3. Entrepreneurial (Based on Innovation) (see Volume 5 for more details)

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Introduction

Recent focus on the information and knowledge economy is now changing to entrepreneurship and generating entrepreneurial mindset as a solution to growth and development

"...there is no science to being an entrepreneur; but there is a method..."

Ryan Trainer as quoted by John Stensholt, 2014

Entrepreneurship is a skill

The definition of entrepreneurship should be divorced from risk. Many people associate entrepreneurialism with risk-taking. Yet most entrepreneurs have evaluated and thought of ways of handling the risk in any venture.

Some quotes from Peter Drucker are

"...The best way to predict the future is to create it..."

Peter Drucker as quoted by Fortune Magazine, 2006a

"...Any business enterprise has 2, and only 2, basic functions - marketing and innovation..."

Peter Drucker as quoted by Al Ries, 1997

Furthermore, he stated entrepreneurs are people

"...who create something new..."

Peter Drucker as quoted by Geoffrey Colvin, 2005b

At the same time

"...Organisational innovation has always lagged behind technology innovation..."

Gary Hamel as quoted by Catherine Fox, 2007l

Many organisations that downsize, practise cost-cutting, etc have found that they cannot shrink their way to success. Furthermore, they have found they cannot grow rapidly by tweaking existing services and products, diversifying, merging, forming joint ventures/partnerships/alliances, etc, take-overs, moving to developing countries, etc. As a result and

"...because of maturing technologies and aging product portfolios, a new imperative is clear: companies must create, develop and sustain innovative new businesses..."

David Garvin et al, 2007

As organisations grow, they become less flexible and as a result, maintaining the pace of growth becomes harder. This forces organisations to search for new sources of revenue (markets, products, services, etc)

Disruptive technologies facilitate the emergence of new markets but initially it may not be very lucrative
"...there is no enduring formula for creativity......When we attempt to production innovation we breed out the very thing we trying to raise: the creative destruction that stokes and re-stokes the fires of capitalism..."
Alex Payne as quoted by James Hutchinson, 2014b

Research is showing (Patrick Durkin, 2014) that many large organisations don't understand what innovation is, how to encourage it or even how to measure it. Some examples, innovation is not included in the key performance indicators, there is no policy or structure to learn from failure, etc
"...companies are fundamentally risk adverse and innovation requires you to embrace risk..."
David Munn, 2014

There are 3 components to innovation
i) efficient innovation (produces the same product more cheaply like an automated production line, etc)
ii) sustaining innovation (changes a good product into a better one, like hybrid cars, etc)
iii) disruptive innovation (transforms an expensive, complex product, service or business model into affordable, simple ones, sometimes using different channels to access customers like smart phones, social media, etc)

The third one can fundamentally change the economics of an industry overnight and presents the greatest potential for growth. On the other hand, they are generally a small percentage of all innovations.

How to embed innovation in your organisation's culture
- encourage risk-taking by defining where you are willing to take risks and lead by example
- engage employees to streamline operations, etc
- recognise success and/or worthy failures
- engage with all stakeholders, especially customers
- use social media, technology, etc to get feedback
- implement good ideas quickly

For example, Google allows 20% of their engineers time to be dedicated to free work, ie explore new ideas and think about things to try to come up with the next new idea. Need to allocate more than time and staff to innovation. Need to encourage the willingness to try a new challenge and reduce the fear of failure so that íts safe to fail, ie if there is no willingness to fail, you have no hope of success
NB "...Ideas are a dime a dozen, people who implement them are priceless..."
Mary Kay Ash as quoted by
Patrick Durkin, 2014b

Innovation strategies

From a survey conducted by University of Sydney business School (2016), 3 major strategies dominated, ie

- in-house innovation labs (aiming to uncover the next big start-up or business idea to transform the organisation)

- venture capital fund or invest directly in start-ups (the average tech start-up takes 4.2 years to market deliver)

- hackathons and cultural programs (to transform a corporate culture into a more disruptive, agile workplace)

Yet one of the world's most innovative companies (Cochlear) does not follow any of the above 3 strategies.

Using a transitional team approach to innovation, eg Mirvac (using 40 innovation champions selected as a demographic slice, ie different business units, ages, seniority, etc to work on innovation in addition to their normal job. They were selected as high achievers, open-minded, love to learn and really inquisitive and passionate about innovation.  Their focus is on predicting what customers will value in the future. One of their successes was off-site manufacturing of wall panels which reduces building time by 40%, increases quality-control, reduces workplace hazards and site wastage by 60%.

Some key tips include

- allowing champions to emerge from anywhere in your organisation and provide them with incentives

- keep bureaucracy at a minimum during the engagement stage

- need to develop ideas to commercialisation stage

(source: Patrick Durkin, 2016)

Innovation involves a culture of review, evidence-based improvement and goal setting
"...innovation springs from adopting a forward-looking and outward-looking approach..."
Roy Kelley, 2015

Three critical factors allow innovation to succeed
i) a desire to improve and openness to change
ii) a culture of risk-taking to seek inventive solutions
iii) a preparedness to fail that is combined with a readiness to learn from experience

Remember: corporations are designed to ensure the success of their established businesses. New businesses have a culture of their own and present 3 main challenges

ii) new businesses require innovation, fresh ideas and mavericks that can clash with the current businesses that generate revenue

iii) there is a poor fit between new businesses and old systems, especially budgeting, HR management, etc.. The systems are designed to handle the operational aspects of the mature businesses, not the strategic, conceptual and entrepreneurial expertise that start-up's require.

