STUDY SESSION 3: BUSINESS INNOVATION

3.1 Introduction

In this study session, you will be introduced to the subject matter of business innovation. Recall

that in our discussion in the previous study session where economic development through

entrepreneurship was explained to us. If you remember, you will understand that one of the

ingredients for economic development as far as entrepreneurship is concerned is business

innovation. Hence, our concern in this study session is to understand the conceptual clarification of

the term “business innovation”. A clearer understanding of what business innovation entails will

help us to understand that it is near impossible to innovate a business without being creative. This

will, then, lead us to what creativity is and the stages involved in creativity. Having a basic

knowledge of creativity will expose you to what innovation in business entails and its benefits. In

addition, you will be made to understand that there are forms of innovation and phases involved in

successful innovation if you want to innovate a business. In turn, you will become acquainted with

the understanding of the importance of creativity and innovation in business.

3.2. Learning Outcome for Study Session 3

At the end of this study session, you should be able to;

1. Define the concept of business;

2. Explain creativity and mention at least two (2) stages of creativity;

3. Discuss what innovation in business is all about;

3.3 An overview of Concept of Business

In Nigeria, people are continuously engaged in one activity or another in order to satisfy their

unlimited wants. As it is popularly said by Economics scholars, human needs are insatiable. Even

as students, you will agree that your needs are numerous, and to satisfy a need requires a solution.

Therefore, business is a solution to your needs. A business is about providing solution in form of

creating goods and services for satisfying human wants. So, business is about creating value and

when value is created in form of solution to peoples’ problem, one gets a reward which is profit.

As students, you need to understand that you do not create a business just to make a profit alone,

rather, you establish business to create and distribute value and ultimately become a problem solver.

It is worthy to note therefore, that as long as human needs are unlimited, business will continue to

exist.

Business law in Nigeria stipulates that an individual is not enough to create a business. It is no

longer acceptable. To create a registered business in Nigeria, it requires two or more people which

is the standard corporate business. Although there is an on-going deliberation at the Nigerian senate

that in order to promote business creation among youths in Nigeria, most importantly Small and

Medium Enterprises, there is need to allow an individual to be able to register a business. Until this

case is passed into law and becomes a policy, an individual cannot register a business with

Corporate Affairs Commission (CAC).

Beyond this, it should be noted that University of Lagos is not training you to become a one-man

business owner. A one-man business owner is a sole proprietorship and this belongs to the informal

sector. But for formal sector, it is a corporate business. A corporate business can be a partnership

business, a corporation or a limited liability company. Figure 3.3.1 illustrates the examples of

corporate business you and some other students can set up even before graduating from University

of Lagos.
 Partnership Limited Liability Corporation
Business between Company Stakeholders invest into
two or more Each stakeholder is the business through
accountable only to the stock and appoint who to
persons as co-
extent of his/her level of form the management.
owners.
investment.

Figure 3.3.1: Examples of Corporate Business

With your participation in the General Entrepreneurship Studies (GST 307), University of Lagos

wants to develop individuals who will become corporate business owners.

In summary, business is an enterprise that involves the combination of two or more people coming

together with ideas, and resources for the purpose of providing goods or services to satisfy peoples’

wants and as well to make a profit. The principal aim, to make profit in business, arises from the

need to sustain the business. However, to create a value laden business, requires creativity which

will be our focus in section. 3.4 of this Study Session.

3.3.1 In-Text Question (ITQs)

Define business in your own words?

3.3.2 In-Text Answer (ITA)

Business is an enterprise that involves the combination of two or more people coming

together with ideas, and resources for the purpose of providing goods or services to

satisfy peoples’ wants and as well to make a profit. A business is about creating value

and when value is created in form of solution to peoples’ problem, you get a reward

which is profit.
3.4. Creativity and its Stages

To establish a business, you need to be creative as students. Creativity is about bringing into

limelight a unique and novel idea or product. Creativity can be regarded as the generation of new

and useful ideas concerning products, services, processes, or procedures (Anderson, Potocnik, &

Zhou, 2014). From the definition offered, you should be able to understand that creativity

emphasizes novelty and the usefulness of an idea. For you as students, the ability to take existing

or new objects and combine them in different ways to develop useful products and services is called

creativity. For example, Mr. Aliko Dangote was able to think creatively by setting up a refinery to

produce refined sugar and salt.

Creativity is about thinking to bring about a notable idea that can turn to something unique. Today,

an average Nigerian youth finds it difficult to think, that is why you see many of them idle and

roaming the streets. It will also interest you to know that thinking has become a herculean task

among students in this contemporary time. A lot of you socialize with your devices and are online

24/7 wasting valuable time that can be used to think creatively. If Aliko fails to think, would he be

able to produce refined sugar and salt that a lot of you consumed in your various households?

