Lecture week 2

The main difference between innovation and entrepreneurship is that innovation involves
introducing something new. This can be a new business model, product, idea, or service. On the
other hand, entrepreneurship involves turning a great idea into a business opportunity

Innovation in Entrepreneurship can open the doors of various opportunities by helping the
business to keep up with the current trends.

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Innovation needs(combination of creativity & management)
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THE PRACTICE OF INNOVATION

Innovation is the specific tool of entrepreneurs, the means by which they exploit change as an
opportunity for a different business or a different service. It is capable of being presented as a
discipline, capable of being learned, capable of being practiced. Entrepreneurs need to search
purposefully for the sources of innovation, the changes and their symptoms that indicate
opportunities for successful innovation. And they need to know and to apply the principles of
successful innovation.

Importance of innovation
innovation is basically the replacement or improvement of something. Innovation is the particular
instrument of entrepreneurs with the help of which an individual exploits the changes as a chance
for a different business. An Innovative Entrepreneur is one who has the ability to tackle to produce
innovative products to meet the market's demands and trends. Innovation in Entrepreneur plays a
role in many ways like in:

1. Creative Development
Innovation enhances the nature, creativity, and design thinking process of a brand. A new business
can attain the height of success by learning the steps of creativeness. Innovation in Entrepreneurship
can open the doors of various opportunities by helping the business to keep up with the current
trends.

2. Persistent Improvement
Innovation gives organizational durability when you are making continual improvements. A good
entrepreneur will realize the importance of innovation, which will help in increasing the creativity
of business.

3. Reinforcing Your Brand

The process of development branding discloses the details, which helps the HR innovation leaders
to learn different ways of being more innovative. This thing is highly crucial because it is among the
main drivers for triumph.

4. Making the best of your existing products

We know that for an entrepreneur, it is important to introduce new products but more than that, to
maintain the innovation culture making the best of old products is more important.
Improvement of existing products can help a company in increasing their efficiency, profits, etc.
With the help of enhancing the design thinking process and with continuous innovative
improvements, a company can attract better staff, improving a business's health.

5. Responding to Trends and Competition

HR innovation responds to the current success and current needs and focuses on predicting future
trends. With the help of innovation in entrepreneurship, responding to future trends can help an
entrepreneur's business to come with solutions to make their business grow more.

6. Having a Unique Selling Point

Consumers generally consider innovation culture as something that adds some interesting values to
its products. Innovation in entrepreneurship can add advantages that can help the company in
getting positive exposure.

7. The Use of Social Media

With social media's help in an organization's innovation campaign, one can attract a wide range of
ideas using social media. Social can be proved great for motivating, managing, and getting focused
on your business.
Social media can help a business to know what are the basic needs of customers, and we can
improve our products to fulfill their demands to make our business grow progressively.
Many companies have started arriving with various unique ideas to attract customers and meet their
demands. With this thing, competition is also getting a new height, and in this era, it is not easy for
an entrepreneur to survive. For an entrepreneur, it can get difficult to survive without any innovative
idea, a good team, and various attractive deals.
To make your business survive and grow in this market, it is important to have the right skills with
great knowledge to apply innovation to your business. And this thing can only be attained when one
has gone to the right institute.
Leading in the list of elite institutions is MIT ID Innovation, which offers industry-centric skills and
knowledge for students. So, if you also want to lead the world with your unique ideas, then MIT ID
Innovation institute can surely help you with this.

What is just-in-time in entrepreneurship?

Just-in-time, or JIT, is an inventory management method in which goods are received from
suppliers only as they are needed. The main objective of this method is to reduce inventory
holding costs and increase inventory turnover.

What are the 4 steps in JIT process? Read on for our four steps to success.
Step 1: Ensure plant efficiency. Complete plant efficiency is at the core of JIT manufacturing. ...
Step 2: Maintain quality control. Effective traceability methods are vital for ensuring a JIT production
process. ...
Step 3: choose the right equipment. ...
Step 4: Secure your supply chain.

