Innovation and Entrepreneurship - PowerPoint Presentation

Slide1

Innovation and Entrepreneurship

According to Drucker

1

Dr. Larry Stapleton

Millikin

University

Slide2

Topics we will cover

2

Systematic Entrepreneurship

Why is Innovation more than a Bright Idea

7 sources of

I

nnovative Opportunity

Principles of Innovation

Entrepreneurial Management

Entrepreneurial Business

Entrepreneurship in the Service Institution

New Venture

Entrepreneurial Strategies

Slide3

3How do you define?

How do you define entrepreneurship?

How does it differ from traditional business?

How do you define Innovation?

Where does innovation come from? Sources

Slide4

Systematic Entrepreneurship

4

Entrepreneurship

is the means to recognize and detect an opportunity

. (

Drucker

)

Then how to apply good management practices to take advantage of the opportunity thru application of innovation.

Innovation

is the source that allows the entrepreneur to take advantage of the opportunity.

  Not all innovation relates to something no one has ever done before.  It could be applying an existing approach(s) better than anyone else or applying a non traditional way of doing something.

What is Systematic Entrepreneurship?

J.B. Say, 1800

Slide5

Why Innovation is more

than a Bright Idea.

5

Is entrepreneurship and innovation restricted to small startup businesses?

Do entrepreneurs make more risky decisions than traditional decision makers?

What are some examples of French Innovation?

Is the French form of health care an Innovation?

Slide6

6

Forms of Innovation

Product Innovation

a good or a service that is new or significantly improved

technical, materials, software or user-friendliness

Process Innovation

new or significantly improved production or delivery method

technology, equipment, software

Marketing Innovation

product design, packaging, placement, promotion or pricing

Organizational Innovation

business organization, practice, external relationships

Slide7

7

Social Innovation

Social Innovations in EU

Té

–

Traiteur

Ethique

is a WISE operating in the high-end catering

industry, which improves the employability of people structurally

Excluded from the job market by offering them a job opportunity,

Training and social support. The Môm’artre network creates new kinds of spaces for after-schoolchildcare, helping children to develop mainly through art. It is a network of associations with eight childcare centers, in Paris and French cities such as Arles and Nimes.

Definition

Slide8

8Examples of Innovation

What are some examples of Innovation?

Which aspect of the company do they impact?

How do your innovation examples differ from a process improvement?

Take 5 minutes and write them down

Slide9

9

Sources of Innovation

Slide10

Sources of Innovative Opportunity

10

Systematic innovation

is

monitoring seven sources for

innovative opportunities

.

The first 4 sources lie within the enterprise

1.  The unexpected -

unexpected success/failure

,

& unexpected

outside event

2.  The incongruity- difference

of

actual reality and reality as it ought to be.

3.  Innovation based on the process need

4.  Changes

in industry

structure or market structure that catch everyone

unaware

.

The next set involves changes outside of the enterprise

5.  Demographic changes

6.  Changes in perception, mood and meaning

7.  New knowledge, both scientific and non

scientific

Slide11

Source 1: The Unexpected

11

The Unexpected Success

The Unexpected Failure

The Unexpected Outside Event

Slide12

Source 2: Incongruities

12

1. Between the economic realities of an industry

2. Between the reality of an industry and the assumption about it

.

3. Between the efforts of an industry and the values and

expectations of its customers

4. Internal within the rhythm or the logic of a process

Incongruity: the difference between “what is” and “what ought to be”

Slide13

Source 3: Process Need

13

Focus is on improvement of existing processes

A successful innovation requires 5 basic criteria

1.  A self-contained process

2. One weak or missing link

3. A clear definition of the objective

4. That the specifications of the solution can be defined clearly

5.  Widespread realization that there ought to be a better way

Caveats?

Slide14

Source 4: Industry and Market Structures

14

If

a change in the industry is significant then all must change

or

those who do not will lose.

Market Structure Impacts Industry Structure Impacts

Four indicators of structural change

1.  

Rapid growth in the

industry.

2.  T

he

way

the company

perceives and services the

industry

is

likely

to

have become inappropriate, typically when sales volume has doubled

3

. The convergence of technology

4. The way it does business is changing rapidly.

Barnes and Noble

Min Wage

Slide15

Source 5: Demographics

15

F

irst

four sources are

primarily

measured thru internal means

.

R

emaining

three sources are

external.

- Changes

in

social

, philosophical, political and intellectual environment.

Why do decision makers overlook changes in demographics?

Based on historical assumptions

Do not recognize the immediate impact, lots of time.

Indicators are insufficient

Is the demographics segmented correctly

Personal Care markets

Slide16

Source 6: Changes in Perception

16

H

ow

people perceive a statistic or result

Though the statistic or result is increasing it may not be considered to be increasing sufficiently

Desire to move up the socioeconomic scale.

