Swarrnim Start-Up and Innovation University

Bhoyan Rathod, Opposite IFFCO, Near ONGC WSS,

Adalaj Kalol Highway, Gandhinagar, Gujarat – 382420
Department of Start-Up and Innovation (IE)

Subject: Orientation Program in Start-up and Entrepreneurship

Semester: I
Reading Material for IE Examination

Concept of Entrepreneurship
Entrepreneurship is the ability and readiness to develop, organize and run a business
enterprise, along with any of its uncertainties in order to make a profit. The most prominent
example of entrepreneurship is the starting of new businesses.

Meaning of Entrepreneur
The entrepreneur is defined as someone who has the ability and desire to establish, administer
and succeed in a start up venture along with risk entitled to it, to make profits. The best
example of entrepreneurship is the starting of a new business venture. The entrepreneurs are
often known as a source of new ideas or innovators, and bring new ideas in the market by
replacing old with a new invention.
In a nutshell, anyone who has the will and determination to start a new company and deals
with all the risks that go with it can become an Entrepreneur.
Definition of Entrepreneur:
An entrepreneur is an individual who creates a new business, bearing most of the risks and
enjoying most of the rewards. The process of setting up a business is known as
entrepreneurship. The entrepreneur is commonly seen as an innovator, a source of new ideas,
goods, services, and business/or procedures.

What are the 3 Types of Entrepreneurship?

It is classified into the following types:
Small Business Entrepreneurship-
These businesses are a hairdresser, grocery store, travel agent, consultant, carpenter, plumber,
electrician, etc. These people run or own their own business and hire family members or local
employee. For them, the profit would be able to feed their family and not making 100 million
business or taking over an industry. They fund their business by taking small business loans
or loans from friends and family.
Scalable Start up Entrepreneurship-
This start-up entrepreneur starts a business knowing that their vision can change the world.
They attract investors who think and encourage people who think out of the box. The
research focuses on a scalable business and experimental models, so, they hire the best and
the brightest employees. They require more venture capital to fuel and back their project or
business.
Social Entrepreneurship-
This type of entrepreneurship focuses on producing product and services that resolve social
needs and problems. Their only motto and goal is to work for society and not make any
profits.

Characteristics of Entrepreneurship:
Not all entrepreneurs are successful; there are definite characteristics that make
entrepreneurship successful. A few of them are mentioned below:

 Ability to take a risk- Starting any new venture involves a considerable amount of

failure risk. Therefore, an entrepreneur needs to be courageous and able to evaluate
and take risks, which is an essential part of being an entrepreneur.
 Innovation- It should be highly innovative to generate new ideas, start a company
and earn profits out of it. Change can be the launching of a new product that is new to
the market or a process that does the same thing but in a more efficient and
economical way.
 Visionary and Leadership quality- To be successful, the entrepreneur should have a
clear vision of his new venture. However, to turn the idea into reality, a lot of
resources and employees are required. Here, leadership quality is paramount because
leaders impart and guide their employees towards the right path of success.
 Open-Minded- In a business, every circumstance can be an opportunity and used for
the benefit of a company. For example, Paytm recognised the gravity of
demonetization and acknowledged the need for online transactions would be more, so
it utilised the situation and expanded massively during this time.
 Flexible- An entrepreneur should be flexible and open to change according to the
situation. To be on the top, a businessperson should be equipped to embrace change in
a product and service, as and when needed.
 Know your Product-A company owner should know the product offerings and also
be aware of the latest trend in the market. It is essential to know if the available
product or service meets the demands of the current market, or whether it is time to
tweak it a little. Being able to be accountable and then alter as needed is a vital part of
entrepreneurship.

Importance of Entrepreneurship:

