UNIT-2
PROJECT MANAGEMENT AND ENTREPRENEURSHIP
SUBJECT CODE : KHU802
INTRODUCTION TO INNOVATION? (DEFINITION)
The word “innovation” is derived from the Latin verb innovare, which means to renew. In essence,
the word has retained its meaning up until today. Innovation means to improve or to replace
something, for example, a process, a product, or a service. In the context of companies, however,
the term needs a definition. In the complex context of business, a definition is needed.
Innovation is a process by which a domain, a product, or a service is renewed and brought
up to date by applying new processes, introducing new techniques, or establishing successful
ideas to create new value.
The creation of value is a defining characteristic of innovation.
Baragheh et al. attempted to define a multidisciplinary definition and arrived at the following
definition:
"Innovation is the multi-stage process whereby organizations transform ideas into new/improved
products, service or processes, in order to advance, compete and differentiate themselves
successfully in their marketplace"[8]
In an industrial survey of how the software industry defined innovation, the following definition
given by Crossan and Apaydin was considered to be the most complete, which builds on
the Organisation for Economic Co-operation and Development (OECD) manual's definition:[7]
Innovation is production or adoption, assimilation, and exploitation of a value-added novelty in
economic and social spheres; renewal and enlargement of products, services, and markets;
development of new methods of production; and the establishment of new management systems.
It is both a process and an outcome.
American sociologist Everett Rogers, defined it as follows:
"An idea, practice, or object that is perceived as new by an individual or other unit of adoption" [9]
According to Alan Altshuler and Robert D. Behn, innovation includes original invention and
creative use and defines innovation as a generation, admission and realization of new ideas,
products, services and processes.[10]
Two main dimensions of innovation are degree of novelty (i.e. whether an innovation is new to
the firm, new to the market, new to the industry, or new to the world) and kind of innovation (i.e.
whether it is processor product-service system innovation).[7] In organizational scholarship,
researchers have also distinguished innovation to be separate from creativity, by providing an
updated definition of these two related constructs:
Workplace creativity concerns the cognitive and behavioral processes applied when attempting to
generate novel ideas. Workplace innovation concerns the processes applied when attempting to
implement new ideas. Specifically, innovation involves some combination of problem/opportunity
identification, the introduction, adoption or modification of new ideas germane to organizational
needs, the promotion of these ideas, and the practical implementation of these ideas.
Peter Drucker wrote:
Innovation is the specific function of entrepreneurship, whether in an existing business, a public
service institution, or a new venture started by a lone individual in the family kitchen. It is the
means by which the entrepreneur either creates new wealth-producing resources or endows
existing resources with enhanced potential for creating wealth.
Creativity and innovation[edit]
In general, innovation is distinguished from creativity by its emphasis on the implementation of
creative ideas in an economic setting. Amabile and Pratt in 2016, drawing on the literature,
distinguish between creativity ("the production of novel and useful ideas by an individual or small
group of individuals working together") and innovation ("the successful implementation of
creative ideas within an organization").
TYPES
Several frameworks have been proposed for defining types of innovation.[14][15]
Sustaining vs disruptive innovation[edit]
One framework proposed by Clayton Christensen draws a distinction between sustaining
and disruptive innovations.[16] Sustaining innovation is the improvement of a product or service
based on the known needs of current customers (e.g. faster microprocessors, flat screen
televisions). Disruptive innovation in contrast refers to a process by which a new product or service
creates a new market (e.g. transistor radio, free crowdsourced encyclopedia, etc.), eventually
displacing established competitors.[17][18] According to Christensen, disruptive innovations are
critical to long-term success in business.[19]
Disruptive innovation is often enabled by disruptive technology. Marco Iansiti and Karim R.
