ENTREPRENEURSHIP AND INNOVATION
Christ University, Bangalore
Agenda
• The creative process
• Idea germination, Preparation, Incubation,
Illumination and Verification
• Are Entrepreneurs Born or Made?
Myths of Entrepreneurship
• Search for Business ideas
Selection of Product/Service
Product innovation
• Product planning and development strategy
• New product development
• Services Industries-Human side of an
enterprise
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Sources for Ideas
• Following are some of the sources for ideas:
• Good understanding of economics and the
economy
• Changing needs of the people in a locality/
society
• Emerging trends in the society (ExampleMigration of people from rural areas to
urban centers, preference for fast food
among youth)
• Extensive travelling and a wide range of
reading
Creativity
• Every problem is an opportunity for a creative person
• Creativity is a major tool for the survival of an entrepreneur
• It not only gives one the edge for recognizing needs, generating
business and marketing ideas, but it also helps in solving problems
• The person who faces a problem and finds a novel solution or is able
to quickly convert the problem into an opportunity that has ready
solutions, will be a survivor in a field where others, less flexible and
less creative, will be left behind
• This is particularly true as small businesses are considered to be more
flexible and pro- active than large, bureaucratic organizations and
thus, can react better and faster to changing circumstances
Rules for Creativity
1. Every problem holds an
opportunity
2. Problems are not excuses for
giving up
3. Every problem has more than
one solution
4. Think sideways
5. Creativity is fun- you get more
ideas in an uncritical
atmosphere
The Creative Process
• Refer Page 33 of David H. Holt Text”Entrepreneurship- New
Venture Creation” for the Diagram and more notes on “The
Creative Process”
1. Idea Germination: The seeding stage of a new idea- Recognition
• The germination process is a seeding process. It is not like planting
seed as a farmer does to grow corn, but more like the natural seeding
that occurs when pollinated flower seeds, scattered by the wind, find
fertile ground to take root.
• Exactly how an idea is germinated is a mystery; it is not something
that can be examined under a microscope. However, most creative
ideas can be traced to an individual’s interest in or curiosity about a
specific problem or area of study
The Creative Process
2. Preparation: Conscious search for knowledge- Rationalization
• Once a seed of curiosity has taken form as a focused idea, creative
people embark on a conscious search for answers. If it is a problem
they are trying to solve, then they begin an intellectual journey,
seeking information about the problem and how others have tried to
resolve it
• If it is an idea for a new product or service, the business equivalent is
market research
• Inventors will set up laboratory experiments, designers will begin
engineering new product ideas, and marketers will study consumer
buying habits
• Any individual with an idea will consequently think about it,
, concentrating his or her energies on rational extensions of the idea
and how it might become a reality
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The Creative Process
3. Incubation: Subconscious
assimilation of informationFantasizing
• Individuals sometimes concentrate
intensely on an idea, but, more
often, they simply allow ideas
time to grow without intentional
effort
• The idea, once seeded and given
substance through preparation, is
put on a back burner, the
subconscious mind is allowed time
to assimilate information
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The Creative Process
• Incubation is a stage of “mulling
it over” while the subconscious
intellect assumes control of the
creative process
• The subconscious mind is
allowed to wander and to pursue
fantasies, and it is therefore open
to unusual information and
knowledge that we cannot
assimilate in a conscious state
• This subconscious process has
been called the art of synectics, a
word coined by W.J.J. Gordon in
1961
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The Creative Process
• Synectics, means a joining
together of different and often
unrelated ideas
• Therefore, when a person has
consciously worked to resolve a
problem without success,
allowing it to incubate in the
subconscious will often lead to a
resolution
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The Creative Process
4. Illumination: Recognition of idea as being
feasible- Realization
• Illumination occurs when the idea resurfaces
as a realistic creation
• Reaching the illumination stage separates
daydreamers and tinkerers from creative
people who find a way to
transmute(transform) value
The Creative Process
5. Verification: Application or test to
prove idea has value- Validation
• An idea once illuminated in the mind of
an individual still has little meaning
until verified as realistic and useful
• Verification is the development stage of
refining knowledge into application
• This is often tedious and requires
perseverance by an individual
committed to finding a way to
“harvest” the practical results of his or
her creation
• During this stage, many ideas fall by
the wayside as they prove to be
impossible or to have little value
Are Entrepreneurs Born or Made?
• A persistent notion is that most
entrepreneurs are “born” with innate
characteristics that prepare them for the
often topsy- turvy life of new venture
creation
• Clearly, entrepreneurs have personal
characteristics that lead to a more
venturesome identity
• Successful entrepreneurs tend to be
optimistic, have a keen sense of
determination, are energetic, and often
have an entrepreneurial parent
• However, there is substantial evidence
that entrepreneurial characteristics may
be environmentally based
Are Entrepreneurs Born or Made?
