Innovation and Enterpreneurship - Essay Example

Innovation and Entrepreneurship Executive Summary This work has come up with some of the roles that innovation and entrepreneurship play in a business. These roles are the advantages that a business gets for having innovative plans towards its operation. They are also the advantages that a business gains in having an entrepreneur who has the ability to run the business effectively. They include; business growth, competition, company success, among others which are all roles that innovation and entrepreneurship play in a business. The work has also identified barriers that affect the implementation of innovations in a business. These include lack of enough funding, fear of risk taking, and lack of proper and adequate measures. These are the factors that hinder growth of a business. The work also focuses on factors that facilitate or negatively affect entrepreneurial management towards innovation outcomes. These are the factors that help the business to get to the outcomes of the innovations. It also gives a case study on Architas Company and later gives recommendations on possible methods of fighting the challenges faced by organizations towards innovation achievement. Introduction The rising harsh economic conditions have led to a high competition in the business industry. All those people who have ventured in to the business industry are looking possible means to do away with the rise in competition, in the market. Several businesses providing same services to customers exist in today’s market, and it is only the strategically placed and stable businesses that will stand a chance to succeed in the market. Their success will depend on the innovative measures the business takes to beat the competition and the high demand for services provided to the customers. It is these measures that will enable the business to provide services that are rare to other business owners. The work that follows, presents the roles and values of innovation and entrepreneurship in a business, barriers to effective innovations and entrepreneurship, and possible solutions to the problems. Background information Innovation is the process of translating an idea or invention into a good or service to create value or cause customers to pay for it (Dodgson and David, 2010). Any idea invented by a business for satisfaction of customer’s need must satisfy the customer for it to become innovative. Innovation involves a number of activities; imagination of a viable idea that will extract value from the resources, application of possible information, and the process of converting the ideas into useful products. Innovation becomes useful when the company applies the ideas to meet the needs and demands of the customer (Dodgson and David, 2010). It is the ideas successfully applied in organizational outcomes and processes. Entrepreneurship is the process of recognizing and seizing opportunities, converting them into workable or marketable ideas by adding value to them through time, money effort or skills. It is assuming the risks in the implementation of these ideas and the realization of the benefits from these efforts to beat the high competition in the market (Kuratko, 2009: 4). Entrepreneurship is the process of creating increment of wealth through innovative practices and ideas that aim at meeting the demands of the customer in the market. It is the process that leads to the provision of better services and goods according to the line which the business ventures (Kuratko, 2009: 5). Entrepreneurship is an ideological process of change, creation, and vision, which requires application of passion and energy in the creation of ideas and solutions. Roles of innovation and entrepreneurship in the economy Innovation and entrepreneurship go hand in hand, in any business. The viability of a business in implementing its innovative ideas depends on its entrepreneurial ability, that is, whether it has the best human and material resource needed for meeting the goal. Entrepreneurship and innovation play an important role in the economy; i. Business growth It is through innovation that a person thinks of starting a business. It takes innovation for the person to gauge the market situation and the communities’ needs and entrepreneurship to come up with a business that will fulfill the needs of the society. Businesses that are starting are usually a plan of the person establishing it. The small business is important for economic growth because they bring financial gain, which keeps the economy growing, and without them, the economy would not survive (Shukla, 2011). The ability to come up with an idea of producing a new product is as a result of innovation and, the ability to have the product, results from entrepreneurship. Business growth is a role played by innovation and entrepreneurship and the value they add to the economy is; the ability of growing to a bigger business that provides services at a wide range to meet the changing customer needs. ii. Competition Competition in the market is at a higher rate, given the harsh economic times in the developing world. The different and changing needs in the society call for the establishment of many businesses to cater for them (Shukla, 2011). It needs businesses with the most innovative entrepreneurs to fight the customer’s demand. These