Unit-2

ENTREPRENEURIAL IDEA AND INNOVATION

INTRODUCTION TO 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.
Innovation is about helping organizations grow. Growth is often measured in terms of
turnover and profit, but can also occur in knowledge, in human experience, and in
efficiency and quality.
Innovation is the process of making changes, large and small, radical and incremental, to
products, processes, and services that results in the introduction of something new for the
organization that adds value to customers and contributes to the knowledge store of the
organization.
Applying innovation is the application of practical tools and techniques that make
changes, large and small, to products, processes, and services that results in the
introduction of something new for the organization that adds value to customers and
contributes to the knowledge store of the organization.
Innovation = Invention + Exploitation

TYPES OF INNOVATION:
1. Incremental Innovation
Incremental can be perceived as continuous innovation. It builds on existing knowledge
of technology to continuously improve on the existing product in the minority and
targeted existing markets.

2. Radical Innovation
Radical innovation is the opposite concept of Incremental innovation. This one applied
either new technology or combine new with existing technologies, which targets new
markets to build new products.
Mostly, the company use radical innovation to create short-term competitive advantages
and then apply incremental innovation to sustain its potential gains.
Gillette is a good example that involves both innovations. Gillette launched its radical
innovation as a disposable blade that can be replaced in the razor. Then Gillette sustains
its profitable business by introduced various versions of razor blade; pack of 3 blades or 5
blades with new razor model.

3. Architectural Innovation
Architectural innovation is a redesigned method to move products/services into a new
market, still based on existing knowledge of core technology.
Canon is the main competitor of Xerox in photocopiers. Canon can win over Xerox,
because of its physical transformation in photocopies machine. What Xerox offered is a
big giant copying machine that requires particular space in large-sized businesses.
Whereas Canon redesigned huge photocopiers into desktop photocopiers that still contain
existing compact concepts of functions.
4. Disruptive Innovation
Disruptive innovation is a new product that disrupts the existing market with the help of
new technologies. It often starts at low-demanding customers with a ―good enough‖
product performance.
Kodak, film camera, died as a result of the disruption of a digital camera. There are fewer
users due to the fewer photo can be taken and the high cost of printing per shot. Whereas
Digital camera offers more photo taken and pictures can be viewed and edited more than
once without add-up cost. For example, Sony, Nikon, and Canon can utilise new
technology to get a job done of customer value in taking quick photo and post on social
media rather than waiting for a week to get the picture and viewed once then stored in the
boxes.

Entrepreneurial Idea Generation:

Idea generation is described as the process of creating, developing and communicating
abstract, concrete or visual ideas. It is the front end part of the idea management funnel
and it focuses on coming up with possible solutions to be perceived or actual problems
and opportunities.
For example:
It was the creative imagination of Ratan Tata that led to the creation of Nano, a low
budget passenger car for middle class families in India.

―Creative thinking inspires ideas. Ideas inspire change.‖ – Barbara Janusz kiewicz

To be successful, the entrepreneur needs to begin with basics i.e., to generate ideas, check
viability and finally seize the opportunity. Hence, ideas have to be shaped into
opportunities after systematic research based on available data, market characteristics and
competitor actions.
 IDENTIFYING BUSINESS OPPORTUNITIES:
Objectives of Identification of Business Opportunities

1. Identification of opportunities by an entrepreneur, in the context of probable industries

and to decide his own role, the scope of work, and relationships, in accordance with the
opportunities.
2. To keep watch over the possible market of the commodity or service to be produced.
3. To decide a high-level group of managers, so that entrepreneurial ventures may be
started.
4. To make an assessment of financial resources by making financial forecasts, in the
context of the process if industrial development.
5. To explore the opportunities for possible entry in other areas.
6. To assess the requirements of labor, capital, and materials for the industries.
7. To find out the possibilities of short term and long term development in various areas of
the economy.
8. To have the desire for technical knowledge, awareness towards new opportunities, and
acceptance of the changes.
9. To see the possibilities of diverting the available resources towards achieving
the business objectives.
10. To identify those industries, which are not based on local sources, but which may be
economically considered, in view of future requirements.

Here we discuss four ways to identify more business opportunities:

To be successful entrepreneurs, we need to be continually innovating and looking for
opportunities to grow our startups.

