Unit 2

Entrepreneurial
Idea and
Innovation

By:
 Unit 2 – Entrepreneurial Idea and Innovation

• Creativity is an individual ability that can lead to an intact

invention or idea by the creative person.
• Innovation is the process to convert invention or idea into a
marketable product or service.
• Entrepreneurship is an individual characteristic that leads the
innovation process successfully in bringing a product or offering a
new service to market despite many obstacles.
• Creativity takes place when the person takes a new solution to a
problem that is faced with. This definition contains two elements;
first one is the problem solution and second new and innovative
solution to the problem solver.
For creative thinking, the development of four categories of skills
is essential:
1. Divergent thinking ability that creates very different solutions to a
wide range of dimensions and angles can be regarded as a problem.
2. Having a vast knowledge and useful experience in the field of
creativity.
3. The ability to communicate with others in order to exchange
experiences and information.
4. Person capacity for critical analysis, because a person reaches to
different solutions during the formation of creativity that is
essential.
5. To choose the right solution and exclusion of other solutions and to
have an accurate judgment and criticism.
Creativity needs several individual and interpersonal factors.:
• Suitable environment,
• Informed parents,
• Competent coaches,
• Training programs,
• Individual differences and
• Hard work are the accessories of creativity
Creativity composed of several elements:
Amably, Head of research at Harvard Business School gives three
element to creativity
• Skills to subject and topic,
• Skills related to creativity
• Motivation
as the main components.
 Creativity Process
• Capturing Information (Doubt and
Imagination)
• Test
• Refinement
• Supply
• Innovation process is more than a good idea.
• Source of ideas is important and creative thinking may play a
role in its development but the idea that comes from ideation is
different from the idea resulting from extended thought, research,
and work experience.
• Innovation is combination of insights of a good idea and assist in
the implementation of the idea.
• Essentially the concept of innovation is from management
perspective, begins from thought and ends with the release of
new product or service businesses.
• The person is authorized to release and to imagine different ways
to spin the idea and then it becomes a practical, useful and
appropriate concept (creativity), in following he converts applied
ideas to goods, services (innovation) and at last by commercial
distribution of goods and services produced, innovative process
ends.
 Difference between Creativity and
Innovation
• Kuntz (1988) said innovation is application of new ideas from
cited creativity and believes that innovation can be a new
product, new service or a new way of doing something, but
creativity is ability of creating new ideas and innovative
thought.
• Albrecht (1987) told about Creativity and Innovation and
distinguished them such that creativity is an intellectual
activity to create new idea, and innovation is converting
creativity to action or result (profit).
• Creative person is innovator, but all creative people are not
necessarily innovative.
 Entrepreneurship
• The term entrepreneurship for the first time
was defined by Kantylyvn.
 Idea Generation and Opportunities Scouting

Searching for Idea generation

Once the entrepreneur perceives the opportunities, it becomes important for him to scan the
environment
Fig. Source of Idea Generation
• It is quite possible that many of the promising
opportunities might not make commercial sense.
• Scanning involves close examination of the
environmental conditions and their impact upon
the business idea.
• It is not a cursory exercise but rather an attempt
to look beyond the immediate opportunities to the
emerging trends. An attempt can be made to
modify, adapt, rearrange, substitute, combine,
reverse etc.
 Opportunity Scanning
• Environmental Analysis
 International Environment
 Macro Environment (political, technological, social, legal and
economic segments)
• Sectoral Analysis
• SWOT Analysis
The hierarchical approach to development of business idea is given
below:
Tools and techniques for generating Ideas
Techniques are ways to generate ideas. There are a number
of methods of doing so.
• Brainstorming
• Focus Groups
• Gap analysis
• Opposite/Reverse thinking
• Brain storm card
• Analogy thinking
• Empathy user research
 Skill Set

