This document discusses creativity and innovation for entrepreneurship. It covers several key points: 1) Marketing and innovation are both essential functions for an organization, with the customer as the central focus. Innovation can create new customers or solve problems for existing target markets. 2) Organizations must decide whether to focus on innovation and shaping new markets, following customers' needs, or interacting with customers. The optimal approach depends on factors like management style and the business environment. 3) Creating an effective business model is important for capturing value from innovations. Innovative models look at the value proposition, revenue generation, capabilities, and position in a network. The business model canvas is a new approach discussed.

1. MS34H – Creativity and Innovation
Management for Entrepreneurship
CREATING VALUE

2. • Discuss whether current marketing practices compliments
innovation within organisations
• Explain how to make marketing decisions at the foundation,
proprietary and rules levels
• Explain the emergence of business models
Objectives

3. • For whom?!!
– The target market
– Is there a ‘pain’ or problem that needs to be resolved?
– How can the innovation manage to solve the problem for the target market
• Consider movies – why did changes occur
– Big Screen to
– Tape Reels to
– Video Cassettes to
– DVDs to
– Computers, telephones, tablets, etc.
Creating Value

4. • Some innovations are marketing solely for economic value.
Benefit comes only from only purchasing the product/service
– This is the situation for most products/services
• Other innovations are to improve the social environment, to
allow easier interactions, for sharing knowledge, etc.
– Open Source Code
– Freemiums
VALUE – economic and social!

5. • Leaders
– Get to market due to advanced processes, technology, research and
development
– Not necessarily the best position
– High cost to be leader
• Followers
– Deliberately gets to market late by studying first entrants, their mistakes,
their successes
– Late entry can also be detrimental, as the target may get attached to the
leader
Leader or Follower

6. • Organisations must connect with their target market
– What are their needs
• Organisation’s activities should be customer driven
• Peter Drucker
– “ What the business thinks it produces is not first importance-especially not
to the future of the business and its success, What the customer thinks he is
buying, what he considers “value” is decisive…Because it is its purpose to
create a customer, any business enterprise has two and only these two
basic functions: marketing and innovation.”
How Important is the Customer?!!

7. • Drucker
• Not a separate function or department
• Central for the entire organisation
• Marketing is for everyone within the organisation – but marketing alone is not
enough
Marketing

8. • Drucker
– “ the second function of a business therefore, is innovation – the provision
of different economic satisfactions…”
– Innovation is not a separate function of the organisation
– “..”Innovation can be defined as the task of endowing human and material
resources with new and greater wealth-producing capacity.”
Innovation

9. • Focuses on the customer – that is the genesis of marketing
• Finding our the customer’s need and delivering as quickly and
efficiently as possible
• Sometimes innovation comes before having a customer – but
the innovation creates customers – eg. Disney World, Television
• Sometimes the customer is created
Effective marketing

10. • Globalisation forces greater emphasis on customer satisfaction,
due to high levels of competition
• Organisation then focuses on ‘Marketing’ to capture market
share
• Innovation becomes critical to create and to segment the
current market
• Globalisation is turbulent and everyone is trying to survive
• Increasing difficult to differentiate
Impact of Globalisation

11. Marketing and Innovation
• Changing needs of the customer can be a
moving target for customer oriented
organisations
– E.g. the computer hardware industry
• Flow of learning flows both ways from
customer to innovation and vice versa
– Involves traditional market research
– Informal information – observation, secret shopper,
etc.
• Some innovations changes person’s lives eg.
Telephone, cars, airplanes, etc.Markets can MISLEAD as well as
to INFORM

12. Organisation’s Focus –
Innovation and or
Customer
• Isolate –
– Organisation focuses on itself
– Technology Stagnates or developed for the
organisation
– Very little market research
Four Strategic Modes
FOLLOWER
B
INTERACT
D
ISOLATE
A
SHAPER
C

13. • Follow
– Ovation driven by Customer response or needs
– Airline Industry responds to customers; also It industry and more
• Shape
– Innovation Technology shapes the market
– Creates customers, as persons don’t realise that they need a
product/service until the innovation exists eg. Telephones, tablets, etc.
– High risk and sometimes fails
• Interact
– Dialogue with the customer

14. • Follow
– Ovation driven by Customer response or needs
– Airline Industry responds to customers; also It industry and more
• Shape
– Innovation Technology shapes the market
– Creates customers, as persons don’t realise that they need a
product/service until the innovation exists eg. Telephones, tablets, etc.
– High risk and sometimes fails
• Interact
– Dialogue with the customer

15. Selecting Area of Focus
• Some organisations may simply select based
on their empasis – whether research -
Innovate and shape; market driven – follow
the customer, but the reality is not simple
• Depends on Management style and business
environment
– Environmental factors – stable or unstable, may
lead to following
– Economic Strength of customers – bargaining
power, may lead to follow
– Competitive Factors – Globalisation, deregulation,
may choose shaping or interacting with the
customer
– Political factors – within the organisation. Strong
unions, strong management, may support a
particular area of focus
How can an organisation know
which area to focus

16. • Creating Value and capturing it - is the business model
• Considerations includes
– Value Proposition
– Revenue Generation
– Capabilities and Processes
– Position in the network
• Innovative Models exists
– Amazon, Skype, Paymaster and more
• Business Model Canvas – new approach
• Read article on OurVLE – Running a Different Race – Dr. Michael
Morris
Business Models