This chapter defines the nature of entrepreneurship and innovation, as well as the limits and possibilities for teaching and learning the skills involved. It discusses some of the differences between traditional management education and training versus E&I-focused programs. It briefly argues the eternal question of whether entrepreneurship can be taught. It presents a framework for understanding the E&I education landscape and some of the processes and expected outputs of this educational system. It illustrates this approach with a case of a French University E&I education program. Finally, it presents the Collaborative Interactivity approach to teaching and learning E&I.
This section is designed to help professors to better understand some of the challenges of E&I teaching. It is highly theoretical and should be of little interest to students. If you are a student, we suggest you skip this section entirely and go straight to Chapter 2, about how to develop your entrepreneurship vision.
1.1. Defining entrepreneurship and innovation
The phenomenon of entrepreneurship lacks a single, universally accepted definition (Valerio et al. 2014). Kirzner (1999) defines it as a process of identifying and exploring (frequently unnoticed) profit opportunities. Klapper et al. (2010) describe it simply as the process of creating new wealth. In its narrowest definition, entrepreneurship is the process of converting ideas into products or services and then creating a new venture to market it (Johnson 2001). Innovation, on the other hand, can be simply defined as “the process of turning opportunity into new ideas and of putting these into widely used practice” (Tidd and Bessant 2013, p. 19). As can be seen from the definitions above, E&I are intrinsically correlated. Creating new ventures does not necessarily imply innovating and, conversely, one may be an innovator without creating a new business. Nevertheless, it can be argued that the kind of entrepreneurship that creates most value does involve innovation. As Peter Drucker (1994) suggested, innovation is the main tool of entrepreneurs.
Joseph Schumpeter’s view of this phenomenon is widely accepted as one of the most relevant and comprehensive to date. According to this Austrian economist who pioneered the field, an entrepreneur is someone involved in the creation of innovative and growth-pursuing firms (Schumpeter 1982). He argues that innovative companies grow faster by introducing new goods or new methods of production, by opening new markets, by conquering of new sources of supply and by carrying out a new organization of an industry. These categories are the basis for the standardized types of innovation as defined by the Oslo Manual for Collecting and Interpreting Innovation Data (OECD 2005): product innovation, process innovation, marketing innovation and organizational innovation.
Let us examine each of the Schumpeterian categories below.
- – New products or services. Arguably the most visible part of innovation, this process consists of identifying unmet customer needs and developing solutions that deliver superior value. Superior value can be achieved by designing products and services that offer better quality, more convenience, lower cost or any other differentiation attribute that is valued by the target customer. An example of this kind of innovation would be a more effective toothpaste, a less expensive computer or a better designed customer experience.
- – New methods of production. Also known as process innovation, this approach consists of improving existing methods to lower costs, increase efficiency, lower environmental impact or achieve any other enhancement in the way products and services are created and delivered. Examples of this type of innovation could include improving the quality, reducing the cost or increasing the speed of a project, or reducing the amount of wood used in the manufacturing of furniture.
- – Opening new markets, foreign or domestic. Contrary to widespread belief, an innovation does not have to be “new”. If an existing product, service or process is introduced in a new market segment which was previously unfamiliar with its benefits, this can be considered an innovation in the Schumpeterian perspective. Examples include successfully introducing a gaming console targeting non-gamers or introducing an old product in new country or region.
- – Conquering new sources of supply. This is about working with suppliers to adopt materials or energy source with better performance, lower cost or improved environmental impact. An example would consist of contributing to the transition towards a fossil-fuel-free society.
- – Carrying out a new organization of an industry. This final Schumpeterian category is the most difficult to achieve and most powerful type of innovation. It consists of introducing such innovative products or services or using such revolutionary methods of production that the rules of the game in an entire economic sector are changed. Ford’s use of the assembly line to produce affordable cars in the early 20th Century is another example. So was Toyota’s introduction of its total quality movement in the 1980s. The introduction of personal computers in the 1980s or smartphones in the 2000s are instances of this powerful disruption.
The entrepreneurship definitions by Schumpeter assume that innovation is an intrinsic part of value creation. It does not exclude the phenomenon of “intrapreneurship” (Drucker 1994), that is, a manager who innovates in one of the above categories without necessarily owning shares in the firm. Like Schumpeter and Drucker, we believe that the entrepreneurship spirit could and should be part of any manager’s attributes, and that is the reason why intrapreneurs are the third target of this book.
According to this approach, it is not enough to create a new venture to be considered an entrepreneur. One must innovate. In our understanding, innovation is the process of addressing the unmet needs of a large enough group of people to sustain a business or organization. This definition is compatible with Schumpeter’s view without requiring radical or entirely new products, services or business models. Indeed, being first to market may result in failure to innovate.
To illustrate this underlying principle, let us take the case of one of the most innovative companies of the last decades: Apple. They have created what can be arguably considered one of the largest value-yielding empires in the history of mankind without ever having been “first to market”. They did not launch the first personal computer, the first portable music player, the first smartphone, the first tablet or the first smartwatch. But when they did launch each one of these groundbreaking product categories, they took deep care to address the unmet needs of a large audience, whether that need was user-friendliness, integration or elegant design.
Therefore, for the purposes of this book, innovation and entrepreneurship are profoundly intertwined. True entrepreneurship in the Schumpeterian sense requires more than simply creating a business: we must constantly try to understand and serve the ever-evolving needs of customers by launching better products or services, by improving our processes and by opening up new markets or segments. On the other hand, innovating in a well-established business is as important as creating new ones. Thus, the tools and insights offered in this book are also valuable to intrapreneurs.
1.2. Innovation and entrepreneurship education
Valerio et al. (2014) make a distinction between entrepreneurship and business management education. Typically, in a European business school, business management focuses on two key competencies: corporate management and enterprise development. In their first year of management, students are often exposed to the principles of organizational theory and its foundational sciences (psychology and sociology) while developing hard skills associated with corporate finance (based on financial mathematics) and accounting, risk management (including notions of statistics and probability), macro- and micro-economics. As this underlying knowledge is acquired, students are better prepared to understand organizational development, having disciplines such as strategic planning, innovation management, sales, marketing and accounting later in the program. Entrepreneurship edu...