Entrepreneurship, Innovation and Invention
Today I’m going to talk about disciplined entrepreneurship a few steps to successfully launching a new venture. What I’m going to start with is what is entrepreneurship? because this term is used all the time it’s bandied about everyone for entrepreneurship.
However, there are two fundamentally different types of entrepreneurship that I want to talk about first of all we have entrepreneurship we have what we call
1- SME Entrepreneurship
SME stands for small medium enterprise entrepreneurship. These are fundamentally small companies that will stay small and they may have been around for a while they’re focused on local markets. They’re often service businesses that are servicing a local opportunity but they’re not something that’s looking to go global. They know there’s no there’s a need local they want to address that this could be a dry cleaner this could be a nail salon this could be a restaurant or our pizza parlors.
These are fundamentally important companies to an economy in a region because they serve a need but relative to the way they’re made up is the system that they create is one that shows kind of linear growth and then at some point. It usually taps out of the market not this is an approximation of what goes on but that’s what it look usually looked like linear growth work but you notice that if this is cash flow here from the business that there’s not a tremendous amount of cash flow out again a simplification.
However when we go to AI bees ( Business sales term) over here, which I will call innovation-driven entrepreneurship or innovation-driven Enterprise entrepreneurship.
2- IDE Entrepreneurship
We have a fundamentally different business this one is looking for global markets or super general markets to serve in the deep well. While SME entrepreneurship is usually owner the owner is usually you know maintaining control of it. IDE (innovation-driven Enterprise entrepreneurship) is going to require more cash because of the dynamics of this business. At the start, it loses money, and then it’s going to start showing exponential growth. So there’s negative cash flow at the start (if this is cash flow on the y-axis and this is the time along the x-axis ) It will initially have to require some capital be put into it but then if it works it will take off because it’s got basically unlimited markets underline.
What they’re doing here is an innovation that’s unique that allows them to address much broader markets. So they’re not just focused on the local market but much broader markets. This is very important because this IDE is getting to require additional cash as I mentioned. while SME is owned by you. You know this SME is controlled by the family or the owner this over here is going to have shareholders and a bunch of other people.
This is a very important difference here between SME & IDE Enterprenship because. While this business is a very important business. Generally, there’s more risk in these the people that are trained for these are doing you know how to manage multiple stakeholders on how to do an underlying innovation.
What is Innovation
Think outisde the box. Now we are going to look at what is innovation and define that more precisely but the point of this is two types of entrepreneurship small medium and enterprise entrepreneurship small companies distributed geographically and then innovation-driven Enterprise entrepreneurship.
Companies that might not make it but then if they make it they get to grow and be very very big these end up. In SME You don’t need a lot of these to generate a lot of jobs these IDE you need a lot. These IDE tend to be more clustered these SME tend to not be so clustered.
In the above section, we talked about the two types of entrepreneurship innovation-driven entrepreneurship and small-medium enterprises or SMEs’ reproduction. Now in this Heading section, we’re going to talk about what is innovation?
Because that’s fundamental to what’s going? what we’re going to do? going forward. So what is a fad? what is innovation?
Innovation and Invention
Innovation equals invention. Let me just stop here innovation equals invention? Often people mistake these two things for the same thing innovation equals invention they are not. Innovation is something that generates value for the world it makes something faster, better, cheaper. It gives someone some great satisfaction.
An invention is an idea, a technology, a patent in and of itself it does not generate value so these two are not the same thing and sometimes you see them interchange and that’s not correct so innovation equals invention times commercialization. So and when we look at this equation of innovation something of value it requires a new idea and then it requires someone or some organization that is going to commercialize that idea and to make it a value to the world.
So it’s important to understand that an idea by itself is not valuable ideas are cheap it’s the commercialization when combined with it that makes them extraordinarily valuable. While sometimes when I used to say invention plus commercialization in fact it times it’s a product because if I don’t have one then it’s zero then I even have no innovation if I even have no new idea I can’t commercialize anything, therefore, it’s zero. If I even have an invention and no commercialization I have no innovation as well so it’s actually a product and we found this very very helpful to help explain to people what is innovation.
When we’re talking about innovation-driven entrepreneurship so next I want to talk about what drives this when we look at the idea. People think that this drives innovation it’s, in fact, the commercialization aspect of it that’s very very difficult if you look at the most innovative company in the world.
Today which I would argue is Apple the underlying inventions that created Apple great innovations starting with the Mac did not come from themselves it actually came from Xerox PARC it was Windows icon mouse pointer that invention they commercialized to create innovation.
Which created terrific value in the marketplace and for their customers and for themselves or investors as well likewise after that you look again that the invention for the underlying enabling in idea technology from the iPod was mp3. Which did not come from Apple again came from the front offer but what Apple was terrific at was commercialization to create innovation again to create great value for their customers and their shareholders.
So this definition of innovation we found very very helpful to make clear that innovation is a combination of a new idea a new technology but then it has to be commercialized and mapped to some customer in the real world where it will generate value.