ENTREPRENEURSHIP & INNOVATION

GROUP ASSIGNMENT

QUESTION ONE
Analyse the views of (1) Economic entrepreneurship theory, (2) Psychological
entrepreneurship theory (3) Sociological entrepreneurship theory, (4)
Anthropological entrepreneurship theory (5) Opportunity-Based
entrepreneurship theory, and (6) Resource-Based entrepreneurship theory
on the current entrepreneurial global trend

QUESTION TWO
a) Examine the characteristics of Entrepreneurs and the strategies for
promoting entrepreneurial characters in an individual
b) Critically evaluate Schultz, Kirzner and Schumpeter’s theories of
entrepreneurship and shows how the theories can be applied in
developing countries, focusing Tanzania’s entrepreneurial culture and
practices.

QUESTION THREE

a) Identify the different myths of entrepreneurship,

a) Assess the impact of the prominent myths to the growth of

entrepreneurship and innovation;
b) Dispel the myths with scholarly view
QUESTION FOUR

a) Compare and Contrast entrepreneurship with small business

b) In 2002 the Government established the SME Policy. After 20 years,
assess the level of SME performance in Tanzania
c) Critically review the similarities and differences between the types of
Entrepreneurs.

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QUESTION FIVE

a) What are the Forms of Business Ventures?

b) Discuss the Features of ALL Business forms.
c) Discuss the Merits and Limitations of Each Form
QUESTION SIX

a) Conceptualize the innovation (meaning; types; sources; and areas)

b) Explore the mechanism of promoting innovations in firms
a) Critically Discuss the innovation process

QUESTION SEVEN

3M: RETHINKING INNOVATION

A CASE STUDY

This company has been around for just over 100 years and during that
period has established a clear reputation as a major innovator. Their
technical competence has been built up by a long-term commitment to R&D
on which they currently spend around $1bn; this has yielded them a regular
position in the top 10 in US patents granted. They have launched a number
of breakthrough products which have established completely new markets
and they have set themselves a consistent stretch target of getting 30% of
sales turnover from products launched during the past four years.

The company presents a consistent picture in interviews and in publications

– innovation success is a consequence of creating the culture in which it can
take place – it becomes ‘the way we do things around here’ in a very real
sense. This philosophy is borne out in many anecdotes and case histories –
the key to their success has been to create the conditions in which

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innovation can arise from any one of a number of directions, including lucky
accidents, and there is a deliberate attempt to avoid putting too much
structure in place since this would constrain innovation.

The company has always valued innovation and this has been a consistent
and key theme since their inception; their ‘hero’ figures amongst previous
CEOs have been strongly associated with enacting and supporting the
innovation culture which characterizes the firm. Their overall innovation
strategy is focused on two core themes – deep technological competence
and strong product development capabilities. They combine these to enable
them to offer a steady stream of breakthrough products and line
extensions/product improvements. A great strength is the integrated input
from the technical and marketing side which enables ‘creative association’,
coming up with new and often powerful combinations of needs and means. A
number of key strategic enablers are worth flagging:

 Setting stretch targets – such as 30% of sales from products

introduced during the past years’ – provides a clear and consistent
message and a focus for the whole organization
 Allocating resources as ‘slack’ – space and time in which staff can
explore and play with ideas, build on chance events or combinations,
etc.
 Encouragement of ‘bootlegging’ employees working on innovation
projects in their own time and often accessing resources in a non-
formal way – the ‘benevolent blind eye’ effect.
 Provision of staged resource support for innovators who want to take
an idea forward effectively different levels of internal venture capital
for which people can bid (against increasingly high hurdles) – this
encourages ‘intrapreneurship’ (internal entrepreneurial behavior)
rather than people feeling they have to leave the firm to take their
good ideas forward.

