Though innovation management and entrepreneurship are two closely related concepts, there are some differences in their key characteristics. Innovation generally refers to the process of creating a unique idea or solution (Schilling & Shankar, 2019). It allows one to accomplish something that was considered impossible before that.
However, ideas have values to the extent that they can be communicated and implemented to reap benefits and address consumers’ pain points. This is what entrepreneurship helps with doing: entrepreneurs grasp the opportunity to cash in on disruptive ideas and invest in making them a reality (Schilling & Shankar, 2019). Lastly, innovation management is an umbrella term that refers to the entirety of different processes involved in creating an innovative product or service, marketing it, and readjusting to consumer needs. Following this logic, entrepreneurship can be part of innovation management and refer to its business development aspect. However, entrepreneurship is not always associated with innovations since there are plenty of businesses that are built around existing ideas and do not push for disruption in the industry.
Recent major startup acquisitions provide great illustrations of how innovation, entrepreneurship, and innovation management are interrelated. In the last two decades, the US e-commerce giant Amazon has acquired more startups than any other big corporation. The company looks for promising initiatives that may be lacking a boost in resources and promotion to rise to prominence. Amazon has exactly that and can enter a mutually beneficial relationship with innovative startups.
One of the biggest tech acquisitions of 2020 was Amazon’s purchase of Zoox, a California-based autonomous vehicle company (Etherington, 2020). The gist of Zoox’s approach is moving on from retrofitted vehicles and developing their own self-driving system to revolutionize the industry. What once was just an idea soon became a viable plan. In 2018, Zoox was the first company to get an offer for providing public self-driving transport services in the state of California. Two years later, the startup signed a definitive merger agreement with Amazon.
The example depicts the process of innovation management and the role that entrepreneurship plays in it. The first experiments on automated driving systems started as early as the 1920s, but it was not until the 1990s that their development had made it to the government agendas. In other words, the general innovative idea has been around for a while, though it either lacked resources or direction. Zoox added its own twist to the concept by rejecting the existing solutions and taken the problem to the next level.
In turn, Amazon started with the identification of innovation, which it has been doing for the last two decades. The startup that caught the corporation’s attention was in line with current trends and well-established enough to have a good reputation at the state level. The entrepreneurship part will begin with refining the technology using Amazon’s resources and making it palatable for the general public. In the end, the acquisition is likely to result in a disruptive product that will give Amazon an unbeatable advantage in the competition against the whole thriving market of passenger transportation.
Innovation Champions and Their Role in Organizations
Any company that wants to push the boundaries of what is possible should be interested in nurturing and retaining innovation champions. An innovation champion is any person who is passionate about innovation and wants the innovation culture to thrive within a given organization, regardless of whether it is their formal responsibility or not (Schilling & Shankar, 2020). They do not have to necessarily be creative geniuses behind the origins of the most disruptive technologies or bold decisions. Sometimes their role is not generating ideas but the linking, connecting, facilitating, and organizing. Some of the key traits of innovation champions include:
- well-networked. Innovation champions have a network of leaders and specialists and know which strings to pull to retrieve the right information or start a venture. They are naturally sociable and see the potential in every person with whom they have the chance to collaborate;
- influential. A good idea is worth nothing if it is not well-communicated and defended against all rebuttals. An innovation champion harnesses their leverage to get their points across and lead the change;
- open-minded and insightful. Having natural curiosity and a penchant for exploration are necessary prerequisites for being an innovation champion. Aside from that, a person with such a role needs to be a sort of visionary who can forecast trends and have a near-perfect timing for introducing new ideas;
- knowledgeable about their own domain. Passion for innovation should be accompanied by hard knowledge of a specific area of expertise. Only a professional is able to gauge the viability of a plan and decide whether its implementation is worth all the risks.
A person who fits all four criteria is YouTube’s current CEO, Susan Wojcicki. At present, she is the longest-tenured chief executive officer that YouTube has ever had and the key figure behind many innovative initiatives. As a holder of a Bachelor’s degree in history and a Master’s degree in economics, Wojcicki has a rich academic background. She attended some of the best schools in the United States – Harvard and the University of California, which gave her access to an extensive network of like-minded individuals.
