Module Teaching Objectives

1. Module Teaching Objectives • To introduce students to the concept of innovation • To explain why it is important for all types of firm or organisation and country economies • To learn how to innovate and the role of ‘entrepreneurial management’ in this context

2. Module Learning Outcomes • Understand what is meant by innovation • Understand what is meant by entrepreneurship • Assess why innovation and entrepreneurial management are important for wealth and value creation • Evaluate the potential importance of innovation and entrepreneurial management in your own organisation by using what you have learnt

3. Your Expectations for module?Think /note down, for 1min and be ready to share

4. Module Structure Overview

5. Teaching innovation and entrepreneurship... Tension “There’s nothing quite like doing it…” Entrepreneur “This is how it should be done…” University

6. Unit1: Introduction to Innovation & Entrepreneurship Unit Learning Outcomes • Understand broadly what is meant by innovation • Understand broadly what is meant by entrepreneurship • Understand broadly why innovation and entrepreneurial management are important for the creation of social and financial value • Introduction to a basic organisational process model • Recognise the potential importance of innovation and entrepreneurial management in your own organisation

7. What is innovation? What is your understanding of the term? Brief class discussion

8. What is innovation? Participants in the EC Lisbon Council's 2010 Innovation Summit Listen to this video clip: What is innovation? http://www.youtube.com/watch?v=2NK0WR2GtFs Afterwards – • Write down as many of the innovation descriptions as you can! • Just who are these people? Where do they come from • Class Discussion

9. Good Idea Invention INNOVATION: A Definition (E. Roberts) Successful Exploitation and Implementation INNOVATION = + INPUTS Group member Knowledge, skills, effort Entrepreneurial/ Innovation Management Process OUTPUTS adding value

10. Evolutionary “Creative Destruction” Joseph Schumpeter “This process of Creative Destruction is the essential fact about capitalism. It is what capitalism consists in and what every capitalist concern has got to live in….” Schumpeter's Innovation Definition: • introducing new commodities or qualitatively better versions of existing ones; • finding new markets; • new methods of production and distribution; • new sources of production for existing commodities; • introducing new forms of economic organisations” (Schumpeter, 1942)

11. Broad set of Definitions for Innovation: • Innovation is the process by which new ideas are successfully exploited to create economic, social and environmental value.BIS (2011) http://www.bis.gov.uk/innovation • ‘innovation is the process of successfully bringing something new into use, to a market or community, that satisfies need or latent demand’ (Gurling, 2010, Unit 1) • ‘A process starting with an invention or an idea, proceeds with the development of the invention/idea and results in the introduction of a new product, process or service to the market place” (Acs and Audretch, 1998) • Companies achieve competitive advantage through acts of innovation. They approach innovation in its broadest sense, including both new technologies & new ways of doing things’ (Michael Porter 2009) • At most simple level “Something new of value to the world, made to happen!”

12. Without “new things” appearing in the marketplace:- • No stimulus to demand and supply • Jeopardises sustainable economic growth • Innovation is therefore an essential ingredient to a free-market economy to encourage growth in demand and supply – basic economics • Creative tides of destruction destroying old markets and replacing them with new ones

13. Innovation creates value Types of Value • Economic • Financial • Social • Environmental • Aesthetic

14. Innovation is not the same as Creativity Creativity:The generation of new ideas Innovation:The successful exploitation of new ideas

15. Kuhn suggests “creativity forms something from nothing but that innovation shapes that something into products and services “ (Kuhn, 1985).

16. Generation of ideas So how do you find ideas? Discuss then watch video: Watch Video: Steve Jobs Where do ideas come from? http://www.youtube.com/watch?v=NugRZGDbPFU

17. The Creative Thinking Process Incubation Knowledge Accumulation Creative Process Ideas Evaluation & Implementation

18. Individual or team – which is better? Incubation Knowledge Accumulation Ideas Evaluation & Implementation

19. “Design” links creativity and innovation • Shapes ideas to become practical and attractive propositions for users or customers • Design may be described as creativity to point to a specific end (Cox review on Creativity in Business: building on the UK’s strength 2005) Idea/Invention Design Application Prototyping Piloting Innovation

20. Innovations can be classified (or categorised) in many different ways • All to help think about what you can do to achieve successful innovation • So.....here are some categorisations ..

