Entrepreneurship:

Theory, Process,
Practice, 12e

Chapter 5: Innovation: The

Creative Pursuit of Ideas

Donald F. Kuratko, Entrepreneurship: Theory, Process, Practice, 12th Edition. © 2024 Cengage Learning, Inc. All Rights Reserved.
May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. 1
 Chapter Objectives
5.1 Summarize the opportunity identification process.
5.2 Explain the sources of innovative ideas for entrepreneurs.
5.3 Outline the major components of the creative process: knowledge accumulation,
incubation process, idea experience, evaluation, and implementation.
5.4 Describe ways of developing personal creativity: recognize relationships, develop a
functional perspective, use your “brains,” and eliminate muddling mindsets.
5.5 Identify the arenas of creativity.
5.6 Examine the factors for a creative climate.
5.7 Introduce the four major types of innovation.
5.8 Review some of the major myths associated with innovation and define the 10
principles of innovation.

Donald F. Kuratko, Entrepreneurship: Theory, Process, Practice, 12th Edition. © 2024 Cengage Learning, Inc. All Rights Reserved.
May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. 2
 Opportunity Identification: The Search for
New Ideas
• Opportunity identification is central to the domain of
entrepreneurship and revolves around the answers to the
following:
− Why?
− When?
− How?

Donald F. Kuratko, Entrepreneurship: Theory, Process, Practice, 12th Edition. © 2024 Cengage Learning, Inc. All Rights Reserved.
May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. 3
 Sources of Innovative Ideas
• External and internal environments alert entrepreneurs to
opportunities.
• Trends signal shifts in current paradigm (or thinking) of major
population.
• Valuable insights constitute source of potential entrepreneurial
ideas.

Donald F. Kuratko, Entrepreneurship: Theory, Process, Practice, 12th Edition. © 2024 Cengage Learning, Inc. All Rights Reserved.
May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. 4
 Trends
• Societal: Aging demographics, health and fitness growth, senior
living
• Technology: Mobile (smartphone) technology, e-commerce,
Internet advances
• Economic: Higher disposable incomes, dual wage-earner families,
performance pressures
• Government: Increased regulations, petroleum prices, terrorism

Donald F. Kuratko, Entrepreneurship: Theory, Process, Practice, 12th Edition. © 2024 Cengage Learning, Inc. All Rights Reserved.
May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. 5
 Sources of Innovative Ideas
Source Examples
Unexpected occurrences Unexpected success: Uber; unexpected tragedy: 9/11
terrorist attack, COVID-19
Incongruities Overnight package delivery
Process needs Sugar-free products, caffeine-free coffee, microwave
ovens
Industry and market changes Health care industry: changing to home health care
Demographic changes Retirement communities for older people
Perceptual changes Exercise (aerobics) and the growing concern for fitness
Knowledge-based concepts Mobile (smartphone) technology, pharmaceutical
industry, robotics

Donald F. Kuratko, Entrepreneurship: Theory, Process, Practice, 12th Edition. © 2024 Cengage Learning, Inc. All Rights Reserved.
May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. 6
 The Knowledge and Learning Process
• Entrepreneurs use their existing knowledge base acquired
through work, experience, and education to hone ideas into
actual opportunities.
• Entrepreneurs must be able to learn from their experiences as
well.

Donald F. Kuratko, Entrepreneurship: Theory, Process, Practice, 12th Edition. © 2024 Cengage Learning, Inc. All Rights Reserved.
May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. 7
 Sources of Innovative Ideas into Potential
Opportunities
Ideas are distilling into opportunities through:
• Personal work, experience, and education
• General industry knowledge
• Prior market knowledge
• Prior customer understanding
• Specific interest knowledge
• Previous knowledge

Donald F. Kuratko, Entrepreneurship: Theory, Process, Practice, 12th Edition. © 2024 Cengage Learning, Inc. All Rights Reserved.
May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. 8
Entrepreneurial Imagination and Creativity
• Creative thinking is blended with imagination in a logical process.
• Entrepreneurs develop an ability to see, recognize, and create
opportunity where others find only problems.
• Entrepreneurial analysis blends creative thinking with systematic
inquiry to look at problems from every angle.

