What is Value Creation?

Without value creation, businesses wouldn't be in business at all. Think of value creation as the ground floor of every organization. As you create value (like the farmer turning seeds into crops), the elevator moves up. When it reaches the top floor, there are consumers waiting and ready to pay for the value created, which generates profits for the business. If there's no value creation, the elevator never leaves the ground floor and the customers look for value elsewhere.

As you can see, value is created from work. Think about it this way: many suppliers provides parts and components that go into creating the vehicle you drive. These parts alone don't hold much value to you, do they? But, when these resources are combined with the skill and work of employees at automobile manufacturing plants, they are transformed into a drivable vehicle. That car or truck provides value to you, so you purchase it. The auto manufacturer, in turn, receives the profits from you, the consumer.

The importance of value creation to both the business and its consumers should now be easy to recognize: Businesses need value creation because it provides financial well-being and keeps them competitive in the marketplace, and consumers need value creation because it provides the products and services we need in our daily lives.

Management skills for Entrepreneurs

Entrepreneurs are the individuals who have the courage to take several risks and single handedly operate their business. An entrepreneur is a leader, innovator, thinker and motivator for his team. However, it isn’t an easy task to be an entrepreneur. There are specific managerial skills that an entrepreneur must master in order to be successful in his ventures.

The essential managerial skills to become a successful entrepreneur are stated below:

Time Management

The most valuable asset for young entrepreneurs is their time. As an entrepreneur, you have to take care of so many things together and time management is the key to keep everything on track. It is vital to get more work done in less amount of time by eliminating interruptions, prioritising tasks and increasing effectiveness as well as productivity. Effectual time management allows entrepreneurs to assign specific time slots to the activities as per their importance. It also gives them the ability to participate in economic forecasting and market research.

Business Planning

Every entrepreneur needs to develop a business plan or a blueprint of how will he develop his new business. A good business plan consists of a single document divided into several sections including the description of the organisation, market research, sales strategies, competitive analysis and financial data. A well-planned blueprint or project outline acts as a strong foundation for the success of the venture. It facilitates the entrepreneurs to make their business fit into the industry, identify their target market and plan to capture them.

Employee Management

An entrepreneur must know how to manage the people. He should be a good judge of character and abilities of an individual such as hiring the right employee is the foremost step for the success of a company. Successful entrepreneurs should know how to motivate the employees in order to work effectively and contribute to garner customer experience.

Customer Management

An entrepreneur must know how to manage his relationship with existing customers with a focus on creating loyalty towards his business. This is the easiest and most effective method to increase revenues. Entrepreneurs must have problem-solving skills, communication skills, attentiveness and patience to manage customers effectively.

Sales Management

Selling or sale management is an essential skill every entrepreneur must master. You need to completely understand the sale activities. This helps the entrepreneurs to tackle the challenges that they may face in their sale management journey.

Financial Management

Even if your business’s finance is handled by an accountant or a finance professional, you must know planning, organising, directing and controlling the financial activities such as procurement and utilisation of funds. With a good financial management system, one can make decisions to improve the business operations.

Business Management

Being a successful entrepreneur involves more than enthusiasm and a good eye for new opportunities. A thorough understanding of the essential business functions is a prerequisite for entrepreneurs who want to take their business to the next level. They must have the complete know-how of general management, finance, marketing, operations management, purchasing, supply chain, human resources and public relations.

Identification of Business Opportunity

In general sense, the term opportunity implies a good chance or a favourable situation to do something offered by circumstances. In the same vein, business opportunity means a good or favorable change available to run a specific business in a given environment at a given point of time.

The term ‘opportunity’ also covers a product or project. Hence, the identification of an opportunity or a product or project is identical and, therefore, all these three terms are used as synonyms. The Government of India’s “Look East Policy” through North East is an example of ‘opportunity’ to do business in items like tea, handicrafts, herbals, turmeric, etc.

