Research, Innovation

and Industrialisation
Prepared
By
Dr. R.F Masaire
 ENTREPRENEUR

• “one who brings resources, labour and other assets into combinations that make
their value greater than before and also one who introduces changes, innovations
and new order---”Hisrich and Peters (2008)
• “someone who innovates a process or product for the first time,--opens up new
source of raw materials or factors of production and creates a new industrial
structure” Schumpeter (1946)
• “an entrepreneur is an individual who establishes and manages business for the
principal purpose of profit and growth. The entrepreneur is principally
characterised by innovative behaviour and will employ strategic management
practices in the business” Carland (2014)
 Meaning of Definitions

• Capital investment and growth/accumulation and inherent risk

• Managerial co-ordination in the pursuit of profit
• Creativity-exploring new ways of solving a problem
• Innovation or invention
• Strategic management-opportunity identification and long term management
• Therefore entrepreneurship goes beyond owning a small business
Entrepreneurship Elements
 ELEMENTS OF ENTREPRENEURSHIP

• The entrepreneur- human capital and social capital

• The opportunity-a gap in the market that provides a source of profit
• Organisation/management ability- the ability to come up with a relevant structure
that facilitates growth
• Resources- mobilising the necessary resources: labour, finances, etc.
 Human Capital
• Knowledge- this can either be acquired or learned.
Acquired is that which we learn in informal environments, while learned is that
which we accumulate in formal environments
Social capital- this is the social networks one creates
 Human Capital Cont’d

• Social networks are a result of one’s socialisation processes-family, friends, etc.

 Human Capital Cont’d

• Opportunity= the difference between the desired and the prevailing situation
Should be sustainable
Should be profitable
Should have a relative advantage over existing ones
 Human Capital Cont’d

Should be compatible with society’s values and beliefs

Should not inflict injuries to potential buyers
Should be easy to communicate the benefits of the product/service
Should be that which can be produced and marketed by the organisation better than
competitors
 Management abilities

• This refers to the process of achieving set objectives through planning, organising,
leading and controlling organisational resources.
Managing also includes the ability to manage the organisation strategically- to
ensure long term survival
Team building capabilities are also critical
 Resource Mobilisation
• This is the ability to bring together all the required resources to ensure that the
business takes off-
Financial resources
Manpower resources
Equipment
 The Environment
• This refers to the context in which entrepreneurial activities occur
• That context must be supportive
• It includes:
The general environment-PESTLE
The institutions- universities, financial institutions; research institutions
Corporates, public institutions, etc.
 Types of Entrepreneurs
• Start-up entrepreneurs-those who venture into setting up business ventures in any
sector :
Habitual= owners of a life time, sometimes in one or in several businesses, mainly
for personal satisfaction. Income is secondary. Usually there is no succession
planning.
 Types of Entrepreneurs Cont’d
Growth entrepreneurs= life time owners seeking major success-legacy
Harvest entrepreneurs= business owners with an exit plan
Spiral/helical= alternate growth and stability periods determined by personal and
family needs
 Types of Entrepreneurs Cont’d
Occasional= those with another job and pursue entrepreneurship periodically
 Types of Entrepreneurs Cont’d
• Corporate entrepreneurs- those who engage in entrepreneurial activities within
their employment (employees)
• Social entrepreneurs-engage in entrepreneurship to improve societies for no profit
 Types of Entrepreneurs Cont’d
• Technopreneurs-engage in entrepreneurial activities in the field of technology:
High technology ventures in internet, life sciences and bio-tech; ICTs and
electronics
Service firms where technology is critical to their mission- FEDEX, e-bay, e-
learning, etc.
 Some popular technopreneurs
• Bill Gates- Microsoft
• Mark Zuckerberg-Facebook
• Jack Dorsey- Twitter
• Steve Jobs (late)- Apple
• Kevin Systrom- Instagram
• Larry Page- Google
• Ellon Musk- Tesla
 Significance of entrepreneurship