Lakhani define foundational technology as having the potential to create new foundations for
global technology systems over the longer term. Foundational technology tends to transform
business operating models as entirely new business models emerge over many years, with gradual
and steady adoption of the innovation leading to waves of technological and institutional change
that gain momentum more slowly.[20][additional citation(s) needed] The advent of the packet-
switched communication protocol TCP/IP—originally introduced in 1972 to support a single use
case for United States Department of Defense electronic communication (email), and which
gained widespread adoption only in the mid-1990s with the advent of the World Wide Web—is a
foundational technology.[20]
FOUR TYPES MODEL
Another framework was suggested by Henderson and Clark. They divide innovation into four
types;
• Radical innovation: "establishes a new dominant design and, hence, a new set of core design
concepts embodied in components that are linked together in a new architecture." (p. 11)[21]
• Incremental innovation: "refines and extends an established design. Improvement occurs in
individual components, but the underlying core design concepts, and the links between them,
remain the same." (p. 11)[21]
• Architectural innovation: "innovation that changes only the relationships between them [the
core design concepts]" (p. 12)[21]
• Modular Innovation: "innovation that changes only the core design concepts of a technology"
(p. 12)[21]
While Henderson and Clark as well as Christensen talk about technical innovation there are other
kinds of innovation as well, such as service innovation and organizational innovation.
Non-economic innovation[edit]
The classical definition of innovation being limited to the primary goal of generating profit for a
firm, has led others to define other types of innovation such as: social innovation, sustainable or
green innovation, and responsible innovation.[22][23]
IDENTIFICATION OF BUSINESS OPPORTUNITY: IDEA GENERATION AND
OPPORTUNITY!
In general sense, the term opportunity implies a good chance or a favourable situation to do
something offered by circumstances. In the same vein, business opportunity means a good or
favourable change available to run a specific business in a given environment at a given point of
time.
The term ‘opportunity’ also covers a product or project. Hence, the identification of an opportunity
or a product or project is identical and, therefore, all these three terms are used as synonyms. The
Government of India’s “Look East Policy” through North East is an example of ‘opportunity’ to
do business in items like tea, handicrafts, herbals, turmeric, etc.
Entrepreneurial Idea Generation? – Definition, Techniques and Success Factors
Ideas are the key to innovation. Without them, there isn't much to execute and because execution
is the key to learning, new ideas are necessary for making any kind of improvement.
It's obvious that ideas alone won't make innovation happen, as you need to be able to build a
systematic process for managing those ideas. The point of ideation isn't just about generating tons
of them but about paying attention to the quality of those as well.
We agree that it can sometimes be difficult to come up with more of those high-quality ideas. It’s
not unusual to get stuck in our old habits and routines when we’re supposed to be creating
something new.
What is idea generation and why it's important?
Idea generation is described as the process of creating, developing and communicating abstract,
concrete or visual ideas.
It’s the front end part of the idea management funnel and it focuses on coming up with possible
solutions to perceived or actual problems and opportunities.
As mentioned, ideas are the first step towards making improvement. Us making progress as
individual human beings depends on new ideas. From the perspective of an individual, new
ideas can help you to move forward if you feel stuck with a task or are unable to solve a
certain problem.
As mentioned, ideas are the first step towards making [Link] making progress as
individual human beings depends on new ideas. From the perspective of an individual, new
ideas can help you to move forward if you feel stuck with a task or are unable to solve a certain
problem.
Perhaps you're looking for new ways to overcome a creative block or you're after a better solution
to your problem?
Maybe you need new ideas so that you can fully explore a new opportunity?
When it comes to your organization, generating and collecting new ideas from your employees is
the best way to uncover creative, tacit knowledge. The ability to create and develop new ideas
allows you to:
• Stay relevant
• Make positive change happen in your organization
Perhaps your organizational goal is to improve your and your team's efficiency or you need new
ideas for making your product better?
Regardless of your goals or the types of ideas you're looking for, the purpose of new ideas is
to improve the way you operate.
On a larger scale, economies depend on innovation to drive growth and increase well-being.
Innovation creates new technologies and businesses, which provide new jobs for people.
So, although innovation isn’t about ideas alone, they are an important part of the equation as there
wouldn’t be one without the other.
• e positive change happen in your organization
Tools and techniques for generating ideas
Okay, now you need ideas. What do you do?
The odds are that you’d run a brainstorming session. It has, however, been shown that
brainstorming not only takes more time and leads to less ideas, but also worse ideas than if the
same participants had just tried to come up with ideas by themselves.
There are several other reasons why brainstorming may not be the best way to come up with ideas.
Scheduling, organizing and documenting the session in a usable format will all take up even more
time.
Although there are certain ways to improve brainstorming performance, it’s beyond the point. The
point is that you shouldn’t automatically default to brainstorming.