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In recent years they have seen their momentum falter, in part because of the
sheer scale of the operation and the range of competition. Their response
has been to identify a series of ‘Pacing Plus’ programmes, which attempt to
focus and prioritize around 30 key areas for development across the
business – essentially an innovation strategy.

Having been working on innovation for so long, they have developed a set of
structures and policies to guide innovative activity from picking up signals
through to implementation. Importantly they allow for parallel routes through
their system so that innovations can come from close market interactions or
from deep technology research in their labs or from various forms of
collaboration, or from serendipitous discovery by their staff. As they put it,
‘we don’t have a skunk-works – round here everyone is a skunk!’ Their skill in
enabling association is particularly relevant; many of their breakthrough
products have come about because staff with technical knowledge has
worked alongside those with awareness of real or latent market needs and
the result has been a creative combination.

There is a formal stage-gate system for innovations and extensions based on

established products but in addition there is a clear progress route for more
radical ideas, moving from an incubator stage, where they are encouraged
and where development funds are available against loose targets, through to
much more rigorous business plan appraisal for projects further down the
line. The ‘trial by fire’ approach is well-known but carries with it a strong
element of encouraging innovation champions to take non-linear ideas
through the system.

Effectively they run parallel systems which all involve funnels and clear
gateways through which ideas pass into narrower parts of the funnel and
which also commit more extensive resources – but although the mechanisms
differ, but the intent is the same.

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3M had managed to build an innovative environment in their operations.
Throughout the company there are various schemes which acknowledge
innovative activity – for example, their Innovator’s Award which recognizes
effort rather than achievement. In 3M innovation is respected – for example,
there is a ‘hall of fame’ whose members are elected on the basis of their
innovative achievements. Movement and combination of people from
different perspectives is allowed for creative combinations that are regarded
as a key issue in such a large and dispersed organization. All employees are
allowed to spend a proportion of their time in curiosity-driven activities which
may lead nowhere but which have sometimes given them breakthrough
products; acceptance of the need for ‘stumbling in motion’ as innovative
ideas evolve and take shape. A famous quote from a former CEO is often
cited in this connection: ‘Mistakes will be made, but if a person is essentially
right, the mistakes he or she makes are not as serious, in the long run, as
the mistakes management will make if it’s dictatorial and undertakes to tell
those under its authority exactly how they must do their job. Management
that is destructively critical when mistakes are made kills initiative, and it is
essential that we have many people with initiative if we are to continue to
grow.’ Management is responsible for giving employees a sense of
empowerment and turning a blind eye to creative ways that staff comes up
with to get around the system acts as a counter to rigid bureaucratic
procedures as well as implement the recruitment policy by looking for people
with innovator tendencies and characteristics.

Linkages and Networking

 Recognition of the power of association – deliberate attempts not to

separate out different functions but to bring them together in teams
and other groupings
 Encouraging broad perspectives. For example, in developing their
overhead projector business, it was close links with users made by

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 getting technical development staff to make sales calls that made the
product so user-friendly and therefore successful.
 Strong culture dating back to 1951 of encouraging informal meetings
and workshops in a series of groups, committees, etc., under the
structural heading of the Technology Forum – established ‘to
encourage free and active interchange of information and cross-
fertilization of ideas’. This is a voluntary activity, although the company
commits support resources, but it enables a company-wide ‘college’
with fluid interchange of perspectives and ideas.
 Recruiting volunteers. Particularly in trying to open up new fields, the
involvement of customers and other outsiders as part of a
development team is encouraged since it mixes perspectives.
QUESTIONS FOR THE CASE STUDY

a) Critically assess the organizational characteristics that influence

innovation process in the 3M.
b) In managing innovation what are the organizational factors that was
employed by the 3M Company to promote creativity and innovation
climate within the organization?
c) Comment on the type of organization structure that was employed by
the company? Provide characteristics that influence successful
innovation management in the 3M.

