How Entrepreneurship and Innovation Support the Development of an Organisation - Case Study Example

Entrepreneurship Student’s Name: Student Number: Name of University: Name of Lecturer: Unit Name: Unit Number: Date: Introduction In a world where market competition is increasingly intensifying, market players are always in search for innovative products, services and strategies that will help them achieve and sustain competitive advantage. Gary Hemel (2000) [Cited in Lukes, 2012], noted that insights into opportunities for discontinuous innovation, but not knowledge, produce wealth. He thus developed a business model comprising of four components: strategic resources; core strategy; value networks; and consumer interfaces. In the model, Hemel noted that innovation is a core part of strategic resource, which in turn helps a business to achieve strategic success (Lukes 2012). Entrepreneurship goes hand in hand with innovation with Drucker (2015) indicating that innovation is a pivotal tool of entrepreneurship. Entrepreneurship is concerned with identifying and exploiting opportunities while innovation is about creating solutions to problems. Entrepreneurs therefore use innovation to create value by coming up with and/or managing business ventures that create value by providing innovative products and services or does things in strategic ways. Innovation and entrepreneurship have been cited as the major strategic resources that an organisation can have which enables the organisation to achieve strategic success (Drucker 2015). Indeed, a majority of the widely known and successful organisations worldwide have demonstrated the role of entrepreneurship and innovation in organisational growth and development. This paper seeks show how entrepreneurship and innovation support further development of an organisation by applying resonant theories, concepts and tools of entrepreneurship. The paper uses Apple as the case study organisation. The Organisation: Apple Apple Inc. is an American-based multinational firm whose headquarters are located in Cupertino, California. The company designs, manufactures and sells a number of electronic products including computers, laptops, iTabs and Smartphones. The company also offers a number of services such as computer software and cloud services. Apple is widely known products and services include iCloud, Mac computers, iPhone, iPod and the iTune Store (Apple 2015). Ronald Wyne, Steve Wozniak and Steve Jobs founded Apple in 1976 and later incorporated the company as Apple Computer Inc. in 1977, initially focusing on personal computers. Later, the company’s management decided to deal with other electronic products, which saw the company renaming to Apple Inc. in 2007 (Apple 2015). Since it was started, Apple has progressed through the ladder of success to become the second largest in the field of information technology worldwide after Samsung Electronics, by revenue (Kim 2015). In the United States, Apple is the largest company by value (Kim 2015). The immense success of Apple is largely attributed to its business strategy which puts innovation in the forefront. Corporate Entrepreneurship Corporate entrepreneurship describes entrepreneurial activities within established organisations. The term corporate entrepreneurship embodies entrepreneurial efforts aimed at implementing innovative activities in the organisation’s products, services or process or even business model. Ireland, Covin and Kuratko (2009) define corporate entrepreneurship as a “vision-directed, organisation-wide reliance on entrepreneurial behaviour that purposefully and continuously rejuvenates the organisation and shapes the scope of its operations through the recognition and exploitation of entrepreneurial opportunity” (21). In the contemporary world of business, business organisations are highly encouraged to develop corporate entrepreneurship strategy. According to Ireland, Covin and Kuratko (2009) corporate entrepreneurship strategy is comprised of three key components. The first component is the antecedents, which include the recognition of conditions supporting entrepreneurship within the organisation. The second component comprises of the elements of corporate entrepreneurship, which include organisational culture and structure supporting entrepreneurship. According to Hashimoto and Nassif (2014), innovative businesses create an environment that motivates employees to develop an entrepreneurial attitude. Hisrich and Kearney (2012) have a similar opinion. The third component includes the outcomes of entrepreneurial activities within the organisation, which include new products, services, business model, strategy and processes (Ireland, Covin & Kuratko 2009). The concept of corporate entrepreneurship is very much like individual entrepreneurship. The two concepts involve the recognition of opportunities and then taking necessary actions to exploit the opportunity by developing and implementing unique ideas. The result of corporate entrepreneurship is the development of new products, services or processes. Corporate entrepreneurship and innovation can be described easily using models which outline and explain the steps involved in the process. A very basic model of corporate entrepreneurship and innovation is given by Damanpour and Schneider (2006) who outline three key steps involved in innovation and