CHAPTER TWO

ENTREPRENEURIAL COMPETENCIES,
INNOVATION & CREATIVITY

1. Entrepreneurial competencies

2. Types of Innovation

3. The Innovation Process

4. Developing Creativity and the Business Idea

5. Evaluating the business Idea

6. Types of Creativity

7. Process of Creativity
 Entrepreneurial competencies

• We live in a rapidly changing society where it is

essential that everyone has the capacity to act upon
opportunities and ideas, to work with others, to
manage dynamic careers and shape the future for
the common good.

• To achieve these goals we need people, teams and

organisations with an entrepreneurial Mindset, in
every aspect of life.
 Entrepreneurial competencies

• Without a doubt, business owners and start-up

founders must possess most of the
entrepreneur competencies to succeed.
• Entrepreneurial competency is a set of skills
and behaviour needed to create, develop,
manage, and grow a business venture.
• It also includes the ability to handle the risks that
come with running a business.
Entrepreneurial competencies

• Entrepreneurial competencies are associated with

the entrepreneurs’ ability to be innovative,

creativity, be able to identify opportunities,
identify strengths and weaknesses.

• Ahmad, Ramayah, Wilson and Kummerow (2010)

defined entrepreneurial competencies as the total

ability of an entrepreneur to perform their role
successfully.
Entrepreneurial competencies

• Mitchelmore and Rowley (2013) suggested that

entrepreneurial competencies be measured
using individual level competencies, which can
be classified into four main categories namely:
– personal and relationship,

– business and management,

– entrepreneurial and

– human relations competencies.

 Entrepreneurial competencies

• Personal and relationship competencies refer to the

ability to negotiate with others, and to maintain a good

personal network of work contacts, developing long term

trusting and loyal relationship with others (Mitchelmore &

Rowley, 2013)

• Business and management competencies, includes

various business tasks such as managing of finance,

budgeting, business operations as well as the business

planning.
 Entrepreneurial competencies

• Entrepreneurial competencies are associated with

the entrepreneur’s ability to be innovative, creative,
be able to identify opportunities strengths and
weaknesses.
• Human relations competencies refer to the
combination of human relations functions and the
management in the business.
• It includes staff development, hiring of new staff
members, leadership and motivating staff
Entrepreneurial competencies

• Competence is a combination of knowledge,

skills and appropriate motives or traits that an
individual must possess to perform a given
task.
• Thus, success of an entrepreneur is governed
by entrepreneurial competencies.
• If he has all these competencies, he can be
expected to achieve his entrepreneurial goals.
 Entrepreneurial
competencies
In general Entrepreneurial Competence is:
• A set of skills and ability that individuals possess
and/or can acquire and improve to become
proactive and to show the initiative spirit.
• A sum of knowledge, skills, and attitudes
necessary to develop, to organize and to
manage a business venture along with any of its
risks
 Entrepreneurial
competencies
Cont’d …
• The ability to develop, organize and manage a
business venture along with any of its risks.
• It includes key characteristics that should be
possessed by a person in order to successfully
run a new venture.
• Among those characteristics are: social,
managerial and networking competences.
 What is Innovation?
Innovation could be:
 Producing something new and commercializing it

Schumpeter’s five types of innovation

 New product or substantial change in existing product

 New process

 New market

 New sources of supply

 Changes in organizations in any industry

 What is Innovation?

– Ability to apply creative solutions to problems

and opportunities
– Doing new things
– Innovation is intrinsically about identifying and
using opportunities to create new products,
services, or work practices (Van de Ven, 1986).
– The practical application of new ideas and
concepts.
 Types of Innovation
• There are various levels of the degree of
innovation based on the uniqueness of the idea.

• As Hisrich and Peter (2005), innovation can be

classified into three: as

1. Breakthrough innovation,

2. Technological innovation, and

3. Ordinary innovation.
 Types of Innovation
1. Breakthrough innovation
• These extremely unique innovations often establish the

platform on which future innovations in an area are

developed.

• Given that they are often the basis for further innovation

in an area, these innovations are usually protected by

strong patents, trade secrets, and/or copyrights.

• Breakthrough innovations include such ideas as penicillin,

the steam engine, the computer, the airplane, the

automobile, the Internet, and nanotechnology
 Cont’d …
2. Technological innovation
• Occurs more frequently than breakthrough
innovation and in general is not at the same level of
scientific discovery and advancement.
• Nonetheless, these are very meaningful innovations,
as they do offer advancements in the
product/service/market area.
• Such innovations as the personal computer, the flip
watch for containing pictures, voice and text
messaging, and the jet airplane are examples of
 Cont’d …
3. Ordinary innovation
• Ordinary innovation—is the one that occurs most frequently.

