Innovation and Entrepreneurship
Agsb entrepreneurship elective lecture
Book by Peter Drucker, management guru
Peter Drucker
Definitions
• Entrepreneurship – “shift of economic resources out of an area of lower to higher productivity of greater yield.” J. B. Say 1800
• Innovation – “creating value out of existing
resources.” A specific tool of entrepreneurship.
They go hand in hand!
Innovation & Entrepreneurship
Entrepreneurship
NEW VALUE FROM EXISTING
• Entrepreneurship – “destroying old order and creating something new.” Schumpeter
• Innovation – innovare to make new
- creating value from existing things
processes
- not just new things; they have to be
NEW VALUE
Types of innovation
• Technical
• Social
• Economic
Most innovations are social and economic. THEY HAVE THE MOST IMPACT!
Social innovations
• Textbooks• Hospitals• Management• Organizations• Universities• Night/adult schools
Technological Innovations
Review
• Creativity
• Innovation
• Inventor
• Entrepreneur
Who was Edison?
Is innovation only for small businesses?
Characteristics of innovation
• It is hard work
• It is systematic
• It focuses on opportunities; not problems
• It is focussed
• It is customer-centric
• Its effect is felt in the economy and society
Practices of innovative companies
1. Responsibility for innovation
2. Rewarding innovators
3. “Hiving off” – divisionalisation
4. Changing corporate rules to nurture
innovation
Skunk works at Lockheed
3M
3m products
R & D
Johnson & Johnson
R & D
R & D
Innovation Strategies
1.“The Fustest with the Mostest”
Original innovations
At the Lead Pack..
Example companies
Original innovators
2. Creative imitators
“Not the orig..”
“Wheel suckers?”
Examples
• IBM
• J &J
• Seiko
• National
• Swatch
Battle of the watches
3. Creating main value propositions
Business model
How does a company earn? – business model
MVP
1. Utility to the customer
2. Price
3. Customer’s reality
4. True value
Innovation policies in nations
WHAT WILL NOT WORK:
• CENTRAL PLANNING
• RELYING ON TECHNOLOGICAL INNOVATION ONLY
Communist Party approving a central dev’t plan
What will work?
CREATIVE DESTRUCTION OF THE OBSOLETE:
• New tax laws that will favor sale of non – performing assets.
• Sunset laws for obsolete gov’t agencies.
“Every generation needs a revolution”
-Thomas Jefferson
French Revolution
Entrepreneurial Revolution?
Another revolution in Egypt –entrepreneurial revolution
Vernuft wind Unsinn,Wohltat Plage“Reason becomes nonsense, Boons
afflictions”
Goethe
Obsolescence
Old Manila
The new gets old
acknowledgement
• The picture and photographs are from Google images;
• The bulk of the presentation are interpretation of the work of Peter Drucker’s book on innovation and entrepreneurship. (creative innovation?)
