Why Entrepreneurial Organizations Seek Opportunities for Innovation Essay.
An entrepreneurial organization is a business that provides time and space for employees to seek creative ideas, promotes those ideas, and supports those ideas by building the project. Innovation is the specific tool of entrepreneurs, the means by which to exploit change as an opportunity for a different or enhanced product or process. The definition of “entrepreneur” from Dictionary.com is “a person who organizes and manages any enterprise, especially a business, usually with considerable initiative and risk.” One such person who invested considerable initiative and risk is Ray Kroc, king of the famous franchise chain, McDonald’s.
Ray Kroc started as a salesman for the Lily-Tulip Cup Co. selling paper cups when he was 37 years old. He met Earl Prince, inventor of the first five-spindle milkshake mixing-machine called a Multimixer. Ray purchased the marketing rights for the Multimixer and sold it all across the country.
When he came upon the first hamburger stand owned and operated by the McDonald brothers, Kroc was so impressed by the simplicity and originality of this new restaurant (a storefront with no seats which offered only burgers, fries, drinks and milkshakes) that he purchased the McDonald’s method from the brothers – and the rest is history.
There are now more than 25,000 McDonald’s in operation worldwide. Ray’s reason for seeking this opportunity was to become profitable and at 61 years of age, he did become a millionaire. Organizations seeking innovative opportunities do so when there is an Organizational Need. United Parcel Service (UPS) designed their own route optimization system which computerized daily schedules to provide more efficient routes thereby saving delivery time, assisting with driving directions (reducing wrong turns and wrong deliveries), and reducing gas consumption.
This system also alerts the closest driver to the pickup location where to go. With this innovative system, UPS intends to be “the biggest and most flexible delivery company”. The savings of this new innovation has greatly outweighed the initial investment and risks. One of my favorite examples of an innovative organization is APPLE which all entrepreneurial organizations must admire. Since Steve Jobs introduced the first MacIntosh computer in 1984, APPLE remains the pioneer as being First to Market with its innovative design and features. Today, Apple continues to develop products that substantiate their leadership in the technology arena. From the MacIntosh to the iPad, Apple has enjoyed a reputation for delivering leading-edge products. Apple takes pride in its reputation and hardcore following of customers who pay premium prices for Apple products.
With the iPhone 5 coming out on the market soon, Apple can rest assured that their customer base – early adopters – will be waiting to buy it. Creative Edge: Entrepreneurial companies keep a strong objective toward creativity. Companies like 3M have rules for strengthening their innovative culture: 25 – 30% of annual sales must come from new products that are five years old or less; they are committed to research and development; they inspire intrapreneurship by allowing employees to pursue their own research interests although they are unrelated to the company’s current projects; their departments are kept small and run autonomously but have access to the company’s information and technical resources; awards are given for good ideas; their products are designed for the customer; and most of all, the company realizes that there will be failures but continues to encourage new ideas. 2
Reason #5: Remain competitive. Japanese company, Honda, began manufacturing its cars in the United States in 2008 at its new facility in Greensburg, Indiana. The $550 million facility was scheduled to produce 200,000 vehicles, and employ 2,000 associates at full capacity. The company standardized its assembly process (mass production) making it more flexible to change from producing pick-up trucks to fuel-efficient cars. By doing so, the company remains competitive and the 4-cylinder Honda Civic sedan remains a popular-selling car today.
Reason #6: Adaptable to the new age: Innovation is not limited to business. It is part of everyday life – including our music. Adaptable to changing times (and still highly successful) is the World’s Greatest Rock and Roll Band, The Rolling Stones. The Stones are the longest-living still-performing rock and roll band. Formed in London in 1962, The Stones have the “ability to adapt to the latest sounds and styles without drifting too far from their origins as a blues-loving, guitar-based rock and roll group.” 3 Their music changes with the times, staying contemporary yet maintaining their signature sound. Sir Mick Jagger has been an icon since The Stones’ first #1 hit “It’s All Over Now” in 1964 to Maroon 5’s video “Moves Like Jagger” hitting #1 in 2011. After four decades, The Stones are still rolling.
There are myriad reasons why entrepreneurial organizations seek opportunities for innovation but the reasons I believe are important are to prevent personal and professional stagnation and to allow people to be the creative geniuses that they are.
Bateman, T. & Snell, S. (2011). Managing Technology and Innovation. In Management: Leading & Collaborating in a Competitive World (Ninth edition). New York, NY: McGraw Hill Irwin. Prominent people, A website dedicated to famous people, celebrities, VIP’s, actors, actresses, musicians, politicians. The Rolling Stones. 2012. Retrieved from http://prominentpeople.co.za/rolling-stones.aspx