Donald F. Kuratko, Entrepreneurship: Theory, Process, Practice, 12th Edition. © 2024 Cengage Learning, Inc. All Rights Reserved.
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 Two Approaches to Creative Problem
Solving
Adaptor Innovator
Employs a disciplined, precise, Approaches tasks from unusual angles
methodical approach
Is concerned with solving rather than Discovers problems and avenues of
finding problems solutions
Attempts to refine current practices Questions basic assumptions related to
current practices
Tends to be means oriented Has little regard for means; is more
interested in ends
Is capable of extended detail work Has little tolerance for routine work
Is sensitive to group cohesion and Has little or no need for consensus; often
cooperation is insensitive to others

Source: Michael Kirton, “Adaptors and Innovators: A Description and Measure,” Journal of Applied Psychology (October 1976):
623. Copyright © 1976 by The American Psychological Association.

Donald F. Kuratko, Entrepreneurship: Theory, Process, Practice, 12th Edition. © 2024 Cengage Learning, Inc. All Rights Reserved.
May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. 10
 The Nature of the Creative Process
• Creativity is a process that can be developed and improved.
Some individuals have a greater aptitude for creativity than
others.
• Typical Creative Process:
– Phase 1: Background or knowledge accumulation
– Phase 2: The incubation process
– Phase 3: The idea experience
– Phase 4: Evaluation and implementation

Donald F. Kuratko, Entrepreneurship: Theory, Process, Practice, 12th Edition. © 2024 Cengage Learning, Inc. All Rights Reserved.
May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. 11
 The Most Common Idea Killers
1. “Naah.”
2. “Can’t” (said with a shake of the head and an air of finality).
3. “That’s the dumbest thing I’ve ever heard.”
4. “Yeah, but if you did that . . .” (poses an extreme or unlikely
disaster case).
5. “We already tried that—years ago.”
6. “I don’t see anything wrong with the way we’re doing it now.”
7. “We’ve never done anything like that before.”
8. “We’ve got deadlines to meet—we don’t have time to consider that.”
9. “It’s not in the budget.”
10. “Where do you get these weird ideas?”
Source: Kuratko and Hodgetts, Entrepreneurship, 8th ed. © 2009 Cengage Learning.

Donald F. Kuratko, Entrepreneurship: Theory, Process, Practice, 12th Edition. © 2024 Cengage Learning, Inc. All Rights Reserved.
May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. 12
 Phase 1: Background or Knowledge
Accumulation
• Often involves extensive reading, conversations, attending
meetings and workshops, etc.
• Additional inspirations for knowledge are joining groups, travel,
develop a library, record useful information, pursue natural
curiosities.

Donald F. Kuratko, Entrepreneurship: Theory, Process, Practice, 12th Edition. © 2024 Cengage Learning, Inc. All Rights Reserved.
May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. 13
 Phase 2: The Incubation Process
• Allow your subconscious to mull over all the information
gathered.
• Some steps to induce incubation are routine activities, exercise,
play sports or board games, think of it while falling asleep,
meditate.

Donald F. Kuratko, Entrepreneurship: Theory, Process, Practice, 12th Edition. © 2024 Cengage Learning, Inc. All Rights Reserved.
May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. 14
 Phase 3: The Idea Experience
• This is the “eureka factor” when the idea or solution is
discovered.
• Sometimes this comes in one moment, sometimes the solution
evolves over time.
• There is often an overlap between Phase 2 and Phase 3.

Donald F. Kuratko, Entrepreneurship: Theory, Process, Practice, 12th Edition. © 2024 Cengage Learning, Inc. All Rights Reserved.
May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. 15
 Phase 4: Evaluation and Implementation
• Most difficult step and requires courage, self-discipline, and
perseverance.
• Often need to rework idea from Phase 3; fail sometimes before
they find their best idea.
• Can test idea, seek advice, etc.

