ENTREPRENEURS + INNOVATION + CREATIVITY

Lecturer Monika Skaržauskaitė

PLAN

1. Articles from online blogs and magazines

2. Student presentations – entrepreneurs of their choice

3. Who is entrepreneur?

4. Entrepreneurship and innovation

5. Creativity

Student Site Student Site

Arrifah Ratna Dewi

http://www.wired.com/

Qusay Alobaidi http://www.wired.com/

George-Teodor Moțica

http://www.businessweek.com/blogs/the-new-entrepreneur

Konstantine Gakharia

http://www.businessweek.com/blogs/the-new-entrepreneur

Kyunghwan Yoon http://gigaom.com/

Mubashir Iqbal http://gigaom.com/

Patrick-Eugen Moraru

mashable.com Keisha Laraine Ingram

mashable.com

Emre Kaplan http://under30ceo.com/

Ehizojie Abdullahi Haruna

http://under30ceo.com/

Hamidullah Nasiri http://www.inc.com/

Alexios Vasileiadis http://www.inc.com/

Min Sun Kim http://www.youngupstarts.com/

Ayaz Guliyev http://www.youngupstarts.com/

Who is entrepreneur?

DEMOGRAPHICS OF ENTREPRENEUR ARE CHANGING

Four primary characteristics

Students presentations:

ENTREPRENEUR OF MY CHOICE

1. why you chose this person in particular?

2. why this businessmen can be held an entrepreneur?

3. why his business is successful?

4. what factors provoked his creative thinking?

+ write down attributes which makes him/her successful of your entrepreneur on the board

1. Min Sun Kim

2. Qusay Alobaidi

3. Konstantine Gakharia

4. Mubashir Iqbal

5. Keisha Laraine Ingram

6. Arrifah Ratna Dewi

7. George-Teodor Moțica

8. Kyunghwan Yoon

9. Patrick-Eugen Moraru

10. Emre Kaplan

11. Ehizojie Abdullahi Haruna

12. Alexios Vasileiadis

13. Ayaz Guliyev

DISCUSSION

Entrepreneurs are born not made. 1. Pro and negative team-speakers must prepare speech of 5 minutes 2. Structure your argument - as if you were writing an essay, you need a

clear introduction, a middle and a conclusion. 3. Prepare questions for other team to answer (2-3) 4. Support your arguments with scientific research data, links to articles

of magazines, opinions of entrepreneurship thinkers

Time for research: 30 minutes, you can leave the classroom and discuss your position in private

INNOVATION AND ENTREPRENEURSHIP

Why innovation is important when studying entrepreneurship?

What is innovation?

variety of meanings

often associated with discoveries carried out by white-haired scientist-types in high tech industry labs or universities or a small group within successful company

much broader definition and wider functions

In 2002, listeners to the Today Programme on Radio 4 in a poll to mark 150 years of the UK Patent Office voted for their top ten inventions : 1. Bicycle (Pierre Lallement, 1866) 2. Radio (Guglielmo Marconi, 1897) 3. Computer (Alan Turig, 1945) 4. Penicillin (Florey & Heatley, 1940) 5. Internal Combustion Engine (Nicolaus Otto, 1876) 6. World Wide Web (Tim Berners-Lee, 1989) 7. Light Bulb (Thomas Edison & Joseph Swan, 1829) 8. Cat’s Eyes (Percy Shaw, 1936) 9. Telephone (Alexander G. Bell, 1876) 10. Television (John Logie Baird, 1923)

KEY ELEMENTS

PROCESS: Innovation is a process (implying, among other things, that it can be learned and managed)

INTENTIONAL: That process is carried out on purpose

CHANGE: It results in some kind of change

VALUE: The whole point of the change is to create value in our economy, society and/or individual lives

OPPORTUNITY: Entrepreneurial individuals enable tomorrow's value creation by exploring for it today: having ideas, turning ideas into marketable insights and seeking ways to meet opportunities

ADVANTAGE: At the same time, they also create value by exploiting the opportunities they have at hand

Using this conceptualization we are able to land on the following definition of innovation:

A PROCESS OF INTENTIONAL CHANGE MADE TO CREATE VALUE BY MEETING OPPORTUNITY AND

SEEKING ADVANTAGE.

INNOVATION VALUE CHAIN

very general sequence of activities that create value in our society and economy.

Key elements of innovation

KNOWLEDGE

CULTURE

PROCESS

The scientist or entrepreneur/innovator

http://www.youtube.com/watch?v=CYQ8FPqBa7k

Imagine that you were just hired to work for a very exciting company that recently received a lot of press for its “groundbreaking” products and services. Your new boss, the VP of Marketing, has made it her mission to instill a culture of innovation within one of the company’s most successful businesses.

While reviewing the profiles of employees from across the company, she noticed that you took a Entrepreneurship class in which you studied creativity, innovation and entrepreneurship. She calls you into her office and asks you to lead a brainstorming session with all of her employees.

The goal of the brainstorming session is to come up with practical definitions of the following different but related concepts. She’s also interested in how they relate to each other and whether you can come up with good examples of each:

1. What is creativity?

2. What is discovery?

3. What is invention?

4. What is innovation?

Can you help her out by finding reasonable definitions and examples of these?

