Entrepreneur's Handbook
INNOVATION AND MANAGEMENT PROCESS IN VENTURES
Innovations offer benefits not only for the entrepreneur or business making the innovation, but also for society and the country. Accordingly, innovations offer benefits as an important driving force with their contribution to the national economy in three main areas. Innovation constitutes the basic dynamics of sustainable economic growth, social development and welfare, and finally competitiveness. The adoption of a culture of innovation in a country can also be a factor that will mobilize people about entrepreneurship. Thus, the entrepreneurial approaches required for the commercialization of innovations will become important for innovations.
The relationship between entrepreneurship and innovation is a relationship that should be handled in a broad framework. The entrepreneur can create a competitive advantage with innovation. In addition, when innovation is acquired as an understanding, it provides the entrepreneur with a potential to open the door to new possibilities. Entrepreneurship basically refers to the process of creating a value by taking advantage of an opportunity in the environment or through innovation. In general, entrepreneurship occurs in the form of managing a new business venture or creating new business by a person or group. When we consider creativity and innovation as the two basic dynamics of entrepreneurship, it is not enough for an entrepreneur to have only creative ideas, practices and techniques. In addition, it must be able to carry out marketing, management and organization processes in accordance with innovation management. More precisely, the entrepreneur can draw a path for himself by melting innovation and creativity in a pot. A successful entrepreneur is an individual who constantly learns and blends his creativity with what he learned to manage innovations.
Both entrepreneurs and businesses must first grasp the concept of innovation in all its aspects in order to innovate with an innovation culture. Therefore, we will talk about the definition and features of the concept of innovation by considering innovation in a holistic way. The concept of innovation comes from the Latin word "innovatus". This concept, which means "using new methods related to social, cultural and administrative issues", is used as "innovation" in English. In Turkish, the word "inovasyon" is used instead of innovation, based on its English equivalent. In this study, the concept of innovation is preferred. Of course, the concept of innovation lacks the emphasis that includes the transformation of what is expressed as "innovation" and defined as essentially new into social and economic value (benefit). This deficiency will only be completed by conceptual studies on the concept of innovation. In order to fill the innovation conceptually and draw its frame correctly, its basic features and components must be clearly revealed. For this, it should be determined what are the definitions of innovation and which emphasis they make.
Innovation is the application of a marketing method or organizational method of a new or substantially modified product, service or process to internal practices, external relations or business organization (Oslo Manual, 2005). According to another definition, innovation is the use of new knowledge of technology and the market in order to offer new products and services that customers want. In this context, new products and services are products and services that were not in the market before, have low costs and unique features, can be accepted as new among customers, and are the result of the use of technology and market knowledge (Afuah, 2003). Elçi (2006) defines innovation as transforming knowledge into economic and social benefit.
Considering the definitions above, it is understood that the concept is viewed from different angles and different definitions are made accordingly. Innovation is mainly about new things. At the same time, the effort to find new things in the market is included in the concept of innovation. Accordingly, innovation characterizes a process rather than a one-off thing. At the end of this process, it is expected to offer a value or benefit to the society, business, entrepreneur and consumer. The value or benefit to be offered will only manifest itself through the implementation and achievement of innovation.
1.1. Features of Innovation
The windows opened by different definitions on innovation show that innovation has some features. Accordingly, innovation has some organizational (business or entrepreneur-related) and social characteristics. Moreover, some features contain both social and entrepreneurial elements. These features are as follows:
Innovation is a process and is continuous: Innovation is not a one-stage activity. Instead, it is a process that consists of specific steps and stages linked together. This process emerges with the interaction of many different factors inside and outside the company. At this point, what is required is the correct management of internal and external factors and the interaction of factors related to these factors. With this feature, innovation appears as a product of a management process. Also, innovation is not something that is done and finished in one go. The innovation process needs to be continued. As a matter of fact, many different inventions and inventions are not considered as innovations. The reason for this is that the new product / service or process cannot move from the production stage to the acceptance and spread by the society. Inventions and inventions that do not create economic and social benefits do not contain any meaning beyond being a difference. Therefore, innovations should be carried out in a way that can respond to increasing competition, changing consumer demands and needs, and shortening the imitation times of innovations.
