The fundamental framework
SOURCE: Hindle, K. 2009. The relationship between innovation and entrepreneurship: easy definition, hard policy. Paper presented at the 6th AGSE International Entrepreneurship Research Exchange, Adelaide, South Australia, Australia.The paper was awarded the conference prize for best paper on applied entrepreneurship.
I think in terms of what I call ‘the value creation trinity’: Innovation, entrepreneurship and opportunity evaluation – and the relationships between them. In accordance with the findings of my research and other leading edge theory and practice, I utilise the following definitions of each term to ensure unambiguous precision.
1. Innovation is the combination of an inventive process and an entrepreneurial process to transform new knowledge into new value for the benefit of defined stakeholders.
2. Entrepreneurship. The full definition of entrepreneurship is a verbal representation of the essential components my Model of Entrepreneurial Process (presented in the next section). When the technical rigour of academic discourse is not mandatory, two shorter abstractions of the definition are often permissible and useful.
Shortest version – Entrepreneurship is the process of turning new knowledge into new value.
Short version – Entrepreneurship is the process of transforming new knowledge into new value for the benefit of intended recipients.
Full definition – Entrepreneurship is the process of evaluating, committing to and achieving, under contextual constraints, the creation of new value from new knowledge for the benefit of defined stakeholders.
3. Opportunity evaluation is the essence of entrepreneurial capacity and is necessary but not sufficient for the successful execution of a full entrepreneurial process. In the most general sense, embracing all human activities (social, cultural, political, artistic, scientific, economic), opportunity evaluation is the process of transforming the analysis of an opportunity into a design for new value creation. In the economic context we can be more specific. Here, opportunity evaluation is the process of transforming the analysis of an opportunity into the design of a business model.
Two further definitions provide a quintet that ensures that any reader of my work knows exactly what I mean by terms that others often use in hazy and ambiguous ways.
4. A business model is a detailed design for transforming precisely defined resources and activities into calculated value for the benefit of defined stakeholders.
5. An Entrepreneurial Business Plan is the formal argument used to secure, from prospective investors, resources required for a proposed entrepreneurial process.