PROJECT MANAGEMENT

&
ENTREPRENEURSHIP
KHU-702

UNIT-II
CONTENT
Entrepreneurial Idea and Innovation:
Introduction to Innovation,
Entrepreneurial Idea Generation and
Identifying Business Opportunities,
Management skills for Entrepreneurs and
managing for Value Creation,
Creating and Sustaining Enterprising
Model & Organizational Effectiveness
What is innovation?
The term innovation refers to a “new way of
doing something”.
Better and smarter way of doing something is
innovation
It may refer to incremental and emergent or
radical and revolutionary changes in thinking,
products, processes, or organizations.
Innovation recipes = Creativity + Failure +
Iteration
Innovation generally refers to changing
processes or creating more effective
processes, products and ideas.
What is innovation?
It could be the introduction of
New technology
New product line or segment
A new method of production
An Improvement in the existing product

Innovation is the specific function of

entrepreneurship
What is innovation?
Being innovative does not only mean
inventing.
Innovation can mean changing business
model and adapting to changes in
environment to deliver better products
or services.
Successful innovation should be an in-
built part of business strategy, where
create a culture of innovation and lead
the way in innovative thinking and
creative problem solving.
Innovation can increase likelihood of
business succeeding. Businesses that
What is innovation?
Innovation refers to the process of bringing
new, problem solving ideas into use.
The ideas may be related to reorganizing,
cutting costs, establishing new budgeting
system, improving communication etc.,
Comprehensively speaking, innovation
involves generation, acceptance and
implementation of new ideas, processes,
products or services. It embodies the
capacity to change or adapt.
What is innovation?
For example,
Labor shortages led to mechanized
equipment,
Drought conditions led to improved irrigation,
Energy crises led to higher efficiency cars,
Farmers’ cooperatives were established
during periods of excessive low farm prices,
Environmental regulations trigger cleaner
technologies,
Tax on carbon will lead to improved stoves
and power plants.
What is innovation?
Innovation is the essential for
entrepreneurial motivation.
Innovation gives money.
Innovation must be knowledge based.
Scientific knowledge is the base for
innovation.

However, innovation is also due to

the convergence of different kinds
of innovation.
What is innovation?
An innovative entrepreneur becomes a market
leader.
His market share and profitability increase
till the competitors catch that innovation and
imitate it by bringing out “me-too” product
in the market.
The innovative entrepreneur hits the market with
another innovation to retain his market leadership
and high profit margin.
The history of entrepreneurial development itself
is a reflection of the innovativeness of
entrepreneurs.
What is innovation?
Schumpeter argued that innovation comes
about through new combinations made by an
entrepreneur, resulting in
a new product,
a new process,
opening of new market,
new way of organizing the business,
new sources of supply
What is innovation?
Schumpeter (1934) distinguished inventions from
innovations and identified ‘Five Types of
Innovation’
What is innovation?
Peter Drucker
Innovation is an important tool of an entrepreneur, as
he perceives new opportunity; convert this
opportunity into attractive projects and become
market leader.
Innovation is the conversion of new knowledge
into new products and services.
Innovation is about creating value and increasing
productivity, and therefore, making your business
grow.
It is the means by which the entrepreneur year
that create new wealth producing resources or
endows existing resources with enhanced
potential for creating wealth
Sources of Innovation
1. Enterprise itself
2. Employee
3. Recipients
4. Competitive Companies
5. Supplies
6. Sales Personal (Foreign Sales network)
7. Fairs, Exhibitions
8. Professional Lectures
9. Patents and standardization literature
10. Market Research
11. Foreign Research Institute
12. Leaflets and folders catalogues
Sources of Innovation
 Most innovations specially the successful ones results from a
conscious purposeful search of innovation opportunities
which are found only in a few situations
Four such areas of opportunity exist within a company or
industry
 Unexpected occurrences

Unexpected Success/ failure/ event

 Incongruities
The difference between reality as it actually is and
reality as assumed to be
 Process needs