Innovation is one of the most important competitive tools for countries and businesses: Innovation provides competitive advantage not only to the business or entrepreneur, but also to the country. Therefore, countries should have innovation policies at both national and sectoral level. As a country, it should be decided to determine the strengths and weaknesses for innovation and which type of innovations will be given importance. Moreover, enterprises and entrepreneurs have to carry out a continuous innovation activity in order to exist in sectors where innovation is intense. This makes both businesses and the country competitive at a certain level. The systematic understanding to be brought to innovation will push both businesses and new entrepreneurs to follow processes and processes suitable for innovation. Thus, innovation will be able to dominate all sectors with an intensive way of doing business.
Innovation is a problem solving process: Entrepreneurs have different methods and techniques to solve the problems they encounter. For example, an entrepreneur who sees a decrease in the market share of existing products and services may face losing competitive advantage. One of the most effective methods to solve this problem is to develop a new product or service. The new product or process that meets the needs to meet more effectively and efficiently both solves the entrepreneur's problem and ensures the continuity of the business.
Innovation is a product of the integration between functions: Innovation includes all departments and employees in the business. Innovation as an integrated and coordinated activity carried out by all departments and employees requires the entrepreneur's management and organizational skills. Perceiving innovation as the task of a single department may cause significant problems in the economic and social success of innovation. From this point of view, it is useful to emphasize that innovation is not only a job of the R&D unit.
Innovation is a means of adapting to and integrating with the environment: Integration with the environment through innovation and adaptation to the environment is a must for today's businesses. The problem of competitive advantage arising from the fact that other competitors in the sector are at the forefront of innovation and the new technologies used by suppliers and intermediaries can be considered as the reasons for this obligation. In addition, the requirement to respond appropriately to changes in the expectations of customers and society makes adaptation and integration a necessity.
Innovation is a value that creates economic and social benefits: It is part of traditional teaching to avoid useless science. This situation, which is also valid for innovation, causes the difference, which does not create benefit or value, not to be evaluated as an innovation. Innovation is a phenomenon in which some changes or differences in invention or present are transformed into an economic value and a social benefit, beyond just making some changes or differences. In this context, innovation has both a social and an economic aspect.
Innovation is a tool that creates change in the lives of those who use it: Consumers; They adopt innovations that make their lives easier and make the work they do more effortless. Moreover, some innovations can make great changes in many different areas, from ways of doing business to lifestyles. Ten years ago, smartphones had not yet occupied the lives of consumers as they are today. Perhaps long before, people kept calendars to keep track of their appointments, followed newspapers and magazines to keep up with daily news, or watch various TV programs for fun. But today, smartphones fulfill a very important function both for entertainment and for the continuity of daily work.
Innovation is the product of a social and cultural ecosystem that supports it: Innovations cannot be separated from the social and cultural context in which entrepreneurs belong. Although some innovations emerge in a radical way, they generally depend on a specific organization or community culture. Innovations are likely to emerge more easily in a cultural pattern that prioritizes change and dynamism. If people think that their new, different and different ideas or practices will be accepted, they will be able to share such ideas and practices with the society more easily. Moreover, within the cultural environment created, everyone will contribute to the functioning of the innovation process interactively and will ensure the continuity of innovation. Innovation has a diffusional feature: It is usual for innovation to show a spreading characteristic to provide a social value or benefit or to offer an economic contribution. The diffusion of innovation, as a social feature, emerges in the form of imitation of the benefit people obtain through innovation by being seen by others. On the other hand, it is not desired to spread the innovations that the company has made in its own business processes and the way of doing business, because thus the business will easily be imitated by its competitors and lose its competitive advantage.
Innovation is a tool that increases the quality of life and welfare level: Innovations are mostly made to meet the demands and needs of the society better and to ensure a more comfortable life. In this respect, innovations increase the quality of life of people. Thus, it has an important effect on them to lead a more comfortable life. Parallel to this, innovation will make significant contributions to the increase in the welfare level of the society with the reflection of its contributions to economic and social life.
