Chapter

2
Entrepreneurship and Innovation

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Outline:
• Creativity And Entrepreneurship
• Business Idea
• The creative process
• The importance and commercialization of technology-based
innovation
• Product Development Processes
• Technology Transfer
• Intellectual Property

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From Creativity to Entrepreneurship

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 Creativity, Innovation and Entrepreneurs

Creativity is thinking new things, and innovation is doing

new things

Researchers believe that entrepreneurs succeed by

thinking and doing new things or old things in new ways .

Entrepreneurship = creativity + innovation

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 What does it take to be creative ?

A Initial Idea

A Willingness to engage in difficult work

Customers who are willing to buy your idea

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Business Idea?

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 What is a Business Idea?
• A business idea is the response of a person or
persons, or an organization to solving an
identified problem or to meeting perceived
needs in the environment (markets,
community, etc.).
• Finding a good idea is the first step in
transforming the entrepreneur’s desire and
creativity into a business opportunity.

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 Why Generate Business Ideas?
• You need an idea to start a new business
• Business ideas need to respond to market needs
• Business ideas need to respond to changing consumer wants and
needs
• Business ideas help entrepreneurs to stay ahead of the
competition
• Business ideas use technology to do things better
• Business ideas are needed because the life cycles of products are
limited
• Business ideas help to ensure that businesses operate effectively
and efficiently
• Business ideas can help specific groups of people (elderly,
disadvantaged, those with disabilities)
• Business ideas help to solve natural resource scarcity, pollution
and depletion/reduction 8
 Sources of Business Ideas

Good business ideas are a prerequisite for initiating a new

business venture. However, good business ideas do not usually
just occur to an entrepreneur.
Sources:
– Hobbies/Personal Interests
– Personal Skills and Experience
– Media (newspapers, magazines, TV, Internet)
– Business Exhibitions
– Surveys
– Customer Complaints
– Natural scarcities and pollution
– Changes in Society
– Brainstorming
– Being Creative 9
 Evaluating a Business Idea

Each business idea should be evaluated in terms of:

• Present market: The size of the presently available market
must provide prospects of immediate sales volume to support
operations
• Market growth: There should be prospects for rapid growth
and high return on invested capital
• Costs: Some of the costs of production will include: a) start up
costs, b) costs of raw material inputs, c) labor costs, d) selling
costs, e) efficiency of production processes, f) service,
warranty, customer complaints and g) patents and licenses.
• Business risks: In assessing business risk consider the following
factors: Market stability in economic cycles , Technological
risks , Import competition Size and power of competitors ,
Legislation and controls , Time required to generate profit
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 Creativity: Exercise
• See the figure below. Link all nine dots with only four straight lines,
which have to be drawn without any breaks and in one.

Nine dots

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Cont…

Nine dots

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Cross the line / think outside the „box“

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14
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 The Right Answer

 Find the one that is different from the others.

“The right answer

approach becomes
deeply ingrained in our
thinking…the difficulty is
the most of life isn’t this
way”
-Roger van Oech

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 Managing for Creativity
• Barriers to Creativity Enhance Ceativity
• Searching for the one “right”
• Expecting creativity
answer
• Expecting and tolerating failure
• Focusing on “being logical”
• Blindly following the rules • Encouraging curiosity
• Constantly being practical
• Problems=opportunities
• Viewing play as pointless
• Trainings to tap one’s creative
• Becoming overly specialized capacity
• Avoiding ambiguity
• Capture ideas and harness
• Fearing looking foolish
them
• Fearing mistakes and failure
• Believing that “I’m not • Providing support
creative”
• Rewarding creativity
• Invite lateral thinking 17
The creative process

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• This is the seeding stage of a new idea.
• It is the stage where the entrepreneur
recognises that an opportunity exists.
• The idea germination takes place according to
interest, curiosity of the entrepreneur

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• On the basis of the idea, interest and curiosity the
need is judged by the entrepreneur and he starts
looking for the answer to implement the idea.
• If the idea is to launch a new product or service then
market research is conducted.
• That happens because the seed of curiosity has taken
form of an idea, the entrepreneurs foresee the future
of the product

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 Give the subconscious time to reflect on the
information (daydream, relax, etc)
 The entrepreneur starts thinking about the idea and
implementation in his sub-conscious mind
 Study the problem/opportunity in a wholly different
environment
 E.g studying the pros and cons of manufacturing
the product before he had launched it.