• These more numerous innovations usually extend an existing

innovation into a better product or service or one that has a
different—usually better—market appeal.
• These innovations usually come from market analysis and
pull, not technology push.
• In other words, the market has a stronger effect on the
innovation (market pull) than the technology (technology
push).
 Types of Innovation
1. Invention: discovery of new things
2. Extension: expansion
3. Duplication: replication of tech

4. Synthesis: combination of
old/existing and new idea
 Innovation and Invention

• The Cambridge Dictionary defines an invention as:

– ​“something that has never been made before, or
the ​process of​ creating something that has never
been made before”.

• By definition, it has to be something entirely new,

so an invention is something that has never been
done before.
• To invent something is to discover a new thing.
 Innovation and Invention

• Meanwhile, to innovate means ​“to use a new ​

idea or ​method”.
• To innovate is:

• to introduce something new to the market,

• to manipulate existing inventions and turn

them into a product or process that is of
use in the real world.
 Dimensions of innovation

There are several types of innovation

– Process, product/service, strategy,

Which can vary in degree of newness:

– Incremental to radical,

and impact:
– Continuous to discontinuous
 Process of Innovation

1. Idea Generation and Mobilization

• New ideas are created during idea generation.

• Successful idea generation should involve the

pressure to compete and the freedom to explore.

• Mobilization occurs when the idea is moved to a

different logical or physical location.

• A new idea often needs someone other than its

originator to move it along.

 Process of Innovation

2. Advocacy And Screening

• This stage is the time for weighing an idea’s
pros and cons.
• Advocacy and screening help to evaluate
the feasibility of a business idea with its
potential problems and benefits.
• Hence, a decision can be made about an
idea’s future.
 Process of Innovation

3. Experimentation
• The experimentation stage tests the
sustainability of ideas for an organization at
a specific time.
• Experimentation generates new ideas with
the information that is gathered on the
results and feasibility of the original idea.
 Process of Innovation

4. Commercialization
• Commercialization develops market value for
an idea by focusing on its impact.
• An important part is establishing the
specifications of any given idea.
• Commercialization is the stage that involves
the change of focus developments to
persuasion.
 Process of Innovation
5. Diffusion And Implementation

• Diffusion is the company- wide acceptance of an

innovative idea, and implementation sets up everything

needed to develop the innovation.

• Diffusion and implementation allow the organization to

determine the next set of needs for customers.

• Receiving feedback, indicators for success metrics, and

other benchmarks enable the organization to stimulate

the innovation process.

 Reflection!!

• What are the driving forces of

innovation?
• What are the challenges of
Innovation?
 Drivers for innovation
– Financial pressures to reduce costs, increase efficiency

– Increased competition

– Industry and community needs for sustainable

development

– Increased demand for accountability

– Demographic, social and market changes

– Rising customer expectations regarding service and

quality

– Changing economy

– Technological Changes
 Challenges of Innoavation
• Employees aren't empowered and motivated to innovate

• Missing an innovation strategy

• Innovation is centralized to one functional group alone

• Lack of collaboration (both internally and externally)

• Lack of diversity (in terms of skills, knowledge and

attitudes)

• Current product offerings are successful

• Missed Customer Connections

• Failure to measure innovation appropriately

 Creativity and Entrepreneurship
What is the difference b/n creativity and
innovation?
• Frequently used interchangeably !!!!! But there is
fundamental difference…..
• Creativity is a core building block of innovation.

• Creativity encompasses the process leading to the

generation of new and valuable ideas.
• Without creativity, there would be no innovation, as
creativity is the foundation on which innovation
emerges, develops and grows
 Cont’d …
• Creativity is about developing ideas, processes, or
concepts, while innovation is the practical application
of these.
• Creativity can lead to commercialized innovation, but to
be successful, the creativity and innovation must create
new value for customers and generate return.
• Creativity and innovation are not possible without people
who have the required competencies, motivation, and
curiosity to discover and invent something novel.
 Cont’d …

 Creativity “…involves the development of

UNIQUE and NOVEL responses to problems and

opportunities

 A combination of elements: intellectual abilities,

knowledge, styles of thinking, personality,

motivation, and environment.

 Creativity is thinking new things

 The Creativity Process
1. Idea Germination (Seeding stage of new ideas)/

Recognition

2. Preparation (Conscious search for new ideas)/

Rationalization

3. Incubation (Subconscious assimilation information)/

Fantasizing

4. Illumination (Recognition of ideas as being feasible) /

Realization

5. Verification (Application or test to prove ideas has value).

Validation
 Importance of Creativity
Creation of innovative ideas:
• The entire procedure of entrepreneurship
rotated around the creation and exploration
of some innovative ideas.

