A dynamic economy is rooted in innovation and entrepreneurs

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Deakins & Freel (2009 p. 201) (1) state that "All entrepreneurs have to trade in an economy that is affected by the trends or forces forming the global economy. Even if a firm's market is restricted to its local geographical area, it may face competitors that are based overseas and trading locally". Gurría (2) suggest that "Globalisation itself is a product of innovation. The application of constantly improved technologies to the massive means of transport and communication has produced an unprecedented level of global connectivity, of global awareness". The global economy is ever changing and developing. The world is now one mammoth open market. For businesses to trade in this mammoth world economy and indeed in their domestic economy they must be constantly changing and updating their products and services to adapt to changing market conditions and ever demanding consumers.

The current author is in agreement with the above statement and intends to illustrate why throughout the paper.

Hisrich et al (2010 p. 6) (3) define an entrepreneur as;

"An individual who takes initiative to bundle resources in innovative ways and is willing to bear the risk and/or uncertainty to act".

Drucker (YEAR .27) defines innovation as:

"...the specific instrument of entrepreneurship. It is the act that endows resources with a new capacity to create wealth".

Competition for business in the current economic climate is rife. Drucker (p.132) points out that "Today's business especially the large ones, simply will not survive in this period of rapid change and innovation unless they acquire entrepreneurial competence". Goffin & Perkin (The Recession: An Innovation Opportunity) state that ".....a recession is exactly the time to invest in innovation, as it will lead to the greatest competitive advantage". As economies around the globe submerge into recession gaining a competitive advantage and reinvention is crucial to the future success of businesses. Not only in recessionary times do firms have to innovate, as Drucker (p. 137) suggests "The enterprise that does not innovate inevitably ages and declines." Steele and Murray (creating, supporting and sustaining a culture of innovation) support this by stating "to remain ahead it is important to speculate on the future rather that sit tight and consolidate". Pinchot and Pellman (4) (1999 p. 1) further Drucker's claim and declare that "...innovation is the primary source of lasting competitive advantage in the twenty-first century".

Pinchot and Pellman make it obvious that innovation is at the heart of the organisation and without innovation the firm would cease to exist. Bridge et al (2009) maintain that innovation can be the adoption of a current product or service to add even more value to it, they also suggest that (2003, p.335) "Innovation is the successful development of competitive advantage and as such, can be said to be the key to corporate entrepreneurship".

Ahlstrom (5) gives the example of Microsoft. Microsoft is a prime example of a company that is constantly innovating, each time they produce a new operating system for computers they add additional features to packages such as Microsoft Word. These features are added before consumers realise that they have a need for them, therefore reinventing their products and outperforming their competitors. Audretsch (6)(2004 p. 173) declares that successfully changing a country's economic performance is derived from how well innovation is exploited.

Hisrich et al (3)(2010, p. 106) state that;

"Innovation is the key to the economic development of any company, region of a country, or country itself".

Ireland has always delighted itself on its entrepreneurial culture. The GEM (Global Entrepreneurship Monitor) report on global entrepreneurship (p. 28-29) shows that Ireland is has elevated amounts of innovative "early-stage entrepreneurial activity". A Fórfas report "Research and Development Statistics in Ireland, 2009 - at a glance - p.7" Shows that

"Between 2004 and 2006 over 47.2% of firms were engaged in innovation activities, with 56.7% of industrial firms and 41.3% of service industry firms being active in innovation of some kind. In monetary terms product innovation activities contributed an estimated €33.5bn to company turnover in Ireland (12.6% of the total turnover of businesses), much of which was underpinned by research and other knowledge investments".

It is clear to say from these figures that innovation contributed to Irelands 'Celtic tiger' era, making Ireland stand out in the global economy, showing that ".......a dynamic economy is rooted in innovation and entrepreneurship."

Drucker (p.69) states that "...a change in market or industry structure is also a major opportunity for innovation."

