APS College of Engineering,

(Affiliated to Visvesvaraya Technological University and Approved by AICTE, NAAC Accredited)

Somanahalli, Kanakapura Main Road, Bengaluru-560116

Department of Electronics and Communication Engineering

Subject Name: Technological Innovation Management and Entrepreneurship

Subject Name: 21EC61
Semester : 6th
Academic Year: EVEN 2023-2024
Module-4

Faculty Name: Dr. Naik D C

Assistant Professor,
 Module-4
Entrepreneurship: Introduction, Evolution of the concept of
Entrepreneurship, Entrepreneurship today, Types of
Entrepreneurs, Intrapreneurship, Entrepreneurial
competencies, Capacity Building for Entrepreneurs.

Identification of Business Opportunities: Introduction,

Mobility of Entrepreneurs, Business opportunities in India,
Models for Opportunity Evaluation.
INTRODUCTION
• Historically, entrepreneurs have altered the direction of national economies,
industries, and markets.
• In addition to increasing national income through job creation, entrepreneurship
has always served as a bridge between innovation and the marketplace.
• Let us look at some ways in which entrepreneurs can participate in the
development of an economy.
1. Contribution to GNP and per capita income: Entrepreneurship contributes to
economic stability by introducing new products and services in the market and
encouraging effective resource mobilization.
• This helps in increasing the gross national product as well as per capita income of
the people in the country.
• Economic stability leads to increased institutional investment for productive
activities and is a sign of economic growth.
2. Employment generation: The government is limited in its ability to
create employment opportunities for the country's population. Entrepreneurs
play an effective role in reducing the problems of unemployment in the
country.
• Entrepreneurs are not only self-employed but also provide employment to
others. Entrepreneurial activities lead to other activities, generating a
multiplier effect in the economy.
3. Balanced regional development: The development of enterprises in less-
developed regions promotes balanced regional development in the country.
• In addition, entrepreneurship stimulates the distribution of wealth and
income to more and more individuals (such as stakeholders) and
geographical areas, thus benefiting larger sections of society.
4. Promotion of export and trade: Entrepreneurship promotes the country's
export trade and earns foreign exchange. When required, this earning can
help combat the country's import dues requirements. International trade
brings economic strength and techno-economic reliance.
5. Improvement in the standard of living: Entrepreneurs bring a wide
variety of products and services into the market.
• This increases competition in the market and makes it possible for people
to avail of a better quality of products and services at lower and more
competitive prices, resulting in an improvement of the country's overall
standard of living.
6. Increased innovation: With the liberalization of the Indian economy, the
increased competition in the domestic and international market has
encouraged entrepreneurs to be more creative.
7. Overall development of the economy: Entrepreneurs create new
technologies, products, processes, and services that become the next wave of
new industries, and these in turn drive the economy.
• Entrepreneurs are change agents in society. They create wealth and value,
and generate employment in society. This naturally leads to social and
economic growth.
• The National Entrepreneurship Awards have been instituted by the Ministry
of Skill Development and Entrepreneurship (MoSDE) to encourage a culture
of entrepreneurship across the country.

• These premier awards seek to recognize and honor entrepreneurs and

entrepreneurship ecosystem builders for their outstanding efforts.

• The National Entrepreneurship Awards seek to recognize the efforts and

achievements of exceptional entrepreneurs and those individuals and
organizations who are working in the field of entrepreneurship development.

