Module Teaching Objectives

BS2402 Innovation & Entrepreneurship

Module Teaching Objectives

· To introduce students to the concept of innovation· To explain why it is important for all types of firm or

organisation and country economies· To learn how to innovate and the role of

‘entrepreneurial management’ in this context

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Module Learning Outcomes

· Understand what is meant by innovation· Understand what is meant by entrepreneurship · Assess why innovation and entrepreneurial

management are important for wealth and value creation

· Evaluate the potential importance of innovation and entrepreneurial management in your own organisation by using what you have learnt

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Your Expectations for module?

Think /note down, for 1min and be ready to share

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BS2402 Innovation & Entrepreneurship Module Structure Overview

Date Content Manual ref Assignment link

Wed 5th Sept Introduction to Innovation & definingAssignment Brief.Entrepreneurship.Importance of innovation

Unit s 1,2,3

Define innovation & types. Recent innovations in org’nUnderstand assignment. Define entrepreneurship/ entrepreneurial management.

Sat 8th Sept Entrepreneurial/ innovation mgt processContext for Innovation. Factors supporting/ hindering. Managing the processOvercoming barriers

Units 4,5,6

Behaviours that impede or facilitate entrepreneurial management .Critical factors/barriers?Making the innovation happen

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“There’s nothing quite like doing it…”

Entrepreneur

Teaching innovation and entrepreneurship...

Tension“This is how it should be done…”

University


Unit1: Introduction to Innovation & Entrepreneurship Unit Learning Outcomes

· Understand broadly what is meant by innovation· Understand broadly what is meant by entrepreneurship · Understand broadly why innovation and entrepreneurial

management are important for the creation of social and financial value

· Introduction to a basic organisational process model· Recognise the potential importance of innovation and

entrepreneurial management in your own organisation

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What is innovation?

What is your understanding of the term?

Brief class discussion

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BS2402 Innovation & Entrepreneurship What is innovation? Participants in

the EC Lisbon Council's 2010 Innovation Summit

Listen to this video clip: What is innovation? http://www.youtube.com/watch?v=2NK0WR2GtFs Afterwards –

1) Write down as many of the innovation descriptions as you can!

2) Just who are these people? Where do they come from

3) Class Discussion

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http://www.youtube.com/watch?v=2NK0WR2GtFs

http://www.youtube.com/watch?v=2NK0WR2GtFs


INNOVATION: A Definition (E. Roberts)

Successful Exploitation and Implementation

INNOVATION =+

INPUTSGroup memberKnowledge, skills, effort

Entrepreneurial/ Innovation

Management Process

OUTPUTS adding value

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Evolutionary “Creative Destruction” Joseph Schumpeter“This process of Creative Destruction is the essential fact about capitalism. It is what capitalism consists in and what every capitalist concern has got to live in….”

• introducing new commodities or qualitatively better versions of existing ones;

• finding new markets; • new methods of production and

distribution; • new sources of production for existing

commodities; • introducing new forms of economic

organisations” (Schumpeter, 1942)

Schumpeter's Innovation Definition:


• Innovation is the process by which new ideas are successfully exploited to create economic, social and environmental value.BIS (2011) http://www.bis.gov.uk/innovation

• ‘innovation is the process of successfully bringing something new into use, to a market or community, that satisfies need or latent demand’ (Gurling, 2010, Unit 1)

• ‘A process starting with an invention or an idea, proceeds with the development of the invention/idea and results in the introduction of a new product, process or service to the market place” (Acs and Audretch, 1998)

• Companies achieve competitive advantage through acts of innovation. They approach innovation in its broadest sense, including both new technologies & new ways of doing things’ (Michael Porter 2009)

• At most simple level “Something new of value to the world, made to happen!”

Broad set of Definitions for Innovation:

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http://www.bis.gov.uk/innovation


Without “new things” appearing in the marketplace:-

• No stimulus to demand and supply

• Jeopardises sustainable economic growth

Innovation is therefore an essential ingredient to a free-market economy to encourage growth in demand and supply – basic economics

Creative tides of destruction destroying old markets and replacing them with new ones


Innovation creates value

Types of Value– Economic

– Financial

– Social

– Environmental

– Aesthetic


Innovation is not the same as

Creativity

Creativity: The generation of new ideasInnovation: The successful exploitation of new ideas

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Kuhn suggests

“creativity forms something from nothing but that innovation shapes that something into products and

services “ (Kuhn, 1985).

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Generation of ideas

So how do you find ideas?

Discuss then watch video: Watch Video:

Steve Jobs Where do ideas come from?