Therefore, I implore you as individual to think in order to create something unique in form of

products and services that can serve humanity.

In addition, creativity is key in business world. To think about new and useful ideas that can turn

to business, you must be able to use your cognitive abilities. When you think, and from your thought

you are able to analyze and combine pieces of information to generate multiple and novel ideas,

you are said to be practicing divergent creativity. However, when you think and from your thought

you able to pierce together pieces of information to form one singular or conventional idea or
solution, you are set to practicing convergent creativity. It is important to note that while divergent

thinking allows the generation of a high number of original ideas, convergent thinking is important

for evaluating and refining these ideas into novel and useful ideas. In other words, do not try to

attach importance to one form of creativity over the other because the two cognitive abilities are

imperative in generating unique and noble ideas. However, for an idea or product to be created and

become useful, there are processes involved. These are regarded as stages of creativity.

Stages of Creativity

As students of entrepreneurship education, you must understand that creativity is in stages just as

you have been acquainted with creativity in terms of cognitive abilities. There are levels to most

positions or processes, even, your stage or level is different from the stage a year one student is,

and they are not eligible to partake in GST 307 not until they get to 300 level.

There are different stages of creativity according to different authors. However, the notable among

all are the stages identified by Jessica in 2014. In Jessica’s proposition, there are four stages of

creativity. These are shown in figure 3.4.1.;

Stage 1: Preparation

In business creation, preparation is very key, so also in stages of creativity. To think creatively, you

need to prepare for it. Hence, preparation is the starting point of a creative process, and serves as

the foundation upon which all other stages are built. Preparation in creative stages begins when you

are able to identify a problem. This tells you that there is a gap that requires a need to be filled or a

solution to be provided. When you are at this stage, you are at the working stage. This is when you

begin to conduct investigations or carrying out a research to gather more information about the need
or solution you are bringing on board. What you are simply doing is that you are laying the

groundwork for creative success.

Preparation
stage

Incubation
stage

Illumination
stage

Verification
stage

Figure 3.4.1: Stages of Creativity

In addition, this stage is a planning stage where you prepare for the new idea or project to come. In

reference to your body system for instance, it is the stage where your brain is using attention,

reasoning, and planning to gather information. For example, a manager is pulling data from

previous team projects in preparation for a new project. This means that the manager is gathering

data to process it for the next line of action which is incubation stage.

Stage 2: Incubation

This stage is about cultivation of ideas. In this stage, you are taking the time needed to reflect upon

the preparation stage and the information you have gathered. While reflecting upon the information

gathered, you may be conscious and unconscious of it. The incubation gives room for your ideas to

develop. For example, you are trying to have a nap and unconsciously, you are thinking about the
research problem you are trying to solve. Has anyone ever experienced this before? Research has

shown that letting your mind wander in this way leads to greater creativity. Greater creativity makes

you to get a clearer picture of the solution to the problem you are trying to solve. This leads us to

the next stage called the illumination stage.

Stage 3: Illumination

At the illumination stage, your idea or solution becomes explicable and conspicuous to the mind.

Illumination stage is where the idea in your subconscious mind meet with the conscious mind and

a sudden discovery manifest and you be like “Yes, that is it. It is like an “Ah Ah! Moment.” Mind

you, to experience this stage, you need to think, not just think but make reflective thinking. This is

when a clearer picture of the idea or solution you are trying to solve can be realized. When this is

done, you then, stand a chance of verifying your solution which leads to the verification stage.

Stage 4: Verification

At the point of illumination, you are not done. This is the stage when you put the idea or product

into test and confirm it. For creativity to reach others and accomplish anything, you need to, once

again, use those critical thinking skills to think about your audience and craft your message or idea.

Some of the greatest creative ideas of all time can easily be lost because they are not packaged in

such a way that it will attract wider consumers. Having confirmed your idea and its uniqueness in

solving problem, you are then, ready to innovate. In the next section, we would discuss what

innovation in business is all about.

3.4.1 In-Text Question (ITQ)

Mention four (4) stages of creativity.

3.4.2 In-Text Answers (ITAs)

1. Preparation stage;

2. Incubation stage;

3. Illumination; and

4. Verification stage.

3.5. What is Innovation in Business?

Innovation means to establish a business, whether new or old. Recall, in our previous section when

you are made to understand that creativity is the ability to think new ideas. In the case of innovation,

it is the ability to do the ideas. Innovation is the ability to apply creative solutions to identified

problems and opportunities to enhance or enrich people’s lives. In Schumpeter (1934) view,

innovation is about combining ideas and resources in any of five ways: new products, new

processes, new markets, new sources of supply, and new organization of industries. If innovation

is about doing new things, then, it is very important in business world for business growth and

development. What, then, is innovation in business?

