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ENTREPRENEURSHIP AND INNOVATION
Christ University, Bangalore
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Agenda
The creative process Idea germination, Preparation, Incubation,
Illumination and Verification
Are Entrepreneurs Born or Made?
Myths of Entrepreneurship Search for Business ideas
Selection of Product/Service
Product innovation
Product planning and development strategy
New product development
Services Industries-Human side of an
enterprise
Christ Universit Ban alore 2
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Sources for Ideas
Following are some of the sources for ideas: Good understanding of economics and the
economy
Changing needs of the people in a locality/
society Emerging trends in the society (Example-
Migration of people from rural areas to
urban centers, preference for fast food
among youth)
Extensive travelling and a wide range of
reading
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Every problem is an opportunity for a creative person
Creativity is a major tool for the survival of an entrepreneur
It not only gives one the edge for recognizing needs, generating
business and marketing ideas, but it also helps in solving problems
The person who faces a problem and finds a novel solution or is able
to quickly convert the problem into an opportunity that has ready
solutions, will be a survivor in a field where others, less flexible and
less creative, will be left behind
This is particularly true as small businesses are considered to be more
flexible and pro- active than large, bureaucratic organizations andthus, can react better and faster to changing circumstances
Creativity
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1. Every problem holds an
opportunity
2. Problems are not excuses forgiving up
3. Every problem has more than
one solution
4. Think sideways
5. Creativity is fun- you get more
ideas in an uncritical
atmosphere
Rules for Creativity
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Refer Page 33 of David H. Holt TextEntrepreneurship- NewVenture Creation for the Diagram and more notes on The
Creative Process
1. Idea Germination: The seeding stage of a new idea- Recognition
The germination process is a seeding process. It is not like planting
seed as a farmer does to grow corn, but more like the natural seeding
that occurs when pollinated flower seeds, scattered by the wind, find
fertile ground to take root.
Exactly how an idea is germinated is a mystery; it is not something
that can be examined under a microscope. However, most creativeideas can be traced to an individuals interest in or curiosity about a
specific problem or area of study
The Creative Process
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2. Preparation: Conscious search for knowledge- Rationalization Once a seed of curiosity has taken form as a focused idea, creative
people embark on a conscious search for answers. If it is a problem
they are trying to solve, then they begin an intellectual journey,
seeking information about the problem and how others have tried to
resolve it
If it is an idea for a new product or service, the business equivalent is
market research
Inventors will set up laboratory experiments, designers will begin
engineering new product ideas, and marketers will study consumerbuying habits
Any individual with an idea will consequently think about it,
concentrating his or her energies on rational extensions of the idea
and how it might become a reality
,
3Christ University, Bangalore
The Creative Process
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Christ University, Bangalore 4
3. Incubation: Subconsciousassimilation of information-
Fantasizing
Individuals sometimes concentrate
intensely on an idea, but, more
often, they simply allow ideas
time to grow without intentional
effort
The idea, once seeded and given
substance through preparation, isput on a back burner, the
subconscious mind is allowed time
to assimilate information
The Creative Process
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5Christ University, Bangalore
Incubation is a stage of mullingit over while the subconscious
intellect assumes control of the
creative process
The subconscious mind is
allowed to wander and to pursue
fantasies, and it is therefore open
to unusual information and
knowledge that we cannot
assimilate in a conscious state This subconscious process has
been called the art ofsynectics, a
word coined by W.J.J. Gordon in
1961
The Creative Process
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Synectics, means a joining
together of different and often
unrelated ideas
Therefore, when a person has
consciously worked to resolve aproblem without success,
allowing it to incubate in the
subconscious will often lead to a
resolution
The Creative Process
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The Creative Process
4. Illumination: Recognition of idea as beingfeasible- Realization
Illumination occurs when the idea resurfaces
as a realistic creation
Reaching the illumination stage separates
daydreamers and tinkerers from creative
people who find a way to
transmute(transform) value
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A persistent notion is that mostentrepreneurs are born with innate
characteristics that prepare them for the
often topsy- turvy life of new venture
creation
Clearly, entrepreneurs have personal
characteristics that lead to a more
venturesome identity
Successful entrepreneurs tend to be
optimistic, have a keen sense ofdetermination, are energetic, and often
have an entrepreneurial parent
However, there is substantial evidence
that entrepreneurial characteristics maybe environmentall based
Are Entrepreneurs Born or Made?