entrepreneurship process. The three steps include initiation, adoption and implementation as shown in figure 1. Figure 1: A basic process model for corporate entrepreneurship and innovation outlining three main steps of the process (Damanpour & Schneider 2006) However, corporate entrepreneurship and innovation are not as simple as shown in the process model above. In every phase, there are a number of tasks and steps that have to be completed before proceeding to the next phase for the process to be successful, which is seen in the form of a successful product or service. In most cases, according to Drucker (2015) the process takes so long to complete because there are numerous decisions to be made, there are so many people involved in the process and one process may take extremely long time to ensure that the best decision is made before proceeding to the next phase or step. According to Lukes (2012), it is extremely important that people involved in corporate entrepreneurship and innovation take ample time to ensure that the best decision is made, which in turn increases the chances of a successful process. Indeed, Kuratko (2007) notes that most corporate innovations do not fail because the ideas presented were not good, but because the process was hasty or because there was no appropriate and effective follow-up strategy to ensure that the idea selected is implemented properly. A process model developed by Bessant and Tidd (2015) give a more detailed process as shown in figure 2. Figure 2: A more detailed process model (Bessant & Tidd 2015) The success of corporate entrepreneurship and innovation is greatly determined by the collaboration between the various parties involved and how well the organisation overcomes obstacles. These two factors are in turn determined by the innovation and entrepreneurship strategy that the organisation has developed. Lukes (2012) identifies four types of barriers to effective corporate entrepreneurship and innovation, which include strategic, political, behavioral and systematic barriers. When an organisation does not have clear innovation and entrepreneurship goals, strategic barriers are bound to arise (Lukes 2012). Another source of strategic barriers to corporate innovation and entrepreneurship is lack of support from the top management, which is supposed to give direction (Lukes 2012). Even if the organisation does have clear entrepreneurship and innovation goals, lack of excellent leadership and support from the top management discourages entrepreneurial and innovation efforts. The second barrier to corporate entrepreneurship and innovation is systematic barrier, which also emanates from the top management, the company’s mission and vision. According to Lukes (2012) firms may come up with and develop some managerial systems and strategies over time which prevents innovation and entrepreneurship in the company. For example, a firm may be too concerned with the quality of the products it offers such that it supports compliance in the effort to ensure that the company produces high quality standards. Although such a strategy has a noble cause, it will be realised that the firm will be preventing employees from generating and trying new ideas. Behavioral barriers arise from functional blindness. This occurs when managers and employees are so much concentrated on their respective functions within the organisation such that they do not see beyond their day-to-day work (Lukes 2012). Functional blindness also arises from low self-efficacy (the notion of being incapable of doing something), perceived lack of time and being afraid of failure and consequent loss of job. Finally, political barriers often arise from power fights which may arise in an organisation, which in turn kills collaboration among employees and managers. For example, one manager may refuse to help another one on an innovation project fearing that the success of the project will result to the owner of the project being considered more useful and powerful in the organisation. From the explanation given above on the barriers of corporate entrepreneurship and innovation, it is apparent that the top management plays a central role in encouraging innovation and entrepreneurship and consequent success in such project. For instance, it is the role of the top management to create and maintain an organisation culture and structure which supports corporate entrepreneurship and innovation. This is only possible after realising that entrepreneurship and innovation are key strategic resources for any organisation. Based on this central role of the top management, an enhanced process model which outlines the steps involved and the success factors is presented. Figure 3: A more detailed innovation/entrepreneurship process model (Lukes 2012) Entrepreneurship and Innovation Activities at Apple Having explained the models for corporate innovation and entrepreneurship, the section that follows analysis innovation and entrepreneurial activities at Apple especially the way Apple applies the theories and models of innovation and entrepreneurship. When Apple was entering the electronics industry, there were other prominent players such as Nokia but with time, Apple was able to topple them. The electronics industry is characterised by major technological innovations and dynamic user needs that require industry players to