Opportunity identification and selection are like comer stones of business enterprise. Better the former, better is the latter. In a sense, identification and selection of a suitable business opportunity serves as the trite saying ‘well begun is half done.’ But, it is like better said than done. Why? Because if we ask any intending entrepreneur what project or product he/she will select and start as an enterprise, the obvious answer he/she would give is one that having a good market and is profitable. But the question is how without knowing the product could one know its market?

One way to overcome this dilemmatic situation is to know how the existing entrepreneurs identified the opportunity and set up their enterprises. An investigation into the historical experiences of Indian small enterprises in this regard reveals some interesting factors.

To mention the important ones, the entrepreneurs selected their products or projects based on:

a. Their own or partners’ past experience in that business line;

b. The Government’s promotional schemes and facilities offered to run some specific business enterprises;

c. The high profitability of products;

d. Which indicate increasing demand for them in the market?

e. The availability of inputs like raw materials, labour, etc. at cheaper rates;

f. The expansion or diversification plans of their own or any other ongoing business known to them;

g. The products reserved for small-scale units or certain locations.

What is Idea Generation?

Idea generation is the creative process or procedure that a company uses in order to figure out solutions to any number of difficult challenges. It involves coming up with many ideas in a group discussion, selecting the best idea or ideas, working to create a plan to implement the idea, and then actually taking that idea and putting it into practice. The idea can be tangible, something you can touch or see, or intangible, something symbolic or cultural.

How it Works

Sam is a marketing manager for a shoe company, and he has about eight people who work for him. Sam is a big fan of using idea generation with his team whenever they need to tackle a new challenge. The team has a new project this month. They have to come up with a brand new way of marketing the newest line of shoes to a previously unaddressed target audience. Sam puts his group to work into pairs.

Each pair tackles the task by first thinking of many ideas, far more than they would ever use. The pair will eventually rejoin the team, and the team will select the best idea or ideas before assessing the ideas' worth on a focus group of potential customers at a later date. After feedback from the focus group, the team will adjust their approach and build on the idea using the focus group feedback before putting their plan through real testing or trials. Finally, when the team is confident in their idea, the idea will be passed on for actual business implementation. In our example with Sam and his team, their marketing plan will be employed by the company to target their new customer demographic.

Idea Generation Techniques

There are many excellent and creative techniques that marketing researchers use for idea generation. It isn't required to use them all, but having a vast arsenal of possible techniques makes the process of idea generation easier.

One technique involves getting into groups and coming up with ideas, known as brainstorming, and this is a tried and true method. This technique has many variations. Some teams use a traditional brainstorming approach and simply let their minds wander while they speak up whenever something promising occurs to them or by passing papers with ideas written so that others can physically add to the group thinking. Other teams may utilize a modified approach where they think of ideas that achieve the opposite of their desired outcome to get thinking out of the box.

Another possible technique is to save discussion for later, where members of the team would be presented with the problem to solve and then sent back to work on other tasks while allowing the new problem and possible ideas to develop in the back of their minds for a given amount of time.

Story boarding, or making picture illustrations to help develop new ideas and find solutions, is a valuable visual technique. New insights can be reached when thinking about a task in this image-based format.

To encourage active participation and thinking, role playing, or having employees act out roles in a specific scenario, can be employed for idea generation. Shy team members may be more encouraged to participate and role-specific ideas or points of view might come to light.

What is Innovation?

The word “innovation” is derived from the Latin verb innovare, which means to renew. In essence, the word has retained its meaning up until today. Innovation means to improve or to replace something, for example, a process, a product, or a service. In the context of companies, however, the term needs a definition. In the complex context of business, a definition is needed.

 

Innovation is a process by which a domain, a product, or a service is renewed and brought up to date by applying new processes, introducing new techniques, or establishing successful ideas to create new value.

Why is innovation so important?

Organisations have several options to increase their competitiveness: they can strive for price leadership or develop a strategy of differentiation. In both cases, innovation is essential.