Fig. Entrepreneurship Skill set

• Planning - It is a basic management method involving formulation of one or more
detailed plan to achieve the best result. The planning process is to identify goal,
formulate strategy and decide the process to be followed to achieve the goal on the
same strategy.
• Motivation - Motivation is defined as goal oriented behaviour. It is frequently used
to describe why a person is interested in doing a particular work. Following points
help us to stay motivated:
 Surround yourself with positivity
 Create a vision board
 Make smart goals
 Reward yourself
 Believe in yourself
 Acknowledge your positive attributes
 Recognize your progress
 Visualize accomplishing your goals
 Be kind to yourself
 Don’t compare yourself to others
• Marketing- It is an ability through which you sell something or
create awareness about something e.g. any product.
• For example T.V. commercials are a part of marketing. It tries to
satisfy needs of clients. It includes the coordination of product,
price, place and promotional strategy. These are known as 4 P’s
of marketing.
• You have to follow the points mentioned below to ensure
maximum sale of your product/service:
– Identify the product
– Determine its price
– Reach the customer
– Implement the of promotional strategy
• Accounting- It is a process of keeping financial record or
preparing financial record. It includes analysis, verification and
reporting of records. Negotiating It is a process through which
people settle all the problems which occur between two or more
parties. Parties try to reach at mutual beneficial outcome through
negotiation.
• Process of negotiation includes following stages:
• Preparation
• Discussion
• Goal clarification
• Arriving at mutual beneficial points
• Agreement
• Implementation of strategy
Understanding Value
Creation
 Value Creation
• Value creation means performing activities that
increases the value to customers and also to the
shareholders.
• The performance of actions that increase the worth
of goods, services or even a business.
 Sustainable Enterprise Model
• A sustainable business model is one that generates
value for everyone involved without being a drain
on the resources that help create it.
• A sustainable business model is what every
business leader hopes to achieve: that the business
will turn a profit quickly and stay afloat for the long
term.
Elements for a sustainable business model
• 1. Diversity
• 2. Modularity
• 3. Openness
• 4. Slack Resources (spare resources)
• 5. Matching Cycles
• 6. Commercially profitable - No business can succeed or
scale unless it attracts customers. What is your value
proposition? Why is your business valuable, and what
niche do you fill?
• 7. Futuristic
• 8. it must be able to gives back
 What is sustainable strategy?
• A sustainable strategy is one that understands the flow of 'in' and
'out' – not just cash flow, but again, the resources both tangible
and intangible that are required to create the product or service.
• most effective sustainability strategies start with an organization's
purpose, encouraging businesses to ask themselves these
questions:
• Why does the organization exist?
• What problem is it solving?
• How is it going to improve the world, environment and society?
 How can you start and maintain a sustainable business model?

1. Plan out your resource usage.

• Make a list of the raw materials you'll need. This list will vary dramatically by business
type.
• Think about where your materials might be sourced. Who is making or harvesting them?
How are they being sold?
• Consider where they are coming from and how they are being transported. How far do
they have to travel to arrive at your home or warehouse? How can you cut down on fuel
miles? What are the riskiest resources on your list, and
how can you increase their productivity while also lessening your dependence on them?
Once you've created your materials list, outline your manufacturing and business
processes.
• Which manufacturing processes are the most wasteful? How can you mitigate the
negative effects of these processes?
• For physical materials, is it possible to source locally?
• How are you packaging your products? (Sustainable, biodegradable packaging can reduce
the amount of trash stuck in landfills.)
• Which materials on your list are the riskiest or least sustainable? How might you replace
them? Could you replace them now?
• What are the end products of these processes? How can you reuse
waste material? Does it have to be thrown away?
• Can the produced waste be used as a resource or fed into a different
process to be used again? How can you reduce the unusable waste?
• Where can you reduce? How can you stretch your raw materials?
Can you lower the amount of resources used to create a specific
product while maintaining its quality?
• What are the labour conditions like? Are your labourers being paid
fairly? Is their quality of life improving or worsening because of
your business processes? Is their time being respected?

2. Engage your customers

What blockers are there to a sustainable business
model?
• Building a sustainable business can be daunting. If your
business is stuck in its status quo, you may be struggling
from one of three issues.
1. Innovation meetings are held, but ideas are not
developed further.
2. Ideas are not implemented.
3. The implemented business models fail in the market.
Why is sustainability important in business?

