THE ROLE OF ENGINEERS IN

NATIONAL ECONOMY
DEVELOPMENT.

By
AYOOLA, Phillip (PhD)
► The American Engineers' Council for Professional Development
defines Engineering as: "The creative application of scientific
principles to design or develop structures, machines, apparatus, or
manufacturing processes, or works utilizing them singly or in
combination; or to construct or operate the same with full
cognizance of their design; or to forecast their behaviour under
specific operating conditions; all as respects an intended function,
economics of operation and safety to life and property.“
•One who practices engineering is called an engineer.
•Engineers borrow from physics and mathematics to find suitable
solutions to the problem at hand.
What do engineers do?
Engineers:
► design
► create.
► explore.
► innovate.
Engineers receive education and training in many different fields.
They work in many different environments.
Engineers do things that make the world worthy of living.
 Major Roles of Engineers in the Society
•Technical
•Social
•Economic

► Engineering bridges the gap between Society and Scientific

Knowledge.
What is Economic Development?
Economic development is a sustainable increase in living
standards that implies increased per capita income, better
education and health as well as environmental protection.
Economics can also be defined in many ways; following are
some of the definitions.
•Economics is the human Science which studies the
relationship between scarce resources and their various uses
which compete for these resources.
•Economics is the study of how society decide what to
produce, how to produce and whom to produce.
Economic Development
► The economic development process supposes that the
legal and institutional adjustments are made to give
incentives for innovation and for investments so as to
develop an efficient production and distribution for
goods and services.
Economic Activities
PRIMARY SECTOR
•Simply speaking primary sector refers to that sector of the economy which uses natural resource to produce
goods.
•Natural factors play crucial role in the production process. Agriculture and allied activities like mining,
fishery, forestry, diary and poultry are included in this sector.

SECONDARY SECTOR
•Secondary sector is also called as manufacturing sector or industrial sector.
•The sector which transforms one physical good into another is called secondary sector. The manufacturing,
electricity, gas, water supply etc. are included in this sector.

TERTIARY SECTOR:
The service sector of the economy is called tertiary sector. Services of various kinds like education, health,
banking, insurance, trade and transport are included in this sector. In advanced countries, the contribution
of tertiary sector to national income is the highest.
ECONOMY DEVELOPMENT

•Quality Education
•Clean and efficient energy
•Sophisticated infrastructure
•Improved social Amenities
•Increasing phase in GDP per capita
•Ability of self-production
•Good economic stability
THE ROLE OF ENGINEERS IN NATIONAL
ECONOMIC DEVELOPMENT
TECHNOLOGY AND INNOVATION
This has played a vital role in:
► Education
► Production
► Construction
► Information and Telecommunication
► Foreign Exchange
► Infrastructure
► Clean, Sustainable Energy
TECHNOLOGY AND INNOVATION

Quality Education with modern days technology:

Many developed countries balance and sustain their economy with returns from
their institutions and colleges

Efficient Production :
Production of goods have been multiplied with less human effort, low cost, and
improved qualities.
TECHNOLOGY AND INNOVATION

Information Communication and Technology:

► The rapid growth in ICT and Telecommunication has
open doors of opportunities, and in turn boost the
economy.
Infrastructure:

► The huge investment in Engineering in Dubai makes

it a must go area for luxurious lovers.
TECHNOLOGY AND INNOVATION

Development/ Construction:
The Engineers deal with the creation, improvement, and
protection of the environment, providing facilities for living,
industry and transportation, including large buildings, roads,
bridges, canals, railroad lines, airports, water-supply
systems, dams, irrigation, harbours, docks, aqueducts,
tunnels, and other engineered constructions within a given
region which produces high economic values.
Clean, Sustainable Energy:
► Power plays a huge role in any other developments that
happen to a country.

► Stable and sustainable power; stable and sustainable

economy.
Engineering Economics
•Engineering economics, previously known as engineering economy, is a subset
of economics concerned with the use and "...application of economic principles"
in the analysis of engineering decisions.
•Get familiar with project management Costing, Accounting and Learn all the
rudiment of economic development.
•You will need these knowledge as you advance in leadership during your
career.
► Engineers personal Development must include leadership and preparation for
participation in National politics. This is where decision makers and policy
that affects National economy are made.
•The Era of Engineers sitting back as advisers and consultants is fading Prepare
for the Leadership of your country
THE ROLE OF ENGINEERS IN NATIONAL
DEVELOPMENT
Engineers and Politics:
► Involvement of Engineers in politics afford them the opportunity to be at these
policy/decision making bodies. Engineers at these levels, use their professional
knowledge to attract and defend important engineering infrastructural
development projects. Similarly, Engineers in politics contribute to the
enhancement of the welfare of other Engineers thereby motivating them to higher
productivity for national economy development.
► Engineering is the bedrock for development of any serious Nation. China has 15
high policy makers, 9 are Engineers. You and I know the level where China is
today in terms of world power and National Economy Development.
Conclusion
•Every Section of Economic activity has the roles of engineering and
technology. Whether it is Raw material, manufacturing or distribution.

•The Challenges facing country in Energy, Infrastructures and environment

are engineering challenges.

•Engineers must play a much stronger role in the public policy process to
provide the right incentives for industry and others to move on sustainable
path so that engineers can be encouraged and supported to design
sustainable technology for the purpose of economic development that
benefits society in a holistic way now and in future.