demands will lead to competition as many businesses get established to meet customers’ needs, leading to production of good quality products in order to win the customers’ wish. This leads to high sales, which is a benefit to the economy. iii. Business/Company success Innovation and entrepreneurship play a role in the success of any business. The companies started keep innovation as part of their organization, and entrepreneurs who are the innovators do not just see one need and stop innovation (Shukla, 2011). They see the continued rise in customers’ needs and keep coming up with multiple ideas, which help in creating multiple solutions to problems. The companies take the employee’s creativity to be a community’s solution to the needs, and they (the companies) organize trainings and seminars to keep the employees encouraged to create a new thing, which is in turn, a financial gain, to the company. iv. Product quality promotion Innovation and entrepreneurship play the role of promoting the quality of a product in a company. This happens due to the high competition in the market. The companies will seek to produce the best quality of products so as to win customers. It is through innovation that the company will look for means of improving the products quality (Shukla, 2011). The sale of good quality products to customers will increase purchases, and this boosts the economy. Barriers to innovation and entrepreneurship Since innovation and entrepreneurship are important aspects in the growth of a business, several factors act as barriers to these activities in many companies; i. Inadequate funding Any business’ success requires enough funding to implement the innovation and entrepreneurship processes. With the many and diverse sectors within the same organization, financial managers of the organization should dispatch the finances in the right criteria to ensure that some departments do not fail to meet their obligations. Many companies rely on funding from other established programs in the company so that they can fund innovations. This becomes a challenge because many of these companies receive funding annually, a practice that does not cater for the real world business opportunities (Andrews, 2006). The current business market competition requires adequate funding because many businesses flock the market, which brings a need to meet the competition in the market. This becomes a challenge given that there will not be the ability to fund any innovation strategy that arises. ii. Risk avoidance Most of the business people fear getting into risks because they want to maintain their health, wealth and peaceful minds. This becomes a barrier to innovation and entrepreneurship because no business will succeed without having to get into the risks involved. Many of the innovations in business fail because the process itself is risky and people turn away from it (Andrews, 2006). However, a good view of the balance between risks and benefits can help create an environment which nurtures innovation rather than killing it. iii. “Siloing” This is the tendency of some part of an enterprise being selfish that is, not happy when others benefit. Those in authority create identities, delegate duties and put rules and defending themselves. Innovation calls for crossing of boundaries in the organization. It calls for deals on who will run things and the process through which profits are shared. The processes through which things are done, for example, in case of a large enterprise; the division of profits becomes a barrier because the organizations that do not benefit or those who fail to get a fair share of benefits cut the innovations that would benefit the whole enterprise, (Andrews, 2006). iv. Time commitments Time is very important in an organization although it is a scarce commodity. It is the duty of management to ensure that every opportunity in the organization gets utilized the best way possible (Andrews, 2006). The time scheduled for every activity in the organization should be gauged on how the activity performed is positioned to pay for it. Any innovation, which its implementation is paying off, should be allocated time to work on it. Every innovation should be allocated the time worth its payment. Time becomes a barrier to innovation if the payment given to those involved is not worth the time they spent (Andrews, 2006). v. Incorrect measures As much as tangible measures affect the progress of an enterprise, so are the intangible measures. Many organizations consider tangible measures like, revenue, profits and market share but do not consider intangible measures such as reputation, knowledge, attractiveness to talent, leadership, and other assets, given that all contribute to the true value of an enterprise (Andrews, 2006). This difference in consideration on which measures are taken against which affects also applies when it comes to innovation. Most innovations according to Andrews are difficult to explain on the return they make on an investment. There are those innovations that may create new markets, but may not be favored when compared to other projects because they demand a standard budgeting process. The comparison of these innovative projects against those that require a simpler budget creates a barrier to implementation. Organizational factors that facilitate entrepreneurial