Entrepreneur
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IMPORTANCE OF INNOVATION IN ENTREPRENEURSHIP
ABSTRACT
Initially when Peter Drucker wrote about innovation and entrepreneurship in the mid 1980s (Innovation and Entrepreneurship Principles and Practices, 1985) the same was based on the then prevailing business practices and environment. In the past twenty seven years, there has been tremendous change in the way business is done, as a result of which the nature and concept of Innovation and Entrepreneurship too have been influenced. With the new innovations & progress in business practices the mindset of entrepreneurs have also changed, the entrepreneurs of today are more confident than the entrepreneurs of earlier period & look for something challenging intellectually. The companies today have very good opportunities but at the same time, they are faced with exceptional challenges and threats that need to be tackled. Today, innovation and entrepreneurship have changed. There are different ways of breeding, executing and practicing those concepts around the world. This paper makes an attempt to look & review at Drucker’s theory, to see what’s applicable for today and what is not.
Innovation involves problem solving and an entrepreneur is a problem solver. An entrepreneur does things in a new and a better way. A traditional businessman working in a routine manner is not entrepreneurial. Innovation leads to the dynamics that governs the interaction between science, industry, and society. Innovative organization wants must have to prepare for renewing the offerings and its delivery process to its stakeholders to survive in today’s globalised world. In the present paper, concept of innovation and entrepreneurship has been studied by the authors. The paper will also include examples of innovative entrepreneurs and how the innovation in products/services helps the business in survival and growth in present globalised market place.
1. INTRODUCTION
What is meant with entrepreneurship and how does this relate to innovation? Entrepreneurship and innovation are concepts that have been given multiple meanings. Innovation and entrepreneurship are often regarded as overlapping concepts. This can be traced back to probably the most well known definition of entrepreneurship, by Schumpeter who defines entrepreneurs as individuals that carry out new combinations (i.e. innovations). Schumpeter distinguishes four roles in the process of innovation: the inventor, who invents a new idea; the entrepreneur who commercializes this new idea; the capitalist, who provides the financial resources to the entrepreneur (and bears the risk of the innovation project); the manager, who takes care of the routine day-to-day corporate management. These roles are most often executed by different persons. The literature on entrepreneurship recognizes a variety of entrepreneurial roles in economic change, such as: 1. the person who bears uncertainty (Knight 1921); 2. an innovator (Schumpeter 1934); 3. a decision maker (Casson 2003); 4. an industrial leader (Schumpeter 1934); 5. an organizer and coordinator of economic resources (Marshall 1890); 6. an arbitrageur, alert to opportunities (Kirzner 1973; 1997); 7. an allocator of resources among alternative uses (Schultz 1975).
1.1 ENTREPRENEURSHIP
The word “Entrepreneurship” has been derived from the French word “Entreprendre” which means “To Undertake”. Entrepreneurship can be viewed as a creative and innovative response to the environment and an ability to recognize, initiate and exploit an economic opportunity. An entrepreneur is an innovator who introduces something new in an economy. Entrepreneurship is doing things that are generally not done in the ordinary course of business.
In summary, entrepreneurship is the process of providing value through establishment of a unique complex of resources in order to enjoy opportunities. Entrepreneurship is not a ‘personality trait’; it is a feature to be observed in the actions of people or institutions. Entrepreneurs in health, education or business work basically the same way. Essentially, they do not just do something better, but do it differently. Despite the long record of investigation of entrepreneurship as well as much effort of researchers, like other concepts of human science, it is difficult and even impossible to provide a certain definition for that. Addressing the evolutionary process of this concept includes interesting points. Several elements such as risk susceptibility, innovation, etc. have been added to the entrepreneurship concept during its evolutionary process. Drucker’s definition of entrepreneurship has a specific focus: innovation. Thus, he distinguishes between entrepreneurial businesses, which involve innovation, and other small businesses, which do not. For example, a person who develops and markets a new product is an entrepreneur, whereas the typical corner grocer is not. Likewise, a restaurant franchisee may not be an entrepreneur, while an independent restaurant owner may be. Entrepreneurs are defined as individuals (or groups of individuals) who act independently or as part of a corporate system, who create new organisations, or who initiate renewal or innovation within an existing organisation. An entrepreneur is a person who develops a new idea and takes the risk of setting up an enterprise to produce a product or service which satisfies customer needs. All entrepreneurs business persons, but not all business persons are entrepreneurs. Entrepreneurship is the activity which is being carried out by the Entrepreneur. Generally Entrepreneur is the concerned authority of the business, without their permission, not single changes or decisions are made. In other words, “An Entrepreneur” is an owner or manager of the business enterprise who makes money through risk or initiative. They are responsible for any changes happened in the business or in the organization.
Think of a woman who sits by the roadside leading to your home and who has been selling the same type of food, from the same size of saucepan or pot, from the same table top, and may not have been able to change her standard of living to any appreciable extent. Such a woman may be a business person but not an entrepreneur. The entrepreneur on the other hand is the business person who is not satisfied with his/her performance and therefore always finds ways to improve and grow. Hence, we see Growing of a business concern is a very important part of entrepreneurship development. Growing by size, level of activities and operations conducted number of people involved, etc accounts for growth of an enterprise but this growth cannot occur until the entrepreneur himself is ready to INNOVATE! Yes, until the entrepreneur is ready to take the risk to innovate new things he cannot grow his business. 1.2 INNOVATION Innovation means "to renew or change”. Wikipedia defines innovation as simply, “a new way of doing something.” By “Innovation”, it is meant to provide a new and useful idea and its immediate transfer to market and to use it in the organization in order to produce cheaper and better products or to obtain more efficient support of customers. In fact, innovation means to make practical those thoughts arising from creativity and creativity is to use mental capabilities to provide a new thought. Innovation may be in; introducing a new manufacturing process that has not yet been tested and commercially exploited, introduction of a new product with which the customers are not familiar or introducing a new quality in an existing product, locating a new source of raw material or semi finished product that was not exploited earlier, opening a new market, hitherto unexploited, where the company products were not sold earlier, developing a new combination of means of production. Although the term is broadly used, innovation generally refers to the creation of better or more effective products, processes, technologies, or ideas that are accepted by markets, governments, and society. Innovation differs from
invention or renovation in that innovation generally signifies a substantial positive change as compared to incremental changes. According to Drucker, innovation is “…whatever changes the wealth-producing potential of already existing resources”. Peter Drucker viewed innovation as the tool or instrument used by entrepreneurs to exploit change as an opportunity. He argued that innovation, as a discipline, is capable of being learned, as well as practiced. The best innovations can be alarmingly simple, and often have little to do with ‘technology’ or ‘inventions’. For example, there was nothing technically remarkable about creating a metal container that could be easily offloaded from a truck onto a ship, but the advent of container shipping as a standardized system of moving things around the globe was an innovation that quadrupled world trade. Many of the greatest innovations are some kind of social value creation, such as insurance, the modern hospital, buying by instalment, or the textbook. Were it not for the humble textbook, which emerged in the mid-seventeenth century, universal schooling would not have been possible, and if American farmers had not had access to instalment purchasing, the surge in agricultural productivity would not have happened. This financial innovation allowed them to become much more productive today, instead of having to wait years to afford a purchase.
Innovation is the specific tool of entrepreneurs, the means by which they exploit change as an opportunity for a different business or a different service. It is capable of being learned, capable of being practiced. Entrepreneurs need to search purposefully for the sources of innovation, the change and their symptoms that indicate opportunities for a successful innovation. And they need to know and to apply the principles of successful innovation. Of these factors: natural raw materials, physical and mental labor and capital. An innovation
is a new combination of these three things. Entrepreneurs, as innovators, are people who create new combinations of these factors and then present to the market for assessment by consumers. This is a technical conceptualization of what is innovation is about. it does not give the practicing entrepreneur much of a guide to what innovation to make, or how to make it, but it should warn that innovation is a much broader concept then just inventing new products. It also involves bringing them to market.