•Therefore the engineers of 21stcentury cannot afford to sit back.

Recommendations
•Engineers need to develop broad fundamental understanding of their professional
responsibilities in the society.
•Students in tertiary Institutions need to begin to see themselves more as potential
engineering ambassadors and prepare for the challenges of participating in the
Socioeconomic activities in the country
•Their activities on campus shouldn’t be inclined on activism but on development and
innovation. The era of activism to gain power is fading. We are no longer in military era
•The era of engineers being limited to the workshops and on the field is becoming outdated.
•The students have an opportunity to integrate their "professional code" into their daily work
as engineering students.
•Programmes that bring professionals into the academic folds are to be more encouraged.
MODULE 1: CONCEPT AND PRINCIPLES OF ENTREPRENEURSHIP

1.0 INTRODUCTION
We welcome you to the first module of this course. This module gives a detailed explanation of the
concepts and principles of entrepreneurship We will take you through the origin of
entrepreneurship and show you some definitions of entrepreneurship. Understanding the core
principles of entrepreneurship is also very important in being a successful entrepreneur.

1.1 LEARNING OUTCOMES

At the end of this Module, you should be able to:
∙ Discuss the origin of entrepreneurship
∙ Discuss the various definitions of entrepreneurship
∙ Differentiate between entrepreneur and entrepreneurship
∙ State types of entrepreneurs
∙ List the characteristics of a successful entrepreneur
∙ Describe the Roles of Entrepreneurs
∙ Understand the core principles of entrepreneurship

1.2 EVOLUTION OF ENTREPRENEURSHIP

ENTREPRENEURSHIP - THE ORIGIN
The concept, entrepreneur, is derived from the French concept “entreprendre” which literarily is
equivalent to the English concept “to undertake” which simply means to start a business.
Schumpeter (1951) opined that the French economist Richard Cantillon was the first to introduce
the concept "entrepreneur" in his work in 1755. He viewed the entrepreneur as a risk-taker (Burnett,
2000).
Some scholars contend that it was an economist, Jean-Baptiste Say, who analysed the concept in
an advanced way in his work in 1821 where he identified entrepreneur as a new economic
phenomenon
Adam Smith, David Ricardo, and John Stuart Mill have written extensively on it, albeit referring
to it as "business management”.
Alfred Marshall buttressed Mill’s view by formally recognizing entrepreneurship as an important
factor of production in 1890; he viewed entrepreneurship as organization creation and believed that
entrepreneurship is the driving element behind organization (Schumpeter, 1951; Burnett, 2000).
Schumpeter (1951) concludes that by combining the various disparate theories, a generalized set
of entrepreneurship qualities can be developed.
Schumpeter then listed the characteristics of entrepreneurs as risk-bearers, coordinators and
organizers, gap-fillers, leaders, innovators or creative imitators.
1.3 DEFINITIONS OF ENTREPRENEURSHIP
Cantillon (circa 1730) views entrepreneurship as: “self-employment of any sort”.
Joseph Schumpeter (1934) equated entrepreneurship with the concept of innovation and applied it
to a business context while emphasising the combination of resources.
Penrose (1963) views entrepreneurship as the activity that involves identifying opportunities
within the economic system.
Leibenstein (1968, 1979) perceives entrepreneurship as involving "activities necessary to create or
carry on an enterprise where not all markets are well established or clearly defined and/or in which
relevant parts of the production function are not completely known”.
Gartner (1988) conceives entrepreneurship as the creation of new organizations.
Okpara (2000) defines entrepreneurship as the willingness and ability of an individual to seek out
investment opportunities in an environment and be able to establish and run an enterprise
successfully based on identifiable opportunities.
Nwachukwu (1990) regards entrepreneurship as a process of seeing and evaluating business
opportunities, gathering the necessary resources to take advantage of them, and initiating
appropriate action to ensure success.
In summary, entrepreneurship is a function, which involves the exploitation of opportunities that
exist within a market.

1.3.1 Definitions of an Entrepreneur

Putari (2006) quoted Say (1816) who asserts that the entrepreneur is the agent “who unites all
means of production and who finds in the value of the products...the reestablishment of the entire
capital he employs, and the value of the wages, the interest, and rent which he pays, as well as
profits belonging to himself."
— Knight (1921) views entrepreneurs as individuals who attempt to predict and act upon change
within markets.
— Schumpeter (1934) conceives the entrepreneur as the innovator who implements change within
markets through the carrying out of new combinations such as the introduction of new techniques
of production, re-organisation of industry, and innovation.
— Schumpeter (1934) further argues that the entrepreneur is an innovator, one that introduces new
technologies into the workplace or market, increasing efficiency, and productivity or generating
new products or services (Deakins and Freel, 2009).
— Cantillon (circa 1730) conceptualized the entrepreneur as the "agent who buys means of
production at certain prices in order to combine them" into a new product (Schumpeter, 1951).

— In Quick MBA (2010), the entrepreneur is defined as one who combines various input factors
in an innovative manner to generate value for the customer with the hope that this value will exceed
the cost of the input factors, thus generating superior returns that result in the creation of wealth.
1.3.2 Definition of Intrapreneur
—When an entrepreneur is not able to establish his or her own business and as such has to work
in an organization is referred to as an “intrapreneur”, that is, an entrepreneur within an
organisation.
— These individuals are entrepreneurs in their own right because they pursue the exploitation of
business opportunities as they emerge and are visionaries within a given organisation.

