Innovation in Entrepreneurship: Amazon Case - Essay Example

?Entrepreneurship Table of Contents Table of Contents 2 Introduction 3 Literature Review 4 Practical evidence 7 Analysis/ Discussion 10 Conclusion 14References 16 Introduction The theory of entrepreneurship was introduced in the 1700s and since then the meaning of this concept has been continuously changing (Arokiasamy, 2011). Commonly, economists of the 20th century explain the meaning of entrepreneur as the one who is always eager to take the risk of launching a new project forecasting its scope of earning maximum profit. It is worth mentioning in this context that there are certain special features in a successful entrepreneur, which make them different from others. They can be differentiated from other group of professionals in terms of certain special characteristics including their leadership styles, self confidence levels, unique thinking process, devotion to a particular goal and flexibility. Apart from these skills, innovation is one of the vital characteristics, which must be possessed by each and every entrepreneur in the 21st century context to establish and manage a business to flourish. According to Peter F. Drucker, innovation is the change which drives the entrepreneur towards a better performance (Selman, n.d). The best example of the innovation strategy adopted by entrepreneurs is the invention of an unconventional online retail store, Amazon.com, by Jeff Bezos in 1995. Jeff Bezos is one of the successful entrepreneurs in the world who had pioneered the trend of online stores, initially by selling books and other products. His early interests in computers and the study of computer science and electrical engineering further led him to the setting up of the biggest online store. Amazon began its journey by selling only books in the US market and other regions of North America. Just after two months of its set up, the company started marketing its products in the other regions of the world following its rapidly growing customer demand and changing trends. Jeff Bezos also started diversifying its products from books to other items such as the CDs, electronic items, clothing and many other household products following which, Amazon today is renowned as a market leader (Gitman & McDaniel, 2008). Evidently, these activities, ranging from expansion of the business and diversification of its product line can be examined as the integral part of innovation demonstrating the innovative skills of the employees. Thus, taking the example of Jeff Bezos, this research will intend to elaborate on the significance of innovation to ensure entrepreneurial success in the 21st century context. Literature Review Innovation is one of the vital characteristics of an entrepreneur, which makes him different from others. According to Andriopoulos & Dawson (2009), innovation is the process of transforming the ideas into a newer and useful product or service, as laid down by the Department of Trade and Industry. As argued in Andriopoulos & Dawson (2009), the Department of Trade and Industry defines innovation as the ability to make successful and positive utilization of newer ideas to satisfy the gap persisting in the current market. Conceptually, innovation is commonly classified into four types, including hypothetical innovation, production innovation, position innovation and process innovation. The theoretical perspective to the concept reveals that innovative skills of the entrepreneur have become quite imperative over the past decade. Again, as Andriopoulos & Dawson (2009) note, in the year 1961, a study was conducted by Burns and Stalker to analyze the organizational innovation. With reference to this study, it can be argued that the importance of organizational innovation is immense in determining the efficiency of a successful entrepreneur. Entrepreneurial skills to define organizational innovation also tend to design the firm’s potentiality and adaptation to a chaotic environment. However, a critical perspective to this context reveals that many of the organizations have confusions between the concepts of innovation and creativity. To be noted, creativity leads to the generation of the useful ideas whereas innovation is used to describe the understanding of the newer ideas (Andriopoulos & Dawson, 2009). Barringer & Bluedorn (1999) further argued that the main theme of innovation is to collect useful information and perform regular analysis to develop and maintain the successful implementation of the innovative strategies within an organization. It is in this context that efficient entrepreneurs are commonly identified to monitor and analyze the effective innovative strategies to be executed in an organization so that it can be beneficial for the organization as well as the stakeholders associated with the entity. Since the innovative strategies have been introduced as the special characteristic of an entrepreneur, Barringer & Bluedorn (1999) argued that the major concern of the firm lies in the innovation of the products and/or services, which must be proficient within a short term so as to maintain the sustainable competitive advantage expected by the company on the whole (Barringer & Bluedorn, 1999). In the similar context, Johnson (n.d.) explained innovation as a consequence of ‘interactive learning’, which comprises of knowledge mixed with the number of ideas perceived and nurtured by the entrepreneur. This mixture of knowledge and ideas further give rise to the newer and intellectual idea in relation to the daily activities of the organization concerning the production