Innovation is the specific tool of entrepreneurs, the means by which they exploit change as an opportunity for a different business or a different service. It is capable of being presented as a discipline, capable of being learned, capable of being practiced. Entrepreneurs need to search purposefully for the sources of innovation, the change and their symptoms that indicate opportunities for a successful innovation. And they need to know and to apply the principles of successful innovation.
A business opportunity, therefore, is the chance to do something differently and the better. An innovation is the way of doing something differently and better. Thus an innovation is the means of exploiting a business opportunity. Innovation has a different meaning in economics. All goods (whether physical products or services) are regarded as being made up of three factors: nature raw materials, physical and mental labor and capital (money). An innovation is a new combination of these three things. Entrepreneurs, as innovators, are people who create new combinations of these factors and then present to the market for assessment by consumers. This is a technical conceptualization of what is innovation is about. It does not give the practicing entrepreneur much of a guide to what innovation to make, or how to make it, but it should warn that innovation is a much broader concept then just inventing new products. It also involves bringing them to market. Some important areas in which valuable innovation might be made will be discussed below.
One of the most common forms of innovation is the creation of new product. The new product may exploit an established technology or it may be the outcome of a whole new technology. The new product may offer a radically new way of doing something it may simply be an existing theme. David Packard built scientific instrumentation and information processing business umpire, Hewlett Packard, based on advanced scientific developments.
Products are not simply a physical tool for achieving particular ends. They can also have a role to play in satisfying emotional needs. Branding is an important aspect of this. A brand name reassures the consumer, draws ready-made associations for them and provides a means of making a personal statement. The possibility of innovations being made through branding should not be overlooked. The English entrepreneur, Richard Branson, for example, has been active in using the virgin brand name on a wide variety of product areas following its initial success in the airline business. To date, it has been used to create a point of difference on, among other things, record labels, soft drinks and personal finance products.
A service is an act which is offered to undertake a particular task or solve a particular problem. Services are open to the possibilities of new ideas and innovation just as much as physical products. For example, the American entrepreneur, Frederick smith, created the multi-million dollar international business, federal express, by releasing a better way of moving parcels between people.
Like physical products, services can be supported by the effective use of branding. In fact, it is beneficial to stop thinking about “products” and “services” as distinct types of business and to recognize that all offerings have product and service aspects. This is important because it is possible to innovate by adding a “customer service” in component to a physical product to make it more attractive to the user. Similarly, developments in products technology allow new service concepts to be innovated.
Innovation can be made in the way in which a product is manufactured. Again, this might be by developing an existing technology or by adopting a new technological approach. A new production technique provides a sound basis for success if it can be made to offer the end-user new benefits. It must either allow them to obtain the product at lower cost, or to be offered a product of higher or more consistent quality, all to be given a better service in the supply of the product.
Production is not about just technology. Increasingly new production “philosophies” such as just-in-time supply (JIT) and total quality management (TQM) are providing platforms for profitable innovation.
NEW MEANS OF INFORMING THE CUSTOMER ABOUT THE PRODUCT:
People will only use a product or service if they know about it. Demand will not exist if the offering is not properly promoted to them. Promotion consists of two parts: a message, what is said, and a means, the route by which that message is delivered. Both the message and the means present latitude for inventiveness in the way they are approached. Communicating with costumers can be expensive and entrepreneurs especially when their ventures are in an early stage, rarely have the resources to invest in high profile advertising and public relation campaigns. Therefore, they are encouraged to develop new means of promoting their products.
An entrepreneurial venture does not have to restrict itself to just one innovation or even one type of innovation. Success can be built on a combination of innovations: for example, a new product delivered in a new way with a new message.
IMPORTANCE OF INNOVATION FOR ENTREPRENEURSHIP: 3.2
ORGANIZATION FOR INNOVATION: CORPORATE ENTREPRENEURSHIP
W.D. Guth and A. Ginsberg defined corporate entrepreneurship (also called in-trapreneurship) as “the birth of new business within existing organization, i.e., internal innovation or venturing; and the transformation of organization through renewal of the key ideas on wish they are built, i.e., strategic renewal.” A large corporation that wants to encourage innovation and creativity must give the new business unit a certain amount of freedom while maintaining some degree of head-quarters control.
In this book innovation and entrepreneurship, Peter Drucker proposed that those interested in starting an entrepreneurial venture-either within an established company or as independent small business-should monitor seven sources of innovative opportunity.
The first four exist within the industry itself, and the last three in the social environment.
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
Innovation is the development process, as shown in figure. It is the translation of an idea in to an application. It requires persistence in analytically working out the details of product design or service, to develop marketing, obtain finances, and plan operations. If the entrepreneur is going to manufacture a product, the process includes obtaining materials and technical manufacturing capabilities, staffing operations, and establishing an organization.