In the early 2000s, Wojcicki was a marketing director at Google. It was in 2006 that she noticed the up and coming project, YouTube, and pitched the idea of its acquisition to the upper management. By that time, YouTube had been collecting 100,000 views per day, with a daily number of uploaded videos reaching 65,000 (“YouTube by the Numbers: Stats, Demographics & Fun Facts,” 2020). Wojcicki showed rare insightfulness when she chose YouTube, even though it was not the first video sharing platform on the Internet. Today, it has outpaced all its competitors and become the second most visited site in the world.
In 2014, Susan Wojcicki assumed the highest-ranking position on YouTube. She continued to push for more innovations and use her influence to promote her projects. The CEO was behind the introduction of channel memberships, merchandise, and Super Chat. The new features allowed for better creator monetization, which attracted even more content makers to the platform and retained the existing ones. Other projects included subscription service YouTube Premium that unlocks creators’ exclusive content advertisement-free. At the moment, Wojcicki (2020) emphasizes the value of educational content and invests in grants and promotion for scientific and learning channels. By doing so, she is not just following but shaping the trend for online education.
What is remarkable about Wojcicki’s innovation championship is her readiness to push back on factors that limit the platform’s potential. While the CEO is against hate speech and violent extremism, she is steadfast in her belief in the freedom of expression. When the popular YouTuber Logan Paul was criticized for making a video about his trip to Japan’s suicide forest, Wojcicki took his side (Newton, 2018). The leader explained that Paul was free to discuss the topic of his liking and did not violate any community policies such as not encouraging suicide.
Creating New Market Space
The 2004 book Blue Ocean Strategy by Kim and Mauborgne introduced two new concepts: “red ocean” and “blue ocean.” The “blue ocean” strategy suggests that there are untapped market spaces, while the “red ocean” strategy is based on environmental determinism and the finite nature of market resources. Through the lens of the “red ocean” strategy, if one company increases its market share, it is only done at the expense of another. In contrast, the blue Ocean Strategy reframes market competition. It implies that the boundaries of the market size are arbitrary, and new companies can create “blue oceans” themselves. Companies that focus on the big picture and are able to forecast trends eventually create a new market space where they become leaders.
Kim and Mauborgne offer a handful of strategies for escaping the red ocean and creating a blue one:
- instead of focusing on rivals, turn to substitute industries to better understand consumers’ decision-making processes. An example that Kim and Mauborgne (1999) use to illustrate this point is Home Depot. At the start, the company realized that customers had two alternatives: to either hire a contractor to do home repair and renovationor buy tools themselves. Both options had their advantages and disadvantages, so Home Depot was smart enough to capitalize on the cost-efficiency of do-it-yourself projects and the convenience of expert advice.
- instead of singling out a strategic group within an industry and fighting for leadership within it, look across other strategic groups. An excellent illustration for this strategy would be what Ralph Lauren did back in the 1960s. The brand was the pioneer of “fashion with no fashion,” offering haute-couture clothes with classical lines and cuts. Ralph Lauren escaped the competition in two markets at once by appealing to buyers who wanted something high-end but wearable and simple.
- instead of following the buyer’s lead in what they want, redefine their needs by offering them something they have never experienced;
- instead of trying to adapt to external trends, lead the change, and start trends through disruption.
A prime example of how a company was able to create “new market space” is Apple and the way it led the revolution in the smartphone market. In its early days, Apple’s main competitor was Nokia, the undefeated phone giant. From the 1990s through the early 2000s, Nokia was the most recognizable and best-sold phone brand. However, it made a fatal mistake by depending too much on its status quo. Its leading position in the contemporary environment made the brand overconfident in their interpretation of customers’ needs. They made gradual, mostly insignificant changes to the hardware and even smaller changes to the software.
Conversely, Apple had a better understanding of customers’ changing preferences and did not fail to deliver. By the early 2010s, consumers had started to demand more from their phone. Their desire was to have a small, pocket-sized computer with extended functionality. Apple did exactly that by giving its product more computing features: it had a functioning web-browser and applications (Podolny & Hansen, 2020). Besides, the US-based smartphone company worked on improving the user interface: the physical keyboard was removed and replaced by a single button and a large touch screen. Nokia’s OS Symbian and chunky interface paled in comparison, and soon, the Finnish company was no longer in the picture.
It is easy to see that Apple used at least to Blue Ocean strategies mentioned before. Firstly, it offered the absolutely novel concept of a smartphone that buyers did not have an established need for but that they grew to appreciate. Secondly, Apple was not trying to weather the new trends: it started one. Today, all smartphones have at least some shared features with iPhones, and consumers will not settle for less.