or marketing of the product (Johnson, n.d). As can be observed from the above discussion, authors have been focused on innovation as a strategy to be adopted for the development of the business. Undoubtedly, innovation has a substantial contribution on the number of aspects related to an organization principally in terms of organizational design and knowledge distribution. According to Barringer & Bluedorn (1999), innovation is a completely a strategy used for serving the various functions of the organizational design. Arguably, innovation process has been noted as equally important for big and small firms in the currently marketplace, which must be acquired by the entrepreneur that will reversely affect the company’s profitability. In simple terms it implies that the innovation skill of the entrepreneur will be ultimately utilised by them in benefiting the company. Emphasising this particular notion, Sabelli (2008) argued that innovation is the creation of an idea driven by numerous factors. It can also be described as the personification of a number of gracious ideas. Contextually, the personification of gracious ideas needs certain social and institutional processes, which advocates that at first an entrepreneur must generate useful and creative ideas at the beginning and then focus on implementing certain advanced and integrated ideas, which may drive those noble ideas into a creative and new idea (Sabelli, 2008). Practical evidence As was mentioned above, in order to gain an insightful understanding of the concerned issue, the example of one of the renowned entrepreneurs has been taken into consideration i.e. the CEO of Amazon.com, Mr. Jeff Bezos. He is considered among the successful entrepreneurs in the world. The fundamental reason for considering Jeff Bezos as an exemplary entrepreneur has been his innovative strategy that led the company to reach new heights of success and development. The decision of Jeff Bezos in setting up Amazon.com in the year 1995 is considered as one of the best examples of innovative strategy, which eventually created a revolution in the global market stimulating the trend of online shopping. To be noted, it was his knowledge base and skill in computer science that assisted him to invent such an idea of online retail shopping. Additionally, it was his innovative skill, which led the company towards the success within a fraction of time (American Institute in Taiwan, n.d). The idea of creating an online retail shopping site was itself a dynamic strategy of innovation adapted by Jeff Bezos. Again, in the later years of the set up of Amazon.com, the organisation expanded to other shopping destinations including the one stop shopping and expansion of its products from books to others electronic items, clothing and music CDs (Amazon.com, 1998). Jeff Bezos strategies certainly contributed to the rapid growth and improvement in Amazon, which in turn proves his creativity and innovative skills (Scott, 2006). At its very initial stage, Amazon was merely renowned as the world’s biggest book store, but later it also gained considerable fame as the online retailer in the entire world. Undoubtedly, the founder of the company, Jeff Bezos was enriched with innovative skills which compelled him to take the company to the peak of success. Apparently, Bezos had a different thinking process altogether about the innovation process. He believed that the innovation process must comprise of certain vital elements, which can assist the entrepreneurs in implementing successful innovation within the organization (Burgelman, n.d.). According to Bezos, the most important requirement of the innovation strategy is team work as he believed that innovation is not an activity to be carried by a single person, rather it is a group effort. Due to this group effort, every leader of the company must cooperate with each other and adapt to the changing environment so that the innovation would be much easier process. The more the leaders interact with each other and work within a group; it will enhance the company’s productivity on the whole as it was beneficial for Amazon as well. An analysis of Bezos’ leadership and entrepreneurial traits reveal that he always dealt with the bigger and complex problems in an organized and planned way with an aim that the creativity and innovation of Amazon will be improved. The other uniqueness of Bezos innovation strategy was that he used to believe innovation to be a continuous process. According to Bezos, innovation is a lengthy process that might take few months or might extend to years and continue until the organisation strives preserving its leadership position in the industry. In such case, the entrepreneurs must have patience and work accordingly so that the innovative strategy is successfully implemented. He never tried to force innovation or implement innovation within a short period of time. Jeff Bezos also affirmed that innovation is something, which cannot be forced or compelled to be implemented. Rather, it is a particular skill, which must be possessed by every efficient entrepreneur (Burgelman, n.d.). Jeff Bezos was very much popular due to his unique innovation strategy. Evidently, it resulted in the rapid success of the Amazon.com over the years. According to Jeff Bezos, Amazon has gone through rapid and continuous the incremental innovation over the years. He also said that the majority of the value and services that the company has created for its customers are due to the incremental innovation, which is also less risky in nature (Burgelman, n.d.). Conceptually, the incremental