1.2 IMPORTANCE OF INNOVATION IN ENTREPRENEURSHIP
Any business is integral to the economy. Without it, our economy would not survive. But a business must also sustain itself, be able to constantly evolve to fulfill the demands of the community and the people. In every business, it is imperative to be industrious, innovative and resourceful. Entrepreneurship produces financial gain and keeps the economy afloat, which gives rise to the importance of innovation in entrepreneurship. Entrepreneurs are innovators of the economy. It is not just the scientist who invents and come up with the solutions.
In the context of this chapter we are especially interested in this second social reality (‘entrepreneurship’) and less so in the first. In order to narrow down the discussion we would like to propose a working definition of entrepreneurship as the introduction of new economic activity by an individual that leads to change in the marketplace (cf. Sarasvathy 2000; Davidsson 2004). This means that we exclude some other interpretations of entrepreneurship (as noninnovative self-employment) and parts of the innovation phenomenon (see figure 1). For example, we exclude non-market activities such as not-for-profit endeavours, changes in contract (e.g. from employee to self-employed) and internal, organizational innovations. We also exclude mere contemplation over new ideas or introduction of fatally flawed ones that do not change the market (directly or indirectly, via learning mechanisms). We thus do not include novelty and creativity in any domain of human behaviour in our concept of entrepreneurship (see also Chapter 1). Inclusion of all this novelty and creativity would make the events of September 11, 2001, an entrepreneurship masterpiece: “To conceive of a fully fuelled passenger jet as a missile and to combine the idea of hijacking with that of kamikaze attacks is certainly innovative, and in terms of impact – economic and otherwise – it has few parallels. However, regarding these attacks as driving market processes is farfetched” (Davidsson 2004: 7). This example also shows that innovations can have devastating effects on society. Figure 1. Entrepreneurship, innovation and self-employment In line with our definition of entrepreneurship as the introduction of new economic activity by an individual that leads to change in the marketplace, we can formulate several necessary conditions for entrepreneurship (cf. Shane 2004: 6): 1. existence of entrepreneurial opportunities (environmental changes: technological, political/regulatory, social/demographic) 2. difference between people (in their willingness and ability to act upon an opportunity) 3. risk bearing; uncertainty until the entrepreneur pursues the opportunity (does demand exist?; can the entrepreneur compete with others?; can the value chain be created? etc.) 4. organizing (exploiting the opportunity); either creating a firm, or using the market mechanism (for example, licensing) 5. innovation: recombination of resources into a new form that is by implication not a perfect imitation of what has been done before, and thus involves a change in the marketplace. These are necessary conditions for entrepreneurship. It is however contingent whether the individuals discovering an opportunity are employees or independent individuals, and whether new firms or incumbent firms are used for the exploitation of the opportunity. Entrepreneurial opportunities Because the range of options and the consequences of exploiting new things are unknown, entrepreneurial decisions cannot be made through an optimization process in which mechanical calculations are made in response to a given set of alternatives (Baumol 1993). People must be able to identify new means-ends relationships that are generated by a given change in order to discover entrepreneurial opportunities. Even if a person possesses the prior information necessary to discover an opportunity, he or she may fail to do so because of an inability to see new means-ends relationships. Unfortunately, visualizing these
relationships is difficult. History is rife with examples in which inventors failed to see commercial opportunities (new means-ends relationships) that resulted from the invention of important technologies - from the telegraph to the laser. Every entrepreneur who starts a new business has ideas. The real challenge is to discover an opportunity that is more than just a good idea. These opportunities can have a radical nature (Schumpeterian) or be relatively incremental (Kirznerian). Schumpeterian opportunities originate from changes in the environment (Shane 2003). These can be technological, social / demographic, and political / regulatory changes. First, technological change, often based on progress in the research base of society, is a prime source of entrepreneurial opportunities for new technology-based firms (for example in the ICT and biotech industries). See section 5.2 for the implications of this on economic growth. Second, social and demographic changes can be quantitative changes like an ageing population that offers new opportunities for entrepreneurs. It may also involve more qualitative changes: changing preferences or wants, for example reflected in the rise the creative industries that satisfy new wants (e.g. EndeMol productions), or in the trend toward health and nutrition and the supply of diet and ecological food. In that sense people’s necessities are few but their wants are endless. Third, deregulation, privatization, and liberalization have opened up many opportunities for entrepreneurship. 3 An example of deregulation is labour market flexibility policy. Flexibilisation of the labour market has opened up several opportunities for entrepreneurship. One the one hand many employees have become selfemployed, partly lured by the lower tax rates in comparison to wage-labour. On the other hand, there have been high-growth start-ups that have used this new trend of labour flexibility to specialize in temporary staffing. Other examples of privatization as sources of entrepreneurial opportunities are the downsizing of municipal services and the privatization of the care market, which have provided opportunities for high-growth start-ups. Some of the examples just given about deregulation as a source of opportunities can also be characterized as Kirznerian. Related to that, the fourth – Kirznerian – source of opportunities can be formulated, namely opportunities proven elsewhere that can be pursued in a new context (“filling a gap in the market”). An example of such a Kirznerian opportunity is the imitation of the Italian coffee bar by Starbucks: the founder of Starbucks was alert enough to see that the coffee bar culture in Italy and its social role might translate to the US. These Kirznerian opportunities most often do not involve straightforward replications, as the business idea has to be adapted to the new local context (see ‘differentiation’ in Chapter 3). Thus, although conceptually it is an imitation, the implementation can be seen as an example of (innovative) entrepreneurship. Finally, customers can themselves be a source of entrepreneurial opportunities, involving so-called user-entrepreneurship (see also userinnovation in Chapter 8).
The mountain bike industry emerged out of a group of hippies that constructed mountain bikes out of existing bike parts, in order to fulfil their want to ride the bike on off-the-road single track downhills. Gary Fisher – one of those hippies – started to produce these mountain bikes in 1979,4 and stood at the cradle of what turned out to be a huge industry (Buenstorf 2001). Another example of userentrepreneurship is the online communication platform Hyves, started out of a personal need to have a computer-mediated social network that connects people. Initially (in 2004) only friends and acquaintances of the founders joined their website; in 2007 Hyves has millions of members, has grown into an enterprise with 30 employees, and has an estimated market value of 50 million euros (Intermediair 2007: 26).
Entrepreneurship as an organizational product
Figure 2 showed that the discovery of an entrepreneurial opportunity can be made by an employee (i.e. a paid organization member) or an independent individual. The latter situation is reflected in so-called user-entrepreneurship: i.e. a personal need as a consumer is the source of the opportunity. Empirical research has shown that the prior situation occurs much more often, as most founders start a new business in an industry that is similar or related to their prior experience (Klepper 2001). “Producer-entrepreneurship” is thus a much
The basic question which we ask ourselves whenever we are talking about entrepreneurship development are What is entrepreneurship? Who is an entrepreneur? And the answers to these questions are even easier than the questions itself. LET US NOW THINK OF WHY ALL BUSINESS PERSONS ARE NOT ENTREPRENEURS? Think of a woman who sits by the roadside leading to your home and who has been selling the same type of food, from the same size of saucepan or pot, from the same table top, and may not have been able to change her standard of living to any appreciable extent. Such a woman may be a business person but not an entrepreneur. The entrepreneur on the other hand is the business person who is not satisfied with his/her performance and therefore always finds ways to improve and grow. Hence, we see Growing of a business concern is a very important part of entrepreneurship development. Growing by size, level of activities and operations conducted number of people involved, etc accounts for growth of an enterprise but this growth cannot occur until the entrepreneur himself is ready to INNOVATE! Yes, until the entrepreneur is ready to take the risk to innovate new things he cannot grow his business.
1.2 INNOVATION
Innovation means "to renew or change”. Although the term is broadly used, innovation generally refers to the creation of better or more
effective products, processes, technologies, or ideas that are accepted by markets, governments, and society. Innovation differs from invention or renovation in that innovation generally signifies a substantial positive change as compared to incremental changes. The following diagram is referred to as an Innovation Value Chain because it represents the very general sequence of activities that create value in our society and economy. Simply put: discoveries result in new ideas in the form of knowledge and concepts, inventions result in new technologies and business models, and innovation exploits inventions to allow for the creation of value through commodities, goods, services and experiences.
