Faculty of Business, Finance, and

Hospitality

ENTREPRENEURSHIP
TOPIC 2 (A) : Innovation

Prepared by: Miss Nabilla

If its important to you, you will find a way. If its not, you’ll find an excuse.
Copyright © MAHSA UNIVERSITY
Definition
“Innovation is the specific tool of entrepreneurs, the means by which they exploit change as an
opportunity for a different business or service.”
Drucker, P. F. (1985)

”Innovation = new idea + implementation + creating value”

Ståhle, P., Sotarauta, M. & Pöyhönen, A. (2004)

”Companies achieve competitive advantage through acts of innovation. They approach innovation
in its broadest sense, including both new technologies and new ways of doing things”
Porter M. E. (1990)

“Innovation is the successful exploitation of new ideas”

Innovation Unit, UK Department of Trade and Industry (2004)
A process by which a product/service takes root in simple applications at the bottom of a
market and then moves up market, eventually displacing established competitors.
(Christenson, 2015)

Examples:
Concept
Generating a thorough understanding of the customer, his/her pain points and jobs-to-
be-done.

A process of successive rapid development of:-

● Highly creative ideation

● Prototyping

● Testing

● Further development of the ideas

Into groundbreaking, innovative customer-delighting product and service concepts.

Importance of innovation

(Cleverism, 2017)
Problem solving

- opening doors for solutions to

problems both within and
outside your company

- Simple conventional linear

planning and problem solving
processes using the same
thinking

- does not result in visionary,

creative ideas to solve
problems
Adaptations to change
Change is inevitable and innovation is the method to not only keep your business
afloat, but also ensure that it remains relevant and profitable

- Knowing how to think differently and analytically, as well as knowing how to

think at critical, creative, and associative levels

- Crucial in transforming the business which is able to coalesce and keep pace
with the innovation culture

- Example: transformation of the NOKIA phone

Maximizing on Globalization
Entrepreneurship is becoming a global movement and entrepreneurship is growing
especially in emerging markets such as China and India

governments realizing that entrepreneurship is a vehicle of economic success and

prosperity

organizations realizing that they can harness the collective genius of their people
through building an entrepreneurship capability

‘ Innovation is an enabler of entrepreneurship’ (ImagineNation, 2016)

 Competition
To retain or establish a company’s cutting edge to strive to be at the top position in
the industry, strategical competition using smart strategic moves matters centrally
to create disruptive, new and uncontested markets.

- By which, emerging business paradigm incorporate start-up methodologies

(Eg. blue ocean strategy)

- as a way of innovating businesses to create increased value for customers

that they value and cherish
Customer’s preference
Customers have a variety of products and services available to them and is well
informed of their choices

- Therefore, companies must keep themselves updated with these evolving

tastes and also forge new ways of satisfying the customer.
 Types of Innovation
Process
Improves interrelated
activities that combine to
produce a value-added
result for customer
Examples: Henry Hord -
first moving assembly line
Product/ Service Service
New innovation products High level of interaction
are the result of a new with customers of
product development healthcare, banking,
process government or
education
Examples: Power
window of a car Examples: Bank’s
mobile app
How Do Innovation Emerge??
Innovations can be classified in 3 basic ways according to the level of impact they
have and the pace by which emerge:

1. Incremental - make incremental improvement to an existing product or

service
2. Radical // Breakthrough - create entirely new trajectories of products or services

3. Disruptive - triggers the creation of a completely new market based on customer

perceptions that it works ‘good enough’ and provides satisfactory value
 Sources of innovation

Innovation and Entrepreneurship

~ Peter Drucker (2012)
Dimensions of innovation ( 4Ps of Innovation space)
1. Product: changes in the things which an organization offers

Dimensions Incremental (doing better) Radical (something new)

Product New version of the car Hybrid car or electric car

(2008 model vs. 2017
model)

(KNOWLEDGE-INNOVATION, 2016)
2. Process: changes in the organization’s process// changes in the ways in which
organization is created and delivered

Dimensions Incremental (doing better) Radical (something new)

Process Improved banking services at Online banking

branch banks

(KNOWLEDGE-INNOVATION, 2016)
3. Position: changes in the context in which the products/ services are introduced

Dimensions Incremental (doing better) Radical (something new)

Position Airlines segmenting service Low-cost airlines opening

offering for different up air travel to those
passenger groups (eg: previously unable to afford it
premium economy)

(KNOWLEDGE-INNOVATION, 2016)
 4. paradigm：changes in the underlying mental models which frame what the
organization does
Dimensions Incremental (doing better) Radical (something new)

Paradigm Redefining the home appliance Redefining industries (eg:

market in terms of high Amazon-retailing, Google-
performance engineered advertising, Skype-telecoms
products (eg: Dyson vacuum through online, e-commerce)
cleaner)

(KNOWLEDGE-INNOVATION, 2016)
Principle of innovation
1. Design with the User

Develop context appropriate solutions informed by user needs.

