The terms entrepreneurship and innovation are used interchangeably by people. But, there is a difference between both.
Innovation is generating unique ideas and using them to create new products and services. Entrepreneurship is the process of taking risks by building new businesses for profit. Innovators have creative thinking and problem-solving skills, while entrepreneurs have planning, management, marketing, and sales skills.
If you’re interested in learning more about the differences between entrepreneurship and innovation and want to know which one is better, then…keep reading…
What Is Innovation?
Innovation is a process of using creative skills to come up with unique ideas and implement them to introduce new products, services, and methodologies. Innovation also means making improvements in the existing markets.
Innovation makes things possible that were previously known to be impossible. For example, before the invention of airplanes, people believed humans couldn’t fly.
So, in simple words, innovation means introducing something new to the market. For instance, introducing equipment that can reduce old cars’ energy consumption is also an innovation.
The primary sources which promote innovation are economic and technological changes. These changes produce new markets, and new markets help innovators develop new and improved products or services.
Before moving into the differences between entrepreneurship and innovation, I will briefly explain what entrepreneurship is…
What Is Entrepreneurship?
Entrepreneurship is a process of creating and operating businesses using innovative ideas. Entrepreneurship solves the problems of society by providing appropriate products or services.
Entrepreneurship is identifying opportunities in the market and capitalizing on them to gain maximum profits.
Entrepreneurs are not required to be innovators, but those with innovative skills are the ones who thrive in business. Most entrepreneurs take advantage of existing innovations currently trending in the market.
The different types of entrepreneurship include Small business entrepreneurship, Large company entrepreneurship, and so on…
There are more types of entrepreneurship, but I will share them with you in detail in a while. For now, let’s understand the difference between entrepreneurship and innovation.
What Is the Difference Between Entrepreneurship and Innovation?
The term entrepreneurship is mainly merged with the term innovation. But, both of these terms have different roles to play in society.
Entrepreneurship and innovations are sometimes hard to differentiate because both terms are used interchangeably for building businesses. But, this is not correct.
Entrepreneurship is the process that builds businesses, while innovations use creative ideas to come up with new and improved products, services, or methodologies.
Entrepreneurs have different skillsets than innovators. For example, Entrepreneurs must have management, marketing, and sales skills to build a profitable business (Innovative skills are plus points for entrepreneurs). On the other hand, innovators must have creative and problem-solving skills to create unique products and services.
Both innovators and entrepreneurs take risks. But, entrepreneurs take business-related risks, and innovators take risks related to the challenges they face while creating products/services.
The motivation behind the drive of Innovators is the success of their products/services, while entrepreneurs are motivated by profits.
Great examples of entrepreneurs who built profitable and life-changing businesses without innovative skills include:
Ray Kroc, founder of McDonald’s, didn’t invent the hamburger but was an entrepreneur who died with a net worth of half a billion dollars.
Henry Ford didn’t invent the car, but he was worth nearly $200 billion. He was also an entrepreneur.
Innovation vs. Entrepreneurship
Now, I will compare both terms side by side so that you can have a more precise understanding.
|Definitions||Process of building a new and profitable business||Process of using creative skills to introduce new products/services/methodologies in the market|
|Skillset||Planning, Management, Marketing, Sales, Risk-taking, etc||Creative thinking, Problem-solving, questioning, experimenting, observing, Risk-taking, etc|
|Motivation||Profit||The success of the product or service|
|Types||Small business entrepreneurship, Large company entrepreneurship, etc||Incremental Innovation, Disruptive innovation,Architectural Innovation,Radical Innovation|
What Are Types of Innovation?
Let’s discuss in detail each type of innovation.
In this type of innovation, a product is improved over a period. The goal is to add new features to the product.
For example, in the smartphone phone industry, incremental innovation occurs by updating the hardware, changing the design, or adding new software features.
Disruptive innovation takes place by applying new technologies to the existing markets. For example, Amazon used the internet to sell books, disrupting the existing bookshops market.
Architectural Innovation occurs when the product’s overall design is changed by putting existing components together in a different way.
For example, cell phone technology was repackaged into a TV to form the Smart TV.
Radical innovation refers to creating new technology, services, and business models that make entirely new markets.
For example, Metaverse is a new virtual world where people can interact.
What Are Types of Entrepreneurship?
The main types of entrepreneurship are:
Small Business Entrepreneurship
Small business entrepreneurs are those people who make enough profit to support their families and live a modest lifestyle.
Small business entrepreneurship includes businesses such as local grocery stores, Hair salons, plumbers, carpenters, etc.
Large Company Entrepreneurship
Large company entrepreneurship includes more professional people who can handle large businesses.
This type of entrepreneurship includes entrepreneurs who constantly develop new ideas and inventions.
Imitator entrepreneurship uses the existing business models as an inspiration for their own.
They make existing products/services better and more profitable.
Which Is Better Innovation or Entrepreneurship?
Both are better. Both can’t exist without one another. For example, If there is no innovation, there will be no new products/services, which means entrepreneurs would not be able to build businesses around these new products/services.
And, the market for existing products/services will get so saturated that no new entrepreneurs will be able to sell anything.
Entrepreneurship and Innovation are both different terms. Entrepreneurs develop new businesses, and innovators introduce new products/services using creative ideas. Entrepreneurs and innovators both take risks but are related to their domains. Both are better because both depend on one another.
I hope you liked reading the article.
You may also like to read… Difference between Entrepreneur, Intrapreneur, and a Manager