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Source: http://resources.talcie.org/topics-andactivities/creativity-innovationandentrepreneurship topic-notes/creativity, discovery, invention, innovation. png? altredirects=0 Innovation is the specific tool of entrepreneurs, the means by which they exploit change as an opportunity for a different business or a different service. It is capable of being learned, capable of being practiced. Entrepreneurs need to search purposefully for the sources of innovation, the change and their symptoms that indicate opportunities for a successful innovation. And they need to know and to apply the principles of successful innovation. Of these factors: natural raw materials, physical and mental labor and capital. An innovation is a new combination of these three things. Entrepreneurs, as innovators, are people who create new combinations of these factors and then present to the market for assessment by consumers. This is a technical conceptualization of what is innovation is about. it does not give the practicing entrepreneur much of a guide to what innovation to make, or how to make it, but it should warn that innovation is a much broader concept then just inventing new products. It also involves bringing them to market. 1.3 IMPORTANCE OF INNOVATION IN ENTREPRENEURSHIP Any business is integral to the economy. Without it, our economy would not survive. But a business must also sustain itself, be able to constantly evolve to fulfill the demands of the community and the people. In every business, it is imperative to be industrious, innovative and resourceful. Entrepreneurship produces financial gain and keeps the economy afloat, which gives rise to the importance of innovation in entrepreneurship. Entrepreneurs are innovators of the economy. It is not just the scientist who invents and come up with the solutions.
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The importance of innovation in entrepreneurship is shown by coming up with new way to produce a product or a solution. A service industry can expand with another type of service to fulfill the ever changing needs of their clients. Producers can come up with another product from the raw materials and by-products. The importance of innovation in entrepreneurship is another key value for the longevity of a business. Entrepreneurs and businesses began with a need. They saw the need within the community and among themselves that they have come up with a solution. They seize the opportunity to innovate to make the lives more comfortable. And these solutions kept evolving to make it better, easier and more useful. Entrepreneurs must keep themselves abreast with the current trends and demands. Manufacturers are constantly innovating to produce more without sacrificing the quality. Companies and enterprises keep innovation as part of their organization. Innovations contribute to the success of the company. Entrepreneur, as innovators, see not just one solution to a need. They keep coming up with ideas and do not settle until they come up with multiple solutions. Innovation is extremely important that companies often see their employees’ creativity as a solution. They come up with seminars and trainings to keep their employees stimulated to create something useful for others and in turn, financial gain for the company. Other factors that raises the importance of innovation in entrepreneurship is competition. It stimulates any entrepreneur to come up with something much better than their competition in a lower price, and still be cost-effective and qualitative. Small businesses see the importance of innovation in entrepreneurship. They were able to compete with large industry and see their value in the economy. Small businesses are important as they are directly involved in the community and therefore, contribute to their financial and economic gain. These small businesses know exactly what community needs and fulfill them. All things start small. Innovation is important not just in entrepreneurship. As individuals, we are innovators by adapting well to our needs and create our own solutions. Entrepreneurs are the same. The innovation in entrepreneurship helped the country by changing with the times and producing new products and service from ones that already exists. And, being innovative has helped us become successful in all our endeavors. In business and economics, innovation is the catalyst to growth. With rapid advancements in transportation and communications over the past few decades, the old world concepts of factor endowments and comparative advantage which focused on an area’s unique inputs are outmoded for today’s global economy. Now, competitive advantage, or the productive use of any inputs,
which requires continual innovation is paramount for any specialized firm to succeed. Economist Joseph Schumpeter, who contributed greatly to the study of innovation, argued that industries must incessantly revolutionize the economic structure from within, that is innovate with better or more effective processes and products, such as the shift from the craft shop to factory. He famously asserted that “creative destruction is the essential fact about capitalism.” In addition,
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entrepreneurs continuously look for better ways to satisfy their consumer base with improved quality, durability, service, and price which come to fruition in innovation with advanced technologies and organizational strategies. 1.4 THE FACE OF THE INNOVATIVE ENTREPRENEUR Albert Cannella, professor of management at the W. P. Carey School, says that sometimes the difference between an innovative venture and a replicative one is subtle. "Innovative entrepreneurship may cover what's been tried and has failed in the past, for example. There are really two parts that go into innovative entrepreneurship; one is the invention -coming up with a new idea for a good or service. But the other is successfully converting that idea into a product or service and commercializing it. In that sense, an electric car that really worked and was well-adopted by consumers would be an innovation. Even though electric cars have been produced (invented) before, they have yet to be successfully commercialized. Innovators also might look quite different from one another; there are innovators who develop new technologies, like we're seeing right now with biotechnology. There are innovators like Michael Dell who pair existing technologies with a creative business model. And there are entrepreneurs who find innovative ways to improve applications of new and existing technologies, as Innovative Solutions & Support Inc. did when designing flat-screen displays for airplane cockpits. The common thread among each type of innovator is that they all continue to innovate to sustain their business. "Motorola began by making converters and has transitioned from there to car radios, to mobile radios for World War II, to TVs, to stereos, and to cell phones. Faced with new low cost producers for its existing product line, the company would have failed had it not continuously innovated." But for the entrepreneur looking to innovate, whether by developing a new good or service, employing a new business model, or applying existing technologies in new ways. "The Phoenix Company TGen, for example, quite consciously pursues innovation through stateofthe-art research. Right now they're trying to take the latest developments in medicine and transfer them to the bedside to serve a global population.
In contrast, Another Phoenix Company, JDA Software, was created when its founder realized that then-available supply chain management software for retail companies wasn't sophisticated enough. He took that realization and turned it into an innovation, which now serves a global population.
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2. RESEARCH METHODOLOGY OBJECTIVES OF THE STUDY a) To study entrepreneurship and innovation b) To study role of the innovative entrepreneur in economy. c) To study and present examples of innovative entrepreneurs. I have used descriptive research design. Data has been collected from secondary sources. 3. FINDINGS OF THE STUDY 3.1 THE ROLE OF THE INNOVATIVE ENTREPRENEUR IN THE ECONOMY Innovative entrepreneurship impacts the economy at three levels: at the aggregate level, at the consumer level, and at the firm level. The positive effects of innovation percolate through the economy. At the aggregate level, innovative entrepreneurship, like its replicative cousin, benefits the overall economy by creating new jobs and increasing income, raising the potential for new investments. In fact, new research demonstrates that it is the gazelles -innovative companies that have experienced annual growth rates greater than 20 percent for four or more years - that create the largest number of new jobs. At the consumer level, the effect of innovation is the added value for consumers - the improved products or services available to them at lower costs. At the firm level, innovators can out-compete other companies that are not innovators, because of the cost advantages that innovation produces. Furthermore, firms that produce innovative goods and services are also more likely to adopt new innovations. Steve Jobs was the greatest innovator and entrepreneur, who created game-changing innovations including the Apple II, Macintosh, NeXT, iMac, iBook, iPod, MacBook, OS X, iPhone and the iPad, and made Apple the most valuable company in the world. Steve Jobs was the cofounder, chairman and chief executive officer of Apple Inc. 3.2 CULTIVATING INNOVATIVE ENTREPRENEURSHIP If innovative entrepreneurship is the key to increasing standards of living, then the question is: how do you cultivate innovation? Arthur Blakemore, professor and chairman of the W. P. Carey School's economics department, says that minimal regulations, a competitive and economically efficient tax system capable of