• Opportunity to create own destiny

• Opportunity to make a difference
• Opportunity to reach full potential- self actualisation
• Opportunity to make a profit
• Opportunity to do what to one enjoys and have fun
 Significance of entrepreneurship Cont’d

• Employment creation
• Seedbed for large businesses and technology advances
• Linkages with large enterprises
• Creates national competitiveness
• Contributes to GDP
 Drawbacks of entrepreneurship
• Uncertain incomes
• Risk of failure and loss of entire investment
• Increased responsibility
• Lower quality of life until business is firmly established
• Need to be knowledgeable in all business areas
 Approaches to Entrepreneurship

• The macro view- the approach argues that the success or otherwise of
entrepreneurial ventures is based on external processes (External locus of control)
• The micro view- it argues that the potential entrepreneur has the ability to control
the outcomes of major influences (internal locus of control)
 The Macro View
The environmental school- focuses on the external forces that shape a
potential entrepreneur
 Institutions
 Morals and values
 Government policies
 Work environment
 Social networks
 The Macro View Cont’d
The financial/capital school- focus is on availing capital resources
 Financial management is viewed as the pillar for entrepreneurial growth
Setting up of financial institutions
Concessionary interest rates
Special fund for specific sectors
Grants to specific targets
The displacement school-focus is on an individual or group of
individuals finding themselves “out of place” or literally displaced
 Political displacement- a political system that rejects free
enterprises/restricts certain industries
 The Macro View Cont’d
 Cultural displacement- focuses on social groups precluded from certain
professional fields
 Economic displacement- focuses on economic variations (bad times)
Recessions;
Job loss
Capital shrinkage
 Micro View

The Entrepreneurial Traits School- based on the common

characteristics found in successful entrepreneurs
 need for achievement, technical knowledge, creativity and determination-
being the common ones
 family development and educational incubation
 Entrepreneurial traits
• Commitment, self reliance and tenacity- do not easily give up but know when to
stop
• High need for achievement- are ambitious, but not driven by envy. They have their
own targets and work towards achieving them
• Opportunity driven- always seeking opportunities and exploiting them
 Entrepreneurial traits Cont’d
• Responsible- they get a task done at the best of their abilities. They stretch
themselves to give the best
• Problem solving abilities
• Team building abilities
• Initiative- go beyond what a task requires thus extend tasks into new
frontiers
 Entrepreneurial traits Cont’d
• Internal locus of control- believe destiny is in their own hands hence no
external forces shape their destiny
• High ambiguity tolerance- able to work in situations where solutions are
not obvious, are risk takers
 Entrepreneurial traits Cont’d

• Integrity and consistency- honest, truthful and possess strong ethics

• Creativity and innovation-finding solutions to problems outside the
conventional ways and being able to commercialise them
• Self-efficacy- strong belief in one’s ability to perform tasks or reach their goals
 Entrepreneurial traits Cont’d
• Persuasive- a communicative behaviour intended to change, modify or
shape the responses, attitudes or behaviour of the receiver
 Entrepreneurial traits Cont’d

