Chapter Fourteen: Innovation and Entrepreneurship

10 essential elements that lead to meaningful incremental innovation:

1. Define quality and customer value. 2. Develop a customer orientation. 3. Focus on the company's business processes. 4. Develop customer and supplier partnerships. 5. Take a preventive approach 6. Adopt an error-free attitude. 7. Get the facts first. 8. Encourage every manager and employee to participate. 9. Create an atmosphere of total involvement. 10. Strive for continuous improvement

Describe the three key elements of the entrepreneurship process.

1. opportunity, 2. the entrepreneurial team, 3. resources:

Six Sigma

A continuous improvement program adopted by many companies in the last two decades that takes a very rigorous and analytical approach to quality and continuous improvement with an objective to improve profits through defect reduction, yield improvement, improved customer satisfaction, and best-in-class performance.

intrapreneurship

A term associated with entrepreneurship in large, established companies; the process of attempting to identify, encourage, enable, and assist entrepreneurship within a large, established company so as to create new products, processes, services, or improvements that become major new revenue streams and/or sources of cost savings for the company.

disruptive innovation

A term to characterize breakthrough innovation popularized by Harvard Professor Clayton Christensen; usually shakes up or revolutionizes industries with which they are associated even though they often come from totally different origins or industry settings than the industry they "disrupt."

CCC21

A world-famous, cost-oriented continuous improvement program at Toyota (Construction of Cost Competitiveness for the 21st Century).

breakthrough innovation

An innovation in a product, process, technology, or the cost associated with it that represents a quantum leap forward in one or more of these ways.

Explain what is meant by continuous improvement and how it contributes to incremental innovation.

Incremental innovation via continuous improvement programs is viewed by most proponents as virtually a new organizational culture and way of thinking. It is built around an intense focus on customer satisfaction; on accurate measurement of every critical variable in a business's operation; on continuous improvement of products, services, and processes; and on work relationships based on trust and teamwork. One useful explanation of the continuous improvement philosophy suggests 10 essential elements that lead to meaningful incremental innovation:

debt financing

Money "loaned" to an entrepreneur or business venture that must be repaid at some point in time.

equity financing

Money provided to a business venture that entitles the provider to rights or ownership in the venture and which is not expected to be repaid.

incremental innovation

Simple changes or adjustments in existing products, services, or processes.

Intrapreneurship freedom factors

Ten characteristics identified by Dr. Gorden Pinchot and elaborated upon by others that need to be present in large companies seeking to encourage and increase the level of intrapreneurship within their company.

invention

The creation of new products or processes through the development of new knowledge or from new combinations of knowledge.

innovation

The initial commercialization of invention by producing and selling a new product, service, or process.

entrepreneurship

The process of bringing together the creative and innovative ideas and actions with the management and organizational skills necessary to mobilize the appropriate people, money, and operating resources to meet an identifiable need and create wealth in the process.

continuous improvement

The process of relentlessly trying to find ways to improve and enhance a company's products and processes from design through assembly, sales, and service. It is called kaizen in Japanese. It is usually associated with incremental innovation.

ideagoras

Web-enabled, virtual marketplaces which connect people with unique ideas, talents, resources, or capabilities with companies seeking to address problems or potential innovations in a quick, competent manner.

Summarize the risks associated with an incremental versus a breakthrough approach to innovation.

breakthrough innovation, while glamourous and exciting, is very risky compared with incremental innovation. Breakthrough innovations, usually get beaten down or outperformed by the slow and steady approach of incremental innovation.

Explain intrapreneurship and how to enable it to thrive.

entrepreneurship in large companies, is the process of attempting to identify, encourage, enable, and assist entrepreneurship within a large, established company so as to create new products, processes, or services that become major new revenue streams and sources of cost savings for the company.

Summarize the difference between incremental and breakthrough innovation.

incremental innovation involves slight changes to existing product where as breakthrough innovation is an innovation in a product, process, technology, or the cost associated with it that represents a quantum leap forward in one or more of these ways.