Entrepreneurship and innovation

 1. Innovations are the harbingers of change

 2. Innovations can take place at the spark of light or can take a generation of
experiments
 3. Innovations provide a Unique Selling Proposition to a business.
 4.Innovations are action oriented .ie.active and searching new ideas.
 5. Innovations are action oriented .ie. Active and seacrhing new ideas
 7.Innovations help in making the product, service or process customer based.
 8. Innovation is all about trying , testing, and revising.

Innovation refers to a process of creation / value addition of a product / service

process/ that can solve exiting problems or tap opportunities.

Innovation is just not limited to products and customers ( eg. Sasken

communication technologies )

Entrepreneurship and Innovation

Creative as a prerequisite to innovation

• The terms creativity and innovation are often used to mean the thing, but each has
a unique connotation.

1. Creativity - is “the ability to bring something new into existence. This

definition emphasizes the “ability”, not the “activity”, of bringing
something new into existence.

2. Innovation - is the process of doing new thing.

• Innovation, therefore, is the transformation of creative ideas into useful

applications, but creativity is a prerequisite to innovation.

The Creative Process

• Entrepreneurs need ideas to pursue, and ideas seldom materialize accidentally.

Ideas usually evolve through a creative process whereby imaginative people,
germinate ideas, nuture them, and develop them successfully.

• Various labels have been applied to stages in the creative process, but most social
scientist agree on five stages that we label as:

• Idea Germination
 • Preparation
• Incubation
• Illumination
• Verification

How can entrepreneurs be innovative ?

 According to Schumpter (1934) listed five different kinds of innovations or ways

to act as an entrepreneur :
 1. The introduction of a new good or quality of a good.
 2. The introduction of a new method of production
 3. The opening of a new market.
 4. The utilization of some new sources of supply for raw materials or
intermediate goods.
 5. The carrying out of some new organizational form of the industry .
It is very important to think out of the box, sidewise network with others

Sources of innovative and creative ideas

 1.Present and potential consumers

 2. existing companies
 Raw material providers
 Distribution and retailers
 Research and development
 Existing employees

MYTHS ABOUT INNOVATION

 1. Innovation is planned and predictable

 2.Technical specification should be thoroughly prepared
 3. Creativity relies on dreams and ideas
 4. Technology is the only driving force of innovation and success.
A model of the creative process:

Idea Germination: Preparation: Incubation:

The seeding Conscious Subconscious
stage of a search for assimilation of
new idea knowledge information
Recognition Rationalization Fantasizing

Illumination: Verification:
Recognition of Application or
ideas as being test to prove
feasible ideas has value
Realization Validation

Innovation and Entrepreneurship

• It is important to recognize that innovation implies action, not just conceiving

new ideas. When people have passed through the illumination and verification stages
of creativity, they may have become inventors, but they are not yet innovators.

• The difference between invention and innovation is:

1. Invention - is the creation of new products, processes, and technologies not

previously known to exist.
2. Innovation - is the transformation of creative ideas into useful applications by
combining resources in new or unusual ways to provide value to society for or
improved products, technology, or services.

• Elements in the Innovation Process

 1. Analytical Planning - to identify: product design, market strategy,
financial need

2. Organizing Resources - to obtain: materials, technology, human

resources, capital

3. Implementation - to accomplish: organization, product design,

manufacturing, services

4. Commercial Application - to provide: value to customers, reward of

employees, revenues for investors, satisfaction for founders.

ENTREPRENEURIAL CREATIVITY

Entrepreneurial Creativity is about coming up with innovative ideas and turning

them into value- creating profitable business activities.
Entrepreneurs are entrepreneurial, as differentiated from managerial or strategic,
because they think effectually; they believe in a yet-to-be-made future that can
substantially be shaped by human action; and they realize that to the extent that this
human action can control the future, they need not expend energies trying to predict
it. In fact, to the extent that the future is shaped by human action, it is not much use
trying to predict it – it is much more useful to understand and work with the people
who are engaged in the decisions and actions that bring it into existence.

Entrepreneurial creativity = creativity × entrepreneurial action.

Entrepreneurial activity is the enterprising human action in pursuit of the

generation of value, through the creation or expansion of economic activity, by
identifying and exploiting new products, processes or markets.
Entrepreneurial creativity is a synergistic combination of four capabilities

1. Creative, lateral and systems thinking skills

2. Cross-functional expertise
3. motivation
4. Entrepreneurial action and technology of achievement.

Creativity

Creativity is a continuous activity for the entrepreneur, always seeing new ways
of doing things with little concern for how difficult they might be or whether the
resources are available. But the creativity in the entrepreneur is combined with the ability
to innovate, to take the idea and make it work in practice. This seeing something through
to the end and not being satisfied until all is accomplished is a central motivation for the
entrepreneur. Indeed once the project is accomplished the entrepreneur seeks another
'mountain to climb' because for him or her creativity and innovation are habitual,
something that he or she just has to keep on doing. Psychologists have presented various
definitions to explain the meaning of creativity.

Stagner and karwoski

Creativity implies the production of a totally or partially novel identity-

Spearman

Creativity is the power of the human mind to create new contents by transforming
relations and thereby generating new correlates.

FACTORS INFLUENCING ENTREPRENEURIAL CREATIVITY

Creative thinking

Creative thinking is the capacity to think outside the box and put existing ideas
together in a new combination. It determines how flexible and imaginatively approach
problems. Creative problem solving as a process was described as a four stage process of
preparation, incubation, illumination and verification. Vertical thinking is defining
problem in only one way without considering alternative views whereas lateral thinking
is seeking to solve a problem by non- conventional, apparently illogical means. This
process and willingness to look at things in a differently way. Lateral thinkers generate
alternate ways of viewing a problem and problem multiple definitions.

Cross-functional expertise

Cross-functional expertise is the knowledge and skill set on various functional

areas and disciplines

Motivation

Entrepreneurs are motivated to start a business because of the factors like

ambitious factors, compelling factors and facilitating factors. Whatever may be the
reason, it can be said that in most of the times of the history of human civilization, there
were entrepreneurs who did independent business and this trend of history still continues.
For the last few decades in all over the world, entrepreneurs are regarded as value adding
people to the society.
The common man thinks that people go into business and become entrepreneurs solely to
make money. The desire to earn money is no doubt an important motivating force. But
entrepreneurs are motivated not for profits alone. Several research studies have been
conducted to identify the factors that inspire entrepreneurs.
The motivating forces

P.N. Sharma identified nine motivating factors which are as follows

• Educational background
• Occupational experience
• Desire to work independently in manufacturing line
• Desire to branch out to manufacturing
• Family background
• Assistance from government
• Assistance from financial institutions
• Availability of technology
• Availability of raw material
• Other factors such as demand of a particular product, utilization of surplus money
etc

These factors can be classified as internal and external factors. The first five
factors are called as internal factors and the final four factors are external motivators.