Example of A just-in-time (JIT) inventory system is a management strategy that has a company receive
goods as close as possible to when they are actually needed. So, if a car assembly plant needs to install
airbags, it does not keep a stock of airbags on its shelves but receives them as those cars come onto the
assembly line
  Advantages of JIT Rather than producing goods and supplying customers from stock,
 JIT processes focus on producing exactly the amount you need at exactly the time your
customers need it.
 Cash Flow Management. Just-in-time inventory helps you to manage cash flow. ...
 Reduces Clutter and Waste. Just-in-time inventory reduces the clutter that is an inevitable result
of keeping too much stock on hand. ...

Disadvantage:

 Requires Thought and Strategy. ...

 Proactive Management Helps.
 Risk of running out of stock: By not carrying much stock, it is imperative you have the correct
procedures in place to ensure stock can become readily available, and quickly.

Fig Problems in just in time implementation

What is TQM in entrepreneurship?

A core definition of total quality management (TQM) describes a management approach to long-term
success through customer satisfaction. In a TQM effort, all members of an organization participate in
improving processes, products, services, and the culture in which they work.

What are the 4 principles of TQM?

 Customer focus,
 employee involvement,
 integrated system,
  process-centric approach,
 systematic flow,
 continual efforts,
 fact-based decision-making, and
 Relationship management

American statistician Dr. W. Edwards Deming, who proposed sampling-based quality inspection
through his Statistical Quality Control theory, first conceptualized the TQM strategy. He also contributed
toward introducing quality control in the quality management measures of the Japanese manufacturers
in the 1950s post-World War Second. It became popularized as a total quality management concept in
the later years.

TQM enables organizations to align their workforce with the manufacturing processes to find and
eliminate errors to improve the overall quality of their outputs. In doing so, the top management,
middle management, and executives assess the end products from every aspect and devise quality
production plans accordingly. To prevent or eliminate errors caused by human mistake or faulty system,
they take various measures, such as:

 Detect the issue and prevent it from occurring.

 Pass it on to the value-added chain for further quality inspection.
 Stop the production if the errors recur at any stage.
 Deploy the technological support.

Key Elements of Total Quality

Management

Aside from that, TQM assists

organizations in streamlining
supply chain management and
checking for the legal
compliance of the products
manufactured. In short, they
want to make sure that the
final product is up to the
market standards, legal
requirements, and customer
expectations.
Principles of TQM

#1 – Customer Focus

Every organization strives to serve only one purpose, i.e., customer satisfaction through quality products
and services. Hence, the first among the total quality management principles is customer focus. It means
the end product must meet the demands and needs of the customers.

#2 – Employee Involvement

When implementing TQM, organizations need to create an environment where their employees will feel
empowered. They, along with management, become responsible for assessing the quality of the
products and services at their levels. Here, organizational communication plays a vital role in boosting
employee morale.

#3 – Integrated System

Having an integrated system is a must for an organization to implement a TQM strategy across its
business processes. Therefore, incorporating quality standards like ISO 9000 standards could help
produce quality products and services. It will lead to meeting or exceeding consumer expectations as
well.

#4 – Process-Centric Approach

A product or service reaches the market after passing through different processes. It means it is
monitored and assessed at each production level and not only at the final stage. Process-led thinking is a
sign of effective TQM.
#5 – Systematic Flow

TQM is all about strategic planning to achieve quality excellence and business objectives. Thus,
considering a systemic flow would ensure the products and services are passing through every stage in
the quality production process.

#6 – Continual Efforts

Quality improvement should be a continuous process. Once done and then left would only mean gradual
deterioration in the manufacturing standards. For the TQM approach to prove effective, people at every
level need to be alert in being regular with quality checking.

#7 – Factual Decision-Making

The organization must make fact-based decisions because every employee is participating in the quality
evaluation processes. Analyzing the organizational performance using performance data, such as sales,
profit, and customer retention could result in more accurate decision-making.

