The Fields of Innovation and Entrepreneurship - Essay Example

Summative Assessment Contents Introduction 3 Nature of Entrepreneurship 3 Managing risk & Opportunity 6 Corporate Entrepreneurship 8 Family Firm 11 Innovation & Entrepreneurship 13 Stage-Gate Process – Business Start-Ups 17 Conclusion 18 References 19 Introduction Entrepreneurship can be defined as a dynamic process of creation, vision and change that requires an application of passion and energy towards the implementation and creation of new creative solutions and ideas. It is a field of research which helps to develop skills for the progress of business. It is a process of new venture creation and innovation and is conducted after following four major dimensions which are individual, process, organization and environment. Entrepreneur is the innovator or developer of a business in the industry. He recognizes the scopes or opportunities and takes initiative to develop a business idea; adds value through money, time, effort and skills; assumes the competitive advantages which can be achieved from market and probable risk factors in the business. An entrepreneur is not only involved in innovative work but also builds an organization after collaborating manpower, material and capital. He gathers resources for the purpose of manufacturing procedure and plans about the key strategies which will help to bring success in the business. Willingness to face risks, adventurism, innovative concepts, creative power etc is the inborn qualities of an entrepreneur. In this essay many concepts, tools and theories will focus on the fields of innovation and entrepreneurship for developing individual characteristics. Nature of Entrepreneurship Entrepreneurship is a multi dimensional concept in the economic environment and business field. Innovation is one of the major characteristics of an entrepreneur. Without innovative ideas and plans a business cannot be developed or implemented in market. Again development is not only the important factor for achieving success. Entrepreneur should make his business different than the other existing firm in the same industry. For this reason he should implement innovative ideas in the offered products or services so that those can attract people in a different way. So this can be said that innovation is a key strategy for developing a successful business in the market. Varieties in the product and service category also increase the dependency of customers on the offered products or services by any particular organization (Bessant and Tidd, 2011). This variety can be generated only after the implementation of innovative ideas in the operational activities in business. Again innovation is required in problem solving procedure also. An entrepreneur has to solve different types of problem by finding appropriate solution and for this work analytical skill and innovative thoughts are required. Society and economy of a country always expect that entrepreneur will gift something new in the economy. So every entrepreneur has this pressure for implementing new business concept which will be helpful for the economy and nation. Entrepreneur always seek better opportunities to flourish their business. Management skill and leadership are the most important qualities for developing behavioural characteristics (Landes, Mokyr and Baumol, 2012). In this case financial skills are secondary important factor. The person has to lead his team member towards the goal and manage human resource in an efficient way. Most significant nature of entrepreneurship is gap filling capabilities. It is the job of an entrepreneur to fill up the gap or make up the deficiencies which generally exist in knowledge. Entrepreneurial and management capabilities include personal organization, interpersonal interaction, managing organization and operation, leading and managing people, market development, applying innovation, investigating opportunity, strategic venture planning, managing finance & resources, responsible management etc. So this can be analyzed that management capabilities and entrepreneurial capabilities are inter-related (Kuratko, 2013). An entrepreneur performs six major roles for implementing a new venture. These roles are the role of inventor, innovator, entrepreneur, manager, marketer and leader. Being an inventor a person creates new products and innovator role will help him to apply new technology in the business activities. After that being an entrepreneur he starts a new business after considering all the available opportunities. Then he builds and manages the activities of business and in this stage the person is called as manager. After that as a marketer the person creates a market to sell the new products and being a leader he leads people to achieve targets of the business. Now the process of starting a new business can be explained as per the following steps. At first entrepreneur will recognize the suitable opportunities for implementing a new business concept and after that innovative idea should be generated by him for consideration. After consideration proper planning is required about the product feature, product category, business development procedure, sources of resource, social connection with the business etc. Then only entrepreneur can be able to launch that product or services in the market place. Now from this point innovative and attractive marketing strategies are required for the purpose of survive in the market. Triadic model can be used for entrepreneurial learning and from this model an entrepreneur can be able to learn some aspects which are negotiated enterprise, contextual learning and personal & social emergence. The sub themes which are involved in contextual learning are practical theories of entrepreneurial action, opportunity recognition through cultural participation and learning through immersion within industry. Negotiated enterprise includes changing role over time, engagement in external relationship, participation & joint enterprise etc. Personal & social emergence includes tension between future and current identity, identity as practice, narrative construction of identity and role of the family (Westhead, Ucbasaran and Wright, 2005). Managing risk & Opportunity Risk can be defined as the probability of an event which may be harmful for business entity. Entrepreneur should focus on the risk management strategies of the business to mitigate the chances of risks. A business owner can achieve success on the basis of some ingredients which are business culture, company strength, business decision, entrepreneurial characters and luck. For implementing a new business concept seeking suitable opportunity is an important step. Accessing opportunity is based on some factors which are investment, risk, return, impact of change and time. In this case it must be said that two types of risks have to face by an entrepreneur in the business activities. These are certain risks and unpredictable risks. Opportunity selection will be depended on the amount of investment, availability of human resources, learning procedure, appropriate strategy, nature & condition of market and innovative concepts. The entrepreneur can use few financial ratios for accessing