The celebrated Harvard Economist and former editor of the Harvard Business Review, Ted Levitt once said, “Just as energy is the basis of life, and ideas the source of innovation, so is innovation the vital spark of all human change, improvement and progress.” His words, as valid as they are, seem to glorify entrepreneurship as the main driving force for all human progress and improvement. Yet, when we consider how entrepreneurship empowers people to take charge of their own economic prosperity and hence their lives, the idea doesn’t sound so far-fetched.
But as important as the idea of entrepreneurship is, Ted Levitt points to an idea that is far more important to the success of any venture; innovation. In fact, in today’s technology-driven global economy, entrepreneurship and innovation must go hand-in-hand if growth is to be achieved. Here are a few ways innovation is vital to entrepreneurship:
- As a Problem Solving Tool
All entrepreneurs have one thing on common; they attempt to solve a societal problem through their products, services and ideas. For example, to address a situation when a majority of the population in Kenya was locked out of the mainstream banking services, entrepreneurs came up with an innovative mobile banking solution called M-Pesa. Today, mobile payments eclipse banking transactions in terms of volume and profits not just in Kenya but in many other developing countries.
- To Drive the Global Entrepreneurship Movement
Generally, entrepreneurship is seen as a global movement and focus of policy-makers. But for the movement to gain traction, significant innovative solutions are required. Disruptive innovation can help impact the quality of life of ordinary people and eventually contribute towards making our communities better places to live.
Understanding the importance of innovation in the overall growth of the economy, governments in emerging markets are partnering with entrepreneurs to support development of new technologies. A good example is the SIDBI Startup Mitra in India which provides the necessary support to enable business growth in the country.
- Technological Advances Boosting Innovation in Business
Technological advancement enabled new business models, work structures and even types of career to emerge. Small startups and large corporations are looking to leverage such technologies to increase their profitability, a factor that has led to even greater innovation. For example, there is a growing need for innovative tools and systems that can help businesses manage their growing freelance workforce.
There is also a healthy growth of low-cost online education both in the developed and developing world. More people can afford a better quality of training as multinationals look to hire employees from all over the world. A good example is Andela, an African Startup that has set a goal to train more than 100,000 software developers in 10 years. So far, the company has managed to match its candidates with such technology bigwigs as Microsoft and IBM.
Innovation keeps businesses relevant by giving them a voice to address the common challenges affecting our communities as well as to provide different and sometimes even refreshing solutions that tend to take the world by storm.
When Steve Jobs said, “Innovation distinguishes a leader from a follower”, he likely meant it on an individual level. Yet, this is true for corporations and economies which is why governments seek to reward the innovators through incentive programs such as tax cuts and private-public partnerships.