This statement is very apparent at the moment as world economies plummet further into recession, organisations switch on their survival mode button and investment in innovation is far from a priority. Organisations now need to look beyond their existing portfolio of products and services to add value to their suite of product offerings if they are to survive the recession. Firms that aren't innovating in these troublesome times are the firms that will be left behind when economic recovery happens.

Intel is an example of an organisation that in the current climate are innovating. Despite reducing its workforce by 5000 Intel will spend Seven billion dollars over the next two years to construct new plants that will produce computing technological advancements for the future (7). According to the IDA website (8) "Intel describes its philosophy as "innovate or die".

Drucker (p. 148) states that "For the existing business to be capable of innovation, it has to create a structure that allows people to be entrepreneurial". It is obvious then from the above examples that both Microsoft and Intel promote a culture of innovation within their organisations. Hisrich et al (2010, p.51) state that businesses must "...encourage and support new ideas instead of disconcerting them...". Hisrich et al (2010, p.51) also suggest that firms who have encouraged an entrepreneurial structure within their firms "lead rather than follow competitors". For innovation then to succeed within an organisation there must be a culture within the firm to promote and nurture innovate ideas. Porter points out that continuous innovation is essential for organisational survival in competitive markets but, in view of the barriers, achieving it requires hard work, appropriate attitudes and proper structures. The company 3M is notorious in the field of innovation. Bridge et al advise us in their text that at the end of the 1980's 3M created an additional 60,000 products and in 1988 approximately one third of sales occurred from products nurtured in the preceding five years. According to an article in Business Week (9), Larry Wendling, vice-president of 3M's corporate research their innovate success comes down to "...a seven-point list. You might call it "The Seven Habits of Highly Innovative Corporations". Within the article he suggests that the seven habits are: "1.From the chief executive on down, the company must be committed to innovation. 2. The corporate culture must be actively maintained. 3. Innovation is impossible without a broad base of technology. 4. Talk, talk, talk. 5. Set individual expectations and reward employees for outstanding work. 6. Quantify efforts. 7. Research must be tied to the customer". Within the same article the author describes the company's current innovative product which was a post it note, printer on glossy paper that can be stuck on a fridge, called "post-it Picture Paper" (10). This goes in line with what Drucker (p. 123) says "all effective innovations are breathtakingly simple. Indeed, the greatest praise an innovation can receive is for people to say :'This is obvious. Why didn't i think if it?". 3M's additional to its product family is an adoption of a current product. Technological advancements now allow us to develop our own photos in the comfort of our own home; 3M have exploited this and adapted their products to changing market conditions.

Goffin and Perkins state that the current financial crisis has put companies in a position that they haven't experienced before. They further this by saying that "tried and tested management approaches are no longer appropriate and managers need to develop a plan to boost creativity and innovation." During the economic down turn in the 1990's the car industry experienced severe turmoil. According to Di Mini et al "...Sales plummeted by 20-30% between 1992 and 1993" (11). Car makers in Europe were hit hard by the recession, especially Fiat who had a 12% stake of the European market. The response of the CEO was to reduce its workforce and company's spending on research and development. Gian Carlo Michellone disagreed with the CEO and provided management with a plan to open its research centre to external parties to contribute to innovation. The result now, years later is that Fiat has turned it reputation throughout the world around and has formed a partnership with Chrysler in the America which could potentially save Thirty thousand jobs. Thus showing how reinventing the company when market conditions changed potentially saved the organisation. Drucker (p. 73) advises us that "a change in industry structure offers exceptional opportunities..." this was certainly the case for Fiat and also AXA Ireland. Goffin and Perkins show the example of Axa, in 2000 AXA Insurance experienced a potential crisis with huge competition, disintegrating profit margins and little consumer focus. When John O'Neil, the new CEO took over, the workforce expected a serious of cost cutting measures to restore the company to its former hay day. O'Neill done the opposite, and instead communicated with staff on the significance of innovation in (p. 2) "developing new insurance products and in implementing customer-focused processes. Through initiatives such as the 'Madhouse' (ideas generation) and 'Taskmasters' (process innovation), AXA Ireland has not only become extremely profitable but also created a culture of innovation that is the envy of their competitors." It is clear from this example that O'Neill changed the culture within the company to an innovative one. To create a more intrapreneurial organisation Pinchot and Pellman (4) suggest that a "typical program includes:

Sharing the business strategy that calls for and gives direction to innovation.