Donald F. Kuratko, Entrepreneurship: Theory, Process, Practice, 12th Edition. © 2024 Cengage Learning, Inc. All Rights Reserved.
May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. 16
 The Critical Thinking Process

Donald F. Kuratko, Entrepreneurship: Theory, Process, Practice, 12th Edition. © 2024 Cengage Learning, Inc. All Rights Reserved.
May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. 17
 Recognizing Relationships
• Recognizing Relationships
− Looking for different or unorthodox relationships among the
elements and people around you.
− This is “perceiving in a relational mode.”
− View things and people as existing in a complementary or
appositional relationship with other things and people.

Donald F. Kuratko, Entrepreneurship: Theory, Process, Practice, 12th Edition. © 2024 Cengage Learning, Inc. All Rights Reserved.
May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. 18
 Developing a Functional Perspective
• Developing a Functional Perspective
− Viewing things and people in terms of how they can satisfy your
needs and help complete a project.
− Look at things and people in nonconventional ways and from a
different perspective.

Donald F. Kuratko, Entrepreneurship: Theory, Process, Practice, 12th Edition. © 2024 Cengage Learning, Inc. All Rights Reserved.
May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. 19
 Using Your Brains
• Using Your Brains
− The right brain helps us understand analogies, imagine things, and
synthesize information.
− The left brain helps us analyze, verbalize, and use rational
approaches to problem solving.
− Need to use both to become more creative.

Donald F. Kuratko, Entrepreneurship: Theory, Process, Practice, 12th Edition. © 2024 Cengage Learning, Inc. All Rights Reserved.
May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. 20
Processes Associated with the Two
Hemispheres of the Brain
Left Hemisphere Right Hemisphere
Verbal Nonverbal
Analytical Synthesizing
Abstract Seeing analogies
Rational Nonrational
Logical Spatial
Linear Intuitive
Imaginative

Donald F. Kuratko, Entrepreneurship: Theory, Process, Practice, 12th Edition. © 2024 Cengage Learning, Inc. All Rights Reserved.
May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. 21
 Ways to Develop Left- and Right-
Hemisphere Skills
Left-Hemisphere Skills Right-Hemisphere Skills
1. Step-by-step planning of your work and life 1. Using metaphors and analogies to describe
activities things and people in your conversations and
writing
2. Reading ancient, medieval, and scholastic 2. Taking off your watch when you are not
philosophy, legal cases, and books on logic working
3. Establishing timetables for all of your 3. Suspending your initial judgment of ideas,
activities new acquaintances, movies, TV programs,
and so on
4. Using and working with a computer program 4. Recording your hunches, feelings, and
intuitions and calculating their accuracy
5. Detailed fantasizing and visualizing of things
and situations in the future
6. Drawing faces, caricatures, and landscapes

Donald F. Kuratko, Entrepreneurship: Theory, Process, Practice, 12th Edition. © 2024 Cengage Learning, Inc. All Rights Reserved.
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 Eliminating Muddling Mindsets
• Either/or thinking (concern for certainty)
• Security hunting (concern for risk)
• Stereotyping (abstracting reality)
• Probability thinking (seeking predictable results)

Donald F. Kuratko, Entrepreneurship: Theory, Process, Practice, 12th Edition. © 2024 Cengage Learning, Inc. All Rights Reserved.
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 Exercises to Eliminate Muddling Mindsets
• Practice with small risks.
• Talk to people who might conform to a common stereotype.
• Take on complex projects with an ambiguous result.
• Think of all positive aspects of any new idea first
• Listen, simply listen.
• Make a decision in the present.