To effectively manage the balancing act between new and existing businesses requires attention in 3 areas: strategy, operations and organisations.

"...develop strategy by trial and error. New businesses operate in highly ambiguous environments, where the full range of alternatives and outcomes isn't known, leading to many possible directions and evolutionary paths. The higher level of ambiguity in new businesses implies that corporate entrepreneurs won't get it right the first time. Because hard numbers are difficult to come by and strategic options are difficult to identify, past practices, too, offer little guidance. Experimentation is essential. Managers must begin with a hypothesis about what will work and what won't: then they should search for ways of validating or invalidating their preconceptions..."

David Garvin et al, 2007

According to Australian Business Foundation, (2007), innovation provides most of the basis for productivity increases.

It is claimed that entrepreneurs are more likely to be 'thrill seekers' who take calculated risks and

"...have more energy, get up and go, and they want to go out and do wonderful and great things..."

Chris Jackson as quoted by Fiona Smith, 2008 m

Only other hand, one of the major differences between a manager and entrepreneur is that the entrepreneur does not fear making mistakes.

"...learning is about making mistakes and learning from them..."

Richard Branson, 2008

Failure is more about not giving something a go, ie

"...failure is not giving things a go in the first place. People who fail are those who don't have a go and don't make an effort......there are few people who have tried something and fallen who didn't get enormous satisfaction from trying, and I have learned more from people who have tried and faltered than from the few charmed people for whom success came easy..."

Richard Branson, 2008

"...failure is not the enemy but fear of failure is. Failure and success are inextricably linked......we must learn to accept and get the most out of failure in order to achieve true success..."
Aalto Entrepreneurialship Society, (2013),

Entrepreneurship and corporatisation were viewed as opposite ends of the risk spectrum, ie entrepreneurship was the business opportunity paired with passion, perseverance, creativity, tolerance for risk and relentless problem-solving ability. The other focused on long-term goals such as secure 5-year plans, with strong fiscal and management practices. This is changing with more of the entrepreneurial mindset required in the corporate world, ie
- embrace uncertainty (usually entrepreneurs have a strong vision and inspiring mission which attracts the best talent; they embraced the uncertainty of the disrupted world; know when to ask for help.  The corporations need to adopt this and focus on new growth opportunities, acknowledge knowledge and skill gaps and where the best talent lies in order to collaborate with to take advantage of opportunities)
- change your view on failure (treat "failure" as gaining new knowledge for future opportunities; focus on servicing the needs of strategically important customer segments;  continually learn from attempts that don't work, ie fail fast, fail cheap, learn fast, adapt fast, etc)
- be an authentic partner of value (successful start-up executives have a strong foundation to explore their unique advantages as they have a strong sense of who they are, what they know and who they know; understanding your capabilities as a business helps you generate powerful partnership possibilities.

Despite what the media's impression, entrepreneurialship is not glamorous but is slog.  It is hard work that requires a very strong focus, large amounts of resilience, grit, commitment, etc.

One of the challenges is to maintain the customer focus so that you earn their trust. Balance this with other stakeholders' needs, like investors who are keen on growing fast.

Some hints on being a successful entrepreneur (Lydia Gilbert, Dia&Co - online retailer for large female clothes)

1. Follow your passion (in order to create something extraordinary, you must love and deeply believe in what you are doing)

2.  Get comfortable with being uncomfortable (ambiguity is here to stay; use it to give you the adrenaline and drive to do incredible things)

3. Focus relentlessly on the customer (in decision-making that customer comes first; exceed their expectations)
(source: Peter Bradd, 2016; Rachel Botsman, 2016b)

Entrepreneur are just limited to business work. For example there are community entrepreneurs or social change agents?
Community entrepreneurs are typically individuals, groups or organisations that seek out and act upon opportunities to transform communities and create a positive impact on community values.

They are different from social entrepreneurs in that many social entrepreneurship models focus on individuals and the disadvantaged, in contrast, community entrepreneurship focuses on the community as a whole and creates a sense of abundance for all.

Ten elements of community entrepreneurship

1.  Have entrepreneurial mindset (open-minded and don't let barriers or perceptions impact on their vision)

2. Are risk takers (not risk averse; have a culture that favours doing something new even if it doesn't work)

3. Turn threats into opportunities (find an opportunity out of adversity; a spark of an idea, however ridiculous it seems to many, will ignite a new venture)

4. Dare to be different (challenge the norm where it limits opportunity)

5.  Embrace failure as an opportunity (if something doesn't work out the first time, they don't lose sight of what they want to achieve; they just readjust the plan)

6.  Are Creative (entrepreneurship is a state of mind; it feeds on creativity; it is not bound by limiting beliefs that shackle others to mediocrity; only by daring to be different can anyone create change; swimming against the mainstream; latch onto dreams and then come up with creative ways to turn those dreams into reality)

7. Are Relationship Builders (they are the "go-between" in the community; acting as change agents; bring together the community to enhance and merge resources to achieve the unthinkable; they are influences who are also open to being influenced by others to increase their knowledge, ideas and credibility)

8.  Are intuitive (their success stems from intuition and imagination; their ideas are based on an unknown, uniting energy that knows no bounds; this goes against the norm for community organisation and groups where personalities can make or break the general direction; draw from a collective to works to achieve goals and creates its own luck)