• The Awards also seek to highlight models of excellence for others to emulate
and improve upon.
EVOLUTION OF THE CONCEPT OF ENTREPRENEURSHIP
• How an entrepreneur is perceived and defined by society has changed several
times over the last few centuries.
• The word entrepreneur originally stems from French and, literally translated,
means someone who undertakes a difficult task. An early example of an
entrepreneur is Marco Polo, who attempted to establish trade routes from Venice
to the Far East.
• In Europe, during the Middle Ages, the term entrepreneur was used to describe
both an actor and a person who managed large production projects, such as
someone in charge of great architectural works, such as castles and fortifications,
public buildings, abbeys, and cathedrals.
• Later, in seventeenth-century Europe, an entrepreneur began to be regarded as a
person bearing risks of profit or loss in a fixed contract with the government
Richard Cantillon
• Richard Cantillon, a noted Irish-French economist, developed one of the
early theory: entrepreneurship.
• around 1730 and is regarded by some as the founder of the term
"entrepreneur” in its modern sense.? In this book, he argued that
entrepreneurs made conscious decisions about source allocations, seeking
higher yields for their money and other investments.
• Adam SmithIn 1776,
• Adam Smith published An Inquiry into the Nature and Causes of the
Wealth of Nations, where he stated that an entrepreneur has all the
knowledge necessary to become a great merchant, and is hindered from
becoming one only by insufficient capital.
• He introduced the concepts of liberal and entrepreneurial capitalism.
Jean-Baptiste Say
• Jean-Baptiste Say (born in 1767) believed that entrepreneurs behaved with
exceptional insight to fulfil society's needs through the process of taking risks.
Say defined an entrepreneur as a person able to recognize opportunities and
manage them effectively.
Francis Walker
• He defined an entrepreneur as one who is endowed with more than average
capacity to organize and coordinate factors of production like land, labour,
capital, and enterprise.
• According to him, an entrepreneur is a pioneer, a leader, and a captain of the firm.
Hence, any profit that the firm makes depends on his efficiency and superior
talent.
Joseph Schumpeter
• In the late-nineteenth and early-twentieth century, entrepreneurs were frequently
not distinguished from managers and were viewed mostly from an economic
perspective.
• In the middle of the 20th century the notion of an entrepreneur as an innovator, an
individual developing something unique, was established. Joseph Schumpeter
(1883-1950) in his work The Theory of Economic Development extended the
concept of entrepreneurship to include the importance of innovation.
• In his words, "the function of entrepreneurs is to reform or revolutionize the
pattern of production by exploiting an invention or, more generally, an untried
technological possibility for producing a new commodity or producing an old one
in a new way, by opening up a new source of supply of materials or a new outlet
for products, by reorganizing an industry and so on.
ENTREPRENEURSHIP TODAY
• The scope of what entrepreneurship involves will continue to change and evolve
with global economic, social, and political changes.
• Although there have been a number of generally acceptable definitions, most of
which vary in focus and scope, there is no official definition of entrepreneurship.
• However, increased academic interest in entrepreneurship is bringing a sharper
focus to bear upon the subject:
Who Is an Entrepreneur?
• The word "entrepreneur" is derived from the French verb enterprendre ("to
undertake"). The word was originally used to describe people who "take on the
risk" between buyers and sellers or who"undertake" a task such as starting a
venture.
• The fifth edition of the Oxford Advanced Learner's Dictionary defines an
entrepreneur as a person who starts or organizes a commercial enterprise,
especially one involving financial risk. The process of creation of a business
• The twentieth century saw a predominance of the personal perspective in
the conceptualization of entrepreneurship.
• In his book The Entrepreneurial Mind, Jeffry Timmons defined
entrepreneurship as "the ability to create and build something from
practically nothing." His definition captures the idea that entrepreneurs are
like magicians, creating thriving organizations out of good ideas, hard
work, business dealing, and personal skills.
• Entrepreneurship is the dynamic process of creating incremental wealth.
The wealth is created by individuals who assume the major risks in terms
of equity, time, and/or career commitment or provide value for some
product or service.
• The product or service may or may not be new or unique but value must
somehow be infused by the entrepreneur through receiving and locating the
necessary skills and resources.'
How Do I Become an Entrepreneur?
The road to becoming an entrepreneur comprises the following steps:
Step 1: Generating business ideas and identifying business opportunities-
Business opportunities must first be identified through an evaluation of business
ideas. A business opportunity is a favourable set of circumstances that creates a
need for a new product, service, or business.
• Business ideas may be generated in the following ways:
• Observing trends: Social and economic trends, technological developments, and
political and regulatory changes often create opportunities for entrepreneurship.
For example, a social trend like more women entering paid employment creates
the need for more child care centres.
• Finding gaps in the market: A lack of a product or service in the market is a
barely-disguised opportunity for entrepreneurs.
Step 2: Conducting a feasibility analysis—A feasibility analysis is the
process of determining the validity of a business idea.
• The important facets of a feasibility analysis are market analysis, technical
analysis, financial analysis, economic analysis, and ecological analysis.
• If the proposed business is found to be feasible after the conduct of a
feasibility study, then a business plan is sketched out.
Step 3: Making a business plan A business plan is a written document,
typically 20-30 pages in length, which describes what a venture intends to
accomplish and how it plans to achieve its goals.
• It serves a dual purpose both inside and outside the firm. Inside the firm, it
enables the company to develop a roadmap to follow in executing its
strategies.
• Outside the firm, it introduces potential investors and other stakeholders to
the business opportunity and how it is pursued. It also provides the business
Step 4: Arranging funds Once a project is selected, the two most common
sources of funding for a venture are equity and debt financing.
• Equity financing means exchanging ownership in a firm for funding. The
various forms of equity financing are angel investing, venture capital,
private equity, personal savings, and investments from family and friends.
• In debt financing, money is borrowed to run a business. The various forms
of debt financing are: funding through bank loans, financial institutions,
and credit cards.
Step 5: Setting up an enterprise and building a venture team —To set up
an enterprise, building a new venture team is very important.
• A venture team, also called promoters of the venture, is made up of the
people who will transform an idea of a venture into a fully functioning
firm.
Advantages of Being an Entrepreneur
There are many advantages of being an entrepreneur. Some of them are listed
below:
• An entrepreneur is an independent person who makes his/her own
decisions and acts on them.
• An entrepreneur has enough scope for innovation.
• An entrepreneur often has the opportunity of realizing dreams .and
achieving excellence while simultaneously contributing to the welfare of
society.
• An entrepreneur usually has immense job satisfaction.
• An entrepreneur can bring about the socioeconomic transformation of a
region by generating employment for others and creating wealth.
• An entrepreneur can make a significant contribution to the development of
the country.
TYPES OF ENTREPRENEURS
• Entrepreneurs may be classified on the basis of functional characteristics,
personality types or schools of thought.
• Entrepreneurs may be classified according to functional characteristics:
1. Innovative entrepreneur: Innovative entrepreneurs are innovative in
their approach to business and introduce new products, new production
methods, or discover new markets or new forms of organization in their
enterprise.
2. Imitative or adoptive entrepreneur: Entrepreneurs belonging to this
category imitate products, production methods, and new forms of
organization in their enterprise. This category of entrepreneurs can be
found especially in developing and underdeveloped countries, partly due
to a lack of investment in research and development.
3. Fabian entrepreneur: Fabian entrepreneurs are not proactive in nature
and do not respond very much to changes in the environment. Instead,
they change only when there is a threat to the existence of their
enterprise.
4. Drone entrepreneur: Drone entrepreneurs are conservative and
complacent in nature and like to maintain the status quo. These
entrepreneurs may incur losses and have to close down their enterprises.
• Based on nine personality types, entrepreneurs may be classified as the
improver, the advisor, the superstar, the artist, the visionary, the analyst, the
fireball, the hero, and the healer.
Again, based on schools of thought on entrepreneurship, we can classify
entrepreneurs as
• belonging to the "great person" school of entrepreneurship (focusing on
intuitive ability, vigour, good instincts, etc.),
• the psychological characteristics school of entrepreneurship, the classical
school of entrepreneurship (focusing on the innovative streak in
entrepreneurs),
• the management school of entrepreneurship (focusing on the idea of
creating entrepreneurs by training them to be good managers),
• the leadership school of entrepreneurship (focusing on leadership qualities
of entrepreneurs), and the
• intrapreneurship school of entrepreneurship (focusing on developing
entrepreneurial traits in managers in an organization)
CORPORATE ENTREPRENEURSHIP
• Corporate entrepreneurship or Intrapreneurship is the process by which teams
within an established company conceive, foster, launch, and manage a new
business that is distinct from the parent company but leverages the parent's assets,
capabilities, market position, and other resources.