opportunities from the market. These ratios are profit margin ratio, capital gearing ratio, return on total asset and asset efficiency ratio. Product market matrix will also be helpful to identify the proper market for launching a particular product. Introducing a new product in a new market will be highly risky by nature and very low growth of this business can be observed at the initial stage. For accessing the risk factors entrepreneur can do SWOT analysis to predict the internal and external scenarios. Strategic risk analysis can be done by calculating passive NPV, perform sensitivity analysis, indentify available real option, value the risk exposures etc. Learning will help to take right decision and by taking right decision entrepreneur can solve the raised problems and thus he can be able to reduce variability and finally measure the performance level in business. Practice based theory can be implemented which is nothing but the framework of interpretation. Rae’s 6 rules of business also can be implemented in this purpose. These rules stated that fixed cost should keep down; first focus should be given on the cash flow and after that profitability and turnover. Corporate Entrepreneurship Corporate Entrepreneurship can be defined as a method to generate product, process and ideas in such a way which will be helpful for creating value of the organization in the market place. This method provides economies of scale opportunities to increase economies of scope in the business and also helps to find out the right size of market for the purpose of business. The need of corporate venture can be observed in the larger firms to manage entrepreneurial business activities. Entrepreneurship will focus on the fact that how an individual will be encouraged to act more entrepreneurially in a large organization. Advantages of corporate venturing are – facilities and innovation can be imported, external sources of finance can be accessed, highly motivated staffs etc. Disadvantages are – investment is risky by nature and investing companies have no control on the field of innovation. Entrepreneurial transformation is required to adopt the changing environment and this will help to change system, structure and culture within organization. Architecture is a relational contract with customers, suppliers and employees of the organization. Culture, strategies and structure of the organization are required to build up architecture and all the factors are guided by the leadership of the management (Markman, Baron and Balkin, 2005). New venture development can be done on the basis of following model which has two major dimensions. These are operational relatedness and strategic importance. Here this can be said that strategies should be adopted according to the nature of operation in the business. Wheel of learning will focus on the major development areas in the business field. These areas are mainly technology, communication, environment, creativity, physical skills, personal and social development, environment and communication etc. Entrepreneurial DNA is basically the traits of entrepreneur skills which are self confidence, innovation, fair vision, high energy, ability to handle the risk factors etc. Entrepreneurial leadership differs from the traditional leadership in many aspects such as opportunity, innovation, changes, co-operation, relationship etc. Entrepreneurial culture will depend on strong relationship, open communication, sharing knowledge and information, risk factors, commitment, learning, innovation & creativity etc. Hofstede’s Dimensions of Culture is a certain framework which is used for cross cultural communication and it describes the effects of an organization’s culture on its members or employees. Again this can be said that management style should be adopted on the basis of organizational structure. Entrepreneurial management style is adopted on the basis of organic structure. The features of this structure are free flow of communication, adoption of more than one operating style, informal control, participative decision making procedure, authority based expertise etc. Bureaucratic management style can be adopted on the basis of mechanistic structure and features of this structure are hierarchical decision making procedure, tight control, highly structured communication etc. The entrepreneur also can adopt the spiral web strategy which will focus on some dimensions which are beneficial for business. The dimensions are project management, program management, personnel management, process management etc. Family Firm Family firm can be explained as a commercial organization in which decision making procedure are done by the multiple generation of a particular family and the owners of this business are related with each other by blood or by marriage. It is the oldest and most common model of economic enterprises. Successful family team can be build when children and new members of the family will be involved in the business. Again close communication among the partners of the business, talents and attitudes of partners, conducting individual responsibility in a disciplinary way, showing respect with each other etc are the required criteria for a successful family business. Partners should not be involved in any kind of ego related issues among each other and they should not compete with each other also in this regard. They should only concentrate to compete with rival companies in the market. There are few advantages for building a family firm and these advantages are – a stable culture can be formed by the business owners within the company (Gupta and Bhawe, 2007). Decision making procedure will be quick in nature as the members of the family are cooperative with each other. This will be also helpful to do the stable business even in the changing atmosphere. The members can take long term planning for the betterment of business as they will stay with each other for the whole life time. Automatically partners will be loyal and responsible in their own work in this business and apply their special knowledge in the relevant field. The time, work and remuneration will also be flexible in this case. Apart from the advantages few conflicts also can arise in case of family business. Entrepreneur should be unemotional and outward looking in the business field. He should serve reward based and tasks based performance and achieve self interest. He will instruct the employees either to perform or leave the company. But being a family member he will be loyal, inward looking and loyal to the business. He never says to the non performers for leaving the company as they are family members. Sharing information to the family members and taking care about them will also be harmful from the perspective of business. In such case owner should split his responsibility between the firm and family and should out attention so that they will not be correlated with each other. They should concentrate on this fact that commercial risk should not affect the peaceful situation in family. Four steps can be followed for managing success in the family business. These steps are – 1) owner managed firm needs to be developed, 2) providing proper training is