always be on the lookout for new needs and then come up with innovative products and services to fulfill such needs. Electronics products are mostly non-basic products. As such, customers are willing to pay a premium price to get highly innovative products which will add value to their lives. Apple has realised this concept very well and that is why the company always strives to design and develop unique products and services and then sells them at premium prices. Apple is considered the most innovative company in the United States (Roosevelt Institute 2015). Its ranking is based on breathtaking, innovative products it keeps on launching every now and then. How has Apple managed to outdo so many other companies on innovation and consequently performance? The answer is that Apple has developed a clear innovation strategy which it uses to enhance its competitive advantage. Apple has a corporate structure and culture which inspires innovation and entrepreneurial activities in a number of ways. The first way through Apple’s structure and culture inspires innovation is through inclusion and diversity (Apple 2015a). Indeed inclusion and diversity in the workforce have been highlighted as the main factors which inspire corporate diversity and entrepreneurial spirit (Luttrell 2014). According to Kumar (2014), workforce diversity creates an environment whereby employees bring in diverse ideas while they learn from each other, which in turn inspires corporate innovation and entrepreneurship. The entrepreneurship and innovation process model shown above shows that innovation and entrepreneurship occurs when due to a conducive organisational environment, employees recognise opportunities and then develop ideas to exploit those opportunities. Therefore, another way through which a firm can foster corporate innovation and entrepreneurship is by encouraging and empowering its workforce to recognise new opportunities and consequently develop innovative ideas towards such opportunities. At Apple, the management empowers its workforce by providing employees with the necessary skills required for innovation and entrepreneurial activities. For instance, Apple has learning centers where researchers, engineers, designers and other employee groups learn, develop ideas and test them (Apple 2015a). According to Tim Cook, one of the senior managers at Apple, these learning centers are the source of Apple’s groundbreaking and innovative products and services (Apple 2015a). Apple’s corporate culture and structure which inspires innovation and entrepreneurship is greatly due to the work of one of its founders, Steve Jobs. Since its inception, Steve Jobs envisioned a company that would bring a major revolution in the information technology industry (Roosevelt Institute 2015). Indeed, during its first years of operation, Apple was greatly felt forcing industry giants such as International Business Machines (IBM) to rethink their strategies (Roosevelt Institute 2015). However, in 1983, Steve Jobs brought on board John Sculley to work as a professional manager of Apple. Sculley came in with a different idea for the company resulting to conflicts with Steve Jobs, which in turn forced Steve Jobs to resign and start a new company, NeXT (Roosevelt Institute 2015). Between 1986 (when Steve Jobs left Apple) and 1997 (after Steve Jobs rejoined Apple), the company was making huge losses because the corporate strategy that Sculley introduced was not in line with the initial strategy developed by Steve Jobs and more so because Sculley’s strategy did not inspire corporate innovation (Roosevelt Institute 2015). Job’s return reenergised Apple because under his control, the company developed a clear innovation strategy, which in turn helped the company to launch innovation products and services (Roosevelt Institute 2015). The short story of Steve Jobs shows that he developed an organisational structure and culture which inspires innovation and entrepreneurial activities. Indeed, it is worth noting that it was after Steve Job’s return that Apple decided to venture into multimedia changing from being a computer maker (Roosevelt Institute 2015). This was a major entrepreneurship activity which saw Apple boosting its sales and financial performance enormously. For instance, the introduction of iPod and iTunes enabled Apple to boost its total sales to $19.3 billion. The Introduction of iPhone boosted the company’s sales by $36.1 billion within 9 months while Apple’s iPad boosted sales by $13.5 billion within nine months after launch (Roosevelt Institute 2015). It is clear that Steve Jobs possessed entrepreneurship traits by the way he designed the organisational structure of Apple. According to Burns (2013), entrepreneurs develop strong relationships with their staff. They value informal organisational structures and consequently prefer them to formal organisational structures (Burns 2013). An informal organisational structure is characterised by lack of clear command lines and it is likened to a spider web as shown below. Figure 4: a spider web characterising the informal organisation structure that entrepreneurs prefer As shown in figure 4, entrepreneurs sit at the middle and having direct interaction with employees. While formal reporting lines still exist, it is not a surprise to find an entrepreneur dealing one-on-one with an employee because