• Firstborn children, for example, are often expected to take over
parental businesses as heirs to established enterprises
• One’s childhood background often forges an entrepreneurial spirit as
individuals from less- fortunate economic conditions have to find
routes to success other than through traditional jobs
• Those who believe entrepreneurs are born conclude that
entrepreneurship cannot be taught
• This corollary (resulting) myth would suggest that studying how new
ventures are formed or how innovation takes place is of new value
• If the environmental theme has credence, then learning as much as
possible about the entrepreneurial process will better prepare students
to succeed in business
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Myths of Entrepreneurship
• Folk heroes like Steven Jobs
Mitchell Kapor are beset by
myths that they “stumbled into
success” and got their ideas by
accident
• Not so. They have spent several
years striving for a foothold in
their particular fields
• Both men made success by
creating their own brand of
luck
• There are other myths to be
explored, but let’s begin by
expanding the notion of luck
Myths of Entrepreneurship
a. Luck is for Gamblers: Clearly, there are individuals who seem to
have an uncanny ability to be able to spot and to exploit opportunities,
and luck(both good and bad) plays a role in the outcome of many
ventures. More often, successful individuals have been nourishing a
concept for some time or working on closely related projects when a
breakthrough occurs.
• For instance, Art Fry of 3M created the Post-it note as a result of
trying to make non-slip hymn book markers. He spent several years
working on the idea, and he also had to fight an uphill battle
convincing 3M executives to manufacture his product.
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Myths of Entrepreneurship
b. Make or Break on the First
Venture: Another popular myth
is that entrepreneurs strike it rich
with the first great “flash of
genius,” or, conversely, they fail
miserably with the first venture.
Entrepreneurship is not a “boom
or bust” process, even though
many new firms succeed
brilliantly and others do not
survive for long.
Myths of Entrepreneurship
c. Entrepreneurs are Mavericks and Misfits: Evidence suggests that
many entrepreneurs march to the proverbial different drummer. They are
not always among the best students, and they tend to be restless in
structured jobs. Consequently, they are likely to be unsettled wanderers.
It is true that entrepreneurs prefer independence and can be rather
rebellious, and both conditions can affect their performance in school and
at work. Most successful entrepreneurs, however, are from the ranks of
above average students, and they are relatively unlikely to have drug or
alcohol problems or to run afoul of the law. Entrepreneurs are mavericks
in the sense that they instigate change and challenge the status quo, but
they are not “misfits”.
Myths of Entrepreneurship
d. Are Entrepreneurs Born or Made?- Already explained
e. Other Myths and Misconceptions
• Historic examples of inventors are used to illustrate success stories,
and although these provide valuable insights, inventors are not
necessarily entrepreneurs. Entrepreneurs are less often inventors than
astute businesspersons who can create an organization to bring new
ideas to market.
• A related misconception is that entrepreneurship must address
whatever is called “high tech” at the time. Currently, information
technology and biogenetic engineering are high- tech stereotypes.
Entrepreneurship has always been associated with technological
advances, but low- and- no- tech enterprises remain very important.
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Myths of Entrepreneurship
• An unfortunate myth that often
accompanies failure is “all you need is
money” to be successful. Even those
with sufficient money to launch an
enterprise find that entrepreneurship
requires skills in marketing,
manufacturing, planning, and managing
human resources, to name a few. Money
does not assure success, and in some
instances it may be a problem because
with excess capital, entrepreneurs may
encumber (hinder, burden) themselves
with unnecessary assets and inefficient
organizations.
Products and Technology
• High- Tech Products: A high- tech product is more of a state of mind
than a discernable entity, but calling something high- tech is useful for
describing products that currently reflect state- of- the- art technology.
• Mid- tech Products: A majority of familiar products are less
sophisticated and more readily understood than high- tech
innovations, and we classify them as mid- tech.
• Low- Tech Products: Perception also plays a role in defining what is
meant by low- tech, but we assume a rather unsophisticated
viewpoint. Low- tech products are usually thought to be marginal
changes or improvements in existing products.
• Identifying Opportunities- Refer Page 152 of David Holt Text
• Generating Product Ideas- Refer Page 153 of David Holt Text
• Mapping New Ideas- Refer Page 154 of David Holt Text
The Product Development Process
• Idea Generation Stage: is the conscious identification of a product
idea that logically addresses an opportunity.