Social Economy and Its Importance for the Business Environment
As per the definition developed by the Organization for Economic Cooperation and Development (OECD), social economy comprises associations, organizations, cooperatives, and foundations who share the values of solidarity and “the primacy of people over the capital.” The term was coined back in 1996 with the emergence of the now-classic paper “Reconciling Economy and Society: Towards a Plural Economy” penned by Sauvage. In the book, Sauvage discussed the communitarian aspect of the economy (plural economy) and the issues of managing collectively owned and private land based on solidarity between people. Since then, the concept has evolved and extended to become the “social economy (SE).”
The most recent conceptual definition of the SE was developed by the European Standing Conference on Cooperatives, Mutual Societies, Associations and Foundations (CEP-CMAF) in the document titled “Charter of Principles of the Social Economy.” The paper enlists the following key features of the SE:
- The prioritization of the individual and the social ends over capital;
- Voluntary and open membership;
- Democratic leadership;
- A mix of the interests of members and shared interests;
- Application and promotion of the principle of solidarity and responsibility;
- Autonomy and lack of affiliation with public authorities;
- Use of any monetary or other resource surpluses to meet higher sustainability ends as well as cover members’/ users’ needs.
The Organization for Economic Cooperation and Development (OECD) (2020) has its own twist on the conceptualization of the social economy. It sees the SE as consisting of two components: addressing societal needs (social and environmental) and organizing economic activities differently. Regarding the latter element, the OECD (2020) points out alternative forms of economic organization such as engaging multiple types of resources, implementing sustainable practices, and having a local anchorage. Indeed, SE organizations typically operate at a local level because, in this way, they are able to stay attuned to the needs of the populations and take measures.
Today, the social economy is on the rise and is more in-demand than ever. The 21st century has been marked by a slowdown in economic growth, especially after the world economic crisis of 2008 and, at present, during the ongoing Covid-19 global outbreak. The world has come to the understanding that economic growth is not synonymous with equity of opportunity, social welfare, and stability for all members of society. At the moment, the European Union has over 2.8 million social economy entities, and together they account for around 6.3% of EU jobs (OECD, 2020). Some of them are small non-profits, while others are large enterprises with global outreach. Such entities are found in all sectors of the economy, from education to banking, healthcare, and information technologies.
However, the impact of the social economy is even more profound than merely providing employment and contributing to the development of corresponding sectors where SE entities are conducting their operations. As noted by OECD (2020), the social economy has always been at the forefront of organizing economic activities in alternative ways. To do that, it has been identifying and implementing social innovations. It has become one of the drivers behind the shift from understanding growth in economic terms to approaching them from a more “human” perspective.
As a result, in recent years, the business world has been adopting paradigms, such as the triple bottom line (OECD, 2020). It is an accounting framework that holds organizations responsible socially, financially, and environmentally. In other words, it has become the norm for big corporations to give back to the community past a certain stage of development, to have a mission and vision that goes well beyond monetary profits.
An example of a recent SE initiative is Masques-Coronavirus.Brussels. The rapid COVID-19 outbreak led to pressing personnel protective equipment shortages at Belgian hospitals. In response to this issue, two social enterprises from Brussels, EcoRes and Travie, united their efforts and created a decentralized production line for masks (OECD, 2020). EcoRes used its research resources and laboratories, and Travie attracted workers among disabled citizens to provide them with employment for the time being. The mast patterns were designed by students from a professional fashion design who volunteered to help the healthcare sector. In total, Masques-Coronavirus.Brussels involved 2,000 people who produced 240,000 masks in just 1.5 months.
References
Etherington, D. (2020). Amazon to acquire autonomous driving startup Zoox.Tech Crunch. Web.
Kim, W.C. & Mauborgne, R. (1999). Creating new market space.Harvard Business Review. Web.
Newton, C. (2018). YouTube’s CEO says Logan Paul doesn’t deserve to be kicked off the platform.The Verge. Web.
OECD. (2020). Social economy and the COVID-19 crisis: current and future roles. Web.
Podolny, J.M. & Hansen, M.T. (2020). How Apple is organized for innovation.Harvard Business Review. Web.
Schilling, M. A., & Shankar, R. (2019). Strategic management of technological innovation. McGraw-Hill Education.
Wojcicki, S. (2020). My mid-year update to the YouTube community. Web.
YouTube by the numbers: Stats, demographics & fun facts. (2020). Omnicore. Web.