management towards innovation outcomes The ability of an entrepreneurial management to promote innovation in an organization depends on different factors, which include; i. Entrepreneurial Skills and Psychological Orientation The ultimate success of an entrepreneurship depends entirely on the entrepreneur. The entrepreneur must be equipped with these qualities for the success of the entrepreneurial venture; hard work and persistence, ability to manage and minimize risks, ability to business plan, and a need-oriented motive to achieve a goal (Stokes and Wilson, 2010). He should also have the ability to handle the employees in a manner that will promote production and enhance the zeal to work towards achieving the organization’s goal. The ability of the entrepreneur to learn from problems or mistakes and rapidly adjust their business accordingly is a key factor to success. It also calls fro the ability of the entrepreneur to understand which strategies can be adjusted quickly and which decisions, once taken, have longer term impact (Stokes and Wilson, 2010). ii. Availability of resources Resources range from capital, human assets, infrastructure, utilities and raw materials. The availability of capital enables the entrepreneur to collect all the other factors and use them to produce goods and services. All enterprises depend entirely on the human resources available; hence no success can be achieved without human resources. For any product to come into a form, it must have once been a raw material (Stokes and Wilson, 2010: 239). All productions rely on the raw materials. Entrepreneurial success also depends on physical infrastructure such as good roads, communication facilities, and power, without which there would be a lack of success. Any insufficiency or lack of resources leads to poor or no production achievement of the organization. iii. Flexibility Flexibility is the business’ ability to adjust to changes in the business. The core competence of an organization is its competitiveness. Flexibility helps the firm to adjust to changes and utilize the available resources both material and human to produce different outputs (Stokes and Wilson, 2010: 239). iv. Customer service Customers are the main concern of any business. The ability of an organization to meet the customers’ demand is the sole goal in business. Customer service is behavior that should be considered in an organization because it is one of the factors that will facilitate innovation to meet the needs of the customer (Stokes and Wilson, 2010: 239). Customer services include production of improved products and advancing the level of customer services already provided, through new technologies. v. Verbal and Psychological violence Organizations are naturally interpersonal, and interactions among people in the organization may take different forms. These relations can be positive and constructive, others with little impact, and others with negative and destructive impacts (Griffin, O’leary and Pritchard, 2004). Managers and supervisors may use their authority to discipline employees with constructive criticism, which when positively taken helps shape the behavior of employees, but in other cases verbal interactions may constitute verbal or psychological abuse. These relations if taken positively will result to good performance of innovations in the firm. vi. Physical abuse There are instances where employees get exposed to physical violence. These activities even lead to murder. They can be as a result of overworking of employees where the employees are not regarded as human in the work to which they get exposed. A situation like this in the work place negatively affects the success of an enterprise (Griffin, O’leary and Pritchard, 2004: 10). vii. Sexual harassment Any work place that associates with sexual harassment on workers can not succeed in their goal. This practice majorly occurs to female workers by their employers of the opposite sex or even to male workers. Sexual harassment affects and damages self-esteem or self concept of the employees and causes stress or physical damage. This will affect the organization financially and shun its reputation (Griffin, O’leary and Pritchard, 2004: 11). viii. Unsafe working conditions These are conditions that expose the employees to dangerous behaviors like using machines in abnormal ways, handling chemicals and other toxic materials without following normal safety precaution (Griffin, O’leary and Pritchard, 2004: 11). Some chemicals are poisonous and harmful to human beings and if not well handled may lead to hazardous conditions on the handlers. All these factors affect the ability of the entrepreneurial management either positively or negatively in trying to implement its innovations. Case Study The case study of this work focuses on Architas, which is an organization that provides multi- manager solutions (Architas, 2013). It deals with funding other organizations and also giving management advices. An organization like this that deals with other organizations requires high management strategies that will be used to give advice to others. The high competition in the business market calls for all organizations to have innovative plans so as to beat the competition. Factors that have helped Architas in its innovation Flexibility For every business to be successful, it has to