QUESTION EIGHT

a) Describe the steps of innovation process and critically evaluate the

innovation process
b) Given the importance of innovation, many businesses have spent
enormous sum of money trying to develop an environment that fosters
innovation. Explain the virtuous circle of innovation and critically
discuss how it brings competitive advantage over others.
c) With examples: Critically Discuss the Phase of creativity process

QUESTION NINE

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 a) The characteristics that make one person an entrepreneur and another
not have been examined in order to explain what factors might trigger
new venture creation. Discuss ALL the key factors likely to influence
the propensity for entrepreneurship in a person.
b) Discuss ALL the management styles of entrepreneurs and comment on
suitability of each one in Tanzania.
c) Discuss ALL ways in which a small business can raise fund
QUESTION TEN

CASE STUDY NO. 1: POST IT-NOTES

One way new products are developed is to take a current product and modify
it in some way. Another way is to determine how a previously developed
product can be marketed or used by a particular group of customers.

The 3M Company is famous for many products, among them adhesives and
abrasives. In one of 3M’s most famous innovative stories from 1980’s a 3M
manager, who was a member of a church choir wanted to mark the pages of
his hymnal so he could quickly find them. A bookmark would not do because
the pieces of paper could easily fall out. The manager needed something
that would adhere to the page but not tear it. Back at work, the manager
asked one of the members of the research and development department if
an adhesive existed that would do this. One did, but it never had been
marketed because the company found that the adhesive was not strong
enough for industrial use. At the manager’s request, a batch of the glue was
prepared and applied to small pieces of paper that could be used as
bookmarks.

As the manager who has requested the product began to think about new
product, he concluded it had uses other than as a bookmark. Secretaries
could use it to attach messages to files, and managers could use it to send
notes along with letters and memos. In an effort to spur interest in the
product, the manager had a large batch of these “attachable” notes, now
called Post –it Notes, made and began distributing them to secretaries

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throughout the company. Before long more people began to ask for them.
The manager then ordered the supply cut off and told everyone who wanted
them that they would have to contact the marketing department. When that
department became inundated with calls for Post –in Notes, it concluded that
a strong demand existed throughout the industry for this notes, and full
production began. Today Post-in Notes is one of the largest and most
successfully product lines at the 3M Company.

1. POST- IT QUESTIONS:
a) From the above case: What type of innovation is this?
b) Suggest the appropriate innovation source that account for this
product success in the market.
c) In the development of this product, discuss what took place in each
phase of creativity process?
d) In relation to new product development what was the objective of the
manager to send the Post-in Notes to all secretaries throughout the
company?

CASE STUDY NO.2: ON SHAKY GROUND: JUST ORGANIC LIMITED’S

JOURNEY THROUGH NATURAL DISASTERS

An Ecopreneur is a relatively new term to define those entrepreneurs who

start new businesses based on the principle of sustainability. In practice this
means they have a green product or service, and they also run the business
in a green way (known as a ‘green-green’ ecopreneur). Founded in 2007 in
Christchurch, New Zealand, Just Organic Limited is an organic box delivery
service that embodies the triple-bottom-line principles of people, profit
and planet (PPP). Like old-time milk delivery in glass bottles, the business
supplies households with fresh and seasonal certified organic fruit and
vegetables – and picks up the waste. Julian is the face and inspiration of the
company, and has a background in horticulture, farming and teaching.
Coming from this background he felt that his skills could be applied to
organic produce box delivery service as he had been involved in a similar
service in the United Kingdom.
After moving to New Zealand from Australia, Julian and his business partner
set out to invest their own funds in a business that would offer them