• Corporate Entrepreneurs are employee: within an organization who use their

entrepreneurial spirit to introduce new products, new processes, new methods,
and new forms within the corporation.

• Corporate Entrepreneurship describes the innovation that occurs inside

established companies through the efforts of creative employees.
 Difference between the Entrepreneur and Intrapreneur

Criteria Entrepreneur Intrapreneur

Dependency Independent in his operations Dependent on the
entrepreneur/owner
Fund Raising Raises funds required for the Funds are not raised
enterprise

Risk taking Fully bears the risk involved in Does not fully bear the risk
the business involved in the business
Operation Operates from outside Operates within the
organization
Primary Motive Goal-oriented, self-reliant, and Access to corporate resources
self-motivated and also responds to corporate
rewards and recognition
Establishing Corporate Entrepreneurship in the Organization
• Organizations desiring an entrepreneurial culture need to encourage new ideas
and experimental efforts, evaluate opportunity parameters, make resources
available, promote a teamwork approach and voluntary corporate
entrepreneurship, and enlist top management's support.
• In addition to being creative, flexible, and visionary, the corporate entrepreneur
must be able to work within the corporate structure.
• Large companies have to tackle the next years of growth by changing the
leadership at the level and create a culture of corporate entrepreneurship in the
whole organization.
• The process of establishing corporate entrepreneurship within an existing
organization requires the commitment of management, particularly top
management.
• The top management must devise and put in place a system that would unleash
employees' potential and build a reward and recognition mechanism for them.
The characteristics of an entrepreneurial environment required are furnished below:
• Organization operates on frontiers of technology;
• New ideas encouraged;
• Trial and error encouraged;
• Failures allowed;
• No opportunity parameters;
• Resources available and accessible;
• Multidisciplinary teamwork approach;
• Long time horizon;
• Volunteer program,
• Appropriate reward system;
• Sponsors and champions available;
• Support of top management.
• Corporate entrepreneurship is beneficial in many ways. An organization stands to make
a lot of profit from the generation of a single successful idea.
ENTREPRENEURIAL COMPETENCIES
• The term entrepreneurial competencies refers to the key characteristics that should
be possessed by successful entrepreneurs in order to perform entrepreneurial
functions effectively.
• However, most successful entrepreneurs do share the competencies given below:
• Creativity and innovation: Creativity is the ability to develop new ideas and to
discover new ways of looking at problems and opportunities; thinking new things.
On the other hand, innovation is the application of creative solutions to problems or
opportunities to enhance or to enrich people's lives, or doing new things.
• Leadership and team building: Leadership is the basic quality of an entrepreneur.
This spirit keeps him paces forward in any field. The quality of leadership should be
demonstrated in networking and problem-solving ability, generating resources, and
building teams. Good business leaders are great visionaries.
• A team is a group of individuals with a common mission, focused and aligned to
achieve a specific task or set of outcomes.
• A good team will be able to share knowledge, core competency, and goals.
• Opportunity seeking and initiative: Entrepreneurs can pursue
opportunities in any industry at any time. For example, some entrepreneurs
build successful new companies by contributing to the founding of a new
industry.
• Along with being able to identify business opportunities, an entrepreneur
needs to have the urge to take initiatives.
• The initiative to start a business can't be enough entrepreneurs must have
the initiative to continue to grow and expand not only the business but their
own minds.
• Risk-taking and decision-making ability: Great business ideas have
sometimes started as a hunch that enterprising individuals have acted upon.
There is always the risk of loss in any endeavour, and entrepreneurs have
just the right amount of confidence to take calculated risks to achieve their
objective.
• The progress of an entrepreneur depends increasingly on effective knowledge and
continuous updating of market conditions and the proper utilization of resources.
• It is generally difficult to assess risk factors in the small-scale sector. Most
business failures appear to occur within five years of founding. A long history of
gradually shrinking sales and profits needs careful consideration.
• Tolerance of ambiguity and uncertainty: Tolerance of ambiguity is the ability
to respond positively to ambiguous situations, and this is an important quality for
entrepreneurs to have because they continually face more uncertainty in their
everyday environment than do managers of established organizations.
• Start-up entrepreneurs usually do not receive revenue in the beginning. To make
matter worse, lack of customers is a common feature.
• For an entrepreneur of a start-up company, change is the way of life. New
customers, co-workers, and staff add to the stress of everyday life. Setbacks and
surprises are inevitable, with hardly enough time to respond to situations
• Motivation to excel: Entrepreneurs are motivated primarily by the desire
to create something new, the desire for autonomy, wealth and financial
independence, the achievement of personal objectives, and the propensity
for action ("doing").
• Problem solving: Successful entrepreneurs are problem solvers. A formal
problem-solving model helps entrepreneurs solve problems in a logical
manner. The model consists of six steps:
1. Define the problem.
2. Gather information.
3. Identify various solutions.
4. Evaluate alternatives and select the best option.
5. Take action.
6. Evaluate the action taken
• Goal orientation: Goal setting is the process of setting both long-term and short-
term objectives for the successful performance of an entrepreneur. A clear set of
goals helps to measure the performance standards of employees.
• In addition, everyone needs to feel that they have a worthwhile goal to reach with
the resources and leadership available. Without goals, different members may