1.3.3 Definition of Technopreneur

—An individual whose business is in the realm of high technology, who at the same time has the
spirit of an entrepreneur.
— A technopreneur’s business involves high technology or to put it more clearly a technopreneur
is a technological innovator and a businessman all combined in one individual (Ogundele, 2007).

1.4. TYPES OF ENTREPRENEURS

1.4.1 Innovative Entrepreneur
An entrepreneur is preoccupied with introducing something new into the market, organization or
nation. They are interested in innovations and invest substantially in research and development.

1.4.2 Imitating Entrepreneur

These are also referred to as ‘copycats’.
— They observe an existing system and replicate it in a better manner.
— They could improve on an existing product, production process, and technology and through
their vision create something similar but better.
— This is the case of the student becoming better than the master!

1.4.3 Fabian Entrepreneur

—These are entrepreneurs who are very careful and cautious in adopting any changes.

— They are lazy and shy away from innovations.

1.4.4 Drone Entrepreneur

—These are entrepreneurs who are resistant to change.
— They are considered ‘old school’.
— They prefer to stick to their traditional or orthodox methods of production and systems.
1.5. CHARACTERISTICS OF ENTREPRENEURSHIP
1.5.1 Creative Activity
Entrepreneurship entails innovations. It deals with product innovation, and production techniques
innovation while bearing in mind the market;
1.5.2 Dynamic Process
Entrepreneurship is a dynamic process that has to bear in mind the dynamic business
environment. 1.5.3 Purposeful Activity
Entrepreneurship is an activity embarked upon for a specific purpose. This could be for profit-
making purposes, for humanitarian purposes or to bring a difference to the market.
1.5.4 Involves Risk
—Entrepreneurship is a very risky venture; entrepreneurial decisions can have far-reaching
impacts on the organization, the people in the organisation, and even the economy.
— These decisions are critical, enormous, and cannot be easily reverted.

1.6. CHARACTERISTICS OF AN ENTREPRENEUR

An entrepreneur must possess the following characteristics
— Risk bearing ability
— Technical Knowledge
— Ability to gather financial and motivational resources
— Self-confidence and multi-skilled
— Confidence in the face of difficulties and discouraging circumstances
— Innovative skills
— Results-oriented
— Risk-taker
— Total commitment
— Calm
— Focused
— Tolerance
— Balance
— Versatility
— Seriousness
— Planning ability
— Prudence
— Customer-centric
— Team player

1.7. ROLES OF AN ENTREPRENEUR

∙— Figure Head Role
∙— Leader Role
∙— Liaison Role
∙— Monitor Role
∙— Information Disseminator Role
∙— Spokesman Role
∙— Entrepreneurial Role
∙— Disturbance Handler
∙— Resource Allocator
∙— Negotiator role
∙— Social Roles of Entrepreneur
o Transformation of traditional indigenous industry into a modern enterprise
o Stimulation of indigenous entrepreneurship.
o Job or employment creation in the community.
o Provision of social welfare service of redistributing wealth and income.

∙ Economic Roles of Entrepreneurs

o Bearing the ultimate risk of uncertainty
o Mobilising savings necessary for the enterprise
o Providing a channel for the disposal of economic activities
o Utilising local raw materials and human resources
∙ Technological Roles of Entrepreneurs
o Stimulation of indigenous technology in the production process.
o Adapting traditional technology to modern system
o Adapting imported technology to the local environment
o Developing technological competence in self and the workforce through innovation
(Ogundele, 2007)

1.8. PRINCIPLES OF ENTREPRENEURSHIP

1.8.1 Principle Number 1: Know Who You Are

o Explore your strengths and weaknesses
o Look out for what you are good at, and search for new ideas that will give you an edge over
your competitors
 o Embrace knowledge, seek necessary information, and learn new skills that are relevant to
your potential business.

1.7.2 Principle Number 2: Go for the right Business/Opportunity

o Do a lot of findings, consult existing entrepreneurs in your line of business,

o Prepare a viable business plan for you to make the right choices.

o Devote your time, energy, and assets to the prospective business to achieve
good success.

1.7.3 Principle Number 3: Invest in people and build successful teams

o Assemble a team of people with requisite skills, who share your vision and passion
o Always receive feedback to know your strength(s) or weakness(es)
o Link yourself with customers, suppliers, investors, etc. for business success.

1.7.4 Principle Number 4: Always Build an Engaging Value

o Define your organisational value, make it clear, and always emphasise it.
o Value is a tool that motivates your team to perform optimally which may have been viewed
as unbearable.

1.7.5 Principle Number 5: You must break the link between the hours worked and the
values you create
o Don’t just work hard, work smart.
o You must be focused and persistent to achieve the desired result(s).