 Creation of Employment- Entrepreneurship generates employment. It provides an

entry-level job, required for gaining experience and training for unskilled workers.
 Innovation- It is the hub of innovation that provides new product ventures, market,
technology and quality of goods, etc., and increase the standard of living of people.
  Impact on Society and Community Development- A society becomes greater if the
employment base is large and diversified. It brings about changes in society and
promotes facilities like higher expenditure on education, better sanitation, fewer
slums, a higher level of homeownership. Therefore, entrepreneurship assists the
organisation towards a more stable and high quality of community life.
 Increase Standard of Living- Entrepreneurship helps to improve the standard of
living of a person by increasing the income. The standard of living means, increase in
the consumption of various goods and services by a household for a particular period.
 Supports research and development- New products and services need to be
researched and tested before launching in the market. Therefore, an entrepreneur also
dispenses finance for research and development with research institutions and
universities.
 why motivation is an important factor for an entrepreneur –
 Tough competition − An entrepreneur needs to face tough competition, in order to
sustain and make a mark in this global market. To cope with this competition,
motivation is required at each stage of the firm.
 Unfavorable environment − Nobody knows what the future holds. One has to take
care of the current economy and should be prepared for the worst situations of
deteriorating economic conditions. For this, motivation and optimism is essential.
 To create public demand − Market runs by the people and for the people. To run a
business profitably, it is required to create a public demand for your product or
service in the market and attract as many customers as possible. To do this in the
right way, motivation is required.
 To enhance creativity − Market always wants something new and different. If every
firm offers the same product without any variation then there is no point of
preferring one brand in particular. To sustain one has to be innovative. Add some
new features in the existing products and services, make them more user friendly in a
considerable budget. This requires motivation too.
 To increase productivity − It is very important to take care of the quality of the
product as well as the profit. People will always prefer a product which is cost
efficient and of good quality. So, motivation is required for increase the productivity
What Motivates an Entrepreneur?
The 6Cs that motivate entrepreneurs to establish their own business are as follows −
 Change − Entrepreneurs frequently want change, not only change, they also want to
be the bearers of change. They are solution givers and want to interrupt the status
quo.
 Challenge − Some people love challenges and they opt for starting a new business as
it is very challenging to handle big problems. These people find typical job in a big
corporate as boring and not challenging enough.
 Creativity − Running one’s own business is all about being more creative and having
the independence to make new discoveries. One needs to have an infinite room to
welcome and introduce creativity in a small business.
 Control − Some people tend to start a business because they don't want to be pushed
around and work for a product/company in which they have no way to shape their
destiny. They want to be their own boss having their own time, own pace, location of
their choice, employees of their choice and have a progressive role in deciding the
direction of the company.
  Curiosity − Successful entrepreneurs are always anxious and ask − "what if we do X
this way?” They want to have more than one option to do a work and choose the best
one from them. They want to understand the customer's perceptions, point of views,
markets and competitors. They are frequently anxious to see how their particular
theory like "people want to do A with B" works. In this aspect, they can’t be
differentiated from a scientist who is trying to prove his theorem.
 Cash − The last but not the least part is the cash. Money says it all. Many non
entrepreneurs have a misconception that cash comes first for entrepreneurs but this is
never really true.
What are the Advantages of Entrepreneurship?
To an Individual
(a) Provides Self-Employment for the entrepreneur
(b) Entrepreneur can provide employment for near & dear one as well
(c) Entrepreneurship often provides an employment and livelihood for next generations as
well.
(d) Freedom to use own ideas – Innovation and creativity
(e) Unlimited income / higher retained income
(f) Independence
(g) Satisfaction

To the nation
(a) Provides larger employment
(b) Results in wider distribution of wealth
(c) Mobilizes local resources, skills and savings
(a) Accelerates the pace of economic development

(b) Stimulates innovation & efficiency

What are the Significant Challenges of Entrepreneurship?

1. Multiple roles and responsibilities- Even though your title may read “CEO” or
“Founder,” you’ll really be using multiple titles at once. Don’t expect to only work on
sales or business development- you’ll be juggling finances, legal, marketing, human
resources, and business admin work until your team gradually expands.
2. Work-life balance- Sure, entrepreneurs can work from anywhere at any time, but the
downside is that you’re pretty much working during most of your free time. That might
involve fielding sales calls in the evening, finishing up a SOW on the weekends, or
putting out fires while on vacation.
3. Self-motivation- Without a boss to keep you in line, discipline becomes a self-taught
responsibility. That may involve getting up early to work, helping team members on a
certain project, or holding meetings on holidays.
4. High risk- Starting a business is no walk in the park- there’s a lot of financial and legal
risk involved if you don’t do your homework. Businesses without a plan in place to
manage their finances risk end their ventures prematurely.
 5. Few business connections- Businesses are built on networks of investors, partners,
influencers, and team members. Unless you’re a veteran in a certain industry, you’re
going to have to build your business network from the ground up. That may be
challenging for those with little networking experience.
6. Building reputation- Building up a new brand can be one of the biggest challenges for
a new start up. Unless you have an innovative breakthrough on your hands, you’ll likely
have dozens of competitors that your target audience will already be more familiar with.

What are the functions of an entrepreneur?

1. Decision making- A decision making process is one of the most critical process for the
company but entrepreneur will make decision about everything.
2. Management Control- Management control is defined as a process that helps to achieve
organizational goals. The teams or an individual within a business entity is forced to perform
specific actions and avoid another set of particular actions so that they can reach their
destined target.
3. Social Responsibility- Entrepreneur performs social responsibility that protects the
welfare, benefit and economic gain of the society.
4. Risk Taking and uncertainly bearing- Risk bearing refers to having or sharing
responsibility for accepting the losses if projects go wrong. Most economic activities are
capable of resulting in losses under some circumstances, however good the expected results
may be. Somebody has to bear the risk of meeting any losses.
Uncertainty bearing is a capability that is innate or developed and using it to bear uncertainty
in an entrepreneurial context is a normal cost of doing business or "cost of production",
where the payoffs are indefinite, future, and based on hope and theories.
5. Innovation- Innovation is the practical implementation of ideas that result in the
introduction of new goods or services or improvement in offering goods or services.