move in different directions, which may give rise to difficulties.
• Self-efficacy and adaptability: Self-efficacy is the belief in one's ability to
muster and implement personal resources, skills, and competencies to attain a
certain level of achievement on a given task. In other words, self-efficacy can be
seen as task specific self-confidence.
• An individual with high self-efficacy for a given task will exert more effort for a
greater length of time, persist through setbacks, set and accept higher goals, and
develop better plans and strategies for the task.
• Mistakes and failure come with the territory of being successful entrepreneurs,
and if they are not making mistakes, they are probably engaging in a very easy
• Internal locus of control: Locus of control refers to how a person perceives the causes
of events in one's life. Individuals high on the internal locus of control assume that any
success or failure they experience is due to their personal actions and that they have the
ability to influence events.
• When someone perceives events as under the control of others, fate, luck, the system or
their boss, they have an external locus of control.
• Persistence, persuasion, and networking: Entrepreneurs display persistence, and are
not discouraged into quitting by difficulties and problems that come up in business or
in their personal life.
• Entrepreneurs with a track record of success are much more likely to succeed than
first-time entrepreneurs. In essence, they have exhibited persistence in selecting the
right industry and the right moment to start new ventures.
• Networking is something all successful entrepreneurs are good at. Networking, is not
an option but a pre-requisite for survival in this world of intense competition.
• While networking, it is important to open all avenues by getting involved in every kind
of social media, to build relationships by being open-minded, and to follow through
any business opportunity you may have identified with personal interaction.
CAPACITY BUILDING FOR ENTREPRENEURS
• In order to become a developed nation, India needs more entrepreneurs with a
managerial mindset.
• In order to build an entrepreneurial society, we need to focus on the following
five areas.
• Create the right eco-system: There is a need to scale up and enrich the
ecosystem. The various elements of the ecosystem for commercialization are
venture capitalists, institutional support systems, government schemes, and
incubators.
• An ecosystem is a system of interconnected stakeholders institutions and
individuals whose linkages enable efficient production, and the spread of new and
economically useful knowledge.
• Build skills: Experiential learning is a part of entrepreneurship. The five most
important skills needed for an entrepreneur are personal skills, communication
skills, negotiation skills, leadership skills, and sales skills.
• Provide access to capital: For a long time, Indian entrepreneurs have faced a
shortage of capital.
• Determining capital requirements, crafting financial and fund-raising strategies,
and managing the financial process are critical to a new venture's success.
Government policy should be congenial for foreign investors, financial
institutions, venture capitalists, and angel investors to enable them to invest in
new ventures.
• Enable networking and exchange: In professional or business networking,
people use their personal contacts for succeeding in their businesses. A network
serves to provide a lot of support to the entrepreneurial enterprise in times of
crisis.
• Create tax benefits, incentives, and simplify the bureaucratic process: One
way to encourage entrepreneurial activity would be to allow entrepreneurs to
keep more of what they earn by lowering tax rates. Incentives to entrepreneurs,
such as reduction of legal costs to hiring, would be beneficial.
MYTHS ABOUT ENTREPRENEURSHIP
• Certain myths have grown up around entrepreneurs over the years.
• Here is a list of some common myths that entrepreneurs should guard against:
• Entrepreneurs are born, not made: In reality, the making of an entrepreneur
occurs through education, training, experience, and experiential learning.
• Entrepreneurs are academic and social misfits: The reality, however, is that
today, many business schools are offering formal education in entrepreneurship
and most entrepreneurs are highly educated and very professional in their
approach.
• All you need is money to be an entrepreneur: In reality, money is only one of
the ingredients in the success of the venture.
• All you need is luck to be an entrepreneur: In reality, what may appear to be
lucky to others is often, in fact, a planned manipulation of events and
circumstances
• A great idea is the only ingredient in a recipe for business: In reality, a
great idea may stay just that if it is not backed by adequate finance, demand
for the product, and, most importantly, good management.
• My best friend will be a great business partner: In reality, it is wrong to
assume that people with whom you have great personalities will make good
business partners.
• Having no boss is great fun: In reality, entrepreneurs are far from
independent and have to work with various stakeholders in the business,
including partners, investors, suppliers, customers, creditors, employees,
and various other agencies involved in the business. They have to work
longer hours and handle many complex situations.
• I can start making lots of money immediately: In reality, it is often
months, if not years, before an entrepreneur starts making money.
IDENTIFICATION OF BUSINESS OPPORTUNITIES
• A business opportunity may be defined as a set of favourable circumstances
in which an entrepreneur can exploit a new business idea that has the
potential to generate profits.
• Business opportunities have the following four fundamental features:
• They create or add significant value to the customer.
• They solve a significant problem by removing pain points or meeting a
significant want or need for which someone is willing to pay a premium.
• They have a robust market, margin, and money making characteristics that
will allow the entrepreneur to estimate and communicate sustainable value
to potential stakeholders.
• They are a good fit with the founder(s) and management teams at the time
and marketplace along with an attractive risk-reward balance.
What Defines a Good Business Opportunity?
• An idea is a thought or a concept that comes into existence in the mind as a
product of mental activity.