9.  Show leadership ( they are leaders with a strong sense of justice, definitiveness of decisions and plans, and willing to go little further than most others; they are pay attention to detail and are willing to assume responsibility)

10.  Group focus (entrepreneurship is embedded within the vision, mission, culture, policies and procedures; it is enacted as a primary value so that the organisation will withstand changes of internal leadership) (source: Patricia Grosse, 2016)

3M's success is based around innovation. Some of its innovations include Post-it-notes, Scotch tape, Fabric protector, Thinsulate linings and reflective glass-bead technology used in streetlights. 3M's workplace culture encourages innovation and scientists/technicians are given an unusual degree of freedom and autonomy. This includes 15% of their work time to focus on their own projects. It is interesting Google is following this idea and has increased this time to 20% of work time to be allocated to personal projects. 3M's aim is to have at least a 1/3 of its total sales from products released in the past 5 years. At the same time, 3M realises that innovation is a disorderly process and it can take up to 6000 raw ideas to find 1 that is successful. 3M uses 7 pillars of innovation:

- commitment to research and development (spends 6 percent of revenue on R & D - this was worth $US 1.4 billion in 2008)

- hires good people (staff turnover is under 10%; prefers employing local staff; uses a matrix reporting system; prefers to promote from within; uses a dual ladder system for career development that encourages promotion without necessitating the move to management, ie technical people go up a technical career path that has similar compensation to management positions)

- tolerates mistakes

- has a broader base of technological expertise which encourages cross-pollination of ideas and networking

- rewards/remunerates outstanding work

- continually evaluates and monitors the effecacy of research funding

- spends time with customers to understand their needs (this balances the danger of a stable workforce becoming complacent)

(NB if researchers are denied funding, they can approach other areas of the organisation for funding)

The challenge is to handle never seen-before-problems or issues or questions or situations. It is impossible to equip people with the knowledge to solve them. People need to learn, adapt, search for answers, etc by problem-solving, entrepreneurial/innovative mindset, ie be able to see opportunities that others cannot and to be able to create opportunities that others cannot create: discipline, perseverance, mental strength, etcare slao required. They need to have a capacity for hard work, hunger to succeed, high risk appetite, ability to operate under stress, etc
It is claimed the universities are not necessarily the best places to teach entrepreneurialship owing to their size and bureaucracy, risk-aversion culture, lack of entrepreneurial experience, etc

"...surviving and thriving when you have no money left in the bank and the end looks near, is a skill you possess. Taking a small idea and having the courage and guts to build a world-class billion-dollar business is not something you can read in a textbook and copy..."
Jack Delosa as quoted by Tony Featherstone, 2015

"...innovation and entrepreneurship are quintessentially about experimentation, trial and error, and learning in the real world. You can't develop the skills in a classroom..."

Entrepreneurship can be seen as a philosophy or a way of thinking that can be applied across disciplines. Or it can be seen as a set of tools within general management.

"...over the past 20 years, Web technologies have democratised innovation and transport and distribution channels and consumer behaviour. The Web empowers people to easily produce digital goods - music, movies, photos, books - and then share and ship them in ways and on a scale never possible before. The same goes for the world of physical stuff.  You no longer need a big factory, a team of engineers and millions of dollars to take a product from a concept to market..."
Rachel Botsman, 2012

"...atoms are the new bits..."
Chris Anderson as quoted by Rachel Botsman, 2012
In addition it is now possible to bypass the traditional financial finance by crowd sourcing project funding.

Entrepreneurial education

In the past, large organisations were safe havens for employment. On the other hand, this has changed as organisations shed more management layers and outsource more jobs. Thus, people need to develop skills that will work across a wide range of businesses and industries. Employees need to be capable of creating their own jobs, eg skilled entrepreneurs who can commercialise ideas, develop new markets and ventures, etc. At the same time technology makes it easier to start a new venture. In addition to having entrepreneurial skills, people need to have the right attitude, eg capacity for hard work, hunger to succeed, high risk appetite, ability to operate under stress, perseverance, mental strength, embrace uncertainty, happy to disrupt markets, create better value from scarce resources, etc.


"...surviving and thriving when you have no money left in the bank and the end looks near, is a skill few possess. Taking a small idea and having the courage and guts to build a world-class million-dollar business is not something you can read in a textbook and copy..."

Patrick Grow as quoted by Tony Featherstone, 2015


"...innovation and entrepreneurship are quintessentially about experimentation, trial and error, and learning in the real world. You cannot develop those skills in a classroom..."

Terry Culter as quoted by Tony Featherstone, 2015


Entrepreneurial education is a new area for most tertiary institutions that are risk averse by nature
How to evaluate a course on entrepreneurship


1. Know your brand (what type of entrepreneur, eg start up, corporate, social, technological, etc do you want to be? Which institution excels at the different types of entrepreneurship?)

2. Education level (What do you want to learn from the course? Some vocational centres are better at teaching you how to start and run a small business than universities)

3. Entrepreneurial ecosystem (What else does the education facility offer like incubation programs, access to funding and other support services?)

4. Teaching quality (what are the backgrounds/experience, etc of the teachers/lecturers, eg academics only, researchers only, pracademics (academics who have started and run a business), their specialties, etc)

5. Course structure (look for courses with a wide range of specialist entrepreneurship subjects or have the scope to take other electives, like technology options, etc.. Does the course offer hands-on, real world experience, etc)

6. Research (as the best programs are usually underpinned by strong research, investigate research capacity. Also, it is a good sign of commitment and being abreast of latest trends)

7. Alumni (a strong alumni program gives access a great network of contacts)

8. Qualifications (if qualifications are important, doing an MBA that provides an entrepreneurial specialisation might be more suitable than doing entrepreneurship degree)

9. Overkill (consider a lean approach, ie learn quickly and cheaply, get into a market, see what works and where there are skill gaps.)
NB There is still an argument about whether entrepreneurship is a discipline in its own right or a subset of management education!!!!

