SPECIFIC OBJECTIVES

Students should be able to:

identify the sources of innovation;

CONTENT
Sources of innovation:
(i) new markets;
(ii) new technologies;
(iii) new political rules;
(iv) running out of roads (limited options);
(v) change in sentiments or behaviours;
(vi) deregulations; and,
(vii) changes in the business models.
(viii) global trends
(ix) new knowledge

New market
Most markets evolve through a process of growth, segmentation, etc. But at certain times
completely new markets emerge which cannot be analysed or predicted in advance or
explored through using conventional market research/analytical techniques.
Eg. Disk-drives, excavators, mini-mills Mobile phone/SMS where market which actually
emerged was not the one expected or predicted by originators.

New technology
Business activities can transcend day and night given the Internet; new research in the field of
biotechnology; development of new materials can breed innovation.
Step change takes place in product or process technology - may result from convergence and
maturing of several streams (e.g. industrial automation, mobile phones) or as a result of a single
breakthrough (e.g. LED as new white light source, Photos to digital images)

New political rules: The ideals of the government of the day in terms of an orientation toward
innovation and creating small business; encouraging innovation; self- help; cottage
industries; financing entrepreneurial development and ideas development through low interest
loans.
Political conditions which shape the economic and social rules may shift dramatically -for
example, the collapse of communism meant an alternative model - capitalist, competition - as
opposed to central planning – and many ex-state firms couldn't adapt their ways of thinking.
E.g. Centrally planned to market economy e.g. former Soviet Union Apartheid to post-apartheid
South Africa Free trade/globalization results in dismantling protective tariff and other barriers
and new competition basis emerges

Limited options: When firms/individuals are faced with limited options/end of the road for
some products, they are encouraged to think outside of the box and in order to remain viable
they look to turn ideas into something useful or marketable.
E.g. Encyclopedia Britannica finally running out of road as it is displaced by first CD-based, then
online and now open source encyclopedias like Wikipedia. Sometimes the firm manages to break
out and establish a new trajectory - e.g. Nokia from timber products to mobile phones.

Sea change in market sentiment or behavior

Public opinion or behaviour shifts slowly and then tips over into a new model - e.g. the music
industry is in the midst of a (technology-enabled) revolution in delivery systems from buying
records, tapes and CDs to direct download of tracks in MP3 and related formats
Long-standing issues of concern to a minority accumulate momentum (sometimes through the
action of pressure groups) and suddenly the system switches/tips over – for example, social
attitudes to smoking or health concerns about obesity levels and fast foods.
E.g. Apple, Napster, Dell, Microsoft vs. traditional music industry McDonalds, Burger King and
obesity concerns Tobacco companies and smoking bans Oil/energy, others, and global warming.
Opportunity for new energy sources like wind-power where Danish firms have come to dominate

Deregulation: The removal of governmental controls/legislation can lead to increased

competition. According to the Global Economic Symposium 2014, deregulation may have a
positive effect on employment creation.
E.g. Political and market pressures lead to shifts in the regulatory framework and enable the
emergence of a new set of rules.

Changes in business models: A business model is the means by which a firm aspires to get
value from the business activities. It incorporates the company’s processes such as how products
are made; for whom it is made. The business model provides a framework for how the firm will
compete in the market/industry. It involves value creation in the business. Changes in the
market/industry e.g. financial crisis, new technologies, acts of terrorism; shifts in perception
for example can impact the business models encouraging creativity and establishing new
products and processes.
E.g. Amazon.com in retailing and Southwest and other low-cost airlines.

Global Trends
Innovation within the marketplace is influenced by larger trends. Global insights play a crucial
role in identifying unmet needs and opportunities for innovation. Understanding how the
innovation landscape is shifting is important for businesses to anticipate and adapt to new
opportunities.
E.g Technologies such as cloud and edge computing, as well as bioengineering, have shown
steady increases in innovation and have expanded use cases across industries. Edge computing,
in particular, is projected to experience double-digit growth globally over the next five years.

New Knowledge
New knowledge can be a significant source of innovation for entrepreneurs. By staying up-to-
date with the latest advances in their field and learning new skills and techniques, entrepreneurs
can develop novel products, services, and processes that provide them with a competitive
advantage.
References

 Maharaj, N., Sanichar, B., Mootoo, R., & Rajkumar, P. (n.d.). Cape Fundamentals in
Entrepreneurship. San Fernandao: Genesis Books.