Innovation and The Entrepreneurial Cycle

Starting a business or developing a product or service requires taking an idea an integrative life cycle. An idea can not come to be without taking it through a rigorous process of innovation where every element of the idea is inspected, tested and developed. According to Professor Admondoza, "There is the lifecycle of the product/service and the lifecycle of venture (business), the latter illustrates funding types and sources along the lifecycle. Also along these life cycles are points where intellectual property needs to be considered. The lifecycle concepts also explain the why and how of corporate innovation and venturing." The graphic below shows a depiction of how a business looks at different stages of said life cycle:

(image from: http://evolvitas.com/2011/06/01/avoid-issue-starting-small-business-startup/business-lifecycle/)

There are many different elements and pieces of the puzzle that need to be examined and adressed when starting a business or bringing an idea for a product or service to life. Without addressing these elements properly you decrease your chance of success astronomically and decrease your chances of gaining outside funding support partners.
 

In the article Raising Money for New and Emerging Companies,  Frank Demmier explains the different stages of the lifecycle of creating a business.He says, "All industries, businesses, and products pass through the four stages of a life cycle: Embryonic, Growth, Maturity, and Decline." What he is saying is that basically every company that begins goes through a similar process; someone has an idea for something (a product or a service), goes through testing, conceptualizing and funding, implementation, growth, becomes a steady business and then either declines or stays steady. This is true for almost all businesses.

The Embryonic Stage is where a business begins and is able to go from idea to a feasible company through set stages. This is the stage I will explain most as it is the determining stage for if a company is able to move along in the growth process. To understand the Embryonic stage you can think of a human embryo as an analogy for this stage; this is where the business is at it's conception and starting on a journey of growth. Within the Embryonic stage there are five phases of development  The picture below depicts these stages with a brief explanation.

These phases are where the business is put through a process of questioning and examination of growth  potential. The business idea and model are tested and hypothesizes and looked at to see if they will be able to grow into a business past this first conception of idea. The Embyonic phase can take a great deal of time and and money as it takes a lot of testing of concept, and many times multiple different testings. The Embryonic phase is essential to make sure that the right amount of testing and questioning of the idea are done so that once the business makes it through this stage, it has proof of viability and uncertainty should be reduced. 

To depict the money that is generally needed for each phase Demmier chose to use this graphic: 

How businesses get money during this phase is to provide potential lenders with low uncertainty of repayment once the business launches. 

These stages generally apply to start-ups as established companies only innovate with these stages, they do not bring their entire company for the most part through the stages. Larger established companies only innovate in small areas, but apply these stages to an innovation. In class we heard from a speaker who did just this and innovated at a large corporate company. The stages he followed to get his idea implemented followed the lifecycle concept. He first told people about his idea and gained backing from significant sponsors in the company. He then had to gain funding for his idea so that he would be able to employ testing. Once he gained funding (which was easy to get being part of a large corporation) he was able to test his idea internally to provide sponsors and the company with proof of concept. Once the company embraced his idea (verification & demonstration) he was endorsed to be able to bring his idea externally (bringing idea to market/commercialization) where the company was able to bring this innovation to the public. This example shows how innovation is able to happen in a large corporation, similarly to how it happens with a start-up; there are obviously differences, but both innovations follow the lifecycle concept for innovation.