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- 1. 1 Chapter 11: Invention and Innovation Entrepreneurial Opportunities Choosing a Venture If you have the skills and characteristics to be an entrepreneur, ask yourself these questions: • What kind of venture will you start? • How will you do it? Entrepreneurs can look for opportunities to develop new ventures in two ways—as idea-driven or as market-driven opportunities. Idea-driven Enterprises An ideas-driven enterprise for a business usually starts as an invention or innovation. Market-driven Enterprises A market-driven enterprise for a business usually develops as a result of a need and want that consumers indicate or desire.
- 2. 2 Chapter 11: Invention and Innovation Entrepreneurial Opportunities Bringing Ideas and Marketing Skills Together Successful ventures combine the idea-driven aspect with the market-driven one. Entrepreneurs can learn marketing skills, technical skills, or form a partnership with someone who has complementary attributes. A feasible venture is one that has the potential to be successful. The entrepreneur plans reasonable goals for the venture, and thinks about an idea and a market to ensure the business’ success.
- 3. 3 Chapter 11: Invention and Innovation Entrepreneurial Opportunities Finding Entrepreneurial Opportunities New venture categories include • manufacturing • retail sales • importing or wholesaling • service A new venture must solve a problem or satisfy a need or a want. To find out about the market for a new business, an entrepreneur needs to segment the current market and create a product or service map.
- 4. 4 Chapter 11: Invention and Innovation Entrepreneurial Opportunities Segmenting Before a new venture is launched, entrepreneurs must analyze the segment of the market by looking for the common characteristics in which the business fits. Product or Service Mapping Product mapping allows an entrepreneur to visualize all the products or services that are available in a segment and to group them by specific features. Setting Your Venture Apart The goal of a new venture is to ensure that it is different than those already operating. Manufacturers, importers, or wholesalers need to offer different products than those that already exist. Retailers and service providers also must think of ways to set themselves apart from others.
- 5. 5 Chapter 11: Invention and Innovation Some Canadian Inventions What Is an Invention? An invention is a product or process that does something that has never been done before. When the invented product or service fills a need, it can potentially be sold to consumers. Canadian Inventors and Inventions Some well know inventions and inventors are included in the chart below. (For more, see chart on p. 345 of text.) Year Invention Canadian Inventor 1921 Insulin Drs. Banting and Best 1960 Goalie mask Jacques Plante 1994 Java computer language James Gosling
- 6. 6 Chapter 11: Invention and Innovation Taking the Next Step Entrepreneurship starts when a new invention or innovation becomes the inspiration for a venture. Patents and Copyrights Entrepreneurs need to patent or copyright their inventions. A patent is the registration of an inventors legal right of ownership for their invention. It prevents others from using the invention without permission. A copyright is the exclusive right to publish, produce, sell, or distribute an original work of literature, art, music, software, design, and so on.
- 7. 7 Chapter 11: Invention and Innovation Entrepreneurial Opportunities Licensing Agreements Licensing an invention or innovation allows another business to use it for a fee or a royalty. Franchising Agreements Similar to a licensing agreement, a franchise agreement is an arrangement for one business to license the rights to its name and procedures to another business or person. Producing the Invention The manufacturing of a new invention often requires a large amount of capital and expertise. This process can be very risky. Selling the Rights Entrepreneurs can sell outright their patents or copyrights.
- 8. 8 Chapter 11: Invention and Innovation The Impact of Innovation What Is an Innovation? An innovation requires using new technology, materials, or processes to improve existing products or to create new production and distribution processes. Innovators as Entrepreneurs Innovators build on what other businesses, such as manufacturers, distributors, and marketers, have already developed. They look to the competition for ways to gain an advantage for their new products or services. Entrepreneurs use innovation to change how a product is used, packaged, marketed, distributed, designed, or manufactured.
- 9. 9 Chapter 11: Invention and Innovation The Impact of Innovation Changing How a Product Is Used When entrepreneurs discover innovative ways to use a familiar product, they can develop a whole new market for that product. Changing the Package Changing the way a product is packaged can create a whole new industry. Changing the Marketing Strategy Changing the way a product or service is promoted or advertised can target a new market and, potentially, improve sales.
- 10. 10 Chapter 11: Invention and Innovation Entrepreneurial Opportunities Changing the Distribution Process Changing or improving the way a product is distributed can potentially result in more and new customers. Changing the Design A design change to a product can improve how it functions or who it appeals to in a new market segment. Changing the Manufacturing Process As new technologies and materials are developed, manufacturers must review their production processes to create better and less expensive products.