Explain the process of Entrepreneurship Development.

The entrepreneurship development process is about supporting entrepreneurs to advance their
skills with the help of training and coaching classes. It encourages them to make better
judgments and take a sensible decision for all business activities.
Process of Entrepreneurship Development
 Discover – Any new process begins with fresh ideas and objectives, wherein the
entrepreneur recognizes and analyzes business possibilities. The analyzing of opportunities is
4a risky task, and an entrepreneur looks out for inputs from other persons, including channel
partners, employees, technical people, consumers, etc. to reach an ideal business opportunity.
 Evaluation – The evaluation of an opportunity can be done by asking several questions to
oneself. For instance, questions like whether it is worth taking a chance and investing in the
idea, will it attract the consumer, what are the competitive advantages and the risk linked
with it are asked. A reasonable and sensible entrepreneur will also analyze his skills and
whether it matches his entrepreneurial objectives or not.
 Developing a plan – After the identification of an opportunity, an entrepreneur has to
build a complete business plan. It is the most important step for new business as it sets a
standard and the assessment criteria and sees if a company is working towards the set goals.
 Resources – The next step in the process of entrepreneurial development is resourcing.
Here, the entrepreneur recognizes the source of finance and from where the human resource
can be managed. In this step, the entrepreneur also tries to find investors for his new business.
 Managing the company – After the hiring process and funds are raised now it’s time to
start the operation to accomplish the desired goals. All the entrepreneur will decide on the
management structure that will be assigned to resolve the operational problems whenever it
occurs.
 Harvesting – The last step in this process is harvesting, where an entrepreneur determines
the future growth and development of the business. Here, real-time development is compared
with the projected growth, and then the business security or the extension is initiated
accordingly.

What are the Factors Favoring Entrepreneurship?

1. Developed Infrastructure Facilities – Availability of infrastructure reduces the cost &
efforts and improves viability of projects through higher profit margins.

2. Financial Assistance – Easy availability of cheap funds is vital for promoting

entrepreneurship.

3. Protective and Promotional Policies – Most of the entrepreneurship projects start very
small and have no resilience. They are extremely vulnerable to competitors, market, money
markets, etc., for considerable time. Favorable Govt policies shelter them from such vagaries.

4. Growth of Education – Science, Technology & Management – Growth of education is

believed to be promoting entrepreneurship. However, there are enough examples to suggest
otherwise. A very large proportion of first generation entrepreneurs are low educated. Take
the case of Microsoft Chairman Mr. Bill Gates or Reliance Founder Mr. Dhirubhai Ambani

5. Risk Taking Abilities – Risk taking ability is one of the pillars of entrepreneurial spirits.

6. Hunger for Success (Capitalistic View) – Fire in the belly and dreams of riches is what
drives most entrepreneurs on this risky path. Any person content with what he has would take
the easier route of salaries job.

7. Environment/Culture Impact – Entrepreneurship is contagious. Communities like

Punjabis and Marwaris are historically entrepreneurial. They are known for seeking and
exploiting business opportunities in most remote areas. It is a culture that propels them.

8. Social Security – Social security acts as a safety net against failure of enterprise. Social
security guarantees basic ‘roti, kapada aur makan’ in case of failure. Entrepreneurial spirit
of United States is born partly out of this security.

9. Technical/Industrial Training Facilities – Industrial Training facilities on one hand

generate skilled manpower so vitally required for setting up enterprises while on the other
hand they are also nursery for future entrepreneurs. Among the educated entrepreneurs, a
majority is product of technical institutes from IIT to ITI.

10. Globalization – Globalization has provided another avenue for business. Many dare
devils have taken a head– along plunge into this uncharted water and have written new
success stories.
 -----------------------------------------------------------------------------------------------------------
Introduction to start-ups:
Startup India is a flagship initiative of the Government of India, intended to build a strong
eco-system for nurturing innovation and Startups in the country that will drive sustainable
economic growth and generate large scale employment opportunities. The Government
through this initiative aims to empower Startups to grow through innovation and design. In
order to meet the objectives of the initiative, Government of India is announcing this Action
Plan that addresses all aspects of the Startup ecosystem. With this Action Plan the
Government hopes to accelerate spreading of the Startup movement: • From digital/
technology sector to a wide array of sectors including agriculture, manufacturing, social
sector, healthcare, education, etc.; and • From existing tier 1 cities to tier 2 and tier 3 citites
including semi-urban and rural areas.
Types of Businesses/STARTUPS:

Start-ups and growing companies pick this popular business structure because it allows outside
funding to be raised easily, limits the liabilities of its shareholders and enables them to offer
employee stock options to attract top talent. As these entities must hold board meetings and file
annual returns with the Ministry of Corporate Affairs (MCA), they tend to be viewed with more
credibility than an LLP or General Partnership.

