Part 2 (Chapter 5-8) Flashcards
What are the 8 sources of innovative ideas?
TUIPP IDK
- Trends
- Unexpected occurrences (unplanned events)
- Incongruities (difference between expectation and reality).
- Process needs (occur when an answer to a particular need is required “pain”).
- Industry and market changes (consumer attitudes).
- Demographics.
- Perceptual changes (Gen x, y, z).
- Knowledge based concepts (mobile phone now has a built in camera etc).
Describe (1) Trends and give an example.
Trends signal shifts in the current paradigm (or thinking)
PEES
SOCIETAL TRENDS: ageing demographics, health and fitness growth, senior living, social media; technology trends: smartphone technology, e-commerce, Internet advances, drones, miniaturisation;
Eg. Ubiquity of smartphones have changed the way we pay, apps such as Skip have emerged that allow you to pay ahead of the queue using your phone
ECONOMIC TRENDS: higher disposable income, dual wage-earner families, performance pressures, rising fuel costs;
Eg. Rising fuel costs have welcomed electricity-powered cars such as Tesla, where Honda have previously failed
POLITICAL TRENDS: increased regulations, terrorism, sovereign debt, military alliances, free trade agreements;
Eg. Free trade agreements have made imports more easily accessible, leading to the rise of the Kyoto ceremony-grade matcha craze in Melbourne.Spawned businesses such as Matcha Maiden, Kenko Tea
ENVIRONMENTAL TRENDS: global warming, drought, increased severity of storms , increased frequency of bushfires, pollution.
Eg. Melbourne’s PMS-y weather makes the Rain Parrot app suitable (real-time notifications of rain)
Describe (2) Unexpected occurrences (unplanned events) and give examples
Definition: An event or result that is unplanned.
Explanation: Success or failures that lead to major innovative surprises within the business / industry due to their unplanned nature.
Example:
Unexpected success: Discovery of penicillin, Viagra, Apple Computer
Unexpected failure: 2008-09 GFC lowered cost of labour supply and spawned new businesses
Describe (3) Incongruities (difference between expectation and reality) and give examples
Definition: Occur when differences exists between expectations and reality
Explanation: Innovation is the creation of solutions to incongruities
Example:
Solving the problem of how to fly in a vacuum gave us rockets and satellites.
Switching to electrons through insulators gave us transistors -> microchips -> Silicon Valley -> Digital Age
Overnight package delivery
Describe (4) Process needs (occur when an answer to a particular need is required “pain”) and give examples
Definition: An answer to a particular need is required -> Bottlenecks.
Explanation: Venture capitalists often refer to these as ‘pain’ that exists in the marketplace. Thus, the entrepreneur must recognise an innovative solution, a ‘painkiller’.
Example: Creation of new medical devices, health foods pharmaceuticals, time-saving devices, eco-sustainable green manufacturing, sugar-free products, caffeine-free coffee, microwave ovens, etc.
Describe (5) Industry and market changes (consumer attitudes) and give examples
Definition: Continual shifts in the marketplace occur all the time, caused by developments such as consumer
attitudes, advancement in technology, industry growth, etc.
Explanation: Industries and markets are always undergoing changes in structure, design or definition. Entrepreneurs need to be aware of and seize these emerging opportunities as the industry undergoes change.
Example: The healthcare industry where hospital care has undergone radical change - where home health care and preventive medicine have replaced hospitalisation and surgery as primary focus areas.
(Healthcare industry - changing to home healthcare).
Describe (6) Demographics and give examples
Definition: Trend changes in population, education, income change, age, occupations, geographic locations, etc.
Explanation: Demographic shifts are important as they often provide new entrepreneurial opportunities.
Example: As the average population age in Australia’s Gold Coast has increased (due to the influx of retirees), land development, recreational and healthcare industries have all profited. (Retirement communities for older people).
Describe (7) Perceptual changes (Gen x, y, z) and give examples
Definition: These changes occur in people’s interpretation of facts and concepts - intangible yet meaningful. Can cause major shifts in ideas to take place.
People’s desire to use their personal time better - as a result, the travel industry has capitalised on the consumers’ need to see the world while they are young and healthy, so timeshare condominiums and travel clubs have increased.
Example:
The fitness fad, caused by the perceived need to be healthy and physically fit, has created a demand for both health foods and health facilities throughout the country. Eg. ClassPass
Describe (8) Knowledge based concepts (mobile phone now has a built in camera etc) and give examples
Definition: The basis for the creation / development of something brand new.
