BS2402 Innovation & Entrepreneurship Module Teaching Objectives To introduce students to the concept of innovation To explain why it is important for

BS2402 Innovation & Entrepreneurship

Module Teaching Objectives

· To introduce students to the concept of innovation· To explain why it is important for all types of firm or

organisation and country economies· To learn how to innovate and the role of

‘entrepreneurial management’ in this context

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Module Learning Outcomes

· Understand what is meant by innovation· Understand what is meant by entrepreneurship · Assess why innovation and entrepreneurial

management are important for wealth and value creation

· Evaluate the potential importance of innovation and entrepreneurial management in your own organisation by using what you have learnt

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Module Structure OverviewDate Content Manual ref Assignment link

Wed 5th Sept Introduction to Innovation & definingAssignment Brief.Entrepreneurship.Importance of innovation

Unit s 1,2,3 Define innovation & types. Recent innovations in org’nUnderstand assignment. Define entrepreneurship/ entrepreneurial management.

Sat 8th Sept Entrepreneurial/ innovation mgt processContext for Innovation. Factors supporting/ hindering. Managing the processOvercoming barriers

Units 4,5,6 Behaviours that impede or facilitate entrepreneurial management .Critical factors/barriers?Making the innovation happen

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Today’s Agenda

am

9.00 Mktg feedback form

9.10 Recap

9.30 Assignment detail

10.00 Context - external

10.20 BREAK

10.30 Context – internal

Management style & orientation

12.40 LUNCH

pm

13.40 Innovation Process

13.55 Ideas Generation

15.00 BREAK

15.10 Remainder of Innovation Process

15.40/16.00 Assignment Q&A

16.00/16.30 END

(mini breaks as required)


What is the difference between invention & innovation?What is the difference between invention & innovation?


INNOVATION: A Definition (E. Roberts)

Successful Exploitation and Implementation

INNOVATION Good Idea

Invention

=

Innovation as Source of Competitive Advantage for Economic Renewal

+


(Joseph Shumpeter, 1934)(Joseph Shumpeter, 1934)

Five Categories of Innovation

1. ‘Totally new or significantly improved good’ - Product Innovation (DVD, Walkman, iPod, PC, car)

2. ‘New method of production’ - New Process (Synthetic Insulin; float glass; iPod; Zara http://www.msnbc.msn.com/id/5457434/site/newsweek/

3. ‘Opening New Market’ - Applying a product or process to a new application (Plastic Jug Kettle; Sushi bars; Benihana)

4. New source/ supply of raw materials (Synthetic Slate, Silicone)

5. New form of organisation (Direct Line, Amazon)

http://www.msnbc.msn.com/id/5457434/site/newsweek


Entrepreneurship

• How did we define it?


A Useful Definition of Entrepreneurship

‘entrepreneurship is the manifest ability and willingness of individuals, on their own, in teams, within and outside existing organisations, to perceive and create new economic opportunities (new products, new production methods, new organisational schemes and new product market combinations) and to introduce their ideas in the market, in the face of uncertainty and other obstacles, by making decisions on location, form and the use of resources and institutions’

(Wennekers and Thurik, 1999):


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Fitting the entrepreneurial management process onto innovation using Robert’s innovation model

Successful Exploitation and Implementation

INNOVATION =+

INPUTSGroup memberKnowledge, skills, effort

Entrepreneurial/ Innovation

Management Process

OUTPUTS adding or creating value

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A pattern of management behaviour that produces innovation (individual, group or firm level)• Perceives and Identifies innovative opportunities

• Takes ‘Risk’ in pursuing this opportunity (link to self-confidence)

• Finds and Gathers scarce resources into appropriate combinations to produce an organisation to deliver that innovation(s)

• Continually ‘reaches’ for the necessary resources to solve problems and foster firm growth (Baumol)

Entrepreneurial Management

• Decision-making based on bias and heuristics; networking; opportunism


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Recognise opportunity Find Resources