Venture Opportunity School-argues that an individual’s ability to

identify opportunities and ability to be creative and innovative determines
entrepreneurship
Strategic Formulation School- success in venture creation is based on
ability to strategically plan and manage a business
 What is industrialisation?
• It is a progressive transformation of an economic system from rudimentary
productive methods to more complex manufacturing processes.
• It is systematic change that aims to reshape the productive forces of a given
country
• This is achieved through innovating existing systems of production through
addressing their weaknesses
• This can also be through producing goods and services that address customer
needs
 What is industrialisation? Cont’d
• Industrialisation implies development of new technologies- equipment,
production processes, new products, services, etc
 The business environment
• It is made up of three environments namely:
The general environment- this is an environment over which managers
have no control
 It is characterized by the Political, Economic, Social, Technological,
Legal, and Ecological factors (PESTLE)
 The business environment Cont’d
The task /the industry environment- this is an environment which
managers have no control but can influence it
 It is characterized by customers, competitors and suppliers
The business environment Cont’d
 The business environment Cont’d
The internal environment- this the environment that managers have
control over
 It is characterized by what the organization owns- resources of the
organization (employees/skills; organizational culture; structure;
equipment; cash; etc)
 SWOT Analysis
• Organisations need to make decisions regarding their continued
existence/business continuity concept
• Such decisions are anchored on the developments in their environment
• Thus organisations need to assess factors that may allow it to grow
(Opportunities) and those that may threaten their existence (Threats)
• Ability to assess the opportunities and threats requires understanding an
organisations Strengths and Weaknesses
 SWOT Analysis Cont’d
• Strengths are those that add Value, are Rare; are Inimitable and allow
organisations to gain competitive advantage (VRIO)
 Creativity vs. Innovation

• Creativity refers to process of identifying solutions to

problems/opportunities/gaps
• “---a process of being sensitive to problems, deficiencies, gaps in
knowledge, missing elements, disharmonies---identifying the
difficulties; searching for solutions, making guesses or formulating
hypotheses about deficiencies testing and retesting them; and finally
communicating results.” Jalan and kleiner
 Forms of Creativity
• Idea creativity- thinking of a new concept eg. Product, service or a way to
solve a problem
• Material creativity- inventing and building a new tangible object eg.
Product, advertisement, report , photograph, sculpture, etc.
• Organisation creativity- organising people, project, organisation , etc.
 Forms of Creativity Cont’d
• Relationship creativity-innovative ways of creating win-win relationships
with others eg collaborations, strategic partnerships, etc.
• Event creativity- ability to produce an event or occasion eg weddings,
awards ceremonies, etc.
• Inner creativity-ability to change one’s self
• Spontaneous creativity- ability –ability to act on the spur-of –the-
moment/spontaneously
 Cultivating Creativity
• Need to recognise that anyone can be creative
• Need to shift the paradigm = a preconceived idea of what the
world is, what it should be and how it operates
• Include creativity as a core value-important to evaluate the
extent of its achievement in the organisation annually-a
performance indicator
• Encourage diversity-hire people from different backgrounds
Allows for diverse contributions
 Cultivating Creativity Cont’d

• Expect creativity-this should be communicated to employees eg. The brain

storming board
• Expecting and tolerating failure-avoid punishing for failed ideas
• Changing scenarios-changing the environment that one works in- familiarity breeds
contempt
• Accepting that problems are challenges-need to work on resolving them-
employees should carry their own monkeys
 Cultivating Creativity Cont’d

• Providing support for creativity- most importantly is to provide time for

employees to be creative-work on pet projects (something they like doing)
Also provide financial support to promising ideas
• Develop a system of capturing the creative ideas
• Talk to customers
• Find alternative uses for organisation’s services or products in the market
 Cultivating Creativity Cont’d
• Reward creativity-recognise creativity to reinforce the creative culture
• Talk to children/youths-they help you remove self imposed barriers (shift
paradigms)
• Model creativity-start at the top
 Cultivating Creativity Cont’d
Convergent thinking- evaluating the ideas generated through divergent
thinking
Could involve looking at similar ideas; related ideas; those that could be
linked; etc
• Incubation- divorcing oneself from the process to allow more time to
reflect on the generated ideas
• Illumination- settling on an idea that seems feasible
 Barriers to creativity
• Seeking the right answer
• Need to follow logic
• Need to be practical
• Need to follow rules
• Need to avoid ambiguity
• Need to avoid errors
• Need to demonstrate maturity
 Cultivating Creativity Cont’d
• Need to stick to area of specialisation
• Need to appear intelligent
• Accepting defeat- “I am not creative”
 What is Innovation?
• Many definitions have been proffered including:
That it is creativity
Coming up with new products/services
Entrepreneurship
Designs
Inventions
 What is Innovation? Cont’d
• However the weaknesses with these definitions is that they focus on the
outcomes of innovation
• They take a narrow perspective- innovation is an event
• However innovation is a process-
 What is Innovation? Cont’d
“innovation is not a single action but a total process of interrelated sub
processes. It is not just the conception of a new idea, nor the invention of
a new device, nor the development of a new market. The process is all
these things acting in an integrated fashion” Myers and Marquis (1969)
 What is Innovation? Cont’d
NB: the concept of new has to be understood in the following context
That new is relative-being applied or used by the concerned party for the
first time
Thus it is measured by the lapse of time since its last use or discovery
 What is Innovation? Cont’d
• Invention is translating intellectual thoughts into an artefact-tangible
process or product
• Thus innovation goes beyond invention
• In summary:
Innovation = theoretical conception + technical invention+ commercial
exploitation
 Theoretical Conception
• Developing an idea about a solution to a social problem-long distance
communication;
• Is supported by creativity
• Level of creativity is also determined by knowledge possessed by the
individual
Recall discussion on Human capital earlier-acquired vs learned
knowledge
 Research and Development

