Republic of the Philippines

PHILIPPINE STATE COLLEGE OF AERONAUTICS

INSTITUTE OF LIBERAL ARTS AND SCIENCES
Piccio Garden, Villamor, Pasay City

LEARNING MODULE 4
Innovation

A . Y 2 0 2 0 - 2 0 2 1
2 N D S E M E S T E R

Instructor: Ms. Mary Joy Valdez LPT

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General Directions: This is a self-directed learning module. Everything you need to navigate
your way through the lessons can be found in this module. Reference books, required
readings, and even website URLs have been provided in this module for your convenience.

Each module has been divided into “chunks” --- bite-sized pieces of lessons that are easy to
understand and learn. In completing each module, first, read the required readings, references,
or URLs, and follow the instructions indicated. Answer all the required questions and activities
only after making sure that you have understood each lesson.

If at any point, you have questions or clarifications, please do not hesitate to get in touch with
your course instructor.

Module Learning Outcomes Topic Learning Outcomes

At the end of this module, you will be able to: At the end of this topics, you will be able to:

MLO 1. Develop and create innovative ideas, products, TLO 1. Compare and Contrast the different external and
services, processes, organizing/delivery methods, raw internal factors affecting the practice of
materials etc., “attractive” enough that can serve as entrepreneurship.
bases for entrepreneurial ventures.
TLO 2. Describe the nature of entrepreneurship as it
MLO 2. Utilize the different Sources of Innovation as a relates to the Philippine setting, the economy, and in
framework for developing innovative ideas, products, the context of various industries.
services, processes, organizing/delivery methods, raw
materials etc…

Learning Competencies:

o Readings on Peter Drucker’s Seven Sources of Innovation

o Synchronous discussion on the role of innovation in entrepreneurship, the innovation process, types,
levels, and sources, and application of innovation
o Group activity on developing innovative ideas

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 TABLE OF CONTENTS

Page Content
General Directions
2
Module Learning/Topic Learning Outcomes
Table of Contents
3
Honesty Clause
4 Definition of Innovation
5 Sources of Innovation
6 Types and Process of Innovation
7 Application of Innovation
8 Principles of Innovation; Innovators; Innovation in Climate Change
9 Impacts of Innovation
9 Entrepreneurial Task and Exercise
10 Reference

I’M A PHILSCAN, PRO-ACADEMIC HONESTY!

Oppps! Before you challenge your wit, don’t forget to sign the honesty pledge below! Remember, our
course policy states that “students are expected to display the highest degree of honesty and professionalism in
their class work, requirements, and activities especially that the flexible modality offers greater opportunity for
cheating.”

I, a proud and honest PhilSCAn, do hereby promise to exercise highest degree of honesty and
professionalism as I accomplish the tasks laid before me. With this, I abhor any forms of cheating,
particularly any acts of plagiarism. If ever I committed such act and got caught, I shall submit myself
to due process as stipulated in the Student Manual. So help me, God.

_______________________________ _____________________________
Your Printed Name and Signature Your Parent or Guardian’s

______________________________
Your Instructor’s Printed Name and Signature

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 Entrepreneurs need to search purposefully for the sources of
innovation, the changes and their symptoms that indicate
opportunities for successful innovation.

INNOVATION - Peter F. Drucker, Innovation and Entrepreneurship

This module is devoted to examining how the creative pursuit of innovative ideas revolves around
opportunity; particularly ideas that may be endowed with positive social and economic potential.
Creativity and innovation are two major topics that are keys to understanding and practising
opportunity development for entrepreneurs.

According to Drucker (1985), the tool of Entrepreneurship is the innovation. In addition, both
innovation and entrepreneurship demand creativity. He commented that “Innovation is the specific
function of entrepreneurship … It is the means by which the entrepreneur either creates new wealth-
producing resources or endows existing resources with enhanced potential for creating wealth”. While

Crossan and Apaydin defined innovation as “production or adoption, assimilation, and

exploitation of a value-added novelty in economic and social spheres; renewal and enlargement
of products, services, and markets; development of new methods of production; and
establishment of new management systems. It is both a process and an outcome.” Creativity is
a process by which symbolic domain in the culture is change in terms of new songs, new ideas,
new machines are what creativity is about Mihaly (1997).

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SOURCES OF INNOVATIVE IDEAS

The following are some of the most effective sources of entrepreneurial opportunities.