Features of Private Limited Company

• For Businesses Raising Funding: Fast-growing businesses that will require funding from
venture capitalists (VCs) need to register as private limited companies. This is because only
private limited companies can make them shareholders and offer them a seat on the board of
directors. LLPs would require investors to be partners and OPCs cannot accommodate additional
shareholders. If you’re raising funding, therefore, the points that follow scarcely matter; your
decision is made

• Limited Liability: Businesses often need to borrow money. In structures such as General
Partnership, partners are personally liable for all the debt raised. If it cannot be repaid by the
business, the partners would have to sell their personal possessions to do so. In a private limited
company, only the amount invested in starting the business would be lost; the directors' personal
property would be safe

• Start-up Cost: A private limited company costs around Rs. 8000 to start at the very least,
excluding professional fees. However, this will be higher in some states; in Kerala, Punjab and
Madhya Pradesh, in particular, the fees are much higher. You also need some paid-up capital,
which can be as little as Rs. 5000 to begin with. The annual compliance costs are around Rs.
13,000

• Requires Greater Compliance: In exchange for the convenience of easily accommodating

funding, the private limited company set-up needs to meet the demands of the Ministry of
Corporate Affairs (MCA). These range from a statutory audit, annual filings with the Registrar
of Companies (RoC), annual submission of IT returns, as well as quarterly board meetings, the
filing of minutes of these meetings, and more. If your business isn’t yet geared to meet these
requirements, you may want to wait a while before you jump into registering a private limited
company
• Few Tax Advantages: The private limited company is assumed to have many tax advantages,
but this is not actually the case. There are some industry-specific advantages, but taxes are to be
paid at a flat rate of 30% on profits, the dividend distribution tax (DDT) applies, as does
Minimum Alternate Tax (MAT). If you’re looking for the structure with the lowest tax burden,
the LLP does offer some better benefits

LIMITED LIABILITY:

A relatively cheaper approach to incorporate as compared to a Private Limited Company and

requires fewer compliances; its main improvement over General Partnership is that it limits the
liabilities of its partners to their contributions to the business and offers each partner protection
from negligence, misdeeds or incompetence of the other partners

Features of Limited Liability Company

• Start-up Cost: Much cheaper than starting a private limited company, with government fees
of Rs. 5000, no paid-up capital and low compliance costs

• For Non-Scalable Businesses: If you’re running a business that’s unlikely to require equity
funding, you may want to register an LLP as it combines several benefits of the private limited
company and general partnership. It has limited liability, like a private limited company, and has
a simpler structure, like a general partnership

• Fewer Compliances: The MCA has made given some concessions to the LLP. For example,
an audit needs to be performed only if your turnover is greater than Rs. 40 lakhs or paid-up
capital is more than Rs. 25 lakhs. Furthermore, whereas all structural changes need to be
communicated to the RoC in the case of private limited companies, the requirement is minimal
for LLPs

• Tax Advantages: Particularly if your business is earning over Rs. 1 crore in profits, the LLP
offers tax benefits. The tax surcharge that applies on companies with profits over Rs 1 crore
doesn’t apply to LLPs, nor does Dividend Distribution Tax. Loans to partners are also not
taxable as income

• Number of Partners: There is no limit to the number of partners there may be in an LLP. If
you’re building a large advertising agency, for example, you need not worry about any cap on
the number of partners

GENERAL PARTNERSHIPS:

A General Partnership is a business structure in which two or more individuals manage and
operate a business in accordance with the terms and objectives set out in the Partnership Deed.
This structure is thought to have lost its relevance since the introduction of the LLP because its
partners have unlimited liability, which means they are personally liable for the debts of the
business. However, low costs, ease of setting up and minimal compliance requirement make it a
viable option for some, such as home businesses that are unlikely to take on any debt.
Registration is optional in the case of General Partnerships.