innovation is the process of making every strategy better than what it should be (Norman & Verganti 2012). Some of the incremental innovation in Amazon has been focused on the detection of the problems regarding the delivery of the products to their respective customers and mitigating those problems in time and with accuracy. Jeff Bezos considered the incremental innovation as the most important form of innovation, which must be implemented by every entrepreneur within their organization. Evidence to the incremental innovation channelized by Jess Bezos in Amazon can be illustrated with reference to the level of customer satisfaction and the gradual development of the business in Amazon. It is owing to the incremental innovation that Amazon has long been successful in meeting the needs of the customers and expanding its products and services in accordance to the varying needs of its targeted market segment (Kenneth, 2011). Arguably, it can be stated that all these aspects have been achievable by the company due to the innovative strategy applied by Jeff Bezos as a successful entrepreneur. The other belief of Bezos regarding the innovation is that he said innovation is mostly important when the potential risk of competition is higher. In the earlier days, Amazon was the only company, which had introduced the concept of online shopping; but with the passage of time, more and more companies have been evolving in this sector raising competitive forces within this industry context. It has been fundamentally owing to this reason that the risk of competition has been observed as growing for Amazon (Mirow, 2005). Analysis/ Discussion Based on the inferences drawn from the literature search and the practical evidence taking the example of Jeff Bezos, it can be affirmed that the concept of organisational innovation as a resultant factor of the innovative skills of the entrepreneur, is very much necessary in today’s context so as to gain efficiency towards obtaining growth and profitability. As was observed, Jeff Bezos was very much innovative since his past life as a student. His innovative skills evidently led him towards the invention of Amazon.com, a pioneering online retail shopping. He was also popular as one of the successful entrepreneurs with innovative skills and knowledge of requisites needed for the efficient running of the business (Brandt, 2011). When concerning, Bezos viewpoints, it can be observed that this entrepreneur considered innovation strategy in Amazon as an essential measure to be carried on not only for the purpose of increasing the sales revenue of the company but also satisfying every desire of the customer in the most efficient manner. Bezos has also been delivering much stress on the innovation initiative as a continuous process, in a customer-centric manner. A similar notion can be observed when considering the findings obtained through the literature search where the idea of providing extra services to its customers was interlinked with the entrepreneur’s ability to innovate or bring innovation in the business process (Molian, 2005). It developed a newer technology where the details of the customers and transaction facts were recorded so that the customer will be forced to visit their website again and make their company the ultimate destination for shopping. Bezos ethical leadership skills have also been noteworthy in his innovative measures wherein, he took due measures to ensure that the details of the customers were recorded with full privacy and would also aid in developing a strong customer relations to generate a continuously increasing brand loyalty among the same (Dyer & et al, 2011). From the study of the innovation strategies applied by Amazon, it can be said that an innovative company is always led by an innovative entrepreneur, which also supports the inferences drawn in McGraw-Hill Education (2013). Apart from Jeff Bezos in Amazon there are other examples illustrating the contribution of innovative entrepreneurs in leading their companies towards innovation. Few of these examples might be stated as Steve Jobs of Apple Inc and Tom Monaghan of Dominos Pizza (American Institute in Taiwan, n.d). It is worth mentioning in this context that innovation is such an aspect, which is inherent in the entrepreneurs as a part of their daily activity. An entrepreneur must therefore derive useful ideas and generate more useful idea from that will be prove beneficial for the company as argued in Thompson (2006). An efficient entrepreneur must also not hesitate to take risks and find out opportunities for the arrangement of growth and development (Thompson, 2006). Correspondingly, it can be identified that Bezos believed business innovation can also be termed as the presentation of the new and developed product or service and a significant change in the organizational process of working. Observably, the innovation skills possessed by entrepreneurs can also be regarded as the ultimate responsibility of an entrepreneur. It is in this context that the innovative idea of an entrepreneur should always be oriented towards the scope of growth and development for the company so as to augment the efficiency of applied business practices (Thompson, 2006). As per the arguments made in Sabelli (2008), the process of innovation is a personification of the gracious ideas perceived by entrepreneurs. It implies that the collection of useful ideas is generated and transformed into newer and advanced ideas so that it can be implemented within the organization for the improvement of its productivity on the whole. All the generation of