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• In this period of illumination the idea re-surfaces in
realistic way.
• The entrepreneur comes out with viable plan to give
practical shape by collecting raw-material, arranging
funds, policy–making for the implementation of
idea.

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• Also called the validation or testing stage.
• Validate the idea is accurate and useful (conduct
experiments, prototypes, etc)
• This is the most difficult phase of creativity as
obstacles begin to appear.
• This is the developing stage in which knowledge
is developed into application

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Innovation

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 Types Of New Products

High
New product New to the world
lines products
(20%) (10%)
Newness to Company

Improvements Additions to
to existing existing pro-duct
products lines (26%)
(26%)

Cost Repositioning
Reductions (7%)
Low (11%)

Low High
Newness to Market

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 The importance and commercialization of
technology-based innovation

INCREASING MOMENTUM OF INNOVATION

Markets and technologies are changing more quickly than ever. Thus,
speed is one of the key competitive weapons.
What are the major advantages of speeding products to be launched on
the market?
 Speed yields advantage over competitors:
 Speed yields higher profits:
 Speed means fewer surprises:

DRIVERS OF INNOVATION
• Technology advances:
• Changing customer needs:
• Shortening product life cycles:
 Profit and cash for new Product Development

Modification
turn over
Market launch

Expansion

Maturity
Development

Ageing
Time / Phase
Competitor appears
Innovation
(sometimes as Imitator)

Profit

Today‘s Profit is the basis for Time / Phase

innovation and new products
Investment
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 Innovation & Turnover
What happens to our profits with and without innovation?

Turnover
Target
4. Increase turnover through
new innovations
3. Increase turnover through
innovative projects in progress

2. Increase turnover through

marketing present products
1. Prediction of turnover with
our present product portfolio
and without innovation
Present
time
Past Future
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 The relation between the factors

Quality

Cost Time

Innovation happens when one is improved without

negatively affecting the other two.
Maintain the same quality reducing either costs or time

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 Scrap Rate of New-Product Projects
For every 7 concepts, one succeeds!
Number of concepts for a new product

For every 4 development projects, One

Screening & one becomes a commercial winner!
Successful
7 Evaluation
Product
6 Business
5 Analysis
Development
Testing
4 Commercialization
3
2
1

0 10 20 30 40 50 60 70 80 90 100

Percentage of Project Time

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 New Product Development Processes
Before the product can be introduced into the market (product launch), it has
to be developed.

Stage-gate model
DISCOVERY

DRIVING NEW PRODUCTS TO MARKET

IDEA SCREEN

GATE
1 SECOND GO TO GO TO GO TO
SCREEN DEVELOPMENT TESTING LAUNCH

STAGE 1 GATE STAGE 2 GATE STAGE 3 GATE STAGE 4 GATE STAGE 5

2 3 4 5

SCOPING BUILD DEVELOPMENT TESTING &

LAUNCH
BUSINESS CASE VALIDATION

ZAR

€€€

POST - LAUNCH $$
A lot ofprocess models forinnovation processes do exist ;
The Stage - Gate - Model was originally created by
R. Cooper. REVIEW
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Discover stage + five key stages