1. Listen to your potential clients and past leads

When you’re targeting potential customers listen to their needs, wants, challenges and
frustrations with your industry. Have they used similar products and services before?
What did they like and dislike? Why did they come to you? What are their objections to
your products or services?
This will help you to find opportunities to develop more tailored products and services,
hone your target market and identify and overcome common objections.

2. Listen to your customers

When you’re talking to your customers listen to what they saying about your industry,
products and services. What are their frequently asked questions? Experiences?
Frustrations? Feedback and complaints?
This valuable customer information will help you identify key business opportunities to
expand and develop your current products and services.

3. Look at your competitors

Do a little competitive analysis (don’t let it lead to competitive paralysis though) to see
what other startups are doing, and more importantly, not doing?
Where are they falling down?
What are they doing right?
What makes customers go to them over you?
Analysing your competitors will help you identify key business opportunities to expand
your market reach and develop your products and services.
4. Look at industry trends and insights
Subscribe to industry publications, join relevant associations, set Google alerts for key
industry terms and news and follow other industry experts on social media.
Absorb yourself in your industry and continually educate yourself on the latest techniques
and trends.

FACTORS TO CONSIDER IN IDENTIFYING BUSINESS OPPORTUNITIES:

The following factors affecting the Identification of business opportunities may be
mentioned, which should be considered, while identifying the business opportunities.
1. Analysis of Internal Demand
2. Availability of Raw Materials
3. External Assistance
4. Knowledge about Industrial Development
5. Internal Sources
6. Risk in Business Opportunities
7. Performance of Existing Units
8. Promote Entrepreneurial Activity

Challenges of Identification of Business Opportunities:

1. Initial Crisis in Beginning of Business
2. Promotion of an Entrepreneurial Venture
3. Financial Challenges
4. Innovation of New Product
5. Unhealthy Competition
6. Decision-Making and Leadership

MANAGERIAL SKILLS FOR SUCCESSFUL ENTREPRENEUR

A successful entrepreneur is the one who is focused on making their decisions and
eliminate the obstacles that arise when achieving the goals. Certain qualities are required
for the entrepreneur to achieve the best goal.

1) Time Management

Time is an important factor to make decisions. The success of an entrepreneur depends

upon how they utilize their time in evaluating and prioritizing their tasks according to
relevance and importance. They have responsibilities towards their partners, customers
and employees to make most out of their time. Effective time management skills enable
entrepreneurs to expeditiously complete essential tasks. They must manage their
professional life in conjunction with their family life, making a balance between work
and home.

2) Opportunity Recognition

The seed of every successful business is a great Idea. They must recognize the
opportunities on time that are unique and gives a competitive advantage. A good
opportunity only comes when an effective market research is done. They must take the
views of industry experts and must utilize the information gained from organizational
experience.
3) Business Planning

Successful business involves proper utilization of managerial skills and formulation

of an effective business plan. The planning is required from the start of the business
till the entrepreneur achieves the goal. Business planning includes the ability to
manage the future forecasting in each aspect.

4) Information Gathering

Reliable information is required to ensure those right decisions are made. Successful
entrepreneurs often make information gathering one of their top priorities. An
entrepreneur's close associates are the most valuable resource for gathering actionable
information. Motivation is required for the associates to share their learning and
experience. Successfully gathering the right information enables entrepreneurs to take
the decisions better than the competitors in the market.

5) Rational Decision Making

Entrepreneurs cannot expect to succeed without nurturing their ability to make
rational decisions. Decisions can be taken for long term or short term depending upon
the working of the business. Many entrepreneurs underestimate the importance of
giving time in taking the right decisions, as a result, they make impulsive decisions
based on intuition or conjecture.

6) Employee Management

Successful businesspeople evaluate potential employees, hire and train workers and
put them in appropriate positions in her company. They must find people who will
work well together and makes organization goals as their own achievements. Once
employees are on the job, a successful entrepreneur needs to have the ability to
manage teams, oversee conflict and dispute resolution and provide ongoing training
to encourage high-quality performance.

7) Communication Skills

An entrepreneur must be a good orator with best communication skills. They must be
able to communicate with the people with whom they work. A good understanding
between businessmen and its fellow persons makes the work easier. Entrepreneurs
with strong communication skills can find it easier to communicate with partners,
acquire funding, and develop relationships with prospective customers.
Communication skills can also make it easier to manage associates who work for the
enterprise.