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

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The Creative Thinking Process

Creative Process

Knowledge Accumulation Ideas

Evaluation &

Implementation

Incubation

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Knowledge Accumulation Ideas

Evaluation &

Implementation

Incubation

Individual or team – which is better?

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“Design” links creativity and innovation Shapes ideas to become practical and attractive

propositions for users or customers Design may be described as creativity to point to a

specific end (Cox review on Creativity in Business: building on the UK’s strength 2005)Design

ApplicationPrototyping

Piloting

Idea/Invention Innovation


Innovations can be classified (or categorised) in many different ways

All to help think about what you can do to achieve successful innovation

So.....here are some categorisations ..


Dimensions of innovations space

Transformational

Radical

Incremental

Product Service ProcessPerc

eive

d ex

tent

of c

hang

e

What is changed(Tidd, Bessant and Pavitt)


Tidd,Bessant & Pavitt’s: Definition of Innovation Incremental Innovation – small improvements to

existing products, services or processes- “do what we do but better”

Radical Innovation – Significantly different changes to products, services or processes - “ do what we do differently”

Transformational Innovation – Offering something that provides the platform on which other variations and generations can be built. (e.g. The wheel, printing press, internet – one thing, wide impact)


Tidd,Bessant & Pavitt’s: Definition of Innovation Product innovation – change in the things that

(products/services) which an organisation offers

Process innovation - changes in the ways in which they are created and delivered

Position innovation-changes in the context in which the product for services are introduced ( Market)

Paradigm innovation which frame what the organisation does ( Strategic / Domain Transformation)


Finnegan's Fish Bar: Video clip applying Bessant & Tidd’s innovation model to a Fish & Chip shop

http://www.managing-innovation.com/vr_finnigans.php

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Take note of the innovation examples given, ready to discuss

http://www.managing-innovation.com/vr_finnigans.php


Innovation: the OECD Definition - 4 types of innovation identified in the Oslo Manual for measuring innovation:

Product Innovation: a good or service that is new or significantly improved. Process innovation: involves a new or significantly improved production or delivery methodMarketing Innovation: Marketing innovation involves a new marketing method involving significant changes in product design or packaging, product placement, product promotion or pricing.Organisational Innovation : Organisational innovation involves introducing a new organisational method in the firm’s business practices, workplace organisation or external relations. These innovations can be new to the firm/educational institution, new to the market/sector or new to the world 26


Plus...... Service Innovation A new or significantly improved service concept

put into practice. e.g. can be a new customer interaction channel, distribution system or a technological concept or a combination of them.

Service innovation always includes replicable elements that can be identified & systematically reproduced in other environments.

Service innovation benefits both the service producer and customers

Competitive edge for the service provider can be based based on some technology or systematic method.

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Technical / technological innovation

…a mix of physical appliances and human ways of doing things involving:

1. Creating new knowledge

2. Generating technical ideas aimed at new and enhanced products, manufacturing processes and services

3. Developing those ideas into working prototypes; and

4. Transferring them into manufacturing, distribution and use

Sources: Scarborough and Corbin (1992); Roberts, E.B. (1988)

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Social Innovation – Mulgan and Albury 2003

• “New ideas that meet unmet needs, social innovations – are all around us.

• Include Fair trade and restorative justice, hospices and kindergartens, distance learning and traffic calming.

• Over last two centuries, innumerable social innovations, from cognitive behavioural therapy for prisoners to Wikipedia, have moved from margins to the mainstream.

• As this has happened, many have passed through the three stages identified by Schopenhauer for any new ‘truth’:

‘First, it is ridiculed. Second, it is violently opposed. Third, it is accepted as being self-evident” “

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Watch and listen: Skoll Foundation Video

An example of a social entrepreneurship starting with - Mohammed Yunus

Nobel Prize Winner Grammeen Bank for microfinance

http://www.youtube.com/watch?v=jk5LI_WcosQ 9 mins

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http://www.youtube.com/watch?v=jk5LI_WcosQ


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So who carries out innovation? Entrepreneurs!

Where do we find them?

Individuals in independent new ventures – new venture entrepreneurship

Working inside organisations – intrapreneurs as individuals or teams

Organisational level – corporate entrepreneurship - many different types depending on the organisation characteristics and what needs to be done


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“Innovation is the specific tool of entrepreneurs, the means by which they exploit change as an opportunity

for a different business or service. It is capable of being presented as a discipline, capable of being

learned, capable of being practiced.”

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Peter Drucker on the relationship between Innovation & Entrepreneurship

Drucker 1991 HBR The Discipline of Innovation


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Innovation & Entrepreneurship

Different sides of the same coin!

