Entrepreneurs innovate. Innovation is the specific instrument of entrepreneurship. The act that endows resources with a new capacity to create wealth. © Peter Drucker.
Innovation distinguishes between a leader and a follower. © Steve Jobs, Apple.
As time goes on, nothing remains the same in our world. Seasons, weather, relationships, human emotions, everything is affected by time- everything keeps changing. The same thing is in market industry. The progress is unstoppable and if one product is a hit today, it could most likely be replaced by another one hit tomorrow. When setting up a business, entrepreneur needs to learn how to deal with these constant changes of our life in order for the business to survive. In such time of change the best way the business can prosper is to innovate (Drucker, 1985). This essay will define main concept of innovation, explain how it is important in entrepreneurship and will give some examples of well known cases of corporations becoming successful by innovating.
In order to state how setting a business related to innovating, it is essential to gain an understanding about what is exactly the meaning of innovation. Surely, the word itself is familiar to us; we can often notice someone use it while watching television, listening to the radio or surfing through the Internet. But if somebody came and asked you directly what innovation is, what would be your answer? Would it be something like “innovation is invention plus introduction” (Nordfors, 2009) or “innovation may be defined as exploiting new ideas leading to the creation of a new product, process or service” (Shukla, 2009)? Interested, I even asked my friend and after some time she spent thinking she replied:” A some change in market, I guess.” So which one of these definitions made by completely different people is the correct one? Actually, the all seem to be right is some way, and if we combine them, most likely we will get the proper answer. The word “innovation” comes itself from the Latin word “innovare” meaning to renew or change (Wikipedia, 2010). So the main concept of innovation can be seen in the expression itself. Although we often think of innovation as if it were the tangible product like the newest digital camera, for example, we need to remember that innovation is not only about the final output; the important part is the whole process of change itself (Bessant and Tidd, 2007). Another thing I need to mention is about the similar expression “invention”. It is surely involved with innovation but actually the two are have completely different meanings. Invention is “the formulation of new ideas for products or processes while innovation is all about the practical application of new inventions into marketable products or services” (tutor2u.net).
“And it is change that always provides the opportunity for the new and different. Systematic innovation therefore consists in the purposeful and organized search for changes, and in the systematic analysis of the opportunities such changes might offer for economic or social innovation” (Drucker, 1985).
The highly valued works and arguments about entrepreneurship and innovation were those of professor Joseph Schumpeter (Swedberg and Knudsen, 2010). In 1942 in his book Capitalism, Socialism and Democracy Schumpeter introduced his famous theory of innovation (Wikipedia, 2010). In this theory, he suggested that there are five types of innovations: 1) Creation of a new good or new quality of good,
2) Creation of a new method of production
3) The opening of a new market
4) The capture of a new source of supply
5) A new organization of industry (Scarlett).
In addition, he explained the related process of creative destruction as:
“The opening up of new markets, foreign or domestic, and the organizational development from the craft shop and factory illustrate the same process of industrial mutation–if I may use that biological term–that incessantly...
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