1

Thinking about

Innovation and Entrepreneurs

hip

2

Thinking about

Innovation and Entrepreneurs

hip

3

4

The 1st Machine Age

5

6

Forbes Top 100 Companies1917US Steel AT & TStandard Oil of NJBethlehem Steel Armour & Co.Swift & Co.International Harvester EI du Pont Midvale Steel and Ordinance US Rubber General Electric International Mercantile MarineAmerican Smelting & RefiningAnaconda Copper Mining Standard Oil of NYPhelps Dodge Singer Manufacturing Jones & Laughlin SteelWestinghouse ElectricAmerican Tobacco

7July 13, 1987

Forbes Top 100 Companies

8

1917 1987US Steel International Business

MachinesAT & T ExxonStandard Oil of NJ General Electric Bethlehem Steel AT & TArmour & Co. General Motors Swift & Co. EI du Pont International Harvester FordEI du Pont MerckMidvale Steel and Ordinance AmocoUS Rubber Digital Equipment General Electric Phillip MorrisInternational Mercantile Marine Chevron American Smelting & Refining Sears, RoebuckAnaconda Copper Mining MobilStandard Oil of NY Bell SouthPhelps Dodge Eastman KodakSinger Manufacturing Standard OilJones & Laughlin Steel Hewlett-PackardWestinghouse Electric Coca-ColaAmerican Tobacco Wal-Mart Stores

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Forbes Top 100 Companies

Of the Top 100 in 1917, how many remained in the Top 100 in 1987 ?

18 11 with the same name 7 with a new name or via merger

Forbes Top 100 Companies

10Source: Forbes, July 13, 1987

Growth in Market Capitalization CAGR % 1917 – 1987General ElectricEastman Kodak

DuPontSears Roebuck

Ford MotorGeneral Motors

ExxonProctor & Gamble

AmocoWestinghouse

ChevronDow Jones Average

MobilTexaco

Forbes Magazine Price Pacific Gas & Electric

CitibankSouthern California Edison

AT&TUS Steel

7.8%7.7%

7.2%6.9%6.9%6.9%6.9%

6.7%6.5%

6.0%5.9%

5.2%4.9%

4.7%4.6%

4.2%3.8%

3.3%2.8%

2.1%

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“ … the dangers of complacency can be seen …”

“…they brought about their demise with an unwillingness to change.”

121975 1980 1985 1990 1995 2000 2005 2010 2015 20200

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20

30

40

50

60

70

80

90

Was Kodak Unwilling to Change ?

Mega pixels = year 1.23

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Businesses throw around the term to show they’re on the cutting edge of everything …. But that doesn’t mean the companies are actually doing any innovating. Instead they are using the word to convey monumental change when the progress they're describing is quite ordinary.

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September 2015

The 20 most used buzzwords in Australian online media in 2015

Innovation/ innovate212,944Collaboration

120,311Selfie

59,646Best practice

24,867Agile

20,480Big data

16,650

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“Over the 20th century, innovation has become quite a valuable buzzword … the term [innovation] may soon cease to be current, emptied of all meaning by constant overuse.” John Pocock, 1971

“Innovation has come to mean all things to all [people] and the careful student should perhaps avoid it wherever possible, using instead some other word.” Edward Ames, 1961

Quotes from Benoit Godin, Innovation Contested, 2015

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Marco Polo

Adventurer Merchant

Christopher Columbus

Adventurer Mercantilist

20

Entrepreneurone who undertakes a project such as manufacturing or building

1723

Richard Cantillon

Richard Cantillon

211730 & 1755

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Richard Cantillon“except the Prince and the Proprietors of Land, all the Inhabitants of a State are dependent; they can be divided into two classes, Undertakers and Hired people;  The Hired people are on fixed wages …. All the rest are Undertakers, whether they are set up with capital to conduct their enterprise, or are Undertakers of their own labour without capital, and they may be regarded as living at uncertainty.”

