DOPE NOTES
ENTREPRENEURSHIP & INNOVATION
348
, Entrepreneurship 348
Chapter 1
How to build an entrepreneurial
Organisation
DOPE NOTES 1 dopenotes.co.za
,What is an entrepreneurial organisation?
• A consensus is emerging that entrepreneurship is concerned with recognising
opportunities, coming up with alternatives and choosing the best one
• Schumpeter’s entrepreneur identifies and creates opportunities and takes
action to realise those new possibilities
o Once innovation is established, the entrepreneur’s role is over
• Seen this way, concentrating on behaviours – the parts they play rather than
the personalities of the actors themselves – it’s clear that entrepreneurial
thinking need not be limited to superhero individuals
o It should rather consider special actions
Understanding innovation
• Nowadays innovation is omnipresent, there are government for innovation,
and it is generally thought of as a good thing
• The fact that the demand for innovation is not being satisfied, even in the
largest organisations suggests that the whole area is not very well
understood, that effort may be misdirected and even counter-productive
• Innovation is about change but sometimes it is unclear exactly what has
changed
Definitions of innovation
• Thousands of books and papers have been written about innovation, yet
many of them have no agreed-on or even working definition
• Part of the confusion arises from the interchangeable uses of the terms
invention, innovation, creativity and design
o To an extent they share common themes: novelty, utility and change
• For clarity, we are going to assume the following working definitions:
o Discovery is the direction or unearthing of new knowledge
o Creativity is the generation of new ideas, usually as a response to
perceived problems and opportunities
o Invention and design are the engineering of new ideas and
discoveries into viable products, shaping them into practical and
attractive propositions for end-users
o Innovation is the successful exploitation of new ideas
§ It is the process that carries ideas into action, be they new
manufacturers or services or technologies; new organisations
and businesses; new ways of organising and doing business,
even new ways of thinking
DOPE NOTES 2 dopenotes.co.za
, Different Forms of Innovation
• Product innovation – changes in products or services that an organisation
offers
• Process innovation – changes in the way that products or services are
created and delivered
• Position innovation – changes in the context in which products or services
are introduced
• Paradigm innovation – changes in the underlying mental models which
frame organisations’ activities
Incremental and Radical Innovation
• As a rule of thumb radical innovations cannot be tracked to a previous version
• Radical innovations tend to disrupt and destroy older ways of doing things in a
process that Schumpeter called creative destruction
• But the distinction depends on your point of view; some radical innovations
have little discernible effect on users, such as changing “copper” coins to
ferrous
o Similarly, the JIT production and supply that we saw in the “ready-
meals” food market is a radical process innovation that goes by almost
unnoticed by consumers
o On the other hand, some seemingly incremental innovations can have
radical consequences
• Incremental innovations tend to be new products and processes; radical ones
tend to bring new positions and paradigms
o In sum, incremental innovation improves – radical innovation
transforms
o Radical innovation does not have to be earth shattering but it does
have to be different
o Schumpeter emphasises “Innovation is possible without anything we
should identify as invention, and invention does not necessarily induce
innovation”
o Therefore, innovation is the action of introducing a new product into the
market; a product newly brought on to the market
o To address the challenge of inclusivity, Schumpeter makes the
definition even looser: “any ‘doing things differently’ in the realm of the
economic life”
DOPE NOTES 3 dopenotes.co.za
ENTREPRENEURSHIP & INNOVATION
348
, Entrepreneurship 348
Chapter 1
How to build an entrepreneurial
Organisation
DOPE NOTES 1 dopenotes.co.za
,What is an entrepreneurial organisation?
• A consensus is emerging that entrepreneurship is concerned with recognising
opportunities, coming up with alternatives and choosing the best one
• Schumpeter’s entrepreneur identifies and creates opportunities and takes
action to realise those new possibilities
o Once innovation is established, the entrepreneur’s role is over
• Seen this way, concentrating on behaviours – the parts they play rather than
the personalities of the actors themselves – it’s clear that entrepreneurial
thinking need not be limited to superhero individuals
o It should rather consider special actions
Understanding innovation
• Nowadays innovation is omnipresent, there are government for innovation,
and it is generally thought of as a good thing
• The fact that the demand for innovation is not being satisfied, even in the
largest organisations suggests that the whole area is not very well
understood, that effort may be misdirected and even counter-productive
• Innovation is about change but sometimes it is unclear exactly what has
changed
Definitions of innovation
• Thousands of books and papers have been written about innovation, yet
many of them have no agreed-on or even working definition
• Part of the confusion arises from the interchangeable uses of the terms
invention, innovation, creativity and design
o To an extent they share common themes: novelty, utility and change
• For clarity, we are going to assume the following working definitions:
o Discovery is the direction or unearthing of new knowledge
o Creativity is the generation of new ideas, usually as a response to
perceived problems and opportunities
o Invention and design are the engineering of new ideas and
discoveries into viable products, shaping them into practical and
attractive propositions for end-users
o Innovation is the successful exploitation of new ideas
§ It is the process that carries ideas into action, be they new
manufacturers or services or technologies; new organisations
and businesses; new ways of organising and doing business,
even new ways of thinking
DOPE NOTES 2 dopenotes.co.za
, Different Forms of Innovation
• Product innovation – changes in products or services that an organisation
offers
• Process innovation – changes in the way that products or services are
created and delivered
• Position innovation – changes in the context in which products or services
are introduced
• Paradigm innovation – changes in the underlying mental models which
frame organisations’ activities
Incremental and Radical Innovation
• As a rule of thumb radical innovations cannot be tracked to a previous version
• Radical innovations tend to disrupt and destroy older ways of doing things in a
process that Schumpeter called creative destruction
• But the distinction depends on your point of view; some radical innovations
have little discernible effect on users, such as changing “copper” coins to
ferrous
o Similarly, the JIT production and supply that we saw in the “ready-
meals” food market is a radical process innovation that goes by almost
unnoticed by consumers
o On the other hand, some seemingly incremental innovations can have
radical consequences
• Incremental innovations tend to be new products and processes; radical ones
tend to bring new positions and paradigms
o In sum, incremental innovation improves – radical innovation
transforms
o Radical innovation does not have to be earth shattering but it does
have to be different
o Schumpeter emphasises “Innovation is possible without anything we
should identify as invention, and invention does not necessarily induce
innovation”
o Therefore, innovation is the action of introducing a new product into the
market; a product newly brought on to the market
o To address the challenge of inclusivity, Schumpeter makes the
definition even looser: “any ‘doing things differently’ in the realm of the
economic life”
DOPE NOTES 3 dopenotes.co.za