1. The Unexpected occurrences - These are successes or failures that, because they were
unanticipated or unplanned, often end up proving to be a major innovative surprise to the
business.
2. Incongruities - These occur whenever a difference exists between expectations and reality.
Innovation is the creation of solutions to incongruities.
3. Process needs - These occur when an answer to a particular need is required. Venture
capitalists often refer to these as ‘pain’ that exists in the marketplace. The entrepreneur must
recognise an innovation solution, or ‘painkiller’.
4. Industry and market changes - Continual shifts in the marketplace occur, caused by
developments such as consumer attitudes, advancements in technology, industry growth and the
like. Industries and markets are always undergoing changes in structure, design or definition.
5. Demographics - These arise from trend changes in population, education, income changes,
age, occupations, geographic locations and similar factors. Demographic shifts are important and
often provide new entrepreneurial opportunities.
6. Perceptual changes - These changes occur in people’s interpretation of facts and concepts.
They are intangible yet meaningful. Perception can cause major shifts in ideas to take place.
7. Knowledge-based concepts - These are the basis for the creation or development of
something brand new. Inventions are knowledge-based; they are the product of new thinking,
new methods and new knowledge. Such innovations often require the longest time period
between initiation and market implementation because of the need for testing and modification.

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TYPES OF INNOVATION

Innovation is the key to the economic development of any company, region of a country, or country itself.
As technologies change, older products/services decrease in sales and old industries dwindle. Inventions
and innovations are the building blocks of the future of any economic unit.

Breakthrough innovations - These extremely unique innovations often establish the platform on which
future innovations in an area are developed. Given that they are often the basis for further innovation in
an area, these innovations are usually protected by strong patents, trade secrets, and/or copyrights
Example - penicillin, the steam engine, the computer, the airplane, the automobile, the Internet,
and nanotechnology.
Technological innovation - occurs more frequently than breakthrough innovation and in general is not at
the same level of scientific discovery and advancement.
Ordinary innovation - These more numerous innovations usually extend an existing innovation into a
better product or service or one that has a different—usually better—market appeal.

THE INNOVATION PROCESS

Most innovations result from a conscious, purposeful search for new opportunities. This process begins
with the analysis of the sources of new opportunities. Drucker has noted that because innovation is both
conceptual and perceptual, would-be innovators must go out and look, ask and listen.

A disruptive innovation is an innovation that creates a new market and value network and
eventually disrupts an existing market and value network, displacing established market leading firms,
products and alliances. The term was defined and phenomenon analysed by Clayton M. Christensen
beginning in 1995. In the early 2000s, “significant societal impact” has also been used as an aspect of

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disruptive innovation. The key idea behind disruptive innovation is that established firms are predisposed
to overlooking market opportunities that have lesser needs despite the fact that the under- or unserved
market segment may have greater potential in terms of market expansion.

APPLICATION OF INNOVATION

Product planning and development process

Once ideas emerge, they need further development and refinement. This refining process— the
product planning and development process—is divided into five major stages: idea stage, concept
stage, product development stage, test marketing stage, and commercialization, which starts the
product life cycle (see Figure 4.6)

Product life cycle the

stages each product goes
through from introduction
to decline

Product planning and

development process The
stages in developing a new
product

Establishing Evaluation Criteria

At each stage of the product planning and development process, criteria for evaluation need to
be established. These criteria should be all-inclusive and quantitative enough to screen the
product carefully in the particular stage of development. So a go forward or stop the decision
process can be made. Criteria should be established to evaluate the new idea in terms of market
opportunity, competition, the marketing system, and financial and development factors.

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PRINCIPLES OF INNOVATION

Innovation principles really do exist. These principles can be learned and, when combined with
opportunity, can enable individuals to innovate. The major motivation principles follow.