Develop Venture by picking and deploying resources

Create ValueEntrepreneurial Goals and Innovation Context

Strategic Vision and direction

Learning

CG Adapted Innovation and E’ship Management Model: Bessant and Tidd 2nd Ed 2011


A pattern of management behaviour that produces innovation (individual, group or firm level)

• Perceives and Identifies innovative opportunities

• Takes ‘Risk’ in pursuing this opportunity

• Finds and Gathers scarce resources into appropriate combinations to produce an organisation to deliver that innovation(s)

• Continually ‘reaches’ for the necessary resources to solve problems and foster firm growth (Baumol)

Management approach to Entrepreneurship

• Decision-making based on bias and heuristics; networking; opportunism


Entrepreneurial Management(manual, unit 4 p 28)

• Entrepreneurial management is becoming a

way of distinguishing a dynamic innovation

capability, where the organisation’s routines

and processes are finely honed to achieve

responsiveness (Teece et al , 1997).


Entrepreneurial Management Style which on in G-TEC (after Stevenson & Gumpert , 1989)

‘PROMOTOR’ ‘TRUSTEE’

‘Entrepreneurial’ ‘Administrative’

Proactive Disinclined to change

Tolerant of uncertainty and ambiguity Guards resources

Able to make incremental changes in Interested in maintainingresponse to environmental pressures the status quo

Q: What type of manager is your manger?


Types of Organisation (Burns and Stalker, 1961)

‘mechanistic reproducer’ ‘organic innovator’ Routines and competencies similar

to existing organisations Copied routines Decisions base on ‘rational’ and

‘scientific’ principles Formal planning and budgeting Risk averse resource maximisers Structured heirarchy

Competencies and routines significantly different to others

Decisions based on cognitive biases and heuristics

Incremental change to direction and resource allocation expected.

New resource combinations Overconfidence and optimism Resource leveragers; use

rather than own Flat organisation structure

Where does your organisation sit on this continuum?

BS2402 Innovation & Entrepreneurship BS2402 Innovation & Entrepreneurship

Assignment Brief Detail


Module Structure OverviewDate Content Manual ref Assignment link

Wed 5th Sept Introduction to Innovation & definingAssignment Brief.Entrepreneurship.Importance of innovation

Unit s 1,2,3 Define innovation & types. Recent innovations in org’nUnderstand assignment. Define entrepreneurship/ entrepreneurial management.

Sat 8th Sept Entrepreneurial/ innovation mgt processContext for Innovation. Factors supporting/ hindering. Managing the processOvercoming barriers

Units 4,5,6 Behaviours that impede or facilitate entrepreneurial management .Critical factors/barriers?Making the innovation happen

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Assignment Brief Recap

Word limit 3,000 words


Assignment – section 1

• Critically analyse and evaluate the management / employee behaviour and its ability to support and foster and achieve innovation within the organisation (entrepreneurial management orientation) in which you work.


Key elements of section 1

• Critically analyse & evaluate• Current innovation levels & management style • Organisation culture• Organisation structure• Team working• Human capital• Knowledge management


Marking Criteria – 30%

• Demonstrate knowledge of the many factors that influence the ability of an organisation to produce innovation outcomes

• Analysis must include entrepreneurial management orientation i.e. management style likely to facilitate innovation

• Demonstration of an ability to apply these factors to your organisation, through analysis & evaluation of these factors that may encourage / discourage entrepreneurial management orientation & innovation within their work

organisation & critically assess them

BS2402 Innovation & Entrepreneurship Management/employee behaviour

influencing innovation in your organisationFactor (Assignment) Factor (Manual &Tidd)

Current innovation levels

Your critical reflection

Management style Leadership, vision (& promotor vs trustee, strategic management)

Organisation Culture Involvement in innovation, creative climate, external/customer focus, communication, rewards

Structure Appropriate structure (& mechanistic bureaucracy vs organic innovator)

Team working Effective Team working

Human Capital Key individuals, recruitment, training & development

Knowledge management

Learning organisation


Assignment – 40%

• Identify the critical factors within the organisation/area which prevent better innovation supportive management (entrepreneurial management orientation) and innovation outcomes

• Provide suggestions on how to overcome these barriers, based on evidence of appropriate reading in entrepreneurship & innovation management literatures, clearly indicating the level of difficulty likely to be encountered in accomplishing them


Assignment - 40% contd.