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convenience and freedom. Immediately the pair were attracted to organics,
as it aligned with their personal values. They felt that their complementary
skills in administration, international business, operations and the technical
side of conducting business could be well applied to the organic produce box
delivery idea. Accordingly, they purchased a customer database and started
Just Organic Limited by recruiting suppliers and handling and packing the
produce in their own warehouse. After a few years, the partner left the
business and it is now run solely by Julian, with the help of administrative
employees and some outsourcing (i.e. couriers, some of the packing).
Pre-earthquake activities
Julian set out to own a business that would offer a close alignment with his
personal values. Aware of the toxins and chemicals frequently found in our
food chain, and an inability to conveniently obtain fresh organic produce for
his family, Julian believed that he could fill the gap that existed in the
market. Julian felt that he could use both the business and his personal
knowledge to educate, encourage change, preserve the environment and
soil, and increase the health of New Zealanders through informing them
about the benefits of eating organic food. This meant he had to find balance
between creating a profitable business operation and staying true to his
environmental values.
Julian believed it was possible to do both: We are a business and we want to
run as environmentally friendly as we can. So we have looked at ways that
we could do this with our vehicles – biodiesel. We were conscious about
every decision we made.
In terms of environmental decisions within the company all packaging is
recycled, cardboard delivery boxes are reused and waste is kept to a
minimum. Julian believes so strongly in what he is doing that he also collects
materials from customers for recycling when he delivers their order:
We’re kind of like a recycling bin in some ways, we’re actually collecting
rubbish that we normally wouldn’t but it’s attached to this business.
Julian was less focused on growing the business exponentially; instead he
desired a ‘well run business that’s ethical, moral and friendly’, with the
creation of trusting and strong relationships with his clients being of higher
priority. In other words, people and planet were more important than profit.
New customers were developed through having ‘friends of the business’ who
spread their positive opinions about Just Organic Limited.
Julian faced the daily reality of justifying why organics is better for your
health and for the environment than non-organic produce. People typically
apply bargain shopping mentality to food – great for finding a new pair of
shoes – but is this a healthy approach to food? As such, he was reinforcing
his belief system and developing an ability to constantly bounce back from
the negative stereotyping:
It’s not about being a hippie or whatever; it’s about making an effort because
that little effort counts. One effort time’s a million people, it’s going to make
a huge difference and that’s basically what we’re pushing for.

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In the early years after starting the business, Julian focused on keeping the
business local, manageable and remained true to his environmental
principles in running the business. Then disaster struck.

The Christchurch earthquake and aftermath

On the 22 February 2011, the historic and elegant City of Christchurch, New
Zealand and the surrounding Canterbury region experienced a series of
devastating earthquakes, the most significant with a magnitude 6.3. This
earthquake shattered buildings, destroyed businesses and took the lives of
185 people. The immediate and immense financial implications were felt not
only regionally, but also nationally with the estimated cost of damage
predicted to exceed US$12.4 billion.2 Unfortunately, for many businesses,
the costs of re-establishing and continuing as usual became overwhelming,
and many businesses either closed down or relocated.
In the aftermath of the earthquakes, Just Organic Limited continued
operating and Julian attributes this to the strong structure of the company
and the loyal customer base that comes with running such a niche and
personalised business. However, while managing to survive, Julian faced a
plethora of challenges, including his warehouse being destroyed, so he had
to move operations to his private home. While the majority of stock was
unharmed and able to be salvaged from the warehouse, ongoing delivery
was impossible due to significant road damage, and Julian made the decision
to donate over $2000 of his stock to his local community before it perished.
Prior to the disaster up to a third of customers were residing close to his
warehouse, but his customer base was virtually halved overnight as many
were forced to move to other suburbs in Christchurch and throughout New
Zealand due to significant infrastructure and housing damage. Unfortunately,
the business lost a significant number of customers almost overnight. The
earthquake caused Julian to rethink many of his ideas regarding expansion.
He was in the process of setting up a smoothie shop for passing cyclists, an
idea which has been put aside for the meantime. However, these setbacks
did not weaken Julian’s resolve to continue with the business. He spotted
opportunities in the chaos that ensued. The reality of his situation is
acknowledged in a matter-of-fact manner, with excitement building when he
discusses his plans for the future. His comment about his thoughts
immediately after the earthquakes succinctly sums up his attitudinal
approach:
I never thought about packing up. I thought to myself immediately, this is
good news. Because war and destruction often end up positive, so if the
reward is as great as the journey, then it should be pretty good.
Just as it was before the earthquake, Julian has the same orientation around
his green ethos. He is still adhering to the findings of Pastakia of being a
‘change agent’.4 However, what is interesting is that whereas his pre-quake
identity was firmly situated around his green ethos, post-quake, in order to
survive and grow through the challenges, he had to focus more on his

