Innovation & Entrepreneurship
Innovation & Entrepreneurship
Innovation & Entrepreneurship
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• Standard of living
• Improved health
• Interesting work
• It’s fun!
Industrial Revolution
2nd – Are You a Human? A better alternative to the existing Internet tool for
human authentication
1st – TNG Pharmaceuticals A cattle vaccine that starves the horn fly by disabling
the blood thinner that it injects into the cow
https://rbpc.rice.edu/2023/results
How are we doing at innovation?
• Overall (A, B, C, D, etc.)
https://www.youtube.com/watch?v=i3b_ktTREq0
Why don’t inventions get into use?
Groups discuss and provide ideas
• Relative advantage
Process Innovation
• Implement a new or improved method of delivery for a product or making changes and
variations to existing technology, equipment or programs that are used in production
and services
Radical Innovation
• The creation of new technologies that open new markets, such as the invention of
airplane that provided a new form of travel (it is transformative, not incremental)
• Example: blockchain technology
Incremental Innovation
• Making improvements on an existing product or service and are directed at the existing
market
• In the automobile industry, the improvements made each year to the newest model of
car are incremental innovations. No new markets are formed, and existing technology
is used to make the car better
Examples of Incremental Innovations
• Each new version of Apple’s iPhone that comes out is typically incremental innovation.
iPhone features such as the camera and processor are tweaked to make an improvement
over the previous model
• When Gillette went from a single razor blade to a double blade, to now up to six blades, no
new markets were created, as the same consumers are buying the blades. There was no
new technology involved, so this is incremental innovation
• Residential washers and dryers have been transitioning from top-loading to side-loading,
and can handle larger loads. This incremental innovation used existing technology and
created no new markets, but stimulated demand for more purchasers at higher prices
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Competence-Enhancing Innovation
• when new and emerging technologies enhance existing competencies and capabilities
• Example: Each generation of Apple's iPhone (e.g., iPhone 12, iPhone SE, and iPhone X)
builds on the technology underlying the previous generation
Competence-Destroying Innovation
• when new and emerging technologies fundamentally destroy existing competencies &
capabilities, and the firm must develop new competencies & capabilities to compete in
the market
Architectural Innovation
• Occurs when new products or services use existing technology to create new markets
and/or new consumers that did not purchase that item before
• Example: the smart watch used existing cell phone technology and was repackaged into a
watch. This opened up a new market of purchasers by repackaging an existing technology
• Some firms have leveraged solar cell technology to produce small outdoor ground
lighting. This created a whole new group of consumers who decorate their yards with
these environmentally friendly lights
• Copiers used to be large and expensive machines purchased only for large offices. Canon
and others reconfigured these copiers to be small and usable on desktops, creating a
whole new market of people buying personal copier/printers
Component Innovation
• Change to one or more components of the product (change some
parts)
The type of innovation is dependent on
two factors
• Business owners and marketers use the product life cycle to make
important decisions and strategies on advertising budgets, product
prices, and packaging
What are the stages of the product life cycle?
Source: https://blog.hubspot.com/marketing/product-life-cycle
Once a product is found to be feasible and potentially profitable it can be produced,
promoted and sent out to the market. It is at this point that the product life cycle begins
Source: https://www.twi-global.com/technical-knowledge/faqs/what-is-a-product-life-cycle
1. Market Introduction and Development
• Developing a market strategy, usually through an investment in
advertising and marketing to make consumers aware of the product
and its benefits
• But there is plenty of evidence that products can fail at this point,
meaning that stage two is never reached
2. Market Growth
• This should see growing demand promote an increase in production
and the product becoming more widely available
• As the product life cycle reaches this mature stage there are the
beginnings of market saturation
• Retailers will not seek to promote your product as they may have done
in stage one, but will instead become stockists and order takers
4. Market Decline
• Eventually, as competition continues to rise, with other companies
seeking to emulate your success with additional product features or
lower prices, so the life cycle will go into decline
• Some companies will survive the decline and may continue to offer
the product but production is likely to be on a smaller scale and
prices and profit margins may become depressed
Stages of New Product Development
1. Idea Generation
• Brainstorm an idea (or ideas) that will help you solve an existing
customer problem in a new and innovative way
• As you’re coming up with ideas that will help you solve customer
needs, it’s important to have a robust understanding of your target
market
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3. Planning
• Formulate a final product idea/definition based on your initial idea
and research and begin coming up with your plans to bring it to life
• You may make multiple prototypes and go back and forth between
this stage and the testing stage before you have a finalized
prototype
5. Testing
• Before launching your product you need to test it to ensure it will
work as advertised and effectively solve your customer needs
7. Commercialization
• Where you introduce your products to market. Where people can
finally make use of what you created
Introduction to Entrepreneurship
2- Stimulating economic growth (this enhances economic development and generates new
wealth)
3- Community service (by solving a problem or developing a specific idea that makes it easier
for individuals in society)
4- Providing more advanced services and products of the highest quality (this in turn creates
intense competition between entrepreneurs, which contributes to the quality of products and
service provided to the public in order to strive to gain customer satisfaction and lead the
market)
Why Do People Become Entrepreneurs
1- To be their own bosses (independence and self-reliance not only at work but also in daily life)
2- To seek to implement their own ideas (freedom and independence in implementing their
ideas, it allows a degree of creativity for those wishing to implement their ideas)
3- This does not mean absolute freedom, because there are factors that influence, such as the
opinions of partners in the project, the directives of investors, and customer comments and
aspirations
4- To achieve financial returns and success (such as making their name successful in society and
making them have a real success story that they can be proud of)
Characteristics of an Entrepreneur
• Business owners share many of the same entrepreneur characteristics:
Leadership, vision, discipline, curiosity, creativity, adaptability, and the ability
to take measured risks
Developing these traits can help you become successful when launching your
business
• As Jeff Bezos, founder of Amazon, said, “Ideas are easy, but
implementation is difficult.”
