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ENTREPRENEURSHIP AND INNOVATION

Christ University, Bangalore

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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 (Example-

Migration of people from rural areas to

urban centers, preference for fast food

among youth)

Extensive travelling and a wide range of

reading

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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 andthus, can react better and faster to changing circumstances

Creativity

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1. Every problem holds an

opportunity

2. Problems are not excuses forgiving up

3. Every problem has more than

one solution

4. Think sideways

5. Creativity is fun- you get more

ideas in an uncritical

atmosphere

Rules for Creativity

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Refer Page 33 of David H. Holt TextEntrepreneurship- NewVenture 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 creativeideas can be traced to an individuals interest in or curiosity about a

specific problem or area of study

The Creative Process

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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 consumerbuying 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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3. Incubation: Subconsciousassimilation of information-

Fantasizing

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, isput on a back burner, the

subconscious mind is allowed time

to assimilate information


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Incubation is a stage of mullingit 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 ofsynectics, a

word coined by W.J.J. Gordon in

1961


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Synectics, means a joining

together of different and often

unrelated ideas

Therefore, when a person has

consciously worked to resolve aproblem without success,

allowing it to incubate in the

subconscious will often lead to a

resolution


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4. Illumination: Recognition of idea as beingfeasible- 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

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A persistent notion is that mostentrepreneurs 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 ofdetermination, are energetic, and often

have an entrepreneurial parent

However, there is substantial evidence

that entrepreneurial characteristics maybe environmentall based


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Firstborn children, for example, are often expected to take overparental businesses as heirs to established enterprises

Ones 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 aspossible about the entrepreneurial process will better prepare students

to succeed in business


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Folk heroes like Steven JobsMitchell 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 ofluck

There are other myths to be

explored, but lets begin by

expanding the notion of luck

Myths of Entrepreneurship

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a. Luck is for Gamblers: Clearly, there are individuals who seem tohave 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 abreakthrough 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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b. Make or Break on the FirstVenture: 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 notsurvive for long.


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c. Entrepreneurs are Mavericks and Misfits: Evidence suggests thatmany 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 andat 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, butthey are not misfits.

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d. Are Entrepreneurs Born or Made?- Already explainede. 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 newideas 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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An unfortunate myth that oftenaccompanies 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 becausewith excess capital, entrepreneurs may

encumber (hinder, burden) themselves

with unnecessary assets and inefficient

organizations.

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Products and Technology

High- Tech Products: A high- tech product is more of a state of mindthan 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

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Idea Generation Stage: is the conscious identification of a productidea 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 largerorganizations 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

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The Incubation Stage: Having survived a screening process andobtained 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 ofturning 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.


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Commercialization Decision: The critical milestone activity at thispoint 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.


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Limited Production for

Testing: The first actual

production run of a new

product may require several

dozen or thousands of items.

Market Testing: Even asimple product will have to

be tested with actual

consumers.

The Market- TestMilestone: Results from

market tests constitute

another milestone in product

development.


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Testing an Innovative Process: If

the innovation is aprocess, 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: APostmortem: Even the best plans go

haywire, and it is not unusual for

excellent products to fail

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The Diffusion Stage: Assuming a product makes it through initialstages 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 onthe market, it attracts immediate attention from competitors. This

leads to a leapfrogging of product improvements in software-

constant 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.

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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 oilprices 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 Kongwhere cheap labor offset higher material costs.

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Beyond Diffusion- A Final Word: While we have identified fourstages 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 thatpoint, 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 preparedfor new generations of products that will emerge.

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THANK YOU!!!!!!!!!!!

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