27- Innovation and Entrepreneurship: Practice and Principles

Below are the answers to the questions, but I didn't the class's questions interesting enough to write much on them, so below are my notes on the book - this will give you a better understanding of the material I hope- the formatting is disgusting, I apologize in advance

General Theme
The focus of the book is on the creation of a society focused on observing governments, markets, businesses, customers, and environments and coming up with innovative solutions to problems. It gives many strategies for existing and new businesses to adopt as well as for public service institutions (government) to embody the spirit of entrepreneurship for constant progression.

Connection to ENT3003
The book gives many examples which were used in ENT3003 lectures and is structured pedagogically similar to the class.

Exercise
The best exercise for this book would likely be the bug list. A large focus of the book is established on the idea of looking for existing problems and using information from outside sources to solve the problem. There is likely technology that has been discovered today which hasn't been implemented into a business or hasn't found its market yet, and if the entrepreneur finds a match between the market and possible solutions, they can capture a market

Interesting Parts
I found the government aspects of the entrepreneurial society to be the most interesting. So often, politicians make significant promises as if they will be able to pull off a revolution in government on their own, but they don’t do what they speak. The book recommends that public institutions set realistic, (not grandiose), specific goals and have a mission like any business- focus on a gradual yet meaningful progression. If the goal cannot be realized than it is either a false goal or ill-defined. Government should see change (economic, social, demographic) as an opportunity and be willing to adapt fairly quickly to so as not to hold society back.


Notes- Skim it, it's dense

Innovation and Entrepreneurship: Practice and PrinciplesPreface
Discusses structure of book and sources, ethos of writer
Intro- economy
Around the world, lost jobs 50s-80s as econ. Slowed from WWII econ, America not- less corporate fortune 500, but more ent. Job
Idea of high-tech and innovation together, but most new jobs not
Growing business barbershop chain, dentist, restaurant, private schools
Private run of public services based on bids "fourth sector"
Kondratieff cycle- economic (ref. Joeseph Schumpeter, Jay Forester)
America bypassed cycle, not period of stagnation like Europe
Universal bank- finding and funding ent. In exchange for disciplined management aid 1890-1914 German, (Amer econ. Present)
Ent. in Amer. Not explained by purely economic study- culture and psych.
Study of management not only for big bus., systematic innovation
Deinstitutionalization- focus on small and powerful management
Value for customers: Quality and predictability of McDonald's
Learn principles to develop/practice discipline
Practice of Innovation- Search for opportunity, Do's and don'ts making idea to business
Systematic Entrepreneurship
Technology already out there, needs to be applied
Wilhelm von Humboldt see university in Germany to adjust public perspective, applied in United States, brought to middle class
Ent.not aimed at ownership- better allocation of resources, own shares and sell after growth
Economic theory doesn't explain bc. Ent is also social, culture, knowledge
Ent. Doesn't have to be risky, needs to be purposeful
Purposeful Innovation and the Seven Sources for Innovative Opportunity
ex. Innovation of cargo lifted from boat to back of truck, textbook
Japanese focus on social innovation as it accepted West good/service Meiji Restoration- unlike China (goods forced on it)
Systematic innovation- organized search for change and analysis of opportunity changes may offer

7 sources

Inside org.

1. Unexpected event- success/failure

  Succ

1. Macy's doing unusually well in sales w/o doing anything new management, Bloomingdale joins market
2. No attention paid- limit of knowledge, vision- should
3. Questions- (exploiting opportunity) What would it mean to us, where could it lead us, what would we have to do, how do we go about it
4. Demands serious support and management focus

 Fail

1. Misunderstand need/demand- ask why they buy, listen, watch without assuming knowledge
2. Understand lifestyle segmentation

  Unexpected

1. ex. Personal computer- gaming industry- take advantage

2. Incongruity between is and ought (cog. Dissonance).
2. Economic- call to action- innovative solution must be definable

Unexpected rise in healthcare cost- USA unbundle healthcare, price explosion- Britian private healthcare (front of line), grows

2. Irrational customer- indicator customer has different value for service
3. Disruption in otherwise routine work- innovation- ex. Eye surgeons cutting muscle

3. Process need
1. Demographic need- no more workforce- robotics
2. Program research- ex. Japan gov. car crash problem, Iwasa reflectors made- clear objective
3. Must understand issue
4. Change in industry/market structure
1. Expanding product globally- suit to tastes- ex. Car market, lifestyle
2. Seen in rapid growth, after market has doubled check for segmentation
3. Structural change if change in way doing business
4. Need to keep strategy simple or expose itself to too many variables

Outside industry

5. Demographic
1. Movement of people, Predictable in long run ex. X kids born, predict need Y uni professors
2. Baby bust- Teenager clothing, inc. age as population inc age, where do they want to shop
6. Change in Mood, perception, meaning
1. Ex. AA progress, but still see disenfranchised, 1920-30 women progress but not enough in eyes of feminists
2. Need to get timing of lifestyle, demographic, social movement
7. New knowledge
1. converging knowledge, need for tech pushes use into market (War)
2. About 30 years until scientific theory used
3. Needs analysis of necessary factors -develop knowledge (research)- social, economic. If not, other business uses it
4. Focus on strat. Position- complete system, market focus (create the market), concentrate on key function, entrepreneurial management
1. Edison made sure before distrib. bulb, power to houses, distribution, not just creation
5. Explosion of new market, weeds down to few- globalization increased joiners- have exit strategy when joining boom
6. Need to make sure ppl receptive- gamble
8. Bright idea- unpredictable success