Innovation based on process needs

 Industry and market changes

Observe the opportunities and option opening in the

market
Sources of Innovation
Three additional sources of opportunity exist
outside a company in its Social and
intellectual environment
Demographic changes
Lifestyle, education , Income etc
Changes in perception
Health , fitness equipments available, right oil in
different variant
New knowledge
Scientific or non Scientific or social
What is innovation?
An innovation can increase profits on the :
Value side (customers value your
innovation enough to pay more for it)
Or the cost side ( the company produces
the offering in a more efficient way)
Either way, value is created for the firm
and the consumer
Innovation and Invention
Innovation and Invention
An invention is different from an innovation
at any particular time in that it doesn't
have commercial value but it may have in
future.
There is no shortage of ideas and
inventions in the world. The challenge is to
introduce these successfully to a market.
Only that idea/invention can be called an
innovation.
Innovation and Invention
In other words, innovation requires
interplay between a product offering
(technology) and a market (people).
Innovation provides better quality
product at lower price which leads to
higher standard of living.
Innovation and Invention
Types of Innovation
Product Innovation
Process Innovation
Service Innovation
Product Innovation
Product innovation
Change in how the product is noticed by the
consumers (change in physical structure).
These changes include change in product design,
research and development, and new product
development (NPD).
To meet customer needs and demands
Product / service innovation is the result of
bringing to life a new way to solve
customer’s problem – through a new
product of service development – that
benefits both the customer and sponsoring
company.
Product innovation
The degree of change can include the
following:
Incremental improvements
Addition to product families
Next-gen products
New core products
Continuous improvements, making the
product more:
efficient, effective
useful or user friendly
valuable to users

Product innovation
Examples
Mechanical – tractors, cars;
Chemical and biological – pesticides seed variety;
Introducing a new screen size for TVs.
Changing from a CRT TV to a flat screen.
Adding functionality such as internet access to
TVs
Managerial-IPM, extra pay for work, overtime;
Institutional-water users’ association, patents,
banks, stock market, conservation districts,
monks.
Process Innovation
It involves a new or significantly improved
method for the production or delivery of output
that adds value to the organization.
The term “process” refer to an interrelated set
of activities designed to transform inputs into a
specified output for benefits of customers.
Processes relate to all operational activities by
which value is offered to the end customer,
such as acquisition of raw Material,
manufacturing logistics and after sales service.
Process Innovation
Process innovation increases bottom line
profitability, reduces costs, improves
efficiency and raises productivity, and
increases employees’ job satisfaction.
It also delivers enhanced value of the
product or service to customers.
For manufacturing companies, process
innovation includes such things as
integrating new production methods and
technologies that lead to improved
efficiency, quality, or time-to-market and
services that are sold with those products.
For service companies, process innovations
enable them to introduce “front office”
 Process Innovation
Make processes:
Simpler
 faster
 more accurate
more reliable
less expensive
 Reducing unit costs by improving the
production capacity.
Service Innovation
Service Innovation
Services involves products (intangible) that
form an extended part of the product life
cycle, from initial sales to end-of-life recycling
and disposal.
Service industries in areas such as finance,
food, education, transportation, health make
up most organizations in any economy.
These organizations also need to innovate
continuously so that they can
increase/improve the levels of service to their
customers
Service Innovation
New way of providing service / a new
service.
New information technology platforms,
particularly the internet have also added
the scope of service innovation.
The internet is a valuable resource on
which new service relationships between
organizations and their customers are
being developed every day.
Technology + better service
Types of Innovation
Christensen (1997), identified two types of
innovations: disruptive innovations and
sustaining innovations.
The former, disruptive innovations involve a
new value proposition by which new markets
are created.
In such instances, individuals or business
organisations seize upon basic inventions and
transform them into economic innovations,
thereby disequilibrating and altering the
existing market structure, then waiting until
the process eventually settles down before
the next wave of innovation begins.
In contrast, the latter, sustaining innovations
Types of Innovation
Types of Innovation
Incremental Innovation
Uses existing technology within existing
market
The goal is to improve an existing offerings
by adding new features, changes in the
design etc.
Example – smart phone market
1. Improving design
2. Application updates in mobile
3. Hardware updation
Types of Innovation
Disruption Innovation
Applying new technologies, processes, to
existing industries
Surpass the existing models and take over
the market due to efficiency and /or
efficacy advantages
Examples
Amazon used Internet Technologies to
disrupt the existing industry for book
shops
Types of Innovation
Architectural Innovation
Domain expertise, technology and skill and
apply them to a different market
Can open up new markets and expand
their customer base
Examples
Amazon Alibaba use existing expertise in
building apps, platforms, their customer
base to offer new services and products
for different markets
Types of Innovation
Radical Innovation
Involves the creation of technologies,
services and business models that open up
entirely new markets
Examples
Invention of the airplane. This radical
new technology opened up a new form of
travel, invented an industry and a whole
new market
Phases of Innovation
Design Phase
The design phase is marked by much
divergent thinking and creativity,
brainstorming, search for alternatives, etc.
Research studies suggest that the
management of the design phase needs to
be marked by great administrative flexibility
and these types of innovation to achieve the
necessary growth to survive
Implementation Phase
It requires a very different mode of
management.
It involves putting the chosen innovation to
work.
Much planning needs to be done, careful
coordination & control, and evaluation of
progress.