• Companies that choose price leadership must secure their long-term competitiveness by developing innovative, highly efficient processes. Process optimization and continuous improvement in terms of costs are important for them.
• Companies that strive for a differentiation strategy need innovation to develop unique distinguishing features to their competitors.
• Many start-ups launch their activities by developing an innovative product or service.

Continuous innovation is, therefore, crucial for all companies. The main difference is in the focus of the innovation strategy, which varies considerably from company to company.

 

 “Although innovation has always been one of the driving forces in competition and has always been a primary competitive dimension, the numerous studies and publications of recent years show that the speed of change is increasing.”

 

The Different Types of Innovation

In the context of businesses, there are different types of innovation.

• Process improvement and organisational innovation: The improvement of processes through continuous improvement and the development of new solutions.
• Product development: The development of innovative products or product features.
• Service innovation: The creation and introduction of new services for customers and partners.
• Business Model Innovation: The development of innovative business models and new revenue streams.

Digitisation and digital transformation also require companies to rethink and develop new approaches.

Entrepreneurship Development Program

Entrepreneurship Development Programme (EDP) is a programme which helps in developing entrepreneurial abilities. The skills that are required to run a business successfully is developed among the students through this programme. Sometimes, students may have skills but it requires polishing and incubation. This programme is perfect for them. This programme consists of a structured training process to develop an individual as an entrepreneur. It helps the person to acquire skills and necessary capabilities to play the role of an entrepreneur effectively.

 

EDP is an effort of converting a person to an entrepreneur by passing him through thoroughly structured training. An entrepreneur is required to respond appropriately to the market and he/she is also required to understand the business needs. The skills needed are varied and they need to be taken care in the best possible way. EDP is not just a training programme but it is a complete process to make the possible transformation of an individual into an entrepreneur. This programme also guides the individuals on how to start the business and effective ways to sustain it successfully.

 

Objectives of EDP

The objective of this programme is to motivate an individual to choose the entrepreneurship as a career and to prepare the person to exploit the market opportunities for own business successfully. These objectives can be set both in the short-term and long-term basis.

• Short-term objectives: These objectives can be achieved immediately. In the short-term, the individuals are trained to be an entrepreneur and made competent enough to scan the existing market situation and environment. The person, who would be the future entrepreneur, should first set the goal as an entrepreneur. The information related to the existing rules and regulations is essential at this stage.
• Long-term objectives: The ultimate objective is that the trained individuals successfully establish their own business and they should be equipped with all the required skills to run their business smoothly.

The overall objectives of EDP are mainly to help in the rapid growth of the economy by supplying skilled entrepreneurs. This programme primarily aims at providing self-employment to the young generation.

Roles of EDP

An Entrepreneurship Development Programme primarily plays four roles to help an individual to become an entrepreneur. They are:

• Stimulatory Role: It aims at influencing people in large number to be the entrepreneur. This includes:

1.      developing managerial, technical, financial, and marketing skill

2.      inculcating personality traits

3.      promotes and reforms entrepreneurial behavior and values

4.      identifying a potential entrepreneur applying scientific methods

5.      motivational training and building a proper attitude

6.      strengthening the motive of a person and giving recognition

7.  The valuable know-how of the local products and the processes help in the selection of products, preparation of project reports

• Supportive Role: It helps in the following ways:

1.      registration of the business

2.      procurement of fund

3.      Incubation support

4.      Team building and team development support

5.      Mentorship and guidance from industry experts

6.      Providing tax relief, subsidy, government schemes etc.

7.      guidance in product marketing

8.      support for management consultancy

•  Sustaining Role: It aims at providing an effective safeguard to businesses to sustain against the cut-throat market competition. This includes:

1.      help in modernization, expansion, and diversification

2.      additional financing for further development

3.      Global Networking Opportunities

4.      creating new marketing processes

5.      helping access to improved services and co-working centers

•  Socio-economic Role: It aims at upgrading the socio-economic status of the public and includes:

1.      identifying entrepreneurial qualities in practicality

2.      creating employment opportunities in micro, small, and medium industries on an immediate basis

3.      arresting concentration of industries by supporting regional development in a balanced manner

4.      focusing on the equal distribution of income and wealth of the nation channelizing the latent resources for building an enterprise

Classification of Entrepreneur

Classification of Entrepreneur – Innovating Entrepreneurs, Imitating Entrepreneurs, Fabian Entrepreneurs and Drone Entrepreneurs

The economic development of an economy depends upon the nature of entrepreneur. An entrepreneur should be innovative, skillful enough to help in the real development of an economy. When the question arises for the development of an economy the entrepreneur should be potent enough to help the development in a healthy way.

