Michael Gerber's Business Development Process Foundation #1: Innovation

On pp. 117-118 of The E-Myth Revisited (New York: Harper Collins, 1995), Gerber quotes Theodore Levitt, Marketing for Business Growth (New York: McGraw-Hill, 1974), p. 71:

The difference between creativity and innovation is the difference between thinking about getting things done in the world and getting things done.

He goes on to say, also on p. 118, "Where the business is the product, how the business interacts with the consumer is more important than what it sells."

This is important to say because we've all been disappointed by businesses. Do we remember the product that was sold? No, just the behavior of the business.

For Gerber the innovation is always doing what you're doing better. I reviewed a business plan for a couple of students designing a fast food business that would sell only fried food. They had a line item in their financials for "R&D" which amounted to finding out what batters were the most distinctive. This would be their marketing edge.

Sounded reasonable.

They had money in the item for the 1st year, but nothing in there for years 2 or 3. I asked them why. They said they had already found out how to make the batter. But, I said, aren't you going to continue to improve them or try out new ones? The stared at me for a minute, but when they revised their plan, I saw they had put in money for that. That's what Gerber calls innovation. Always improving how the business performs.

What do you think of this? The goal is to produce more skilled entrepreneurs. Does this help? Tell me. Post a comment. I'd like to know. And follow me on Twitter.com

Entrepreneurship informs all of my professional activities. Entrepreneurial ideas are their life's blood. For my ideas on entrepreneurial real estate go to www.yourstopforrealestate.com/blog and for my ideas on writing and publishing, go to www.kearneymusicschoolmurders.blogspot.com.

Disruptive Technology

Wikipedia, the free, on-line encyclopedia, says a disruptive technology is

A disruptive technology or disruptive innovation is a technological innovation that improves a product or service in ways that the market does not expect, typically by being lower priced or designed for a different set of consumers. A disruptive innovation ignores the currently popular definition of what counts as quality and creates a new definition.

Disruptive innovations can be broadly classified into low-end and new-market disruptive innovations. A new-market disruptive innovation is often aimed at non-consumption (i.e., consumers who would not have used the products already on the market), whereas a lower-end disruptive innovation is aimed at mainstream customers for whom price is more important than quality.

Disruptive technologies are particularly threatening to the leaders of an existing market, because they are competition coming from an unexpected direction. A disruptive technology can come to dominate an existing market by either filling a role in a new market that the older technology could not fill (as cheaper, lower capacity but smaller-sized flash memory is doing for personal data storage in the 2000s) or by successively moving up-market through performance improvements until finally displacing the market incumbents (as digital photography has largely replaced film photography).

In contrast to "disruptive technology", a "revolutionary technology" introduces products with highly improved new features into the market, such as the automobile or telephone. A "sustaining technology or innovation" improves product performance of established products. Sustaining technologies are incremental.

The literature tells us that innovations that are successful generally don't require users to completely change what they're doing. The best ones are those that help people do what they are already doing but more conveniently, easily, or cheaply. for example, accounting software allowed millions of tax payers who already did their own taxes to do them better and more quickly. That doesn't mean there can't be some learning to do.

What do you think about this? I'd like to know. Read the entire Wikipedia article, then post a comment.

Entrepreneurship 2.0 is my entrepreneurship course. It supplies the life's blood of my professional activities: teaching, writing, and real estate. For entrepreneurial real estate go to www.yourstopforrealestate.com/blog and for entrepreneurial writing to www.kearneymusicschoolmurders.blogspot/com.

Invention

Wikipedia, the free, on-line encyclopedia says:

An invention is the discovery or creation of a new configuration, composition of matter, device, or process. Some inventions are based on pre-existing models or ideas. Other inventions are radical breakthroughs which may extend the boundaries of human knowledge or experience.

Inventions that get out into the world are innovations, and may be a major breakthroughs or of minor and incremental impact. The effects can also be inbetween these two extremes.

An invention that is novel and not obvious to those who are skilled in the same field may be able to obtain the legal protection of a patent. There is also a cultural invention which is an innovative set of useful social behaviors adopted by people who then passed on to others.

Inventors are not necessarily entrepreneurs. Often they make lousy business leaders because their skill-set does not include entrepreneurial skills. Just about everything we use now was invented by somebody, everything from cars to computer chips. In fact the history of the world could be written as the history of innovation.

Entrepreneurs have to be aware of what's being invented and see how they can use inventions to make a difference in the world.

Are you an inventor? Know one? Let me know by posting a comment.

Entrepreneurship is the life's blood of all my professional activities. For entrepreneurial real estate, go to www.yourstopforrealestate.com/blog and for entrepreneurial writing and publishing, to www.kearneymusicschoolmurders.blogspot.com

Market Research

Research is the asking and systematic answering of questions. Finding out whether you should take an umbrella with you is not conducting research. Asking and looking into the question, what factors are associated with precipitation is. The key is systematic, though looking out the window in the morning to see what you should wear is not a bad idea. It's just not research.

