MP

6- Strategic Entrepreneurship and Innovation

Strategic entrepreneurship combines principles of strategy and entrepreneurship to create new business opportunities. It leverages competitive advantages to achieve sustained market success.

Key Definitions

  • Invention: Discovery of a new idea or product. E.g., the Wright Brothers' development of airplane flight.

  • Innovation: The commercialization of an invention, facilitating market entry. E.g., Boeing integrating new technologies into its airplanes.

The Role of Competition in Innovation

  • Competition drives innovation: It is necessary for advancement and leads to the development of new products and services.

  • Necessity is the mother of invention: Societal needs often stimulate innovative solutions.

Innovation Misconceptions

  • The term "innovation" is often overused in corporate jargon, which dilutes its meaning. Articles have highlighted the excessive mentions by companies, leading to audience fatigue and skepticism about what constitutes genuine innovation.

Joseph Schumpeter's Creative Destruction

  • Refers to a process where innovation results in the demise of outdated products and services, paving the way for new ones. This concept is critical in understanding capitalism and the evolution of industries.

Industry Examples

  • Encyclopedia Britannica vs. Microsoft Encarta: The introduction of Encarta revolutionized information access, leading to the decline of Britannica.

  • Wikipedia: Further disrupted traditional encyclopedias by allowing user-generated content to flourish.

Innovation Process

  1. Idea: Abstract concepts drawn from research or findings.

  2. Invention: Creation of a new product or process which often requires patent protection.

  3. Innovation: The commercialization of the invention to bring it to market.

  4. Imitation: Competitors replicate successful innovations, which leads to market saturation.

First Mover Advantage

  • The benefits of being the first in the market include establishing brand recognition and customer loyalty.

  • Examples include Apple's partnership with AT&T for the iPhone, which set a precedent for exclusive market control.

Types of Innovation

  1. Incremental: Gradual improvements on existing products. E.g., updates to the iPhone.

  2. Radical: New technologies that create entirely new markets. E.g., the introduction of smartphones.

  3. Architectural: Reconfiguration of existing technologies for new markets.

  4. Disruptive: New technology that disrupts existing markets. E.g., digital photography replacing film.

The Industry Life Cycle

  • Phases: Introduction, Growth, Shakeout, Maturity, Decline.

  • Introduction: Characterized by high R&D and establishing proof of concept.

  • Growth: Dominance of specific market designs, with an emphasis on profit maximization.

  • Shakeout: Increased competition leads to the exit of weaker firms.

  • Maturity: Market saturation with a focus on cost leadership.

  • Decline: Options for firms include exit, harvesting, maintaining, or consolidating.

Importance of Innovation in Business

  • Emphasizes a company's ability to adapt and meet changing market demands.

  • It's critical to define core competencies and develop strategies appropriate to each phase in the industry lifecycle.

Conclusion

  • Learning from failure is essential; it emphasizes the importance of strategic risk-taking and understanding past mistakes to foster future innovation.

  • Encouraging employees to present new ideas without fear of judgment fosters a culture of creativity and adaptability within the business.