Ginsberg defined corporate
entrepreneurship (also called in-trapreneurship) entrepreneurship (also called in-trapreneurship)
as “the birth of new business within existing as “the birth of new business within existing
organization, i.e., internal innovation or organization, i.e., internal innovation or
venturing; and the transformation of organization venturing; and the transformation of organization
through renewal of the key ideas on wish they are through renewal of the key ideas on wish they are
built, i.e., strategic renewal.” A large corporation built, i.e., strategic renewal.” A large corporation
that wants to encourage innovation and creativity that wants to encourage innovation and creativity
must give the new business unit a certain amount must give the new business unit a certain amount
of freedom while maintaining some degree of of freedom while maintaining some degree of
head-quarters control. head-quarters control.

12. Burgelman proposes that the uses of a particular Burgelman proposes that the uses of a particular
organizational design should be determined byorganizational design should be determined by
•the strategic importance of the new businessthe strategic importance of the new business to the to the
corporation andcorporation and
•the relatedness of the unit’s operationthe relatedness of the unit’s operation to those of to those of
the corporation. The combination of these two the corporation. The combination of these two
factors results in 9 possible organizational designs factors results in 9 possible organizational designs
for corporate entrepreneurship. for corporate entrepreneurship.
ORGANIZATION FOR INNOVATION:
CORPORATE ENTREPRENEURSHIP
(Continued)

13. 1.1.Direct integrationDirect integration
2.2.New product business departmentNew product business department
3.3.Special business unitSpecial business unit
4.4.Micro new ventures departmentsMicro new ventures departments
5.5.New venture divisionNew venture division
6.6.Independence business unitsIndependence business units
7.7.Nurturing and contractingNurturing and contracting
8.8.ContractingContracting
9.9.Complete spin-offComplete spin-off
ORGANIZATION FOR INNOVATION:
CORPORATE ENTREPRENEURSHIP
(Continued)

14. 3.33.3
SOURCES
OF
INNOVATION
FOR
OPPORTUNITIES

15. SOURCES OF INNOVATIONSOURCES OF INNOVATION
In this book innovation and In this book innovation and
entrepreneurship, Peter Drucker entrepreneurship, Peter Drucker
proposed that those interested in proposed that those interested in
starting an entrepreneurial venture-starting an entrepreneurial venture-
either within an established company either within an established company
or as independent small business-or as independent small business-
should monitor seven sources of should monitor seven sources of
innovative opportunity. innovative opportunity.

16. The first four exist within the industry itself, The first four exist within the industry itself,
and the last three in the social environment.and the last three in the social environment.
1.1.The UnexpectedThe Unexpected
2.2.IncongruityIncongruity
3.3.Innovation Based on Process NeedInnovation Based on Process Need
4.4.Changes in Industry or Market StructureChanges in Industry or Market Structure
5.5.DemographicsDemographics
6.6.Changes in Perception, Mood, and MeaningChanges in Perception, Mood, and Meaning
7.7.New KnowledgeNew Knowledge

17. Factors affecting a new venture’s Factors affecting a new venture’s
success success
Industry structure Industry structure
Business strategy Business strategy
Entrepreneurial characteristicsEntrepreneurial characteristics
Successful entrepreneurs are betterSuccessful entrepreneurs are better
Successful entrepreneurs have a sense of Successful entrepreneurs have a sense of
urgencyurgency
Successful entrepreneurs have a detailed Successful entrepreneurs have a detailed
knowledgeknowledge
Successful entrepreneurs seek outside help to Successful entrepreneurs seek outside help to
supplement their skills, knowledge and supplement their skills, knowledge and
abilities abilities

18. 3.43.4
THE INNOVATION
PROCESS

19. Invention versus Innovation:Invention versus Innovation:
Analytical
planning
Organizing
resources
Implementation Commercial
application
To identify:
Product
design
market
strategy
financial
need
To obtain:
Materials
technology
human
resources
capital
To accomplish:
Organization
product design
manufacturing
services
To provide:
Value to
costumers
rewards for
employees
revenues foe
investors
satisfaction for
founders
Translation of creative idea into a useful application

20. Innovation is the development process, as Innovation is the development process, as
shown in figure. It is the translation of an idea shown in figure. It is the translation of an idea
in to an application. It requires persistence in in to an application. It requires persistence in
analytically working out the details of product analytically working out the details of product
design or service, to develop marketing, obtain design or service, to develop marketing, obtain
finances, and plan operations. If the finances, and plan operations. If the
entrepreneur is going to manufacture a entrepreneur is going to manufacture a
product, the process includes obtaining product, the process includes obtaining
materials and technical manufacturing materials and technical manufacturing
capabilities, staffing operations, and capabilities, staffing operations, and
establishing an organization.establishing an organization.