This document discusses corporate entrepreneurship and innovation. It covers topics like the types of innovation according to Schumpeter, barriers to innovation, the differences between adaptors and innovators, and the relationship between innovation, risk, and competitive advantage. Additionally, it examines how to encourage innovation within an organization through developing the right culture, being responsive to opportunities, using small teams, and promoting interactive learning. The key is for organizations to foster entrepreneurial behavior, balance risk across their innovation portfolios, and link innovation strategies to their overall marketing approach.

1. Corporate Entrepreneurship: Building the Entrepreneurial Organization by Paul Burns
PART 4
CREATIVITY AND
INNOVATION
CHAPTER 13
Encouraging
Entrepreneurial Innovation

2. Corporate Entrepreneurship: Building the Entrepreneurial Organization by Paul Burns
Schumpter’s Innovations
• Introduction of a new or improved good
• Introduction of a new process
• Opening of a new market
• Identification of a new source of supply of
raw materials
• Creation of new types of industrial
organisation

3. Corporate Entrepreneurship: Building the Entrepreneurial Organization by Paul Burns
Product/Service and Process
Development
Product/Service Development
New to the world
New to the market
New lines within company
Additions to lines
Improvements and revisions
New applications
Repositioning
Cost reduction
Process Development
Major new process
Minor new process
Significant revisions
Modest improvements

4. Corporate Entrepreneurship: Building the Entrepreneurial Organization by Paul Burns
Innovation and Competitive Advantage
Increasing
competitive
advantage
Frequency of
Innovation
Degree of Innovation
HighLow
High

5. Corporate Entrepreneurship: Building the Entrepreneurial Organization by Paul Burns
Barriers to Innovation
• Regard new ideas with suspicion
• Enforce cumbersome approval mechanisms
• Pit departments & individuals against each other
• Express criticism without praise
• Treat problem identification as a sign of failure
• Control everything carefully
• Plan reorganisation in secret
• Keep tight control over information
• Delegate unpleasant duties to inferiors
• Assume you know everything about the business

6. Corporate Entrepreneurship: Building the Entrepreneurial Organization by Paul Burns
Adaptor v Innovator
• Is sensitive to group
cohesion and cooperation
• No need for consensus; often
is insensitive to others
Adaptor
• Employs a disciplined,
precise, methodical
approach
• Is concerned with solving,
rather than finding,
problems
• Attempts to refine current
practises
• Tends to be means
orientated
• Is capable of extended
detail work
Innovator
• Approaches task from unusual
angles
• Discovers problems and
avenues of solutions
• Questions basic assumptions
related to current practices
• Has little regard for means; is
more interested in ends
• Has little tolerance for routine
work

7. Corporate Entrepreneurship: Building the Entrepreneurial Organization by Paul Burns
Ability to be
CREATIVE
Ability to spot
OPPORTUNITIES
INVENTION
INNOVATION
SUCCESS
ENTREPRENEURIAL ENVIRONMENT
Creativity, Invention, Opportunity and
Entrepreneurship

8. Corporate Entrepreneurship: Building the Entrepreneurial Organization by Paul Burns
Invention and Entrepreneurship
STRUGGLER
COPIER
INNOVATOR
STAGNATOR
Creativity /
Invention
Opportunity perception / Entrepreneurship
High
Low High

9. Corporate Entrepreneurship: Building the Entrepreneurial Organization by Paul Burns
Growth and Risk
Increasing
risk
Newnessofmarket
Same
Totally new
Newness of product
Same Extended
range
Better
coverage
Related
Incremental
changes
Totally
new
Increasing
risk
Twilight Zone

10. Corporate Entrepreneurship: Building the Entrepreneurial Organization by Paul Burns
Risk and the Process of Innovation
Imitation DiscreteDramatically
continuous
Continuous
Process of Innovation
High
Low
Risk
Twilight Zone
No innovation