1.9. CONCEPT OF ENTREPRENEURSHIP DEVELOPMENT

Entrepreneurship development (ED) refers to the process of enhancing entrepreneurial skills and
knowledge through structured training and institution-building programmes. This accelerates
employment generation and economic development.
MODULE 4: KEY SUCCESS FACTORS IN BUSINESS
4.0 INTRODUCTION
According to the literature (empirical evidence), as well as observations and experience, it has been
discovered that success in business depends on the peculiar ability to spot opportunities in the
market and act on them by organising the necessary resources to offer something attractive to
customers and take on the attendant risks. This is the essence of entrepreneurship in a business
context.
The crucial ingredient in the whole process is, ‘the entrepreneur’. This is because he/she takes the
initiative and bears the risk of creating and/or organising an attractive offer of value to potential
customers. The entrepreneur’s ability to do this successfully depends on certain key success factors
that are categorised into:
(i) Motivation and Determination,
(ii) Ability,
(iii) Idea and Market, and
(iv) Resources.
This is shortened to MAIR.
After the business ideas have been identified (as discovered in Module 3), the next step is to carry
out an in-depth evaluation of each idea identified to make sure it has merit.
This is the focus of this Module, using MAIR Framework to review your motivation and
determination, ability, idea and market, as well as resources required to organise and run the
business venture with which to commercialise the idea.
Learning Objectives
At the end of this module, you should be able to:
(i) Identify and describe the key variables that determine success in setting up a successful
business.
(ii) Use MAIR to assess your business idea.
These factors are depicted diagrammatically as shown below (figure below).
4.2. KEY SUCCESS FACTORS
4.2.1. Motivation and Determination
It is widely acknowledged that to be successful, the individual or group needs to be highly
motivated and determined to set up the business to make it succeed. This will be reflected, for
example, in how persistent is such a person in overcoming obstacles that might get in the way, how
he/she goes about seeking information, and how he/she acts on opportunities. Additional indicators
might be commitment and attitude to work (quality, efficiency, long hours), previous attempts to
set up a business, and the support of family or partners.
The figure above is known as MAIR Framework which is adapted from Gibb, A. A. (1981).
(Source: International Labour Organisation (1996). Know About Business - Module 4: How to become an entrepreneur.)

4.2.2. Ability
Another important question is whether the individual or others involved have particular abilities.
These may be knowledge, technical, or managerial skills of relevance to the business or project.
One way of making up for any lack in this area could be to team up with people who have the
necessary expertise or buy it in.

4.2.3. Idea and Market

The important issue to be determined here is the viability of the idea, that is, the product or service
to be offered. In other words, does the idea (product or service) meet a need or want for which there
are customers who can afford it and are willing to use/purchase it in sufficient quantities to make
the whole project worthwhile (i.e., return a profit, in a business context)? How is the proposition
to be offered more desirable or better than what is currently available and how will competitors
react?
Because different parts of the organisation have different goals and processes, it's important to be
able to link idea management to the existing ones. New products often cannot be improved using
the same processes you’re using for improving services or customer satisfaction, which is why you
need to have multiple simultaneous processes at once.
4.2.4. Resources
Finally, the extent to which the person(s) involved can acquire or organise resources in an adequate
measure will not only influence performance but also, in some cases, whether they start at all.
Examples here include capital, cash, premises, materials, equipment, and labour. The availability
of infrastructure (e.g., utilities like electricity, telephone, roads) and support services might also be
important.
Conclusion
In order to turn the above four components into reality, a plan would be required. In business, this
is normally referred to as a Business Plan. On the whole a business plan should show four main
things, namely:
(i) Where you currently are with your idea, project, or business?
(ii) What do you wish to do?
(iii) How do you propose to go about it?
(iv) Is the project worthwhile?
This will be considered in detail in Modules 6 and 7.
In setting up the business, or before starting to operate, there may be legal or other statutory
requirements to be met. There may be a need to consult professionals such as lawyers, accountants,
and/or staff from small business support agencies for advice. The whole business and the process
need to be managed, and how well this is done in particular, finding and dealing with customers,
management of cash and finances, marketing, handling employees, dealing with suppliers, and
control systems will all affect performance.
 USING MAIR FRAMEWORK TO EVALUATE YOUR IDEA

MOTIVATION & DETERMINATION IDEA AND MARKET

a) Why have decided to pursue self-
a) Who are your customers and will they
employment? (Is it as result of pay? If not, who will pay?
retrenchment? frustration? not been b) Are there enough customers to make
fulfilled? wealth? solving problem? it work?
etc) c) How will you test your idea further to
b) What do you hope to accomplish? ensure that there is a market for it?
c) What are your expectations? d) How will you develop your product or
service IDEA
to ensureAND MARKET
it is distinct from
d) How committed are you to starting a your competitors?
business? e) Are you sure your idea can be
e) How courageous are to take risk? profitable?