• When an entrepreneur gets innovative that is

efficient and in favour of the business,
then they can stay ahead of the curve and beat
the competition in a very proper manner.
 Importance of Creativity (Cont’d
…)
Novel ways to develop and improve the
products
• Creativity is all the way associated with making
changes in the products or services in such a way that
it creates something different.

• Chances of improvement in any product are high but it

just needs some sort of creative thinking to know
what is missing in the products. This thing can only be
assessed by a creative entrepreneur.
 Importance of Creativity
(Cont’d …)
Thinking out of the world

• The intention and imagination of producing something

different with unique ideas is called Creativity.

• Imagination is always must to cross the boundaries

between the normal and unique and come up with

something that can help you think outside of the box.

• The creative entrepreneur always thinks out of the world

and replaces the traditional solutions with inventive ones.

 Importance of Creativity
(Cont’d …)
Growth of new businesses with creativity
• It is vital to explore the new aspects of
conventional business in the entrepreneurship.
• It can be done in various ways such as by changing
the manufacturing techniques, mode of delivery or
make some changes in the service or product.
• All these changes create a big difference in business
strategies and give birth to a new niche/position,
role/place/.
 Importance of Creativity
(Cont’d …)
Stand out from the crowd:
• A start-up with huge success is something remarkable that
can set an example that you are completely unique from
others. Need to get up from the crowd.
Pushing your potential and never stay settle down
• If the business is running smoothly and the entrepreneur is
comfortable with the whole process, then it is quite
dangerous as well as monotonous or boring (tedious) too.
Become a solution:
• Continuous working on the problem is the only solution to
make it right.
 Types of Creativity

• Deliberate and Cognitive creativity

• Deliberate and Emotional Creativity
• Spontaneous and Cognitive Creativity
• Spontaneous and Emotional
Creativity
 Types of Creativity
Deliberate and Cognitive creativity
• These characteristics possessed by people who are
purposeful.
• These people have a huge amount of knowledge
regarding a particular subject and they utilize their skills
and abilities to prepare a plan to accomplish something.
• When people work in a definite niche/position for a long
time, then they can be built such type of creativity and
it takes some time.
 Types of Creativity (Cont’d) …

• People equipped with this creativity are usually

very good at research, problem-solving,

proper investigation and experimentation.

• A long span of time is spent by these people

each day to develop some new ideas and

solutions.
 Types of Creativity (Cont’d) …

• For example, one prominent example of this type

of creativity is Sir Thomas Alva Edison as he

was a creative person.

• He went through a lot of experiments before

inventing electricity, the light bulb and

telecommunication.

•
 Types of Creativity (Cont’d) …

Deliberate and Emotional Creativity

• These are a category of people whose work is
swayed (influenced) by their emotions as these
people are very emotional as well as sensitive
in nature.
• Relatively, these people need some personal and
quiet time to reflect and they like to write a diary.
• However, their decisions are always logical and
rational at the same time.
 Types of Creativity (Cont’d) …

• Their creativity is always a blend of products

having deliberate emotional thinking and logical

actions.

• This creativity occurs at random moments and

these moments are “a-ha!” moments when a

solution is suddenly stuck into the mind of a

person to sort out problems or think about the

innovative ideas.
 Types of Creativity (Cont’d) …

Spontaneous and Cognitive Creativity

• It is a time when you get into the problem and
spend a lot of time to find out the relevant
solutions but no solution is to figure out.
• To exemplify, the same thing has happened
with the great scientist, Sir Isaac Newton as he
get the idea about the law of gravity when
he was sitting under a tree.
 Types of Creativity (Cont’d) …

• This type of creativity gives a “Eureka!!”

(exclamation) moment and it happens when a person

has the knowledge to do the job but he/she needs

motivation and wants the right avenue to walk through.

• This occurs at very convenient hours of the day as when

you are on the bed or taking a shower.

• In spontaneous and cognitive creativity, the conscious

mind stops working and the unconscious mind starts

working to get a chance for work.

 Types of Creativity (Cont’d) …

Spontaneous and Emotional Creativity

• This type of creativity is associated with the “amygdala”
part of the human brain as it is responsible for
emotional thinking in the human’s mind.
• When the prefrontal, as well as the conscious
mind, is resting, then this type of creativity
happens.
• Mostly, it can be seen in great artists such as
musicians, painters and writers.
 Types of Creativity (Cont’d) …
• It is a situation when a person realizes something suddenly.

