- Innovation is the tool that entrepreneurs use to exploit opportunities for change and create new business models or services. It involves combining resources like labor, materials, and capital in new ways. - Some areas where entrepreneurs can innovate include developing new products or services, improving production techniques, or finding new ways to inform customers about offerings. - Successful innovations often offer customers benefits like lower costs, higher quality products, or better service. Entrepreneurs must search for sources of innovation and understand how to successfully develop and market new ideas.

1. ENTREPRENEURSHIP
ENTREPRENEURSHIP
AND
AND
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. IMPORTANCE
IMPORTANCE
OF
OF
INNOVATION
INNOVATION
FOR
FOR
ENTREPRENEURSHIP:
ENTREPRENEURSHIP:
3.2

11. ORGANIZATION FOR INNOVATION:
ORGANIZATION FOR INNOVATION:
CORPORATE ENTREPRENEURSHIP
CORPORATE 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 by
organizational design should be determined by
• the strategic importance of the new business
the strategic importance of the new business to the
to the
corporation and
corporation and
• the relatedness of the unit’s operation
the 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 integration
Direct integration
2.
2. New product business department
New product business department
3.
3. Special business unit
Special business unit
4.
4. Micro new ventures departments
Micro new ventures departments
5.
5. New venture division
New venture division
6.
6. Independence business units
Independence business units
7.
7. Nurturing and contracting
Nurturing and contracting
8.
8. Contracting
Contracting
9.
9. Complete spin-off
Complete spin-off
ORGANIZATION FOR INNOVATION:
CORPORATE ENTREPRENEURSHIP
(Continued)

14. 3.3
3.3
SOURCES
OF
INNOVATION
FOR
OPPORTUNITIES

15. SOURCES OF INNOVATION
SOURCES 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 Unexpected
The Unexpected
2.
2. Incongruity
Incongruity
3.
3. Innovation Based on Process Need
Innovation Based on Process Need
4.
4. Changes in Industry or Market Structure
Changes in Industry or Market Structure
5.
5. Demographics
Demographics
6.
6. Changes in Perception, Mood, and Meaning
Changes in Perception, Mood, and Meaning
7.
7. New Knowledge
New 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 characteristics
Entrepreneurial characteristics
 Successful entrepreneurs are better
Successful entrepreneurs are better
 Successful entrepreneurs have a sense of
Successful entrepreneurs have a sense of
urgency
urgency
 Successful entrepreneurs have a detailed
Successful entrepreneurs have a detailed
knowledge
knowledge
 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. 3.4
3.4
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.