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supporting an appropriately competitive infrastructure, openness to trade and competition, and facilities for R&D are all necessary factors in an innovative economy. It's not likely that policymakers can directly guide innovation, but they can provide the kind of environment that fosters it”. Furthermore, R&D is very important. Clearly all of the most famous clusters of innovation -- Silicon Valley, Route 128 in Boston, the Research Triangle in North Carolina -- they all have universities in proximity producing basic R&D that can ultimately be commercialized. The famous clusters of innovation have another factor in common: a critical mass of companies involved in innovation. "Silicon Valley became the innovation mecca it is today almost by accident. HP started there in a rented-out garage, and its presence attracted other companies, which attracted others, and so on. This type of clustering produces is called network externalities. Innovative firms accrue production advantages from their proximity to other innovators. The clustering provides synergy, a knowledge base, a talent base and an efficient means of transferring information. The presence of large innovating companies is important. If you want to cultivate innovative entrepreneurship, you have to have large innovative companies, because they spawn startups. A lot of innovative entrepreneurs get their technical experience working for a large company. Once they come up with the innovative idea, they leave the company to go out on their own. The presence of a well-funded university involved in R&D is also a critical factor for an innovative economy. A highly trained labor force and a culture of lifelong learning are important factors in the cultivation of innovative entrepreneurship. In addition to serving as centers for R&D, universities also must do well at educating innovative entrepreneurs. There are two types of education that innovative entrepreneurs need to be successful: on one hand, they need a really solid technical understanding; and on the other hand they need an education that stimulates creativity and imagination." Innovation involves changing the status quo with respect to customer experiences, product performance, business processes, alliances, and the channels of distribution or the way the product or service is ultimately delivered to consumers. Thus, teaching innovation is not just about teaching students how to develop new goods or services, but how to explore their ideas, and develop their latent potential for innovation. 3.3 SOME OF THE FAMOUS INNOVATIVE ENTREPRENEURS 3.3.1 BILL GATES William Gates the III, the former CEO of Microsoft, for short period of time, had assets worth over 100 billion dollars, making him the world’s first centibillionaire. Today his assets are half
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that but he remains, as he has for the past decade and then some, the world’s wealthiest man according to Forbes. Gates was born on 28 October, 1955 in Seattle, Washington to a successful family and was able to attend a Seattle private school. His mother was a schoolteacher and his father a Seattle attorney. He developed interest in software and began programming at age 13 when the school acquired an ASR-33 teletype terminal from a mother’s rummage sale. Because of their exploits of bugs in the school’s second computer: a DEC PDP-10, owned by Computer Center Corporation, Gates and a number of other students, including Paul AllenMicrosoft’s co-founder, were offered unlimited computer time in exchange for debugging the company’s computers. After CCC went out of business, the students were hired by Sciences Inc. to write a payroll program. The students were successful and were received royalties on the program. 3.3.2 RATAN NAVAL TATA Ratan Naval Tata (born 28 December 1937) is the present chairman of Tata sons and therefore,Tata Group. He is also the chairman of major Tata companies such as Tata steel, Tata Motors, Tata Power, TCS, Tata Tea, Tata Chemicals, The Indian Hotel Company and Tata teleservices. Ratan Tata was adopted by Naval Tata and Soonoo Commisariat in the Tata Family a prominent family belonging to the Parsi community. He is the great-grandson of Tata group founder Jamshedji Tata. After his parents separated in 1944, he was brought up by his grandmother Lady Navajbai and did his schooling in Mumbai from Campion School. Later, he enrolled in Cornell University, where he earned a B.S in architecture with structural engineering in 1962, and has also completed the Advanced Management Program at Harvard business school (Class of 1975). 3.3.3 VIJAY MALLYA (Born 18 December 1955) is an Indian liquor baron andRajya Sabha MP. The son of industrialistVittal Mallya, he is the Chairman of the United Breweries Group and Kinfisher Airlines, which draws its name from United Breweries Group's flagship beer brand, Kingfisher. He also co-owns the Formula One team Force India, the Indian Premier League team Bangalore Royal Challengers, and the I-League team East Bengal FC. According to Forbes.com, as of March 2011, Mallya, is worth US $1.4 billion. He is ranked 879 in The Forbes World Billionaires Ranking (2011), and 38th in India. He receives substantial press coverage that focuses on his lavish parties, villas, automobiles, Force India, Royal Challengers Bangalore and his yacht, the Indian Empress. Mallya was born into a Konkani Goud Saraswat Brahmin family which originally from the town of Bantawal, near Mangalore in Karnataka. He is the son of Vittal Mallya and Lalitha Ramaiah. He was educated at La
Martiniere for Boys School, Calcutta] and completed his degree at St. Xavier’s college kolkata
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He later set up business ventures in Dubai, United Arab Emirates. Mallya's first wife was Sameera and they have a son together, named Siddharth Mallya. Sidhartha was educated at Wellington College in Crowthorne followed by Queen Mary's College in the University of London. Later on, Mallya married Rekha with who he has two daughters Laila is engaged with loganathan and Tanya Mallya and one son. 3.3.4 RAGHAV BAHL He is an Indian Businessman best known for his ownership of several television channels, including TV-18 India. He received schooling from St. Xavier’s School Delhi and attained a Masters in Business Administration from FMS Delhi. He is responsible for directing most of the work of TV-18 and channels like CNBC-Awaaz, Nickelodeon and colors. Recently he has written a book 'Super Power?' which compares the two developing countries China and India. Raghav “earned” his 2007 Entrepreneur of the year award of Ernst and young. Around 50, he is a first generation Entrepreneur. He started Newtwork-18 as a television software house in the mid nineties. He developed the India Show and The India Business Report for BBC very successfully. He saw hard times for many years but he and his team were able to come through the agni pariksha very well. Now he has in his media house three of the best global properties CNBC, CNN and VIACOM. Raghav was born in IAS family and his grandfather was principal of a government college. He studied at St. Stephen college MBA from DU and went to Columbia for his doctorate on scholarship but decided to come back to do what he loved to do. 3.3.5 JAWED HABIB Jawed Habib who was “Entrepreneured” into 220 Jawed Habib Salon and 42 Training Academies not just in India but across Asia, from Malaysia to Nepal and beyond. Last year he launched Hair Express outlets, offering hair cut at just Rs 99 each. Jawed, is a post Graduate in French Literature from JNU, New Delhi. He went to London’s Morris School of Hair Dressing and London School of Fashion for a 2 year course in the art and science of hair style and grooming. He is already there in the Limca Book of world Record with Featof 410 nonstop haircuts in a day. 3.3.6 KIRAN MAZUMDAR-SHAW ''The stud lady from India' (Managing Director of Biocon Limited a biotechnology company based in Bangalore (Bangaluru), India. Kiran Mazumdar-Shaw was born on March 23, 1953 (age 58) in Bangalore, India. Kiran Mazumdar-Shaw completed her schooling from the city’s Bishop
Cotton Girl’s High School (1968). She wanted to join medical school but instead took up biology and completed her BSc Zoology Honors course from Mount Carmel College, Bangalore University (1973). She later did her post-graduation in Malting and Brewing from Ballarat College, Melbourne University (1975). She worked as a Trainee Brewer in Carlton and United Breweries, Melbourne and as a Trainee Malster at Barrett Brothers and Burston, Australia. She also worked for some time as a Technical Consultant at Jupiter Breweries Limited, Calcutta and as a Technical Manager at Standard Maltings Corporation, Baroda between 1975 and 1977.
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She started Biocon in 1978 and spearheaded its evolution from an industrial enzymes manufacturing company to a fully integrated bio-pharmaceutical company with a wellbalanced business portfolio of products and a research focus on diabetes, oncology and auto-immune diseases. She also established two subsidiaries: Syngene (1994) to provide development support services for discovery research and Clinigene (2000) to cater to clinical development services. Her pioneering work in the sector has earned her several awards, including the prestigious Padma Shri (1989) and the Padma Bhushan (2005) from the government of India.She was recently named among TIME magazine’s 100 most influential people in the world. She is also on the Forbes list of the world’s 100 most powerful women, and the Financial Times’ top 50 women in business list. 4. CONCLUSION With rising population of the world, the world’s need and necessities pattern had also evolved through the years. To sustain the ever increasing demand and supply of products, right entrepreneurship skills and innovation are much more needed. Without new business ideas and technology to support it, no consumer demand will be fulfilled completely. Thus, innovation and entrepreneurship is the need of hour and needs to be adopted by one and all business enterprises. Innovation and Entrepreneurship is a good resource for categorizing and identifying sources of innovation. Entrepreneur does an excellent job of organizing the key elements involved in innovation and there is a fair amount of real world examples that help others understand the concepts. Innovation and Entrepreneurship is more about creating a framework for innovation that can be used to compartmentalize current practices and shed light on their origins. To accurately point out, the least likely sources of innovation are from new knowledge and bright ideas. The insight into this alone, makes the concept well worth understanding.