There are, however, some other useful techniques that might be worth giving a shot to challenge
conventional thinking. Because you're going to need different ideas, it's good to have a few
techniques in mind for generating them. Most of these ideation methods can be used for more
effective brainstorming but also for other type of ideation.
Idea Challenge
Idea Challenge is a focused form of innovation where you raise a problem or opportunity with
the hopes of coming up with creative solutions.
The point of idea challenge is to participate in ideation and generate ideas around a pre-defined
theme for a limited period of time.
It allows you to form a specific question and direct that question at a specific audience to receive
new ideas and unique insights.
Before setting up an idea challenge, it’s important to define what you want to accomplish with it.
Because there are two types of idea challenges, problem centric and solution centric approaches,
you should first clarify whether you’re looking to identify challenges or develop potential
solutions for them.
When organizing an idea challenge, there are different parameters that you can choose to achieve
the outcomes you’re looking for, such as theme, audience, responsibilities, time, or channels.
Keep in mind that idea challenge is the best technique when you need to generate lots of new ideas.
It may not be the most effective way to generate ideas if you only involve a few experts in your
ideation process as it’s proven to be more useful for engaging large audiences.
Although idea challenge enables you to gather lots of ideas fast, careful planning takes time and
might not be worth the effort if there are no resources to execute it properly. Also, right timing is
necessary for it to succeed.
SCAMPER Technique
The SCAMPER technique is created by Bob Eberle, and is a method used for problem-solving and
creative thinking. It’s a holistic way of applying critical thinking to modify ideas, concepts or
processes that already exist.
The purpose of the SCAMPER is to make adjustments to some parts of the existing idea or process
to reach the best solution. It consists of seven actions that can be used to replace parts in the
process:
1. Substitute – Substitution technique refers to replacing a part of your product, concept or process
with another to achieve even better outcome.
2. Combine – The combine technique explores the possibility to combine two ideas into a single,
more effective solution.
3. Adapt – Adaptation analyses the possibilities to make the process more flexible and focuses on
other similar incremental improvements to the idea, process, or concept.
4. Modify – Modifying the idea looks at the problem or opportunity from a bigger perspective and
aims for improving the overall results, not just the idea.
5. Put to another use – This approach focuses on finding ways to use the idea or existing solution
for another purpose and analyses the possible benefits if applied to other parts of the business.
6. Eliminate – The elimination technique is quite straightforward: it examines the possible
outcomes if one or more parts of the concept were eliminated.
7. Reverse – This action focuses on reversing the order of interchangeable elements of an idea.
Although the SCAMPER technique was originally designed for brainstorming sessions, it can be
applied to your own thought processes as well.
Often, people tend to focus on finding the next big idea. When generating new ideas, it is easy to
forget that the continuous incremental improvements are the ones that really make an impact in
the long run.
When you make ideation a constant practice, you’ll have a good chance to win that big idea through
a number of small ones. Sometimes, all it may take is to
have look at what you’ve already got. Using your existing ideas or processes as a starting point
can reveal a lot about your current situation, which is what the SCAMPER technique is about.
OPPOSITE THINKING
Opposite/reverse thinking is a technique that can help you question long-held
assumptions related to your business. It’s a useful tool to consider if you feel your team is stuck
with the conventional mindset and coming up with those “out-of-the-box ideas” seems to be
difficult.
Often, finding the best solutions aren’t found through a linear thought process. Although our brains
are wired that way, opposite thinking can help us question the norm.
With this type of thinking, you consider the exact opposite of what’s normal. You can even think
backwards to find unconventional solutions.
Succeeding with Idea Generation
Before engaging more people to use these tools and techniques for generating more ideas, there
are a few more tips that can help you get more out of your ideation methods.
IDENTIFYING BUSINESS OPPORTUNITIES:-
Four ways to identify more business opportunities
1. Listen to your potential clients and past leads. When you're targeting potential customers listen to
their needs, wants, challenges and frustrations with your industry. ...
2. Listen to your customers. ...
3. Look at your competitors. ...
4. Look at industry trends and insights.
• Define the problem or opportunity
Although this seems obvious, the more accurately you’re able to describe your current or perceived
problem or opportunity, the better chances you have of actually generating useful ideas.