• Stage 0: Discovery: Activities designed to discover

opportunities and to generate new product ideas.
• Stage 1 - Scoping: A quick and inexpensive assessment of
the technical merits of the project and its market prospects.
• Stage 2 - Build Business Case: Technical, marketing and
business feasibility are accessed resulting in a business case
which has three main components: product and project
definition; project justification; and project plan.
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 Cont…
• Stage 3 - Development: Plans are translated into concrete
deliverables. The actual design and development of the
new product occurs, the manufacturing or operations plan
is mapped out, the marketing launch and operating plans
are developed, and the test plans for the next stage are
defined.
• Stage 4 - Testing and Validation: The purpose of this stage
is to provide validation of the entire project:
– the product itself, the production/manufacturing
process, customer acceptance, and the economics of
the project.
• Stage 5 - Launch: Full commercialization of the product -
the beginning of full production and commercial launch.
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Technology Transfer
• Technology Transfer is the application of technology to a
new use or user. It is the process by which technology
developed for one purpose is employed either in a
different application or by a new user. The activity
principally involves the increased utilization of the existing
science/technology base in new areas of application as
opposed to its expansion by means of further research
and development. (Langrish et al., 1982)
• The process of promoting technical innovation through
the transfer of ideas, knowledge, devices and artifacts
from leading edge companies, R&D organizations and
academic research to more general and effective
application in industry and commerce. (Seaton and
Cordey-Hayes, 1993)
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 Cont…
• International transfer of technology essentially
means the movement of technological knowledge
and information across international borders and its
effective diffusion into recipient countries.

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 Horizontal and Vertical Technology Transfer
• Horizontal transfer refers to an established technology
being transferred from one operational environment to
another. This is more common when technology is being
transferred from industrialized to developing countries

• Vertical transfer refers to technology being transferred

from research to development to production. Therefore
it follows the progressive stages of invention, innovation
and development, with the technology becoming more
commercialized as it proceeds through each stage. This
can be within one organization or a transaction between,
say, a research institute and a manufacturing company.
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 Technology Adoption

• Adoption of technology refers to the actual

acquisition and eventual utilization of a
technological product.

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 Factors influencing Technology Adoption
The following factors influence the adoption of technology
 Use and user: the decision of the individual to make use
of a certain functionality
 The process of adoption: The decision of the individual
to adopt and make use of a new technology or service,
from the moment he or she perceives a need through
the decision to acquire the technology or service to the
actual use whenever the occasion to use it is there.
 The process of diffusion: The process by which a
technological innovation moves within society from the
first adopters to the last adopter groups.
Cont…

There are two types of diffusion effects:

– Innovation: trial of product caused by advertising
and promotions
– Imitation: trial of product caused by word-of-
mouth recommendations and reputation
Technology Adaptation and Appropriateness
• Rarely is the same technological solution optimal
everywhere. The value of an innovation depends on socio-
economic, climatic, and ecological specifics.
• Important innovative activities adapt technological
solutions to specific conditions.
– Export of technologies across regions without adaptation may
lead to negative environmental side effects and waste.
• A technology may have several versions to meet needs
and capabilities of various users in a region, e.g., large vs.
small farmers’ versions of a machinery. The establishment of an
innovative capability starts with a buildup of capacity to support
and adopt innovations and new technologies.
 What is appropriate technology?
• Appropriate technology has been used to cover a wide
range of both technologies and lifestyles including
sustainable living, alternative fuels, and ethical technology
transfers.
• A technology is considered appropriate if it solves a social
problem without negative effects.
• Every new technology has consequences for society. A
technology is appropriate when its intended positive
consequences outweigh its unintended negative
consequences
 How do we evaluate appropriateness?
• There are three ways of evaluating appropriateness:
technical, cultural, and economic.
– Technical--considering the technical knowledge and
background of the people who will be using this
technology.
– Cultural—the relationship of the technology to the
critical social systems in the society including family
systems, religious beliefs, division of labor in a society,
and levels of education and training.
– Economic--a technology's effect on income levels and
income distribution in a society and income disparity
between different socio-economic groups.
 Assessment of an appropriate technology
• Various factors for assessment of appropriateness would
include the following:
– What is the need?
– Is there an adequate business environment in place for
this technology?
– What is the best technical option for the transfer?
(Some issues include the requirements for operating the
technology, repair facilities for the technology, scope of
the technology)
– What are the possible unintended negative effects of
the technology?
– What are the broader cultural, political and/or social
effects of the technology?
 Factors that foster Technology Transfer
• high quality of incoming communication;
• readiness to look outside the firm;
• willingness to share knowledge;
• willingness to take on new knowledge, to license and to enter
joint ventures;
• effective internal communication and coordination mechanisms;
• deliberate survey of potential ideas;
• use of management techniques;
• awareness of costs and profits in R&D departments;
• identification of the outcomes of investment decisions;
• good-quality intermediate management;
• high status of science and technology on the board of directors;
• high-quality chief executives; and
• high rate of expansion.
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 Mechanisms for Technology Transfer
• Public-Private Partnerships
– Government co-financed developments
• Private-Private Partnerships
– Joint Ventures with business fit
• University-Private Partnerships
– Targeted R&D collaboration
• Technology Intermediaries
– NGOs, Government