Half full vs Half Empty

A Resource or customer changes their perception of themselves

Changes in perception is the change in meaning towards a group

China

African -Gates

Slide17

Source 7: New Knowledge

17

Timing Convergences

What knowledge-based innovation requires

Careful analysis of what factors are necessary and what factors are not yet available and whether the missing factors can be attained. whether knowledge itself or social economic or perceptual factors.

A clear focus on the strategic position.

Develop a complete system

Have a market

focus.

- identify

or create the need

. (don't sell the product)

Occupy a strategic position, creation of a core

competency

Innovator needs to learn and practice entrepreneurial management.

Risks Shakeout Receptive Gamble

Slide18

18Examples

Using the examples you and your classmates defined earlier, what source(s) would you say best describes how they were developed.

If you have thought of a new example then define which source best fits.

Take 10 minutes

Slide19

19

Entrepreneurial Management

Slide20

Principles of Innovation:

The Do’s

20

Analysis of opportunities: sources of innovative opportunities review.

Innovation is both conceptual and perceptual

- Go out to look, to ask, to listen - Analyze the numbers

T

his innovation should reflect why the user should want to use it and how it provides them an opportunity.

Innovation, to successful, has to be simply and it has to be focused.

- Complicated innovations leads people to not see how it helps them

- It needs to be obvious in how to use it.

Effective innovations start small

Innovation should need little money, few people and small, limited market

A successful innovation aims at being a leader in the market

This could be a leader in a niche

Slide21

Principles of Innovation:

The Don’ts

21

Try not to be clever

Use is by ordinary people, so keep it

simple

Do not diversify: stay

focused

Do not try to innovate for the future; innovate for the present

You do not understand what the future environment will be so stay current

Slide22

Principles of Innovation:

3 Conditions

22

Innovation is work

Requires knowledge

Requires

ingenuity

To succeed, innovators must build on their strengths

Look at opportunities over a wide range

Which of these opportunities fits me, my company, requires what we are good

at

Innovation is an effect in economy and society

It is a change in customers, teachers, farmers, eye surgeons,

etc

Are Entrepreneurs Risk Takers?

Slide23

Entrepreneurial Management

23

The

organization must be made

receptive to innovation

and willing to

perceive change as an opportunity

rather than a threat

.

Systematic measurement

or at least appraisal of a company's performance as an entrepreneur and

innovator

Entrepreneurial management requires specific practices pertaining to

organizational structure, to staffing and managing and to compensation, incentives and rewards

.

Slide24

Entrepreneurial Management

Policies to foster Innovation

24

A

company should

hold a review of all processes

, products and personnel as to their necessity towards the future of this business

.

Recognize that all products, services, markets, distribution channels, processes and technologies

have a limited life expectancy

.

Placement of products, services, distribution channels

on a life cycle

.

Determine how long they maybe in each stage and what can the company realistically do to maintain the contribution to company objectives

.

Development of a systematic abandonment

of products, services, channels that are not assisting in corporate goals

.

Development of an entrepreneurial

plan

; determines

how many people are needed, with what abilities and capacities. Supply

with

the tools needed, the money and the information and provide clear an unambiguous deadlines.

Slide25

Entrepreneurial Management

Practices

25

Focusing managerial vision on opportunity

Hold a two day "show and tell" on how some managers are implementing innovation

.

A member of top

management

meeting informally with Junior staff from Research, engineering,

mfg

, marketing and

accounting

and other

departments

to listen, not talk, about opportunities

Culture starts at the top and

must be demonstrated

Slide26

Entrepreneurial Management

Measuring Innovative Performance

26

Steps:

Create feedback on results

to expectations for each innovative

process

Develop a

systematic review of innovative efforts

all

together

Judging the

company's total innovative performance against the company's innovative objectives

, against its performance and standing in the market, and against its performance as a business

altogether

Slide27

Entrepreneurial Management

Organization Structures

27

Separate the new

from the existing units

There needs to be

someone in top management

who has

responsibility

for these innovative groups

.

Keep

separate so that traditional metrics

are not

used

Tie

compensation to success

in implementing

success

A person or component group should be held clearly

accountable

Slide28

Entrepreneurial Management

Staffing

28

Do’s

Seek

out someone who has the behaviors, policies and practices that will work towards nurturing an idea

.

T

o

gain success you need to define the positions and skills needed and place people who fit those skills. Not just anyone you is

available

One needs to consider personalities as the culture of the organization must fit that of innovation

.

Don’ts

1. Do

not mix managerial units and entrepreneurial ones

2. Innovative

efforts that take the existing business out of its own field

are

rarely

successful

Almost

always futile to avoid making one's own business

entrepreneurial

by "buying in".

Slide29

Service Institution

Entrepreneurship

29

Why do Non- For Profits need innovation more than For-Profit Institution

The

public sector is based on a budget

rather than being paid out its results

.

Dependent on a

multitude of

constituents

They perceive their

mission as a moral one

which does good

.

Focus is on Maximization rather than optimization

Most Innovation in the private sector comes from new ventures

Slide30

Service Institution

Policies

30

Need

a clear definition

of its mission

Realistic

statement of

goals

Failure

to achieve objectives should be considered an

indication

that the

objective is wrong

Build into policies

the constant search for innovative opportunity

Slide31

The New Venture

31

Entrepreneurial Management in the New Venture

requirements

.

