| What is the difference between entrepreneurship and innovation? | Entrepreneurship: process to identify and exploit opportunities that satisfy a market need.
Innovation: the conversion of new knowledge into a product, process or service. And getting this into commercial use. |
| What is entrepreneurial opportunity recognition? | Involves three interdependent elements:
1. Environment trends and marketplace gaps – Building on macro trends and possible marketplace gaps; observing economic, technological, social and political trends. (PESTEL)
2. Resources and capabilities – Having access to or being able to obtain resources and capabilities. (Value chain and SWOT)
3. Entrepreneur or entrepreneurial team – Drives and integrates various parts of an entrepreneurial process including scanning and spotting trends in the environment.
A combination of all 3 shows a product/service (or other) business opportunity |
| What are the 6 steps in the entrepreneurial process? | 1. Opportunity recognition
2. Feasibility analysis
3, Business plan
4,. Industry conditions and competitor analysis
5. Business model and strategy
6. Financing and funding |
| What are the stages of entrepreneurial growth | See pic |
| Why do we view managerial thinking (Casual reasoning vs effectual reasoning) in regards to entrepreneurship, and what are the differences between casual and effectual reasoning? | • Usually, when making the pricing decision, marginal revenue is set equal to marginal cost. How do we do the pricing decision for a firm that does not exist?
• How do we hire for an organization that does not exist?
• How do we value a firm in an industry that did not exist 5 years ago?
These are some of the key challenges facing entrepreneurs. However, professor Saras D. Sarasvathy argues we can use casual reasoning or effectual reasoning:
1. Causal reasoning: The owner of the restaurant set a menu and the chef cooks from that.
2. Effectual reasoning: The chef prepares a menu based on ingredients from whatever is at their disposal in the kitchen and cooks’ dinner from that. |
| What does Rudimentary theory say about entrepreneurial effectuation? | 1. Affordable loss rather than expected returns: Causation models focus on maximizing the returns for a decision by selecting optimal strategies. Effectuation predetermines how much loss is affordable and focuses on experimenting with as many strategies as possible with this
2. Strategic alliances rather than competitive analyses: Causation models (Porter, 1980) emphasize detailed competitive analyses . Effectuation emphasizes strategic alliances and pre- commitments from stakeholders as a way to reduce uncertainty and to erect entry barriers.
3. Exploitation of contingencies rather than exploitation of pre-existing knowledge: Causation models seek to exploit expertise to form the source of competitive advantage. Effectuation, seeks to exploit contingencies that arise over time.
4. Controlling an unpredictable future rather than predicting an uncertain future: Causation processes focus on the predictable aspects of an uncertain future - to the extent that we can predict the future, we can control it. Effectuation, focuses on the controllable aspects of an unpredictable future - to the extent that we can control the |
| What is the technology push vs market pull issue of innovation? | Technology push – new knowledge or capabilities created by scientists (R&D) pushes the innovation process.
Market pull – users’ wants and needs pulls the innovation process
• Lead users - pull form leading customers
• Frugal innovation - pull exerted by ordinary consumers |
| What is the Innovate product vs innovate process issue of innovation? | Product innovation relates to the final product (or service) to be sold, especially with regard to its features.
Process innovation relates to the way in which a product is produced and distributed |
| What is the Open vs closed innovation issue of innovation? | ‘Closed’ innovation – traditional approach relying on own internal resources (e.g. laboratories and marketing departments). Innovation is secretive; anxious to protect intellectual property and avoid competitors free-riding on their ideas.
‘Open’ innovation – deliberate import and export of knowledge by an organisation in order to accelerate and enhance its innovation. Exchanging ideas openly is seen as likely to produce better products/services more quickly. |
| What types of open innovation do we have? | Example of different types:
• ‘Collaboratories’ – IBM has established 10 worldwide joint development ventures with other companies and universities.
• Crowdsourcing – an organisation broadcasts a specific problem to a crowd of individuals or teams, often with prizes awarded to the best solution.
• Ecosystems – a group of mutually dependent partners interact to create value for all in a collaboration ecosystem [ARM ecosystem p.164] |
| How do we decide between open vs closed innovation | Factors to reckon with:
• Level of competitive rivalry? If it is intense, closed innovation may be better.
• ‘One-shot’ or continuous innovation? Open is better suited to where innovation is continuous (encouraging reciprocal behaviour).
• Complex and tight-linked innovation? Closed innovation is better here, in order to avoid inconsistent elements in development. |
| What is innovation diffusion? | Diffusion is the process by which innovations spread amongst users. This can vary in both scope and speed, but we can see a sort of overview below: |
| What are the supply side determinants of diffusion? | 1. Degree of improvement – more improvement encourages change and faster diffusion.
2. Compatibility – the more compatible products there are, the faster is the diffusion.
3. Complexity – over complex product or marketing slows down diffusion.
4. Experimentation – ability to test products before purchase (e.g. free trials) encourages diffusion.
5. Relationship management – ease of getting information and support increases diffusion. |
| What are the demand side determinants of diffusion? | 1. Market awareness – better promotion (especially ‘push’ campaigns) speeds up diffusion.
2. Network effects – diffusion increases as more people adopting the innovation makes it more desirable (e.g. Facebook).
3. Customer propensity to adopt – targeting to the early adopters (often younger and wealthier consumers) speeds up diffusion by creating a bandwagon effect. |
| What is the diffusion S-Curve | Diffusion of innovations is a theory that seeks to explain how, why, and at what rate new ideas and technology spread.
The tipping point is where demand for a product or service suddenly takes off, with explosive growth.
The “tripping” point is the opposite of the tipping point, when demand collapses – sometimes drastically but often more gradually. |
| What are the advantages of being a first mover? And what are the advantages of being second mover? | First-mover advantage exists where an organisation is better off than its competitors as a result of being first to market with a new product, process or service.
In theory, this creates a competitive advantage, but it also has its downsides as you are the very first to do the thing.
Advantages: Network effects, scale benefits, reputation, experience curve benefits.
Disadvantages: Pre-emption of scarce resources, buyer switching costs
Second/follower advantages:
1. Freeriding – imitating pioneer’s strategies but more cheaply
2. Learning – from the mistakes made by pioneers |
| What 3 factors should be considered when choosing between being first and second mover? | • Capacity for profit capture (can firstmover defend?) – follower is better if an innovation is easy to replicate and/or if intellectual property rights are weak
• Complementary assets (can first-mover leverage up?) – follower is better if the organisation has the resources to ‘scale up’ the start-up innovation
• Fast-moving arenas (can first-mover stay infront?) |
| What is invumbents response to entrepreneurial challenge? | Can incumbents react effectively and in time?
May be too attached to legacy assets, skills, solutions = only capable of keeping up with ‘sustaining innovations’) = vulnerable to disruptive innovation new superior performance trajectory
Incumbents can initiate various strategic responses to keep them ahead of disruptive innovations:
• Develop a portfolio of real options (limited investments that keep opportunities open for the future).
• Corporate venturing small, innovative businesses with relative autonomy.
• ‘Intrapreneurship’ the ability of individuals to perform entrepreneurial activities within a large organisation. |
| What has been the fall and rise of strategic planning? | “Strategic planning, as it has been practiced, has really been strategic programming, the articulation and elaboration of strategies, or visions, that already exist.
When companies understand the difference between planning and strategic thinking, they can get back to what the strategy-making process should be:
• capturing what the manager learns from all sources (both the soft insights from his or her personal experiences and the experiences of others throughout the organization and the hard data from market research and the like) and then
• synthesizing that learning into a vision of the direction that the business should pursue” |