Features of General Partnership

• Unlimited Liability: On account of unlimited liability, the partners in the business are liable
for all of its debts. This means that if, for whatever reason, a partner is unable to repay a bank
loan or is liable to pay a fine, this can be recovered from his or her personal possessions. So the
bank, institution or supplier would have right to their jewellery, house or car. Furthermore, aside
from ease of set-up and minimal compliance, the partnership offers no benefits over the LLP. If
one opts to register it, which is optional, it may not even be cheaper. Therefore, unless one is
running a very tiny business (let’s say you offer a lunch pack service in your area and would like
to set a profit ratio with your partner), you should not opt for a partnership

• Easy to Start: If you choose not to register your partnership firm, all you need to get started is
a partnership deed which you can have ready in just two to four working days. Even registration,
for that matter, can be completed in a day once you have the appointment with the registrar. As
compared with a private limited company or LLP, the procedure for starting-up is much simpler

• Relatively Inexpensive: A General Partnership is cheaper to start than an LLP and even over
the long-term, thanks to the minimal compliance requirements, is inexpensive. You would not
need to hire an auditor. This is why, despite its shortcomings, home businesses may opt for it

SOLE PROPERTIERSHIP:

A sole proprietorship is a business that is owned and managed by a single person. You could
have one up and running within 10 days, which makes it very popular among the unorganised
sector, particularly small traders and merchants. There is no such thing as registration;
proprietorships are recognised by other registrations, such as a service or sales tax registration.

Features of Sole Proprietorship

• Unlimited Liability: Just as a partnership, a sole proprietorship has no separate existence.

Therefore, all debts can only be recovered from the sole proprietor. Therefore, the owner has
unlimited liability with regard to all the debts. This should heavily discourage any risk-taking,
which means that it’s suited to only small businesses. If you plan on running a business that
requires a loan or may end up paying penalties, fines or compensation, it’s best you look into
registering an OPC

• Easy to Start: There is no separate registration procedure for proprietorships. All you need is
a government registration relevant to your business. If you’re selling goods online, a proprietor
would only need a sales tax registration. Therefore, starting up as a sole proprietor is relatively
easy

ONE PERSON COMPANY:

The constitution of a One Person Company (OPC) was recently introduced as a strong
improvement over sole proprietorship. It gives a single promoter full control over the company
while limiting his/her liability to contributions to the business. This person will be the only
director and shareholder (there is a nominee director, but with no power until the original
director is incapable of entering into contract). Hence, there is no scope of raising equity funding
or offering employee stock options.
Features of One Person Company

• For Solo Entrepreneurs: A big improvement over the sole proprietorship firm, given that your
liability is limited, the OPC is meant for solo entrepreneurs. However, do note that if it has
revenues of over Rs. 2 crore and paid-up capital of over Rs. 50 lakh, it needs to be converted
into a private limited company. Furthermore, given that there must be a nominee director (to
enable perpetual existence of the OPC), you may as well consider starting a private limited
company, which will also have flexibility of raising funding

• High Compliance Requirements: While there are no board meetings, you will be required to
conduct a statutory audit, submit annual and IT returns and comply with the various
requirements of the MCA

• Minimal Tax Advantages: The OPC, like the private limited company, has some industry-
specific advantages. But taxes are to be paid at a flat rate of 30% on profits, the DDT applies, as
does MAT. If you’re looking for a structure with the lowest tax burden, the LLP does offer some
better benefits
• Start-up Costs: Nearly the same as a private limited company, with government fees, a little
less than Rs. 7,000. However, this will change for different states, for example in Kerala, Punjab
and Madhya Pradesh in particular, the fees is much higher

Explain registration process of startup in India.

Step 1: Incorporate your business
First things first, one need to incorporate your business as a Private Limited Company or a
Limited Liability Partnership or a Partnership firm. One just need to follow the normal
procedure that includes filling up a form to get the registration.
Step 2: Register under Startup India
Now one need to register your firm or company as a startup in the Startup India scheme of the
government. One just need to fill the form available for you on the Startup India website. One
has to fill in all the details and upload a certain number of documents as well.
Step 3: Documents should be uploaded in a PDF format only
One needs a letter of recommendation along with the registration form. They can get any one
of the following recommendation letters.
A recommendation letter from an Incubator known in a post-graduate college in India, in a
format approved by the DIPP. This is regarding the innovative nature of the business; OR
A recommendation letter from an incubator that the Government of India funds as part of any
specified scheme to promote innovation; OR
A letter from any of the Incubators, recognized by the Government of India, in DIPP format.
A letter of funding not less than 20% in equity, by an Incubation Fund, Private Equity Fund,
Angel Fund, Accelerator, Private Equity Fund, registered with SEBI that endorses the
innovative nature of business; OR
A recommendation later by the Central or any State Government of India; OR
A patent filed and published in the Journal of Indian Patent office in areas affiliated with the
nature of the business being promoted.
Registration or Incorporation Certificate
You need to upload the certificate of incorporation of your company or LLP, or the
registration certificate for a partnership company.
Brief description of your business
Step 4: You need to mention if you need tax exemption
In India, startups do not have to pay income tax for the first three years but to avail such
benefits, the company must be certified by the Inter-Ministerial Board (IMB). This is where
companies registered with DIPP get relaxation as the registration is enough to get the
benefits.
Step 5: Self-certification of the following conditions
You are a Private limited company, an LLP or a partnership firm.
Your business must be incorporated or registered in India, not before 5 years.
Your company’s turnover must not be more than Rs 100 crore.
The company has to keep innovating something new or making the existing system better in
its own way.
Your business must be a fresh idea and not a splitting up or reconstruction of an existing
business.
Step 6: Get your recognition number
On application of this registration, you will get a recognition number with immediate effect.
You get the certificate of registration or incorporation only after the authority goes through
all your uploaded documents.