ideas and transformation of those refer to the innovation strategy of the entrepreneurs (Sarasvathy, 2001). Accordingly, concerning the practical evidences, the innovation skill has become a mandatory aspect to be possessed by each and every entrepreneur, irrespective of small or big organizations. But in this context, Jeff Bezos believe that the innovation skill is not something, which can be achieved through learning or getting through some kind of special training. Rather it is that quality which should be present within every entrepreneur to ensure organisational success (Sarasvathy, 2001). In precise, it can be admitted that Jeff Bezos has been among those successful entrepreneurs, who, with their behaviour, have given a different meaning to the term ‘innovation’, It is said about Bezos that he himself participated in every activity of Amazon in order to bring innovations in the company and motivate other members to take active participation in the group innovative process within the business. He further stated that the innovation program depends on the people existing in the organization, its process of working and the philosophies which it follows in its daily run of business (Dyer & Et Al, 2011). Conclusion The above study was conducted with an objective to gain knowledge about the innovation skills of the entrepreneurs, as a major attribute for the company to attain a sustainable growth and also prove the efficiency of the entrepreneurs. In this essay, one of the successful entrepreneurs i.e. Jeff Bezos of Amazon has been illustrated so as to obtain sufficient practical evidence regarding the concerned issue. Undoubtedly, as revealed from the above study, the various beliefs and innovative strategies of Bezos made his company attain the position of the biggest online shopping destination of the world. As per the study, the various authors have quoted the meaning of innovation in different ways. But the similarity among their definitions was that almost all of them explained that innovation indicates the generation of useful ideas and transformation of those into another newer and advanced idea. The essay also provides an in-depth understanding advocating the fact that an entrepreneurial project can be led towards success depending on the innovative ideas of the entrepreneurs. As was observed, Jeff Bezos takes active participation in almost all the operational activities of the company as he believes that innovation is a group effort. Certainly, a company can go through successful innovation with the efforts of all the members of the business organization. It is also true that innovation cannot take place within an organization over a night or a day. It is rather a lengthy process, which might take few days or years for accomplishment and continue as soon as another innovative goal is fixed for the organisation. In this case, it is very much important for the entrepreneurs to work with patience and implement the innovation strategy within the organization. Therefore, from the entire study it can be inferred that the implementation of the innovative strategy within the organization also proves the efficiency of the entrepreneurs. References Amazon.com, 1998. Amazon.com. Expanding Beyond Books, pp. 1-24. American Institute in Taiwan, No Date. Principles of Entrepreneurship. What is Entrepreneurship? [Online] Available at: http://www.ait.org.tw/infousa/zhtw/docs/enterp.pdf [Accessed November 26, 2013]. Andriopoulos, C., & Dawson, P., 2009. Managing Change, Creativity and Innovation. Sage. Arokiasamy, A. R. A., 2011. The Role of Higher Education in Promoting Entrepreneurship in Malaysia. Asian Journal of Management Research, Vol. 2. Iss. 1, pp. 520-532. Brandt, R. L., 2011. One Click: Jeff Bezos and the Rise of Amazon.com. Penguin UK. Barringer, B. R., & Bluedorn, A. C., 1999. The Relationship between Corporate Entrepreneurship and Strategic Management. Strategic Management Journal, Vol. 20, pp. 421-444. Burgelman, No Date. Strategic Mgmt of Tech. & Innovation. Tata McGraw-Hill Education. Dyer, J., & et al, 2011. The Innovators DNA. Harvard Business Review Press. Gitman, L. J., & McDaniel, C., 2008. The Future of Business: The Essentials. Cengage Learning. Johnson, A., No Date. Functions in Innovation System Approaches. Abstract, pp. 1-19. Kenneth, L. C., 2011. E-Commerce: Business, Technology, Society, 4/e. Pearson Education India. McGraw-Hill Education, 2013. E-business. Amazon.com—Not Your Average Bookstore, pp. 63-100. Mirow, M., 2005. Strategies to Achieve Market Leadership: The Example of Amazon. Introduction, pp. 1-53. Molian, D., 2005. Enterprise Development: The Challenges of Starting, Growing and Selling Businesses. Cengage Learning. Norman, D. A., & Verganti, R., 2012. Incremental and Radical Innovation: Design Research versus Technology and Meaning Change. Incremental and Radical Innovation, pp. 1-19. Sabelli, H., 2008. Bios Theory of Innovation. The Innovation Journal: The Public Sector Innovation Journal, Vol. 13, No. 3, pp. 1-13. Sarasvathy, S. D., 2001. What makes Entrepreneurs entrepreneurial? Effectual Reasoning: the problem, pp. 1-8. Scott, A. J., 2006. Entrepreneurship, Innovation and Industrial Development: Geography and the Creative Field Revisited. Small Business Economics, Vol. 26, pp. 1-24. Selman, J., No Date. Leadership and Innovation: Relating to Circumstances and Change. Distinguishing Innovation. [Online] Available at: http://www.innovation.cc/discussion-papers/selman.pdf [Accessed November 26, 2013]. Thompson, A., 2006. Entrepreneurship and Business Innovation. Introduction, pp. 1-127. Read More