ABSTRACT
Initially when Peter Drucker wrote about innovation and entrepreneurship in the mid 1980s (Innovation and Entrepreneurship Principles and Practices, 1985) the same was based on the then prevailing business practices and environment. In the past twenty seven years, there has been tremendous change in the way business is done, as a result of which the nature and concept of Innovation and Entrepreneurship too have been influenced. With the new innovations & progress in business practices the mindset of entrepreneurs have also changed, the entrepreneurs of today are more confident than the entrepreneurs of earlier period & look for something challenging intellectually. The companies today have very good opportunities but at the same time, they are faced with exceptional challenges and threats that need to be tackled. Today, innovation and entrepreneurship have changed. There are different ways of breeding, executing and practicing those concepts around the world. This paper makes an attempt to look & review at Drucker’s theory, to see what’s applicable for today and what is not.
Innovation involves problem solving and an entrepreneur is a problem solver. An entrepreneur does things in a new and a better way. A traditional businessman working in a routine manner is not entrepreneurial. Innovation leads to the dynamics that governs the interaction between science, industry, and society. Innovative organization wants must have to prepare for renewing the offerings and its delivery process to its stakeholders to survive in today’s globalised world. In the present paper, concept of innovation and entrepreneurship has been studied by the authors. The paper will also include examples of innovative entrepreneurs and how the innovation in products/services helps the business in survival and growth in present globalised market place.
1. INTRODUCTION
What is meant with entrepreneurship and how does this relate to innovation? Entrepreneurship and innovation are concepts that have been given multiple meanings. Innovation and entrepreneurship are often regarded as overlapping concepts. This can be traced back to probably the most well known definition of entrepreneurship, by Schumpeter who defines entrepreneurs as individuals that carry out new combinations (i.e. innovations). Schumpeter distinguishes four roles in the process of innovation: the inventor, who invents a new idea; the entrepreneur who commercializes this new idea; the capitalist, who provides the financial resources to the entrepreneur (and bears the risk of the innovation project); the manager, who takes care of the routine day-to-day corporate management. These roles are most often executed by different persons. The literature on entrepreneurship recognizes a variety of entrepreneurial roles in economic change, such as: 1. the person who bears uncertainty (Knight 1921); 2. an innovator (Schumpeter 1934); 3. a decision maker (Casson 2003); 4. an industrial leader (Schumpeter 1934); 5. an organizer and coordinator of economic resources (Marshall 1890); 6. an arbitrageur, alert to opportunities (Kirzner 1973; 1997); 7. an allocator of resources among alternative uses (Schultz 1975).
1.1 ENTREPRENEURSHIP
The word “Entrepreneurship” has been derived from the French word “Entreprendre” which means “To Undertake”. Entrepreneurship can be viewed as a creative and innovative response to the environment and an ability to recognize, initiate and exploit an economic opportunity. An entrepreneur is an innovator who introduces something new in an economy. Entrepreneurship is doing things that are generally not done in the ordinary course of business.
In summary, entrepreneurship is the process of providing value through establishment of a unique complex of resources in order to enjoy opportunities. Entrepreneurship is not a ‘personality trait’; it is a feature to be observed in the actions of people or institutions. Entrepreneurs in health, education or business work basically the same way. Essentially, they do not just do something better, but do it differently. Despite the long record of investigation of entrepreneurship as well as much effort of researchers, like other concepts of human science, it is difficult and even impossible to provide a certain definition for that. Addressing the evolutionary process of this concept includes interesting points. Several elements such as risk susceptibility, innovation, etc. have been added to the entrepreneurship concept during its evolutionary process. Drucker’s definition of entrepreneurship has a specific focus: innovation. Thus, he distinguishes between entrepreneurial businesses, which involve innovation, and other small businesses, which do not. For example, a person who develops and markets a new product is an entrepreneur, whereas the typical corner grocer is not. Likewise, a restaurant franchisee may not be an entrepreneur, while an independent restaurant owner may be. Entrepreneurs are defined as individuals (or groups of individuals) who act independently or as part of a corporate system, who create new organisations, or who initiate renewal or innovation within an existing organisation. An entrepreneur is a person who develops a new idea and takes the risk of setting up an enterprise to produce a product or service which satisfies customer needs. All entrepreneurs business persons, but not all business persons are entrepreneurs. Entrepreneurship is the activity which is being carried out by the Entrepreneur. Generally Entrepreneur is the concerned authority of the business, without their permission, not single changes or decisions are made. In other words, “An Entrepreneur” is an owner or manager of the business enterprise who makes money through risk or initiative. They are responsible for any changes happened in the business or in the organization.
Think of a woman who sits by the roadside leading to your home and who has been selling the same type of food, from the same size of saucepan or pot, from the same table top, and may not have been able to change her standard of living to any appreciable extent. Such a woman may be a business person but not an entrepreneur. The entrepreneur on the other hand is the business person who is not satisfied with his/her performance and therefore always finds ways to improve and grow. Hence, we see Growing of a business concern is a very important part of entrepreneurship development. Growing by size, level of activities and operations conducted number of people involved, etc accounts for growth of an enterprise but this growth cannot occur until the entrepreneur himself is ready to INNOVATE! Yes, until the entrepreneur is ready to take the risk to innovate new things he cannot grow his business. 1.2 INNOVATION Innovation means "to renew or change”. Wikipedia defines innovation as simply, “a new way of doing something.” By “Innovation”, it is meant to provide a new and useful idea and its immediate transfer to market and to use it in the organization in order to produce cheaper and better products or to obtain more efficient support of customers. In fact, innovation means to make practical those thoughts arising from creativity and creativity is to use mental capabilities to provide a new thought. Innovation may be in; introducing a new manufacturing process that has not yet been tested and commercially exploited, introduction of a new product with which the customers are not familiar or introducing a new quality in an existing product, locating a new source of raw material or semi finished product that was not exploited earlier, opening a new market, hitherto unexploited, where the company products were not sold earlier, developing a new combination of means of production. Although the term is broadly used, innovation generally refers to the creation of better or more effective products, processes, technologies, or ideas that are accepted by markets, governments, and society. Innovation differs from
invention or renovation in that innovation generally signifies a substantial positive change as compared to incremental changes. According to Drucker, innovation is “…whatever changes the wealth-producing potential of already existing resources”. Peter Drucker viewed innovation as the tool or instrument used by entrepreneurs to exploit change as an opportunity. He argued that innovation, as a discipline, is capable of being learned, as well as practiced. The best innovations can be alarmingly simple, and often have little to do with ‘technology’ or ‘inventions’. For example, there was nothing technically remarkable about creating a metal container that could be easily offloaded from a truck onto a ship, but the advent of container shipping as a standardized system of moving things around the globe was an innovation that quadrupled world trade. Many of the greatest innovations are some kind of social value creation, such as insurance, the modern hospital, buying by instalment, or the textbook. Were it not for the humble textbook, which emerged in the mid-seventeenth century, universal schooling would not have been possible, and if American farmers had not had access to instalment purchasing, the surge in agricultural productivity would not have happened. This financial innovation allowed them to become much more productive today, instead of having to wait years to afford a purchase.
Innovation is the specific tool of entrepreneurs, the means by which they exploit change as an opportunity for a different business or a different service. It is capable of being learned, capable of being practiced. Entrepreneurs need to search purposefully for the sources of innovation, the change and their symptoms that indicate opportunities for a successful innovation. And they need to know and to apply the principles of successful innovation. Of these factors: natural raw materials, physical and mental labor and capital. An innovation
is a new combination of these three things. Entrepreneurs, as innovators, are people who create new combinations of these factors and then present to the market for assessment by consumers. This is a technical conceptualization of what is innovation is about. it does not give the practicing entrepreneur much of a guide to what innovation to make, or how to make it, but it should warn that innovation is a much broader concept then just inventing new products. It also involves bringing them to market.