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 Cont…
Mechanisms for TT between university/public R&D centres, and
industry/private/end users

• Collegial interchange, conference, publication

• Consultancy and technical services provision
• Exchange program
• Joint venture of R&D and joint research projects
• Cooperative R&D agreement
• Licensing
• Contract research
• Science Park, Research Park, Technology Park or incubators
• Training
• New start-up or spinoffs
• Extension programmes
• Technology donations 46
 Types of Intellectual Property Rights
• Intellectual property (IP) rights are the legally
recognized exclusive rights to creations of the mind.
Under this law, owners are granted certain exclusive
rights to a variety of intangible assets.
• Common types of intellectual property rights include
• patents
• Copyrights
• Trademark
• Trade secrets
• Industrial design rights

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 Cont…
Patents
• It grants an inventor the right to exclude others from
making, using, selling, offering to sell, and importing an
invention for a limited period of time, in exchange for the
public disclosure of the invention.
– For new and useful products and
– For processes for the manufacture of new or existing products

• Inventions patentable
– Art, Process, Method or Manner of manufacture;
– Machine, Apparatus or other Articles;
– Substances produced by Manufacturing
– Computer Software
– Product Patent for Food/Chemical/Medicines or Drugs 48
 The Patent Process
Document Patent Patent Patent Patent
disclosure search application examination grant

Initial filling of Preliminary Inventor files Patent office makes Patent office
creation with search of patent formal written through search and documents new
patent office records by application with patent patent grant
to establish inventor or legal drawings, claims examination, and and allowed
record of idea agent to uncover declarations, and specifies claims claims for
prior claims and required fees allowed or recordation
patents, if any problems to be
resolved.

Record of idea Opinion by Creation given Creation records as Final patent

with official legal agent as status of “patent pending” recorded and
file number to the “patent filed” subject to third “letters patent”
patentability with file arty objections or sent to inventor.
of invention number counter claims

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Cont…

Copyright
• It gives the creator of original work exclusive rights
to it, usually for a limited time. It means apply to a
wide range of creative, intellectual or artistic forms
or work.
– For example, musical composition, literary work such as
poems, plays etc.

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 Copyright Procedure
Declaration Application
Deposit
Issue
Print copyright Make application to
declaration by the the Copyright
owner on property Office, pay required Obtain
caution: Owner fees verification of
must declare in copyright
published from but and
not sell or distribute registered
copyright item number from
Forward
before it is Library of
concurrently with
registered Congress
application copies
of material or
excerpts required
for deposit wit the
Library of
Congress

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Trademark
It is a recognizable sign, design or expression
which distinguished products or services of a
particular trades from the similar products or
services of other traders.

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 Filling for a Trademark
Applicant Filling
Written application Drawings prepared Specimen prepared

Using standard form or plan Formal drawing on Image, photograph,

paper, the trademark is white paper using black facsimile, or artist
described and classified with ink for photographing
rendering in flexible file
ownership declaration

Patent Office Action

Trademark examination Trademark issue

Patent Office searches records Trademark is registered, copies are sent to

and examines the trademark for applicant, and the trademark is published
lawful recording in the Official Gazette

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Cont…
Trade Secret
 Any confidential business information which
provides an enterprise a competitive edge may be
considered a trade secret.
• For example, Coca-Cola formula

Industrial design
• It protects the visual design of objects that are not
purely utilitarian.
– It can be a two or three dimensional pattern used to produce
a product, industrial commodity or handicraft.

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