Explanation: Invention are knowledge-based; they are the product of new thinking, new methods and new knowledge. Impossible to create something completely brand new with current thinking and level of knowledge.
This form of innovation often requires the longest time period between initiation and market implementation - due to the need for testing and modification.
Example:
Smartphone technology has advanced to transform the mobile phone into a camera, Internet access platform and music provider
Robotics
Pharmaceutical industry
What are the 4 models of opportunity?
- Mature market model of opportunity.
- New market model of opportunity.
- Alertness model of opportunity.
- Social innovation model of opportunity.
What topic can the Models of Opportunity link to?
Kinzer’s Theory of Alertness (Chapter 7)
Describe the (1) Mature Market Model of Opportunity.
- Arbitrage trading opportunity - buy low; sell high
- Leverages off demand and supply discrepancies
- Think of forex/commodity trading
- This market must be highly competitive and mature for this to be sustainable
- This activity introduces dynamics that alter the supply and demand in the existing market (i.e. Entering an existing market as a new player)
- Drives supply and demand to a new equilibrium
- By finding improving the supply chain
- Or by exploiting and creating shifts in demand
Example -> Under Armour entering the footwear market in 2006, taking on Adidas and Nike, etc.
Provide an example from the textbook of an entrepreneur who applied the (1) Mature market model of opportunity.
Carman’s Granola Bars.
BUYING LOW- Carolyn Creswell found herself offering her life savings to buy out her employer. ‘It was a small business that made homemade muesli for a few cafes and delis in and around Melbourne’, Carolyn says. ‘I worked there one day a week while I was at uni, and loved it. When the owners put the business up for sale, I thought my job would be in jeopardy so I offered them $1000 which was initially dismissed, then, finally they took up my offer.’
In 1992, despite the presence of such large market players such as Kellogg’s, Sanitarium and Uncle Tobys, Carolyn entered the muesli business and the mature breakfast cereal market with the Carman’s brand. By defining a niche market to exploit a demand opportunity, riding nutrition trends, using smart packaging and design and with the determination and persistence, Carolyn now operates a multinational business that exports to 25 countries.
Describe the (2) New market model of opportunity
- Needs innovation
- Highly disruptive in an existing market OR creates a new market
- Introduces new supply and demand dynamics
- Creates a demand for the new good or service
- Thus, a new market is introduced
- Pros behind this is it creates new jobs and businesses
- Con might be that these new markets kill off existing markets, causing a loss in the economy.
- However, the overall output of new products / services is increased for the better
- Therefore, the pros usually outweigh the con
- This form of entrepreneurship requires a commitment to R&D and creative forces
Provide a textbook example of the New market model of opportunity
Cochlear Australia.
In the mid-1960s, Professor Graeme Clark began researching the possibility of an electronic, implantable hearing device that implants the cochlea, the inner ear that contains the sense of hearing. His colleagues said a cochlear implant wouldn’t work while others warned of the unknown risks.
There was also the lack of funding and the technological challenge of fitting electrodes into the tiny inner ear. In 1978, Professor Clark’s drive to innovate paid off and the first cochlear implant surgery took place - the surgery was a success.
From this success, Cochlear Australia, the company, was born. Its purpose: to make Professor Clark’s innovative multi-channel cochlear implant commercially available all over the world. Today, over 80k severely or profoundly deaf children and adults have received a cochlear implant thanks to Graeme Clark’s radical new product that revolutionised the market for the hearing impaired.
Describe the (3) Alertness model of opportunity
- Combination of the first two opportunity models; Mature market model + New market model
- Places a higher emphasis on the knowledge of the entrepreneur
- Assumes that opportunities are out there, waiting to be discovered
- This entrepreneur has the advantage to see things differently and act upon insights through their superior knowledge
Eg. AirBnB
Describe (4) Social innovation model of opportunity
- Dedicated non-profits as well as hybrid business have given life to this new model of opportunity in the past few decades
- Does not care too much about innovating to improve economic growth
- Cares more about expanding market utility and social innovation
- Stanford researchers have stated that social innovations are products of the times, of a particular period in history
Provide examples of areas in (4) Social Innovation
Community-centred planning Emissions trading Fair trade Habitat conservation International labour standards Microfinance Socially responsible investing Supported employment
List 4 Types of Innovation. (innovation process)
DIES
(1) Invention
(2) Extension
(3) Duplication
(4) Synthesis
Describe the 4 Types of Innovation and provide examples.
DIES
(1) INVENTION
Creation of a new product, service or process, often one that is novel or untried. These tend to be revolutionary.