A

focus on the

marke

t

Financial foresight, and planning for

cash flow and capital needs

.

Building a

top management team

long before the new venture actually needs one

.

The

founding entrepreneur

must make a decision in respect to

their own role

, area of work, and relationships.

Slide32

The New Venture

32

For existing businesses the focus is on entrepreneurial

.

For new ventures the focus is on Management

WHY?

Slide33

The New Venture

Market focus

33

The innovator needs to

recognize and consider

applications and markets beyond

the

original intent

of the product

and/or

service

.

Failure

to make this recognition and willingness to pursue it will

result in competitors entering the market

and gaining the majority of the market share.

What is Market focused and how do we apply it?

Slide34

The New Venture

Financial Foresight

34

Most companies focus on revenue and profit.

Isn’t that what you should be looking at?

Why should I focus on available cash?

How does this differ from revenue and profit?

Perceived vs actual

Slide35

The New Venture

Management Team

35

I am the founder so why should I build a management team to be successful?

When should I form a team?

How do I form a team?

Policies and Procedures

Slide36

The New Venture

Where do I fit

36

How does the founder fit into the management team?

How will they determine?

Is there a need for outside help?

What are you good at?

Slide37

37

Entrepreneurial Strategies

Slide38

Entrepreneurial Strategy:

Fustest with the

Mostest

38

Focus is on

attaining a permanent leadership

position in

the market.

An ambitious

aim

Creating a new market or

industry

Creating a highly unconventional

process

Requires thought and careful

analysis

Exploitation of the right economic and political

conditions

Once the new market has been established the innovator must remain focused to retain the leadership role

.

Prices must be cut to retain leadership thru value and to reduce the opportunity for competitors.

Apple and Samsung

Slide39

Entrepreneurial Strategy:

Creative Imitation

39

Revision of

an existing product or market

so that it better

meets the needs and desires of the market

.

Can result when

you define a market but fail to retain the leadership noted in

Fustest

with the

Mostest

.

S

trategy

is less risky than

Fustest

with the

Mostest

because someone else has established the market.

The

issue with this strategy is that the market needs is an ever moving target, as such your strategy must be to recognize this movement and provide what it wants.

market focused and market driven

Slide40

Entrepreneurial Strategy:

Entrepreneurial Judo

40

Where do we start?

Take advantage of their weakness by recognition of

their

habits

.

There are 5 common bad habits that enable newcomers to use entrepreneurial judo.

Not invented here:

Focus

your attention only on the "cream" of the market.

Quality

defined as a level of complexity or what the supplier puts into the

product

Delusion

of a premium

price

Maximization

versus optimization

Slide41

Entrepreneurial Strategy:

Ecological Niches

41

Seeks control rather than market leadership

Strategies

Toll Gate:

Consequence is much higher than cost of product or service

Specialty Skill:

A unique skill that creates an input into the final product/service.

Specialty Market:

Has specialized knowledge of a market

Product, service or knowledge that is essential to the process or market

Personal Care Markets

Slide42

Entrepreneurial Strategy:

Changing Values and Characteristics

42

Creating Customer utility

Recognition of and satisfaction of what the customer truly wants

.

Pricing

Price the action not just the item

The Customer reality

Customers are rational

by considering

the constraints and factors which go into the buying process.

These constraints and factors are the buyers reality.

To

sell to a buyer you must understand these constraints and factors.

L

imitations

of money, space, knowledge, technology and more

Slide43

Entrepreneurial Strategy:

Changing Values and Characteristics

43

Delivering Value to the customer

Recognition of what is important to the

customer

Identification and communication of the value the supplier provides to the

customer

This advantage or value must be viewed from the consumers perspective not that of the supplier

.

Sometimes this is brooding the definition of what is to be provided

.

This may seem to go against the niche philosophy, but remember that one of the disadvantages is that you might not see opportunities if you are too

focused

So is price the only measure of value

.

Value

or is it utility, what is the difference?

Slide44

44

Cases

Slide45

45Case Study:

Legos

Describe which innovation sources are used in the case.

Discuss which strategy do you think were used.

Do you think that the innovation source or strategy changed as the product matured?

Legos

Slide46

46Large Company Innovation

Large Company Innovation

Why did each company wish to instill innovation into their companies?

What methods did each employ?

What factors did they feel needed to be changed to create an innovative culture.

Slide47

47

Mini cases - Engineering

Case Study: Engineering

How do these cases relate to the sources and strategies presented by

Drucker

?

Slide48

48

Failures in Innovation

-

New Coke

-

Technology Failures

-

Boeing 787

Dreamliner

Slide49

49My Experience with Innovation

Deployable Flight Incident Recorder (crush material)

Display viewing using a Fresnel lens

Use of MS Project to enhance communication for group projects

Use of supplier linked computers for ordering material.