UNIT- II

INNOVATION
The word “innovation” is derived from the Latin verb Innovare, which
means to renew. Innovation is a process by which a domain, a product, or a
service is renewed and brought up to date by applying new processes,
introducing new techniques, or establishing successful ideas to create new
value.

IMPORTANCE OF INNOVATION
Organizations have several options to increase their competitiveness: they
can strive for price leadership or develop a strategy of differentiation. In
both cases, innovation is essential. Companies that choose price leadership
must secure their long-term competitiveness by developing innovative,
highly efficient processes. Process optimization and continuous
improvement in terms of costs are important for them. Companies that
strive for a differentiation strategy need innovation to develop unique
distinguishing features to their competitors.
Many start-ups launch their activities by developing an innovative product
or service. Continuous innovation is, therefore, crucial for all companies.
The main difference is in the focus of the innovation strategy, which varies
considerably from company to company. Although innovation has always
been one of the driving forces in competition and has always been a
primary competitive dimension, the numerous studies and publications of
recent years show that the speed of change is increasing. This makes
innovation one of the most important drivers for the long-term success of
companies. Accordingly, methods of collaboration and teamwork are
increasingly being used in numerous companies, for example, to promote
digital innovations and overcome the challenges of digital change.
Innovation requires a higher degree of creativity than the operative
business and a clear innovation strategy. Concepts like lean innovation and
the establishment of community-based innovation networks become
increasingly relevant. Companies are using modern idea management
1
software and innovation management software to manage innovation
efficiently.

Mindset for Innovation

Innovation requires more creativity and more willingness to take risks than
the implementation of typical projects. To successfully realize innovation
projects, a different mindset is needed.
Key points
 With traditional approaches and conventional methods, you will
often not get anywhere in the field of innovation so explore new
paths off the beaten track.
 Innovation projects constantly need new ideas in order to overcome
obstacles, to change concepts, and to optimize strategies.

 Imagine how your innovation will look like in reality. Believe that
you will be able to overcome all obstacles on the way to realization
 Innovation needs the diversity of various competencies and diverse
ways of thinking.

DIFFERENT TYPES OF INNOVATION

In the context of businesses, there are different types of innovation.
1.Process improvement and organizational innovation: The
improvement of processes through continuous improvement and the
development of new solutions.
2. Product development: The development of innovative products or
product features.
3.Service innovation: The creation and introduction of new services for
customers and partners.

2
ENTREPRENEURIAL IDEA GENERATION
Entrepreneurship is being able to create and run a business. In
entrepreneurship, idea generation is one of the main factors that lead to its
success. The idea thought of here should be able to solve a problem. Along
with being unique, the idea should also be easy to execute. For example,
let’s suppose you feel a lot of people have a problem understanding legal
jargon and legal proceedings. So, in this case, your entrepreneurial idea
could be setting up a platform that caters to all the legal needs of people
and helps them understand it easily.

Idea Generation Process

The process may be different for different organizations and different
people.
The three main steps in the process are:
Identification of the question or the problem that need to be solved.

Come up with ideas and probable solutions.

Select the most suitable idea and execute it.

For example, let’s suppose you are opening up a restaurant. So firstly, you
need to identify what question you need to answer. Let’s assume you want
to decide upon a name for the restaurant. Now you will use different
techniques (brainstorming, mind mapping, etc.) to come up with ideas for
names. In the last step, you will choose the most appropriate name from the
different names you came up with within the second step.

IDEA GENERATION TECHNIQUES

The different idea generation techniques are as follows:
1. Mind Mapping
It is a technique of presenting information. Here we show the links between
the different elements or the pieces of information. The links or connection
is usually shown with the help of lines and arrows. It’s a visual way of
3
presenting the information.
For example, let’s suppose you want a name for your new application.
You will start by writing the main topic in the center of a paper, which here
is the name for your new application. From the center point, you will have
arrows pointing out. These arrows will point to the main things to be kept
in mind while thinking of a name like guidelines, visualization,
productivity, etc. Now from every key aspect, there will be more arrows
pointing out. These arrows will describe the key aspect in detail. Like
‘guidelines’ will talk about the name being able to express what the
application does, following the naming scheme, etc.