When the entrepreneur is shy and humble the environment is underdeveloped and it is developed only when he is strong, skillful and innovative. In a study of American Agriculture, Clarence Danhot has made classification of entrepreneurs according of limit.

The entrepreneur can be classified as:

1. Innovating Entrepreneurs

2. Imitating Entrepreneurs

3. Fabian Entrepreneurs, and

4. Drone Entrepreneurs.

Type # 1. Innovative Entrepreneurs:

Such entrepreneurs are aggressive in nature and they include innovation in their nature. Such entrepreneurs produce new product technologies etc. in a developed economy. Such entrepreneurs are capable of providing new and better technologies and products to an existing product and technology.

Type # 2. Imitating Entrepreneurs:

Such entrepreneurs are mere imitators. They include adoption of changes in technology and techniques. They do not but only imitate into the existing technologies of a developed economy. Such entrepreneur look forward the changes and the new innovations of a developed economy and adopt them in a developing economy. Such entrepreneurs not only adapt but also change and adjust themselves as per the changing situations.

Type #  3. Fabian Entrepreneurs:

This category of entrepreneurs include such groups of persons which neither accept the new trends, technologies and innovations nor leave the old customs, traditions and beliefs. They are neither imitators nor innovators, they are just the ones who proceed in with the situations they are in and use only traditional methods of production. Such entrepreneur are lazy and not interested in bearing risks.

Type #  4. Drone Entrepreneurs:

Such entrepreneurs exist in underdeveloped countries and refer to the category of persons who are neither interested in imitating the new technologies nor in the acceptance of already existing technologies in a developed economy. Such entrepreneurs bear losses as they keep on sticking to those technologies which are responsible for their losses.

 

Difference Between Entrepreneur and Intrapreneur

As both entrepreneur and intrapreneur share similar qualities like conviction, creativity, zeal and insight, the two are used interchangeably. However, the two are different, as an entrepreneur is a person who takes a considerable amount of risk to own and operate the business, with an aim of earning returns and rewards, from that business. He is the most important person who envisions new opportunities, products, techniques and business lines and coordinates all the activities to make them real.

Definition of Entrepreneur

An entrepreneur is an individual who conceives the idea of starting a new venture, take all types of risks, not only to put the product or service into reality but also to make it an extremely demanding one.  He  is someone who:

• Initiates and innovates a new concept,
• Recognises and utilises opportunity,
• Arranges and coordinates resources such as man, material, machine and capital,
• Take suitable actions,
• Faces risks and uncertainties,
• Establishes a startup company,
• Adds value to the product or service,
• Takes decisions to make the product or service a profitable one,
• Is responsible for the profits or losses of the company.

Entrepreneurs are always the market leader regardless of the number of competitors because they bring a relatively new concept in the market and introduce change.

Definition of Intrapreneur

An intrapreneur is nothing but an entrepreneur within the boundaries of the organization. An intrapreneur is an employee of a large organization, who has the authority of initiating creativity and innovation in the company’s products, services and projects, redesigning the processes, workflows and system with the objective of transforming them into a successful venture of the enterprise.

The intrapreneurs believe in change and do not fear failure, they discover new ideas, looks for such opportunities that can benefit the whole organizationtakes risks, promotes innovation to improve the performance and profitability, resources are provided by the organization. The job of an intrapreneur is extremely challenging; hence they are appreciated and rewarded by the organizationaccordingly.