• A business idea is an idea that can be used for commercial purposes.

• There can be many sources of business ideas, including the following:

• A resolved problem faced by an actual or potential entrepreneur.

• An unmet customer need discovered by an actual or potential entrepreneur

at a place of employment.

• Changes in the business environment.

• Not all business ideas are found to be good business opportunities. This simple
five-step framework helps screen ideas and find out whether a business idea truly
represents a good business opportunity.
• Urgency of the market need: The business idea should envision a product
or service that satisfies a market need or a need of the customer.
• The market need has to be carefully assessed by consulting industry experts as
well as potential customers.
• It is important to focus on the "need" of the customer rather than on the attributes
of the offering and to evaluate the urgency of that need in order to gain the
assurance that there are customers ready to purchase that product/ service once it
hits the market.
• The greater the market need, the greater the opportunity for a profitable business.
• Adequate market size: A business usually targets a particular market
segment after assessing their demographic, geographical, and lifestyle factors.
• In order to make the business viable, a large number of potential customers
should exist. There is a need to find out the potential market size for the product
or service.
• Sound business model: In simple terms, a business model is a broad range
of descriptions of various core aspects of business, such as purpose, strategies,
infrastructure, organizational structures, marketing programmes, and operational
processes and policies.
• In other words, a business model clearly gives the outline or the rationale of how
the potential entrepreneur intends to satisfy a customer need and create value.
• A business model that presents a plan to generate profits within three to five years
is considered to be relatively good.
• Potential brand value: The product/service being offered must be
differentiated from those being offered by competitors to maintain a
competitive advantage in the market.
• It is necessary to assess the potential brand value of the product or service
envisioned in order to ensure a fair chance of survival against competition by
existing as well as future products.
• An able management team: The ability and passion of team members to
use a business opportunity is important to success.
• The team should have contacts among suppliers, competitors, and customers.
• The number and quality of contacts up and down the value chain is an
important determinant of eventual business success.
• On the whole, the business should be big enough to make it worthwhile and
the team should be looking forward to being involved with it for a long time.
When is an Idea an Opportunity?
• Usually business starts with the generation of the business idea. A business idea may not
necessarily be a business opportunity; one needs to filter and sift through these ideas to
realize whether they are real opportunities.
• A business idea becomes a good business opportunity when it has the following five
essential qualities?:
• Attractiveness: The business idea needs to have market attractiveness. A promising
business idea must offer a product or service that would be accepted by a large market.
• Timeliness: The business idea should be implemented within the time frame to get market
acceptance. Timeliness is essential to gain first-mover advantage.
• Durability: The Business idea should last long and sustainable so that it is profitable in the
long run.
• Relevant: The business idea must fulfil customer's need or solve the problem. The quality
of being anchored in a product or service that creates or adds value for its buyer or end user.
• Creative and Innovative: The acceptability and profitability of a business idea hinge
largely on how innovative the idea is. Every business idea should have a unique selling
proposal.
Types of Innovation
• Innovation is the key to the economic development of any company and country.
• There are various levels of innovation based on the uniqueness of the idea.
• Three major types of innovation, in increasing order of uniqueness incremental
innovation, technological innovation, and breakthrough innovation.
• Incremental innovation is the one that occurs most frequently. Incremental
innovation is small improvements or upgrades made to a company's existing
products, services, processes or methods.
• The changes implemented through incremental innovation are usually focused on
improving an existing product's development efficiency, productivity, and
competitive differentiation.
• These innovations usually come from market analysis.
• Technological innovation occurs less frequently than incremental innovation
and more frequently than breakthrough innovation. The technological
innovation system is a concept developed within the scientific field of
innovation studies which serves to explain the nature and rate of
technological change.
• Breakthrough Innovation is the fewest and extremely unique innovations.
They are often the basis for further innovation in an area. They are protected
by patents, trademarks, and/or copyrights.
• Breakthrough Innovation takes a current process or product and typically
provides greater efficiency or cost-effectiveness.
• A breakthrough innovation leads to a substantial improvement or opens up
new possibilities.
• A breakthrough innovation can be considered disruptive if that increased
efficiency or cost-effectiveness threatens to make the competition's business
• Disruptive innovation is a term coined by American scholar Clayton M.
Christensen. It refers to an innovation that creates a new market and value and
eventually disrupts an existing market and value.
• Disruptive innovations are usually produced by entrepreneurs, rather than
existing market leaders. Some examples of disruptive innovation include:
Personal computers disrupted mainframe and minicomputers, cellular phones
disrupted fixed-line telephony and Wikipedia disrupted traditional encyclopaedia.
• Frugal innovation is the process of reducing the complexity and cost of goods
and its production. Usually, this refers to removing nonessential features from a
durable good, such as a car or phone, in order to sell it in developing countries.
• Jugaad a word taken from Hindi which captures the meaning of finding a low-
cost solution using locally available resources to any problem in a creative way.
• It is a new way to think constructively and differently about innovation and
strategy. Juggad is a simple, innovative, intuitive, ingenious, economical and out
of the box thinking. Jugaad innovation has a long-lasting tradition in India.