Editor's Notes
- ENTREPRENEURIAL OPPORTUNITIES Idea-driven Enterprises Someone is inspired to provide a new service or create a new product and then brings it to market. Since no need was expressed by the marketplace for the product there is risk involved with idea-driven enterprises. Market-driven Enterprises Market-driven means the venture is the result of a market demand or need rather than someone coming up with a product idea. The need or want within the market may not match the entrepreneurial skills and characteristics that an individual has.
- BRINGING IDEAS AND MARKETING SKILLS TOGETHER Marketing skills can be acquired by taking courses, reading texts, accessing websites, and magazines. Skilled individuals can be hired from ad firms, research companies, and consultant firms. High schools and community colleges provide technical skills training. How-to-books, the Internet, and magazines also are a wealth of information. Technically skilled people can be hired from drafting firms, industrial design companies, and technical consulting firms. Taking on a partner can increase venture capital and diversify the risk. Prospective partners can be accessed at capital trade fairs, by placing advertisements, or by using the Internet.
- FINDING ENTREPRENEURIAL OPPORTUNITIES You need to find out what is and what is not already available in the market. You can innovate of improve on an existing product or service. You can provide a product of service that does not exist. A feasible venture is a venture that has the potential to succeed. A market segment is any part of an overall market that has common characteristics.
- FINDING ENTREPRENEURIAL OPPORTUNITIES Segmenting A market segment is a part of an overall market that has common characteristics. An example of a market segment is the caffeine-free diet colas that are part of the overall beverage market. Mapping Root beer could be mapped by features to include long-necked bottles, premium root beers, foaming root beers, and so on. See Figure 11.2, “Root Beer Product Map”, on page 342. Analyses of statistics, taste-test data, product histories, consumer motivation data, etc. to learn more about the different brands. The resulting product map is best represented visually in an organizational style chart. Once completed the map helps an entrepreneur develop a product or service with a unique set of features. Setting Your Venture Apart There are many venture configurations that would result in success.
- WHAT IS AN INVENTION? Some entrepreneurs build businesses that produce, distribute, and market an inventions. Some inventors do not realize the potential commercial applications of their invention or prefer not to pursue it. CANADIAN INVENTORS AND INVENTIONS See Table 11.1, “Canadian Inventions and Inventors”, on page 345.
- PATENTS AND COPYRIGHTS The acquisition of a patent can be complicated and expensive. Lawyers can help with application and patent searches. If someone else has a previous patent or similar one a new application will not be granted. Inventions are protected during the “patent pending” period of time. To prevent the theft of your idea(s) make sure to utilize the services of a reputable patent service.
- ENTREPRENEURIAL OPPORTUNITIES Licensing Agreements Royalty is a fee paid to the owner of a patent or copyright by someone who uses it. A royalty can be a fixed price or a percentage of total sales revenue. Ideas, images, and names can be licensed in product development. Fictional characters and sports teams are examples of things that could have their names, pictures, and logos on products. Producing the Invention Often entrepreneurs form partnerships with established businesses or financial investors that provide funds and expertise. Venture capital markets are a forum for bringing together inventors and financial investors who are interested in developing new ideas. Selling the Rights This is the fast way to realize revenue from an invention or innovation. An advantage would be that the buyer assumes risks such as financing, production, and marketing of the product. Another advantage is that the entrepreneur would not have to wait for the money. A disadvantage to selling the rights is that the invention is used in an application not anticipated by the inventor. A second disadvantage could be that long term profits may exceed the payment for the patent or copyright.
- WHAT IS AN INNOVATION? Many product we use today have changed from the original way the inventor created them. Soap has seen many changes in the way it is manufactured, what ingredients go into it, how it is distributed, and its form (soap on a rope).
- INNOVATORS AS ENTREPRENEURS Changing How a Product is Used 3M Scotch Tape, introduced in 1948, has been marketed for a wide variety of uses over the years. Changing the Package Beverage containers have gone from glass bottles to wax covered cartons to recyclable tetra style boxes. Package innovations occur for many reasons including to be environmentally friendly and to help the products marketability to a new audience. Changing the Marketing Strategy An example of increasing sales occurred in the late 1990’s when the marketers of Corn Pops strategically placed commercial targeting teens.
- INNOVATORS AS ENTREPRENEURS Changing the Distribution Process Trade shows are an exhibition where a large number or manufacturers and distributors show their goods. These shows often have restricted entrance, only allowing people involved in the show’s industry attendance. Expanding a product market can be accomplished by distributing it internationally. Kiwi is an example of a product that was not readily available before the 1980s in Canada, but now is commonly purchased fruit. Changing the Design Changing the size, colour, or shape of a product can generate more sales. Changing the Manufacturing Process New processes and machines can improve efficiency and lower production costs; produce products in less time and help in the creation of better quality products.