• It is the purposeful and systematic use of scientific knowledge to improve

men’s lot even though some of its manifestations do not meet with universal
approval eg. Cloning
• R&D differs from organisation to organisation
• However it is always anchored on a firm’s heritage and resources
 Research and Development Cont’d
• Components of R&D:
Basic research-seeks to broaden knowledge about a particular area; thus
it is general in nature
Curiosity-driven basic research-this is research that does not seek to
address a particular market problem but just to satisfy an area of interest
 Research and Development Cont’d
 May result in the discovery of technologies or products
• Applied research-focuses on addressing particular needs through use of
existing scientific knowledge resulting in new technologies
 What is technology?
• Refers to the process of applying knowledge to achieve a practical result-
eg. Vacuum cleaners, washing machines, laptops, etc.
• Technology is dependent on knowledge
• Need to invest in knowledge creation-Research
 Invention
• Process of converting the idea into tangible product or process
• Need science and technology
• Science being the knowledge about the subject area- communication
• Technology being the process of converting the knowledge into a tangible
solution
 Commercialising
• Creating demand for the invention-need for marketing function
 Benefits of Innovation
• Improved social standards
• Increase knowledge base
 Importance of Innovation
• Allows for firm growth
New customers/markets
Firm competitiveness
Firm profitability
Shareholder value
National acceptance
Allows for employee growth
 Importance of Innovation Cont’d
• Allows for national economic growth
Contribution to national GDP
Improves nation’s competitiveness
Grows national productivity and income levels
 New Product Development
• Idea generation-this is the creative process driven by gaps in the market or
within the organisation
The process may also be driven by the desire to create convenience for the
market or the organisation-3M experience (creating needs)
 New Product Development Cont’d
• Idea screening- vetting ideas that were generated in the creative phase
The organisation seeks to innovate the ideas/create value for the
organisation
Use of defined criteria-organisation’s objectives, resources, organisation’s
capabilities, impact on existing offerings, etc
 New Product Development Cont’d
• Concept testing-sampling potential customer’s view on the new product
idea
Oral or written presentation of the product idea
Seeks reactions of the market to the idea-how will the market respond to
the idea
Normally there is a presentation followed by relevant questions
 New Product Development Cont’d
• Business analysis- this involves analysis of the potential impact of the
product idea on the overall business performance
Costs
Sales
Environmental changes-reaction of competitors, suppliers, government,
etc.
 New Product Development Cont’d
• Product development-developing the idea prototype
Requires that the idea is produced at a price that will make it acceptable
(that the target market is prepared to pay)
Product must be produced at the a level where its functionality will be
tested (all dimensions must be met)
The stage also allows the organisation to asses its capabilities in
production
 New Product Development Cont’d
• Test marketing-introducing the product in selected markets
This is mainly to assess the extent to which the product will be accepted
Also assists in understanding the marketing challenges the product will
face
Important to select markets that are representative of target markets
 New Product Development Cont’d
At times organisations use simulated test marketing-giving out free
samples and seeking customer opinions
 New Product Development Cont’d
• Commercialisation- refining and finalising the budget in preparation of
full scale manufacturing and marketing of product
 Feasibility Studies