1.2. Types of Innovation
Innovation has been subjected to many different classifications according to their fields, degree, characteristics and effects. These different classifications show that innovation has become a concept that is so intertwined with the organization that it directs all fields and culture of the company. Innovations are classified as product-service, process, marketing and organizational innovation according to their fields. According to the degree of change and difference caused by innovations, it is classified as radical, progressive and structural innovation. In addition, a different classification has been made as individual, organizational and social innovation by considering innovation not only at the enterprise level but also at the individual and social / national level. The most common of these classifications are;
- radical and progressive innovations,
- with product-service and process innovations
- technological and non-technological innovation classifications.
Some innovations may have the characteristics of one or more of these types of innovation. For example, a product innovation can have both radical and technological features.
1.2.1. Radical and Progressive Innovations
Innovation can be called radical or gradual innovation, depending on the size of the change. A change that turns into a benefit with the development of a product / service, process or method that did not exist before is called "radical innovation". Radical innovations often lead to significant changes in an individual's life and behavior. Television, for example, was experienced as a radical innovation in the 1950s. Likewise, the Internet and smartphones have radically affected people's daily lives and practices. Radical innovations are usually carried out by small companies. Small firms or entrepreneurs thus aim to enter the sector they want to operate in. This offers significant advantages in competing with other companies in the sector. At the same time, when a radical innovation occurs, it increases uncertainty in environmental factors, leading to transformation of businesses and industry.
Unlike radical innovation, some innovations emerge with gradual improvements. The type of innovations that follow the process in which steps are taken to improve the product / service, process or method gradually and as a result, the innovation is revealed as progressive innovation. Progressive innovations help businesses improve their current capabilities and functions. Progressive innovation, as important as radical innovation, is also valuable in its emphasis on continuity of innovation. In addition to being a radical innovation of television or the Internet, innovations such as LCD screen, HD image or mobile communication, which enrich their use, can generally be considered as progressive innovations.
Radical and progressive innovation refers to a process that consists of the creation, development and maturation of products / services and methods that complement each other over time. Because radical innovations in areas such as products / services, processes and methods develop and mature with progressive innovations. Although radical innovations offer significant benefits to customers and create great changes in their behavior, progressive innovations are the changes and differences that maximize this benefit. Another important issue regarding radical and progressive innovations is the concept of "creative destruction". Creative destruction means the disappearance of the old and the continuation of this cycle with the development of new products, production methods, markets and forms of organization. Schumpeter (1934), who put forward this concept and deeply influenced the studies on innovation, argued that new technologies will take action with a dynamic process that replaces the old one, in other words, innovations will destroy the existing ones in time. Accordingly, an entrepreneur who does not innovate will not have a competitive advantage.
As radical innovations give the business a competitive edge, one of the most important tools to maintain this competitiveness is progressive innovations. Incremental innovation is easier and less costly for businesses than radical innovations. Therefore, most of the large enterprises develop their innovation strategies based on incremental innovations rather than radical innovations. Thus, they can avoid the risks of radical innovations.
1.2.2. Product / Service and Process Innovations
Product and service innovation refers to the introduction of a completely different or significantly differentiated product or service in terms of the existing features and areas of use of existing products or services. Product and service innovation can be done basically in two different ways. The first of these is the development and introduction of a product and service that did not exist before. Such a new product may sometimes be a completely new product that has never been before, and sometimes it may be a new product only for that market and sector. Second, product and service innovation is achieved by making changes and differences in existing products and services at various levels. These changes and differences will often increase the value of the product and service by changing the usage areas of the products and services and will provide a competitive advantage over competing products and services. Changes and differences in existing products and services can sometimes be made according to the needs and demands of different market groups and create new market areas for the company.
Process innovation is the changes and differences made in the pre-production supply, production and post-production distribution patterns of products and services in order to increase efficiency and value. Businesses or entrepreneurs can realize process innovation by either completely changing their systems and mechanisms, or by making certain changes or corrections. An example of such an innovation is the transition to a supply system that will provide comfort, promptness and efficiency in accessing products and services for customers.
1.2.3. Technological and Non-Technological Innovations
It may seem interesting or wrong for some that innovations may not be technological in today's world, where technology is witnessing an increasingly large part of people's lives. As a matter of fact, in the process of innovation, technological and non-technological innovations can be examined depending on the intensity of technological input. Technological innovation occurs with the development of innovation depending on a technological development or the use of existing technology, while non-technological innovation is the innovation that occurs in the presentation of products and services, storage, management and working styles of the personnel, where technology is not used much, even never. Technological innovations manifest themselves especially in the design, production of a new product or technology-based service provision. Non-technological innovations are marketing innovations such as presenting a product and service to the customer, finding different markets for new or existing products, developing a different payment method from existing payment methods, or introducing a new understanding of customer communication.