Startup
A startup or start-up is a company or project undertaken by an entrepreneur to
seek, develop, and validate a scalable business model
2. Incubation
a state of anxiety, subconscious fear, and hesitation to do work and search for solutions
It is the stage of awareness used to grow to reach the stage of creative incubation
It takes from minutes to weeks
Methods are also drawn up, activating ideas on the ground
3. Illumination/insight/shining
Individual reaches some solutions or proposals that lead to the idea of a solution and a way out
of the impasse, where everything that was ambiguous before appears clear, and this stage is
considered the peak of the innovative process
4. Evaluation
The idea is clear here, but the validity of the creative idea may be evaluated, analyzed, and
compared to alternative ideas
5. Verification
Obtaining authentic, useful and satisfactory results, the creative product attaining social
satisfaction and the idea becoming material or on the ground
In the preparation stage, information is collected, and in the investigation stage, the validity
of the new ideas and their conformity with reality is verified
In the second, third, and fourth stages, subconscious mental actions take place that help the
individual in the emergence of innovative ideas
Idea Generation Techniques
• Idea generation techniques are activities and approaches that can
help people process and analyze their thoughts in order to think of
new inventions, solutions or designs
• You can use these techniques in both individual and group settings
2- Criticism of ideas is not allowed, whether laughing or making facial expressions (this hinders
creativity)
3- Encouraging the free expression of imaginative ideas without restrictions to collect more
ideas
4- We do not want anything to slow down the generation of ideas in brainstorming, for example
not writing down the ideas in detail
Focus Groups
• A focus group is a small group of people in your target market who meet for a guided
discussion about your business idea
• It is a research technique used to collect data through group interaction. The group
comprises a small number of carefully selected people who discuss a given topic. Focus
groups are used to identify and explore how people think and behave, and they throw light on
why, what and how questions
Library and Internet Search
• It defines a library as a collection of information resources made available to a community
for reference or borrowing, and can include physical or digital materials
• The objective of this activity is for the researcher to understand the routine and typical
activities of a user that the user performs by mere habit and that the user would perform
subconsciously
• Customer Advisory Board is a group of customers who come together on a regular basis to
share insights and advice with an organization. High-level executives at their organizations
and therefore can provide in-depth market insight
Innovation and Entrepreneurship
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One of the effective tools used to help evaluate ideas is the Idea Sketch Pad (which helps
evaluate ideas in a relatively short period of time)
The Really Big Idea Sketch Pad
Feasibility Analysis
• Determine whether the idea can be turned into a viable business to
create a successful business
• If this step succeeds, you may move to the next step or cancel the
project without wasting time, money, energy, or resources
Feasibility Study
• It is an opportunity to take a closer and insightful look at your idea to see if it needs
secondary or main axes, or if you should abandon it completely and move on to another idea
• It helps you consider the costs and activities required to set up and run a business, and how
to make an informed decision about whether to start a business and how to do it
Industry and Market Feasibility Analysis
• The focus at this stage is divided into two parts:
1) To determine the overall attractiveness of the industry as a suitable place
for new work
1. Sociocultural factors
2. Technological factors
3. Demographic factors
4. Economic factors
6. Global factors
1. Sociocultural Factors
• Social and cultural change can lead to radical changes, entirely new
industries, and radical transformation
• Example: In the 1970s and 1980s, women began entering the workforce at
much higher rates than had previously been the case (this is a result of the
women's movement of the 1960s); This led to:
• Example: Uber
4. Economic Factors
• Most companies suffer and struggle during economic recessions,
and some companies are able to grow
A product or service feasibility analysis determines the degree to which the product
or service idea is attractive to potential customers and determines the resources
needed to produce or deliver it
• Two questions are addressed: 1. Are customers willing to buy our products or
services? 2. Can we offer the product or service to customers at a profit?