THEORIES ON INNOVATION

1. Schumpeter – S-curves

2. Drucker – 7 sources of innovation

3. Kondratiev – waves of innovation

4. Rogers – diffusion of innovation

There is no dominant theory on the field and little agreement among managers and academics alike regarding what affects a company’s ability to innovate.

(1) Kondratieff innovation waves

K – WAVES

Attributes: change, entrance of radically new technology in leading economics -> diffused unevenly around the globe, impact on power hierarchies, culture and politics In economics, Kondratiev waves (also called grand supercycles, surges, long waves, or K-waves) are regular S-shaped cycles in the modern (Capitalist) world economy. Fifty to sixty years in length, the cycles consist of alternating periods between high sectoral growth and periods of slower growth.

K-waves are not based on natural law that says innovation boom comes every 50 years, but only amplifies that there is a tendency of innovations to come on line in clusters and it appears in lifecycles too.

Reading :

http://www.economist.com/node/186628

Most cycle theorists agree, however, with the "Schumpeter-Freeman-Perez" paradigm of five waves so far since the industrial revolution, and the sixth one to come. These five cycles are”

– The Industrial Revolution - 1771 – The Age of Steam and Railways - 1829 – The Age of Steel, Electricity and Heavy Engineering - 1875 – The Age of Oil, the Automobile and Mass Production -

1908 – The Age of Information and Telecommunications - 1971

According to this theory, we are currently at the turning-point of the 5th Kondratiev.

Source: Feb 18th 1999 From The Economist print edition

(2) Schumpeter S-curves

• Schumpeter kept alive the Russian Kondratiev's ideas on 50-year cycles, K-waves

• Schumpeter suggested a model in which the four main cycles

Schumpeter

• creative destruction • describes the way in which capitalist economic development arises out of the

destruction of some prior economic order • “the opening up of new markets, foreign or domestic, and the organizational

development [...] illustrate the same process of industrial mutation, that incessantly revolutionizes the economic structure from within, incessantly destroying the old one, incessantly creating a new one”.

• “creative destruction” waves that restructure the whole market in favor of those who grasp discontinuities faster

• S-shaped rate of adoption • Schumpeter identified innovation as the critical dimension of economic change.[18]

He argued that economic change revolves around innovation, entrepreneurial activities, and market power. He sought to prove that innovation-originated market power could provide better results than the invisible hand and price competition.

Examples

INTERNET has acted as a catalyst for creative destruction. The internet has allowed businesses to compete in markets outside of their geographic location, reach more consumers, create efficiencies and cut costs in manual processes as well as pioneer new techniques for doing business.

Kondratiev's ideas were not supported by the Soviet government. Subsequently he was sent to the gulag and was executed in 1938. In 1939, Joseph Schumpeter suggested naming the cycles "Kondratieff waves" in his honor.

What is entrepreneur for Schumpeter?

person willing and able to convert a new idea or invention into a successful innovation

they employ "the gale of creative destruction" to replace in whole or in part inferior innovations across markets and industries, simultaneously creating new products including new business models.

this way, creative destruction is largely responsible for the dynamism of industries and long-run economic growth.

(3) Drucker 7 sources of innovation

Drucker extended Schumpeter’s definition of entrepreneur’s as initiators of meta-events

For Drucker entrepreneurship is about taking RISK. The behavior of the entrepreneur reflects a kind of person willing to put his or her career and financial security on the line and take risks in the name of an idea, spending much time as well as capital on an uncertain venture.

Drucker’s view that in turbulent times such as recession, innovation is critical

In previous recessions, winners tend to be innovators not cost reducers or downsizers

Entrepreneur systematically searches for change, responds to it, and exploits opportunity

They look for opportunities!

ASSIGNMENT

7 sources for each student.

Reading + presenting of the material to the classmates

Duration: 30 min

1. What the source is all about?

2. Provide examples and case studies from the material

3. Why do you think this source is important?

SEVEN SOURCES FOR INNOVATIVE OPPORTUNITY

“Systematic innovation consists in the purposeful and organised search for changes and in the systematic analysis of the opportunities such changes

might offer for economic and social innovation”

p95

Source

The unexpected success (Apple), failure (Ford Edsel), outside event

Incongruities between reality as it actually is and reality as it is assumed to be or as it ought to be (overnight package delivery)

Process need Source innovation based on process need (sugar free products, caffeine free coffee, microwave owen)

Industry and market structures

changes that catch everyone unawares (health care industry: changing to home health care)

Demographics changes in the population (retirement homes for older people)

Changes in perception also changes in mood and meaning (exercise, health and green movement)

New knowledge both scientific and non-scientific (video industry, robotics)

By Drucker, P (1994) Innovation and Entrepreneurship, Elsevier and Drucker, P (2002) The Discipline of Innovation, Harvard Business Review, Aug 2002, Vol 80,

(4) Rogers diffusion of innovation

Diffusion of innovations

HOW, WHY, AND AT WHAT RATE new ideas and technology spread through cultures?

http://www.youtube.com/watch?v=zU3fIEPfctQ

The diffusion of innovation curve is useful to remember that trying to quickly and massively convince mass of a new controversial idea is useless.