entrepreneurs value personal relationships with staff (Morris, Kuratko & Covin 2011). When Steve Job came back to Apple, he had one key goal, excellent designs. For Steve Jobs, design is everything. Accordingly, he designed the organisational structure of Apple in such a way that designers would report directly to him as the Chief Executive Officer (CEO). He simply wanted to be involved in design work right from ideation to product testing to development. He had to change the organisational structure from being too formal and rigid to being informal and flexible so that Apple could easily adapt to changes in the market. This way, employees also became flexible and the innovation process started to take shorter time between ideation to product development. Consequently, Apple was able to launch new and innovative products faster than before and than its competitors, which has given Apple a competitive advantage over its rivals. In addition, according to the American Society of Association Executives (ASAE), informal organisational structures are extremely difficult to copy (ASAE 2010). This has continuously given Apple a better advantage because it is hard for its rivals to copy its organisational structure because it is rather complex. As earlier mentioned, entrepreneurship and innovation are the most important strategic resources for any contemporary company especially in industries characterised by stiff market competition. The readily seen results of corporate innovation are the introduction of new products and services or the improvement of existing products and services. The long-term benefits of corporate entrepreneurship and innovation are the achievement and sustenance of competitive advantage in the market, which is visualised in the form of increased financial performance in terms of revenue, profitability and ranking. At Apple, huge investments in entrepreneurship and innovation have resulted to huge benefits. The section that follows investigates how entrepreneurship and innovation have supported the growth of Apple. The section also discusses ways through which Apple will continue to experience organisational growth through corporate entrepreneurship and innovation. The Role of Innovation and Entrepreneurship in the Growth of Apple Were it not for Steve Job’s entrepreneurial spirit, Apple would have most probably exited the market so many years ago. Steve Jobs is arguably the savior of Apple Inc., who came just at a time when the company needed him most. His radical restructuring of the company brought the company back to its feet enabling it to perform even better than how it was performing before. The entrepreneurial spirit of Steve Job resulted into the expansion of Apple from just making computers to designing, developing and selling other electronic products and services including Smartphones, iPads, iPods, iCloud, iTunes and the most recent and widely famous product, Smart Watch (Apple 2015). It is quite interesting to note that currently, Apple is not known for its initial products, personal computers (Mac) but for the products and services it launched after the rejoining of Steve Jobs. By categorising the initial line of business as the primary business and the other lines of business which Apple ventured into in the mid 2000s as secondary businesses, it is worth noting that Apples massive success results from its secondary businesses. Indeed, in 2010, sales from iPhone and iPad accounted for 62% of the total revenues of the company. Considering that the company was also selling other products apart from personal computers, such as iPod (Roosevelt Institute 2015), it is very clear that the sale of computers accounted for a small fraction of the company’s revenues. Supposing therefore that the company did not diversify its business into the other business, it is extremely clear that the company would not have survived the competition. Accordingly, this evidently shows how entrepreneurship, which resulted into opening up new business in other lines of business outside the primary/traditional line of business, helped Apple to grow its revenues. The establishment and maintenance of strong relationship with key stakeholders is part of entrepreneurship and a key success factor in entrepreneurship. According to Burns (2013), entrepreneurs understand the role of strong relationships in the success of the venture. Key stakeholders include staff, customers and suppliers. For example, an entrepreneur knows very well that he needs people to buy his products and services, others to provide him with the raw materials and other supplies and others to help him make the products and services. Upon having this knowledge, entrepreneurs will establish and maintain contacts with these people in the effort to assemble the strategic resources to enable them achieve their goals. At Apple, a customer is considered a very important stakeholder without who Apple will no longer exist. As such, apart from making sure that the company designs high quality, innovative products, Apple strives to keep in contact with the customer always. As Burns (2013) indicates entrepreneurs use relationship marketing instead of transactional marketing in the effort to maintain the customer as long as possible in order to achieve long-term success. This is exactly what Apple does; it pays close attention to customers’ concerns