InnovationEntrepreneurship


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So what is it entrepreneurs do?

Class Discussion...


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Definition of Entrepreneurship: Individual ‘A Human Creative Act that builds something of value from practically nothing.

It is the pursuit of opportunity regardless of resources….to hand.

It requires vision, passion and the commitment to lead others in the pursuit of that vision.

It also takes a willingness to take calculated risks’

Source: Timmons New Venture Creation 3rd Edition


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‘Entrepreneurship is process by which individuals - either on their own or inside organisations - pursue opportunities without regard to the resources they currently control’

Stevenson, Roberts and Grousebeck 89

Individual or Corporate entrepreneurship


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Stevenson and Gumpert 1990“the process of discovering innovative opportunities, evaluating them and managing the innovation process to bring the innovation successfully into use”

Sharma and Chrisman 1999“ a process whereby an individual or a group of individuals in association with an established company, creates a new organisation or instigates renewal or innovation within the current organisation”

Corporate Entrepreneurship Definitions


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A pattern of management behaviour that produces innovation (individual, group or firm level)

• Perceives and Identifies innovative opportunities

• Takes ‘Risk’ in pursuing this opportunity

• Finds and Gathers scarce resources into appropriate combinations to create an organisation, which delivers innovation and value to customer, founder, investor and stakeholder

• Continually ‘reaches’ for the necessary resources to solve problems and foster firm growth (Baumol)

Entrepreneurship:


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Fitting the entrepreneurial management process onto innovation using Robert’s innovation model

Successful Exploitation and Implementation

INNOVATION =+

INPUTSGroup memberKnowledge, skills, effort

Entrepreneurial/ Innovation

Management Process

OUTPUTS adding or creating value

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Unit 2: Role of Innovation & Entrepreneurship in the Economy


Why is entrepreneurship & Innovation so important?

Class Discussion

• National Level

• Organisation Level

• Individual Level

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National Level - The impact of entrepreneurship / new firm starts / innovation on economic performance• Number of new enterprises linked to overall GDP

performance ( Link of TEA / global entrepreneurship monitor to economic performance / OECD Audretsch & Thurik

• I.e. positive effect of start-ups on economic growth.

In Developed Economies

1. Industry structure is generally shifting towards an increased role for small enterprises.

2. Extent and timing of this shift not identical across countries.

3. Shift in industry structures towards a greater role for SMEs heterogeneous / shaped by country-specific factors. 42


UK “Innovation Nation” White Paper Mar. 2008

“Innovation is essential to the UK’s future economic prosperity and quality of life. To raise productivity, meet the challenges of globalisation and to live within our environmental and demographic limits, the UK must excel at all types of innovation.”

UK Coalition Government 2011

Innovation is the process by which new ideas are successfully exploited to create economic, social and environmental value. http://www.bis.gov.uk/innovation 2011 43

http://www.bis.gov.uk/innovation


Why innovate? EU Commission considers http://ec.europa.eu/enterprise/sme/innovation_en.htm#

“Innovation is now widely understood to be the driving force in economic growth. ( Addition CG- in a free market economy)It is new products and services, and new methods for making or delivering them which add value to our economy, and enable us to improve standards of living. SMEs are responsible for much of the innovation which leads to new higher value products and services (even if ultimately larger firms may take on production and mass marketing of such innovations), and so the European Commission seeks to promote innovation to SME’s and all organisations across Europe”

Organisational level

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http://ec.europa.eu/enterprise/sme/innovation_en.htm


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• Entrepreneurship & firm creation long been recognised as a vital force driving innovation.

• With globalization & co-incident shift towards a knowledge-based economy, link between entrepreneurship policy & innovation received renewed attention.

• By underpinning firm creation & firm expansion, entrepreneurship policies strengthen innovation, increasing productivity in the enterprise sector.

• In return, policies fostering innovation will tend to spur firm creation as the results of R&D are commercialized.

OECD Fostering Entrepreneurship


Individual level: The Organisation for Economic Co-Operation and Development Towards an Enterprising Culture. (OECD (1989) - • "An enterprising individual has a positive, flexible & adaptive

disposition to change, seeing it as normal and as an opportunity rather than a problem.

• To see change in this way, an enterprising individual has a security born of self-confidence, & is at ease when dealing with insecurity, risks & the unknown.

• An enterprising individual has the capacity to initiate creative ideas & develop them into action in a determined manner.