#8 – Relationship Management

A well-maintained relation with stakeholders like customers and employees will ensure proper quality
control procedures and honest feedback. With TQM, organizations can establish effective
communication with all of them and implement result-oriented changes.

Benefits of TQM

Let us have a quick look at the benefits of the TQM:

 Error prevention and elimination

 Guaranteed customer retention
 Reduced service costs and increased profits
 Feedback from all stakeholders
 Involvement and empowerment of employees at every production level
 Improved market image
 Customers becoming the main focus
 Meeting consumer expectations leads to increased customer satisfaction
 Improved organizational culture
 Enhanced stakeholder relationships
 Boost in employee morale
 Continuous efforts to meet the quality standards
 Increased stakeholder value
 Innovative strategies and creative ideas
What are the major types of innovation?
Essentially, there are three types of innovation: radical, incremental, and disruptive. They may vary
depending on the niche, market, brand essence, services, and products offered.
If your company wants to innovate, it's important to know these varieties. Find out what characterizes
each of them:

1. Radical innovation
As the name suggests, a radical innovation really changes the circumstances of a brand, whether in
terms of market or of business dynamics.
It can occur due to a complete change in a company's positioning, work method, processes, services, and
products offered, or how it relates to customers.
An example of radical innovation would be Apple's iPhone. When it was released, smartphones already
existed, but Apple included features that changed the market and made it more popular.
2. Incremental innovation
Another type of innovation is incremental innovation. It adds new features to a product, brand, or
production methods without promoting a very drastic change.
It's usually an evolution of an innovation already implemented by the brand that complements and
offers improvements, be it to employees, customers, or features of a business.
An example of incremental innovation is Gmail, which was created with the purpose of sending emails
quickly – but over time, different features were added to improve the customer experience and make it
more useful and competitive.
3. Disruptive innovation
Technological and behavioral changes have favored the emergence of disruptive innovation in recent
decades.
This type of innovation follows the market more than a specific brand, product, or service. It can be
leveraged by something a company has offered and, as a result, made their name, but, in general, it's
a scalable change that reaches many people at the same time.

Examples of disruptive innovation include Netflix, as the market used to rely on companies like
Blockbuster for movies and TV series. Netflix started offering DVD-by-mail rental services but decided
to innovate. It started offering video streaming services through a monthly subscription and, in doing so,
drove Blockbuster out of the market. In addition to being innovative, this also gave Netflix a predictable
monthly revenue.
Examples of innovation
Now that you know the types of innovation, we will show some examples so that you understand the
topic in practice. Let's begin!
 Product innovation
Easily noticed, product innovation actually brings something new to the market. Television, for example,
was something innovative when it was invented, bringing image, sound, and entertainment into people's
houses.
It was a radical innovation that, with acceptance of the public, became disruptive and over time began
to rely on incremental innovation. The whole world followed the release of different kinds of TV: color,
cable, flat-screen, and, today, smart TV.
 Service innovation
A visible example of service innovation is food delivery. For a long time, in order to eat something from a
restaurant, customers needed to walk into the place or order takeout.
That's when the market innovated and offered delivery service so that customers could order whatever
they wanted with just a phone call. Over time, it became possible to order food on websites, and now we
can order food on mobile apps at our fingertips.
 Innovation in production processes
Here it is interesting to highlight environmental awareness. Many cosmetic brands, for example,
innovate by implementing cruelty-free processes that don’t involve animals.
 Innovation in business model
Innovation in the business model is very common in startups. A simple example would be marketplaces.
Virtual stores like Amazon mediate between buyers and sellers.
Another example would be virtual banks. Today, there are many financial institutions with no physical
facilities for customer service and whose transactions are all performed online.
 Technological innovation
Technological innovation is the most evident kind of innovation. The advance of technology brings about
many opportunities. Thinking back a few centuries, the Industrial Revolution springs to mind as a good
example, since it changed production methods in companies, work methods, and even workers’ lives.
In a modern context, though, the primary examples are the internet and smartphones, which
revolutionized not only products and services, but also society's behavior.
Technological innovation, as we see in the case of Industry 4.0 technologies, enables us to take steps
that would otherwise be unachievable with human power alone.
 Logistical innovation
For a long time, it would take up to a month to receive a letter by mail. For international products, it
would take an average of three months. To change this, companies and distributors innovated in
logistics, creating storage points and strategic distribution centers. Today, there are apps to hire delivery
services and even delivery drones!
 Marketing innovation
Ways of acquiring new customers have evolved, and we're seeing more and more
innovations in marketing. Sometimes, the way you advertise can be innovative. With the creation of
social media, for example, lots of brands innovated by advertising on those platforms instead of
newspapers and television.
 Organizational innovation
Organizational innovation brings several other kinds of innovation. They concern structural changes
and practices that improve productivity, services, products, and processes.
Home offices are an example of organizational innovation, as are management software, customer service
chatbots, and trainee programs in which employees get to know all departments of a company before
actually working in one of them.