• Giving an Idea Form: Once an idea has begun to gel, the
entrepreneur must set it down on paper, design it, and if appropriate,
make a “bench- model”.
• Transition to the Next Stage: If the proposal is made through
corporate R & D, it must be accepted and funded. If management
cannot share the same vision of success as the innovator, the product
may be terminated without fanfare.
• Screening the Product: Screening procedures exist in larger
organizations whereby a product is submitted to a formal survey
among key managers and engineers. The screening process is a
subjective evaluation that relies on expert opinion of a select group to
rate the proposal for its commercial feasibility.
The Product Development Process
• The Incubation Stage: Having survived a screening process and
obtained funding, the innovator must set about implementing the first
stage of actual product development. The product must be devised and
a prototype developed.
• Product Design: Traditional R&D will follow a prescribed path of
turning rough sketches into blueprints. These will be expanded into
material lists and a plan for making one item- a prototype.
• Making the Prototype: Assuming the innovator has endured the
failures and has a design that finally seems workable, a prototype is
built and submitted to testing. This stage of development can be quite
lengthy and include having several prototypes field- tested under
government supervision (or by approved laboratories) to comply with
government regualtions.
The Product Development Process
• Commercialization Decision: The critical milestone activity at this
point is to write a formal business plan. The entrepreneur may have
written an initial business plan at the proposal stage, but the product
has probably undergone substantial stages that will require a revised
plan.
• The Implementation Stage: The third stage in product development
involves limited manufacturing and is called the initial
implementation stage (as opposed to the “illumination stage” in the
creativity model). This is a preliminary effort to put actual products
into the field and to gather market feedback. It is comprised of making
a transition from prototype to limited manufacturing.
• Gearing Up for Manufacturing: The first step, and one with heavy
costs for new equipment and production setup, is the initial process of
gearing up for manufacturing.
The Product Development Process
• Limited Production for
Testing: The first actual
production run of a new
product may require several
dozen or thousands of items.
• Market Testing: Even a
simple product will have to
be tested with actual
consumers.
• The Market- Test
Milestone: Results from
market tests constitute
another milestone in product
development.
The Product Development Process
• Testing an Innovative Process: If
the innovation is a process, such as a
new method of robotic welding, test
marketing is not part of the
development scenario. However,
testing is done in a controlled
environment under rigorous
conditions.
• When Projects Are Killed: A
Postmortem: Even the best plans go
haywire, and it is not unusual for
excellent products to fail
The Product Development Process
• The Diffusion Stage: Assuming a product makes it through initial
stages to the point of being formally marketed, the process is not
complete until the product can prove that it can profitably penetrate
the target market. It must be successfully sold through a diffused cross
section of the market, showing a pattern of growth in demand.
• Reacting to Competition: When a new software program comes on
the market, it attracts immediate attention from competitors. This
leads to a “leapfrogging” of product improvements in softwareconstant updates and revisions, new toots and whistles to leap beyond
the other guy, only to find the other guy leaping beyond you.
• Dealing with False Market Tests: Even well- devised market tests
may have fatal flaws that render a product vulnerable once it is
introduced. Perhaps the product was introduced at an artificially low
price during the test, and a higher price in the actual market will be
rejected by consumers.
The Product Development Process
• Recognizing Management Assumptions: Every new product carries with it a set of
assumptions made by management. These include profit forecasts made during
development stages, economic forecasts that underpin market demand, scenarios of
competition, cost estimates for factors of production, and many more. When one of
these assumptions changes, the product may quickly come under scrutiny. For
example, a slight change in material costs could render the product a loser, and such
a change affected toy manufacturers in dramatic fashion during the 1970s when oil
prices soared. Toys made of plastics required petroleum- based resins, and when oil
prices tripled, plastic toys became expensive and unprofitable. When something like
this happens, management should have contingency plans. Fisher- Price Toys, for
example, quickly modified toy designs for wood rather than plastic in response to
petroleum costs. Others, such as Tyco, relocated manufacturing to Hong Kong
where cheap labor offset higher material costs.
The Product Development Process
• Beyond Diffusion- A Final Word: While we have identified four
stages that take a product from imagination to market introduction,
clearly the life- cycle process requires continuous product attention
well beyond this early period. If the product is successful, it will enjoy
early growth, enter a rapid growth stage, mature as competitors enter
the market, and eventually reach saturation in its markets. Beyond that
point, new products will be introduced, rendering the existing
products obsolete and signaling a period of decline. The later stages
may span decades of sales and require organizational changes.
Entrepreneurs can, however, recognize the process and be prepared
for new generations of products that will emerge.
THANK YOU!!!!!!!!!!!