• An enterprising individual is able, even anxious to take responsibility, is an effective communicator, negotiator, influencer, planner & organiser. An enterprising individual is active, confident and purposeful — not uncertain & dependent“

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1. Economic renewal / rejuvenation within the business environment (see J. Schumpeter, 1934) and enterprise

2. Response to accelerating pace of technological change, shorter life cycles, globalisation of markets (Krondatiev Waves) (Tidd, Bessant & Pavitt)

4. Socio - political cohesion improvement in communities as a means of furthering economic development through the third sector (Mort, Weerawardena & Carnegie 2003)

3. Value Creation and Competitive Advantage for those able to mobilize knowledge , technological skills and experience to create new products processes and services (Barney 91)

Reasons for intense focus on Innovation

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Recognise opportunity Find Resources

Develop Venture by picking and deploying resources

Create ValueEntrepreneurial Goals and Innovation Context

Strategic Vision and direction

Learning

CG Adapted Innovation and E’ship Management Model: Bessant and Tidd 2nd Ed 2011


Dyson Case Study: see electronic manual p 8 Unit 1

• http://www.dyson.co.uk/about/story/ •

http://news.bbc.co.uk/1/hi/business/1802155.stm

• http://news.bbc.co.uk/1/hi/uk/3046791.stm

View, Read and Discuss49

http://www.dyson.co.uk/about/story/



http://news.bbc.co.uk/1/hi/uk/3046791.stm


Where do ideas come from within the company? How does the company encourage

Opportunity selection Innovation development Successful implementation ie the

management process adopted What barriers did he face in introducing the Dyson

vacuum cleaner? Is Dyson an entrepreneur? Why?


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BS2402 Innovation & Entrepreneurship Your Organisation: Task before

next time Ask around amongst your colleagues at work and find

out what “new things” have been introduced in the past. It is very easy to forget that the things that surround you

were once probably new? Eg zips, trainers, biros, plastic bottles....the same

has probably been happening in your work context... Try and identify their categories using the previous

slide labelled Dimensions of Innovation Space Any people around who consistently “ make new things

happen? Could you categorise them as having an entrepreneurial approach through successfully introducing innovation?

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Learning




• http://www.dyson.co.uk/about/story/ • http://news.bbc.co.uk/1/hi/uk/3046791.stm

• http://www.youtube.com/watch?v=vjD69XIv0xs (4min)

View, Read and Discuss

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http://www.dyson.co.uk/about/story/

http://news.bbc.co.uk/1/hi/uk/3046791.stm

http://www.youtube.com/watch?v=vjD69XIv0xs


Where do ideas come from within the company? How does the company encourage

Opportunity selection Innovation development Successful implementation ie the

management process adopted What barriers did he face in introducing the Dyson

vacuum cleaner? Is Dyson an entrepreneur? Why?


54


Exercise (if time) - in 3s. 10min.

• Discuss your own organisations and/or sector.• What innovations can you think of within them?

– Some may be quite old– Are they innovations created by your organisation

or innovations that you use?

• What type are they? – process, service, product?– incremental, radical?

55

BS2402 Innovation & Entrepreneurship Your Organisation: Task before

next time Ask around amongst your colleagues at work and find

out what “new things” have been introduced in the past. It is very easy to forget that the things that surround you

were once probably new? Eg zips, trainers, biros, plastic bottles....the same

has probably been happening in your work context... Try and identify their categories using the previous

slide labelled Dimensions of Innovation Space Any people around who consistently “ make new things

happen?” Could you categorise them as having an entrepreneurial approach through successfully introducing innovation?

56

BS2402 Innovation & Entrepreneurship Your Organisation: Task

throughout module Can you think of any nagging work problems or

opportunities that need action? Start to think, and jot down ,ideas for solving these

problems or taking advantage of the opportunity. Can you get a few colleagues together, or suggest

it as a subject for a work meeting?

We will look further at prompting ideas and creativity on Sat 3rd March.

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Contributions to Study of Entrepreneurship

CAUSESWhy?PsychologySociology

Importance of the individual culture and community

BEHAVIOURHow?Management

How to achieve entrepreneurial behaviour and outcomes

EFFECTSWhat?Economics

Function by which growth in the economy is achieved

(Derived from Stevenson and Jarillo SMJ 1990)


What Characteristics do you associate with an Entrepreneur?


The Entrepreneur… (from Southon & West, 2002)

Entrepreneurs are:

confidentcharismatic

obsessed with workambitious

in a hurryarrogant

manipulative

high in energy poor completers

impatient at times


Psychology: The Causes Why do people behave as entrepreneurs?• Why do we want to know?