Adam Smith

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1759 1776

Adam SmithAdventurer“One who hazards, or puts something at risk, as merchant-adventurers”Projector “One who forms wild or impracticable schemes”Undertaker“One who undertakes; one who engages in any project or business”

Webster’s Dictionary, 1828

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InnovationInnovation means something new, but it has contracted a bad sense, it means something new and bad at the same time.

Jeremy Bentham 1824Innovation: change made by the introduction of something new… often used in an ill sense, for a change that disturbs settled opinions and practices

Webster’s Dictionary 1828

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Economic Progress

27Ian Morris, Why the West Rules – For Now, 2010

Economic Progress

Thomas Malthus

281798

Thomas Malthus

29

Agricultural production

Agricultural production required

Years

Outp

ut

Labor & land −> outputoutput = f ( labor, land )

Classical Economics

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output = f ( labor, land, capital )

Jean-Baptiste Say “The entrepreneur launches and manages an enterprise by combining the means of production - labor, land, capital, natural agents, and knowledge.”

1803

John Stuart Mill

321848

Diminishing returns of land and labor could

“be suspended … by whatever adds to the general power of mankind over nature, and especially by any extension of their knowledge, and their subsequent command of the properties and power of natural agents.”

Gabriel Tarde

33

social development is

driven by innovation which

comes from invention and its adoption through

imitation1890

Joseph Schumpeter

“the champion of innovation and entrepreneurship”

“… perhaps the most powerful thinker ever on innovation, entrepreneurship, and capitalism.”

Joseph Schumpeter

35

The … stimulus to economic development is innovation …

defined as the commercial application of something new …

Joseph Schumpeter

36

[innovation] … must be distinguished from invention.

As long as they are not carried into practice, inventions are economically irrelevant.

An innovation is a new combination

of productive means that

appear discontinuously

Joseph Schumpeter

37

1934

New combinations• New good• New method• New market• New source• New

organization

Joseph Schumpeter

38

1934

Joseph Schumpeter

Innovation as a rule is embodied

in new firms which generally

do not rise out of the old ones

Theory of Economic

Development1911

39

Joseph Schumpeter

Theory of Economic

Development1911

40

The carrying out of new combinations, we call enterprise,

the individuals whose function is to carry them out, we call entrepreneurs.

Joseph Schumpeter

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[The entrepreneur’s] chief function in society was to challenge established ways of doing things.

The leader type appears only when [innovative] possibilities present themselves

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Innovation As Adoption

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an idea, practice, or object that is perceived as new by an individual or unit of adoption

Everett Rogers 1962

Growth through Technical Change

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TECHNICAL CHANGE AND THE AGGREGATE

PRODUCTION FUNCTION

Robert M Solow

1957

45

output = technology f ( labor, capital )Solow

output = f ( labor, capital )Classical

Innovation as Economic Growth

46

Growth through Technological Change

output = f ( capital, labor, technology, human capital)

ENDOGENOUS TECHNOLOGIAL

CHANGE

Paul Romer

1990

Technology

47

A means to fulfill a human purpose

Method, process, or device

Brian Arthur 2009

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Lean startup / launch pad

Steve Blank

A startup searches for a business model ; a business executes a business plan

Startups are not smaller versions of large companies

Uncertainty: Unknown products and unknown markets

Small or MediumEnterprise

Bill Aulet MIT

Innovation Driven Enterprise

Business

Technology

Human Values

IDEO & Stanford Design School

Businessviability

Technologyfeasibility

Human Values

desirabilityusability

IDEO & Stanford Design School

Innovation

Novel

Disruptive

Wicked Problems

Extreme Uncertainty

Changing and conflicting

requirements

Problem formulation and solution are

coupledRittel & Webber, 1973

Educational Focus

The innovator

The wicked problem solver

The methods and processes supporting

innovation

55

Information is the resolution of uncertainty

Thank You for your interest and

attention !!