Innovation & Entrepreneurship
(MBA-III Semester)
KMBN 302
Objectives:
•To study the terms creativity, idea, discovery &
invention
•To understand the concept of Innovation
•To study the types of innovation
•To understand the innovation strategy
Creativity vs. Innovation
Creativity = Ideas
Innovation = Ideas + Action
Creativity = Novelty
Innovation = Novelty + Value
Innovation in Industry & Commerce
• Businesses in Traditional Sectors are Innovating
(Product Innovations & Business Process Innovations)
• Regional Development Authorities:
Develop High Growth Technology Based SME’s
Develop Science Parks, Innovation Centres & Technology Parks
R&D Institutions
Multistakeholder Processes (MSP’s)
Learning Alliances & Innovation Platforms as examples of MSP’s
INNOVATION PLATFORMS
An innovation platform is a space for learning and change.
It is a group of individuals (who often represent
organizations) with different backgrounds and interests:
farmers
traders
food processors
Researchers
government officials etc.
• The members come together to diagnose problems,
identify opportunities and find ways to achieve their
goals.
• Innovation platforms can be used to explore
strategies:
boost productivity
manage natural resources
improve value chains
and adapt to climate change
Levels of Innovation
Operational Innovation: This is primarily about
operational excellence wherein IT investments
could play a big role but these could be easily
imitated on account of technology diffusion.
Product Innovation: This is related with product
development but could be imitated over longer
time frame.
Strategy Innovation: It is about smart new
business models.
Management Innovation: It is the highest level
of management innovation as it represents a
management capability which is hard to replicate.
Technology Waves
Four complete waves
• K1- Involved mechanization and involved the
time period between 1770-80s to 1830-40s
• K2- This was the steam power and railway
Kondratiev. This was the period between 1830-
40s and 1880-90s
• K3- The third K Wave called electrical and heavy
engineering Kondratiev started from 1880-90s
to 1930-40s.
• K4- This wave was called Fordist mass
production Kondratiev. This lasted from 1930-
40s to 1980-1990s.
• K5-The fifth K-wave appears to have begun in
the 1980s and 1990s and is associated with
Physical Technology and Social
Technology
Physical technology deals with the
invention part of innovation. It is the know-
how or the new benefit of a development, be it
technology or a process.
Social technology is about its diffusion and
deployment through multiple entities such as
society and various institutions.
The success of a physical technology is
dependent on social aspects as to how
institutions use it as well as the deployment of
resources.
Differences between Physical and
social Technologies
• Physical technologies are easier to
specify with their physical characteristics
while as social technologies involve
organization structures and decision
making styles which are difficult to
elaborate.
• Physical technologies can be measured
while as social technologies are difficult
to measure.
• Physical technologies are easier to
replicate than social technology.
Types of Technology led
Innovations
Incremental Innovation: These are the small
modifications and improvements in
technologies. For example, making
improvements in features of a phone is
incremental innovation.
Radical Innovation: These are discontinuous
technologies or changes, which may drastically
transform existing products or processes. An
example is the shift from transistor
technologies to digital technologies. A PC or a
smart phone is a radical innovation, which has
transformed how communication takes place
Incremental Innovation
• Harvard Business Review (2003) defines
incremental innovation as innovation that
either improves upon something that already
exists or reconfigures an existing form or
technology to serve some other purpose.
• This means that it is a minor improvement in a
technology or a process
Radical Innovation
Christensen (2003) defines ‘a radical innovation
as a technical innovation that has the potential to
upset an organization’s or an industry’s existing
business model’. Digital imaging technology and
silicon chip technology are key examples.
Radically different performance features:
•Drastic reduction in costs
•Ability to change the industry/market
dynamics
Management Innovation
• Scientific management
• Cost accounting and variance analysis
• Commercial labs
• ROI and capital budgeting
• Brand management
• Large scale project management
• Divisionalization
Management Innovation
• Leadership development
• Industry consortia
• Radical decentralization
• Formalized strategic analysis
• Employee driven problem solving
Innovation in small firms
Advantages Disadvantages
•Out of box thinking • Marketing
•Flexibility in challenges
processes • Research
•Flatter structures challenges
• Financial
challenges
• People challenges
Large firms and innovation
Advantages Disadvantages
•Resource capability • Challenges for
•Systems and processes bureaucracy
n place • Decision making is
•Can adopt a diverse complex and involves
range of strategies numerous iterations
•Brand strength to attract • Challenges of
talent and leadership leadership and old
•Market reach and mindset
capacity to invest in • Problems of
marketing efforts complacency
•Have a clout in market
place
Why should firms invest in
innovation?
• It leads to growth of the firm and enables it to
adapt to changing market situations and
consumer expectations.
• Enables longevity for the firm.
• Enables testing of ideas and launch new
products.
Your business model needs to be
managed , renewed and changed
SERVICE
INNOVATION
DESIGN- LED INNOVATION
CO-CREATION & OPEN
INNOVATION
CREATIVE DESTRUCTIONS
What Is Creative Destruction?
Creative destruction is the
dismantling of long-standing practices
in order to make way for innovation
and is seen as a driving force of
capitalism
Creative destruction describes the deliberate
dismantling of established processes in order to make
way for improved methods of production.
Creative destruction is most often used to describe
disruptive technologies such as the railroads or, in our
own time, the internet.
The term was coined in the early 1940s by economist
Joseph Schumpeter, who observed real-life examples
of creative destruction, such as Henry Ford’s assembly
line.
Creative destruction can be seen across many different
industries such as technology, retail, and finance.
Creative destruction often has unintended
consequences such as temporary losses of jobs,
environmental issues, or inequity.
Principles of Creative Destruction
Innovation: Creative destruction involves the
introduction of new ideas, products, and technologies
that replace the existing ones. Innovation is the driving
force of creative destruction. Without innovation,
creative destruction could not exist and without
innovators, there would be no change agents that could
make creative destruction happen.
Competition: The process of creative destruction
involves intense competition between the old and new
technologies or products. The new products or
technologies must prove to be better and more efficient
than the old ones to replace them. For this reason,
creative destruction is usually heavily tied to competition
and competitive advantages. Companies usually strive to
find the best ways to do things and are often willing to
creatively destroy what they've done in the past to find
better long-term solutions.
Entrepreneurship: Entrepreneurship is also critical to the
process of creative destruction. The entrepreneurs who
develop new products and technologies and disrupt
existing markets are the agents of creative destruction.
They are responsible for overseeing change
management, educating both internal staff and
consumers on how this change will impact them. Without
clear guidance on the intention of the creative
destruction, the entrepreneur will likely fail in their
attempt to innovate.
Capital: Making sweeping, radical innovate changes is
often expensive, and companies must be prepared to
take on financial risk to make this change. Companies
look for venture capital investments to aid the funding of
creative destruction.