• Picking the right people / economic growth

• Psychological approach: Understanding the entrepreneurial personality

• Personality Traits (Hisrich & O’Brien 82, Chell 91)

• Cognitive Theories of Behaviour

• Socio-cultural:• Environmentally contingent


Personality Trait Approach: Internal Characteristics which explain Behaviour ? -

Internal Locus of Control (Miller & Freisen 84) Need for Achievement

(McCelland 61)

Desire for Autonomy (McCelland 61)

Tolerance of Ambiguity and Uncertainty (Schere 82)

Risk Taking /Overoptimistic (Begley & Boyd 87)

Financial motivation?


Watch and listen: Skoll Foundation Video

An example of a social entrepreneurship starting with - Mohammed Yunus

Nobel Prize Winner Grammeen Bank for microfinance

http://www.youtube.com/watch?v=jk5LI_WcosQ 9 mins

63

http://www.youtube.com/watch?v=jk5LI_WcosQ


Problems with the Trait approach• Little predictive power: no guarantee of

entrepreneurial performance• Personality traits change over time

• Ignores influence and interaction with the Environment: Social and Cultural, Nature and nurture debate

• Difficulty in distinguishing the innate from learnt patterns of behaviour


Socio-cultural Approach

Environment acts as stimulus• Geographic and Demographic Factors (Urban / Rural,

Location / Cluster effect, Age Profile etc)

• Economic Factors (Economic Climate, Legislative Environment, Specific Govt Assistance Schemes)

• Social Factors (Class,Gender, Education, Family antecedents, Experience, Cultural background)

• Market / Technology Development Environment acts as stimulus


Cognitive Theories: Entrepreneurial Behaviour Models

Behaviour modified by interaction with the environment

Personality traits + Environmental Factors + Individual Attitudes & Motivation + Learning = Behaviour


A pattern of management behaviour that produces innovation (individual, group or firm level)• Perceives and Identifies innovative opportunities• Takes ‘Risk’ in pursuing this opportunity (link to self-confidence)

• Finds and Gathers scarce resources into appropriate combinations to produce an organisation to deliver that innovation(s)

• Continually ‘reaches’ for the necessary resources to solve problems and foster firm growth (Baumol)

Management approach

• Decision-making based on bias and heuristics; networking; opportunism


Sharon Wright - Magnamol• Where did Sharon get the idea?• Which roles is Sharon currently fulfilling and what

does she want from the Dragon/ Dragon to fund?• What risks has/ is she taking? (you may have to infer).

What do you think spurred her on to take the risks?• What resources is Sharon using currently?• What characteristics does Sharon have that have

helped her succeed, and so impressed the Dragons?


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Learning



Entrepreneurial Management Style (after Stevenson & Gumpert , 1989)

‘PROMOTOR’ ‘TRUSTEE’

‘Entrepreneurial’ ‘Administrative’

Proactive Disinclined to change

Tolerant of uncertainty and ambiguity Guards resources

Able to make incremental changes in Interested in maintainingresponse to environmental pressures the status quo

Q: What type of manager is your manger?


Which Types is G-tec here of Organisation (Burns and Stalker, 1961)

‘mechanistic reproducer’ ‘organic innovator’

• Routines and competencies similar to existing organisations

• Copied routines• Decisions base on ‘rational’ and

‘scientific’ principles• Formal planning and budgeting• Risk averse resource maximisers• Structured heirarchy

• Competencies and routines significantly different to others

• Decisions based on cognitive biases and heuristics

• Incremental change to direction and resource allocation expected.

• New resource combinations• Overconfidence and optimism• Resource leveragers; use rather

than own• Flat organisation structure

Where does your organisation sit on this continuum?


Summary

• Defined innovation & considered types of innovation• Considered the importance of innovation for different

groups• Assessed entrepreneurship from different

perspectives.• Started to consider entrepreneurial

management............more Saturday 10th September

BS2402 Innovation & Entrepreneurship Lesson Plans/ Process

Date Content Manual ref Assignment linkWed 5th Sept

Intro to innovation Unit 1 Introduction

Assignment brief Importance of innovation.Entrepreneurship and intro to entrepreneurial management.

Unit 2, 3;

Understand assignmentDefining innovation, entrepreneurship, entrepreneurial management & importance of innovation.

Sat 8th Sept

Context for innovation including management orientationInnovation process . Ideas generation

Units 4, 5 . Part unit 6

Critically analyse & evaluate behaviour that supports innovation in your organisation.Starting ideas generation for your specific innovation.

Barriers to innovation.Assignment Q&A

Unit 6 Identify barriers to innovation in your organisation & how to overcome them

Documents

Module Teaching Objectives