Definition of Innovation and Entrepreneurship

Introduction

Entrepreneurial innovation deals with the introduction of new concept, a new way of doing things, or a new approach. Innovation can also be in terms of new technology, new techniques of production, new sources and types of raw materials, novel machinery, new labour saving devices, new packaging techniques and packaging materials, new way of advertising, product development, new application of existing product and even developing a new market.

Innovation refers to the process of bringing new, problem solving ideas into use. The ideas may be related to reorganizing, cutting costs, establishing new budgeting system, improving communication etc., Comprehensively speaking, innovation involves generation, acceptance and implementation of new ideas, processes, products or services. It embodies the capacity to change or adapt. Innovations are new ways to achieve tasks. Innovations respond to the needs and constraints and conditions. Inventors and researchers put effort in solving burning problems; these efforts lead to innovations. For example, labour shortages led to mechanized equipment, Drought conditions led to improved irrigation, Energy crises led to higher efficiency cars, Farmers’ cooperatives were established during periods of excessive low farm prices, Environmental regulations trigger cleaner technologies, A tax on carbon will lead to improved stoves and power plants.

Innovation is the essential for entrepreneurial motivation. Innovation gives money. Innovation must be knowledge based. Scientific knowledge is the base for innovation. However, innovation is also due to the convergence of different kinds of innovation.

Sometimes, there is a need to combine the innovative works of similar other scientists. Though their works were different in intent and content, by combing their works together, there is a chance for developing new products.

An innovative entrepreneur becomes a market leader. His market share and profitability increase till the competitors catch that innovation and imitate it by bringing out “me-too” product in the market. The in-novative entrepreneur hits the market with another innovation to |retain his market leadership and high profit margin. The history of entre­ preneurial development itself is a reflection of the innovativeness of entrepreneurs.

Peter Drucker saying that innovation is an important tool of an entrepreneur, as he perceives new opportunity; convert this opportunity into attractive projects and become market leader. Innovation is the conversion of new knowledge into new products and services. Innovation is about creating value and increasing productivity, and therefore, making your business grow.

Entrepreneurial strategy is neither hunch nor gamble. It is not service but judgment. “What we need is an entrepreneurial society in which innovation and entrepreneurship are normal, steady, and continuous. Just as management has become the specific organ of all contemporary institutions, and the integrating agent of our society of organisation, so innovation and entrepreneurship have to become an integral life-sustaining activity in our organisations, our economy, our society.

Meaning of Innovations

According to Drucker, the principles of innovation require a few’ dos’ and a few’ don’ts’. He also enumerates what he calls “conditions”.

The ‘Dos’,

Purposeful, systematic innovation begins with an analysis of opportunities. It begins with thinking through what he has called the sources of innovative principles.

Innovation is both conceptional and perceptual. The second imperative of innovation is to go out to look, to ask, and to’ listen.

An innovation to be effective has to be simple and it has to be focused. It should do only one thing, otherwise it confuses. If it is not simple, it won’t work.

Effective innovations start small. They are not grandiose. They try to do one specific thing.

A successful innovation aims at leadership.

The ‘Don’ts’.

The first is simply not to try to be clever. Innovations have to be handled by ordinary human beings. In other words, anything too clever, whether in design or in execution, is almost bound to fail.

Do not diversity. innovations ‘that stray from a core are likely to become diffuse. They remain ideas and do not become innovations.

Finally, do not try to innovate for the future. Innovate for the present.

According to Drucker, three conditions have to be fulfilled, All three are obvious, but often go disregarded:

Innovation is work. It requires knowledge. It often requires greatingnuity. When all is said, and done, innovation. becomes hard, focused on purposeful work, making very great demands on diligence, on persistence, and on commitment.

To succeed, innovation must build on their strengths.

Finally, innovation always has to be close to the market, focused on the market, indeed market-driven.

Product Innovation

Product / service innovation is the result of bringing to life a new way to solve customer’s problem – through a new product of service development – that benefits both the customer and sponsoring company.

Examples

Mechanical – tractors, cars;

Chemical and biological – pesticides seed variety;

Managerial-IPM, extra pay for work, overtime;

Institutional-water users’ association, patents, banks, stock market, conservation districts, monks.

Process Innovation

Process innovation increases bottom line profitability, reduces costs, improves efficiency and raises productivity, and increases employees’ job satisfaction. It also delivers enhanced value of the product or service to customers. For manufacturing companies, process innovation includes such things as integrating new production methods and technologies that lead to improved efficiency, quality, or time-to-market and services that are sold with those products. For service companies, process innovations enable them to introduce “front office” customer service improvement and add on services.

Business Innovation

Business innovation involves a wide spectrum of original concepts, including development of new business models, organizational innovation, business application of technology and communications, new management techniques, environmental efficiency, new forms of stakeholder participation, transport and finance.

These consist of new business models, new management models, new approaches to value chain management, new approaches to information, idea and knowledge management, new forms of strategic partnerships, new forms fo selling and customer service.

                                                                                                           Entrepreneurial Innovation Process

Organizational Innovation

More efficient innovation metric, associated with organizational innovation, reflects the recognition that new ways of organizing work in areas such as work force management through employee empowerment, new people partnership, or positive action to involve all employees in order to make organization of work a collective resource for innovation, knowledge management, value chain management, customer partnership, distribution, finance, manufacturing can improve competitiveness. Organizational innovation also includes business model innovation.

Technology Innovation

Technological innovation covers innovation derived from research and development of technology, that is independent of product and service initiative.

Marketing Innovation

Innovative distribution and customer service methods are an inseparable part. It helps a company to develop new value added services, enter new markets, and create new market segments / categories, new distribution methods, and new forms of customer service and customer partnership. Marketing Communication can also be more effective with Innovative Strategies.

Strategy Innovation

It consists of reinvented strategy of the enterprise, innovative corporate growth strategies, improved competitive strategies. It is about challenging existing methods of industry of creating value for customer in order to meet newly emerging customer needs, add additional value, and create new markets and new customer groups for the sponsoring company.

Implementation of all these innovations can improves the utilization of human capital.

Summary

Thus this lesson explains the need for entrepreneurial culture, the behaviour of the individual in the entrepreneurial society and how to develop culture? Besides it tells upon the significance of counseling and follow up process for developing an ideal entrepreneurial culture. Innovation is one of the significant attributes of entrepreneurship. But successful entrepreneurship involves other key elements like risk taking ability, values, ethics, organizational skill, operational excellence. To convert the creative ideas into profitable business, entrepreneurs use such quality as motivation, dynamism, adaptability, knowledge, tactfulness, dreaming, instinct, will-power, aptitude, pride, flexibility, self-confidence, and common sense. Besides this, entrepreneurship flourishes in innovative work culture, competitive infrastructure, and entrepreneurial managers under the leadership of innovative environment.