1.2 IMPORTANCE OF INNOVATION IN ENTREPRENEURSHIP
Any business is integral to the economy. Without it, our economy would not survive. But a business must also sustain itself, be able to constantly evolve to fulfill the demands of the community and the people. In every business, it is imperative to be industrious, innovative and resourceful. Entrepreneurship produces financial gain and keeps the economy afloat, which gives rise to the importance of innovation in entrepreneurship. Entrepreneurs are innovators of the economy. It is not just the scientist who invents and come up with the solutions.
In the context of this chapter we are especially interested in this second social reality (‘entrepreneurship’) and less so in the first. In order to narrow down the discussion we would like to propose a working definition of entrepreneurship as the introduction of new economic activity by an individual that leads to change in the marketplace (cf. Sarasvathy 2000; Davidsson 2004). This means that we exclude some other interpretations of entrepreneurship (as noninnovative self-employment) and parts of the innovation phenomenon (see figure 1). For example, we exclude non-market activities such as not-for-profit endeavours, changes in contract (e.g. from employee to self-employed) and internal, organizational innovations. We also exclude mere contemplation over new ideas or introduction of fatally flawed ones that do not change the market (directly or indirectly, via learning mechanisms). We thus do not include novelty and creativity in any domain of human behaviour in our concept of entrepreneurship (see also Chapter 1). Inclusion of all this novelty and creativity would make the events of September 11, 2001, an entrepreneurship masterpiece: “To conceive of a fully fuelled passenger jet as a missile and to combine the idea of hijacking with that of kamikaze attacks is certainly innovative, and in terms of impact – economic and otherwise – it has few parallels. However, regarding these attacks as driving market processes is farfetched” (Davidsson 2004: 7). This example also shows that innovations can have devastating effects on society. Figure 1. Entrepreneurship, innovation and self-employment In line with our definition of entrepreneurship as the introduction of new economic activity by an individual that leads to change in the marketplace, we can formulate several necessary conditions for entrepreneurship (cf. Shane 2004: 6): 1. existence of entrepreneurial opportunities (environmental changes: technological, political/regulatory, social/demographic) 2. difference between people (in their willingness and ability to act upon an opportunity) 3. risk bearing; uncertainty until the entrepreneur pursues the opportunity (does demand exist?; can the entrepreneur compete with others?; can the value chain be created? etc.) 4. organizing (exploiting the opportunity); either creating a firm, or using the market mechanism (for example, licensing) 5. innovation: recombination of resources into a new form that is by implication not a perfect imitation of what has been done before, and thus involves a change in the marketplace. These are necessary conditions for entrepreneurship. It is however contingent whether the individuals discovering an opportunity are employees or independent individuals, and whether new firms or incumbent firms are used for the exploitation of the opportunity. Entrepreneurial opportunities Because the range of options and the consequences of exploiting new things are unknown, entrepreneurial decisions cannot be made through an optimization process in which mechanical calculations are made in response to a given set of alternatives (Baumol 1993). People must be able to identify new means-ends relationships that are generated by a given change in order to discover entrepreneurial opportunities. Even if a person possesses the prior information necessary to discover an opportunity, he or she may fail to do so because of an inability to see new means-ends relationships. Unfortunately, visualizing these
relationships is difficult. History is rife with examples in which inventors failed to see commercial opportunities (new means-ends relationships) that resulted from the invention of important technologies - from the telegraph to the laser. Every entrepreneur who starts a new business has ideas. The real challenge is to discover an opportunity that is more than just a good idea. These opportunities can have a radical nature (Schumpeterian) or be relatively incremental (Kirznerian). Schumpeterian opportunities originate from changes in the environment (Shane 2003). These can be technological, social / demographic, and political / regulatory changes. First, technological change, often based on progress in the research base of society, is a prime source of entrepreneurial opportunities for new technology-based firms (for example in the ICT and biotech industries). See section 5.2 for the implications of this on economic growth. Second, social and demographic changes can be quantitative changes like an ageing population that offers new opportunities for entrepreneurs. It may also involve more qualitative changes: changing preferences or wants, for example reflected in the rise the creative industries that satisfy new wants (e.g. EndeMol productions), or in the trend toward health and nutrition and the supply of diet and ecological food. In that sense people’s necessities are few but their wants are endless. Third, deregulation, privatization, and liberalization have opened up many opportunities for entrepreneurship. 3 An example of deregulation is labour market flexibility policy. Flexibilisation of the labour market has opened up several opportunities for entrepreneurship. One the one hand many employees have become selfemployed, partly lured by the lower tax rates in comparison to wage-labour. On the other hand, there have been high-growth start-ups that have used this new trend of labour flexibility to specialize in temporary staffing. Other examples of privatization as sources of entrepreneurial opportunities are the downsizing of municipal services and the privatization of the care market, which have provided opportunities for high-growth start-ups. Some of the examples just given about deregulation as a source of opportunities can also be characterized as Kirznerian. Related to that, the fourth – Kirznerian – source of opportunities can be formulated, namely opportunities proven elsewhere that can be pursued in a new context (“filling a gap in the market”). An example of such a Kirznerian opportunity is the imitation of the Italian coffee bar by Starbucks: the founder of Starbucks was alert enough to see that the coffee bar culture in Italy and its social role might translate to the US. These Kirznerian opportunities most often do not involve straightforward replications, as the business idea has to be adapted to the new local context (see ‘differentiation’ in Chapter 3). Thus, although conceptually it is an imitation, the implementation can be seen as an example of (innovative) entrepreneurship. Finally, customers can themselves be a source of entrepreneurial opportunities, involving so-called user-entrepreneurship (see also userinnovation in Chapter 8).
The mountain bike industry emerged out of a group of hippies that constructed mountain bikes out of existing bike parts, in order to fulfil their want to ride the bike on off-the-road single track downhills. Gary Fisher – one of those hippies – started to produce these mountain bikes in 1979,4 and stood at the cradle of what turned out to be a huge industry (Buenstorf 2001). Another example of userentrepreneurship is the online communication platform Hyves, started out of a personal need to have a computer-mediated social network that connects people. Initially (in 2004) only friends and acquaintances of the founders joined their website; in 2007 Hyves has millions of members, has grown into an enterprise with 30 employees, and has an estimated market value of 50 million euros (Intermediair 2007: 26).
Entrepreneurship as an organizational product
Figure 2 showed that the discovery of an entrepreneurial opportunity can be made by an employee (i.e. a paid organization member) or an independent individual. The latter situation is reflected in so-called user-entrepreneurship: i.e. a personal need as a consumer is the source of the opportunity. Empirical research has shown that the prior situation occurs much more often, as most founders start a new business in an industry that is similar or related to their prior experience (Klepper 2001). “Producer-entrepreneurship” is thus a much
The basic question which we ask ourselves whenever we are talking about entrepreneurship development are What is entrepreneurship? Who is an entrepreneur? And the answers to these questions are even easier than the questions itself. LET US NOW THINK OF WHY ALL BUSINESS PERSONS ARE NOT ENTREPRENEURS? Think of a woman who sits by the roadside leading to your home and who has been selling the same type of food, from the same size of saucepan or pot, from the same table top, and may not have been able to change her standard of living to any appreciable extent. Such a woman may be a business person but not an entrepreneur. The entrepreneur on the other hand is the business person who is not satisfied with his/her performance and therefore always finds ways to improve and grow. Hence, we see Growing of a business concern is a very important part of entrepreneurship development. Growing by size, level of activities and operations conducted number of people involved, etc accounts for growth of an enterprise but this growth cannot occur until the entrepreneur himself is ready to INNOVATE! Yes, until the entrepreneur is ready to take the risk to innovate new things he cannot grow his business.
1.2 INNOVATION
Innovation means "to renew or change”. Although the term is broadly used, innovation generally refers to the creation of better or more
effective products, processes, technologies, or ideas that are accepted by markets, governments, and society. Innovation differs from invention or renovation in that innovation generally signifies a substantial positive change as compared to incremental changes. The following diagram is referred to as an Innovation Value Chain because it represents the very general sequence of activities that create value in our society and economy. Simply put: discoveries result in new ideas in the form of knowledge and concepts, inventions result in new technologies and business models, and innovation exploits inventions to allow for the creation of value through commodities, goods, services and experiences.