Define Innovations:

"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

Creativity and innovation

In general, innovation is distinguished from creativity by its emphasis on the implementation
of creative ideas in an economic setting.
creativity is "the production of novel and useful ideas by an individual or small group of
individuals working together" and innovation is "the successful implementation of creative
ideas within an organization", and as such, they consider both part of the same process.

4 TYPES OF INNOVATIONS:

 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."

 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."

 Architectural innovation: "innovation that changes only the relationships

between them [the core design concepts]"
  Modular Innovation: "innovation that changes only the core design concepts of a
technology"
The Five Stages of Successful Innovation
Stage 1: Idea Generation and Mobilization
The generation stage is the starting line for new ideas. Successful idea generation should be
fueled both by the pressure to compete and by the freedom to explore. IDEO, the product
development and branding company based in Palo Alto, California, is a good example of an
organization that encourages successful idea generation by finding a balance between
playfulness and need.

Once a new idea is generated, it passes on to the mobilization stage, wherein the idea travels
to a different physical or logical location. Since most inventors aren’t also marketers, a new
idea often needs someone other than its originator to move it along. This stage is vitally
important to the progression of a new idea, and skipping it can delay or even sabotage the
innovation process.

Stage 2: Advocacy and Screening

This stage is the time for weighing an idea’s pros and cons. Advocacy and screening have to
take place at the same time to weed out ideas that lack potential without allowing
stakeholders to reject ideas impulsively solely on the basis of their novelty. The authors
found that companies had more success when the evaluation process was transparent and
standardized, because employees felt more comfortable contributing when they could
anticipate how their ideas would be judged. For example, one software engineer from an
information technology organization said, “One of the things I have struggled with is
evaluations of my ideas. Some of my ideas light up fires around here, while others are
squashed. . . . Needless to say, I grow skeptical when [the executives] ask for ideas and then
do not provide feedback as to why an idea was not pursued.”

Stage 3: Experimentation

The experimentation stage tests the sustainability of ideas for a particular organization at a
particular time — and in a particular environment. At this stage, it’s important to determine
who the customer will be and what he or she will use the innovation for. With that in mind,
the company might discover that although someone has a great idea, it is ahead of its time or
just not right for a particular market. However, it’s important not to interpret these kinds of
discoveries as failures — they could actually be the catalysts of new and better ideas.

Washington Mutual Inc.’s recent interior redesign provides a good example of how
successful experimentation works. Instead of applying a new design to all its branches, the
banking and insurance company, headquartered in Seattle, Washington, implemented the
design in just a couple of locations to see how it would be received. Subsequently, when
customers responded favorably, the bank took its innovation to the next level, applying the
new design to several other branches. This way, the company didn’t lose money and time by
applying a new idea all at once without knowing if it would succeed.

Stage 4: Commercialization
In the commercialization stage, the organization should look to its customers to verify that
the innovation actually solves their problems and then should analyze the costs and benefits
of rolling out the innovation. The authors make sure to note that “an invention is only
considered an innovation [once] it has been commercialized.” Therefore, the
commercialization stage is an important one, similar to advocacy in that it takes the right
people to progress the idea to the next developmental stage. For example, one chief executive
officer said, “We learned a simple thing: Researchers and idea creators do not appreciate the
nuances of marketing and commercialization. . . . In the past, we tried to get the researchers
involved in the commercialization aspects of the business. . . . The end result was pain and
more pain.”

Stage 5: Diffusion and Implementation

The diffusion and implementation stages are, according to the authors, “two sides of the same
coin.” Diffusion is the process of gaining final, companywide acceptance of an innovation,
and implementation is the process of setting up the structures, maintenance and resources
needed to produce it. A good example of a successful approach to diffusion comes from
International Business Machines Corp., which involves its employees early in the idea-
generation stage and conducts so-called innovation jams, to which they invite not only
employees but also clients, business partners and even employees’ families. IBM aids later
diffusion by giving everyone a stake in the idea from the beginning.

