entrepreneurship skills notes

1. LESSON 8 ENTREPRENEURSHIP SKILLS NOTES
Innovation and entrepreneurship
Definition- Innovation is a way of doing something which is new, different and better
than those that existed before
1. Before 1800, innovations were scarce, and those that were available had significance
effect on the society e.g the Portuguese navigation instruments innovation opened the
world to rapid colonization, while the steam engines innovated by the Scottish lead
to the industrial revolution in 1830’s
2. The most successful entrepreneurs are the innovators
3. Innovation can take place in the following five forms
i. Introduction of new products in the market
ii. Installation of new technology
iii. Entry in new markets into which the product has not been previously
marketed
iv. Discovery of new sources of raw materials
v. New form of organisation of the industry
Creativity and innovation
1. -The terms creativity and innovation are often used interchangeably but each has
a unique meaning
2. creativity is the ability to bring something new into existence
3. innovation is the process of doing new things, ideas have little value until they are
converted into products, services or processes. Innovation is the process of
transformation of creative ideas into useful application. Thus it can be argued that
creativity is pre-requisite for innovation
Steps in the Creativity Process
a) Stage 1: Idea generation- this is the stage where a new idea is recognized. It is
also called idea planting stage i.e where an entreprenuers recognizes the opportunity
or the problem to solve in the society. Most of the ideas can be traced to an individual’s
interest and curiocity.
b) Stage 2: Preparation: gathering information and materials, identifying sources of
inspiration, and acquiring knowledge about the project or problem at hand. This is
often an internal process (thinking deeply to generate and engage with ideas) as well
as an external one (going out into the world to gather the necessary data, resources,
materials, and expertise).
c) Stage 3: Incubation: In this stage, the ideas and information gathered in stage 1
marinate in the mind. As ideas slowly simmer, the work deepens and new connections
are formed. During this period of germination, the artist takes their focus off the
problem and allows the mind to rest. While the conscious mind wanders, the
unconscious engages in what Einstein called “combinatory play”: taking diverse ideas
and influences and finding new ways to bring them together.

2. d) Stage 4: Illumination
This is the elusive aha moment. After a period of incubation, insights arise from the
deeper layers of the mind and break through to conscious awareness, often in a
dramatic way. It’s where you exclaim I have found it! Seemingly out of nowhere, the
solution presents itself.
e) Stage 5: Verification
Following the aha moment, the words get written down, the vision is committed to
paint or clay, the business plan is developed. Whatever ideas and insights arose in
stage 3 are fleshed out and developed. The artist uses critical thinking and aesthetic
judgment skills to hone and refine the work and then communicate its value to others.
4 elements of Innovation
1. Analytical planning that consists of identifying product design, market strategy and
financial needs
2. Organising resources that deals with obtaining materials, technology, human
resources and capital
3. Implementing that consists of accomplishment of organization product design and
manufacturing services
4. Commercial application which means to prove value to customers, reward for
employees, revenues for investors and satisfaction to founder
N/B- inventors are not limited to those who create new products, but they include
those who identify new technological processes and new designs
Importance of Innovation
1. Reduced costs of production and distribution- Innovation facilitates reduced costs of
production and distribution. Due to new and cost-effective methods and processes,
the overall costs of production comes down
- Also due to better techniques of distribution, the overall costs can decline
- This reduction in costs can improve the overall profitability of enterprises
2. Improvement in quality and quantity- The new technology and methods of
production and processes can generate higher speed and as such the quantity of
production can increase at a rapid pace
- The improvement in machines and production methods can also facilitate
quality improvement.
3. Customer satisfaction- innovation generates customer satisfaction. Innation results
in production of high quality goods and services at lower prices, whioch makes
customers satisfied since they get value for their money
4. Corporate image- innovation can facilitate good corporate image. Customers
associate innovation with high quality goods and services, which improves truust
and image of that company in the minds of shareholders, customers, suppliers,

3. government authorities, financial institutions and other members of the public,
compared to the image of the competitors
- Improved image and trust is what we call goodwill.
5. Customer Loyalty- Due to high quality goods/services as a result pof innovation,
customers become loyal to the firm, and they become ambassadors of the firm i.e
they spread good word about the innovative companies wherever they go.
- This results in repeat purchase by satisfied customers, and
recoommenadtion/referrals to prospective customers
6. Competitive advantage- innovation helps helps a business enterprise achieve
competitive advantage the market i.e they are able to fair well compared to the
competitors
7. Motivation to employees- Employees get motivated because of the good image of
their innovative organization, which makes them to have a sense of pride for
working for such an organization. Innovation leadinmg to improved quality
goods/services implies improved profits, which may leadt to improved salaries of
the employees
8. Expansion of the Business- As indicated above, due to innovation, a firm can gain
competitive advantage. Therefore, the competitive advantage results in better
performance and huge profits are made by thebusiness
Opportunities through Change
- Entrepreneurs tend to be strategic thinkers, they recognise changes and see
opportunities where others do not see
- The sources of change could be the following:
1. Change in technology- Introduction of computers have revolutionised office,
manufacturing and organizational systems, this has attracted entreprenuers who
have invested in programmes to assist business enterprises
2. Change in consumer needs e.g where consumers are becoming health conscious
and the keen entreprenuers are able to take this opportunity and produce what
consumers wants
3. Changes in government policies and legislation- government introduces new
laws which affect business operations e.g new regulations in packaging attracted
new investors who manufactured new packaging designs to suite the new laws.
Government policies include introduction of credit facilities and other incentives
to enterprenuers
4. Changes in the society can also influence enterprenuership decisions e,g as the
society has become modernized , new and better services needs to be provided
and this presents opportunity for entreprenuers
Intraprenuership

4. - This is where an already existing entrepreneurial activity encourages creativity from
the within. E.g a drip irrigation installation firm which is already existing may
encourage a department within the firm to lease land and engage in agriculture to
boost profits for the firm. The farming activity is what we would call
Intraprenuership. Intranuer exists from within an existing entrepreneurial activity.
- Having known the meaning of entraprenuer and interprenuer, then the two can be
distinguished from each other on the following basis:
Difference Entrepreneur Intraprenuer
Dependency An entrepreneur is
independent in his
operations
He is dependent on the
entrepreneur i.e the owner
Raising of funds He raises funds required for
the enterprise
Funds are not raised by the
intrapreneur
Risk Entreprenuers bears the
risk involved in the
business
An intrapreneur does not
fully bear the risk involved
in the enterprise
Operation An entrepreneur operates
from outside
On the contrary, an
intrapreneur operates from
within the organization
itself
- The introduction of intrapreneurship benefits the organisation in the following ways:
1. Innovation: Entrepreneurship encourages creativity and innovation in the
organisation. It helps to develop new products, new processes, new methods or new
ventures into new markets
2. Corporate image- it improves corporate image
3. Helps the firm to attain competitive advantage in the market because it encourages
creativity and innovation, which in the end results in increased quantity, improved
quality and reduced costs of production
4. Motivation of employees because the employees are free to express their creative
ideas
5. Expansion of the business - competitive advantage generated from entrepreneurship
results in better performance of the firm in terms of profits. The profit generated is
used for the firm expansion either locally, regionally or nationally.