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Source: http://resources.talcie.org/topics-andactivities/creativity-innovationandentrepreneurship topic-notes/creativity, discovery, invention, innovation. png? altredirects=0 Innovation is the specific tool of entrepreneurs, the means by which they exploit change as an opportunity for a different business or a different service. It is capable of being learned, capable of being practiced. Entrepreneurs need to search purposefully for the sources of innovation, the change and their symptoms that indicate opportunities for a successful innovation. And they need to know and to apply the principles of successful innovation. Of these factors: natural raw materials, physical and mental labor and capital. An innovation is a new combination of these three things. Entrepreneurs, as innovators, are people who create new combinations of these factors and then present to the market for assessment by consumers. This is a technical conceptualization of what is innovation is about. it does not give the practicing entrepreneur much of a guide to what innovation to make, or how to make it, but it should warn that innovation is a much broader concept then just inventing new products. It also involves bringing them to market. 1.3 IMPORTANCE OF INNOVATION IN ENTREPRENEURSHIP Any business is integral to the economy. Without it, our economy would not survive. But a business must also sustain itself, be able to constantly evolve to fulfill the demands of the community and the people. In every business, it is imperative to be industrious, innovative and resourceful. Entrepreneurship produces financial gain and keeps the economy afloat, which gives rise to the importance of innovation in entrepreneurship. Entrepreneurs are innovators of the economy. It is not just the scientist who invents and come up with the solutions.
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The importance of innovation in entrepreneurship is shown by coming up with new way to produce a product or a solution. A service industry can expand with another type of service to fulfill the ever changing needs of their clients. Producers can come up with another product from the raw materials and by-products. The importance of innovation in entrepreneurship is another key value for the longevity of a business. Entrepreneurs and businesses began with a need. They saw the need within the community and among themselves that they have come up with a solution. They seize the opportunity to innovate to make the lives more comfortable. And these solutions kept evolving to make it better, easier and more useful. Entrepreneurs must keep themselves abreast with the current trends and demands. Manufacturers are constantly innovating to produce more without sacrificing the quality. Companies and enterprises keep innovation as part of their organization. Innovations contribute to the success of the company. Entrepreneur, as innovators, see not just one solution to a need. They keep coming up with ideas and do not settle until they come up with multiple solutions. Innovation is extremely important that companies often see their employees’ creativity as a solution. They come up with seminars and trainings to keep their employees stimulated to create something useful for others and in turn, financial gain for the company. Other factors that raises the importance of innovation in entrepreneurship is competition. It stimulates any entrepreneur to come up with something much better than their competition in a lower price, and still be cost-effective and qualitative. Small businesses see the importance of innovation in entrepreneurship. They were able to compete with large industry and see their value in the economy. Small businesses are important as they are directly involved in the community and therefore, contribute to their financial and economic gain. These small businesses know exactly what community needs and fulfill them. All things start small. Innovation is important not just in entrepreneurship. As individuals, we are innovators by adapting well to our needs and create our own solutions. Entrepreneurs are the same. The innovation in entrepreneurship helped the country by changing with the times and producing new products and service from ones that already exists. And, being innovative has helped us become successful in all our endeavors. In business and economics, innovation is the catalyst to growth. With rapid advancements in transportation and communications over the past few decades, the old world concepts of factor endowments and comparative advantage which focused on an area’s unique inputs are outmoded for today’s global economy. Now, competitive advantage, or the productive use of any inputs,
which requires continual innovation is paramount for any specialized firm to succeed. Economist Joseph Schumpeter, who contributed greatly to the study of innovation, argued that industries must incessantly revolutionize the economic structure from within, that is innovate with better or more effective processes and products, such as the shift from the craft shop to factory. He famously asserted that “creative destruction is the essential fact about capitalism.” In addition,
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entrepreneurs continuously look for better ways to satisfy their consumer base with improved quality, durability, service, and price which come to fruition in innovation with advanced technologies and organizational strategies. 1.4 THE FACE OF THE INNOVATIVE ENTREPRENEUR Albert Cannella, professor of management at the W. P. Carey School, says that sometimes the difference between an innovative venture and a replicative one is subtle. "Innovative entrepreneurship may cover what's been tried and has failed in the past, for example. There are really two parts that go into innovative entrepreneurship; one is the invention -coming up with a new idea for a good or service. But the other is successfully converting that idea into a product or service and commercializing it. In that sense, an electric car that really worked and was well-adopted by consumers would be an innovation. Even though electric cars have been produced (invented) before, they have yet to be successfully commercialized. Innovators also might look quite different from one another; there are innovators who develop new technologies, like we're seeing right now with biotechnology. There are innovators like Michael Dell who pair existing technologies with a creative business model. And there are entrepreneurs who find innovative ways to improve applications of new and existing technologies, as Innovative Solutions & Support Inc. did when designing flat-screen displays for airplane cockpits. The common thread among each type of innovator is that they all continue to innovate to sustain their business. "Motorola began by making converters and has transitioned from there to car radios, to mobile radios for World War II, to TVs, to stereos, and to cell phones. Faced with new low cost producers for its existing product line, the company would have failed had it not continuously innovated." But for the entrepreneur looking to innovate, whether by developing a new good or service, employing a new business model, or applying existing technologies in new ways. "The Phoenix Company TGen, for example, quite consciously pursues innovation through stateofthe-art research. Right now they're trying to take the latest developments in medicine and transfer them to the bedside to serve a global population.
In contrast, Another Phoenix Company, JDA Software, was created when its founder realized that then-available supply chain management software for retail companies wasn't sophisticated enough. He took that realization and turned it into an innovation, which now serves a global population.
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2. RESEARCH METHODOLOGY OBJECTIVES OF THE STUDY a) To study entrepreneurship and innovation b) To study role of the innovative entrepreneur in economy. c) To study and present examples of innovative entrepreneurs. I have used descriptive research design. Data has been collected from secondary sources. 3. FINDINGS OF THE STUDY 3.1 THE ROLE OF THE INNOVATIVE ENTREPRENEUR IN THE ECONOMY Innovative entrepreneurship impacts the economy at three levels: at the aggregate level, at the consumer level, and at the firm level. The positive effects of innovation percolate through the economy. At the aggregate level, innovative entrepreneurship, like its replicative cousin, benefits the overall economy by creating new jobs and increasing income, raising the potential for new investments. In fact, new research demonstrates that it is the gazelles -innovative companies that have experienced annual growth rates greater than 20 percent for four or more years - that create the largest number of new jobs. At the consumer level, the effect of innovation is the added value for consumers - the improved products or services available to them at lower costs. At the firm level, innovators can out-compete other companies that are not innovators, because of the cost advantages that innovation produces. Furthermore, firms that produce innovative goods and services are also more likely to adopt new innovations. Steve Jobs was the greatest innovator and entrepreneur, who created game-changing innovations including the Apple II, Macintosh, NeXT, iMac, iBook, iPod, MacBook, OS X, iPhone and the iPad, and made Apple the most valuable company in the world. Steve Jobs was the cofounder, chairman and chief executive officer of Apple Inc. 3.2 CULTIVATING INNOVATIVE ENTREPRENEURSHIP If innovative entrepreneurship is the key to increasing standards of living, then the question is: how do you cultivate innovation? Arthur Blakemore, professor and chairman of the W. P. Carey School's economics department, says that minimal regulations, a competitive and economically efficient tax system capable of