• Primary research: direct data collection and analysis
• Secondary research: collecting data that has already been collected and analyzing it
Initial Search
• It may be done through the following:
1. Customer surveys and questionnaires
• The questionnaire must be kept short, and the questions must be
carefully placed so as not to bias the results
• Do not ask people you know who are easy to reach, and you must
poll the opinions of people who represent the target market
2. Focus Group
Involves recruiting a small number of potential customers (5 to 10)
to provide feedback on specific issues about your product or service
Listen carefully to what group members like and don’t like about
your product or service because they are telling you what is on their
minds
• An original, functional model of a new product that a business can put into the hands of
potential customers so they can see, test, and use it
• Prototypes point out potential problems in a product's design, giving inventors the
opportunity to address and resolve them even before it gets into customers' hands
• For example, computer software makers often put prototypes of new products into
customers' hands as they develop new products, which improve existing products' design and
add new features
• These experiments are known as beta tests and lead to an iterative design process where
software designers collect feedback from users and then incorporate their ideas into the
product in the next round of testing
4. In-Homes Trials
• It involves sending researchers into customers' homes to observe them as they
use the company's product or service; This is expensive and may not be
affordable for most entrepreneurs
7. Local data: Such as the Ministry of Commerce and Chamber of Commerce provide
useful data about the local market
8. The Internet: Benefit from the vast amount of market research information
available online, but care must be taken regarding the reliability of online sources
Financial Feasibility Analysis
• Extensive financial analysis that examines basic economic viability
• The four main elements that must be included in the financial feasibility analysis:
Initial capital requirements, estimated profits, time to expiration of cash flow, resulting return
on investment
• How entrepreneurs start with little funding:
• This process includes a variety of strategies and techniques that cover all business
management functions: marketing, recruitment, inventory management,
production, and other administrative processes to maintain the company
• Lace up your shoes and go,” meaning self-reliance in the self-startup process. Those
who start their startups with their own financial resources and refuse to rely on
investors’ money
How do these self-made people start their
entrepreneurial journey in this way without relying on
any external funding?
Later, when revenues begin to come in, these revenues are recycled
by creating a Cash Flow cycle, thus achieving the Growth required
for the emerging project
Expected profits (net income, profit): Entrepreneurs must predict the
possibility of achieving profits from the proposed business
Cash Flow Time: The total cash that will be spent to maintain the
business until the project achieves equal cash flow
If the entrepreneur cannot reach the point of positive cash flow before
running out of capital available for startup, the company dies
49% of startups fail due to insufficient capital - that is, not having
enough money to start...
Therefore, it must be taken into account that there are unexpected costs
Return on investment: This aspect combines estimated profits and
capital requirements to determine the rate of return expected to
result from the project
• Rate of return on invested capital = (estimated net profits / amount of capital invested in the
company) *100
• The higher level of risk involved in a potential business, the higher rate of return it should
provide to the entrepreneur (the return on investment is proportional to the rate of risk)
Entrepreneur Feasibility
• The feasibility analysis so far has proven that the industry and market are suitable, and there
is evidence of demand for the product or service in the market, and the concept seems
financially feasible...but a question remains:
• Is this idea right for me? Entrepreneurial readiness assessment: The knowledge, experience,
and skills necessary for the success of entrepreneurs (this is called entrepreneurial readiness)
• For example, starting a landscaping business requires knowledge of how to operate a lawn
mower, etc., and knowledge about plants and herbs
• Entrepreneurs can acquire the knowledge and skills they need through previous jobs, formal
education, interests and hobbies
On the other hand, a fine dining restaurant works closely and personally with customers to
ensure they get exactly what they want
4. Channels
The process of choosing appropriate channels is an important and
precise process due to its close connection to the ability to reach
customers, which is included in the marketing plan
o What are the human, capital and intellectual resources necessary for business success?
7. Key Partners
• It is a list of all external parties that the company needs to
complete its work related to the product or service
• They represent the various ways a company makes money from its value
proposition
• The sources of income are usually diverse and do not depend on one source
Careem Company
How Does Careem Work?
Uber Business Model
Skype Business Model
Training Center Business Model