ENTREPRENEUR

RESOURCES
a) What resources will you need to make it
happen?
b) What funding will you require?
c) How will you raise this funding?
d) Where will you go for help?
e) Can you build up the necessary networks
around you?
f) Can you find the tools, premises, supplies,
and human resources the business will
need?
ENTREPRENEUR
ABILITY
a) What are the key skills needed to
run the business effectively? (For
example, marketing/selling,
accounting, negotiating, etc.
b) Which of these skills do you have
and which do you need to
develop?
c) What is your plan for developing your
business skills?
d) Do you have a reliable source of
business?
e) What are your strengths and weaknesses?
Example of Using MAIR Framework to Evaluate Business Idea
MOTIVATION & DETERMINATION
a) Passionate about teaching others.
b) Reduce the failure rate in
Mathematics.
c) Known for helping students.
d) I am very resilient and hardworking
fellow.
e) Ready to lose, ready to learn more,
ready to win.
BUSINESS IDEA
Online tutorial
training on MTH
101
RESOURCES
a) Website and computer system.
b) Personal saving, from parents, and
relations.
c) Appeal to my parents
d) Departments of Mathematics as well as
Computer Science and Engineering.
e) I will engage the service of students.
f) All resources are available
IDEA AND MARKET
a) Customers are students that
registered for MTH 101 in OAU. They
are ready to pay because it has very
high unit and it is a compulsory
course.
b) There are at least 1,500 students.
c) Idea will be tested by making part of it
to be free.
d) It will be online so that students can
learn it at the comfort of their room.
e) It is profitable considering the number
of students.
ABILITY
a) Mathematics and computing
skills.
b) I possess the two skills.
c) I will attend SEO 003 and also consult
experts from the Institute for
Entrepreneurship and Development
Studies.
d) The source of information is my past
notes and textbooks.
e) Strengths: Persuasion & Teaching.
f) Weaknesses: Record keeping.
Module 7: INNOVATIONS AND APPROPRIATE TECHNOLOGY

7.0. INTRODUCTION
In this module, you are going to learn about the importance of innovation to entrepreneurship, as
well as the definition, sources, and channels of innovation. The module also discusses the concept
of appropriate technology.
Learning Objectives
At the end of this module, you should be able to:
(i) Define innovation and differentiate between innovation and invention.
(ii) Explain why and how innovation is important.
(iii) Explain different forms, sources, and channels of innovation.
(iv) Define appropriate technology.

7.1. CHANNELS OF INNOVATION AND PHASES IN SUCCESSFUL INNOVATION

The importance of innovation, especially in a business enterprise, has been established a long
time ago. For example, Joseph Schumpeter (1911), in his publication on “The Theory of
Economic Development”, described the vehicle of development as the innovation itself. Peter
Drucker also wrote that, from the business management point of view, there are only two main
tasks, that is, marketing and innovation. While the marketing function is to satisfy the current
needs of the consumers, innovation goes further to satisfy consumers' future needs. Therefore,
it can be concluded that without the ability for constant innovation, enterprise disappears once
the consumers’ needs, technology, or competition changes.
However, the factor which is responsible for establishing these new combinations is
entrepreneurs. Innovation is therefore the centrepiece of entrepreneurship. This is because an
entrepreneur is somebody who establishes new combinations, and thus fulfills the
entrepreneurial function. The essence of innovation is to fulfill the entrepreneurial function of
making new combinations.
8.1.2. Invention, Creativity and Innovation
For clarity, it is important to make a distinction between invention, creativity, and innovation.
While invention is the first occurrence of an idea for a new product or process, creativity is the
ability to bring something new into existence, and innovation is the process of doing new things.
For this lecture, innovation is defined as the renewal and enlargement of the range of products
and services and associated markets; the establishment of new methods of production, supply,
and distribution; the introduction of changes in management, work organisation, and the
working conditions and skills of the workforce (Korres, 2012).
Inherent in this definition are the various types of innovation, which include the introduction of:
a) New product or service (product innovation), which refers to any new or improved
product, equipment, or service that is introduced in the market.

1
 b) New methods of production (process innovation). This is the introduction of a new
procedure or technique of producing a product or offering a service, which reduces the
cost of producing the product or service or enables the production of new products.
c) New ways of organising business (organisational innovation). This refers to
the introduction of new approaches to managing or organising the firm. It is, therefore,
the creation or alteration of business structures, practices, and models, and may therefore
include process, marketing, and business model innovation.
d) Other areas where innovation can be created are the discovery of new sources of
supply and the exploration of new markets.

7.1.3. Forms and Classification of Innovation

7.1.3.1 Form of Innovation
According to Hamel (1997) in Dess and Lumpkin (2005), innovations come in different forms:
a) Technological innovativeness primarily comprises research and engineering efforts
aimed at developing new products and processes.
b) Products-market innovativeness consists of market research, product design,
and innovations in advertising and promotion.
c) Administrative innovativeness is concerned with novelty in management systems,
control techniques, and organisational structure.

7.1.3.2. Classification of Innovation

There are also various classifications of innovations according to degrees of
innovativeness. Hence, innovation can be classified in terms of whether it is radical,
incremental, modular, or architectural in nature.
a) Radical (or revolutionary) innovation, which is a newly marketed product whose
functionality, technical construction, performance characteristics, design, and use of
materials and components are new or substantially changed. For example:
• The introduction of a compact disc (CD) was a radical innovation in the music and
film industry, as well as a memory stick in replacement of the old 5¼ and 3½
inches floppy diskettes.
• Introduction of the photocopier in replacement of the carbon paper, and digital
camera in replacement of analog camera.
• Flat-screen technology television and computer monitor in replacement of bulk
cathode ray tube.
• iPhone and smartphone that replaced the old phone.
b) Incremental (or evolutionary) innovation, which is an existing product whose
technical characteristics have been enhanced or upgraded. For examples:
• Introduction of 32-bit chips to replace 16-bit chips