1. It allows you to still be here decades from now,

having created something of lasting value.
2. It makes you much more attractive in the eyes of
customers, employees, abutters and other
stakeholders who actively want to do business with
companies that think beyond the single bottom line.
3. It helps the planet and its creatures heal from the
abuse humans have piled on it, especially in the last
250 years or so.
These are some forces putting pressure on
companies to build robust sustainability
strategies:
• Employees
• Customers
• Investors
• Retailers
• Defined by customers,
investors and other stakeholders :
• Created through the
organization’s purpose, strategy,
and business model taking into
account all resources, capitals, and
relationships in an integrated way
• Delivered to ever-more
demanding and sophisticated
stakeholders through responsible
products and services, and through
new channels, at an appropriate
price.
• Sustained by retaining and
protecting value internally, and by
appropriate reinvestment and
distribution to shareholders and
wider society.
 Sustaining Enterprising model
• The term sustainable development is used to defend the reduction
of vulnerability and the mitigation of disaster impacts.
• It is rarely acknowledged that mitigation does not necessarily
require a focus on the relation between the environment and a
disaster.
• While the economic downturn has adversely impacted many
enterprises, certain enterprises have been able to continue business
operations and even prosper during the COVID-19 virus
pandemic.
 Organizational Effectiveness

• According to Merriam-Webster, effectiveness is ‘the

power to produce a desired result’. J.F. Kennedy
was an effective president, Jack Welch an effective
CEO, and Greta Thunberg is an effective climate
activist.
• In an organizational context, however, effectiveness
is harder to define. Apple is considered a successful
organization on many measures – but is it also
effective? The effectiveness of an organization
depends on its mission & goals, internal efficiency,
strategic positioning, and many more factors.
• In the example earlier, you saw that three
organizations that did widely different things,
can be equally effective. That is because there
are multiple angles to look at organizational
effectiveness. The table below shows the seven
most common perspectives on effectiveness
(also known as effectiveness models) and what
effectiveness means for each of these.
How to measure organizational
effectiveness?
• The organizational effectiveness models provide a
perspective on assessing OE. If we want to measure it, we
need to create a more detailed scorecard. This creates a
systematic approach that can be used regularly to re-evaluate
and track progress on how effective the organization really is
and where we can make improvements.
• Based on Cameron (2015), we have defined the following
five questions that you can use to assess organizational
effectiveness. As you will recognize, the activity domain and
perspective form the effectiveness models we covered in the
previous section.
1. Activity domain. What is the domain of activities that OE assesses? Activity domains
include goal realization, stakeholder satisfaction, financial return, employee loyalty,
product leadership, customer intimacy, and so on.
2. Perspective. From whose perspective is organizational effectiveness assessed?
Examples include a shareholder perspective, employee perspective, customer
perspective, or societal perspective.
3. Level of analysis. What level of analysis applies? This can be on the individual, group,
department, organizational, industry, or even on a global level.
4. Time frame. What is the time frame used for the analysis? This can be over a period in
the past, a snapshot of the current organization, or a long-term trends timeframe.
5. Frame of reference. What is the frame of reference for the effectiveness assessment?
The organization can be compared with the ideal organization, its competitors, a past
version of the organization, or with its stated goals.
• These questions allow you to take a specific perspective on organizational effectiveness
and make it measurable. We added a simplified example below. This scorecard shows
constituency satisfaction in the organization on an aggregated level, measured annually
for 2020 and 2021.
• The scorecard shows two key trends: Relations with labor unions and employees are low
and deteriorating while shareholders and board satisfaction remains high. This may
indicate a disconnect between senior management and the broader workforce, which is a
danger to organizational effectiveness.
Of course, this is a simplified example.
There are many more ways to measure satisfaction – e.g., turnover rates for employees, the
degree to which labor unions have made frustrations public (in the news), and shareholder
value. There are also many other KPIs to track, like the degree to which’ the organization
reaches its goals, its position compared to their industry, and how effective it is in
maintaining its competitive advantage. However, the example shows the power of measuring
organizational effectiveness, and how you can use internal benchmarking to make the
organization more effective.
Task for Students (Time : 20 minutes)

1. What you want to do just after completing you graduation? Please elaborate?

2. Have you ever dreamt of any business Idea?

3. What kind of business you will prefer to do? Regular business or something
creative? Please elaborate your business activity or business plan in details?

4. At which stage in your life, you are planning to go for Business activity or
entrepreneurship?

5. Name any businessperson, who you consider as your Idol?

6. What qualities you like the most in your Idol Businessman or entrepreneur?

7. Who is your Idol from any sphere of life? What major traits, you want to adopt from
them?