There is a trend in universities' management courses to link with the workplace in the "real world", ie students study live problems, consultancy projects with organisations, internships, employer-related assignments, formal mentoring from senior executives, etc.

Intrapreneurism
Having innovative staff can give you the competitive edge.  Thus the need to create internal entrepreneurs, ie intrapreneurs
Identify and nurture intrapreneurism by having staff who 
i)  understand strategic objectives and take full responsibility for delivering them
ii)  are not confined to yesterday's or status quo thinking, ie think beyond the mindset of what was achieved yesterday and/or "this is how we do it here"
iii) approach the future with blank-canvas thinking and/or "think outside the box" (see section on creativity) which enables them to develop creative solutions to challenges and opportunities
iv) lead by example, ie "walk the talk"
v) are flexible, eg willing to start again if something isn't working
vi) uphold and embody the values of an organisation in a way that inspires and holds others accountable (Jack Delosa, 2016)

(sources: Tony Featherstone, 2015; Lucinda Schmidt, 2015)

Internet

"...the most successful companies on the planet are based around the internet..."

Gary Hamel as quoted by Catherine Fox, 2007

"...Businesses taking full advantage of the Internet are twice as likely to be growing......productivity in on-line business is far higher, with an average of twice the revenue per employee of those who aren't online..."
Maile Carnegie as quoted by Paul Smith, 2014a

Extraordinary potential market in developing economies in Asia, Africa, Pacific, etc once these economies are connected to the Internet.

Internet with mobile phones is improving communications. If people in physically isolated communities have mobile (smart) phones with Internet and electricity connections, they are able to use social media and have access to people, information, etc as if they are living in urban communities.
The price of smart phones is falling, eg in the Solomon islands, the price had fallen by 6 times to around SI$1,000 in 12 months (2015)

The Internet is democratizing innovation, ie there is online sharing of information, technology and feedback between all stakeholders, rather than intellectual property protection. Some examples include

"...Proctor and Gamble's movement from internal R&D labs to sourcing 50 percent of the new product innovations from 'connect and develop' collaborations with a host of technologists and product developers worldwide. Or GE Healthcare's sharing, critiquing and working up for new generation technologies with an advisory board of luminaries from the medical and research communities. Or Dairy Australia announcing an 'open innovation' research center for disparate specialist research institutes and the major dairy companies in a deliberate effort to speed up innovation results and efficiencies..."

Australian Business Foundation, 2007

These are very different ways of doing business in these different sectors which are disrupting the traditional approach.

Reasons for reviewing business model involves 1 of 4 objectives, ie
i) to satisfy existing but unanswered market needs (satisfy market, eg Tata car, GrameenBank, Mobile banking, etc)
ii) to bring in new technologies, products or services to the market (bring to market, eg Swatch, Nespresso, etc)
iii) to improve, disrupt or transform an existing market with a better business model (improved market, eg Skype, IKEA, Ryanair, etc)
iv) to create an entirely new market/business (create market, eg Diners Club, Google, etc)
The motivation to review your business model involves 1 of 4 elements:
i) crisis with existing business model (reactive, eg Rolls-Royce, IBM, etc)
ii) adjusting, improving or defending the existing model to adapt to a changing environment (adaptive, eg Nokia, P&G, etc)
iii) bringing new technologies, products or services to a market or exploit existing IP (expansive, eg Nestle with Nespresso, Apple with iPods/iTunes)
iv) preparing for the future by exploring and testing new business models that might eventually replace existing ones (proactive/explorative, eg Amazon Web services, etc)
Challenges with this are
- finding the right model
- category testing the model before a full-scale launch
- inducing the market to adapt to the new model
- continuously adapting the model in response to market feedback
- managing uncertainty
- developing an interest in the new model by all stakeholders
- aligning old and new models
- managing vested interests
- focusing on the long-term

The traditional business models are under threat from the Internet. It has caused monumental changes in industries with the demise of many great corporations whose influence & profitability seemed unassailable, eg

- books (on-line like Amazon v. book stores like Borders - the latter is no longer in business. Online book retailers like Amazon, The Book Depository and Dymocks (Australian multi-channel retailer) have benefited from the surge in online book sales of 26% annually while overall retail book sales have fallen 5% annually for the last five years (2015)

- media (e-newsletters/TV v. print - the latter have falling readership & circulation, eg for 23 consecutive quarters, Australian newspaper circulation has declined with falling advertising income and mass staff lay-offs, etc)

- car (almost all of the big firms were saved financially by the US Government after 2008)

- music (decades ago, big studios owned by a few key record labels & disc jockeys dominated; now the internet has allowed musicians to dominate)

- movies (large studios to virtual film-making)

- retail (clothes, books, etc from shops to Internet, ie e-commerce)

An example of the impact of the Internet is shopping. Before the Internet, shopping involved visiting stores to buy merchandise, etc. Sometimes up to 3 trips were made before a purchase. With smart phones (50%+ penetration in the USA), shoppers can use the Web to research, ie more than 50% of Americans do this before they buy in person. In other words by the time they get to the store they already know what they want to buy. Furthermore, stores are now going to shoppers by using their websites. Salespeople are being replaced by informative websites; the cashiers are being pushed aside by automatic check out machines. Thus the daily task once done by store employees are being taken over by machines or outsourced to customers.

