Introduction to innovation

Kapeel Kumar

Definitions
Dimensions
Drivers
Developments

A framework for
describing new venture
creation
Individuals

Environment

Organization

Process

Definition:
New Venture creation is the organizing of new organizations.
To organize is to assemble ongoing interdependent actions into
sensible sequences that generate sensible outcomes (Weick,
1979).

Categorization: Dimensions
Environment
Venture capital availability
Presence of experienced
entrepreneurs
Technically skilled workforce
Accessibility of suppliers
Accessibility of customers or
markets
Govt influences
Proximity of universities
Availability of land or facilities
Accesibility of transportation
Attitude of the area population
Availability of supporting services
Living conditions
Occupational & industrial
differentiation
More recent immigrants in population
Large industrial base
Availability of financial resources
Barriers to entry
Existing competitors
Substitute
Bargaining power buyers/suppliers

Individuals
Need for achievement
Locus of control
Risk taking propensity
Job Satisfaction
Previous work experience
Entrepreneurial parents
Age
Education

Process
Locate a business opportunity
Accumulate resources
Market products and services
Produce the product
Build an organization
Respond to govt and society

Organization
Overall cost leadership
Differentiation
Focus
The new product or service
Parallel competition
Franchise entry
Geographical transfer
Supply shortage
Tapping unutilized resources
Customer contract
Becoming a second source
Joint ventures
Licensing
Market relinquishment
Sell off of division
Favored purchasing by govt.
Governmental rule changes

What is innovation?
Innovation is the process and outcome of
creating something new, which is also of value.
Innovation involves the whole process from
opportunity identification, ideation or invention
to development, prototyping, production
marketing and sales, while entrepreneurship only
needs to involve commercialization
(Schumpeter).

Creativity, innovation and

entrepreneurs
Creativity is thinking new things, and innovation is doing new
things
Creativity is the ability to develop new ideas and to discover
new ways of looking at problems and opportunities.
Innovation is the ability to apply creative solutions to those
problems and opportunities in order to enhance peoples
lives or to enrich society
Entrepreneurship = creativity + innovation

What is innovation?
Today it is said to involve the capacity to
quickly adapt by adopting new innovations
(products, processes, strategies, organization,
etc)
Also, traditionally the focus has been on new
products or processes, but recently new business
models have come into focus, i.e. the way a firm
delivers value and secures profits.

What is innovation?
Schumpeter argued that innovation
comes about through new combinations
made by an entrepreneur, resulting in

a new product,
a new process,
opening of new market,
new way of organizing the business
new sources of supply

Dimensions of innovation
There are several types of innovation
Process, product/service, strategy,

which can vary in degree of newness:

Incremental to radical,

and impact:
continuous to discontinuous

Drivers for innovation

Financial pressures to reduce costs, increase efficiency, do more
with less, etc
Increased competition
Shorter product life cycles
Value migration
Stricter regulation
Industry and community needs for sustainable development
Increased demend for accountability
Demographic, social and maket changes
Rising customer expectations regarding service and quality
Changing economy
Greater availability of potentially useful technologies coupled with a
need to exceed the competition in these technologies

From Creativity to
Entrepreneurship

Creativity
There are four phases which can help to remove idea blocks
to and enhance creative thinking.

The four phases with their important activities are as

follows:

1: background or knowledge accumulation e.g. reading,

professional conferences, talking, visit to library
2: incubation process e.g. sleep on it, exercise,
3: idea or eureka experience, usually this phase slowly but
surely formulates the solution
4: evaluation and implementation e.g. prototypes, advice.

Creativity

The following questions are designed to spur the imagination and

can help develop creativity:
1. Is there a new way to do it?
2. Can you borrow or adapt it?
3. Can you give it a new twist?
4. Do you merely need more of the same?
5. Do you just need less of the same?
6. Is there a substitute?
7. Can the parts be rearranged?
8. What if we do just the opposite?
9. Can ideas be combined?
10. Can we put it to other uses?
11. What else could we make from this?
12. Are there other markets for it?

Creativity
Be aware that there are numerous barriers to
creativity, including:
1. searching for the one right answer
2. focusing on being logical
3. blindly following the rules
4. constantly being practical
5. viewing play as frivolous
6. becoming overly specialised
7. avoiding ambiguity
8. fearing looking foolish
9. fearing mistakes and failure
10. believing that Im not creative.

What is innovation?
Gary Hamel argued that todays market
place is hostile to incumbents, who now
needs to conduct radical business
innovation:
Radically reconceiving products and services,
not just developing new products and services
Redefining market space
Redrawing industry boundaries

Famous Entrepreneurs

Thomas Alva Edison amongst many other

contributions, developed electric powergeneration technology and created the
General Electric Company in 1892.

Famous Entrepreneurs
Chief Executive Officer of Facebook, Mark
Zuckerburg, was 20 years old when he founded
Facebook and now he is the youngest billionaire
in the world.
Some kids played computer games. Mark
created them. Writer, Jose Antonio Vargas.

Famous Entrepreneurs
Steve Forbes was a student in Princeton when
he first started the Business Magazine in
1968. Now Business Magazine has over a 6 million
readers and Forbes current net worth is around
430 million dollars.

Famous Entrepreneurs
Mary Kay Ash founded Mary Cay Cosmetics
Inc. in 1968 initially only selling five products.
She achieved to be one of the biggest
marketing and cosmetics companies in the
male dominated business world.

Main Types of Innovation

Product Innovation
Innovations of goods and services. Creating new
technologies or technical improvements of products.

Organizational
Innovation
An organizational innovation is the
implementation of a new organizational
method in a firm's business practice,
workplace or external relations.

Process Innovation
Improvements of the production or delivery
method.
In the 1980s this model of innovation came to the
fore driven primarily by the remarkable success
of Japanese auto manufacturers, which were twice
as efficient as their international competitors.
Japan Lean
production contrast
with the mass
production techniques

West Mass Production,

typfied by Henry Ford is
based on assembly lines
producing standardized
products

Marketing Innovation
Marketing innovation is the implementation of new
marketing methods.
By the 1990s Roy Rothwell began to identify a
number of changes occurring in strategy firms,
which were using innovation and technologies to
support themselves. The innovation strategies
were highly integrated with its partners including
lead customers demanding users, and codevelopers. Rothwell called this the strategic
integration and networking model of innovation.

New conditions for

innovation
Small start-up entrepreneurs increasingly
depend on large firms:

as suppliers or customers
for venture finance,
for exit opportunites,
for knowledge (production, markets and R&D)
and for opening new markets.

New conditions for

innovation
Large firms increasingly depend on
small start-ups
for NPD,
as suppliers of new knowledge (which they
cannot develop themselves),
or organizational renewal, for experimentation
with busienss models,
for opening new markets, etc

New developments in
innovation raises new issues
and problems
Greater emphasis on commercializing scientific
discoveries, particularly in IT and the bio-sciences
Speed and potential value of scientific progress leads to
emphasis on solid and well-designed portfolios of
research projects
Universites as active drivers of innovation: Academic
entrepreneurship and the entrepreneurial university
University-industry partnerships
Increased search for radical innovation and top-line
growth.

Summary .

Questions and Comments

Thank You