2. Reverse Thinking
This technique asks us to think oppositely. Instead of working on the
problem in front of us, we work on the exact opposite of it.
For example, let us assume you want to know--How to increase your
followers on social media platforms? According to this technique, you will
instead think of--How will I not increase my followers on social media
platform? To this question, you will get answers like--by not posting
regularly, or posting low-quality content, etc. Now you just have to reverse
your answers. So, to increase followers on a social media platform you
should post high-quality content regularly. This idea generation technique
works on the concept that it’s easier to come up with negative suggestions.

3. Brainstorming

This technique is quantitative meaning that you come up with a large

number of ideas. Here a group comes up with a different probable solution
to the problem.
For example, if you along with some of your colleagues are trying to come
up with a tagline for your product. And each one of you gives your ideas,
then that is called brainstorming.

4. Role-Playing

In this technique, the participants take up roles to play. These roles are
different from the ones they usually play. It adds an element of fun and
4
 helps get innovative ideas.
For example, you could take up the roles of customers and discuss your
expectations and what you want from products. This could lead you to
stumble upon some good ideas.

5. Storyboarding

This technique refers to the process of making storyboards to generate

ideas. Storyboards use pictures, illustrations, and other information to
better present the ideas.
For example, suppose you are working on an idea for an advertisement.
You can portray the different scenes in the form of a storyboard. This helps
you in better visualization and you can make changes accordingly.

IDENTIFYING BUSINESS OPPORTUNITIES

We can identify a good business opportunity by,

1. Analysis of Internal Demand: Business opportunities may be

identified by assessment of internal demand of the existing and
proposed products, as to what will be the possibility of future demand.

2 Availability of Raw Materials: Easy availability of raw material also has

important role in selecting the business opportunities; the reason is that the
quantity and level of future production are decided only by it.

3.External Assistance: Role of external assistance, like - government,

suppliers, investors, and specific institutions is also important, in
Identification of business opportunities.

4. Knowledge about Industrial Development : By having detailed

knowledge about proposed industrial development, the entrepreneur may
know which type of industry and at which place will be profitable.
5. Internal Sources : The availability of internal sources also has an
important role in tbe identification of business opportunities.

5
Management skills for Entrepreneurs
Entrepreneurs are the individuals who have the courage to take several
risks and single handedly operate their business. An entrepreneur is a
leader, innovator, thinker and motivator for his team. However, it isn’t an
easy task to be an entrepreneur. There are specific managerial skills that an
entrepreneur must master in order to be successful in his ventures.
The essential managerial skills that help the entrepreneurs to succeed and
take their business to the next level are stated below:

1. Time Management
The most valuable asset for young entrepreneurs is their time. As an
entrepreneur, you have to take care of so many things together and time
management is the key to keep everything on track. It is vital to get more
work done in less amount of time by eliminating interruptions, prioritising
tasks and increasing effectiveness as well as productivity. Effectual time
management allows entrepreneurs to assign specific time slots to the
activities as per their importance. It also gives them the ability to
participate in economic forecasting and market research.

2. Business Planning
Every entrepreneur needs to develop a business plan or a blueprint of how
will he develop his new business. A good business plan consists of a single
document divided into several sections including the description of the
organisation, market research, sales strategies, competitive analysis and
financial data. A well-planned blueprint or project outline acts as a strong
foundation for the success of the venture. It facilitates the entrepreneurs to
make their business fit into the industry, identify their target market and
plan to capture them.

3. Employee Management
An entrepreneur must know how to manage the people. He should be a
good judge of character and abilities of an individual such as hiring the
right employee is the foremost step for the success of a company.
6
Successful entrepreneurs should know how to motivate the employees in
order to work effectively and contribute to garner customer experience.

4. Customer Management
An entrepreneur must know how to manage his relationship with existing
customers with a focus on creating loyalty towards his business. This is the
easiest and most effective method to increase revenues. Entrepreneurs must
have problem-solving skills, communication skills, attentiveness and
patience to manage customers effectively.

5. Sales Management
Selling or sale management is an essential skill every entrepreneur must
master. You need to completely understand the sale activities. This helps
the entrepreneurs to tackle the challenges that they may face in their sale
management journey.

6. Financial Management
Even if your business’s finance is handled by an accountant or a finance
professional, you must know planning, organising, directing and
controlling the financial activities such as procurement and utilisation of
funds. With a good financial management system, one can make decisions
to improve the business operations.