What is Intrapreneurship?
Intrapreneurship is defined as entrepreneurship within an existing business set-up. That is to
say- Intrapreneurship is corporate entrepreneurship. When a corporation indulges in
entrepreneurial activities, like diversification into new businesses, it is called
intrapreneurship.
It is a tool for capitalizing the entrepreneurial spirit of employees in the organisation. It gives
managers the freedom to try new ideas by employing firm’s resources in a unique way.

What are the Characteristics of an Intrapreneur?

An intrapreneur is not far removed from an entrepreneur. The major difference being that an
entrepreneur risks his own money where as an intrapreneur works with his employer’s
money. Thus, the risk level of an intrapreneur is considerably reduced. For most other
characteristics, the two match perfectly.
1. Vision – It is the basis for successful venture. An Intrapreneur has ability to visualize from
idea to implementation.

2. Motivation – Intrapreneur is generally self-motivated, but expect corporation reward and

recognition.
3. Orientation – Intrapreneur is achievement oriented.

4. Risk Appetite – Intrapreneurs are moderate risk takers since risk acceptance depends on
their skills. Wild risk takers are not affordable to corporates.
5. Locus of status – Intrapreneurs want to do the work on their own rather than delegate like
managers.
6. Failure and Mistakes – Intrapreneur hide risky projects and ideas to ensure learning
without political cost and public failure. They develop multi-disciplinary team in the
organisation and may go beyond organisation boundaries for results.
7. Goal set up – Intrapreneur are determined to do things not even asked for. They set goals
and quality standards.

What are the Steps for setting Intrapreneurship in organisation?

1. Cultural Changes – The cultural changes needed to development the spirit of
Intrapreneurship in an organisation is not possible without whole hearted commitment of its
full line of higher management. It requires prolonged commitment and investment in
arranging to expose the spirit of intrapreneurship among the employees.
2. Resource Requirement – Intrapreneurship demands commitment of lot of resources;
material as well as human. Without commitment of higher management, such resources will
not be available for any intrapreneurial venture.
3. Confidence Building – While intrapreneurship leads to rich rewards for the company,
there is very little direct benefit to the employees. Most tend to work as intrapreneur to give
expression to their creative zeal. On top of that, there is always a fair amount of risk of failure
in such ventures. Therefore, unless the employees have full support of the higher
management, they will not stick their neck out in such a venture.
4. Create Framework for Intrapreneurship – Once cultural changes have been launched,
which is a long slow process lasting approximately 2–3 years, parallelly, a framework needs
to be developed as to how the ideas will be processed and executed, how they will be funded,
how they will be monitored and how will the losses, whenever they occur will be accounted.
5. Identification of Intrapreneurial Leaders – Not everyone has entrepreneurial spirit.
Therefore, people with entrepreneurial characteristic need to be identified, selected and
trained. Along with training, a mentor/sponsor system is also needed to be developed. These
mentors from the top management will give the needed guidance and support to the
intrapreneurial leaders
6. Identify the general areas of Intrapreneurial Thrust – Every company has a priority area
where it would like to move forward. Such areas need to be identified and notified to
employees. An IT company would rarely want to foray into hardcore manufacturing sector
even if the prospects are quite promising.
7. Improve Responsiveness and Flexibility – Intrapreneurial spirit cannot sustain the usual
snail paced and ultra-cautious bureaucratic decision making process in case of capital
investments that is typical of ordinary organisations. Use of technology to speed– up decision
making process and induce flexibility in the process is required.
8. Modifying Organisational Structure – A fat hierarchical organisational structure is
inherently sluggish in decision making. A flat organisational structure is more suited to the
Intrapreneurship. Therefore, certain modifications to the organisational structure may be
needed. However, it is easier said than done.
9. Publicity of Ideas – New ideas should be well publicized. While such publicity is a morale
booster for the author of the idea and therefore encourages more people to come forward with
ideas, published ideas get scrutinized and value added by other people.
10. Tapping Customers Base for New Ideas – Customers are the richest source of new ideas.
3M Corporation, holding over 6 lakh patents, claims that almost 70% of new ideas have been
contributed by the customers themselves.
11. Create Strong Support Structure for Intrapreneurship – This is particularly important
since most people have short term focus on quarterly, half yearly and yearly numbers.
Intrapreneurial ventures are long term projects and therefore may get overlooked for funding
and other support. Similarly, appraisal of the intrapreneurs may get adversely affected since
there is nothing concrete to show quarter by quarter. Such a mishap is to be strongly guarded
against because if such a thing does happen, it would kill the initiative among the employees.
12. Create a Strong Reward System Linked to Performance of the Intrapreneurial Venture
– Notwithstanding all the OB theories to the contrary, nothing works as fast and as effectively
as tangible/material rewards system to motivate most people to put their best feet forward.
13. Create an Evaluation System – Some Intrapreneurial venture are bound to fail for
various reasons including change in external environment. Also, some ventures are likely to
astonish with their success even the most optimistic supporters. Therefore, regular evaluation
of the ventures in hand is necessary. Promising ventures might need further thrust or scaling
up in size while unsuccessful need to be wound up.

