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Entrepreneurship and Innovation – The Connection
Charles R. B. Stowe MBA, JD, Ph.D
Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Entrepreneurship and innovation are two terms that are often seen together.Â Why?Â Creating an entrepreneurial firm requires innovation to enjoy high rates of growth and higher than industry rates of profitability.Â To achieve this requiresÂ innovation: an ability to solve problems profitably while offering superior quality of service or goods.Â The challenge for the entrepreneur is to properly analyze whose problem is worthy of solving and having the imagination and practicality to inject innovation into the product or service.Â
Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Innovation is more than being clever. Innovation requires creativity that results in a practical and cost effective solution for the buyer.Â Merely being creative or different is not a true measure of innovation.Â Solving a problem in a cost effective way with excellence in quality are the ingredients of innovation. Creativity alone offers a pleasing aesthetics or cleverness, but creativity alone does not necessarily mean the customer will perceive added value.Â If a prospective customer does not see the utility or benefit from the product or service, they will likely remain prospective. Â Â
Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â One of the reasons why innovation seems to go hand in hand with entrepreneurship is that entrepreneurs wouldÂ not achieve success in building a high growth, highly profitable business if they did not bring innovative approaches to the marketplace.Â This does not mean that all entrepreneurs are inventors because innovation is not necessarily patentable or unique.Â Nor are all innovations the type that might become intellectual property eligible for Â legal protection.Â
Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Successful entrepreneurs understand that their competitive advantage is based on their superior product or service that solves a problem for their customers and not merely on developing patents.Â Nightingale – Conant originally started as a firm selling motivational audio tapes.Â When they discovered they had captured a high percentage of the market, they realized that continued growth of the firm meant relooking at their core competency.Â They learned that they had developed expertise in operating call centers, managing inventory, and arranging for delivery of goods.Â That led them to sell their solutions to firms needing fulfillment services.Â Their innovation was in the way they solved their own problem of responding efficiently to service their customers, not in any invention.Â They did not invent call centers or warehouses or delivery services.Â But they did develop useful expertise in combining these efforts to “fulfill” customer orders very, very efficiently.Â
Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Most entrepreneurs have some background in their industry which allows them to become familiar with the problems facing their potential customers.Â And armed with that industry knowledge, they realize that if they are going to grow exponentially, they must attract new customers quickly.
Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Too many prospective entrepreneurs simply get into a business they know without stopping to ask themselves exactly what they intend to bring to their future customers.Â Â That is why successful entrepreneurs understand that innovation is connected to their current and future success.