1.3. Innovation Management
As seen above, innovation can be revealed in different types, for different purposes and by following different processes. As a matter of fact, monitoring a general innovation management process within all these differences is important for both entrepreneurs and large-scale enterprises. We mentioned in the sections above that innovation is a process. At this point, it will be possible to determine how the process will be executed, controlled and maintained with innovation management.
Innovation management should not be considered independent of economic, political and social environmental factors. Therefore, providing an innovative environment is essential for the smooth and effective operation of the innovation process. This dependence on environmental factors actually reveals the realization of innovation management in a sea of uncertainty. There are technical and organizational uncertainties as well as uncertainties regarding the market and resources, which makes it difficult to question how innovation should be managed. At this point, there is a need for the entrepreneur's risk taking and managing roles. In the process of entrepreneurial innovation, these uncertainties will be overcome with the capabilities it has. At this point, it should be said that there is no single recipe for innovation management and that the entrepreneur will need an original innovation management by determining the appropriate techniques, ways and methods in his situation and process. Nevertheless, increasing knowledge about the process will enable the ways, methods and techniques to manage innovation to be enriched.
Innovation management is now handled in a more complex way than previous innovation models, which are closed to the external environment and consist of one-sided communication. Accordingly, an effective communication should be developed between different activities in the innovation management process. The figure below (Figure 1) shows an innovation management model with the knowledge-based foundation of the organization at its core. The knowledge base of the organization, business or entrepreneur is based on the values, beliefs and habits and organizational structure. The structure of the entrepreneur's knowledge-based values will prepare an important infrastructure that will support and strengthen communication and interaction in the innovation process.
In the innovation process, organizations become aware of their problems, define them and generate new information for solutions. In this process, the exchange of information is very important in order to generate new ideas. However, this information may not always be clearly stated. Sometimes, the information needed can be confidential information, and the business needs to develop effective communication tools in order to reveal this information and lead new ideas. This information is mostly hidden information that can be learned from the experience and experiences of the business. (Trott, 2002: 22).
Relationships between internal functions and external factors in the innovation process need not always be formal. These relationships can be formal, sometimes informal or social. Because the information obtained from official relations may not always be useful information for the business. Therefore, social interaction and communication between functions and with the external environment is very important, especially for revealing unexpressed (hidden) information.
Although the main actors of the innovation process are shown as internal and external disciplines, the contribution of employees, individuals and especially the entrepreneur cannot be ignored in the emergence of innovation. Because it is possible to make the innovation process dynamic and make it continuous with the success, creativity and willingness of the individuals who affect this process. In the innovation process, individuals will take on important roles such as inventors, entrepreneurs and managers. Most importantly, the decisions about innovation will be made by the entrepreneur. In this respect, the entrepreneur should be seen as the key component of the process.
The innovation management process requires the entrepreneur to make a series of decisions. Accordingly, the entrepreneur first (1) obtains the information. This information can be in the form of information obtained either by himself or from other units within the organization. Moreover, this information can occur accidentally. Then (2) the persuasion phase is passed. The entrepreneur, who is the decision unit, decides at this stage to have an attitude against or in favor of innovation. Later, the entrepreneur individual comes to the (3) decision stage and at this stage he has to decide whether to adopt or reject the innovation. While the adoption expresses the acceptance of the innovation and the decision to use it, the rejection means that the innovation is not adopted. It is implemented with the decision for adoption. (4) While a mental process is followed until the implementation phase, it is observed that there is a clear behavioral change in the application phase. Because the new is now in practice. Finally, the (5) approval stage is passed. At this stage, he can strengthen or reverse his previous thought about innovation by further reinforcing as a result of the application. As a result of the implementation of innovation, with meeting the expectations and providing the maximum benefit, the thoughts at the stage of persuasion about innovation will become stronger. However, if the innovation does not meet the expectations, its performance is low, or a better alternative innovation does not emerge, it may be possible for decision units to abandon the implementation of the existing innovation.