11. Corporate Entrepreneurship: Building the Entrepreneurial Organization by Paul Burns
Risk and Innovation Process Time
Time to market
High
Low
Risk
Best time to
launch

12. Corporate Entrepreneurship: Building the Entrepreneurial Organization by Paul Burns
Innovation and size
• SMEs produce their fair share of innovations
and do it more efficiently than large firms
• Both small and large firms have advantages
in producing different types of innovation –
this has implications for structure
• SMEs tend to innovate in sectors where
resources (ie. capital) are less important
• Innovation is not entirely related to firm size -
it also relates to business activity, industry,
nature of innovation and type of company

13. Corporate Entrepreneurship: Building the Entrepreneurial Organization by Paul Burns
Discontinuous Innovation
• Unpredicted new markets
• New business models
• New technologies
• New political rules
• Market exhaustion
• Sea-change in market sentiment or behaviour
• Deregulation or shifts in regulatory regimes
• Fracture along ‘fault lines’ causing ‘flips’
• Unthinkable events
• Shifts in ‘techno-economic’ paradigm
• Architectural innovations rewriting the ‘rules of the
game’

14. Corporate Entrepreneurship: Building the Entrepreneurial Organization by Paul Burns
Innovation Networks
Similar Organisations
Radical
innovation
Incremental
innovation
Different Organisations
Zone 2
• Strategic alliances
• Sector consortia
• New technology
development consortia
Zone 1
• Sector for a
• Supply chain learning
programmes
Zone 4
• Multi-company
innovation networks in
complex product
systems
• New product/process
Zone 3
• Regional clusters
• Best practice clubs
• Topic networks

15. Corporate Entrepreneurship: Building the Entrepreneurial Organization by Paul Burns
From Information to Knowledge
Information Learning Knowledge
Decisions
Actions
Behaviours
Feedback loops

16. Corporate Entrepreneurship: Building the Entrepreneurial Organization by Paul Burns
Commitment to Innovation
From top management that innovation:
• Is at the core of what the business does
• Is everyone’s responsibility, not just the R&D
Department
• Happens in everything from product
development to marketing

17. Corporate Entrepreneurship: Building the Entrepreneurial Organization by Paul Burns
Balancing the Portfolio
• High-risk, high return and low-risk, low
return innovations
• Discrete, dynamic and continuous
innovations
• Product/service and market innovations
• Short and long-to-market innovations
• Innovations that employ new technologies
and those that employ existing technologies

18. Corporate Entrepreneurship: Building the Entrepreneurial Organization by Paul Burns
A Specimen Risk Portfolio
Newnessofmarket
Same
Totally new
Newness of product
Same Extended
range
Better
coverage
Related
Incremental
changes
Totally
new
Twilight Zone
Increasing risk
Increasingrisk
A
DEFG
H
C
B

19. Corporate Entrepreneurship: Building the Entrepreneurial Organization by Paul Burns
Innovation and Marketing Strategy
Degree of differentiation
Low High
Competitive
emphasis
placed on..
Innovation
stimulated
by..
Predominant
type of
innovation
Product
line
Production
process
Cost
reduction
Pressure to
reduce costs,
improve quality
Incremental
product & process
innovation
Undifferentiated
standard products
Efficient, often
capital intensive
& rigid
Product/service
variation
Functional
product
performance
Opportunities
created by external
technical capability
Information on
user needs
Major process
innovations required
by rising volume
Frequent major
changes in
product/service
Diverse often
including custom
designs
Includes at least
one stable or
dominant design
Flexible & inefficient
Experiment &
change frequently
Becoming more
rigid & defined

20. Corporate Entrepreneurship: Building the Entrepreneurial Organization by Paul Burns
Keys to Successful Innovation
• Atmosphere and vision…..the right culture
• Market responsiveness….opportunity driven
• Small, flat organisations
• Skunkworks
• Multiple approaches
• Interactive learning
Quinn (1985)