The 5 Types of Entrepreneurs

Let’s take a look at some different types of entrepreneurs, their roles, and how each type
affects the success of the business:

1. Innovators

Innovators are the types of entrepreneurs who come up with completely new ideas and turn
them into viable businesses. In most cases, these entrepreneurs change the way people think
about and do things. Such entrepreneurs tend to be extremely passionate and obsessive,
deriving their motivation from the unique nature of their business idea.

Advantages of Being An Innovate Entrepreneur:

 Get all the glory for the success of the business (and take all the arrows)
 Create the rules
 Face minimal competition during the initial days

Disadvantages of Being An Innovate Entrepreneur:

 You will need a lot of capital to bring a new idea to life

 Often face resistance from shareholders
 The timeframe for success is longer

The ability of an innovative entrepreneur to envision a new way of thinking makes them

stand out from the crowd and wildly successful in many cases however it takes significant
capital, patience and commitment to bring true innovation to life.

2. The Hustler Entrepreneur

Unlike innovators whose vision is the gas in their engine, hustlers just work harder and are
willing to get their hands dirty.  Hustlers often start small and think about effort – as opposed
to raising capital to grow their businesses. These types of entrepreneurs focus on starting
small with the goal of becoming bigger in the future.
Hustlers are motivated by their dreams and will work extremely hard to achieve them. They
tend to be very focused and will get rid of all forms of distractions, favoring risks over short-
term comfort.

A perfect example of a hustler is Mark Cuban. He started in business very young selling trash
bags, newspapers and even postage stamps and this hustle later created a goldmine which was
acquired by internet giant Yahoo!

Advantages of Being A Hustler

 They will outwork most

 Tend to have thick skin – they don’t give up easily
 See disappointment and rejection as just a step in the process

Disadvantages of Being A Hustler

 Usually prone to burn out

 Wear out their team members who don’t have the same work ethic
 Often don’t see the value of raising capital as opposed to just working harder

Even though many hustlers never give up, a lot of them are willing to try anything to succeed
which unfortunately means that they have a lot of hits and misses. Achieving their dreams
takes a lot longer than most other types of entrepreneurs.

3. Imitators

Imitators are the types of entrepreneurs who copy certain business ideas and improve upon
them. They are always looking for ways to make a particular product better so as to gain an
upper hand in the market.

Advantages of Imitators

 Refining a business idea is easier and less stressful

 You can easily benchmark your performance with the original idea
 Can learn and avoid mistakes that were made by the originator

Disadvantages of Imitators

 Their ideas are always compared to the original idea

 Always have to play catch-up

Taking an existing idea and refining and improving it can be a great way to develop a
business.
4. Researcher

Even after having an idea, researchers will take their time to gather all the relevant
information about it. To them, failure is not an option because they have analyzed the idea
from all angles.

Researcher entrepreneurs usually believe in starting a business that has high chances of
succeeding because they have put in detailed work to understand all aspects.

As a result, these types of entrepreneurs usually take a lot of time to launch products to make
decisions because they need the foundation of deep understanding. These entrepreneurs rely
much more on data and facts than instincts and intuition.

For a researcher, there should be no room for making mistakes.

Advantages of Being a Researcher Entrepreneur

 Plan for as many contingencies as possible

 Write detailed, well-thought-out business and financial plans
 Focus on data and information rather than gut feeling
 Won’t start unless they feel like they know the market
 Will minimize the chances of failing in the business

Disadvantages of Being a Researcher Entrepreneur

 Typically moves slow

 Doesn’t like risk and that can hamper progress in a new venture

Even though these types of entrepreneurs spend a lot of time researching and digging into the
data to ensure the success of their business, they can fall into the habit of obsessing over the
numbers and focusing less on the running of the business.

Comparison between Entrepreneur and Intrapreneur

BASIS FOR
ENTREPRENEUR INTRAPRENEUR
COMPARISON

Meaning Entrepreneur refers to a Intrapreneur refers to an

person who set up his own employee of the organization who
business with a new idea or is in charge of undertaking
concept. innovations in product, service,
process etc.
 BASIS FOR
ENTREPRENEUR INTRAPRENEUR
COMPARISON

Approach Intuitive Restorative

Resources Uses own resources. Use resources provided by the

company.

Capital Raised by him. Financed by the company.

Enterprise Newly established An existing one

Dependency Independent Dependent

Risk Borne by the entrepreneur Taken by the company.

himself.

Works for Creating a leading position in Change and renew the existing
the market. organizational system and
culture.

----------------------------------------------All The Best------------------------------------------------------