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business acumen – with greater focus on profitability, margins and marketing
issues. For instance:
So as my business grows my margins are able to come down too, so at 500
customers I’d be selling probably about 90% of my produce at the same
price as conventional because I could afford to do it, its online I don’t have to
pay for a shop. So if I’ve cut out all those expenses on top of the margin,
then I can actually bring the margin down.
Organics still had that stigma attached to it, so I’m having to change my
image as well, because I don’t want people to look at it like that. If I was to
advertise that image it wouldn’t be doing me any good you know.
The earthquakes inevitably led him to re-evaluate priorities. Though Julian
still remains environmentally conscious, he is realistic about the need to
make money in order to have a sustainable business. For example, though
using expensive couriers to supply to locations outside of Christchurch was a
concern early on, serving the dispersion of customers around New Zealand
made it necessary in order for the company to remain in business. Just
Organic Limited now delivers all over New Zealand. Indeed, Julian believes
the debate surrounding food miles (see ‘Food or product miles’ in Chapter
15) and carbon emissions has calmed over the recent years, and customers
may be less concerned with this issue than he previously thought. Also, he
abandoned his idea of opening a retail outlet to reach a wider range of
customers, as this is presently difficult given the shortage of appropriate
properties to lease as the city is still being rebuilt some four years later.
Internal tensions have been evident in balancing the change in
circumstances cause by the quake with the strong green ethos that Julian
holds. Pre-quake, he deliberately limited business growth to enable a focus
on educating consumers as to the benefits of organic systems over non-
organic. Post-quake this tension has been between promoting business
growth in a new direction as a response to both customer dispersion and
increasing demand, and the realisation that as an online business the entire
world is a potential market. In order to remain in operation, Julian has had to
sacrifice some of his ideas regarding his strong commitment to the
environment. He has also had unexpectedly to have the business operate
from his home for over three years and this has created some difficulty in
balancing work and family. There is still a shortage of affordable commercial
space in Christchurch as the rebuilding continues.
Julian’s environmental values remain strong and are largely evident
throughout his entire business. However, he remains realistic and logical
about his efforts. To be successful, in

Julian’s view, would be ‘to change the soil on earth’. Using the PPP
philosophy, Just Organic Limited is interested in creating a sustainable and
profitable business, while simultaneously supporting others to build and
maintain their own organic farming. Though they may lose business because
of it, educating the public remains a high priority. In order to provide a
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steady income for his family, Julian also supplements his business with some
teaching at a polytechnic.
So the question for Julian now is – where to from here? Does he abandon
some of his more ‘difficult’ goals to ensure the survival of the business?

ON SHAKY GROUND QUESTIONS

1) How did Julian see the gap in the market to develop the venture
initially?
2) How does Julian measure performance and success in Just Organic
Limited? Is this different to other entrepreneurial ventures? If so, in
what ways is this measurement of performance and success different?
3) For the company to expand, additional capital would be required.
Which source(s) of capital do you think would be most suitable for Just
Organic Limited to pursue?
4) What possible growth options do you see for Just Organic Limited?
Remember that the growth options should be in line with the owners’
green ideals.
5) What do you think you would have done if placed in a similar position
to Julian when faced with several large-scale earthquakes?
6) In this case, you can see how Julian has balanced his environmental
ideals along with his entrepreneurial ideas. How easy or difficult do you
think it is to have both in a business?

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