Before you start, try to gather as much information about the problem as possible to get to the heart
of the problem. Identify what you already know about it and what information is still needed.
• Involve the right people
For your ideation to be as productive as possible, it is important to involve the right people to the
process. Engage those people who know about the topic and are genuinely interested in making a
change in your organization.
If your plan is to engage a larger group of people to generate ideas, make sure your audience is
relevant and well informed on the subject.
• Set constraints
Communicating that any idea is a good idea may hinder creativity, so make sure your goals are
ambitious and specific enough. One way to get more of actually creative ideas from your audience
is to set constraints.
If your general goal was to reduce costs, it’s likely that people would suggest ideas such as
spending less on office equipment or buying cheaper coffee. However, the ideas you’ll get will be
a lot different if you’d ask: “What could we do to save 70% on costs?”.
Without constraints, people typically come up with small suggestions for improvement with little
or no creativity. But when describing the challenge in more detail and setting more ambitious
goals, people really need to use their imagination to achieve a desired outcome.
CONCLUSION
The purpose of generating new ideas is about improving what already exists as well as coming up
with something new.
Often when trying to solve a problem or approaching a new opportunity, people use existing
solutions or mental models instead of trying to come up with new ones. The problem with this
approach is that it doesn’t allow you to explore different opportunities and it narrows down the
number of possible solutions.
Coming up with completely new ideas can help you approach your problem or opportunity from a
new perspective. It enables you to expand the range of ideas beyond your current way of thinking
which eventually leads to more ideas.
There are several different methods and techniques that can be used to challenge that conventional
mindset and to get more of those high-quality ideas. The ones introduced in this post can be used
as a reference in your brainstorming sessions or when generating ideas on your own.
The next step towards generating more ideas would be to try some of these methods in
practice. You can download our idea generation toolkit that consists of some of our favorite tools
for idea generation.
MANAGEMENT SKILLS REQUIRED TO BECOME AN ENTREPRENEUR:-
Entrepreneurs are the individuals who have the courage to take several risks and single handedly
operate their business. An entrepreneur is a leader, innovator, thinker and motivator for his team.
However, it isn’t an easy task to be an entrepreneur. There are specific managerial skills that an
entrepreneur must master in order to be successful in his ventures.
The essential managerial skills to become a successful entrepreneur are stated below:
Time Management
The most valuable asset for young entrepreneurs is their time. As an entrepreneur, you have to take
care of so many things together and time management is the key to keep everything on track. It is
vital to get more work done in less amount of time by eliminating interruptions, prioritising tasks
and increasing effectiveness as well as productivity. Effectual time management allows
entrepreneurs to assign specific time slots to the activities as per their importance. It also gives
them the ability to participate in economic forecasting and market research.
Business Planning
Every entrepreneur needs to develop a business plan or a blueprint of how will he develop his new
business. A good business plan consists of a single document divided into several sections
including the description of the organisation, market research, sales strategies, competitive
analysis and financial data. A well-planned blueprint or project outline acts as a strong foundation
for the success of the venture. It facilitates the entrepreneurs to make their business fit into the
industry, identify their target market and plan to capture them.
Employee Management
An entrepreneur must know how to manage the people. He should be a good judge of character
and abilities of an individual such as hiring the right employee is the foremost step for the success
of a company. Successful entrepreneurs should know how to motivate the employees in order to
work effectively and contribute to garner customer experience.
Customer Management
An entrepreneur must know how to manage his relationship with existing customers with a focus
on creating loyalty towards his business. This is the easiest and most effective method to increase
revenues. Entrepreneurs must have problem-solving skills, communication skills, attentiveness
and patience to manage customers effectively.
Sales Management
Selling or sale management is an essential skill every entrepreneur must master. You need to
completely understand the sale activities. This helps the entrepreneurs to tackle the challenges that
they may face in their sale management journey.
Financial Management
Even if your business’s finance is handled by an accountant or a finance professional, you must
know planning, organising, directing and controlling the financial activities such as procurement
and utilisation of funds. With a good financial management system, one can make decisions to
improve the business operations.
