Entrepreneurship Management Innovation and Entrepreneurship Prof Bharat Nadkarni

Entrepreneurship Management Innovation and Entrepreneurship What is Innovation ? Innovation is not a technical term. It is an economic and social term. It’s criterion is not science or technology but a change in the economic or social environment, a change in the behaviour of people as consumers, producers or as citizens. Innovation is investing of resources to create new wealth or investing of wealth to create new resources. It is measured by assessing its impact on environment, and therefore, innovation should always be Market Focused. It is the responsibility of every individual, and it begins with a conscious search for opportunities. Finding those opportunities and exploiting them with focused, practical solutions requires a rare genius.

Entrepreneurship Management Innovation and Entrepreneurship - The link Innovation is the specific function of entrepreneurship. It is the means by which the entrepreneur either creates new wealth producing resources or endows existing resources with enhanced potential for creating wealth. Innovation is an activity, the effort to create purposeful focused change in an enterprises’ economic or social potential. What is Innovative Strategy ? The first objective of a strategy for an ongoing business is to optimize what already exists. However, the ruling assumption of an innovative strategy is whatever exists is aging. The assumption is on the premise that existing product lines and services, existing markets and distribution channels etc will sooner or later go down rather than up.

Entrepreneurship Management ……. Innovative Strategy contd. The motto of a strategy for the on going business is “ Better and More “, however, the motto of a strategy for innovation is “ New and Different “. Innovative strategy is planned out by systematically getting rid of the old, the dying and obsolete, because abandoning yesterday alone will free resources for tomorrow. Why does one need to Innovate ? • to face competition • to stand out in a clutter • to survive recession • to solve certain problems

Entrepreneurship Management Innovations and Profits The main function of an entrepreneur is to introduce innovations in the economy and profits are reward for his performing this function. Any new measure or policy adopted by an entrepreneur to reduce the cost of production or to increase the demand for his product is an innovation. Innovation can be divided into two categories • Those which reduce the cost of production ie which change the production functions. This first type of innovation includes the introduction of new machinery, new and cheaper technique or process of production, exploitation of a new source of raw material, a new and better method of organizing the firm etc. • Those which increase the demand for the product ie which change the demand or utility function. This category includes the…… contd

Entrepreneurship Management introduction of a new product, a new variety or design of the product, a new and superior method of advertisement, discovery of new markets etc. Role of an Innovator Role of an innovator is a part of entrepreneurship. The entrepreneur is not a man of ordinary managerial ability, but one who introduces something entirely new. The entrepreneur is motivated by the desire to be the founder of a private commercial kingdom, the will to conquer and prove his superiority and the joy of creating, of getting things done or simply of exercising one’s energy and integrity. Role of Profit An entrepreneur innovates to earn profits. Profits arise due to dynamic changes resulting from innovation. They continue to exist until innovation becomes general.

Entrepreneurship Management Breaking of the Circular Flow Schumpeter’s Model Profits caused by a particular innovation tends to be competed away as other imitate and adapt that. But if the entrepreneur comes out with another innovation at that time when the favourable effects of the former innovation are dying out, he will make profits again. Therefore, as long as innovation exist, profits continue to arise out of them. According to Schumpeter, Innovation is the sole cause of Profit.

Entrepreneurship Management Instilling Attitude for Innovation • Encourage creative conflict • Big ideas come from small teams • Learning happens away from the desk • Understand the Product’s user - empathise • Live in the future • Failure sometimes produces innovation • Brainstorming for Innovation Entrepreneur / Project Leaders Mantra Understand, Observe, Visualise, Evaluate, Implement “ Team need leaders and mentors, they do not need bosses “ “ Fresh ideas occur in a fun workplace “

Entrepreneurship Management Sources of Innovation As mentioned by Peter Drucker Within an Enterprise • Unexpected occurances • Incongruities • Process needs • Industry and Market changes Outside the Enterprise • Demographic changes • Changes in perception • New knowledge

Entrepreneurship Management Sources of New Ideas • Consumers • Existing Products and Service • Distribution channels • Govt. – Patents, Import List, Licensing • Research & Development

Entrepreneurship Management Principles of Innovation “ Think and look beyond the obvious “ • Analysis of the sources of new opportunities • Innovation is both conceptual and perceptual • Right and Left side of Brains • Effective innovations start small

Creativity • Creativity is the engine of invention and innovation • The essence of creativity is combining two or more ideas to arrive at an entirely new one • Creative ideas must add value

Creative Environment (Triandis 1990) • Permits people to work in areas of their greatest interest. • Encourages employees to have broad contact with stimulating colleagues • Allows taking moderate risks • Tolerates some failures and non-conformity • Provides appropriate rewards and recognition

Creative Person (Barron 1969) • Conceptual Fluency (i. e. being able to express ideas well and formulate the ideas as one proceeds) • The ability to produce a large number of ideas quickly • The ability to generate original and unusual ideas • The ability to separate source (who said it) from content (what was said) in evaluating information

Creative Person (contd. ) • The ability to stand out and be a little deviant from others • Interest in the problem one faces • Perseverance in following problems wherever they lead • Suspension of judgment and no early commitment • The willingness to spend time analyzing and exploring • A genuine regard for intellectual and cognitive matters

Gains of Creativity • • Produces greater quantities Improves efficiency Retain seeds Provides Opportunities for combinations Increase potential for better decisions Reduces personal conflicts Increases group ownership

Entrepreneurship Management Thank You