Innovation in business is about creating new unique products and services to ensure competitiveness

and sustainability of the business. Innovation in business is the application of new techniques and

strategies in transforming ideas or products and services for business growth. As entrepreneurship

students, you must understand that innovation is vital to business success and ultimate survival. If

you fail to improve and upgrade your products and services, your business becomes obsolete and

may become less competitive in the consumer market economy. If you observe closely, you must
have discovered that a lot of companies, home and abroad, are rebranding and upgrading their

products and services just to maintain that competitive edge in the business world. For instance,

year in year out, Bill Gates is upgrading and updating on his Microsoft applications and devices. In

Nigeria, Mike Adenuga is creating innovative ideas that will make his Globacom business continue

to remain relevant and compete successfully among other telecommunication companies.

In summary, innovation in business is very important, and it is the best strategy you can adopt to

make your business stand out, competitive and sustainable. It is the development and

implementation of a new idea or product to create or improve value of a business for greater growth

and sustainability. As business innovate new products and services, it increases its value and

promotes its relevance in the business world. Having learnt about innovation in business, it is

important to be acquainted with the forms of innovation.

3.5.1 In-Text Questions (ITQs)

What is innovation in business?

3.5.2 In-Text Answers (ITAs)

Innovation in business is the application of new techniques and strategies in

transforming ideas or products and services for business growth. Innovation is vital to

business success and ultimate survival.

3.6 Summary of Study Session 3

In this study session, you have learnt the meaning of business. You are made to understand that

business creation in the formal sector should be between two or more people because you are not

to create a business only for profit motive but to create value and solve problems therein, you make

profit. You have been able to understand what creativity means to business and the stages involved

in creativity. In addition, you have equally been acquainted with the forms of innovation and phases

in successful innovation. As you are aware, a lot of students find it hard to think these days that is

why they are not coming up with creative and innovative ideas that can change their

entrepreneurship career. Finally, you have learnt what innovation in business entails and its benefit.

For a business to be successful, it must continue to be creative and innovative. In the next study

session, you shall learn more about the dimensions of innovation.

3.6.1. Self-assessment Questions (SAQs)

1. Which of these words is not embedded in the conceptual clarification of business?

A. Profit making

B. Exchange of goods and services

C. Market lobbying

D. Satisfaction of wants

2. What is the principal aim of starting a business?

A. To networking with associates

B. To create value and solve human problems

C. To satisfy customers

D. To make profit

3. Which one of these is the concise meaning of creativity?

A. Doing new things

 B. Creating solution

C. Thinking new things

D. Applying new ideas

4. Stages of creativity do not include__________

A. Incubation stage

B. Verification stage

C. Illumination stage

D. None of the above

5. Innovation in business means?

A. Integrating new ideas, products and services into business

B. Applying concept to business

C. Incorporating rules to business

D. Defining ethics of the business

6. One among the following is not a benefit of innovation?

A. Competitive advantage

B. Competing with other products

C. Innovation for growth and profit

D. Unique product differentiation

7. _________ is a form of innovation?

A. Incubation

B. Idea

C. Divergent thinking

D. Product innovation
8. Distinctive characteristics of business innovation is _________?

A. Implementation of novel business practices in business workplaces

B. Maintaining competitive advantage.

C. Developing strategies for market delivery

D. None of the above

9. Which of these phases of successful innovation ensures extensive analysis of concepts for

the solution?

A. Idea

B. Solution

C. Concept

D. Market

10. Creativity and innovation are vital for?

A. Business growth and sustainability

B. Business administration

C. Business expansion

D. A and C above.

3.6.2 References/Suggestions for Further Reading

Anderson, N., Potocnik, K., & Zhou, J. (2014). Innovation and creativity in organizations: A

state-of-the-science review, prospective commentary, and guiding framework. Journal of

Management, 40(5), 1297–1333.

OECD, (2005). Oslo manual: Guidelines for collection and interpreting technological innovation
data. Paris.

Jessica, S. (2014). The 4 stages of creativity. http://www.inc.com/jessica-stillman/the-4-stages-of-

creativity.html

Schumpeter, J.A. (1934). Schumpeter, J. A. (1934). The theory of economic development: An

inquiry into profits, capital, credit, interest, and the business cycle. New York, Oxford University

Press.

Should you require more explanation on this study session, please do not hesitate to contact

your e-tutor via the LMS.