What are the stages of the innovation process?

Being innovative may seem like something unusual that requires you to be extremely lucky or a genius.
But it can actually occur in any company, big or small, and in any sector.
The stages of the innovation process are simple, and to innovate you must have a system and repetition.
Learn about them here:

Generation of new ideas: What are the opportunities in the field? What hasn't been done yet and would
actually change a product, service, or company?

Evaluation: What's necessary to put this into practice, is it possible, and how do you make it viable?

Experimentation: It's vital to test your ideas and identify what really works and what needs to be
improved.

Marketing: Has it reached the sweet spot? It's time to offer to customers what before was just an internal
project.
Follow-up: Keeping track of what has been implemented is important to understand public acceptance,
audience, and strategy. To do that, feedback is essential.

All stages need to be based on technology. This makes it possible to speed up processes and document
versions prior to the innovation, monitor results, compare versions, test, and assess overall performance.

How do you implement innovation in a company?

Have you ever heard of "selling an idea"? Implementing innovation is related to this.
It's about showing employees, customers, and partners the reasoning behind the innovation, how it works,
and why it's the best path to follow.
From there, you need to identify what works best for the company, be open to any necessary adaptations,
and promote acceptance of what is new.
Here are some tips on how to effectively bring innovation to your business.

 Involve the whole team

 Treat innovation as a strategic element
 Invest in internal entrepreneurship development
 Empower your employees
 Create an environment that favors innovation
 Develop an innovation process
 Start a high-impact transformation
 Follow the example of large companies

Use technology to support innovation

Along with all the strategies mentioned to realize innovation in your business, it's important to have
technological tools that support its implementation.
With digital transformation,
 companies can automate all processes and, as a result, have more control over their current
situation and how they perform after innovation.
 Management software allows you to collect and analyze data so that innovations are based on
consistent information.
 To put this into practice, one option is to follow the logic of Business Process Management
(BPM), which changes a company's culture to think about processes in an integrated and cyclical
manner, focusing on continuous improvement.
 For this to happen, you can use tools like a BPMS (Business Process Management Suite) to
automate and execute processes in a digital environment.

The risks and rewards of innovation

Guide

Innovation is a complex process with many different stages and inherent risks. It will often
require an investment of time and money before any positive effects become visible.

