Concept of Innovation & Entrepreneurship
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What is innovation?
Innovation Innovation is: production or adoption, assimilation, and exploitation of a value-added novelty in economic and social spheres; renewal and enlargement of products, services, and markets; development of new methods of production; and establishment of new management systems. It is both a process and an outcome. - Crossan and Apaydin, 2010
Innovation
Invention
Sources: Agamawi, 2012. Fagerberg et al. , 2005
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Innovation Two dimensions: • Type of innovation • Degree of novelty
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Types of Innovation
Service Innovation
Product Innovation
Process Innovation
Source: Agamawi, 2012
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Innovation: degree of novelty Low Novelty
Incremental -reduction of costs or functional improvements -existing knowledge -increasing competitiveness -low uncertainty
High Novelty
Radical/Disruptive/Breakt hrough -new products, services or processes -new knowledge -transforming markets -high uncertainty Source: Emprechtinger, 2016
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Incremental innovations
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Radical/ Disruptive innovations Alexander Graham Bell – 1878 First call from a mobile – over 40 years ago
Nokia Mobira, 1984
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Innovation spectrum
Source: Jackson, 2011
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Why do we care?
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Motivators for innovation (contemporary approach) • Innovation leads to wealth creation • Catalyst for regional development • Basis for comparative advantage of nations • Creativity & human nature • Key value for the longevity of business • Source of transformative, qualitative change • Source of organic growth for firms
• Solution to complex problems (e.g. climate change) Sources: Shukla, 2017; Garud et al. 2013; Rennings 2000
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58.5
Source: Cornell University, INSEAD, the World Intellectual Property Organization & others)
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Who innovates?
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"Entrepreneur" (1723) – “adventurer” • Creative destruction • J. Schumpeter • Willingness to develop and take risks • Entrepreneurial behavior – not only for start-ups • Operating in an ecosystem • • • • • •
Government programs NGOs Lobbyers Incubators Education Financing
In order to succeed 1. Innovation is work 2. Innovators must build on their own strengths 3. Innovation is an effect or change and must be close to the market
Source: Drucker, 2008
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Last remarks
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The influencers • Joseph Schumpeter (1883-1950), Neoclassical economics. e.g. Capitalism, socialism and democracy; Economic theory and entrepreneurial history • Peter Drucker (1909-2005), Modern management. e.g. ”The End of Economic Man”, ”Concept of Corporation”, ”Technology, Management and Society” • Clayton Christensen (1952- ), Business consultancy. ”The Innovator’s Dilemma”
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References Agamawi, M. (2012). From Idea to Product. Course lectures Crossan, M.M., Apaydin, M. (2010). A multi-dimensional framework of organizational innovation: A systematic review of the literature. Journal of Management Studies 47 (6), 1467–6486. Drucker, P. (2008). The Essential Drucker. The Best of Sixty Years of Peter Drucker’s Essential Writings on Management, HarperBusiness: US. Emprechtinger, F. (2016). What is the degree of innovation?. [Blog] Lead Innovation. Available here. Accessed 27.12.2017 Fagerberg, J.; Mowery, D.C., Nelson, R.R. (2005). The Oxford Handbook of Innovation, Oxford University Press Inc., New York. Garud, R., Tuertscher, P., & Van de Ven, A. H. (2013). Perspectives on innovation processes. The Academy of Management Annals, 7(1), 775-819. Global Innovation Index (2017). Official website [online], Cornell University, INSEAD, the World Intellectual Property Organization. Available at: https://www.globalinnovationindex.org/home . Accessed 1.1.2018 Jackson, D.J. (2011). What is an Innovation Ecosystem. White paper. Available at: http://erc-assoc.org/content/whatinnovation-ecosystem. Accessed 27.12.2017 Rennings, K. (2000). Redefining innovation—eco-innovation research and the contribution from ecological economics. Ecological Economics,32(2), 319–332. Schumpeter, J. A. (1947). The Creative Response in Economic History. The Journal of Economic History, 8(2), 149–159. Shukla, A. (2017). What is Innovation? Why Innovation is important?. [Blog] Paggu. Available here. Accessed 27.12.2017
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