• Then identify a specific potential innovation you would like to carry out within the organisation/area & identify specific changes in working practice that would help the implementation of the innovation with reference to the overall analysis


Remaining 30 %

• Overall depth & breadth of research & background reading – 20%

• Clarity of presentation & report writing style, Harvard Business referencing


Context for Innovation

Factors Affecting Innovation


Context for Innovation - External Factors

External factors

• Sector

• Size

• National systems of innovation

• Lifecycle


Oil and Gas companies

• Generally large scale• R&D labs• Process innovation


Haulage

• Some small businesses• Customers as source• Process / service innovation


IT hardware & software

• Specialist or niche vs. large scale• Technology driven• Product and process innovation


Large Firms

• Considerable Resources - £ + people• Large R & D. Budgets / Capital • Economies of Scale • Dominant in innovation in mature industries• Market Power / Mass markets• Balance Risk from innovative projects with ‘cash

cows’


Small Firms:

• Behavioural Advantage in flexibility and adaptability in early stages of market and industry development

• Early stages of market development before standardisation - dominant design

• Experimentation role

• Less bureaucracy and inertia preventing change


Context for Innovation – National systems

• Natural resources (or lack of)

• Market Pressures• Local demands• Competition• Clusters – eg: related and supporting organisations

• Skilled labour/ competencies• eg: in production and research

• Management style & corporate governance

• Government policies & activities ? Adapted from Porter: the competitive advantage of nations, 1990


Product innovation

Process innovation

Ra

te o

f Maj

or

Inn

ova

tion

Fluid phase Transitional phaseSpecific phase

The Dynamics of Innovation (with Lifecycle) (Abernathy-Utterback model in Utterback (1994) p.xvii


BREAK


Context for Innovation

Internal Factors Affecting Innovation


Class discussion re.Tidd & Beasant self assessment

How well do we manage innovation?

• Leadership style – where on promotor to trustee scale?

• Culture – ‘the way we do things around here?’• Cross functional activity• Key Personnel• Team work


© 2009 John Wiley & Sons Ltd.www.wileyeurope.com/college/tidd

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http://www.wileyeurope.com/college/tidd


Shared Vision, leadership & will to innovate

• Innovation about learning, change often risky & disruptive

• Often organisations & individuals develop ways to maintain the status quo

• Entrepreneurs challenge the accepted rules of the game

• Core competencies v core rigidities• One of concerns in innovative organisations is

finding ways to ensure individuals with good ideas can progress them – ‘intrareneurship’


Role of ‘Top’ Management

• Changing mindset & refocusing organisational energies requires articulation of a new vision

• Need to demonstrate long term commitment & involvement

• Need to prepared to take risk & utilise lessons from failiure

• Leaders with focus who enable their people to focus


‘Bottom up’ innovation

• IBM turnaround partly due to bottom up team initiative – entry into e-business

• Tidd & Beasant – outline development of the idea of the execution of leadership vision by management drones to argue that they may be ‘two constructs on a continuum, rather than two opposing characteristics’


Appropriate organisation structure

• “Organisations – rigid hierarchies top down, one way communication – unlikely to be supportive of smooth info flows & cross functional cooperation

• Burns & Stalker – outlined characteristics of ‘organic’ & ‘mechanistic’ organisations

• Innovation not confined to R & D depts. Innovation becoming corporate wide – cross functional



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Activity

• How does organisational structure impact on innovation levels in your organisation?