- occupations with median hourly rates of less than US$ 14 account for nearly 60% of all job growth between 2008 and early 2010.

- it is expected that labour from the retail sector will move into the health care and food services sectors.

- after the GFC, retailers reduced staff and replaced them with technology. Walmart, which has cut its total workforce by 20,000 since 2008, has opened 455 new stores in that period.

With online sellers offering brands at up to 40% cheaper than "bricks & mortar" retailers, the latter have lost their point of difference. They have responded by reducing costs such as
- better management of supply chain including cutting out middlemen and sourcing directly from manufacturers
- going online themselves, ie "if you can't beat them, join them"
- closing under-performing stores
plus
- becoming more exclusive and up-market
- changing format of stores like installing Wi-Fi, vinyl bars, coffee shops, etc

The Australian ABC (radio and TV media) is a "... vast and complex organisation......one of the most dramatic periods of change in global media industry. Technology giants, such as Google, Apple and Facebook have blown apart the advertising and audience model of traditional radio, print and television companies. The busiest television platform in the world today is YouTube, which is owned by Google and gets 1 billion unique visits a month. Every tablet, mobile phone and desktop is now a television, newspaper, radio or book. The Apple watch...... is the latest device on which audiences can read, watch or listen - wherever, whenever and however they want...... so much of the news has been commoditised..."
Ann Hyland, 2015b

To handle this, the ABC has rolled out pod casts, multiple websites, a television catch-up service in iview, apps for its radio services and additional digital television channels like ABC News 24+ plus embraced social media.

The digital era has resulted in fragmenting media audiences and advertisers. This has undermined the business models of commercial media outlets. On the other hand, it has increased the importance of public broadcasters like the ABC in Australia. For example, there is no commercial model that can sustain a Radio National, or make the kinds of investments into local drama production, or have regional footprints with local voices and local news.

As a result, the Australian public broadcaster (ABC) is an early adapter of technology which commercial stations are reluctant to pursue.
One of the biggest challenges facing the ABC is not new technology but losing its connection to its audience. If the ABC gets complacent, then it is marching down the path of irrelevance.

The ABC needs to follow the path of becoming more deeply ingrained in the public consciousness as the home of Australian stories, culture and conversations, ie
"... in an era of global content just arriving with such a flood in Australia, there is a premium for being at the centre of Australianness..."
Mark Scott (retiring ABC's Managing Director) as quoted by Anne Hyland, 2015b

Internet of Things (IoT)

This is where every device gets hooked to the Internet, allowing bobble devices to work together to create new functions and services
Samsung aims to have 90% of its products linked to the Internet by 2017 and all of them by 2020. Samsung makes 665 m. products per year (including vacuum cleaners, fridges, washing machines, mobile phones, etc)

As a person's electrocardiogram is more identifiable than a fingerprint and harder to fake, Intel is working on a wearable device that uses the heart rate to authenticate the identity of the wearer over the Internet (John Davidson, 2015)

Under threat by on-demand services online is the big firm professional services model, ie charging premium prices for advice Traditionally a large organisation makes sense when it is more efficient for buyers & sellers to coordinate activities through a centralised hierarchy than to purchase goods & services directly. On the other hand, the Internet has changed all this by allowing buyers & sellers to connect directly

Disruptive innovation occurs if there is relentless focus on satisfying unappreciated customer's needs. In the professional services there is a rift between supply and demand with clients unable to afford or find the services offered by big firms. Also professionals are looking for different ways to offer, charge for and deliver their expertise. It is estimated that the annual cost of legal services for small to medium-size US businesses US'$ 100 b. (Rachel Botsman, 2015). The main priorities in employing legal professionals are price, responsiveness, efficient discovery & transparency.

"...Is it right that clients are paying steep fees for work done largely by junior associates? How can our success be measured by billable hours and not by the quality of work? Do we really want to slug away for a decade to try to make partner?..."

Botsman, 2015 a

There is a trend to professional service providers operating in a virtual marketplace. Some examples,

- UpCounsel, LawyerMatch, PrioriLegal, Lawdingo for lawyers;
- VouchedFor for accountants and financial advisers;
- RecruitLoop for recruiters;
- Skillbridge, Business TalentGroup, Clarity.fm, HourlyNerd, Liquidtalent, MBAco, etc for consulting are some of the start-ups offering on demand services online.
- UpCounsel's transactional revenue growth is 20% monthly
(source: Rachel Botsman, 2015)

"...they work by matching with the skills, pricing and availability needed. It's being labelled the "on-demand talent economy" ......a client posts a brief......the platform creates two or three best matches; to make the final selection, the client can chat online or call prospective attorneys with questions..."
Rachel Botsman, 2015a

Usually the administration, including billing, is handled by the provider with clients able to observe in real time the details of the service, ie how much the services are costing and for what.