2
 • Upgrade from Pentium I through to IV processor.
• Gillette razors
• Introduction of Cherry Coke and Coke with lime.
c) Modular Innovation: This kind of innovation changes the core design of one or more
components but does not change the entire product architecture. This type of innovation
requires new knowledge for one or more components, but the architectural knowledge
remains the same. Examples are:
• Digital phone which replaced the analog phone.
• 360-degree smartphone camera.
• Touchscreen laptop computer.
• Miniature modular drones.
d) Architectural Innovation: The essence of this type of innovation is the reconfiguration
of an established system to link together components and parts in a new way (Henderson
and Clark, 1990 in Hager, 2006). Architectural innovation does not mean that the
components remain unchanged but they are changed in a manner that there are new ways
of linkage between the components. The change is so small that the core concept behind
the changed component is the same, and the associated scientific and engineering
knowledge remains the same. Examples are:
• Reduction of the size of the hard drives from 14-inches diameter disks to diameter
of 3.5-inches, and from 2.5-inches to 1.8-inches, and
• Desktop photocopiers.

7.1.4. Development of Innovation

There are several ways through which innovation can be created or developed. These are:
a) In the form of invention. Research and Development (R&D) is a major contributor to
innovation, generating a flow of technical ideas and continually renewing the pool of
technical skills.
b) An enterprise may be innovative by taking an idea from another business sector and adapting
it for use in its production processes or market (adaptation). c) The search for new, untapped,
market space is another driving force. This may rely on technological innovation or on
reconfiguring existing products and services to present a radical change that will be
perceived by customers as offering more or better value (value innovation).
c) It may be through the introduction of a comprehensively new approach to a business, such
as new business models of online retailers, to create new market space or increase
profitability in an existing market.

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7.1.5. Channels of Innovation
a) Internal Innovation: By using the firm’s resources and capabilities to innovate.
b) Cooperating to Innovate: When two or more firms form an agreement to combine their
resources and capabilities to innovate.
c) Acquiring Innovation: Through buying ownership of another firm’s innovations and
innovation capabilities.
d) Spillover: This occurs when there are changes in the technological capabilities of the
domestic firm due to the presence of foreign firms. This could arise as a result of
competition, labour mobility, backward or forward linkages, and demonstration effect.

7.1.6. Phases in Successful Innovation

The following five essential phases of successful innovation have been identified:
(i) Idea generation and mobilisation: This phase is the starting point for new ideas. Successful
idea generation should be stimulated by the pressure to compete and by the freedom to explore.
Once a new idea is generated, it is conveyed to the mobilisation phase, wherein the idea travels to
a different physical or logical location.
(ii) Advocacy and screening: According to Desouza et al. (2007), this phase is the period for
weighing the costs and benefits of the idea (cost-benefit analysis). Advocacy and screening have
to take place simultaneously to weed out ideas that lack potential without allowing stakeholders to
reject ideas impulsively solely based on their novelty.
(iii) Experimentation: The experimentation phase assesses the sustainability of ideas for a
particular firm at a particular time – and in a particular environment. In this phase, it is essential to
determine who the customer will be and what he or she will use the innovation for. With that in
mind, the firm might discover that although someone has a great idea, it is ahead of its time or just
not right for a particular market (Desouza et al., 2007).
(iv) Commercialisation: At this phase, the firm presents the product or service to its customers to
verify that the innovation solves their problems and then analyses the costs and benefits of rolling
out the innovation. According to Desouza et al, 2007), an invention is only considered an
innovation once it has been commercialised. Therefore, the commercialisation phase is a significant
one similar to advocacy in that it takes the right people to progress the idea to the next
developmental phase.
(v) Diffusion and implementation: Diffusion is the process of gaining the company’s overall
acceptance of an innovation, ultimately leading to the setting up of the structures, maintenance, and
resources needed to produce it.

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7.2. APPROPRIATE TECHNOLOGY
(a) Introduction and Definition
Appropriate technology is seen as a way of thinking (or ideology) that canvases small-scale, labour-
intensive, energy-efficient, environmentally friendly, people-centered, and locally controlled
projects. Therefore, in designing an appropriate technology the following are the focus:
(i) Belief that human communities can have a hand in deciding what their future will be like, and
that the choice of tools and techniques is an important part of this.
(ii) Recognising that technologies can embody cultural biases and sometimes have political and
distributional effects that go far beyond a strictly economic evaluation.
Hence, appropriate technology involves a search for technologies that have, for example, beneficial
effects on income distribution, human development, environmental quality, and the distribution of
political power, as well as productivity, in the context of particular communities and nations.
Appropriate technology involves attempting to ensure that technologies are fitted to the context
of their use, that is, the:
(i) Biophysical context which takes account of health, climate, biodiversity, and ecology.
(ii) Psycho-social context which takes into consideration social institutions, politics, culture,
economics, ethics, and the personal/spiritual needs of individuals.

(b) Characteristics of appropriate technology

(i) Low investment cost per workplace.
(ii) Low capital investment per unit of output.
(iii) Organisational simplicity.
(iv) High adaptability to a particular social-cultural environment.
(v) Sparing use of natural resources.
(vi) Low cost of the final product
(vii) High potential for employment.

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(c) Examples of Appropriate Technology

6
7.3. SUMMARY
In this lecture, you have learned about innovation, which is the process of doing new things. The
innovation initiative provides a chance for the organisation to think more holistically about
innovation from a business model perspective whether accountants, plant managers, and business
owners work alongside salespeople, engineers, and chemists.

