1. Innovation and its importance
Chapter
Module-II
Innovation and its importance
McGraw-Hill/Irwin
Entrepreneurship, 7/e
Copyright © The McGraw-Hill Companies, Inc. All rights reserved.

2. Creativity & Innovation
Creativity is the ability to develop new ideas and to discover new ways of looking at problems & opportunities
Innovation is the ability to apply creative solutions to those problems & opportunities to enhance or to enrich people’s lives

3. PHASES OF CREATIVE PROCESS
Phase 1: Background or Knowledge Accumulation
Involves seeking and gathering of information through observations, readings, conversations with others, attending seminars, meetings and workshops, etc.
Phase 2: The Incubation Process
Entrepreneurs deliberately allows creativity to spur by breaking-away from the problem and let the subconscious mind work on it.
Phase 3: The Idea Experience
Discovery of the idea or solutions to the problems (eureka factor).
Phase 4: Evaluation and Implementation
Evaluation and implementation of workable ideas requires high level of persistency and patience. Entrepreneurs do not easily give-up when they face obstacles. 3

4. COMPONENTS OF CREATIVITY
Creative thinking skills
The use of creative intelligence to approach problems and find solutions
Knowledge
Four styles of creative intelligence:
Intuitive
Innovative
Imaginative
Inspirational
Motivation
Extrinsic
Intrinsic 4

5. Creativity is thinking new things & innovation is doing new things
Entrepreneurs succeed by thinking and doing new things or old things in new way
Having a great new idea is not enough; transforming the idea into a tangible product, service or business venture is the essential next step
Leadership expert Warren Bennis says. “ today’s successful companies live and die according to the quality of their ideas”

6. Innovation Process - bringing an invention to market and users
Innovation is planned - does not happen by chance
Requires team work and cooperation
inventors and researchers
process, product and design engineers
lawyers and marketing specialists
financial and production managers
sales, advertising and distribution specialists
entrepreneurs

7. Features of Innovation
Novelty: Innovation is something new
Function
Technic
Design (?)
Implementation: Innovation is introduced into market
Modification: A innovation should cause a change/improvement

8. Types of innovation

9. Incremental Innovation
Incremental innovation refers to simple changes or adjustments in existing products, services, or processes
Continuous improvement, is the process of trying to find ways to improve and enhance a company’s products and processes from design through assembly, sales, and service

10. Breakthrough Innovation
A breakthrough innovation is an innovation in a product, process, technology, or the cost associated with it that represents a quantum leap forward in one or more of those ways
Breakthrough approaches to innovation are inherently more risky than incremental innovation approaches

11. Risks Associated with Innovation
Innovation involves creating something that doesn’t exist
Market risk
Technology risk

12. Innovation behavior of the enterprise
External factors
- market environment characteristics
- regional institutional characteristics
- policy institutions
Internal factors
- organizational
- personal
- financial, etc

13. Competitive advantage/innovate
Difficult to imitate
Sustainable
Significant value to customer

14. Obstacles to Innovation
Conservative and hierarchical structures hostile/unfriendly to innovation
New ideas threaten the profits of existing products and services
Inventors not able to present ideas in business terms; many do not even see the business benefits of their ideas
general no-saying attitude of people & culture of the enterprise

15. Translation of Creative Idea into Useful Application
Innovation Process
Translation of Creative Idea into Useful Application
Analytical Planning
Organizing Resources
Commercial Application
Implementation
To Identify
Product Design
Market Strategy
Financial Need
To Obtain
Materials
Technology
Human Resources
Capital
To Accomplish
Organization
Product Design
Manufacturing
Services
To Provide
Value to Customers
Rewards to Employee
Revenue to Investors
Satisfaction of Founders

16. Sources for innovative idea
Innovation idea
Sources for innovative idea
Analyze market, customers and environment;
Analyze your existing business
Check your idea;
Check yourself
Evaluation level
Implementation
Results

17. Sources of New Idea Family, Friends, Relatives Market Research Firms,
Industry,
Consumers
Channel partners
Existing goods and services
Suppliers
Competitors
Employees

18. Methods of Generating New Ideas
Focus groups
number of group members from 6-12
Moderator focuses discussion of the group in a directive or nondirective manner.
Co. women’s slipper-concept of “warm & comfortable slipper that’s fits and old shoe” – 12 women focus group
An excellent method for initially screening ideas and concepts.
Brainstorming
A Group method for obtaining new ideas & solutions

19. Brainstorming Conti.... 4 Rules should be followed
No criticism is allowed by anyone in the group
Freewheeling is encouraged-wilder the idea the better
Quantity of ideas is desired- greater the no. of ideas the greater the likelihood of the emergence of useful ideas
Combinations and improvements of ideas are encouraged- ideas of others can be used to produce still another new idea

20. Focus group and brainstorming is different in the sense that FG is structured or moderated...while BS is not a debate or discussion like that....its people giving lots of ideas without criticism allowed

21. Methods of Generating New Ideas
Problem inventory analysis
Instead of generating new ideas themselves consumers provided with list of problems in general product category
Then asked to identify & discuss products in this category that does not have particular problem
Can be used to test a new product idea.
Effective method since its easier to relate known products to suggested problems & arrive at a new product idea than to generate an entirely new product idea by itself
Results must be carefully evaluated as they may not actually reflect a new business opportunity.

22. Reverse brainstorming
A group method for obtaining new ideas focusing on the negative.
Finding fault by asking questions “in how many possible ways can the idea flop”
Maintain group morale
Stimulate innovative thinking
Often involves identification of everything wrong with an idea- followed by discussion how to overcome these problems

23. Brain writing Form of written brainstorming.
It is a silent, written generation of ideas by a group of people.
This sheet can b passed around on as well
Pass the sheet around – reach its owner
The only thing wrong with it is that there is no excitement of verbal discussion

24. Attribute Listing Steps:
Identify the product or process you are dissatisfied with or wish to improve.
List its attributes. For a simple physical object like a pen, this might include: material, shape, target market, colors, textures, etc.
Choose, say, 7-8 of these attributes that seem particularly interesting or important.
Identify alternative ways to achieve each attribute (e.g. different shapes: cylindrical cubic, multi-faceted….), either by conventional enquiry, or via any idea-generating technique.
Combine one or more of these alternative ways of achieving the required attributes, and see if you can come up with a new approach to the product or process you were working on. 24

25. SCAMMPERR (Micheal Michalko)
A checklist that could assists students to imagine various changes they can make to an existing products/things to create a new one.
SCAMMPERR stands for:
S - Substitute - components, materials, people
C - Combine - mix, combine with other assemblies or services, integrate
A - Adapt - alter, change function, use part of another element
M - Magnify - Make it enormous, longer, higher, overstated, added features
M - Modify - increase or reduce in scale, change shape, modify attributes (e.g. colour)
P - Put to another use
E - Eliminate - remove elements, simplify, reduce to core functionality
R - Rearrange - change the order, interchange components, change the speed or other pattern.
R - Reverse - turn inside out or upside down.
Students can use these changes as starting points for Lateral Thinking 25