Innovation and Entrepreneurship Relationship
Published: 27 June, 2022
Innovation and Entrepreneurship Relationship
Innovation and entrepreneurship are two different concepts having entirely different meanings. However, there is a striking relationship between innovation and entrepreneurship which sometimes causes confusion.
The main difference between innovation and entrepreneurship is that innovation involves introducing something new. This can be a new business model, product, idea, or service. On the other hand, entrepreneurship involves turning a great idea into a business opportunity.
Therefore, entrepreneurship begins with innovation. Moreover, there is a risk component in entrepreneurship that is not there in innovation.
Let us consider each term separately to determine the differences between them.
What is Innovation?
Innovation is a new idea, method, strategy, or the act of introducing something new. This can be a business model, idea, service, or process. For example, introducing a new technology that can reduce the rate of electricity consumption is an innovation.
Innovations can be new business models/products/services/any form of a new idea. However, it does not have to mean the creation of something totally new. Improvements upon existing products, services, or ideas are also regarded as innovations. Innovation disrupts the status quo. In fact, it creates change but does not automatically translate to new business or entrepreneurship.
Innovations need new thinking and creativity. However, innovation does not mean invention. It can create change and add value to existing products or services. The sources of innovation are new markets, new knowledge, technological changes, economic changes, etc. These factors make a person think of new business processes, services, and products. Innovation help organizations to remain relevant and stay competitive in the industry. There is no risk involved in innovation.
What is Entrepreneurship?
Entrepreneurship is the willingness of an individual or group of people to take risks and organize or develop business opportunities from ideas in an ever-evolving market.
Business Entrepreneurs are leaders, innovators, pioneers, and inventors. They are at the forefront of economic, technological, and social movements in their field.
Entrepreneurship involves turning great ideas into business opportunities by taking risks. So, a business entrepreneur understands the business opportunity for the great ideas innovated and adds value and creativity to the innovation. Entrepreneurs always search for innovation sources and do not limit themselves to just one type of innovation. They set up business on the opportunity identified and run it profitably.
Entrepreneurs need to be risk-takers, motivators, leaders, managers, decision-makers, and planners. Successful entrepreneurship is always a result of risk-taking, commitment, and hard work.
A Business Model Canvas defines the key aspects of your business, including your Value Proposition Canvas, how you create and deliver that value, and the resulting costs and benefits. Your Business Model is likely going to contextualize many of your customer relationships. In essence, it is the Who, What, How, and Why of your business.
Difference Between Innovation and Entrepreneurship
Although there is a link or relationship between innovation and entrepreneurship, they have different meanings altogether. Here are the major differences between the two concepts:
|Point of Difference||Innovation||Entrepreneurship|
|Definition||Innovation is the process of creating something new.||Entrepreneurship identifies the opportunities in great innovations and creates opportunity, adds value, and keeps the value improving over a period of time.|
|Risk-Taking||In innovation, there is no major risk involved.||In converting an idea into a business opportunity, risk-taking cannot be avoided. Risk-taking is a key factor in entrepreneurship.|
|Durability||Innovation generally has a short durability||Entrepreneurship has long durability, which adds and improves the value of the opportunity created.|
|Interest||Innovators lose interest after the idea stage.||Entrepreneurs fail, rethink and work hard to make the venture more successful.|
|Skills||Innovators have a passion for inquiry and experiment with creative thinking.||Entrepreneurs need skills like planning, leading, managing, and decision-making. Entrepreneurs take risks, work hard, and are committed to achieving success in their business.|
|Cause||Innovation is the outcome of new thinking.||Entrepreneurship is the process of making innovation a business opportunity.|
Definitions of Innovation and Entrepreneurship:
Innovation: Innovation is the process of creating something new.
Entrepreneurship: Entrepreneurship identifies the opportunities in great innovations and creates opportunity, adds value, and keeps the value improving over a period of time.
Characteristics of Innovation and EntrepreneurshipCharacteristics
Entrepreneurship: In converting an idea into a business opportunity, risk-taking cannot be avoided. Risk-taking is a key factor in entrepreneurship.
Innovation: In innovation, there is no major risk involved.
Entrepreneurship: Entrepreneurship has long durability, which adds and improves the value of the opportunity created.
Innovation: Innovation generally has a short durability
Entrepreneurship: Entrepreneurs fail, rethink and work hard to make the venture more successful.
Innovation: Innovators lose interest after the idea stage.
Entrepreneurship: Entrepreneurs need skills like planning, leading, managing, and decision-making. Entrepreneurs take risks, work hard, and are committed to achieving success in their business.