As a dimension of corporate entrepreneurship, innovation is a firm’s commitment to creating and

introducing products, production processes, and organisational systems. Hence, if your firm wants
to remain competitive and prosper, it has no choice but to improve its innovation effectiveness
proactively.

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Module 5: Business Innovation Model

5.1. INTRODUCTION
Innovation is very important for all organisations (especially business enterprises) because the
product or service being offered is the centre of the activities of any organisation. As you will
discover in Module 8, innovation is associated with new or improved products, processes, and
organisational structure. Alongside these types of innovation is business model innovation which
requires changes to the foundational decisions upon which the business operates. Over the years,
Business Model Innovation (BMI) has gained popularity and has become an important aspect of
the business development process. The reason for its popularity is because of uncertain market
forces as well as shifts in customer habits, globalisation, and technological innovations. These
forces and changes are seriously posing challenges to all companies.
BMI is required to describe the process in which an organisation adjusts its business model which
is reflected in how a company delivers value to its customers. That is, whether through the
development of:
(i) New or improved products (or services),
(ii) Revenue streams,
(iii) Distribution channels,
(iv) Any other aspects of business management.
BMI happens when a company makes changes and adapts to remain relevant and competitive. A
business model innovation is therefore the deliberate change of an existing business model or the
creation of a new business model that better satisfies the needs of customers than existing business
models.
In this module you will learn about the concept of a business model and how you can use the most
popular BMI tool, known as Business Model Canvas (BMC), to navigate through the journey of
your business development or improvement.

Learning Objectives
At the end of this topic, you should be able to:
(i) Define the business model and identify its core areas.
(ii) Design a customer value proposition canvas.
(iii) Describe the elements of the business model canvas.
(iv) Design a simple business model canvas.
5.2. BUSINESS MODEL INNOVATION
The whole essence of a business enterprise, especially the one that will remain competitive, is all
about the exchange of value. That is, the business creates something that is of value to its target
customers (or consumers) in exchange for this value, this set of people gives the business
something that the owner wants (usually money).
Therefore, the concept of business model is about the unique value proposition of a business
enterprise and how it will be implemented. Note that the business model is not only about how a
business makes a profit but also about providing answers to fundamental questions such as: who is
the customer? and what does the customer value? That is, the business concept sees value from
the point of the customer. The value, from the customers’ perspective, could be related to solving
a problem, improving performance, or reducing risk and costs. The focus of the business model
is, therefore, on how an organisation does business, how it generates revenue, what value it offers,
who the customers are, and why customers would keep coming back to patronise the business.
The definition proposed by Alex Osterwalder, a leading strategist, and consultant for startups, is
adopted in this lecture. That is, the business model is the rationale for how an organisation
creates, delivers, and captures value (Osterwalder & Pigneur, 2009[1]). See Figure 5.1 below. In
other words, a business model is a conceptual framework that describes how a company creates,
delivers, and extracts value (Skarzynski & Gibson, 2008[2]).
It is important to state that a business model is not the same as a business plan. A business model
helps the entrepreneur to design and articulate how a business could work, and how innovation can
be carried out in the business. A business plan is a formal and detailed document that provides
background and financial information about the company, outlines the goals of the business, and
describes how the goals will be reached. Details on the business plan will be considered in Module
6.
Depending on the level of detail required, the business model can be based on the:
(i) Business Model Navigator (BMN) concept of the University of St. Gallen (visit
https://businessmodelnavigator.com/about.php for details), or
(ii) Business Model Canvas (BMC) by Alexander Osterwalder and Yves Pigneur (visit
https://www.strategyzer.com/canvas/business-model-canvas for details).
BMN method is not as detailed as BMC hence the latter concept is adopted in this lecture.

Figure 5.1. Business Model (Source: Nieminen, 2020[3])

5.3. VALUE PROPOSITION CANVAS
The starting point of thinking through the whole story of your business is the formulation of a
business value proposition. This is where you will establish the reasons why customers would
prefer your product or service over the competitors. A value proposition therefore defines the
benefits of a business’ product or service offered to the customer and expresses the offering of the
business in a way that compels the customer to buy and make a repeated purchase. Hence, the
entrepreneur must be able to establish what specific value he/she is offering to alleviate or reduce
the pains of or create benefits for the target customers.
Moore (2014[1]) developed a template for formulating a value proposition as shown
below: (i) For (target user)
(ii) Who wants/needs (target application)
(iii) The (product name) is a (product category)
(iv) That provides (a compelling reason to buy)
(v) Unlike (main competitor)
(vi) Our product (statement of primary differentiation)
Examples of a value proposition, using the above template 1:
Example 1 – Clean cookstove
The product or service of XYZ Ltd. is for (i) households in rural communities in Nigeria, (ii) who
need to cook daily over 3 stone fires, XYZ Ltd. provides (iii) a clean cookstove solution, (iv) that
saves customers money and encourages long-term usage, (v) unlike unsupported government
giveaway stoves, (vi) XYZ Ltd. is building a network of micro-entrepreneurs that provide ongoing
customer support through marketing, stove maintenance, and sales of fuel pellets”. (Adapted from
+Acumen, 2019[2]).
Example 2 – Herbal concoction

The product or service of XYZ Ltd. is for (i) elites in urban cities in Nigeria, … (ii) those who want
to drink herbal concoctions to boost their immune system … (iii) XYZ Ltd. provides hygienic and
well-packaged immune-boosting herbal concoctions, … (iv) that enhances customers’ prestige, as
well as affordable and accessible to them, … (v) unlike the roadside herbal concoction that is not
hygienic and not well packaged, … (vi) XYZ Ltd. is producing a well-packaged, hygienically
prepared, and accurate dosage herbal concoction”.