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Christ University, Bangalore 8
Firstborn children, for example, are often expected to take overparental businesses as heirs to established enterprises
Ones childhood background often forges an entrepreneurial spirit as
individuals from less- fortunate economic conditions have to find
routes to success other than through traditional jobs
Those who believe entrepreneurs are born conclude that
entrepreneurship cannot be taught
This corollary (resulting) myth would suggest that studying how new
ventures are formed or how innovation takes place is of new value
If the environmental theme has credence, then learning as much aspossible about the entrepreneurial process will better prepare students
to succeed in business
Are Entrepreneurs Born or Made?
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Folk heroes like Steven JobsMitchell Kapor are beset by
myths that they stumbled into
success and got their ideas by
accident Not so. They have spent several
years striving for a foothold in
their particular fields
Both men made success by
creating their own brand ofluck
There are other myths to be
explored, but lets begin by
expanding the notion of luck
Myths of Entrepreneurship
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Christ University, Bangalore 10
Myths of Entrepreneurship
a. Luck is for Gamblers: Clearly, there are individuals who seem tohave an uncanny ability to be able to spot and to exploit opportunities,
and luck(both good and bad) plays a role in the outcome of many
ventures. More often, successful individuals have been nourishing a
concept for some time or working on closely related projects when abreakthrough occurs.
For instance, Art Fry of 3M created the Post-it note as a result of
trying to make non-slip hymn book markers. He spent several years
working on the idea, and he also had to fight an uphill battle
convincing 3M executives to manufacture his product.
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b. Make or Break on the FirstVenture: Another popular myth
is that entrepreneurs strike it rich
with the first great flash of
genius, or, conversely, they fail
miserably with the first venture.
Entrepreneurship is not a boom
or bust process, even though
many new firms succeed
brilliantly and others do notsurvive for long.
Myths of Entrepreneurship
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Myths of Entrepreneurship
c. Entrepreneurs are Mavericks and Misfits: Evidence suggests thatmany entrepreneurs march to the proverbial different drummer. They are
not always among the best students, and they tend to be restless in
structured jobs. Consequently, they are likely to be unsettled wanderers.
It is true that entrepreneurs prefer independence and can be rather
rebellious, and both conditions can affect their performance in school andat work. Most successful entrepreneurs, however, are from the ranks of
above average students, and they are relatively unlikely to have drug or
alcohol problems or to run afoul of the law. Entrepreneurs are mavericks
in the sense that they instigate change and challenge the status quo, butthey are not misfits.
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Myths of Entrepreneurship
d. Are Entrepreneurs Born or Made?- Already explainede. Other Myths and Misconceptions
Historic examples of inventors are used to illustrate success stories,
and although these provide valuable insights, inventors are not
necessarily entrepreneurs. Entrepreneurs are less often inventors than
astute businesspersons who can create an organization to bring newideas to market.
A related misconception is that entrepreneurship must address
whatever is called high tech at the time. Currently, information
technology and biogenetic engineering are high- tech stereotypes.Entrepreneurship has always been associated with technological
advances, but low- and- no- tech enterprises remain very important.
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Myths of Entrepreneurship
An unfortunate myth that oftenaccompanies failure is all you need is
money to be successful. Even those
with sufficient money to launch an
enterprise find that entrepreneurship
requires skills in marketing,
manufacturing, planning, and managing
human resources, to name a few. Money
does not assure success, and in some
instances it may be a problem becausewith excess capital, entrepreneurs may
encumber (hinder, burden) themselves
with unnecessary assets and inefficient
organizations.
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Products and Technology
High- Tech Products: A high- tech product is more of a state of mindthan a discernable entity, but calling something high- tech is useful for
describing products that currently reflect state- of- the- art technology.
Mid- tech Products: A majority of familiar products are less
sophisticated and more readily understood than high- tech
innovations, and we classify them as mid- tech. Low- Tech Products: Perception also plays a role in defining what is
meant by low- tech, but we assume a rather unsophisticated
viewpoint. Low- tech products are usually thought to be marginal
changes or improvements in existing products. Identifying Opportunities- Refer Page 152 of David Holt Text
Generating Product Ideas- Refer Page 153 of David Holt Text
Mapping New Ideas- Refer Page 154 of David Holt Text
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Idea Generation Stage: is the conscious identification of a productidea that logically addresses an opportunity.
Giving an Idea Form: Once an idea has begun to gel, the
entrepreneur must set it down on paper, design it, and if appropriate,
make a bench- model.