In addition to the on-demand professional services, there are other services provided. For example,

- Airtask (finding someone to assemble your IKEA furniture);
- Mad Paws (finding a sitter for your pet);
- Helpling ( will send somebody to clean your house);
- Freelance Elance & ODesk (will find contractors in many fields like designers, assistance to Web developers, etc)

Currently 1 in 3 Americans are independent workers and it is expected by 2020 freelancers will outnumber full-time staff; also millenniums change jobs on average 6.3 times between the age of 18 and 25 (Rachel Botsman, 2015). This is linked with the desire for independence/autonomy, flexibility and freedom to choose work aligned with their interests. For example, Skillbridge (started in 2013) is an online platform that provides top tier consultants on demand. It now has more than 5000 consultants who are professionals with years of experience.

The impact of virtual marketplace with flexible labour force stresses the need for governments to rethink the concepts around taxes, insurance, sick pay, benefits, risk/responsibility allocation, predictability/security of income, etc when staff are not full-time employees

Knowledge-based organisations

There has been a change from the corporate to creative economy. The corporate economy organised capital and labour to optimize continuous production of identical goods at the lowest cost; putting a high premium on cost, repetition and style. Managers worked hard to improve control, efficiency and cost-effectiveness. The staff were fiercely loyal to the corporation. On the other hand, individuals in the creative economy value agility, innovation, novelty and flexibility above price, repetition and strategic planning; they are more intuitive than rational; more subjective than objective. Mistakes are regarded as useful learning experiences necessary for success. Furthermore, their loyalty is primarily to themselves:

"...the greatest value in the creative economy is added when people use firms rather than when firms used people......strategy is no longer a reliable source of business success. Today's innovation can be bottom-up, rapid and eventually free. It is no accident that a lot of innovation comes from users doing it for fun. The game industry now actively encourages gamers. Mountain bikes were developed by frustrated riders, not by corporate planners. Many successful online companies have been developed by frustrated users, not corporate strategists..."

John Howkins, 2006

With knowledge-based organisations growing in importance for future prosperity, the concept of entrepreneurship (creation of the resource) and organisational learning (acquisition of useful knowledge by an organisation) are strongly linked. Generally entrepreneurial research has concentrated on the characteristics of an entrepreneur and the context in which is the entrepreneurial process is enacted. Central to this is understanding how entrepreneurs are made; Richard Harrison et al, (2005), observes:

- organisational learning is experiential (entrepreneurial traits are forged through active learning)

- learning permanently alters behaviour (once an entrepreneur, always an entrepreneur)

- while organisational learning is individual, it occurs in a social context (no entrepreneur is an island)

- learning is regulated through standard procedures and rules (creating entrepreneurs can be managed or mismanaged)

The knowledge-based worker is motivated by a set of intangibles that include trust, autonomy, constant feedback and meaningful work. These are crucial indicators of high-performance environments

Knowledge-based organisation is linked with the development of the internet

"...The fruits of the information society are easy to see, with a mobile phone in every pocket, a computer on every desk & big IT systems in back-offices everywhere..."

Victor Mayer-Schonberger et al, 2013

Owing to Internet's global connections, it has given access & voice to individuals that they never had before, & given

- consumers unprecedented power their habits

- democratisation of innovation/information

- demolished traditional barriers to entry

- US Securities & Exchange Comm. (2013) allows firms to release their financial results on social media like Twitter, Facebook, etc

- firms like Google, Amazon, Facebook & Twitter are internet utilities

Links between innovation, entrepreneurship, invention, marketing, sustainable development, etc

For innovation and entrepreneurship

"...usually the idea is the easy part.....often the real talent lies in knowing what to do next: how to finance and build the product, when and how to market it, and how to persist with it through very difficult times.....do not believe that there is one type of entrepreneur, one type of business, or one way to make a business work. Each entrepreneur has their own set of circumstances, their own personality, quirks and motivations which they then bring to bear on a business......is it really possible to learn from their experiences and replicate their success......their talents lie in hiring the right people to help them, and recognising which skills they need to learn to succeed. When opportunity knocks, they listen. The simple truth is that there are as many ways to succeed in business as there are great businesses..."

Emily Ross et al, 2004

Innovation relies on invention and marketing. Innovation is taking an invention successfully into the market place. There have been many inventors but few innovators. For example,

- while it was Alexander Graham Bell who discovered how sound waves could be converted into undulating electric currents, it took Edison, with Charles Batchelor, to produce an effective carbon-button microphone so that Western Union could pool the patents of Edison and Bell's rival Elisha Gray and create a working telephone. Then Theodore Vail presided over the amalgamation of Western Union and the Bell telephone to form the American Telephone and Telegraph Co.. Vail foresaw the potential of a long-distance system and overcame the many political, technical and bureaucratic obstacles. Thus the innovator of the telephone was Vail - not the others (Bell, Edison, Batchelor, etc)

- Chester Carlson played with static electricity and chemicals in his home to transfer a dry mark from one piece of paper to another. Initially, no commercial organisation was interested. Then, Joseph Wilson of Haloid Corp., a maker of photographic products, sent a colleague to investigate. By investing in the device, Wilson nearly bankrupted his company. Wilson is the innovator of the photocopier machine

- Nathaniel Hayward discovered how raw rubber might be rendered usable but he gave up. It was Charles Goodyear who took Hayward's insight and brought it to fruition. In doing so, Goodyear went in and out of jail for debt all his life and sacrificed his family to develop vulcanized rubber. Thus Goodyear was the innovator.