It makes more sense in these circumstances to start with convincing innovators and early adopters first. All the categories and percentages can be used as a first draft to estimate target groups for communication process.

TYPES OF INNOVATION

Why you need to know with what type of innovation you are dealing with?

Understanding what type of innovation you are dealing with is of critical strategic importance when it comes to you deciding how you will react to an innovation, whether someone else has introduced it or whether you plan to introduce it to the marketplace.

TYPES OF INNOVATION (1) 4P’s of innovation

PRODUCT INNOVATION: changes in the things (products or services) which an organization offers

PROCESS INNOVATION: changes in the ways in which they are created an delivered

POSITION INNOVATION: changes in the context in which the product or services are introduced, coffee as premium product

PARADIGM INNOVATION: changes in the underlying mental modes which frame what an organization does, Ford cars

Source: Tidd, J., Bessant, J. and Pavitt, K. (2005), Managing Innovation – integrating technological, market and organizational change, Wiley, 3rd edition

SOUTH WEST AIRLINES Example: service innovation

– ‘no frills’ – low cost – achieved by means of: a single aircraft type (then and now

the Boeing 737), smaller low cost airports, rapid turnarounds (typically 15-20 minutes), high load factors

– diverted so me traffic away from existing carriers but more significantly it generated a lot of new business, especially leisure and business passengers who could be persuaded to fly rather than drive. As Herb Kellner (Dogannis, 2001: p128) put it:

‘we are not competing with airlines, we’re competing with ground transportation’

TYPES OF INNOVATION (2) Henderson & Clark

Source: Henderson and Clark (1990)

TYPES OF INNOVATION (2) Henderson & Clark

Source: Henderson and Clark (1990)

Incremental innovation

Incremental innovation refines and improves an existing design, through improvements in the components. However it is important to stress these are improvements not changes, the components are not radically altered. Christensen (1997) defines incremental innovation in terms of:

‘a change that builds on a firm’s expertise in component technology within an established architecture.’

Most common type of innovation

Incremental innovation would be case of offering a machine with a more powerful motor to give faster spin speeds. It leaves the architecture of the system unchanged

and instead involve refinements to particular components.

TYPES OF INNOVATION (2) Henderson & Clark

Source: Henderson and Clark (1990)

RADICAL INNOVATION

calls for a whole new design, ideally using new components configured (i.e. integrated into the design) in a new way. In Henderson and Clark’s (1990) terms,

‘Radical innovation establishes a new dominant design, and hence a new set of core design

concepts embodied in components that are linked together in a new architecture.

comparatively rare

Radical innovation is often associated with the introduction of a new technology. In some cases this will be a transforming technology, perhaps even one associated with the transforming effect of a Kondratiev long wave.

Examples

TYPES OF INNOVATION (2) Henderson & Clark

Source: Henderson and Clark (1990)

MODULAR INNOVATION

• doesn’t involve a whole new design, but involve new or at least significantly different components.

• function remains the same

Clockwork radio

The same radio but does not use external source of energy New technology but not as radical Opened up new markets for people who do not have access to power source

dragdis.com

smart walking stick with built-in sat-nav for elderly by fujitsu

designed by egle ugintaite from Lithuania, is a walking stick with built-in sat-nav. the next generation cane is designed to help elderly people find their way, as well as monitor things such as heart rate and temperature. its location can also be followed online and can be set up to send email alerts if it thinks the user may have fallen over.

Source: http://www.designboom.com/design/smart-walking-stick-with-built-in-sat-nav-for-elderly-by-fujitsu/

TYPES OF INNOVATION (2) Henderson & Clark

Source: Henderson and Clark (1990)

Architectural

Reconfiguration of established system to link together components in a new way

The function changes dramatically

There could be improved components, but they are not essential

http://vimeo.com/61210101

http://www.ted.com/talks/lang/en/saul_griffith_on_everyday_inventions.html

The innovation machine

http://www.economist.com/node/16888745

Where “more” creativity and innovation is happening in start-up’s or in established companies?

CREATIVITY AND INNOVATION

innovation ≠ creativity

Creativity is about coming up with the big idea. Innovation is about executing the idea —

converting the idea into a successful business.

Opportunity + successful implementation

EVERYTHING IS A REMIX

http://www.youtube.com/watch?v=coGpmA4saEk

Exploring creativity of the world where everything is a remix

New media created from old meadia

As a group:

1. Define main problem

2. Discuss the problem using 6 thinking hats method

Director of Everything is a remix talks @ TED

http://www.ted.com/talks/kirby_ferguson_embrace_the_remix.html

COMPONENTS OF CREATIVITY

Creativity and lead users

http://www.youtube.com/watch?list=ECF6C0319C607DEDC1&v=PTKREnr2vLU&feature=player_detailpage#t=373s

Not doing something for money

Example of lead users importance in innovation and creativity

Shows importance of peers that is why entrepreneurs work in hubs, valleys and teams

Where good ideas come from?