• In Groups of 3 (5mins – then share back & exchange ideas)


Key Individuals

• Champions – help overcome complexity & uncertainty involved in innovation

• Roles: – Sources of critical technical knowledge -often inventor /

team leader– Organisational sponsor / project team leader– Business innovator– Technological gatekeeper


High involvement in innovation

• Quality Miracle – Japanese ‘continuous improvement’ Involvement of a wide range of- personnel providing limited, incremetal innovations (kaizens)

• XYZ systems – rewards• Needs organisational culture to support & encourage over the

long term. Now recognised as a major source of competitive advantage (P117 Tidd & Beasant)

• Secondary effect – more people involved in change the more receptive they become to it



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Effective Team Working

• Research on high performing teams– Selection & investment in team building– Clearly defined tasks & objectives– Good balance of team roles & match to

individual behavioural style• Team working critical determinant to success – can

bridge boundaries, cross functional teams bring together different knowledge.

• Provide a decentralised & agile operating structure


Effective Team Working –Tidd &

Beasant • A clear, common & elevating goal• Results-driven structure• Competent team members• Unified commitment• Colloborative climate• Standards of excellence• Principled leadership• Appropriate use of the team• Participation in decision making• Team spirit• Embracing appropriate change



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Creative Climate

• Reward systems – innovative organisations look to reward creative behaviour & to encourage its emergence. Linked to the idea of intrapreneurship - internal entrepreneurship. Concept of rewarding failiure, people learn from their mistakes and will get it right – look at Dyson philosophy

• www.whatifinnovation.com– Matt Kingdon – 3 elements of Innovation energy: attitude,

behaviours & structures– http://vimeo.com/15118963– http://www.youtube.com/watch?v=0ZgajaPkwyE

http://www.whatifinnovation.com/

http://vimeo.com/15118963

http://www.youtube.com/watch?v=0ZgajaPkwyE


In Groups (5min discussion; 3min share back)

What policies are in place in your organisation to:

• Encourage the identification of innovative opportunities?

• Reward the successful implementation of innovative suggestions?

• What sort of rewards, tangible and intangible, might change your behaviour?

( think individuals and teams)

Alternative – if time, but possibly need to allocate different aspects to each group



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• Trust & openness: emotional safety in relationships – people share common values & trust

• Challenge & involvement - degree to which people are involved in daily operations, long term goals & visions

• Support & space for ideas – high idea-time situation where there are possibilities to discuss & test unplanned impulses & fresh suggestions. Low idea time – research confirms individuals are less creative.


MECHANISM EFFECT15% Rule Employees are allowed to allocate around

15% of their official time to pursueindependent research, irrespective of theirofficial project. This rule resulted in thedevelopment of many innovative products at3M

Genesis Grants Under Genesis grants employees wereprovided around $50,000 financial support fortheir research for developing prototypes andconducting market tests. This stimulatedentrepreneurship at 3M

Own BusinessOpportunities

3M gave employees the opportunity to runtheir projects depending on the sales. Thisstimulated internal entrepreneurship at 3M

Dual Ladder This approach at 3M enabled technicalemployees to move up the career path withoutcompromising their research / professionalinterests

Technical Forums Technical forums were established to give 3Memployees the opportunity to present theirtechnical papers and exchange ideas withothers.

New Product Forums These forums were established to enable alldivisions to discuss new ideas, thusencouraging the generation of ideas across alldivisions

Source: James, C. Collins, and Jerry I. Porras Built to Last (Harper Business, 1997)

Mechanisms Stimulating Innovation at 3M


• Risk Taking – high risk taking: bold new initiatives can be taken even when the outcomes are known. People feel ‘they can take a gamble’. Risk avoiding climate – cautious, safe, decide to ‘sleep on the matter’ It’s about balance between risk & stability

• Freedom – ‘the independence in behaviour exerted by people in the organisation’


Boundary Spanning

• The extent to which innovation has become an open process involving richer networks across & between organisations

• Successful innovating organisations – an orientation which is essentially open to new stimuli


Matt Kingdon Interview

Please can you pull out key points re the internal context for discussion


Entrepreneurial Management(manual, unit 4 p 28)

• Entrepreneurial management is becoming a

way of distinguishing a dynamic innovation

capability, where the organisation’s routines

and processes are finely honed to achieve

responsiveness (Teece et al , 1997).