• This creativity has a major role in scientific breakthrough,

religious and philosophical discoveries too.

• The person looks at the problems or situations in a

deep way and gets a deeper viewpoint.

• These are “rare” moments when discovery takes place.

• It does not require any specific knowledge about a

particular area but there should be a talent such as

writing, musical or maybe artistic as well.

Sources of Business Ideas

• What are the sources of new ideas

for entrepreneurs?

• What are the Methods of

Generating New Ideas

 Sources of Business Ideas

What are the sources of new ideas for

entrepreneurs?
• Consumers,

• Existing products and services,

• Distribution channels (e.g., wholesalers,

retailers, distributors)
• The government, and

• Research and development

 Methods of Generating New
Ideas
• Focus Group: Groups of individuals providing information

in a structured format

• Brainstorming: A group method for obtaining new ideas

and solutions. Critiques is not allowed here.

• Brainwriting: is a form of written brainstorming. It is a

silent, written generation of ideas by a group of people

• Problem Inventory analysis: in this analysis consumers

are provided with a list of problems in a general product

category to identify the product with a problem.

 Cont’d …

• Reverse Brainstorming:
– Is similar to brainstorming, except that criticism is
allowed.
– In fact, the technique is based on finding fault by
asking the question, “In how many ways can this
idea fail?”
– Since the focus is on the negative aspects of a
product, service, or idea, care must be taken to
maintain the group’s morale.
 International Entrepreneurship
• IE: is the process of an entrepreneur conducting business

activities beyond national boundaries.

• IE comprise novel and innovative activities that crosses or is

compared across national borders with the aim of creating

value and growth in business organizations.

• According to McDougall and Oviatt, “International

Entrepreneurship is a combination of innovative,

proactive, and risk-seeking behavior that crosses

national borders and is intended to create value in

organizations.
 International Entrepreneurship

• When an Entrepreneur goes to other countries to run and

operate their business, then it is known as International

Entrepreneurship.

• These types of Entrepreneurship include exporting of

goods, licensing as well as commencing a sales

office in other countries.

• There are many industries that have produced numerous

international entrepreneurs Coca-Cola, Nike, MacDonald,

BMW, Puma, Philips and Tata etc.

 Advantages of International
Entrepreneurship

An entrepreneur going global has many advantages:

• Large markets beyond home country borders.

• Improvements in technologies, quality, and operations.

• Challenges in doing business in a competitive environment.

• Earning foreign exchange for the organization and home

country.

• Reputation enhancement.

• Greater motivation in new opportunities.

 Barriers of IE

• International Entrepreneurship is all about expansion and

availability of all types of products all over the world.
• It takes a lot of effort to take any domestic business to
the next level at international Entrepreneurship and it is
quite thrilling seeking to face some barriers while taking
the business to a great extent.
• The following are major barriers of International
Entrepreneurship
 Barriers of IE (Cont’d) …
Attitude of Entrepreneur

• When there is negativity in the mind of the Entrepreneur

that they do not have any knowledge about the global
market and he/she has a misconception that they will not
able to set up a business. This attitude emerges as the
biggest hurdle.

Lack of Information

• As a new to the international market, the Entrepreneur has

no info about the market conditions and unaware of the
customer’s taste as well as the preference of products.
 Barriers of IE (Cont’d) …
Lack of Network Influences

• If the Entrepreneur has some links with the business firms in

the host nation, then it becomes easy to deal with the new

conditions and get some info. In the case of no connections,

it is somehow difficult to commence business and

establishing it.

Financial problems

• As the Entrepreneur is going to expand their business in

other nations, so there is a financial risk as the financial

institutions are reluctant to provide any kind of assistance.

 Barriers of IE (Cont’d) …

Tariff barriers

• Tariff refers to the duty that is levied on products while

importing. The price of imported goods rises with the increase in

tariffs and also, seems unattractive from a customer’s point of

view.

Non-Tariff Barriers

• Apart from the tariff hurdles, some other obstacles are dealt with

by businesses such as testing, bureaucracy, certification, and so

on. These are some problems raise by the government to limit

foreign goods.
 Barriers of IE (Cont’d) …
Political Barrier

• There is a question mark in business success due to the high rise in

some illegal activities in the host nation such as kidnapping,

discrimination, employee violence, and others. These unstable

political scenarios make it difficult for a business to grab abundant

opportunities for growth.

Human Resource

• The existence of labor unions, strikes, lockdowns, and

incline in labor costs make it tough for entrepreneurs to set

up a successful business.