From last few years, it has become a trend that large corporations appoint intrapreneur within the organization, to bring operational excellence and gain competitive advantage.

 

Key Differences Between Entrepreneur and Intrapreneur

The important distinguishing points between entrepreneur and intrapreneur, are given in the following points:

1.      An entrepreneur is defined as a person who establishes a new business with an innovative idea or concept. An employee of the organization who is authorized to undertake innovations in product, service, process, system, etc. is known as Intrapreneur.

2.      An entrepreneur is intuitive in nature, whereas an intrapreneur is restorative in nature.

3.      An entrepreneur uses his own resources, i.e. man, machine, money, etc. while in the case of an intrapreneur the resources are readily available, as they are provided to him by the company.

4.      An entrepreneur raises capital himself. Conversely, an intrapreneur does not need to raise funds himself; rather it is provided by the company.

5.      An entrepreneur works in a newly established company. On the other hand, an intrapreneur is a part of an existing organization.

6.      An entrepreneur is his own boss, so he is independent to take decisions. As opposed to intrapreneur, who works for the organization, he cannot take independent decisions.

7.      This is one of the salient features of an entrepreneur; he is capable of bearing risks and uncertainties of the business. Unlike intrapreneur, in which the company bears all the risks.

8.      The entrepreneur works hard to enter the market successfully and create a place subsequently. In contrast to Intrapreneur, who works for organization-wide change to bring innovation, creativity and productivity.

Conceptual Model of Entrepreneurship

John Kao has developed a conceptual model of entrepreneurship in his article: Entrepreneurship, creativity and organization in 1989. This model has four main aspects:

1.      Entrepreneurial Personality: The overall success of a new venture largely depends upon the skill, qualities, traits and determination of the entrepreneur.

2.      Entrepreneurial Task: It is a role played by entrepreneur in an enterprise. The major task of the entrepreneur is to recognize and exploit opportunities.

3.      Entrepreneurial Environment: It involves the availability of resources, infrastructure, competitive pressures, social values, rules and regulations, stage of technology etc.

4.      Organizational Context: It is the immediate setting in which creative and entrepreneurial work takes place. It involves the structure, rules, policies, culture, human resource system, communication system. 

 

According to Kao, the most successful entrepreneur is one who adapts himself to the changing needs of the environment and makes it hospitable for the growth of his business enterprise. This ECO (Entrepreneurship, creativity ad organization) analysis frame work developed and conceptualized by John J. Kao contributes a great deal to the emergence as well as sustenance of entrepreneurship and entrepreneurial talent in the prevailing business environment.

Entrepreneurial motivation (Mc Clellend’s Achievement motivation theory)

In the early 1940s, Abraham Maslow created his theory of needs. This identified the basic needs that human beings have, in order of their importance: physiological needs, safety needs, and the needs for belonging, self-esteem and "self-actualization".

Later, David McClelland built on this work in his 1961 book, "The Achieving Society." He identified three motivators that he believed we all have: a need for achievement, a need for affiliation, and a need for power. People will have different characteristics depending on their dominant motivator.

According to McClelland, these motivators are learned (which is why this theory is sometimes called the Learned Needs Theory).

McClelland says that, regardless of our gender, culture, or age, we all have three motivating drivers, and one of these will be our dominant motivating driver. This dominant motivator is largely dependent on our culture and life experiences.

These characteristics are as follows:

Dominant Motivator	Characteristics of This Person
Achievement	Has a strong need to set and accomplish challenging goals? Takes calculated risks to accomplish their goals. Likes to receive regular feedback on their progress and achievements. Often likes to work alone.
Affiliation	Wants to belong to the group. Wants to be liked, and will often go along with whatever the rest of the group wants to do. Favors collaboration over competition. Doesn't like high risk or uncertainty.
Power	Wants to control and influence others. Likes to win arguments. Enjoys competition and winning. Enjoys status and recognition.