Business Management
Being a successful entrepreneur involves more than enthusiasm and a good eye for new
opportunities. A thorough understanding of the essential business functions is a prerequisite for
entrepreneurs who want to take their business to the next level. They must have the complete
know-how of general management, finance, marketing, operations management, purchasing,
supply chain, human resources and public relations.
So, these were the essential managerial skills that help the entrepreneurs to succeed and take their
business to the next level. If you want to embark on the journey of entrepreneurship, then you can
easily brace your skills according to your time schedule with MIT-SDE’s Post Graduate Diploma
in Management (PGDM) courses which are not only equivalent to Distance MBA courses but
also updated with latest industry trends and happenings.
VALUE CREATION DEFINITION:-
The definition of value creation is giving something valuable to receive something else that’s
more valuable to you. This definition is broad and captures both costs and benefits. Further, it
applies to owners, customers, and employees, as I’ll describe later.
Isn’t it just profitability? It might be for shareholders of large businesses but becomes less true for
small businesses. A shareholder of a large business may only care about profits. It’s a component
in their investment portfolio and its only role is to enlarge their wealth.
Some investors have gone beyond that to impact investing and want more than just income from
their investment. This has led to the rising popularity of B-corporations. Impact investing and B-
corporations balance financial returns with producing a public benefit. They are driven by both
mission and profit.
Value creation must be defined very broadly for small businesses because their owners define
value in many ways. Small businesses have even more non-financial definitions of success. You
have the freedom to define value creation of your company for your specific values.
It may be how you can live out your values or achieve goals you couldn’t do individually. You
may want time or freedom. It may be your status or position in the community. Owners often have
a deep devotion to employees and are willing to provide for them even if it means reduced profits.
Clarifying your values takes work. I go into detail on how to do this in my blog article on how
business goals move you from distraction to direction. In that article, I provide exercises to:
• Identify your life aspirations
• Develop the primary aim of your business
• Develop goals that focus your company on achieving that primary aim.
You can define “value” in many ways. I’ve created a short worksheet with three exercises to clarify
your values and set the purpose of your company. You’ll list what you want to be, do, or have in
your life and how your company can support.
Value creation for customers
You get value when you give value. Your business will only succeed if you provide great value to
both your customers and to employees.
Businesses fail when they can’t produce value for both owners and customers. I’ll explain later in
this article how to create value for employees.
At one extreme, you could create a product with high value to you but customers don’t see a need
for it. You don’t make sales, which means you don’t create much value for you.
For example, a business owner could create a high-tech gadget at a high price. It’s a business
failure if customers aren’t willing to pay the price or don’t see a need for the device. These owners
aren’t serving their customers and they aren’t earning profits. They haven’t created value.
The other extreme provides value to customers but no value to owners. Owners do this when they
provide their services or products at prices near or below their costs. The company is very busy
making little profit or cash flow. This owner would need to find some other source of value to
justify this. This may be viable if it’s part of a larger pricing strategy that provides profits later. I
talk about this in my pricing strategies article.
I’ve been asked many times to analyze a product or pricing strategy that they know will be very
popular with customers. These products often devastate company profits. Financial analysis has
proven many “great ideas” to be earnings disasters.
You get value when you give value
It’s easy to be caught up in the excitement of a potentially great idea. Take time to challenge it and
do the financial analysis on it. I talk about how to do the financial analysis in this article.
Common selling wisdom is to sell benefits and not features. People care most about how their life
will be better. The features are just proof that your product or service can deliver the benefits.
Carmine Gallo, the author of Talk Like TED, summarizes this as “Sell dreams, not products.”
In an Inc. article titled “The Hidden Reasons Why Customers Buy Your Products,” Katlin
Smith states, “People make purchases that fit who they are or who they aspire to be (or both). Who
are your customers? Who do they want to be? Determine this. Keep it in mind at all times.”
In my free customer dreams worksheet, you can identify the dreams of your customers and how
you fulfill them. You can then clearly communicate the value you provide to customers.
Organizational effectiveness: the X factor for company success
“Organizational effectiveness” may sound like an empty corporate buzzword, but more and more
it’s become a measurement for company success. In fact, it’s become such a hot-button concept
recently that some universities are offering certificate programs toward its implementation.