Include all user groups in planning, development, implementation and assessment.

Design solutions that enhance existing workflows and plan for organizational adaptation.

2. Understand the Existing Ecosystem

Participate in networks and communities of like-minded practitioners.

Align to existing technological, legal, and regulatory policies.

3. Design for Scale

Design for scale from the start, and assess and mitigate dependencies

that might limit ability to scale.

Employ a “systems” approach to design, considering implications of

design beyond an immediate project.

 4. Build for Sustainability
Plan for sustainability from the start

Engage with local governments to ensure integration into national strategy and identify

high-level government advocates.

5. Be Data Driven

Design projects so that impact can be measured at discrete milestones with a focus on outcomes rather

than outputs.
6. Use Open Source

Adopt and expand existing open standards.

Open data and functionalities and expose them in documented APIs (Application

Programming Interfaces) where use by a larger community is possible.

7. Reuse and Improve

Use, modify and extend existing tools, platforms, and frameworks when possible.

Develop in modular ways favoring approaches that are interoperable over those that are

monolithic by design. 8. Do no harm

Assess and mitigate risks to the security of users and their data.

Consider the context and needs for privacy of personally identifiable

information when designing solutions and mitigate accordingly.

9. Be Collaborative

Engage diverse expertise across disciplines and industries at all stages.

Work across sector silos to create coordinated and more holistic approaches.

Share widely the document work, results, processes and best practices.
Overcome Obstacles Of Innovation
Types of obstacles:

1. Wrong Culture & Value

2. Lack of follow through

3. Limited funding and resources

4. Lack of time

5. Low adoption rate

6. Keeping up with fast-paced changes

7. Imbalance between speed and data collection (Sarah. K, 2015) & (Nicole. F, 2015)
1. Wrong Culture & Value

a. Fear of failure

b. Exp: ‘GOOGLE’ reinforce innovation by

i. Allowing employees spend 20% of their time working on their own ideas

ii. Keep several active email lists to collect ideas from all employees.

2. Lack of follow through

a. Easy to get idea but hard to apply the idea

b. Townsend said: the person who dedicate to innovation is generally “separate from your main line business unit that has
core incentives of pushing market share and winning against the competition”.

3. Limited funding and resources

a. Limited funding > fail innovation

b. Previously > Prototype approach (no investment or staff)

c. Now > Funding (central concern)

4. Lack of time

a. Companies often focus more in short term performance criteria, thus no time for innovative thinking and collaboration.

b. Leaders should be aware of time for investment if they want to see the company become more innovative.
5. Low adoption rate

a. “Lack of belief in the approach itself”

6. Keeping up with fast paced changes

a. Not easy to keep up with the fast pace of technology especially large company.

b. Therefore, targeting department by department in a greater company may reap benefits.

7. Imbalance between speed and data collection

a. Exp: Adam Tishman (co-founder of customized mattress company, HELIX SHEEP)

think that it is hard to keep up with the speed of the incoming data, data collection and
analysation > affect effectiveness of innovation.

b. Therefore, determine the most important data to be hone is the most important way to
balance between speed and data collection.
References
BUYSE, K. (2012). Five generations of innovation models. [Online] Available from:

http://strategicongr.wordpress.com/2012/09/29/rothwells-generations-innovation-models/
[Accessed: 14th July 2017]

CLEVERISM. (2017) The Innovation Process: Definition, Models and Tips. [Online] Available
from: https://www.cleverism.com/innovation-process-definition-models-tips/ [Accessed: 14th July
2017].

DRUKER, P. (2012) Innovation and Entrepreneurship. Routledge: New York. [Online] Available
from:
https://books.google.com.my/books?id=OiuDBAAAQBAJ&pg=PT6&dq=Innovation+and+Entrepre
neurship+1985+DRUCKER&source=gbs_selected_pages&cad=3#v=onepage&q=Innovation%20
and%20Entrepreneurship%201985%20DRUCKER&f=false [Accessed: 13th July 2017]