Donald F. Kuratko, Entrepreneurship: Theory, Process, Practice, 12th Edition. © 2024 Cengage Learning, Inc. All Rights Reserved.
May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. 24
 Arenas of Creativity

• Idea creativity • Event creativity

• Material creativity • Inner creativity
• Organization creativity • Spontaneous creativity
• Relationship creativity

Donald F. Kuratko, Entrepreneurship: Theory, Process, Practice, 12th Edition. © 2024 Cengage Learning, Inc. All Rights Reserved.
May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. 25
 The Creative Climate
• Characteristics of a Creative Climate:
− A trustful management that does not overcontrol employees
− Open channels of communication among all business members
− Considerable contact and communication with outsiders
− A large variety of personality types
− A willingness to accept change
− An enjoyment in experimenting with new ideas
− Little fear of negative consequences for making a mistake
− The selection and promotion of employees on the basis of merit
− The use of techniques that encourage ideas, including suggestion systems and
brainstorming
− Sufficient financial, managerial, human, and time resources for accomplishing goals
Donald F. Kuratko, Entrepreneurship: Theory, Process, Practice, 12th Edition. © 2024 Cengage Learning, Inc. All Rights Reserved.
May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. 26
 Innovation and the Entrepreneur
• Innovation
− Is the process by which entrepreneurs convert opportunities (ideas)
into marketable solutions.
− Is a combination of the vision to create a good idea and the
perseverance and dedication to remain with the concept through
implementation.
− Is a key function in the entrepreneurial process.
− Is the specific function of entrepreneurship.

Donald F. Kuratko, Entrepreneurship: Theory, Process, Practice, 12th Edition. © 2024 Cengage Learning, Inc. All Rights Reserved.
May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. 27
 The Innovation Process
• Most innovations result from a conscious, purposeful search for
new opportunities.
• Uses both the right and left sides of the brain.
• Entrepreneurs look at figures and people.
• Successful innovations are simple and focused toward a clear
and carefully designed application.
• During the process, they create new customers and markets.

Donald F. Kuratko, Entrepreneurship: Theory, Process, Practice, 12th Edition. © 2024 Cengage Learning, Inc. All Rights Reserved.
May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. 28
 Types of Innovation
• Invention: creation of a new product, service or process
• Extension: expansion of something already in existence
• Duplication: replication with a creative touch to improve
• Synthesis: combination of existing concepts

Donald F. Kuratko, Entrepreneurship: Theory, Process, Practice, 12th Edition. © 2024 Cengage Learning, Inc. All Rights Reserved.
May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. 29
 Innovation in Action
Type Description Examples
Invention Totally new product, service, or Wright brothers—airplane
process Thomas Edison—lightbulb
Alexander Graham Bell—telephone
Extension New use or different application of an Ray Kroc—McDonald’s
already existing product, service, or Mark Zuckerberg—Facebook
process Barry Sternlicht—Starwood Hotels & Resorts
Duplication Creative replication of an existing Walmart—department stores
concept Gateway—personal computers
Pizza Hut—pizza parlor
Synthesis Combination of existing concepts and Fred Smith—FedEx
factors into a new formulation or use Howard Schultz—Starbucks

Donald F. Kuratko, Entrepreneurship: Theory, Process, Practice, 12th Edition. © 2024 Cengage Learning, Inc. All Rights Reserved.
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 The Major Misconceptions of Innovation
• Innovation is planned and predictable.
• Technical specifications must be thoroughly prepared.
• Innovation relies on dreams and blue-sky ideas.
• Big projects will develop better innovations than smaller ones.
• Technology is the driving force of innovation success.

Donald F. Kuratko, Entrepreneurship: Theory, Process, Practice, 12th Edition. © 2024 Cengage Learning, Inc. All Rights Reserved.
May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. 31
 Principles of Innovation

• Be action oriented. • Start small.

• Make the product, process, or • Aim high.
service simple and • Try/test/revise.
understandable.
• Learn from failures.
• Make the product, process, or
service customer based. • Follow a milestone schedule.
• Reward heroic activity.
• Work, work, work.

Donald F. Kuratko, Entrepreneurship: Theory, Process, Practice, 12th Edition. © 2024 Cengage Learning, Inc. All Rights Reserved.
May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. 32
 Summary
Click the link to review the objectives for this presentation.

Link to Learning Objectives

Donald F. Kuratko, Entrepreneurship: Theory, Process, Practice, 12th Edition. © 2024 Cengage Learning, Inc. All Rights Reserved.
May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. 33