Note:

Those with a strong power motivator are often divided into two groups: personal and institutional. People with a personal power drive want to control others, while people with an institutional power drive like to organize the efforts of a team to further the company's goals. As you can probably imagine, those with an institutional power need are usually more desirable as team members!

Factors Affecting Entrepreneurship Development

The following are the factors affecting entrepreneurship development:

1. Aspiration and Attitude

Every person acts and behaves according to his aspirations and attitude.

A person with high ambitions helps himself to become a big entrepreneur.

Similarly, if a person has the attitude to work as an entrepreneur, only then he can achieve success.

2. Personal Factors

The personal factors of an individual also influence his spirit of becoming an entrepreneur or not.

The entrepreneur having qualities of immense imaginations, maturity, optimism, foresightedness, ability to bear risks, efficiency, self-confidence, leadership ability, dynamic thinking, hard work, honesty, etc. is sure to achieve success.

3. Family Circumstances

Every person has different family circumstances.

It is often observed that due to family non-cooperation enterprises get frustrated, whereas a person becomes a successful entrepreneur with a family Corporation.

4. Government Policies, Facilities, and Incentives

Various government policies like the Economic policy, Taxation Policy, Import-Export Policy, and Licensing Policy, etc.

If the government provides basic infrastructural facilities, like electricity, transport, banking, insurance, communication, water, raw materials, and warehousing facilities, etc.

It certainly results in the development of entrepreneurship or entrepreneurial.

5. Social and Cultural Factors

Social organizations, traditions, level of education, personal behavior, situational circumstances, caste or class system, family training and another ethical level of the society are such social and cultural elements, which affect the development of entrepreneurship or entrepreneurial.

In addition, the political environment of the country also affects the development of entrepreneurship or entrepreneurial.

6. Progeny and Traditions

Traditions of society and family have a substantial impact on the working style of an individual.

Even today, in our society, various sections of the Vaishya community better understand the intricacies of business and are more suited to business.

Although in a change in times, progeny and traditions are also changing, these traditions still exist.

7. Business Competition

If healthy competitive conditions prevail in society, the development of entrepreneurship or entrepreneurial is sure, whereas the unhealthy competition blocks the development of entrepreneurship or entrepreneurial.

Various ancillary small industries can be developed, along with big Industries.

The government may create the conditions of healthy competition by its policies and various laws.

8. Economic and Business Environment

The economic and business environment of the country also affects the development of entrepreneurship or entrepreneurial.

Availability of basic infrastructural facilities, industrial areas and estates, raw material, labour, transport, communication, Insurance and financial facilities, price level, trade cycles, economic stability, and investment position in the country are such motivating elements that influence the development of entrepreneurship or entrepreneurial.

9. Support System

Availability of support system, like specific Financial Institutions, advisory services, and expenditure on research and investigations, etc.

have also there owned a role in the development of entrepreneurship or entrepreneurial class.

10. Attitude of Big Entrepreneurs

Big entrepreneurs may motivate and inspire small entrepreneurs with success and prosperity.

Besides, the positive attitude of big entrepreneurs is also inspiring for small entrepreneurs.

Big entrepreneurs may boost up the morale of small entrepreneurs by providing them knowledge about law, building, raw materials, techniques, and marketing, etc.

11. Entrepreneurship Oriented Education and Training

Education and training as an important role in the development of entrepreneurship.

The entrepreneurs are not born but are developed as such, by way of proper education, training, and counseling.

In India also, the prospective entrepreneurs are educated and trained through entrepreneurial or entrepreneurship development programs, by various technical and management Institutions.

These institutions provide details training about feasibility reports, industrial surveys, project reports, etc.

12. Role of Banks and Financial Institutions

Banks and Financial Institutions have also played an important role in the development of entrepreneurship or entrepreneurial.

If these Institutions quickly approve the projects submitted by the entrepreneurs, it provides encouragement for the establishment of Business and Industrial Enterprises.

It also simplifies the policies and procedures for providing loans and credit, and also provide facilities for Research and investigations, which results in the development of entrepreneurship or entrepreneurial, which otherwise is not easily possible.