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M A R C U S. 7. INNOVATION AND ENTREPRENEURSHIP. Chapter Learning Objectives. Explaining the factors needed for successful innovation and entrepreneurship. Examining barriers to innovation and suggesting how to overcome these barriers.

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M

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7

INNOVATION AND ENTREPRENEURSHIP


Chapter Learning Objectives

  • Explaining the factors needed for successful innovation and entrepreneurship.

  • Examining barriers to innovation and suggesting how to overcome these barriers.

  • Understanding how to identify opportunities for innovation and entrepreneurship.


Chapter Learning Objectives(Continued)

  • Being aware of the role leading-edge industries and environmental challenges play in innovation and entrepreneurship.

  • Distinguishing risk from uncertainty and exploring different types of uncertainty.

  • Seeing innovation and entrepreneurship as a long-term process.


Invention and Innovation

A promising idea is an invention: It is the creation of an idea in a laboratory, a test of the principles involved, and an act of technical creativity where a concept may be suitable for patenting

Innovation entails actually delivering on the idea’s promise by creating distinctive value and paying attention to the needs of customers.


Ex. 7.2Invention Versus Innovation


Ex. 7.3Types of Entrepreneurs

  • Stubborn dreamers

    • Stick tenaciously to vision despite odds (less than 1 in 10 new ideas bear fruit)

    • Sometimes exhibit foolhardy optimism to overcome natural inclination to caution

  • Leaders of small companies

    • May not have access to capital, workforce, or other resources to complete the task

  • Refugees from large corporations

    • Have solid business experience, which may mean more success


Ex. 7.3(Continued)

  • Women

    • Numbers are increasing

  • Classic inventors without conventional credentials

  • Well-connected individuals

    • Access to investment banks and venture capitalists


Sources of Funding for New Businesses

  • Own personal fortunes and contacts

  • Commercial banks

  • Venture capitalists

  • Initial Public Offering (IPO)

  • Large corporations


Business Plan

A business plan describes the business. It has an external analysis that covers such essentials as suppliers, customers, and competitors; an internal assessment of the organization’s capabilities and its functional plans; an implementation schedule; an end-game strategy that indicates when the business will be viable; financial projections; and a risk analysis


Economic Growth

  • Economic growth – the capacity to produce the goods and services people desire

  • Economic growth depends on

    • Quantity and quality of labor and natural resources

    • Capital, machines, and equipment

    • Management

    • Values that encourage hard work, diligence/thrift

    • High level of technology


Ex. 7.4Innovation Waves


Ex. 7.5Next Innovation Wave

Extension of Human Sensory Capabilities and Intellectual Processes

  • Genetic engineering

  • Advanced computers/ telecommunication

  • Robotics

  • Artificial intelligence

  • Alternative energy (solar, fuel cells, etc.)

  • Advanced materials (molecular design, new polymers, high-tech ceramics, fiber-reinforced composites)


Ex. 7.6Environmental Challenges as Opportunities

New Model

Win-Win

High

Compliance

Model (neutral)

Profits

Old Model

Win-Loss

Low

Bad

Good

Environmental Performance


Ex. 7.8Enhanced Efficiency via Pollution Prevention at Novartis


Ex. 7.9Material Balance Model

T

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P

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product

1

T

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P

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Hazardous/

solid waste

2

Process

step

waste/

water

3

air

releases

4

Total inputs =

Total outputs

other


Ex. 7.10Minimizing Risk

  • Focus on simple, well-trod areas

  • Establish new generations of existing products

  • Introduce new models

  • Differentiate product rather than create different ones

  • License others’ inventions

  • Imitate others’ product introductions

  • Modify existing processes

  • Make minor technical improvements


Types of Uncertainty Affecting New Product Development

  • Technical uncertainty

  • Business condition uncertainty

  • Market uncertainty

  • Government uncertainty


Difficulties of Successful Innovation

  • The entities that make the discoveries are not always the ones that profit from them

  • Innovation rarely is instantaneous

  • Diffusion is very uneven

  • Since imitators face lower costs, the incentive to be innovative and entrepreneurial is not large


Ex. 7.11The Innovation Journey – A Typical Path

  • Coincidental events initiate gestation of many years

  • Plans presented to resource controllers in form of sales pitches

  • At start, disagreement and lack of clarity abound

  • Ideas proliferate, making managing difficult

  • Lack of continuity among personnel creates problems

  • Emotions run high, leading to frustration, setbacks, mistakes, and blame

  • Problems snowball and patience of resource providers weakens

  • A struggle for power ensues

  • Resources may run out before dreams fulfilled


Ex. 7.12An Augmented View of Innovation


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