INSTITUTE OF ACCOUNTANCY
ARUSHA (IAA)
Entrepreneurship And Innovation
ITT 06212
By Madaba, R.
Topic FOUR
THE ROLE OF INNOVATION TO INDIVIDUALS
AND ORGANIZATIONS.
What is Innovation?
– Innovation is a word deriving from Latin and
means the introduction of something new to the
existing world and the order of things or the
improvement of resources productivity as
mentioned by J. B. Say, quoted in Drucker
(Drucker 1985 ).
cont..
– Peter Drucker ( 1985 ) stresses that: “innovation is
the special tool of businessmen to utilize change as
an opportunity for a different activity or service. It is
possible to appear as a discipline, to be learned, to be
practiced”.
cont..
– Paul Michael Porter ( 1990 ): “enterprises acquire
a competitive advantage through acts of
innovation. They approach innovation in its
broader sense, including new technologies and the
new way to do things”.
cont..
– Innovation refers to the process of creating new
ideas, products, services, or methods that bring
significant improvements or changes to existing
systems.
– It involves the development and implementation
of something new that adds value, solves
problems, or meets previously unmet needs.
Key aspects of innovation
Creativity and Idea Generation:
– Innovation begins with the generation of new ideas.
Creativity plays a crucial role in identifying unique
solutions and opportunities that others might not
see.
cont..
Implementation:
– Having a great idea is just the first step. Innovation
also requires the practical application of these ideas
to create tangible outcomes. This could mean
developing a new product, launching a new service,
or applying a new method in a specific context.
cont..
Value Addition:
– True innovation adds value, whether by improving
efficiency, enhancing user experience, reducing
costs, or creating new markets.
– The value can be economic, social, or
environmental
cont..
Improvement and Disruption:
– Innovation often involves improving existing
solutions but can also be disruptive,
fundamentally changing how things are done.
– Disruptive innovations create new markets and
value networks, often displacing established
market leaders
cont..
Adaptation and Evolution:
– Innovation is an ongoing process. Once an
innovation is implemented, it often needs to be
refined and adapted based on feedback and
changing conditions
Types of innovation
Incremental Innovation:
– Small, continuous improvements made to existing
products, services, or processes.
Radical Innovation:
– Fundamental changes that create new markets or
value networks, often rendering existing solutions
obsolete.
cont..
Disruptive Innovation:
– Innovations that disrupt existing markets and value
networks, often by being more accessible,
affordable, or simple.
Architectural Innovation:
– Applying existing technologies or practices in new
ways or to new markets.
Disruptive innovations.
– Disruptive innovation is a concept that describes
how a new product, service, or business model can
radically change an industry or market by creating a
new market and value network, often displacing
established market leaders and products.
– The term was coined by Clayton Christensen in his
1997 book "The Innovator's Dilemma."
cont..
– Disruptive innovations are characterized by their
ability to make products and services more
accessible, affordable, and user-friendly, thus
appealing to a broader audience that was
previously underserved or ignored by existing
market players.
Characteristics of disruptive innovations.
Market Creation:
– Disruptive innovations often start by targeting a
niche segment or a completely new market that
existing players either overlook or are unable to
serve profitably.
cont..
Simplification and Affordability:
– These innovations typically offer simple, cheap, and
more convenient alternatives to existing products
or services.
– They might initially appear inferior to the
established options but improve over time
cont..
Accessibility:
– They make products and services accessible to a
larger portion of the population, including those
who previously couldn't afford or didn't have access
to them.
cont..
Gradual Improvement:
– Disruptive innovations often begin at the lower end
of the market and gradually move upmarket as they
improve in quality and functionality.
cont..
Incumbent Displacement:
– Over time, disruptive innovations can overtake
established companies, which may struggle to
compete due to their focus on high-end, profitable
customers and their existing business models.
Phases of Disruptive Innovation
Introduction:
– The innovation is introduced to a small, often
overlooked segment of the market.
– Initial performance may be lower than existing
solutions, but it offers other benefits like lower cost
or greater convenience
cont..
Adoption:
– As the innovation improves and meets the needs of
a broader audience, more customers start adopting
it.
– This phase experiences rapid growth and increasing
market share.
cont..
Disruption:
– The innovation becomes mainstream, and
established players find it difficult to compete.
– The new technology or business model becomes
the new standard, often leading to the decline or
transformation of older companies and products.
Examples of disruptive innovations
Smartphones
– The introduction of smartphones, particularly with
the launch of the iPhone in 2007, revolutionized the
mobile phone industry.
– Smartphones integrated communication,
computing, and entertainment into a single device.
cont..
– Smartphones replaced multiple devices such as
MP3 players, PDAs, and basic mobile phones.
– They also spurred the development of mobile
applications, creating a new ecosystem for
software developers
cont..
– The smartphone era led to the decline of
companies that dominated the pre-smartphone
market, such as Nokia and BlackBerry, and
established new leaders like Apple and Samsung.
cont..
Dual-SIM and eSIM Technology.
– Dual-SIM and eSIM (embedded SIM) technology
allow users to manage multiple phone numbers and
carriers on a single device without needing physical
SIM cards.
cont..
– These technologies offer greater flexibility for
users, especially for those who travel frequently or
manage separate work and personal numbers.
Examples of disruptive innovations in
Tanzania
Mobile Money Services: M-Pesa,Tigo Pesa,
Airtelmoney, Halopesa and T-pesa
– Mobile money services, have revolutionized the
financial sector in Tanzania.
– These platforms allow users to transfer money, pay
bills, and access financial services using their mobile
phones.
cont..
– These services have increased financial inclusion,
especially for the unbanked population in rural
areas.
– They provide a safe and convenient way to handle
transactions without needing a traditional bank
account.
cont..
– The traditional banking sector has been challenged
to adapt, leading to the integration of mobile
banking solutions by conventional banks.
cont..
Education Technology: Shule Direct
– Shule Direct is an ed-tech platform that provides
digital learning content aligned with the Tanzanian
national curriculum.
– It offers educational resources to students,
teachers, and parents through web and mobile
applications
cont..
– The platform enhances access to quality education,
especially in remote and underserved areas.
– It supports both formal and informal education by
providing study materials and interactive content
cont..
– Traditional educational institutions are
incorporating digital tools and resources into their
teaching methods, changing how education is
delivered and accessed
cont..
Transportation: SafeBoda
– SafeBoda is a motorcycle taxi (boda-boda) hailing
service that connects passengers with safe, trained,
and professional riders via a mobile app.
– The service has improved safety standards,
increased convenience for commuters, and
provided a regulated platform for boda-boda riders.
cont..
– The traditional informal boda-boda sector has had
to compete with an organized, technology-driven
service that emphasizes safety and customer
service.
cont..
– These few examples of disruptive innovations in
Tanzania demonstrate how technology and new
business models are transforming various sectors,
improving accessibility, efficiency, and quality of
services for the population.
END