BS2402 Innovation & Entrepreneurship Corporate Entrepreneurship and

Innovation Management Wilson (04)

New Business within Firm

Corporate Venturing: Product / Process

Innovation management:

Focus on one off process (i.e. product / process innovation)

Firm 1 Firm 2 Corporate Renewal: Organisational

Corporate Leadership: Transformational

Market / Industry

competition Entrepreneurial

Management: Dynamic capability

Product / Process Innovation


Barriers to Innovation



Reluctance to close down failing programmes or organisations

Reluctance to close down failing programmes or organisations

No innovationNo innovation

Poor skills in active risk or change managementPoor skills in active risk or change management

No rewards or incentives to innovate or adopt innovationsNo rewards or incentives to innovate or adopt innovations

Short-term budgets and planning horizonsShort-term budgets and planning horizons

Technologies available but constraining cultural or organisational arrangements

Technologies available but constraining cultural or organisational arrangementsDelivery pressures and

administrative burdensDelivery pressures and administrative burdens

Over-reliance on high performers as sources of innovation

Over-reliance on high performers as sources of innovationCulture of risk aversionCulture of risk aversion

Figure 6:1: Barriers to Innovation in the Public Sector Source: Cabinet Office (2003) p.31



• Path Dependence• Convergence of reward and incentive schemes

with innovation reasoning• Access to sufficient capital to fund long term

innovation• Organisational inability to tolerate uncertainty

innovation requires chaos


The Innovation Process


Do we have a clear innovation strategy?

Simple Model of the Innovation Process (Tidd & Bessant, 2009)

Select – what are we going to do – and why?

Implement – how are we going to make it happen?

Capture – how are we going to get the benefits from it?

Search – how can we find opportunities for innovation?

Do we have an innovative organisation?

BS2402 Innovation & Entrepreneurship The Innovation Management Process

(Source ABI Assisting Business Competitiveness CDRom, 2003)

Stage 1

Stage 2

Stage 3

Stage 4

Stage 5

Stage 6

Idea Generation

Idea Screening

Concept development and testing

Market strategy and business analysis

Product development and testing

Market introduction & life-cyclemanagement

Cu

stom

er I

nte

grat

ion


The Innovation Process: Conceptual Model

Analysing and learning

Generating possibilities

Incubating and prototyping

Replication and scaling up

Source: Government Strategy Unit (2003) p.12


Seven ‘sources’ of innovation (areas to exploit)

• The unexpected

• The incongruous

• Process need

• Industry and market structure

• Demographics

• Changes in perception

• New knowledge(Source: Drucker)


• an urgent or nagging business imperative

• different perspectives on this imperative

• an environment conducive to reflection

(“successful innovation” Michael Syrett and Jean Lammiman, 2002)

• an urgent or nagging business imperative

• different perspectives on this imperative

• an environment conducive to reflection

(“successful innovation” Michael Syrett and Jean Lammiman, 2002)

Inspiration for new ideas mostly stems from the presence of, and interplay between....


Organisation>50%

Customers/Users30%

Suppliers/ Distributors/ Partners

Competitors30%

Sources of Ideas

Environmental scanning


Customers orinterest group

SEEN BUT CAN’T FIND IT?

OUT OF DATE OR STYLE?

NOT EASY TO USE?QUALITY…NOT GOOD ENOUGH?

WANT BUT DOESN’T EXIST?

IT’S TOO EXPENSIVE?