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supporting an appropriately competitive infrastructure, openness to trade and competition, and facilities for R&D are all necessary factors in an innovative economy. It's not likely that policymakers can directly guide innovation, but they can provide the kind of environment that fosters it”. Furthermore, R&D is very important. Clearly all of the most famous clusters of innovation -- Silicon Valley, Route 128 in Boston, the Research Triangle in North Carolina -- they all have universities in proximity producing basic R&D that can ultimately be commercialized. The famous clusters of innovation have another factor in common: a critical mass of companies involved in innovation. "Silicon Valley became the innovation mecca it is today almost by accident. HP started there in a rented-out garage, and its presence attracted other companies, which attracted others, and so on. This type of clustering produces is called network externalities. Innovative firms accrue production advantages from their proximity to other innovators. The clustering provides synergy, a knowledge base, a talent base and an efficient means of transferring information. The presence of large innovating companies is important. If you want to cultivate innovative entrepreneurship, you have to have large innovative companies, because they spawn startups. A lot of innovative entrepreneurs get their technical experience working for a large company. Once they come up with the innovative idea, they leave the company to go out on their own. The presence of a well-funded university involved in R&D is also a critical factor for an innovative economy. A highly trained labor force and a culture of lifelong learning are important factors in the cultivation of innovative entrepreneurship. In addition to serving as centers for R&D, universities also must do well at educating innovative entrepreneurs. There are two types of education that innovative entrepreneurs need to be successful: on one hand, they need a really solid technical understanding; and on the other hand they need an education that stimulates creativity and imagination." Innovation involves changing the status quo with respect to customer experiences, product performance, business processes, alliances, and the channels of distribution or the way the product or service is ultimately delivered to consumers. Thus, teaching innovation is not just about teaching students how to develop new goods or services, but how to explore their ideas, and develop their latent potential for innovation. 3.3 SOME OF THE FAMOUS INNOVATIVE ENTREPRENEURS 3.3.1 BILL GATES William Gates the III, the former CEO of Microsoft, for short period of time, had assets worth over 100 billion dollars, making him the world’s first centibillionaire. Today his assets are half
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that but he remains, as he has for the past decade and then some, the world’s wealthiest man according to Forbes. Gates was born on 28 October, 1955 in Seattle, Washington to a successful family and was able to attend a Seattle private school. His mother was a schoolteacher and his father a Seattle attorney. He developed interest in software and began programming at age 13 when the school acquired an ASR-33 teletype terminal from a mother’s rummage sale. Because of their exploits of bugs in the school’s second computer: a DEC PDP-10, owned by Computer Center Corporation, Gates and a number of other students, including Paul AllenMicrosoft’s co-founder, were offered unlimited computer time in exchange for debugging the company’s computers. After CCC went out of business, the students were hired by Sciences Inc. to write a payroll program. The students were successful and were received royalties on the program. 3.3.2 RATAN NAVAL TATA Ratan Naval Tata (born 28 December 1937) is the present chairman of Tata sons and therefore,Tata Group. He is also the chairman of major Tata companies such as Tata steel, Tata Motors, Tata Power, TCS, Tata Tea, Tata Chemicals, The Indian Hotel Company and Tata teleservices. Ratan Tata was adopted by Naval Tata and Soonoo Commisariat in the Tata Family a prominent family belonging to the Parsi community. He is the great-grandson of Tata group founder Jamshedji Tata. After his parents separated in 1944, he was brought up by his grandmother Lady Navajbai and did his schooling in Mumbai from Campion School. Later, he enrolled in Cornell University, where he earned a B.S in architecture with structural engineering in 1962, and has also completed the Advanced Management Program at Harvard business school (Class of 1975). 3.3.3 VIJAY MALLYA (Born 18 December 1955) is an Indian liquor baron andRajya Sabha MP. The son of industrialistVittal Mallya, he is the Chairman of the United Breweries Group and Kinfisher Airlines, which draws its name from United Breweries Group's flagship beer brand, Kingfisher. He also co-owns the Formula One team Force India, the Indian Premier League team Bangalore Royal Challengers, and the I-League team East Bengal FC. According to Forbes.com, as of March 2011, Mallya, is worth US $1.4 billion. He is ranked 879 in The Forbes World Billionaires Ranking (2011), and 38th in India. He receives substantial press coverage that focuses on his lavish parties, villas, automobiles, Force India, Royal Challengers Bangalore and his yacht, the Indian Empress. Mallya was born into a Konkani Goud Saraswat Brahmin family which originally from the town of Bantawal, near Mangalore in Karnataka. He is the son of Vittal Mallya and Lalitha Ramaiah. He was educated at La
Martiniere for Boys School, Calcutta] and completed his degree at St. Xavier’s college kolkata
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He later set up business ventures in Dubai, United Arab Emirates. Mallya's first wife was Sameera and they have a son together, named Siddharth Mallya. Sidhartha was educated at Wellington College in Crowthorne followed by Queen Mary's College in the University of London. Later on, Mallya married Rekha with who he has two daughters Laila is engaged with loganathan and Tanya Mallya and one son. 3.3.4 RAGHAV BAHL He is an Indian Businessman best known for his ownership of several television channels, including TV-18 India. He received schooling from St. Xavier’s School Delhi and attained a Masters in Business Administration from FMS Delhi. He is responsible for directing most of the work of TV-18 and channels like CNBC-Awaaz, Nickelodeon and colors. Recently he has written a book 'Super Power?' which compares the two developing countries China and India. Raghav “earned” his 2007 Entrepreneur of the year award of Ernst and young. Around 50, he is a first generation Entrepreneur. He started Newtwork-18 as a television software house in the mid nineties. He developed the India Show and The India Business Report for BBC very successfully. He saw hard times for many years but he and his team were able to come through the agni pariksha very well. Now he has in his media house three of the best global properties CNBC, CNN and VIACOM. Raghav was born in IAS family and his grandfather was principal of a government college. He studied at St. Stephen college MBA from DU and went to Columbia for his doctorate on scholarship but decided to come back to do what he loved to do. 3.3.5 JAWED HABIB Jawed Habib who was “Entrepreneured” into 220 Jawed Habib Salon and 42 Training Academies not just in India but across Asia, from Malaysia to Nepal and beyond. Last year he launched Hair Express outlets, offering hair cut at just Rs 99 each. Jawed, is a post Graduate in French Literature from JNU, New Delhi. He went to London’s Morris School of Hair Dressing and London School of Fashion for a 2 year course in the art and science of hair style and grooming. He is already there in the Limca Book of world Record with Featof 410 nonstop haircuts in a day. 3.3.6 KIRAN MAZUMDAR-SHAW ''The stud lady from India' (Managing Director of Biocon Limited a biotechnology company based in Bangalore (Bangaluru), India. Kiran Mazumdar-Shaw was born on March 23, 1953 (age 58) in Bangalore, India. Kiran Mazumdar-Shaw completed her schooling from the city’s Bishop
Cotton Girl’s High School (1968). She wanted to join medical school but instead took up biology and completed her BSc Zoology Honors course from Mount Carmel College, Bangalore University (1973). She later did her post-graduation in Malting and Brewing from Ballarat College, Melbourne University (1975). She worked as a Trainee Brewer in Carlton and United Breweries, Melbourne and as a Trainee Malster at Barrett Brothers and Burston, Australia. She also worked for some time as a Technical Consultant at Jupiter Breweries Limited, Calcutta and as a Technical Manager at Standard Maltings Corporation, Baroda between 1975 and 1977.
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She started Biocon in 1978 and spearheaded its evolution from an industrial enzymes manufacturing company to a fully integrated bio-pharmaceutical company with a wellbalanced business portfolio of products and a research focus on diabetes, oncology and auto-immune diseases. She also established two subsidiaries: Syngene (1994) to provide development support services for discovery research and Clinigene (2000) to cater to clinical development services. Her pioneering work in the sector has earned her several awards, including the prestigious Padma Shri (1989) and the Padma Bhushan (2005) from the government of India.She was recently named among TIME magazine’s 100 most influential people in the world. She is also on the Forbes list of the world’s 100 most powerful women, and the Financial Times’ top 50 women in business list. 4. CONCLUSION With rising population of the world, the world’s need and necessities pattern had also evolved through the years. To sustain the ever increasing demand and supply of products, right entrepreneurship skills and innovation are much more needed. Without new business ideas and technology to support it, no consumer demand will be fulfilled completely. Thus, innovation and entrepreneurship is the need of hour and needs to be adopted by one and all business enterprises. Innovation and Entrepreneurship is a good resource for categorizing and identifying sources of innovation. Entrepreneur does an excellent job of organizing the key elements involved in innovation and there is a fair amount of real world examples that help others understand the concepts. Innovation and Entrepreneurship is more about creating a framework for innovation that can be used to compartmentalize current practices and shed light on their origins. To accurately point out, the least likely sources of innovation are from new knowledge and bright ideas. The insight into this alone, makes the concept well worth understanding.