Any of the following can contribute to customer value creation (Osterwalder & Pigneur, 2009):
(i) Newness: The value satisfies an entirely new set of needs that customers previously did not
perceive because there was no similar product or service before, e.g., a cell phone.
(ii) Performance: That is, the product or service performs better than similar ones.
(iii) Customisation: Tailoring products or services to the specific needs of individual
customers or customer segments.
(iv) Getting the job done: That is, a product or service that helps customers get certain jobs
done.
 (v) Design: The product or service stands out because of superior design, especially in the
fashion and consumer electronics industries.
(vi) Brand/status: A product or service that makes the users to be unique from others. For
example, wearing a Rolex watch signifies wealth, class, etc.
(vii) Convenience/Usability: This is a type of product or service whereby there is an arrangement
to make it convenient or easier to buy or use it. For example, crediting your mobile phone
or paying bills through a certain code.
(viii) Cost reduction: A product or service that helps customers reduce costs. For example,
home delivery or service.
(ix) Risk reduction: This is a product or service having an arrangement whereby the risk incurred
by customers is reduced when the product or service is purchased. For example, warranty
or guarantee.
(x) Price: That is, offering a product or service that has the same quality as other substitutes
but at a lower price.
(xi) Accessibility: Making the product or service available to customers who previously lacked
access to it.
The tool for developing a value proposition is known as Value Proposition Canvas (see Figure 5.2
below) developed by Alexander Osterwalder and Yves Pigneur. It is used to position a product or
service around what the customer values and needs.
According to these authors, the first part of building a business model is to specify the customers
of the product or service of the business.
(i) Customer
Who is your customer? Describe your target (or most important) customers accurately. Specify
them based on types of customer segments, as described below:

• Mass market: Large group of customers with broadly similar needs and problems. •

Niche market: Specific and specialised customer groups, e.g., car part manufacturers.

• Segmented market: Market where there are slightly different needs and problems. Examples
are common in the watch, medical, and industrial automation industries.

• Diversified market: Customer segments with very different needs and problems. For
example, Amazon.com sells cloud computing through (a) online storage space and (b) on-
demand server usage.

• Multi-sided platform (or multi-sided markets): Two or more interdependent customer

groups. For example, Google needs a large user base to attract advertisers.
Value Map section Customer Profile section

Figure 5.2: Value proposition canvas

Once the target customers have been identified, a value proposition canvas is used to match the
product or service of the business with the needs of the target customers. The canvas is divided into
two main sections, that is, customer profile and value map.
1. Customer profile: Customer profile is divided into three parts, that is, customer jobs, pains,
and gains.
(a) Customer jobs: Here, the entrepreneur should describe the tasks or jobs the target customers
are trying to complete, such as:
· Functional jobs (e.g., mowing the lawn, eating healthy as a consumer, writing a report, or
helping clients as professionals).
· Social jobs (e.g., look trendy as a consumer or be perceived as competent as a professional).
· Personal/emotional jobs (e.g., feeling good or secure such as seeking peace of mind regarding
investment or achieving a feeling of job security).
(b) Pains: This is where the ‘pains’ of the target customers are described. That is, the negative
aspects customers hate and would like to avoid. Examples could be undesirable costs and
situations, negative emotions, and risks.
(c) Gains: This section describes the benefits that the customers expect and need, which may be
in terms of functional utility, social gains, positive feelings, and cost savings.
2. Value map: This section is also divided into three parts, which are product and service, pain
relievers, and gain creators.
(a) Product or service: This is where the entrepreneur will describe the product or service the
business plans to offer. That is the bundle of products or services that help target customers
get a job or task done.
(b) Pain relievers: This is a description of how the product/service to be offered will alleviate the
pains already identified under the customer profile. That is, how will the product/service
remove undesired costs or situations, dispel negative emotions, and mitigate risks?
(c) Gain creators: Gain creators describe how the product/service will create customer gains. That
is, how the product intends to produce outcomes and benefits that customers expect, desire, or
would be surprised by.

5.4. BUSINESS MODEL CANVAS

The Business Model Canvas is a strategic management tool used to visualise all the different
elements of how a business works. It can be used to develop new or change existing business
models. The business model canvas tool is used to analyse:
(a) What the business does,
(b) For and with whom,
(c) The resources it needs to do that, and
(d) How money flows in and out of the business.
There are four major parts of the business model. These are:
(a) The offering that constitutes the value proposition.
(b) The customers who relate to customer segments, channels, and customer relationships.
(c) Infrastructure which includes key activities, key resources, and key partners. (d)
Financial viability that includes cost structure and revenue streams.
Business model canvas has three Sections with nine basic building blocks (segments) that reflect
the different parts of a business (see Figure 5.3 below). These sections are where value is created,
delivered, and captured.