Principles of Innovation

If New idea not replicable or teachable- not innovation

Do's

Analyze opportunities systematically

Confirm assumptions by talking and listening

Make sure people can see innovation filling their need

Focus on specific, start small

Strive for leadership in environment

Don'ts

Too many things at once

Don’t only innovate for future- make it applicable today

Conditions

Focus on strengths- innovation and self values/reasons align

Social and economic activity- not risk taking, filling need

The Practice of Entrepreneurship

Entrepreneurial Management- existing business

Focus in medium sized business

Big bus. Not against innov.- need leadership focus on it

Policies for ent. Man(agement)

1. See change as opportunity- ent. Climate- benefit managers for promoting, need time frame laid out
1. Allow man. To abandon wasteful pursuits, otherwise Allocate best performers to innov., financial resources
2. Make man. aware of short life cycle of products
3. X-ray business- if continue to make present products, how long can we go- find minimum innovation- aim for 3x minimum innov- many don’t work
4. Practices

Focus on opportunities and problems

Man. Meetings to discuss successes and failures- cross-adopt best practices among management

Higher management listens to lower for vision, opportunities, threats- three times/yr- suggestion person should write proposal for making opportunity real

2. Appraisal of performance- built-in learning

Expectation vs result- find success/limitations

Review of all innovative efforts- see needs, success, or abandon

Compare innov. Review to objectives

Structures- policy- needed or ent. Env. dies

1. Separate old from new
2. Assign role/title in accordance with task- accountable- need checkups from existing business- set up separate business w/ project manager- can all report to one senior management- innov. Have similar problems (like infants)
3. Keep them at good pay
4. Evaluate new business differently- growth goals, profit goals, time limits
5. Assign responsibility

Staff

Do- focus behavior, policy, practice

Don’t-

put man. And ent. Together

Take main business to focus on innov.

Acquire business and expect man. To buy in

3. Incentive/rewards

Public-service institution

Funds based on budget others have earned- success defined as getting larger budget, not result- existence based on satisfying all

Seen as moral imperative- help all even if unrealistic

Ent. Policy

Need mission/objectives- institutions as means to end- failure to achieve means obj. wrong or defined wrong.

Realistic goal statement

Welcome change as opportunity

Need to innov

Look to social, econ, tech. shifts as opportunity or become obstacle

Public school need to innov. But policy won't change, private school growth

new venture

Exit strategy when skill and learning desire stops- experts needed

Market focus

Know innov. May find use of product/service business never thought of-understand and exploit

Financial Foresight

Need to predict costs for year- worst-case assumption

Want product to break even soon :2-3yr max

Want routine operation- not require much supervision

Reach market fairly quick

Growth of 40-50% to maintain financial control- more= outgrow- if so, control critical fin. areas in enterprise- ex. Receivables, manufacturing cost

Management team

Build team before bus. needs one or capped potential- need time to earn man. trust- usually 3yrs

What areas do survival of business depend on- what areas can be taken on as aligned with personal strength, "what can enterprise expect of you"

Don't just take roles for what is expected of X position, focus on personal strength

Needs of business: strategy, R&D, Development of people- who best suited

Some want to build co, not run them

Entrepreneurial Strategies- innovation to market

"Fustest with the Mostest"

Focus on grandiosity with aim at immediately dominating- take advantage of large opportunity- needs to succeed immediately or it fails completely

May be useful to be outside of industry

Immediately come with innovation on product, cut prices systematically to bar competitors

Hitting Them Where They Ain’t

"creative imitation" Take another ent. Attempt that is close but just off- not satisfying market- dominate-Catering to new markets- some innovation, analyze issue with existing

Needs alertness for flexibility

5 bad habits allowing imitation domination

1. Not invented here- new not good if
2. Focusing only on "big" users/ highest spenders
3. Thinking quality= time/money- only needs to satisfy need
4. Premium pricing
5. maximize not optimize- incorporate all features for different markets into 1 product- need segmentation to avoid complexity

ecological niche

toll-gate strategy;

Focus on areas where new product/innovation does not change demand- cannot raise prices with monopoly or obsolete

specialty skill strategy

Develop skill for product/service people in industry need, become "standard"- innov.

Vulnerable to change in market it's attached to

specialty market strategy.

Specialized knowledge of market

Vuln. When small becomes mass market

Changing the economic characteristics

Creating utility

Enable customer to serve their purpose- satisfy wants their own way

Pricing

Align pricing with what customer thinks it should be worth ex. Buy copy machine for documents- charge per document

Customer's reality

Price in accordance with how customer works-

Ex. Turbine service included in new blade cost, farmer w/seasons pay installments for machine

true value

Cost structure aligned with with value to customer

Ex. Contractors pay for lubricant insurance- working equipment

Customer pays what makes sense to them- doesn't have to be lump sum

Conclusion- Society

Do not need revolution, need adaptation and specific, controlled solutions to problems- decentralization

Gov. shouldn't focus just on high tech- not most important- need ent. Society and few high tech will come from it

Not only stick with "safe" large firms

Innovations needed

Help redundant workers- blue collar- gain education, skill, social competence, otherwise inhibit society- innovation opportunities as jobs

Abandon unnecessary social policy and public-service institutions and develop new solutions for ineffective ones

New tasks

Tax system- have to pay tax for liquidating business parts, promotes allocation to inefficient areas to avoid tax

Give small businesses tax exemption or put off tax until established- prevent from allocating all profit/surplus into tax or inhibit growth

High regulation for tax and law costs small businesses money- charge gov. for costs of red tape above 5% co. rev.

Individuals

Continuous learning- learned at childhood is not all- only launching pad

Constantly adopt New practices- update methods with present