to ensure a strong relationship with customers. For example, after the release of iPhone 4, customers were dissatisfied with its antenna (Ogg 2010). Apple’s Steve Jobs realised that failure to address this concern properly would result to loss of customers. Accordingly, the company decided to give free casing for every customer who purchased iPhone 4 (Ogg 2010). Investing in customer relations of course comes with huge costs, which some companies may see as not worth undergoing. However, Apple has realised that in such a highly competitive market environment, any company intending to have long-term success must be ready to invest heavily in customer relationship management. Indeed, Apple is already reaping the benefits of its customer relationship management strategy. For instance, for the seventh year in a row, Apple has emerged best in customer satisfaction as per the American Customer Satisfaction Index (ACSI) (Ogg 2010). High customer satisfaction implies that customers are very much willing to purchase Apple’s products and services, which results to high sales and revenues. This is one of the factors explaining Apple’s excellent financial performance despite operating in a highly competitive industry. The company’s excellent customer management strategy is a perfect indication of entrepreneurship principles at corporate level, which will help Apple to achieve long-term strategic competitiveness. This customer relationship management strategy is the driving force behind Apple’s innovative products which are highly liked by customers as evidenced by extremely high sale volumes after launching. In accordance with Burns (2013), strong relationship with customers help an entrepreneur to identify market needs, recognise opportunities and then make products that customers want. The constant introduction of new, innovative products at Apple is a product of this strong relationship with its customers whereby it uses these links to learn and grow. Conclusion Entrepreneurship and innovation have been outlined as key strategic resources which will help companies to survive high market competitions and rapid market changes. Companies which have well established innovation and entrepreneurship strategies have a promising future in terms of long-term success. One such company is Apple. Steve Jobs is widely recognised as the force of change at Apple whereby his application of entrepreneurship principles during his return to the company helped the company to get back to its feet after a decade of poor financial performance. Upon his return, Apple operates on a corporate culture and structure which inspires and promotes entrepreneurial activities and innovation. Consequently, Apple has managed to outperform its rivals in several areas including financial performance and satisfaction rating. This case study has shown that innovation and entrepreneurship have a crucial role to play in the development and growth of an organisation. Bibliography American Society of Association Executives 2010, Inside the Informal Organization. [Online] Retrieved from [Accessed September 3, 2015]. Apple 2015, Apple. [Online] Retrieved from [Accessed September 4, 2015]. Apple 2015a, Inclusion & Diversity. [Online] Retrieved from [Accessed September 3, 2015]. Burns, P 2013, Corporate Entrepreneurship: Innovation and Strategy in Large Organizations (3rd Ed.). PALGRAVE MACMILLAN. Damanpour, F. & Schneider, M 2006, Phases of the adoption of innovation in organizations: Effects of environment organization and top managers. British Journal of Management, vol. 17, pp. 215–236. Drucker, PF 2015, Innovation and Entrepreneurship (2nd Ed.). New York, NY: Routledge. Hashimoto, M. & Nassif, VM 2014, Inhibition and Encouragement of Entrepreneurial Behaviour: Antecedents Analysis from Managers’ Perspectives. Brazilian Administration Review, vol. 11, no. 4, pp. 385-406. Hisrich, R. & Kearney, C 2012, Corporate Entrepreneurship: How to Create a Thriving Entrepreneurial Spirit throughout your Company. McGraw-Hill. Ireland, RD., Covin, JG. & Kuratko, DF 2009, Conceptualizing corporate entrepreneurship strategy. Entrepreneurship Theory & Practice, vol. 33, pp. 19-46. Kim, E 2015, The Smartphone Market Just had its Second Best Quarter in History but it wasn’t Just Because of Apple and Samsung. [Online] Retrieved from [Accessed September 4, 2015]. Kumar, V 2014, Understanding Cultural Differences in Innovation: A Conceptual Framework and Future Research Directions. Journal of International Marketing, vol. 22, no. 3, pp. 1-29. Kuratko, DF 2007, Corporate Entrepreneurship. Foundations and Trends in Entrepreneurship, vol. 3, no. 2, pp. 151-203. Luke, M 2012, Supporting Entrepreneurial Behavior and Innovation in Organizations. Central European Business Review, vol. 1, no. 2, pp. 29-36. Luttrell, R 2014, Diversity and Inclusion in the 21st Century: Guidelines for Managers. Public Relations Tactics, vol. 21, no. 12, pp. 12-12. Morris, MH., Kuratko, DF. & Covin, JG 2011, Corporate Entrepreneurship and Innovation: Entrepreneurial Development within Organizations (3rd Ed.). Mason, OH: South-Western Cengage Learning. Ogg, E 2010, Secrets of Apple’s Customer Success. [Online] Retrieved from [Accessed September 3, 2015]. Roosevelt Institute 2015, Apple’s Jobs: A Rebirth of Innovation in the US Economy. [Online] Retrieved from [Accessed September 3, 2015]. Read More