be ready to face any changes that flock in the business market. The challenges must be met by well planned approach. On this note, organizational flexibility dictates how the organization meets its challenges. According to Stokes and Wilson (2010), flexibility is the ability to embrace the changes in the business market, for example, price fluctuations, change in money market among others. Architas management has leaders already trained on business management and are able to embrace the changes that face their business. Entrepreneurial skills Architas is an organization with a management team equipped with entrepreneurial skills to beat the high competition in the market. It has people who can come up with ideas and implement them so that it meets its goal of providing services to other management firms. Organizations that venture in the business of money lending are at high risks of changes in the market such as the fluctuating changes in the money market. Architas has entrepreneurs trained to take risks in order to perform in the market. However, the organization has faced different challenges in trying to implement these innovations. Just like any other organization, the company faces several challenges as they try to bring to effect some new ideas and in efforts to implement them. The following are barriers faced by Architas in its business operational practices. Competition Competition in every industry dictates the success that firms eventually achieve. This is because every firm aims at winning a large market share. In this endeavor, they ultimately reach high standards. Notably, several organizations venture in this line of business where the rising customer demands have led to competition from other firms providing the same services. These organizations have made innovations to improve their businesses, and this brings a high rate of competition to Architas. During the organization’s February report on funds, they say they are aiming at providing a higher level of income as compared to prevailing rates in the market (Architas, 2013). Lack of funds Lack of funds is a major draw back in any business organization. It limits the ability to implement the innovations of the business. Architas being a firm that deals mostly with funding services is faced with lack of funds and is doing any possible means to meet this challenge. Conclusion The rise in competition, in all lines of the business market calls for business organizations’ preparedness so as to meet the daily changing customer needs. Many businesses have risen to cater for the demands of the customer, and this calls for high innovative plans that will help organizations to meet the stiff competition. The organizations need to have management developments that will help utilize the resources that are available in the market be they human or material, so as to cater for the organizations’ progress. This means the organizations will have to embrace all the factors that support or facilitate the implementation of innovations in the organization. The organizations need to organize for training for entrepreneurial skills for their management such that they get to be able to undertake any requirement in the changing market. Flexibility is important in the organizations as there are changes that occur in the market which need the organization to withstand (Stokes and Wilson, 2010). Recommendations For Architas to succeed in its innovation, the factors mentioned above need a positive consideration in their business organization. There are areas which are critically important for the organization to progress in its business; The organization needs a trained entrepreneurial team to take care of the implementation of its innovations. Although this calls for use of finances in training the management, the output of the group is more profitable than the finances involved in training. The organization also needs to equip itself with the appropriate resources. These resources, which range from human to capital, are the essentials in a business and dictate any progress that the organization will make. Architas should also seek to improve its services to customers. The high competition in the market calls for innovation plans so as to beat the customer demand in the market. These customer services call for improved technology due to the changes technology even in the business line (Stokes and Wilson, 2010). Bibliography Andrews, Peter. (2006). Barriers to innovation. Available from https://www-935.ibm.com/services/uk/igs/pdf/g510-6342-00-5barriers-etr.pdf [Accessed on 12 April 2013] Architas, 2013. www.architas-mm.com Dodgson, Mark & Gann, David. (2010). Innovation: A Very Short Introduction. New York. Oxford University Press, 2010 GRIFFIN, R. W., O'LEARY-KELLY, A., & PRITCHARD, R. D. (2004). The Dark Side of Organizational Behavior. Hoboken, John Wiley & Sons. http://public.eblib.com/EBLPublic/PublicView.do?ptiID=468732. KURATKO, D. F. (2009). Entrepreneurship: theory, process, practice. Mason, Ohio, South-Western Cengage Learning. Shukla, Amitabh. (2011). Importance of innovation in Entrepreneurship. Available from www.paggu.com/entrepreneurship/the-importance-of-innovation-in-entrepreneurship/ [Accessed on 12 April 2013] STOKES, D., & WILSON, N. (2010). Small business management and entrepreneurship. Andover, Cengage Learning. Read More