• The global innovation index (GII) aims to capture the multi-dimensional
facets of innovation and provide the tools that can assist in tailoring policies
to promote long-term output growth, improved productivity, and job growth.
• The GII helps to create an environment in which innovation factors are
continually evaluated.
• The GIl is measured in terms of Innovation efficiency ratio. The Innovation
Efficiency Ratio is the ratio of the Output Sub-Index score over the Input
Sub-Index score.
• It shows how much innovation output a given country is getting for its
inputs. The Innovation Output Sub-Index provides information about outputs
that are the results of innovative activities within the economy.
• There are two output pillars: Knowledge and Technology outputs
(knowledge creation, knowledge impact and knowledge diffusion) and
creative outputs (intangible assets, creative goods and services and online
How to Generate Business Ideas
Having business ideas is central to the task of identifying business opportunities.
Let's discuss some ways to generate business ideas.
• Brainstorming: Brainstorming is a technique used to quickly generate a large
number of ideas and solutions to problems.
• The brainstorming session is conducted to generate ideas that might represent
business opportunities.
• Brainstorming works well individually as well as with a varied group of people.
• A group brainstorming session requires a facilitator, white board, and space to
accommodate the participating people.
• Brainstorming works well with 8-12 people and should be performed in a relaxed
environment.
• Participants are encouraged to share every idea that enters their mind with the
assurance that there is no right or wrong answer
• Survey Method: The survey method is used to collect information by direct
observation of a phenomenon or systematic gathering of data from a set of
people.
• The survey method involves gathering information from a representative sample
population, that is, a fraction of the whole population under study that presents an
accurate proportional representation of that population.
• Surveys generate new products, services, and business ideas because they ask
specific questions and get specific answers.
• Surveys may be of different types, such as general and specific surveys, regular
and ad hoc surveys, preliminary and final surveys, and census and sample
surveys.
• Reverse Brainstorming: This is a method that is similar to brainstorming,
with the exception that criticism is allowed. It is, therefore, also called
"negative brainstorming."
• In this technique, the focus is on the negative aspects of every idea that has
been generated through brainstorming. Also called the "sifting" process, this
process most often involves the identification of everything that is wrong
with an idea, followed by a discussion of ways to overcome these problems.
• The Gordon Method: This is a creative technique developed by A. F.
Osborn in his book L'arte della Creativity to develop new ideas.
• This method is similar to brainstorming. Collective discussion addresses
every aspect of the planned product in an uninhibited solution-oriented way.
• This discussion encourages a fresh, creative, and unusual approach to
developing a new product.
What Leads to the Creation of Opportunities
Entrepreneurial opportunities often come into being because of certain external
changes, such as technological change, regulatory and political change, social and
demographic change, and economic change.
• Technological Changes: Technological changes lead to entrepreneurial
opportunities because they make it possible for people to do things in new and
more productive ways.
• Technological changes can take the form of five forms of business opportunity—
new products and services, new methods of production, new markets, new ways of
organizing, and new raw material.
• Political and Regulatory Changes: Political and regulatory changes lead to
business opportunities by paving the way for new, more productive use of resources
or a redistribution of wealth from one person to another.
• Statutory and regulatory requirements create opportunities for entrepreneurs to start
firms that help other firms and the community to comply with the requirements.
• Social and Demographic Changes: Social and demographic changes,
such as changes in family and work patterns, the ageing of the population,
increasing diversity at the workplace, increasing focus on health and
fitness, the increase in the number of cell phone and Internet users, and new
forms of entertainment, lead to the creation of business opportunities
because they alter people's preferences or demand for products and
services, and consequently make it possible to generate new ideas to meet
new demands.
• Economic Changes: Economic forces affect business opportunities by
determining who has money to spend. An increase in the number of women
in the workforce over the last few decades and their related increase in
disposable income is largely responsible for the number of boutique
clothing stores targeting professional women that have opened in the past
few years.
How to Identify a Business Opportunity:
• Several studies have shown that previous experience in an industry helps
entrepreneurs to recognize business opportunities. In addition, the extent and
depth of an individual's social network also affects the identification of
opportunity.
• It is important for entrepreneurs to grab a business opportunity before the market
becomes saturated with competitors and the window of opportunity is closed to
them.
• There are three general approaches entrepreneurs use to identify an opportunity.
1. Observing trends: Entrepreneurs can identify business opportunities by
carefully observing trends.
• The most important trends to follow are economic, social, technological, and
political trends. For example, the development of the Internet and the
miniaturization of electronics goods led to the development of e-commerce and
laptop computers, respectively.
2. Solving a problem: Another approach to identifying business
opportunities is to recognize and solve a pressing problem that customers are
facing today.
• From an entrepreneur's point of view, every problem is a disguised
opportunity.
3. Finding gaps in the marketplace: A third approach to identifying
business opportunities is to find a gap between what is needed by the
customer and what is actually provided to the customer.
• Finding such gaps can help entrepreneurs develop new products and
improve existing ones. For example, over three decades ago, the lack of toy
stores focusing on a child's intellectual development resulted in the
development of Discovery Toys, a California-based company specializing