Risks of innovation
You can face several types of innovation risks in your business. Risks can be:

 operational - eg failing to meet your quality, cost or scheduling requirements

 commercial - eg failing to attract enough customers
  financial - eg investing in unsuccessful innovation projects

As part of any innovation process, you should strive to understand, evaluate and manage risk.
To reduce the risks, you can consider the following:

 Professional advice - consultants, industry professionals or contacts in business

networks can provide valuable insight into your related markets.
 Joint ventures - sharing the development process with a business partner spreads the
risk, and means you can benefit from their expertise and resources. See joint ventures
and business partnerships.
 Licensing - allowing somebody else to bear the risks of developing your idea in return
for a fee and royalties.
 Grants - these could help to spread financial risk and allow you to develop your system
to a higher quality, reducing operational risk. See innovation, research and
development grants.
 Incremental innovations - looking for ways to enhance your existing offering. New
ideas for low-cost opportunities may come from customer feedback, employees, or
networking with other businesses.
 Ongoing research - keep up to date with market research and technological
developments that may influence your business.
To find out how to identify and manage risk in your business, see managing risk.

Protecting your business and your innovations

When you innovate, it's important to protect all your business assets - not just premises and
equipment, but also intangible assets such as knowledge, motivation, vision and intellectual
property (IP).

Although these may be difficult to quantify, you can still protect them. You should assess what
your assets may be and how you can protect them. Read more about protecting intellectual
property.

Innovation Come From? The Seven Sources of Innovation

 The Unexpected. This is indeed the Eureka moment where something unexpected happens that
leads to a new product or service. ...
 Incongruities. ...
 Process Needs. ...
 Industry and Market Structure. ...
 Demographics. ...
 Changes in Perception. ...
 New Knowledge.
innovations, however, especially the successful ones, result from a conscious, purposeful search for
innovation opportunities, which are found only in a few situations.

Four such areas of opportunity exist within a company or industry: unexpected occurrences,
incongruities, process needs, and industry and market changes.

Three additional sources of opportunity exist outside a company in its social and intellectual
environment: demographic changes, changes in perception, and new knowledge.

True, these sources overlap, different as they may be in the nature of their risk, difficulty, and
complexity, and the potential for innovation may well lie in more than one area at a time. But together,
they account for the great majority of all innovation opportunities.

1. Unexpected Occurrences

The unexpected failure may be an equally important source of innovation opportunities. Everyone
knows about the Ford Edsel as the biggest new-car failure in automotive history. What very few people
seem to know, however, is that the Edsel’s failure was the foundation for much of the company’s later
success. Ford planned the Edsel, the most carefully designed car to that point in American automotive
history, to give the company a full product line with which to compete with General Motors. When it
bombed, despite all the planning, market research, and design that had gone into it, Ford realized that
something was happening in the automobile market that ran counter to the basic assumptions on which
GM and everyone else had been designing and marketing cars. No longer was the market segmented
primarily by income groups; the new principle of segmentation was what we now call “lifestyles.” Ford’s
response was the Mustang, a car that gave the company a distinct personality and reestablished it as an
industry leader.

This is a caricature, to be sure, but it illustrates the attitude managers often take to the unexpected: “It
should not have happened.” Corporate reporting systems further ingrain this reaction, for they draw
attention away from unanticipated possibilities. The typical monthly or quarterly report has on its first
page a list of problems—that is, the areas where results fall short of expectations. Such information is
needed, of course, to help prevent deterioration of performance. But it also suppresses the recognition
of new opportunities. The first acknowledgment of a possible opportunity usually applies to an area in
which a company does better than budgeted. Thus genuinely entrepreneurial businesses have two “first
pages”—a problem page and an opportunity page—and managers spend equal time on both.

2. Incongruities

An incongruity is a discrepancy, a dissonance, between what is and what 'ought' to be, or between what
is and what everybody assumes it to be. We may not understand the reason for it; indeed, we often
cannot figure it out. Still, an incongruity is a symptom of an opportunity to innovate.
An example of an incongruity between perceived expectations and actual customer expectations could
be when many companies were trying to create smaller MP3 players with more functionality and
storage. People were not necessarily after the increased specification of the MP3 player product though
as now people have everything in their mobile phones

An incongruity between expectations and results can also open up possibilities for innovation. For 50
years after the turn of the century, shipbuilders and shipping companies worked hard both to make
ships faster and to lower their fuel consumption. Even so, the more successful they were in boosting
speed and trimming their fuel needs, the worse the economics of ocean freighters became. By 1950 or
so, the ocean freighter was dying, if not already dead.