 Be action oriented.
 Make the product, process or service simple and understandable.
 Make the product, process or service customer-based.
 Start small
 Aim high
 Try/test/revise
 Learn from failures
 Follow a milestone schedule
 Reward heroic activity
 Work, work, work

INNOVATORS

Isaac Newton - pioneered classical mechanics Henry Ford - pioneered mass-produced motor cars
Albert Einstein - pioneered Relativity Nikola Tesla - pioneered the induction motor
Karl Benz - developed the first automobile with Isambard Kingdom Brunel - revolutionised public
internal combustion transport and engineering
Sir Richard Arkwright - credited for inventing Robert H. Goddard - pioneered the liquid rocket
spinning frame engine
Wright Brothers - pioneered controlled flight Tim Berners Lee - pioneered the World Wide Web
Thomas Edison - developed the first economically Benjamin Graham - economist and professional
feasible light bulb investor
Dennis Ritchie - developer of the Unix operating Steve Jobs - introduced first commercially
system and authored the C programming language successful personal computers, Graphical user
Woody Shaw - American trumpeter and composer interface PCs smartphones, tablet computers, first
referred to by NPR as “the last great trumpet feature-length computer-animated film.
innovator

INNOVATION IN THE ERA OF CLIMATE CHANGE

Eco-Innovation development of products and processes that contribute to sustainable

development, applying the commercial application of knowledge to elicit direct or indirect
ecological improvements. This includes a range of related ideas, from environmentally friendly
technological advances to socially acceptable innovative paths towards sustainability. The field
of research that seeks to explain how, why, and at what rate new “ecological” ideas and
technology spread is called eco-innovation diffusion

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 IMPACTS OF INNOVATION
The innovative accomplishment exists if the following happens:
1. Effecting a new policy – creating change or orientation or direction.
2. Finding new opportunities – developing an entirely new product or opening a new
market.
3. Designing a new structure – changing the formal structure, reorganizing or introducing a
new structure.
4. Devising a fresh method – introducing a new process, procedure, or technology for
continued use.
The elements of innovation orientation are as follows:
a. Value placed on creativity and innovation in general;
b. An orientation towards risks;
c. A sense of pride in the organization and its members, and the enthusiasm about what
they are capable of doing
d. An offensive strategy of taking the lead towards the future.

Entrepreneurial Exercise ( 5 points*5items = 20pts)

1. Where and how do you generate ideas worth pursuing into a business?
2. What is the best way to evaluate business opportunities?
3. What is an idea that is worth a business?
4. Describe the stimulants to creativity.

Entrepreneurial Task – Collaboration with 3 members (50 points)

1. Using the future thinking approach, target an area of interest which then becomes your focus area. From
your focus area, develop alternative scenarios around the preferred and probable futures. Examples of
focus area: water, holiday travel, education, energy, food, games, airline. Your focus should target an
area in which you have an interest in starting a business. Use the focus area to concentrate your mind.
Use the political, environmental, social and technology (PEST) dimensions as a basis for thinking about
the probable and preferred futures.

2. Create a PPT showing PEST (political, environmental, social and technology) analysis.
Submit on or before May 20, 2021. Put the Last Name of each group member as file name of your output.

You may check here in this link to learn more about PEST analysis
https://www.investopedia.com/terms/p/pest-analysis.asp

Visit Entrepreneurship; Theory, Process, Practice 4th Edition by Howard Frederick, Donald Kuratko, & Allan
S page 218 for the examples and instruction of the activity.
Connor

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References:

Kuratko, D. (2017). Entrepreneurship: Theory, Process, Practice 10th Edition. Melbourne, AU:

Cengage Learning

Hisrich, R., Peters, M., Shepherd, D. (2017). Entrepreneurship 10th Edition. New York, NY: Mc-

Graw Hill.

Bygrave, W.; Zacharakis, A. (2016). Entrepreneurship. Hoboken, NJ: John Wiley and Sons.

Dollinger, M. (2015). Entrepreneurship: Strategies and Resources. Lombard, IL: Marsh Publications.

Katz, J. (2018). Entrepreneurial Small Business. 5th. ed New York, NY: McGraw-Hill Education.

Lee-Ross, D; Lashley, C. (2017). Entrepreneurship and Small Business Management in the

Hospitality Industry. London, UK: Elsevier.

Brindle, M. (2017). Social Entrepreneurship for Development: A Business Model. New York:
Routledge, Taylor Francis Group.

D’Andria, A. (2017). Building 21st Century Entrepreneurship, Hoboken, NJ: Wiley.

Chahine, T. (2016). Introduction to Social Entrepreneurship. Boca Raton: CRC Press.

Kickul, J. (2016). Understanding Social Entrepreneurship: The Relentless Pursuit of Mission in an

Ever Changing World. 2nd ed. New York: Routledge.

Harvard Business Review http://hbr.org

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