7. Business Management
Being a successful entrepreneur involves more than enthusiasm and a good
eye for new opportunities. A thorough understanding of the essential
business functions is a pre-requisite for entrepreneurs who want to take
their business to the next level. They must have the complete know-how of
general management, finance, marketing, operations management,
purchasing, supply chain, human resources and public relations.

7
 VALUE CREATIONS AND ITS NECESSITY IN BUSINESS
Value creation is the process that creates outputs which are mora valuable
than the input. The creation of value is the core purpose and central process
of economic exchange. Traditional models of value creation focus on the
firm's output and price. It is performance of actions that increase the worth
of goods, services
Many business operators now focus on value creation both in the context of
creating better value for customers purchasing its products and services, as
well as for shareholders in the business who want to see their stake
appreciate in value.
Value creation is important in business because:
 It grasps customer requirements for product quality, design, and
development of products.
 It attracts customers, investors and other stakeholders.
 It creates the organization's purpose, strategy, and business model
taking into account all resources, capitals, and relationships in an
integrated way.
 It delivers stakeholders through responsible products and services at
an appropriate price.
 It helps in retaining and protecting value internally and distribution
to shareholders and customers.
How to manage Value Creation?
We could manage value creation by keeping good control over:
1. Quality management: Quality management is the act of overseeing all
activities and tasks that must be accomplished to maintain a desired level of
excellence.
2.Quality of products or services: It includes the determination of a quality
policy, creating and implementing quality planning and assurance, and
quality control and quality improvement.
3.Ability to attract, develop, and keep talented people: Organization
should have ability to manage the skilled workers.
8
4.Use of corporate assets: Assets are important for any kind of business as
it allows businesses to gain profit, improve the business' value and keep the
business up and running.
5.Financial soundness : The main areas of financial soundness that should
be examined are liquidity, solvency, profitability, and operating efficiency of
a company.
6.Capacity to innovate: Innovation capacity refers to produce and exploit
new products, services or processes over long periods of time.

STEPS TO CREATE AN ENTERPRISE MODEL

The following steps are involved in process of creating a new enterprise
Identification of business opportunity: The process of identifying
opportunity involves identifying the needs and wants of the customers,
scanning the eavironment, understanding the competitor's policy etc.
Generation of business idea : The ideas that provide value for the
customer, profit for the entrepreneur and benefit for society and can be
transformed into products of services are called business ideas.
Feasibility Study: Feasibility study is a detailed investigation of the
proposed project to determine whether the project is financially,
economically and technically visible or not.
Preparation of a business plan: In this step an entrepreneur prepare a good
business plan, designs and creates the organizational structure for
implementation of the plan.
Launching the enterprise: At this step the entrepreneur hunts for suitable
location, design the premises and install machinery and fulfill some legal
formalities like:
 Acquiring license
 Permission from local authorities
 Approvals from banks and financial institution
 Registration

9
ORGANIZATIONAL EFFECTIVENESS:
Organizational effectiveness is maintained by:
Clear decision rights: Organizational effectiveness requires real decision
rights and resources to prioritize and implement changes to avoid becoming
stuck in a cycle of risks while being unable to effect change.
Strong leadership commitment: Transformations with strong leader
involvement are more likely to succeed, and if decisions are right roles and
responsibilities are clear.
Strategy first: Strategy sets out the workforce capabilities, skills and
competencies that organization needs, and bow they can be developed to
ensure a sustainable, successful organization.
Business-unit involvement: Leaders should align to relevant initiatives to
enable seamless implement action and ensure the organization is not
operating inefficiently.
Holistic approach: The leaders should address a holistic set of actions to
ensure the desired outcomes are actually achieved. These actions include
topics like process redesign, re-skilling, workforce planning and decision
making.
Balance authority and responsibility : No matter where the employees fit
within the organizational structure, they should be givenequal measures of
authority and responsibility.

STRATEGIES FOR SUSTAINABLE ENTREPRENEURSHIP

MODEL
Following are the strategies for a sustainable enterprişe model:
Maximize material and energy efficiency: Aims at less material and
energy input through more efficient processes.
Control resource wastage : Aims at controlling resources wastages through
reuse, remanufacturing, and recycling.

1
0
Deliver functionality rather than ownership: Aims at providing the user
with the functionality requires without owning the product that delivers the
service.
Adopt a stewardship role: Aims to take the responsibility that company
have to understand and manage their impacts on the environment in any of
ways.
Encourage sufficiency: Aims at providing information and incentives that
encourage less consumption of resources.

1
1