At the most elemental level, organizational effectiveness is a concept that measures how
thoroughly and efficiently a company achieves its business goals. An effective organization runs
like a well-designed, well-oiled machine. Its moving parts function smoothly to produce the results
the business set out to achieve, with minimal wasted resources or time.
Read on to find out why organizational effectiveness is worth the hype, and what steps leaders can
take to position their company for more efficient performance.
What is organizational effectiveness?
Organizational effectiveness refers to how an organization has achieved full self-awareness due in
part to:
• Leaders setting well-defined goals for employees and outlining ways to efficiently execute those
goals
• Management implementing clear decision-making processes and communication pipelines
• Engaged employees—who are carefully selected and fairly compensated—producing work that
prioritizes results
Why does organizational effectiveness matter?
The more effective an organization, the more likely it will survive and flourish over the long term.
It’s worth noting that organizational effectiveness cannot be achieved, as one Bain & Company
study put it, by “a cycle of recurring initiatives” to make your company more efficient. The
behavior must be learned and baked into the day-to-day functioning and ongoing evaluation of the
business.
The study goes on to describe the difference between an ongoing commitment to organizational
effectiveness and a series of one-time initiatives that might cut costs. The former is comparable to
a healthy routine of eating good food and getting regular exercise, while the latter is akin to extreme
dieting. Although the latter might work in the short term, it doesn’t “build the muscles to sustain
long-term change.”
Prioritizing effectiveness shouldn’t discourage company health or customer satisfaction, either.
According to the same Bain & Company study, “Companies that embrace an efficiency mindset
are four times more likely to say their cost efforts enabled growth rather than hindered it. They
also are four and a half times more likely to report improved customer experience.”
5 ways leaders can produce long-term organizational effectiveness
The Bain & Company study maps out five key areas where successful companies made
adjustments to achieve organizational effectiveness:
• Strategy
• Metrics
• Commitment
• Behaviors
• Culture
“Tenacity and a sustained investment in these areas create the best chance of success,” the study
asserts.
1. Strategy
Strategy involves shifting an organization’s central identity—how leaders describe its purpose and
goals both internally and externally—to include effectiveness and efficiency as core values. The
more your company is known to be “effective” and “efficient,” by both the market and your
employees, the more these values will be built into every new project and goal.
Organizational effectiveness should simplify and clarify long-term objectives for a company. The
clearer these objectives are outlined at a strategic level, the easier it is to translate across
departments.
2. Metrics
Measuring organizational effectiveness through metrics can help organizations stay accountable.
But choosing the right data to measure—as well as knowing when to prize human judgment and
discussion over hard analytics—is just as important. A few questions to help your organization get
started should include:
• What concrete goals are your teams working toward?
• Are they clearly outlined by team leaders?
• How and at what intervals will progress be evaluated?
This effectiveness report from the University of North Carolina is a great example of an
organization keeping itself honest through regular evaluation. It clearly states the organization’s
strategic focus, efforts to promote clarity in roles, as well as recommendations for improving
general administration organizational design.
3. Commitment
“Strong executive sponsorship is the single most important factor for success and the most often
cited reason for failure when things go off track,” the Bain & Company study says. The authors
stress that “visible and credible commitment” to effectiveness policies from senior leaders—in
companywide communications and hiring approaches, all the way down to how quarterly budget
meetings are conducted—creates a trickle-down effect across the organization.
4. Behavior
Meanwhile, recurring behavior is where efforts to achieve organizational effectiveness are most
likely to break down. Identifying specific decision-making moments in the day-to-day operation
of the company, communicating the ways employees ought to be changing their behavior in those
moments, and then implementing systems for reinforcement, including incentivizing those
choices, can build a much healthier organization that polices its own effectiveness.
5. Culture
Finally, the degree to which employees are enthusiastically engaged at work determines how
effective their work will be. Therefore, creating an organizational culture that values effectiveness
is key.
Countless studies, from business schools to consulting firms, have underlined the correlation (if
not causation) between employee engagement and overall organizational performance. Oft-
cited Gallup findings suggest that unengaged workers are costing employers at least a third of
those workers’ wages, and overall could be costing the U.S. economy over $600 billion in lost
productivity.
Even in a purely financial context, focusing on company culture—and prioritizing employee
engagement in particular—is the best place to start when embedding organizational effectiveness
into your company’s DNA.