21. Dimensions of innovations space Transformational Radical Incremental Perceived extent of change Product Service Process What is changed (Tidd, Bessant and Pavitt)

22. Tidd,Bessant & Pavitt’s: Definition of Innovation • Incremental Innovation – small improvements to existing products, services or processes- “do what we do but better” • Radical Innovation – Significantly different changes to products, services or processes - “ do what we do differently” • Transformational Innovation – Offering something that provides the platform on which other variations and generations can be built. (e.g. The wheel, printing press, internet – one thing, wide impact)

23. Tidd,Bessant & Pavitt’s: Definition of Innovation • Product innovation – change in the things that (products/services) which an organisation offers • Process innovation - changes in the ways in which they are created and delivered • Position innovation-changes in the context in which the product for services are introduced ( Market) • Paradigm innovation which frame what the organisation does ( Strategic / Domain Transformation)

24. Finnegan's Fish Bar: Video clip applying Bessant & Tidd’s innovation model to a Fish & Chip shop http://www.managing-innovation.com/vr_finnigans.php Take note of the innovation examples given, ready to discuss

25. Innovation: the OECD Definition - 4 types of innovation identified in the Oslo Manual for measuring innovation: Product Innovation: a good or service that is new or significantly improved. Process innovation: involves a new or significantly improved production or delivery method Marketing Innovation: Marketing innovation involves a new marketing method involving significant changes in product design or packaging, product placement, product promotion or pricing. Organisational Innovation : Organisational innovation involves introducing a new organisational method in the firm’s business practices, workplace organisation or external relations. These innovations can be new to the firm/educational institution, new to the market/sector or new to the world

26. Plus...... Service Innovation • A new or significantly improved service concept put into practice. • e.g. can be a new customer interaction channel, distribution system or a technological concept or a combination of them. • Service innovation always includes replicable elements that can be identified & systematically reproduced in other environments. • Service innovation benefits both the service producer and customers • Competitive edge for the service provider can be based based on some technology or systematic method.

27. Technical / technological innovation • …a mix of physical appliances and human ways of doing things involving: • 1. Creating new knowledge • Generating technical ideas aimed at new and enhanced products, manufacturing processes and services • Developing those ideas into working prototypes; and • Transferring them into manufacturing, distribution and use Sources: Scarborough and Corbin (1992); Roberts, E.B. (1988)

28. Social Innovation – Mulgan and Albury 2003 • “New ideas that meet unmet needs, social innovations – are all around us. • Include Fair trade and restorative justice, hospices and kindergartens, distance learning and traffic calming. • Over last two centuries, innumerable social innovations, from cognitive behavioural therapy for prisoners to Wikipedia, have moved from margins to the mainstream. • As this has happened, many have passed through the three stages identified by Schopenhauer for any new ‘truth’: • ‘First, it is ridiculed. Second, it is violently opposed. Third, it is accepted as being self-evident” “

29. Watch and listen: Skoll Foundation Video An example of a social entrepreneurship starting with - Mohammed Yunus Nobel Prize Winner Grammeen Bank for microfinance http://www.youtube.com/watch?v=jk5LI_WcosQ 9 mins

30. So who carries out innovation? • Entrepreneurs! • Where do we find them? • Individuals in independent new ventures – new venture entrepreneurship • Working inside organisations – intrapreneurs as individuals or teams • Organisational level – corporate entrepreneurship - many different types depending on the organisation characteristics and what needs to be done

31. Peter Drucker on the relationship between Innovation & Entrepreneurship “Innovation is the specific tool of entrepreneurs, the means by which they exploit change as an opportunity for a different business or service. It is capable of being presented as a discipline, capable of being learned, capable of being practiced.” Drucker 1991 HBR The Discipline of Innovation 32

32. Innovation & Entrepreneurship Different sides of the same coin! Entrepreneurship Innovation

33. So what is it entrepreneurs do? Class Discussion...

34. Definition of Entrepreneurship: Individual ‘A Human Creative Act that buildssomething of value from practically nothing. It is the pursuit of opportunityregardless of resources….to hand. It requiresvision, passion and the commitment to lead others in the pursuit of that vision. It also takes a willingnessto take calculated risks’ Source: Timmons New Venture Creation 3rd Edition

35. Individual or Corporate entrepreneurship ‘Entrepreneurship is process by which individuals - either on their own or inside organisations - pursue opportunities without regard to the resources they currently control’ Stevenson, Roberts and Grousebeck 89

36. Corporate Entrepreneurship Definitions Sharma and Chrisman 1999 “ a process whereby an individual or a group of individuals in association with an established company, creates a new organisation or instigates renewal or innovation within the current organisation” Stevenson and Gumpert 1990 “the process of discovering innovative opportunities, evaluating them and managing the innovation process to bring the innovation successfully into use”

37. Entrepreneurship: A pattern of management behaviour that produces innovation (individual, group or firm level) • Perceives and Identifies innovative opportunities • Takes ‘Risk’ in pursuing this opportunity • Finds and Gathers scarce resources into appropriate combinations to create an organisation, which delivers innovation and value to customer, founder, investor and stakeholder • Continually ‘reaches’ for the necessary resources to solve problems and foster firm growth (Baumol)