• “A logical tool used in considering a new operation or launch of a

new product/service in order to make sure that the total investment
needed will successfully bring the project to completion” Bridge S
et al (2003)
 Feasibility Studies Cont’d
IPTV industry “a preliminary study undertaken before the real work of a
project starts to ascertain the likelihood of the project’s success…
it is an analysis of possible solutions to a problem and a recommendation
on the best solution to use.”
 Feasibility Studies Cont’d
Product/service
• The product – performance, legality, purchase or produce, reliability,
design, etc.
• The skills of entrepreneur/venture team- skills possession, market
understanding,
• Suppliers
 MARKET FEASIBILITY
• Customers- who are they, where are they, how often do they buy,
their profile, etc.
• Competition- who are they, how many are they, how do they
operate, their likely reaction, etc.
• Marketing strategies- how much to spend on advertising, selling
strategies, sales promotions, discounts, credit facilities, etc.
 Financial Feasibility
• Total initial capital outlay required
• Owner contribution
• Financing the balance
• Sales to be generated
• Costs of producing and operating
• Is it profitable
• Is it worth investing in
 What is a Business Plan?

• A business plan is a written document prepared by the

entrepreneur that describes all the relevant internal and
external elements and strategies for starting a new venture.
• It is a integration of functional plans such as marketing,
finance, manufacturing, sales and human resources.
 Why Have a Business Plan?

• The business plan is valuable to the entrepreneur, potential

investors, or even new personnel, who are trying to familiarize
themselves with the venture, it goals, and objectives.
– It helps determine the viability of the venture in a designated market
– It provides guidance to the entrepreneur in organizing his or her planning
activities
– It serves as an important tool in helping to obtain financing.
 Information Needs

• Before committing time and energy to preparing a business plan,

the entrepreneur should do a quick feasibility study of the
business concept to see whether there any possible barriers to
success.
• Internet can be a valuable resource.
 Outline of a Business Plan

• Introductory Page
– Name and address of business
– Name(s) and address(es) of principal(s)
– Nature of business
– Statement of financing needed
– Statement of confidentially of report
 Outline …

• Executive Summary – Three to four pages summarizing

the complete business plan
– What is the business concept or model?
– How is this business concept or model unique?
– Who are the individuals starting this business?
– How will they make money and how much?
 Outline …

• Environmental and Industry Analysis

– Future outlook and trends
– Analysis of competitors
– Market segmentation
– Industry and market forecasts
• Description of Venture
– Product(s)
– Service(s)
– Size of business
– Office equipment and personnel
– Background of entrepreneurs
 Outline …

• Production Plan
– Manufacturing process (amount subcontracted)
– Physical plant
– Machinery and equipment
– Names of suppliers of raw materials
• Operational Plan
– Description of company’s operations
– Flow of orders for goods and/or services
– Technology utilization
 Outline …

• Marketing Plan
– Pricing
– Distribution
– Promotion
– Product forecasts
– Controls
 Outline …
• Organizational Plan
– Form of ownership
– Identification of partners or principal shareholders
– Authority of principals
– Management-team background
– Roles and responsibilities of members of organization
 Outline …

• Assessment of Risk
– Evaluate weakness of business
– New technologies
– Contingency Plans
• Financial Plan
– Pro forma income statement
– Cash flow projections
– Pro forma balance sheet
– Break-even analysis
– Sources and applications of funds
 Using and Implementing The Business
Plan