required especially to the new generation members of the family, 3) partnership strategies in the business and 4) power transfer from one person to another or from one generation to another generation. The family business life cycle also can be followed by the business owners. This life cycle has several stages. The 1st stage shows the founder’s dream which will be implemented by the other family members after taking joint initiative. After that the next generation of family will maintain the traditional vision of the business in a successful way and at the later stage the next generation will implement the innovative idea to flourish the business in a different way (Fassin, 2005). Trade sale, management buy-out, liquidation etc Strategy can be adopted in case of disposal of this kind of businesses. The members of the family can take help from any outside parties for developing successful business plan in this regard. Innovation & Entrepreneurship Entrepreneurship is largely based on creativity and innovation. Also, entrepreneurship can be based on creating a new opportunity or exploring an available opportunity. Exploring an opportunity would encompass a number of steps. These are given in the figure below. A creative thinking process is essential to drive innovation. The creative thinking process as explained in the “art of thought” model includes four stages. These are preparation, incubation, illumination and verification (Moloner, Gamero and Ortega, 2012). The preparation phase includes assimilating any piece of information and preparing a clear question. The incubation period encompasses a series of involuntary and unconscious mental events which prepare the entrepreneur to set up a clear plan. The illumination stage includes a realization of the way success can be achieved in exploring and implementing a new idea. The validation stage includes the validity testing and implementation of the new idea. Innovation may include real innovations or innovation of incremental ideas which are built upon existing business ideas. The mould breaking innovations and developments can be done in the area of a commercial opportunity by an entrepreneur. This may relate to new products and services, new ways of production and marketing of the products and services etc. Innovations by an entrepreneur may also include discontinuous innovation which is a differentiated type of innovation. Discontinuous innovation may influence major changes in the functioning of the industry, consumer behaviour or competitive scales. The discontinuous innovations may include introduction of new technologies, creation of new market scopes, new political rules, architectural innovations, market exhaustion, dynamic changes in market perceptions and behaviours etc. This type of innovation may cause major changes like the discontinuation of an existing product. For example, the innovation of personal computers slowly made the typewriters obsolete for general use. The entrepreneurial environment includes factors like creativity, invention, innovation and external opportunities which are closely related as shown in the diagram below. These factors are combined to result in entrepreneurial success. Innovation and invention largely depends on the ability to create as well as the ability to identify opportunities in the external business environment. The ability to identify opportunities and the ability to innovate are key requirements that should be present or should be developed in the characteristics of an individual who wants to assume an entrepreneurial role. The general process followed in the innovation journey includes the following steps (Rousseau, Frese and Wiklund, 2014): Identification of current business opportunities. Transforming the needs into opportunities. These opportunities may include knowledge, product, service, technology, physical resource, lifestyle, trading opportunities etc. Development of an idea to suit the opportunity. This may be based on the identification of a problem followed by creation of a solution, identification of a solution followed by evaluation of the problem or identification of a market need followed by providing a solution. The problems should be mapped to the solutions through the use of the problem versus opportunity mapping techniques. The use of Demand-Innovation-Feasibility-Attraction (DIFA) model can be done to identify whether the invention is an idea or a solution (Plummer, Haylie and Godesiabois, 2007). The opportunity should be defined in terms of SMART objectives which include preparing objectives which are specific, measurable, achievable, and realistic and time bound. Opportunity assessment can be done using the pentagon model which considers the factors of investment, time, change, risk and return for an opportunity. This should be followed by opportunity selection and opportunity evaluation. Stage-Gate Process – Business Start-Ups The stage gate process was devised by Robert G. Cooper as a tool for product development. This process is a powerful tool that can be used in structuring and planning start-up businesses. The stage gate model segregates the progress of a new business plan into a series of gates and stages which can create a structured and well organized flow for a new project. The stage gate model defines decision points and activities in a flow diagram that can be used to structure a new business venture. The different stages of this model include the enquiry or scoping stage, business case building stage, idea generation, feasibility assessment, proto type development, product testing , commercialization, growth and exit. The stage gate model can be extremely useful for an entrepreneur because it helps to give a well-defined structure and proper direction to an entrepreneurial venture. A feedback and learning scope is presented at every stage of the model so that a step by step review and rectification of the business plan can be done at every step of implementation. These feedbacks and feasibility analysis points act as the gates of the model. These gates are useful for deciding whether the venture is being steered in the right direction and whether the venture should be continued (Ucbasaran, Westhead and Wright, M. 2009). These decisions also take into consideration the necessary deliverables that are required in each stage of the entrepreneurial venture. Conclusion At the part of conclusion this can be mentioned that innovation is the key strategy for developing effective entrepreneurship. Relational, recourse based and opportunity based strategies can be adopted for getting success in business and these strategies will be depend on the nature of business. Family firm is generally followed family business life cycle concept for better growth. Entrepreneur should find opportunities in such a way so that the opportunities can minimize the probable risk factors which are associated with the business. By implementing the above mentioned theories and techniques entrepreneur can develop their professional skills in the context of business. References Bessant, J. and Tidd, J. 2011. Innovation and Entrepreneurship. Beijing: John Wiley & Sons. Fassin, Y. 2005. 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