38. Good Idea Invention Fitting the entrepreneurial management process onto innovation using Robert’s innovation model Successful Exploitation and Implementation INNOVATION = + Entrepreneurial/ Innovation Management Process INPUTS Group member Knowledge, skills, effort OUTPUTS adding or creating value 39

39. Unit 2: Role of Innovation & Entrepreneurship in the Economy

40. Why is entrepreneurship & Innovation so important? • Class Discussion • National Level • Organisation Level • Individual Level

41. National Level - The impact of entrepreneurship / new firm starts / innovation on economic performance • Number of new enterprises linked to overall GDP performance ( Link of TEA / global entrepreneurship monitor to economic performance / OECD Audretsch & Thurik • I.e. positive effect of start-ups on economic growth. • In Developed Economies • Industry structure is generally shifting towards an increased role for small enterprises. • Extent and timing of this shift not identical across countries. • Shift in industry structures towards a greater role for SMEs heterogeneous / shaped by country-specific factors.

42. UK “Innovation Nation” White Paper Mar. 2008 “Innovation is essential to the UK’s future economic prosperity and quality of life. To raise productivity, meet the challenges of globalisation and to live within our environmental and demographic limits, the UK must excel at all types of innovation.” UK Coalition Government 2011 Innovation is the process by which new ideas are successfully exploited to create economic, social and environmental value. http://www.bis.gov.uk/innovation 2011

43. Organisational level Why innovate? EU Commission considers http://ec.europa.eu/enterprise/sme/innovation_en.htm# “Innovation is now widely understood to be the driving force in economic growth. ( Addition CG- in a free market economy) It is new products and services, and new methods for making or delivering them which add value to our economy, and enable us to improve standards of living. SMEs are responsible for much of the innovation which leads to new higher value products and services (even if ultimately larger firms may take on production and mass marketing of such innovations), and so the European Commission seeks to promote innovation to SME’s and all organisations across Europe”

44. OECD Fostering Entrepreneurship • Entrepreneurship & firm creation long been recognised as a vital force driving innovation. • With globalization & co-incident shift towards a knowledge-based economy, link between entrepreneurship policy & innovation received renewed attention. • By underpinning firm creation & firm expansion, entrepreneurship policies strengthen innovation, increasing productivity in the enterprise sector. • In return, policies fostering innovation will tend to spur firm creation as the results of R&D are commercialized.

45. Individual level: The Organisation for Economic Co-Operation and Development Towards an Enterprising Culture. (OECD (1989) - • "An enterprising individual has a positive, flexible & adaptive disposition to change, seeing it as normal and as an opportunity rather than a problem. • To see change in this way, an enterprising individual has a security born of self-confidence, & is at ease when dealing with insecurity, risks & the unknown. • An enterprising individual has the capacity to initiate creative ideas & develop them into action in a determined manner. • An enterprising individual is able, even anxious to take responsibility, is an effective communicator, negotiator, influencer, planner & organiser. An enterprising individual is active, confident and purposeful — not uncertain & dependent“

46. Reasons for intense focus on Innovation • Economic renewal / rejuvenation within the business environment (see J. Schumpeter, 1934) and enterprise • Response to accelerating pace of technological change, shorter life cycles, globalisation of markets(Krondatiev Waves) (Tidd, Bessant & Pavitt) • Value Creation and Competitive Advantage for those able to mobilize knowledge , technological skills and experience to create new products processes and services (Barney 91) • Socio - political cohesion improvement in communities as a means of furthering economic development through the third sector (Mort, Weerawardena & Carnegie 2003)

47. CG Adapted Innovation and E’ship Management Model: Bessant and Tidd 2nd Ed 2011 Strategic Vision and direction Recognise opportunity Find Resources Develop Venture by picking and deploying resources Create Value Entrepreneurial Goals and Innovation Context Learning

48. Dyson Case Study: see electronic manual p 8 Unit 1 • http://www.dyson.co.uk/about/story/ • http://news.bbc.co.uk/1/hi/business/1802155.stm • http://news.bbc.co.uk/1/hi/uk/3046791.stm View, Read and Discuss

49. Dyson Case Study: see electronic manual p 8 Unit 1 • Where do ideas come from within the company? • How does the company encourage • Opportunity selection • Innovation development • Successful implementation ie the management process adopted • What barriers did he face in introducing the Dyson vacuum cleaner? • Is Dyson an entrepreneur? Why?

50. Your Organisation: Task before next time • Ask around amongst your colleagues at work and find out what “new things” have been introduced in the past. • It is very easy to forget that the things that surround you were once probably new? • Eg zips, trainers, biros, plastic bottles....the same has probably been happening in your work context... • Try and identify their categories using the previous slide labelled Dimensions of Innovation Space • Any people around who consistently “ make new things happen? Could you categorise them as having an entrepreneurial approach through successfully introducing innovation?