Innovation and entrepreneurship belong together. The work of the entrepreneur inevitably involves some kind of innovation.
We have clear profit targets. The team listed the SWOTs. The planners have a short list of Strategic Elephants. They considered strategic alternatives for addressing these major strategic issues. It is time to move on to deciding how to invest resources.
Peter F. Drucker, in his classic work Innovation and Entrepreneurship said, ‘…Entrepreneurship is neither science nor an art. It is a practice…’ p. 248.
Neither innovation nor entrepreneurship require especially gifted individuals or inspired geniuses. Of course, some great developments come from the work of outstanding individuals. However, most enterprises cannot rely on such individuals appearing on the scene. Most firms need to, and can organize the practice of innovation for use by ordinary people.
Innovation is the key skill of the entrepreneur. They need to take resources from one area and apply them to another of higher productivity and value creation potential. Firms can learn this practice of innovating, and shifting resources to areas that are more productive. An attitude of embracing change is required. Not everyone is equally ready to do so.
The SWOT analysis stage of the strategic planning process can throw up some issues pointing to the need for innovation. Common possibilities worth examining include the following -
Entrepreneurial approaches to innovation can help develop opportunities that go beyond the current mainstream value chain of the firm.
Entrepreneurship and innovation may yield improved performance in some aspect of the firm’s activities through accumulation of many small changes. Such growth through piecemeal innovation in a current line of business may become the basis for a new business.
A useful idea to keep in mind for managing innovative and entrepreneurial approaches is the McKinsey Three Horizons Model.
The way big strategic issues from the SWOT analysis relate to one another may point the strategic planning team towards -
Intrepreneurship involves encouraging entrepreneurship as a cultural norm within the organization.
Innovation is entrepreneurial when it leads to new use of resources in ways that radically change the competitive forces in an industry. This restructuring of an industry may develop what amounts to a new industry.
Most firms find it difficult to come up with major innovations. They often find other apparently less well-endowed firms disrupting them. Sometimes this happens when firms cross the line from outside their industry.
An innovation strategy used by an individual may make the concept clearer. Whitney Johnson, a colleague of Clayton Christensen has described what she learned by applying the lessons in her own career move. See her blog at Harvard Business Review.
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