The defining characteristics of innovators are a determination and dedication to bring an invention into the marketplace that involves

- a readiness to take risks

- a thick skin to handle the "naysayers". For example,

"...Raymond Damadian was a 'screaming lunatic' for thinking that nuclear magnetic resonance imaging might be used for medical diagnosis. Theodore Judah was a 'crazy Judah' for advocating a railway over high Sierras. Amadeo Giannini was a ' hothead dago' for setting up branch banking for the masses: Bank of America was the result. Heading triumphantly spliced a gene, the young molecular biologist Herbert Boyer endured academic opprobrium by going into business to mass-produce man-made hormones; synthetic insulin and Genetech were the sequel..."

Harold Evans, 2004

- unrealistic obsession, ie pig-headedness and willing to press ideas beyond their sensible limits. For example, Samuel Insull and Juan Trippe demanded engines of unprecedented power for electricity generation and aircraft, respectively

- originality

- extreme persistence (remember: most new ideas are not initially successful)

- a willingness to borrow and combine inventions. As Henry Ford asserted

"...I invented nothing new.....I simply assembled into a car the discoveries of other men behind whom were centuries of work..."

Henry Ford as quoted by Harold Evans, 2004

- imagination, ie the ability to see relationships. For example,

"...Jean Nidetch did not invent the diet she used at Weight Watchers; she made it effective by borrowing the mutual support techniques of Alcoholics Anonymous. Ruth Handler based Barbie on a German sex doll named Lilli but transformed a static doll into a vehicle for role modelling when she offered a variety of outfits - an idea stolen from cardboard-cutout games..."

Harold Evans, 2004

- a desire to improve the lives of others rather than moneymaking as the main driver, eg

"...Giannini did it with his branch banking for the little man, Ford with these models T, ......Pierre Omidyar created a democracy of supply and demand with eBay. In Reno, Raymond Smith transformed casinos from dark, smoky places peopled by men to public places for entertainment, foreshadowing the rise of Las Vegas..."

Harold Evans, 2004

The diagram below shows the critical mass on innovations meeting real market needs and creating new waves of innovation

organisational development change management

Karlson Hargroves et al, 2005

The future is already here!!!!! But, you need to know where to look. Organisations wanting to be truly innovative have to go outside the industry's comfort zone. Some examples include supermarkets becoming banks, petrol stations becoming supermarkets, home ware retailers offering cooking classes, etc. This is sometimes referred to as cross industry pollination. We need to keep tabs on where technology is heading!!!!!

The increasing importance of sustainable development, innovation and knowledge (ie knowledge worker) with greater focus on initiative, flexibility and creativity in developing business, and on maintaining competitive edge (especially through improved integration of information and smarter ways to manage internal business processes) is now being acknowledged. Sustainable development is shaped by an innate appreciation of systems: particularly the mutually-sustaining, interdependent, causal relationships among the economic, environmental and social spheres. Actions to meet goals in one of these spheres affects the others, and are helped or hindered by them. This is linked with a concept called conscious oversight, ie a discipline of care and nurturing of people and systems with an eye toward the impact on generations who come after them. This discipline encompasses the ability to see and understand the system at hand as part of a nested body of larger systems, and to make thoughtful decisions about matters which will have significant, long-term consequences.

Decisions made as part of this discipline are based on the consideration of:

- traditions of the past (while distinguishing those parts which are still important)

- realities of today (from a variety of points of view)

- sustainability of life for generations who come after.

When practising conscious oversight, decision-makers focus on:

- ensuring congruence

- the viability of a system larger than themselves

- the service of a purpose larger than themselves

- community life and well-being that is beyond the life of an individual or organisation.

More and more evidence is stressing the importance of innovation, ie

"...Detailed case studies of hundred of industries, based on dozens of countries, reveal that the internationally competitive companies are not those with the cheapest inputs or the largest scale, but those with the capacity to improve and innovate continually. Competitive advantage, then, rests not on static efficiency or on optimizing within fixed constraints, but on the capacity for innovation and improvement that shifts constraints......Increasingly then, companies that are most competitive, achieving the greatest productivity gains, are not those with access to the lowest cost inputs. Rather, they are those firms who constantly innovate......A major study by McKinsey & Co, of over 1000 companies in 15 sectors over 36 years, found that innovating to become the best in new emerging markets was a key element of success..."

Karlson Hargroves et al, 2005

An organisation's survival depends on its ability to capture intelligence, transform it into usable knowledge, embed it as organisational learning and diffuse it rapidly throughout the organisation.

"...Maximizing an organisation's intellect......taking everyone's best ideas and transferring them to others is the secret. There is nothing more important......than being open to the best of what everyone, everywhere, has to offer. The second is transferring that learning across the organisation..."

Jack Welch as quoted by Jack Welch et al, 2001

Knowledge management

This includes analysing core competencies to form the basis of innovation. Furthermore, a peak-performance organisation has a culture which views failure as a learning experience, ie it encourages innovation and risk, in the quest for continuous improvement. This leads into knowledge management. Until now, managers have focused on managing and controlling the key processes and distribution channels, which explains the popularity of techniques such as TQM and business process re-engineering. With rapidly changing customer desires, managers have to look beyond these techniques. The need for knowledge management grows from a recognition that inflexible structures are more likely to collapse when the ground is shifting as rapidly as it does in today's markets. Knowledge management involves managing both intangible and tangible assets. Furthermore, the management of knowledge and data are different. Data is the basis for information; knowledge has more to do with the process of learning, understanding and applying new tasks and procedures.

Remember: data is not information; information is not knowledge; knowledge is not wisdom!!!