8) Leadership

Leadership quality is essential for every entrepreneur to make the whole team work
together and give their best in achieving the goal. Entrepreneurs must possess
adequate leadership skills to effectively coordinate the efforts of everyone involved in
 an enterprise. Leadership skills can be learned through experience and formal
education on leadership techniques.

9) Business Management

Successful entrepreneurs must have strong overall business management skills. They
must understand all the aspects of how his business operates, including the regulatory
requirements of his industry. They should have knowledge about labor, employment,
and tax laws, and must stay abreast of industry and market trends. This will help him
quickly change direction if economic conditions dictate.

10) Financial Management

Hiring an accountant or finance professional to track money and other assets is

responsible for the financial management of the company. It is significant when the
company is at the growth stage and is bringing the investors. A successful
entrepreneur has the management skills necessary to review books and financial
statements to ensure that he is always aware of his business's finances.

MANAGING FOR VALUE CREATION:

The value creation process is at the heart of integrated thinking and value
creation. Strategically, the business model is a central cog in the value creation
process which turns valuable resources and relationships (inputs) into results
(outputs) that create value for stakeholders and society (outcomes and impacts).
Value for customers and other stakeholders is ultimately created or destroyed
through the business and operating model.
Many organizations undertaking integrated reporting using the international
integrated reporting framework to set out their value creation and business model
as a central part of their integrated reporting.
This approach provides a tool to connect purpose, strategy and the value creation
process across relevant capitals, outcomes and impacts.
Ensuring that value is created over time involves making significant decisions on
where the business competes (e.g., markets, geography, segments), identifying the
principal opportunities and risks related to the strategy and business model,
ensuring products and services meet customer needs and respond to societal
challenges, and collaborating with critical partners in value creation. To create
long-term value, organizations need to put in place the infrastructure, capability
and relationships (tangible and intangible assets) that enable them to meet the
needs of their customers and stakeholders.
Consequently, capital and resource allocation decisions are a critical part of how
value is created and sustained. Investments in capital maintenance and
development of strategic assets and capabilities such as talent, innovation,
infrastructure, brand and intellectual assets enable value to be created. They need
to be considered beyond estimated financial returns and in the context of internal
and external stakeholder outcomes, and a wider set of impacts.

ORGANIZATIONAL EFFECTIVENESS:
Organizational effectiveness refers to how an organization has achieved full self-
awareness due in part to:
 Leaders setting well-defined goals for employees and outlining ways to efficiently
execute those goals.
Management implementing clear decision-making processes and communication
pipelines.
Engaged employees—who are carefully selected and fairly compensated—
producing work that prioritizes results.

FIVE WAY TO ACHIEVE ORGANIZATIONAL EFFECTIVENESS:

 Strategy
Strategy involves shifting an organization’s central identity—how leaders
describe its purpose and goals both internally and externally—to include
effectiveness and efficiency as core values.
The more your company is known to be ―effective‖ and ―efficient,‖ by both the
market and your employees, the more these values will be built into every new
project and goal.
Organizational effectiveness should simplify and clarify long-term objectives for
a company. The clearer these objectives are outlined at a strategic level, the easier
it is to translate across departments.

 Metrics
Measuring organizational effectiveness through metrics can help organizations
stay accountable. But choosing the right data to measure—as well as knowing
when to prize human judgment and discussion over hard analytics—is just as
important.
It clearly states the organization’s strategic focus, efforts to promote clarity in
roles, as well as recommendations for improving general administration
organizational design.

 Commitment
―Strong executive sponsorship is the single most important factor for success and
the most often cited reason for failure when things go off track,‖ the Bain &
Company study says.
The authors stress that ―visible and credible commitment‖ to effectiveness
policies from senior leaders—in companywide communications and hiring
approaches, all the way down to how quarterly budget meetings are conducted—
creates a trickle-down effect across the organization.

 Behavior
Meanwhile, recurring behavior is where efforts to achieve organizational
effectiveness are most likely to break down. Identifying specific decision-making
moments in the day-to-day operation of the company, communicating the ways
employees ought to be changing their behavior in those moments, and then
implementing systems for reinforcement, including incentivizing those choices,
can build a much healthier organization that polices its own effectiveness.

 Culture
Finally, the degree to which employees are enthusiastically engaged at work
determines how effective their work will be.
Therefore, creating an organizational culture that values effectiveness is key.