Example: Telephone, Taxi Services, Hotel Accommodation, Airplanes, Lightbulb
(2)EXTENSION
The extension of a product, service or process already in existence. Such concepts make a different application of a current idea.
Example: Uber, AirBnB, Facebook, Solar panel, Yacht, McDonalds
(3) DUPLICATION.
The replication of an already existing product, service or process. However, different to simply just copying - but adds the entrepreneur’s own creative touch to improve on competition.
Example: Uber -> Lyft, Uber Eats Foodora Deliver
(4) SYNTHESIS
Combination of existing concepts and factors into a new formulation or use. Taking current ideas or current inventions and finding a way so together they form a new application.
Example: Starbucks, FedEX, Smartphones
What are the 10 principles of innovation?
These principles can be taught and learnt, when combined with opportunity, can enable innovation.
1) Be action oriented - Be active and searching for new ideas, opportunities or sources of innovation.
2) Make the product, process or service simple and understandable - People must readily understand how the innovation works. If it’s too difficult to learn or out of this world, it’ll scare people away. Hence why people sometimes say that a certain innovation is too ahead of its time. e.g. The Microsoft SPOT - smartwatch from 2004.
Noticed how you probably don’t know what it is? That’s because it was too ahead of its time :)
3) Make the product, process or service customer-based - Keep the end-user in mind, this gives you the best chance that the concept will be accepted and used.
4) Start small - Build and develop when the time is right, plan for growth and expansion.
5) Aim high - Seek a niche in the marketplace for success.
6) Try / Test / Revise - Helps to work out any flaws in the product, process or service.
7) Learn from failures - Failures often give rise to innovations.
8) Follow a milestone schedule - Allows for panning and evaluation of the project.
9) Reward heroic activity.
10) Work, work, work. - #rih
What are the 4 Phases in the Creative Process
Phase 1: Background or Knowledge Accumulation (Preparation Phase)
Phase 2: Mind Incubation Process
Phase 3: Idea Experience
Phase 4: Evaluation and Implementation
Describe the 4 Phases in the Creative Process
PHASE 1: PREPARATION PHASE (knowledge accumulation)
- Successful creations generally require investigation and information gathering via:
- -Extensive reading
- -Conversations with others working in the field
- -Workshops & meet-ups
- -Anyway to improve and soak up information relative to the problem or issue being focussed on
Research into unrelated fields also sometimes works as this allows for a variety of perspectives on the problem
PHASE 2: MIND INCUBATION PROCESS
This incubation phase often occurs while individuals are engaged in activities unrelated to the subject or problem after they’ve spent a great deal of time soaking in information during the preparation phase. Let the subconscious mind work on the problem allows for creativity sometimes.
1) Engage in routine, ‘mindless’ activities (cutting the grass, painting the house)
2) Exercise regularly
3) Play (sport, board games, puzzles)
4) Think about the project or problem before falling asleep
5) Meditate or practise self-hypnosis
6) Sit back and relax on a regular basis
PHASE 3: IDEA EXPERIENCE
This is sometimes referred to as the eureka factor, this phase is also the one the average person incorrectly perceives as the only component of creativity.
Textbook honestly has jackshit on this, kind of just repeats itself on top of phase 2.
Here are some ways to speed up the idea experience
1) Daydream and fantasies about your project
2) Practise your hobbies
3) Work in a leisurely environment (e.g. at home instead of the office)
4) Put the problem on the back burner
5) Keep a notebook at your bedside to record late-night or early-morning ideas
6) Take breaks while working
PHASE 4: EVALUATION & IMPLEMENTATION
Most difficult step of a creative endeavour.
Needs perseverance and self-discipline. Needs to also know what ideas will work and what will fail. Fail early if possible. But don’t simply just give up when you run into a temporary obstacle. All about refining the idea until it works well enough.
1) Increase your energy level with proper exercise, diet and rest
2) Educate yourself in the business planning process and all facets of business
3) Test your ideas with knowledgeable people
4) Take notice of your intuitive hunches and feelings
5) Educate yourself in the selling process
6) Learn about organisational policies and practices
7) Seek advice from others (for example, friends, experts)
8) View the problems you encounter while implementing your ideas as challenges to be overcome
What is cradle-to-cradle design and social innovation?
Cradle-to-cradle design is a philosophy of innovation based upon the cyclical flows of the Earth.
One organism’s waste becomes the next organism’s nourishment.
Cradle-to-cradle products produce virtually no waste and provide the nutrients for both nature and for the next products of industry.
Every action - commercial, lifestyle, educational or governmental - ought to have a net positive effect on the environment.
Eg. edible cutlery by Bakeys