Creating implementation channels for intrapreneurs with ideas that align with the strategy.

Supporting the launch of intraprises with sponsors, training, and coaching.

Diagnosing and improving your climate for innovation".

Drucker also informs us that (p. 140) "To allow it to innovate, a business has to be able to free its best performers for the challenges of innovation". In the case of AXA Ireland, by creating in house initiatives the company have done just as Drucker suggested and in doing so reinvented their business.

Bridge et al (2003, p.318) suggest that "......organisational policies and procedures often discourage managers and others from taking risks". They further point out that "...failure is often seen as a barrier to career advancement". Hisrich et al (2010 p. 51) advises us that a company wishing to establish an entrepreneurial culture must also be willing to create a setting that permits errors. They further their point by suggesting that without a setting that permits errors, hardly any generated ideas will be cultivated. At a recent entrepreneurial conference, out on your own, Seán Gallagher, "entrepreneur and founder of smart homes (12)" spoke noticeably about entrepreneurial failure. He suggests that people should invest in themselves and not be afraid to take risks that you will learn from failure. This can be carried through to innovation within the firm also, both employees and organisations can learn from failure. Fear of failure is just one example of how innovation within an organisation is hindered. Pinchot and Pellman (4) (1999, p.11) suggest that a "....big gap in the innovation process is the capacity of the system to implement ideas rapidly and cost effectively". Bridge et al (2003, p. 319) point out that "If a new idea looks promising then adequate funds must be made available". Pinchot and Pellman (1999, p.57) "The key to cost-effectiveness is to accelerate the learning process by testing the critical assumptions as early as possible". By early detection of a problem or issue with the innovative concept the organisation saves not only on costs but on time. An post, Irelands postal network are constantly trying to come up with new innovative ideas to increase its customer base, this is due to the opening of the postal market in Ireland to competition. In 2007 an post launched postbank, the retail bank which was to be based in the post offices network in Ireland.

The bank was a joint venture between Fortis and an post. It is estimated to have cost an post several million to seek out the right bank to join an post in the joint venture. In February 2010, postbank announced that it was closing citing the reason as xxx . It can be argued that if an post looked further into an already saturated banking market they may have detected issues with their banking concept, thus saving millions for the company. Although not a success story an post are still trying to reinvent themselves and gain a long term customer base as it anticipates the future.

Throughout the text the current author has illustrated the argument for the statement at the beginning of the assignment. The argument has been shown through reviewing the literature, statistical information and using company situations. The Irish Government also recognise the important of innovation and entrepreneurship and in 2008 issued a blueprint for Ireland future "Building Ireland Smart Economy: A Framework for Sustainable Economic Renewal.".

The objective of the plan is (p. 7):

"...to make Ireland the innovation and commercialisation capital of Europe - a country that combines the features of an attractive home for innovation multinationals while also being a highly-attractive incubation environment for the best entrepreneurs in Europe and beyond".

Batt O'Keefe, Minister for Enterprise, Trade and Innovation spoke at the aforementioned entrepreneur's conference. The Minister spoke about how the Government were increasing funding for innovation, and that the announcement of the €500 million innovation fund would allow for innovation to become commercial reality.

Drucker (p. 31) suggest that the" Most successful innovations are far more prosaic; they exploit change."

Ryanair copying south west airline structure to becoming the biggest European airline.

Drucker (p.78) "complicated innovations do not work".

Drucker (p. 126) "Innovation therefore always has to be close to the market, focused on the ,market, indeed market-driven"

As quoted by drucker 'necessity is the mother of invention' (p.62)