in educational toys.
Ideas Labs
Design thinking outlines a process of five steps to arrive at an innovative solution
to a problem. They are Empathize, define (the problem), Ideate, Prototype, and
Test. The five stages of framework is given below:
1. Empathize: Any venture begins with the human element. Gather information
through interviews, observation, or first-hand experience. Learn about the
audience for whom designing is being made. Keep an open mind and listen. By
empathizing with the user and witnessing first-hand how they experience your
product or service, you can understand how to optimize existing products or
create new ones that will truly fill a need.
2. Define: The second stage is to define the problem. A problem statement can be
condensed to a word. Construct a point of view that is based on user needs and
insights. The goal is to craft a meaningful and actionable problem statement.
The statement focuses on insights and needs of a particular user.
3. Ideate: This is an idea generation mode. Brainstorm and come up with
creative solutions. Thinking creatively, having many voices and solutions
helps to conjure up the best product for the user. Ideation provides both
the fuel and also the source material for building prototypes and getting
innovative solutions.
4. Prototype: A prototype is an early sample, model, or release of a product
built to test a concept or process or to act as a thing to be replicated or
learned from. Build a representation of one or more of your ideas to
show to others. Develop a prototype, a demo or a test model. A prototype
can be anything that a user can interact with such as post-it-notes, a
gadget, a role-playing activity, a storyboard or a mode.
5. Test: Once the prototype is ready to solicit feedback about your ideas
from the users about their experience. If needed repeat the previous steps.
MOBILITY OF ENTREPRENEURS
• Entrepreneurial mobility is the movement of entrepreneurs from one location to
another (geographical mobility) or from one occupation to another (occupational
mobility) based on business opportunities.
• Entrepreneurial mobility is usually caused by political, economic, cultural, and
social factors.
• Political conditions: Entrepreneurial mobility is influenced by political factors.
• Education: Education imparts knowledge and hones one's analytical thought
process.
• In general, an educated entrepreneur will be able to scan and understand the
business environment-whether domestic or global-better in order to exploit both
domestic and international business opportunities.
• An educated entrepreneur will also usually be able to communicate, interact, and
network more effectively.
• Experience: Entrepreneurs with experience in business and industry are
quick to exploit opportunities. Their past experiences enable entrepreneurs
to take up various types of ventures in distant places, leading to
entrepreneurial mobility.
• Size of enterprise: The larger the size of the business, the greater is the
entrepreneur's mobility.
• Large business houses want to grow organically and inorganically through
diversification, expansion, mergers, acquisitions, and joint ventures.
• Availability of facilities: Availability of labour, land, water and power, and
proximity to market, transport, suppliers, clusters, and communication
increases the mobility of entrepreneurs.
• We can see more IT industries located in cities such as Bangalore and
Chennai due to the availability of knowledgeable workers and other
infrastructural facilities.
BUSINESS OPPORTUNITIES IN INDIA
• The opportunities for importing, exporting, trading, investing, and franchising are
immense.
• A potential entrepreneur needs to take into account the economy, the consumer,
and business trends.
• One should also understand that what may be a good business opportunity for one
entrepreneur may not be a good opportunity for another.
• It is essential for entrepreneurs to pick opportunities that they are passionate
about.
• There are several factors that create favourable business opportunities in India:
• India is a well-established democratic country with a free and fair judicial system.
• The country also has a well-established banking system consisting of public and
private banks and other financial institutions.
• The country has a huge middle-class with enhanced purchasing power. Coupled
with a high-growth economy, this creates the potential for a huge growth in
manufacturing, services, and the retail sector.
• India has vibrant trade links with the South Asian Association for Regional
Cooperation(SAARC) nations such as Sri Lanka, Pakistan, Nepal, Bhutan,
Bangladesh, and the Maldives.
• India has a competitive advantage in the global market with the availability of a
huge pool of cheaper labour and knowledgeable workers to enhance industrial
productivity.
• Economic reforms and policy changes have created an investment-friendly
environment.
• The country is self-sufficient in agriculture and rich in natural resources.
• The capital markets in India are one of the fastest-growing markets in the world,
attract in huge foreign investments. A lot of international companies have started
outsourcing and setting up international operations in the country.
MODELS FOR OPPORTUNITY EVALUATION
Business opportunity evaluation is the process of evaluating a business opportunity
and developing into an effective business model. The following section discusses
two models to evaluate business opportunity. They are the RAMP Model and the
Seven-domain Framework by John Mullins.
The RAMP Model
RAMP is an acronym for four factors-return, advantage, market, and potential. Let
us look at each factor.
Return on Investment Ask the following questions:
• Will your revenues be higher than your expenses? Is the business profitable?
• How much time will the business take to break even?
• How much investment is needed to start the business? How are you going to raise
this investment?
• What is the exit strategy?
Advantages Ask the following questions:
• What are the barriers to entry?
• What will be your distribution channel for selling your product?
• Do you have a proprietary advantage such as a patent or exclusive license on
what you will be selling?
• What is the cost structure taking into account things like suppliers and sourcing?
Market Ask the following questions:
• Is there a value proposition? What is the need you will fill or problem you will
solve?
• How do you define the targeted market? Are you selling to consumers?
Businesses? What are the demographic features of your targeted market?
• What per cent of the market do you believe you could gain? How fast is the
market for your product growing?
• How is the competition? What will be the price of your product?
Potential Ask the following questions:

