Innovation and Entrepreneurship

Good innovations are very focused, not trying to do many things, but just one thing extremely well. They attract the comment, ‘Why wasn’t this done before?’ By Matt Schofield

Innovation and entrepreneurship play vital roles in know-ledge creation and exploitation to generate value and drive sustainable economic, social, technological and organisational development. Processes and behaviours central to entrepreneurship and innovation are equally important to new and early stage ventures, and within existing organisations.

Innovation is defined as a means by which entrepreneurs may exploit change in order to create new service and business opportunities. Entrepreneurial enterprises by their nature create a market niche and fill a consumer need. These enterprises include small businesses, large enterprises, and non business service institutions.

“The entrepreneur”, wrote Frenchman Jean-Baptiste Say, “shifts economic resources out of an area of lower and into an area of higher productivity and greater yield.”

Entrepreneurship is not a ‘personality trait’; it is a feature to be observed in the actions of people or institutions. Entrepreneurs in health, education or business work basically the same way. Essentially, they do not just do something better, but do it differently.

Classical economics says that economies tend towards equilibrium – they ‘optimise’, which results in incremental growth over time. But the nature of the entrepreneur is to ‘upset and disorganise’. He or she is a wildcard that generates wealth through the process economist Joseph Schumpeter described as being creative destruction. However embracing change and assiduously trying out different things is actually the best way to invest resources.

Innovation is described as being     “…whatever changes the wealth-producing potential of already existing resources”. The best innovations can be alarmingly simple, and often have little to do with ‘technology’ or ‘inventions’.

Good innovations are very focused, not trying to do many things, but just one thing extremely well. They are not too clever, and can be used by simpletons. They attract the comment, ‘Why wasn’t this done before?’ The economist David Ricardo once said, “Profits are not made by differential cleverness, but by differential stupidity”. He meant that the most successful products or services are those which allow their users not to have to think. They save effort, money and time.

Anyone who asks the question “what does the customer really buy? will win the race. In fact, it is not even a race since nobody else is running.” The purpose of innovation is to provide satisfaction where before there was none.

In conclusion it is to be stressed that there is a need for innovation and entrepreneurship in society. To ensure of this, entrepreneurial executives must make innovation and entrepreneurship “a normal, ongoing, everyday activity, a practice in their own work and in that of their organization.”

Source: Peter F. Drucker’s “Innovation and Entrepreneurship, Tom Butler-Bowdon

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