There are 4 components to knowledge management:

i) a database subsystem that allows the sharing of information in a timely and efficient manner

ii) an organisational language subsystem that is understandable and user-friendly

iii) a networking subsystem for locating and acquiring information and knowledge, both external and internal to the organisation

iv) a transfer subsystem whereby systemic knowledge is either directly transferred between individuals, or new knowledge is created by the unique combination of information with the individual's experience base.

Linked with this formal structure is the informal structure. The formal structure is linked with the IT system; however, the informal structure is more how people network and communicate with each other. Usually the informal networking is more powerful, and as a result, its role in knowledge management needs to be understood

If you think that the revolution is over, think again!!!! The rise and fall of the dot coms is not the real story. That was merely the most talked about evidence of the increased importance of speed, adaptability, and imagination in business success. No matter how many dot coms fail, the landscape for those organisations that remain is changed forever. The age of incremental innovation has passed - we have entered the age of radical innovation. Can your organisation afford to be left behind?

We all knew what a coffee shop was - until Starbucks brewed up a whole new experience. We knew what a stockbroker was - until Charles Schwab rewrote the definition (twice!). A book shop was a bookshop - until Amazon broke down the walls. The lesson is this: your industry is going to be reinvented. If it's been reinvented once, it's going to happen again. As Gary Hamel (2000) sees it, the big questions for your organisation and industry are:

- Will you reinvent it (and reap the rewards)?

- Or will you fall into the dustbin of history because of it?

- Sure, your company has a strategy. But do you know how to calculate strategy decay?

- Do you know its implications?

- Does your company have a way to systematically sow, nurture and harvest innovation throughout the organisation?

- It can be done. The revolution is here. Are you ready?

Innovation and knowledge management are inextricably linked. As part of the ever-changing world, the importance of managing intangible assets such as knowledge (including intellectual property) and innovation are being recognised as key drivers to future, long-term corporate growth.

In fact, knowledge is fast becoming the prime factor of production, and as a result, is becoming more important than land, labour and capital in the creation of wealth.

Given the pressure on companies to maximise shareholders' returns, better utilisation of these intangible assets provides a great opportunity to maximise returns. For example, the revenues from the licensing on patent rights in USA has skyrocketed in the last ten years from $US15 billion in 1990 to more than $US110 billion (HBR 2000). As Jack Welch (2001), of GE fame, stated

"...there is much more leverage from brain power than products..."

Remember: knowledge management and innovation give several advantages:

- patented processes give you leverage into new markets and a competitive advantage

- help increase productivity

- reduce costs

- help capture and share knowledge (IT) to solve problems

- keep staff motivated

Some quotes from the Harvard Business Review

"...in a world where battles are increasingly being waged not for control of markets or raw materials but for the rights to new ideas and innovations, the management of intellectual property must become a core competence..."

"...It is recognized that the knowledge economy has given rise to a new ecology of competition in which intellectual assets rather than physical assets are the principal wellsprings of shareholder wealth and competitive advantage..."

"...The true source of a company's competitive advantage lies not in its products or services but in its innovative way of doing business..."

"...The competitive game has changed: the advantage now often goes to the company that is most adept at choosing from the large number of technological options and not necessarily to the companies that create them"(and) using knowledge more effectively than their competitors do..."

Perpetual innovation, etc

Need to institutionalise a capacity for perpetual innovation. This involves understanding the degrees of unpredictability and taking calculated risks. More often than not, each change can threaten to undermine the historical sources of an organisation's profitability, yet each change needs to bring customers new benefits that have enormous payoffs, eg Schwab in the discount brokerage industry introduced a change from "bricks and mortar" to "cliques and mortar" (online business). This means working from the customer backwards.

Key elements for perpetual innovation are

- a passion

- a broader definition of business boundaries based on core competencies and assets such as the ability to move quickly, satisfy customer needs, the first to the market and leverage distribution channels

- a vibrant internal market for new, wealth-creating ideas where new voices have the chance to get heard

- an open market for talent, especially as many innovations that will affect your industry come from outside your industry

- highly motivated entrepreneurial staff who get to share in the wealth they create

- fluid organisational boundaries that allow skills and resources to be creatively and endlessly re-combined

- minimum number of restrictions, ie few rules and regulations

- working from the customer backwards

- using stretch goals

- encouraging innovation meritocracy

- rapid experimentation and prototyping

- encouraging genetic diversity within your organisation

- in a quickly changing world, do not allow allegiance (to a particular technology/product/ service/business concept) to stifle innovation

Some additional comments on innovation include

- intrapreneurs (intra-corporate entrepreneurs) in large organisations need sponsors who will help intrapreneurs through the organisational barriers. Furthermore, the sponsors provide important coaching and support. Generally there is a lack of suitable sponsors in most organisations

- innovation in small groups generally works better than in large groups as the smaller groups allow for more effective development of personal relationships, thereby creating greater confidence within the people in the group and a readiness to express opinions and risk failure

- competition is important in innovation; competition inhibits complacency and status quo thinking which both work against innovative forces

It is felt that small organisations are in a better position to handle technology than larger organisations. The reason for this is the layers of management in large organisations where there are roughly 80% of people managing the 20% who do the work. Furthermore, these 20% spend considerable time managing others. This increase in overhead costs and the layers of management tends to stifle creativity. By contrast, a start-up organisation does not have these 2 impediments. Of course, the start-ups may lack resources, such as finance

Furthermore, big corporations are just

"...conglomerations of assets whose desire for short-term growth limits their capacity for innovation..."

Goran Carstedt as quoted by James Hall, 2005

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