Innovation & Entrepreneurship - It’s Not Either Or, It’s And and And!

?Innovation and entrepreneurship may seem two distinct concepts, but they are closely related. In practice, innovation and entrepreneurship are intertwined.?

Innovation refers to the development of new ideas, processes, products, or services that create value, while entrepreneurship is the process of turning an innovative idea into a business venture to capture the value created.

Hence, in theory, it is possible to have innovation without entrepreneurship. For example, a scientist may develop a ground breaking new technology in a research laboratory, but may not take any steps to commercialize it. Similarly, a company may invest in research and development to create new products or services, but not pursue any commercial activities to bring them to market.??

Entrepreneurship is essential to the success of innovation as it involves the identification of market opportunities by solving a real problem, creating a significantly better solution and a business model, and then developing a go-to-market strategy to reach out to end users who are willing and able to pay for it, thus creating value for the customers.?

The vast majority of ‘successful’ innovations are driven by entrepreneurs who seek to bring their ideas to market and create value for customers.

Therefore, innovation without entrepreneurship can be best termed as invention, as it is unlikely to have a significant impact on society or the economy.?

To fully realize the benefits of innovation, entrepreneurs are needed to turn new ideas into reality and create value for customers and society.

Joseph Alois Schumpeter is considered as the father of innovation.?In his words, innovation is the “creative destruction” that develops the economy,?while the entrepreneur performs the function of the change creator. In Schumpeter’s?work, Entrepreneurship is innovation and the actualization of innovation. In?this point it has to be clearly marked, that entrepreneurship cannot be confused with invention due to the?four complementary functions: risk-taking, error-correction and administration (which in Schumpeter’s economics of evolution are separate), distinctive, which are completely non- entrepreneurial in nature.?

Coming to India’s entrepreneurial effort, the emphasis is on innovation but in reality the outcome is inventions, if at all. Most support and effort provided is leading to product/services with zero or insignificant commercial value. The outcome, 95% of the start-ups?perish in 3-5 years.?

Government’s mobilization of large pools of resources and capabilities to support the Indian entrepreneurs/ startups is really great, as it believes that this will stimulate the economy. Government policies are motivated by the thought?that by encouraging innovation, entrepreneurship, outcome is a surety and vice-e-versa.?However, its impact cannot be properly evaluated and since it pays no price for being wrong, it struggles in assigning responsibility.?

Schumpeter’s theory of entrepreneurship very clearly divides technological progress, for example, into three stages of taxonomy:

1. In the first stage is the invention, creative response or entrepreneur phase, new ideas are generated.?
2. Second, is the innovation process stage, where new ideas are used to develop or transform new products or processes.?
3. Third stage is the diffusion stage is concentrated on the adoption and penetration of these new products or processes.?

Now that means that a new product or service, an “invention”,?can qualify to be ‘innovation’ once there is a “commercial” value to it that would help the “diffusion” by its adoption by society at large.

After meeting a couple of thousands of entrepreneurs in person over the last ten years or so and being a serial entrepreneur myself, I now have a fairly good understanding of the Indian entrepreneurial ecosystem. My opinion here is based on my interaction with entrepreneurs, mentors, investors, government officials in various ministries, incubators, accelerators, student entrepreneurs and self-proclaimed gurus of entrepreneurship.?

My conclusion – Indian entrepreneurs pursue innovation without entrepreneurship and hence they fail. Thus, wasting time, effort and precious resources as the innovative ideas are not used to create value or benefit society in any way! Solution…in the next part!?

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