Transition to the Next Stage: If the proposal is made through
corporate R & D, it must be accepted and funded. If management
cannot share the same vision of success as the innovator, the product
may be terminated without fanfare.
Screening the Product: Screening procedures exist in largerorganizations whereby a product is submitted to a formal survey
among key managers and engineers. The screening process is a
subjective evaluation that relies on expert opinion of a select group to
rate the proposal for its commercial feasibility.
The Product Development Process
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The Incubation Stage: Having survived a screening process andobtained funding, the innovator must set about implementing the first
stage of actual product development. The product must be devised and
a prototype developed.
Product Design: Traditional R&D will follow a prescribed path ofturning rough sketches into blueprints. These will be expanded into
material lists and a plan for making one item- a prototype.
Making the Prototype: Assuming the innovator has endured the
failures and has a design that finally seems workable, a prototype is
built and submitted to testing. This stage of development can be quite
lengthy and include having several prototypes field- tested under
government supervision (or by approved laboratories) to comply with
government regualtions.
The Product Development Process
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Commercialization Decision: The critical milestone activity at thispoint is to write a formal business plan. The entrepreneur may have
written an initial business plan at the proposal stage, but the product
has probably undergone substantial stages that will require a revised
plan. The Implementation Stage: The third stage in product development
involves limited manufacturing and is called the initial
implementation stage (as opposed to the illumination stage in the
creativity model). This is a preliminary effort to put actual products
into the field and to gather market feedback. It is comprised of making
a transition from prototype to limited manufacturing.
Gearing Up for Manufacturing: The first step, and one with heavy
costs for new equipment and production setup, is the initial process of
gearing up for manufacturing.
The Product Development Process
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Limited Production for
Testing: The first actual
production run of a new
product may require several
dozen or thousands of items.
Market Testing: Even asimple product will have to
be tested with actual
consumers.
The Market- TestMilestone: Results from
market tests constitute
another milestone in product
development.
The Product Development Process
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The Product Development Process
Testing an Innovative Process: If
the innovation is aprocess, such as a
new method of robotic welding, test
marketing is not part of the
development scenario. However,
testing is done in a controlled
environment under rigorous
conditions.
When Projects Are Killed: APostmortem: Even the best plans go
haywire, and it is not unusual for
excellent products to fail
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The Product Development Process
The Diffusion Stage: Assuming a product makes it through initialstages to the point of being formally marketed, the process is not
complete until the product can prove that it can profitably penetrate
the target market. It must be successfully sold through a diffused cross
section of the market, showing a pattern of growth in demand.
Reacting to Competition: When a new software program comes onthe market, it attracts immediate attention from competitors. This
leads to a leapfrogging of product improvements in software-
constant updates and revisions, new toots and whistles to leap beyond
the other guy, only to find the other guy leaping beyond you. Dealing with False Market Tests: Even well- devised market tests
may have fatal flaws that render a product vulnerable once it is
introduced. Perhaps the product was introduced at an artificially low
price during the test, and a higher price in the actual market will be
rejected by consumers.
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The Product Development Process
Recognizing Management Assumptions: Every new product carries with it a set of
assumptions made by management. These include profit forecasts made during
development stages, economic forecasts that underpin market demand, scenarios of
competition, cost estimates for factors of production, and many more. When one of
these assumptions changes, the product may quickly come under scrutiny. For
example, a slight change in material costs could render the product a loser, and such
a change affected toy manufacturers in dramatic fashion during the 1970s when oilprices soared. Toys made of plastics required petroleum- based resins, and when oil
prices tripled, plastic toys became expensive and unprofitable. When something like
this happens, management should have contingency plans. Fisher- Price Toys, for
example, quickly modified toy designs for wood rather than plastic in response to
petroleum costs. Others, such as Tyco, relocated manufacturing to Hong Kongwhere cheap labor offset higher material costs.
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The Product Development Process
Beyond Diffusion- A Final Word: While we have identified fourstages that take a product from imagination to market introduction,
clearly the life- cycle process requires continuous product attention
well beyond this early period. If the product is successful, it will enjoy
early growth, enter a rapid growth stage, mature as competitors enter
the market, and eventually reach saturation in its markets. Beyond thatpoint, new products will be introduced, rendering the existing
products obsolete and signaling a period of decline. The later stages
may span decades of sales and require organizational changes.
Entrepreneurs can, however, recognize the process and be preparedfor new generations of products that will emerge.
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THANK YOU!!!!!!!!!!!