Innovation in Entrepreneurship

3 years ago
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by Wand of Knowledge Team

Innovation in Entrepreneurship- Meaning, Characteristics, Process etc.

Innovation means doing new things or doing existing things in a new way. For example, introducing a new product, creating a new market or producing goods with a new feature. Innovation implies performing new activities. It may be a new method of production, or new product itself, or a new source of raw materials or a new market or using a new source of energy.

Schumpeter has laid emphasis on innovative trait or quality of an entrepreneur. He describes innovative trait as to discover a new business opportunity and exploit it commercially.

Innovation may include, among other things, the following:

  1. New methods or process of production which has not been used or exploited commercially earlier.
  2. New product or adding new features to an existing product.
  3. Exploiting new markets.
  4. Innovating new marketing techniques.
  5. Innovative methods of raising capital.
  6. Innovating new ideas and developing them.
  7. Innovating new sources of energy.
  8. Innovating cheap and better source of raw materials.

Characteristics of Innovation

Peter F. Drucker, Joseph Schumpeter and Frentz after intensive research and analysis have identified the following factors for innovation, its nature, values and decisions in respect of innovation. Accrding to them important characteristics of innovation are:

  1. Using new ideas.
  2. Welcoming changes.
  3. Identifying problems to find out solutions.
  4. Identifying new methods of production.
  5. Identifying new products.
  6. Not to get discouraged in case of mounting problems.
  7. Evaluating mew ideas.
  8. Presenting an existing product in own style.
  9. He is creative.
  10. Last but not the least to derive immense pleasure in taking initiative.

Factors of Innovation

David H. Halt has included the following factors in innovation:

  1. To Identify:
  • Product Design
  • Market Strategy
  • Financial Needs
  1. To Obtain:
  • Materials
  • Technology
  • Human Resources
  • Capital
  1. To Accomplish :
  • Organization
  • Product Design
  • Manufacturing
  • Service
  1. To Provide :
  • Value and service satisfaction to customers
  • Reward for Employees
  • Project for investor
  • Satisfaction to founder

Steps of Innovation Process

Innovation is the translation of a creative idea into a useful commercial application. Its elements are explained below:

  1. Analytical Planning :

    To convent ideas, the entrepreneur makes plans regarding the product design, market strategy, and financial requirements. This planning provides an overall picture of entrepreneur’s activities and efforts to be made. It gives necessary details of his actions.

  2. Organizing Resources :

    After making plans, the entrepreneur identifies necessary resources to execute his plans. He obtains all necessary resources such as materials, machines, equipment, capital workforce, managers, land and building, technology and other production facilities.

  3. Implementation :

    During this stage, plans are carried out. An organizational structure is set-up. Product designs and quality standards are started. Required services are finally touched and manufacturing process are provided to the production section. Engineering, product resting quality control services are made available there.

  4. Commercial Application :

    At this stage, product stocks are maintained to provide value to customers. Their needs are satisfied by providing useful new or improved products. This new product will create customers and expand markets, product is advertised and promoted. Marketing channels are prepared. At this stage due rewards are paid to employees and investors. All this improves the profits of entrepreneur. The overall innovative goal is to provide benefits to society through innovation process.

Pre-Requisites for Effective Innovator

  • The success of innovative projects and ventures can be seen to depend on some pre-requisites for an entrepreneur. To be effective innovator you need :
  • To have a clear initial view of the results you want to achieve-you should not worry too much to begin with about the ways of achieving them.
  • To define clearly the aims and benefits of the project
  • To argue the case for the project persuasively.
  • To get support not only from your boss but also from you colleagues and subordinates you need to build a coalition in which everyone shares equally in the belief that the project is worthwhile.
  • Courage-to take calculated risks and to weather the storm when the inevitable setbacks occur.
  • To be good at getting people into action-to mobilize people to contribute fully to the project means using a participative management style.
  • Power to obilise support and resources and to get things done.
  • The ability to handle interference or opposition to the project- resistance can be open, but it often takes a passive or covert from: criticism of the plan’s details, foot-dragging later responses to requests, or arguments over allocation of time and resources among projects. Covert resistance can be the most dangerous.
  • The force of character to maintain momentum, especially after the initial enthusiasm for the projects has wanted and the team is involved in more tedious work.

Difference between Invention and Innovation

At the outset, it should be made clear that there is a fundamental difference between invention and innovation. These are as follows:

  1. Innovation means discovering new methods or technique new scientific or technological ideas or principles for example invention of steam engine, radio, television, telephone etc.
  2. Innovation is a process using or applying inventions and discoveries in order to produce goods and services. It is also converting ideas in to the reality. Basically innovation is putting creative ideas and concepts into productive uses and services.
  3. There is close relationship between innovation and invention. In fact innovation makers use of inventions. For example, introducing a new process of production with the help of new technology or a new machine. According to Joseph Schumpeter entrepreneur’s function is, “to reform or revolution the pattern of production by exploiting an invention or more generally, an untried technological possibility of producing a new product or commodity.’

Relationship between Innovation and Entrepreneur

There is a close relationship between innovation and entrepreneur. One is complementary to the other. Negatively speaking, an entrepreneur is incomplete without innovation and innovation is incomplete without an entrepreneur.

Joseph Schumpeter has gone to the extent of remarking, “a person cannot be called an entrepreneur unless he innovates”.

Peter F. Drucker also laid great emphasis on innovation. He remarked that “Innovation is the specific tool of entrepreneurs, the means by which they explain an opportunity for a different business or a different service. It is capable of being presented as a discipline, capable of being learned and practiced. Entrepreneurs need to search purposefully for the sources of innovation, the changes and their symptoms that indicate opportunities for successful innovation. And they need to know and to apply the principles of successful innovation.” An entrepreneur through innovation provides opportunities to the consumers to enjoy various products and services.

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