PEOPLE WANT THINGS

Adapted from Scottish Enterprise Foundation (U. Stirling) 1990


cc

Generating Innovation Possibilities through crossing boundaries

Boundary spanning activities

ExternalInternal

Govt regulation & support

Inspection & audit

University research; science & tecnhology parks

Other public services & countries

Supportive culture – eg. cross disciplinary working

Organisational heterogeneity/ diversity

Users, front-line staff, middle mgrs

• Networking

• Scanning of environment

• Benchmarking

• R&D


Changing your perspectiveLook around you:

Now look around again – focusing on any objects that match your chosen colour

Now choose a colour…

Does the scene look the same? Try with a different colour…

Source: www.spaceforideas.uk.com (Professor Wiseman)

http://www.spaceforideas.uk.com/


How could the Foundation Degree be improved?How could the Foundation Degree be improved?Source: University of Teeside

Innovation on your doorstep - A TASK


Brainstorming...

• Generate as many ideas as possible - the more the better

• Improve and build on each others’ ideas: as well as suggesting new ideas, try and develop someone else’s ideas by proposing improvements or ways of combining ideas

• encourage long shots: crazy-sounding ideas can often spark off original and practical thoughts

• encourage rather than criticize others: praise other group members’ ideas to encourage them to come up with more rather than turning off their creative tap by adverse comments

• always record all ideas on a sheet of paper or a flip chart


Changing perspective .…

• Take Something Away • The foundation degree has no lecturers

• Provocation• The foundation degree makes you less employable

• Analogy• The foundation degree is like a car servicing garage

(window/ rugby game etc..) because......

• Blank Sheet – back to original purpose• Providing access to higher education to wider group


General Points on Opportunities

• Creating Value not lowering cost

• Opportunities not the same for everyone

• Not every Good Idea is a business opportunity

• Look for opportunities in emerging markets rather than established ones: entry barriers

• Does not need to be hi tech / high risk innovation: Schumpeterian innovation

Derived from Birley and Muzyka in Mastering Enterprise


Q: How are your progressing with an Innovation Idea?

• In 3s. • Take turns to share your ideas, or your plans to generate

innovative ideas. Help each other create a plan. (1min each)

• Where will you go to for your innovation ideas? • Who to?/sources? – new employees; customers; suppliers; outside

sector? This group?• Techniques useful? – eg: brainstorm with work colleagues?

• Where do you have your best ideas?

• How will you create space for yourself to reflect?









· Is the innovation likely to succeed? · Is the problem the innovation is designed to address

well-formulated? · Have similar innovations been tried elsewhere?· Is there is a clear plan for how the idea can be

developed?· Are the potential benefits commensurate with the

development costs? · PLUS:· Does the innovation fit with the organisation goals?· Is the organisation capable of coping with it?

Incubation, prototyping & managing risk...

In effect…how do you (safely) turn a good idea into an innovative opportunity?


Safe Spaces...

Safe Space CharacteristicPilot Provides a local or small-scale testPathfinders Similar to pilot but linked strategically to

subsequent full-scale developmentZones Testing ground for new ideas within pre-determined

arbitrary boundaryIncubators Support & resource infrastructure bringing together

various different parties within one ‘safe space’









Replication and Scaling Up...

In general, Governments have relied on two sets of mechanisms:

· law, central direction and administrative command; and

· dissemination of evaluations of pilots, case studies and best practice

Both can be appropriate in particular circumstances but both have their weaknesses.

Q: Can you think of some examples of each?









Identify and example of an innovation in your organisation that you have been involved in.

To what extent were the phases identified and explicitly or implicitly followed?

Which phase appeared to the most challenging?

Why?

Identify and example of an innovation in your organisation that you have been involved in.

To what extent were the phases identified and explicitly or implicitly followed?

Which phase appeared to the most challenging?

Why?

Discussion – Innovation Process


Summary of the Day

Reviewed Assignment Considered context for innovation

External and internal factorsReflected on own organisation internal context – ready

for first part of assignmentBarriers to entryInnovation Process

Put the internal factors affecting innovation into the context of the innovation process.

Started to think creatively about our innovation idea(s) – ready for final section of assignment

Documents

BS2402 Innovation & Entrepreneurship Module Teaching Objectives To introduce students to the concept of innovation To explain why it is important for