All that was wrong, however, was an incongruity between the industry’s assumptions and its realities.
The real costs did not come from doing work (that is, being at sea) but from not doing work (that is,
sitting idle in port). Once managers understood where costs truly lay, the innovations were obvious: the
roll-on and roll-off ship and the container ship. These solutions, which involved old technology, simply
applied to the ocean freighter what railroads and truckers had been using for 30 years. A shift in
viewpoint, not in technology, totally changed the economics of ocean shipping and turned it into one of
the major growth industries of the last 20 to 30 years

3. Process Needs

Anyone who has ever driven in Japan knows that the country has no modern highway system. Its roads
still follow the paths laid down for—or by—oxcarts in the tenth century. What makes the system work
for automobiles and trucks is an adaptation of the reflector used on American highways since the early
1930s. The reflector lets each car see which other cars are approaching from any one of a half-dozen
directions. This minor invention, which enables traffic to move smoothly and with a minimum of
accidents, exploited a process need.

What we now call the media had its origin in two innovations developed around 1890 in response to
process needs. One was Ottmar Mergenthaler’s Linotype, which made it possible to produce
newspapers quickly and in large volume. The other was a social innovation, modern advertising,
invented by the first true newspaper publishers, Adolph Ochs of the New York Times, Joseph Pulitzer of
the New York World, and William Randolph Hearst. Advertising made it possible for them to distribute
news practically free of charge, with the profit coming from marketing.

4. Industry and Market Changes

When an industry grows quickly—the critical figure seems to be in the neighborhood of 40% growth in
ten years or less—its structure changes. Established companies, concentrating on defending what they
already have, tend not to counterattack when a newcomer challenges them. Indeed, when market or
industry structures change, traditional industry leaders again and again neglect the fastest growing
market segments. New opportunities rarely fit the way the industry has always approached the market,
defined it, or organized to serve it. Innovators therefore have a good chance of being left alone for a
long time.

5. Demographic Changes

Managers have known for a long time that demographics matter, but they have always believed that
population statistics change slowly. In this century, however, they don’t. Indeed, the innovation
opportunities made possible by changes in the numbers of people—and in their age distribution,
education, occupations, and geographic location—are among the most rewarding and least risky of
entrepreneurial pursuits.

6. Changes in Perception

“The glass is half full” and “The glass is half empty” are descriptions of the same phenomenon
but have vastly different meanings. Changing a manager’s perception of a glass from half full to
half empty opens up big innovation opportunities.

A change in perception does not alter facts. It changes their meaning, though—and very
quickly. It took less than two years for the computer to change from being perceived as a threat
and as something only big businesses would use to something one buys for doing income tax.
Economics do not necessarily dictate such a change; in fact, they may be irrelevant. What
determines whether people see a glass as half full or half empty is mood rather than fact, and a
change in mood often defies quantification. But it is not exotic. It is concrete. It can be defined.
It can be tested. And it can be exploited for innovation opportunity.

7. New Knowledge

Among history-making innovations, those that are based on new knowledge—whether

scientific, technical, or social—rank high. They are the super-stars of entrepreneurship; they get
the publicity and the money. They are what people usually mean when they talk of innovation,
although not all innovations based on knowledge are important.

Knowledge-based innovations differ from all others in the time they take, in their casualty rates,
and in their predictability, as well as in the challenges they pose to entrepreneurs. Like most
superstars, they can be temperamental, capricious, and hard to direct. They have, for instance,
the longest lead time of all innovations. There is a protracted span between the emergence of
new knowledge and its distillation into usable technology. Then there is another long period
before this new technology appears in the marketplace in products, processes, o r services.
Overall, the lead time involved is something like 50 years, a figure that has not shortened
appreciably throughout history.