Market research is research related to marketing questions. From Wikipedia, the free, on-line encyclopedia, we have:

Market research is the process of systematically gathering, recording and analyzing data and information about customers, competitors and the market. Its uses include to help create a business plan, launch a new product or service, fine tune existing products and services, and expand into new markets. Market research can be used to determine which portion of the population will purchase a product/service, based on variables like age, gender, location and income level.

If you're interested in this, read the whole article and follow the links. There have also been hundreds of market research textbooks written on the subject, though the recent paradigm shift in the economics of information may have made moot a lot of the information out there. So whatever you read has to be filtered through an ever more recent lens of what society is like now.

I don't recommend that entrepreneurs commission market research studies. Such studies take money, require investment in time, and may not be helpful at the end of the study because society changed while the study was being done. Gathering all the information an entreprendur can find on consumer habits and preferences and so forth is key, though. Not just commissioned market research. I'll explain in subsequent postings.

What do you think? I want to know. Post a comment.

Entrepreneurship informs all my professional activities. For entrepreneurial real estate, go to www.yourstopforrealestate.com/blog and for entrepreneurial writing, to www.kearneymusicschoolmurders.blogspot.com.

Innovation

I go with Everett M. Rogers's definition of innovation: An innovation is an idea, practice, or object that is perceived as new by an individual." Rogers goes on to say,

It matters little, so far as human behavior is concerned, whether or not an idea is 'objectively' new as measured by the lapse of time since its first use or discovery. The perceived newness of the idea is enough for the individual determines his or her reaction to it. If an idea seems new to the individual, it is an innovation." (Everett C. Rogers, Diffusion of Innovations, New York: the Free Press, 2003, p. 12)

Rogers' book is a "must have" book for the the entrepreneur. He covers just about everything there is to cover on innovation and innovation reserach. Also, read the Wikipedia artcle on innovation. It's a bit less daunting and more accessible.

What do you think? I'd like to hear from you. Post a comment.

Entrepreneurship informs all of my entrepreneurial activities. For entrepreneurial real estate go to www.yourstopforrealestate.com/blog and for entrepreneurial writing and publishing to www.kearneymusicschoolmurders.blogspot.com

Incidence

The spread of innovation through networks mimics the spread of disease through populations. Hence the term, "viral marketing." So the concept of "incidence," a term from epidemiology may be appropriate for entrepreneurs to use.

From Wikipedia, the free, on-line encyclopedia, "incidence" is

A measure of the risk of developing some new condition within a specified period of time. Although sometimes loosely expressed simply as the number of new cases during some time period, it is better expressed as a proportion or a rate with a denominator."

The Wikipedia article also gives the term, "incidence proportion," also known as "cumulative incidence":

The number of new cases within a specified time period divided by the size of the population initially at risk. For example, if a population initially contains 1,000 non-diseased persons and 28 develop a condition over two years of observation, the incidence proportion is 28 cases per 1,000 persons, i.e. 2.8%.

And then, the article also describes the "incidence rate":

The number of new cases per unit of person-time at risk. In the same example as above, the incidence rate is 14 cases per 1000 person-years, because the incidence proportion (28 per 1,000) is divided by the number of years (two). Using person-time rather than just time handles situations where the amount of observation time differs between people, or when the population at risk varies with time.

Anyone interested in the term should read the entire Wikipedia article and follow all the links and references.

Epidemiology offers offers the entrepreneur a way of shifting perspective to think about the creation and adoption of new products in new ways. Rather than time-worn jargon such as "market share," "market potential," and so forth, think of markets in terms the extent to which various networks are at risk of adopting new products.

If you like what I say, post a comment. Entrepreneurship informs all my professional activities. For entrepreneurial real estate, go to www.yourstopforrealestate.com/blog and for entrepreneurial writing, go to www.kearneymusicschoolmurders.blotspot.com.

Prosumer

Wikipedia defines "prosumer" this way:

Prosumer is a portmanteau formed by contracting either the word professional or producer with the word consumer. The term has taken on multiple conflicting meanings: the business sector sees the prosumer (professional–consumer) as a market segment, whereas economists see the prosumer (producer–consumer) as having greater independence from the mainstream economy

Commentators have used the combined word to reflect the co-creation that is going on in the market today where those who consume, or use, a product innovate and produce new, marketable products, thereby becoming prosumers. Those interested in reading more about the concept should consult the Wikipedia article.

All of my activities are entrepreneurial. For my thoughts on entrepreneurial real estate, go to www.yourstopforrealestate.com/blog. For writing and publishing, www.kearneymusicschoolmurders.blogspot.com.