• Does the team have the potential to successfully launch and sustain the
business? What will be the nature of the business entity (e.g., sole
proprietorship, partnership, cooperative, etc.)?

• Is the business concept compatible with the business mission of the team?

• What is the risk involved? What is the reward for the founders and
investors if the company succeeds?

• How will you differentiate your company from what is already out there?
Mullins's Seven-domain Framework
• Successful entrepreneurship comprises three critical elements market, industry,
and the key people that make up the entrepreneurial team.
• John Mullins of the London Business School has developed a seven-domain
model for evaluating entrepreneurial opportunity. The domains are':
• Market domain—macro level
• Market domain—micro level
• Industry domain-macro level
• Industry domain —micro level
• Team domain— aspirations
• Team domain— capability of execution
• Team domain— connections or networks
• These seven domains address the following central elements in the assessment of
any entrepreneurial opportunity:
• Are the market and the industry attractive?
• Does the opportunity offer compelling customer benefits as well as a sustainable
advantage over other solutions to the customer's needs?
• Can the team deliver the results they seek and promise to others?
• Market Domain-Macro Level
• This domain requires an analysis of the attractiveness of the overall market based
on certain factors. Some of these factors are:
• The number of customers in the market.
• The amount of money spent by customers on the relevant class of goods or
services.
• The number of relevant products or usage occasions for services bought annually.
Market Domain-Micro Level
• This domain requires an analysis of the benefits and attractiveness of the targeted
market segment. Some of the factors on the basis of which the analysis is made are:
• Identifying the target market and the market segment where customers are ready to
pay premium prices.* Product/service differentiation.
• The size of the market segment and the phase of growth.
• Future growth potential and the future plan of the business.
Industry Domain-Macro Level
This domain requires an analysis of the attractiveness of the industry, based on
certain factors. Some of these factors are:
• The threat of displacement by competitors.
• The bargaining power of suppliers and buyers.
• Competitive rivalry and the threat of substitutes.
Industry Domain-Micro Level
• This domain requires an analysis of the sustainable advantages of the industry. Ask
yourselves the following questions:
• Does the venture have proprietary elements patents, trade secrets, and so on— that
other firm are unable to duplicate or imitate?
• What will be the likely presence of superior organizational processes, capabilities,
or resource that others would have difficulty duplicating or imitating?
• Is there an economically viable business model?
Team Domain- Aspiration
This domain requires an analysis of the team's mission, aspirations and propensity for
risk taking. A question that this analysis will answer is:
• Does the opportunity fit the team's business mission, personal aspirations, and risk
propensity?
Team Domain-Capability of Execution
This domain requires the ability of the team to execute tasks on the basis of the
identified critical success factors. One question that needs to be addressed is:
• Does the team have what it takes, in a human sense-in terms of experience and
industry know-how—to deliver a superior performance for this particular
opportunity, given its critical success factors?
Team Domain-Connections or Networks
This domain requires an analysis of the team members' connectedness—up, down,
and across the value chain. A question you may ask yourself is:
• Is the team connected well enough to notice any opportunity or need to change its
approach if conditions warrant?
• Look for ideas that will change the way people live and work. High-potential
opportunities invariably solve an important problem, want, or need that someone is
willing to pay for now.