• The business plan is designed to guide the entrepreneur

through the first year of operations.
• Implementation of the strategy contain control point to
ascertain progress and to initiate contingency plan if necessary.
• Business plan not end up in a drawer somewhere once the
financing has been attained and the business launched.
 Measuring Plan Progress

• Entrepreneur should check the profit and loss statement, cash flow
projections, and information on inventory, production, quality, sales,
collection of accounts receivable, and disbursements for the previous month.
– Inventory control
– Production control
– Quality control
– Sales control
– Disbursements
 Updating the Plan

• The most effective business plan can become out-of-date

if condition change.
• If the change are likely to affect the business plan, the
entrepreneur should determine what revisions are needed.
• In this manner, the entrepreneur can maintain reasonable
targets and goals and keep the new venture on a course
that will increase probability of success.
 Why Some
Business Plans Fail

• Goals set by the entrepreneur are unreasonable.

• Goals are not measurable
• The entrepreneur has not made a total commitment to the business or to the
family.
• The entrepreneur has no experience in the planned business.
• The entrepreneur has no sense of potential threats or weaknesses to the business.
• No customer need was established for the proposed product or service.
 Steps in registering a Pvt Ltd Company
• Business registration is done by the Registrar of companies in Harare.

• The registration process is administered through the Companies and

Other Businesses Act Chapter 24
 Steps in registering a Private Business
Corporation
1) Online name search (CR2 form)
2) Confirmation of reserved name-CV4
3) Submit CR28 (Incorporation Statement) forms in duplicate together
with accounting officer’s professional certificate, eg CIS, ACCA,
CIMA,
4) The Registrar shall issue a certificate of incorporation
Steps in Private Limited Company registration

1) Online name search (CR2 form)

2) Confirmation of reserved name-CV4
3) Submit in duplicate: The Memorandum and Articles of Association
together with two copies of Form CR5 (Registered company address)
and Form CR6 (List of directors and secretaries)
4) The Registrar shall issue to a successful applicant a certificate of
incorporation
Steps in Public Limited Company registration

1) Online name search (CR2 form)

2) Confirmation of reserved name-CV4
3) Submit in duplicate the Memorandum and Articles of Association
together with two copies of Form CR5 (Registered company address),
Form CR6 (List of directors and secretaries), Form CR19 (Affidavit
section 158 of the Act), Form CR20 (Consent to act as directors), CR
21(List of persons to act as directors)
Steps in Private Limited Company registration

1) Online name search (CR2 form)

2) Confirmation of reserved name-CV4
3) Submit in duplicate: The Memorandum and Articles of Association
together with two copies of Form CR5 (Registered company address)
and Form CR6 (List of directors and secretaries)
4) The Registrar shall issue to a successful applicant a certificate of
incorporation
Steps in Public Limited Company registration

1) Online name search (CR2 form)

2) Confirmation of reserved name-CV4
3) Submit in duplicate the Memorandum and Articles of Association
together with two copies of Form CR5 (Registered company address),
Form CR6 (List of directors and secretaries), Form CR19 (Affidavit
section 158 of the Act), Form CR20 (Consent to act as directors), CR
21(List of persons to act as directors)
 Steps in Public Limited Company registration

• 4. Submit in duplicate a copy of prospectus or a statement in lieu of

prospectus.
• 5. The Registrar shall issue to a successful applicant a certificate of
incorporation
• 6. The Registrar shall also issue a certificate to commence business
FORM TITLE

CR1 Applications for authority to use an electronic mail address, website, portal or other
interactive electronic link.
CR2 Application for search the availability of name
CR3 Notice of Registration of Assumed Names
CR4 Application for Replacement of lost, defaced and destroyed documents
CR5 Notice of situation and postal address of a company’s registered once registered
principal place of business and of any change thereto.
CR6 List of Directors and Secretaries
CR7 Notice of change of entity name
CR8 Special resolution
CR9 Notice of conversion, consolidation and split of Share Capital
CR10 Notice of increase of share capital