Innovation: Innovators have a passion for inquiry, and experiment with creative thinking.
Innovation: Innovation is the outcome of new thinking.
Entrepreneurship: Entrepreneurship is the process of making innovation a business opportunity.
The Role of Innovation in Entrepreneurship
With the rising competition across all facets of human endeavors, business entrepreneurs need innovation to remain relevant. But what is the role of innovation in entrepreneurship? Basically, innovation has to do with the replacement or improvement of something. It is the particular instrument that entrepreneurs exploit to develop different innovation strategies. So, an innovative entrepreneur is one who has the ability to come up with innovative products and services to meet the market’s trends and demands.
Here are some benefits of innovation entrepreneurship:
Innovation in Entrepreneurship Benefits:
1- Creative Development
Innovation entrepreneurship enhances the creativity, nature, and design thinking process of an organization. A new brand can attain a desirable height by tapping into the creativity of employees. Entrepreneurship innovation can open the doors of various opportunities by helping the business keep up with current market demands and trends.
2- Reinforcing Your Brand
The process of brand development discloses the details which help the HR innovation team to learn different digital business models. This is highly important because it is among the main drivers of success for businesses.
3- Persistent Improvement
Innovation entrepreneurship sets the course for organizational durability when you’re making continual improvements. A good business entrepreneur will realize the importance of innovation, which will help in improving their creativity.
4- Responding to Trends and Competition
The HR innovation team responds to the current needs and focuses on predicting/positioning the business for future market trends. Innovation entrepreneurship helps you understand how to respond to future trends. This positions you to come up with solutions that make your business grow more.
5- Making the Best of Your Existing Products
We know that for a business entrepreneur, it is important to introduce new products and services. However, beyond introducing new products into the market, it’s more important to maintain innovative culture and make the best of existing products. Little improvements on existing products and services can help a company increase its profits and efficiency. So, a company can scale to greater heights by combining the enhancement of the design thinking process and with continuous innovative improvements.
6- Having a Unique Selling Point
Consumers understand that innovation culture adds value to products and services. Innovation entrepreneurship adds some interesting values that can help the company in getting positive exposure and having a unique selling point.
7- The Use of Social Media
You can leverage social media to get your innovation campaign across a wide target market. Social media can help you gather information on the basic needs of customers and how you can improve your products and services to meet those needs and demands.
Innovation and entrepreneurship are two closely related words used in today’s business world. Some may think they mean the same thing, but using them interchangeably is an error. While they center around the same idea, it is important to understand their differences. Innovation involves applying your creativity to come up with unique solutions and ideas. It is a technological or digital invention that positions you to do things you could not previously do.
Innovation is the backbone of every organization. A business that does not encourage innovation will soon bow to companies that do.
A company needs both entrepreneurs and innovators to remain relevant within its industry. While the business entrepreneur may know what decision to be made, the innovator understands how to make them work to achieve a common goal.
Entrepreneurship is about being able to discover business opportunities, and innovation involves building the opportunity.
We believe the information shared in this post will give you a better understanding of the Innovation-Entrepreneurship Relationship.
The UNITE Business Model Framework
How to Create Innovation includes a number of canvases that focus on value creation and finding the right business model to meet your customer segment and customer needs. The framework is built to inspire drastic changes that help you find a competitive advantage. Our hope is that your company grows through business model innovation, and so we again encourage you to look deeper into our website and the book.
Here is a summary of the key ingredients of the framework:
The centerpiece is the Business Model Template, which covers the six main areas of a Business Model (the Operating, Value, Service, Experience, Cost, and Revenue Models).
A Business Model can be broken out into its numerous aspects. Depending on what challenges you face, you can zoom in on your area of interest using an appropriate tool or canvas:
- Your Business Intention and objectives as well as your Massive Transformative Purpose summarize your drivers and give direction to what you do.
- The Value Proposition Canvas details the central components of your offering (the product or service).
- To dig into your Customer Segments, work with data-driven Personas.
- The JTBD Customer Job Statement and Job Map frame the JTBD of your customers.
- The Business Model Environment Canvas puts your Business Model in a market context composed of emerging trends and disruptive forces.
- The Organizational Culture Canvas helps you understand and consciously shape a culture that supports innovation.
- The Innovation team structure enables you to draft a team structure for your innovation initiative.
- Using learning and growth metrics, you can measure progress at the initial stages of development. These metrics help you focus on what really matters instead of creating a detailed business plan that will not really help you. Later on, you can expand the financial aspect of the Revenue and Cost Models with a full business case.
- The Operating Model Canvas helps you think through the Operating Model.