This document provides an overview of a presentation on teaching and encouraging entrepreneurship and innovation at Belarus universities. It discusses topics like innovation, opportunity recognition, managing innovation, and developing new businesses. It also covers entrepreneurship risks and rewards, the art and science of building value, identifying opportunities, and considerations for entrepreneurs like innovation and opportunity identification. Finally, it discusses encouraging entrepreneurship through showing young people how to participate, connecting them with experienced entrepreneurs, and providing access to resources through education, technologies, capital, and incentives.
HTP Session 1-Effective Interviewing to the Moneyball Approach to Selection
training of Professor Kent Millington (2)
1. TEACHING AND ENCOURAGING
ENTREPRENEURSHIP AND
INNOVATION
Belarus Universities
DR. KENT MILLINGTON
OCTOBER 2012
2. TOPICS OF DISCUSSION
• Innovation
• Opportunity Recognition
• Managing Innovation
• Technology Commercialization
• Developing New Business
• Business Model canvas
3. Entrepreneurship Risks and Rewards
Risks:
• Business Failure
• Unpredictable Business Conditions
• Long Hours
• Product/Service compete on Price only
• Imitation strategy
4. Entrepreneurship Risks and Rewards
Rewards:
• Financial
• Emotional – building a business
• Pride
• Recognition
• Flexibility
• Creativity
5. ENTREPRENEURSHIP: THE ART
AND SCIENCE OF BUILDING VALUE
ART: CREATIVITY; ENERGY; FEEL;
INSIGHT
SCIENCE: ANALYSIS; DISCIPLINE;
SYSTEMATIC APPROACH
6. ENTREPRENEURSHIP
Identify a need or opportunity
Create a solution - Innovation
Implement solution to create value
Harvest or other long-term strategy
7. Two Kinds of Entrepreneurship
1. Opportunity – based
2. Necessity – based
Young people 25-34 are dominant
participants in entrepreneurship.
9. Continuum of Innovation
Imitative Incremental Evolutionary Radical Revolutionary
The secret to innovation is uncovering an unmet consumer
need and the filling it in an innovative, creative way.
10. Continuum of Innovation
Imitative: copies something well-known and accepted
Incremental: small improvements; faster, better,
cheaper
Evolutionary: new to firm but not to world (i.e.,
technologies in new places)
Radical: technologies that give large performance
improvements or lower costs
Revolutionary: new to individual, firm, and the world
Best Opportunities between Incremental and Radical
11. The Creativity-Innovation-Entrepreneurship Chain
Latest science and technology
Creativity Innovation
Entrepreneurship
• Production of novel • Refining, evaluation
• Creation of value
and useful ideas and first prototypes
in the marketplace
• Discovery of of the new ideas • Exploitation of
opportunities • Evaluation of
opportunities
• Output: new ideas opportunities • Output: new product,
• Output: prototype
service, or process
Needs in society and the marketplace
12. Types of Innovation
1. Product: early stage of product life cycle,
innovations are frequent. As rate of product
innovation decreases, process innovation
increases. (What we make)
2. Process: makes manufacturing more efficient
through automation, lowering costs. (How we
make it)
Product /Service innovation creates much more
new wealth than process innovation!
13. Three Characteristics of Opportunity
Newness
Potential Economic Value
Perceived Desirability
Opportunity implies something that has not existed or
been available before, that can yield potential economic
gains, and whose development is consistent with legal
and/or moral standards of the society in which it occurs.
14. A Framework
•Alertness
•Social Network Ideas
•Prior Knowledge
-Of markets
-How to service markets
-Customer problems
-Accumulation over time
Example: Focus Media in Shanghai
15. Basic Propositions Concerning
Opportunities
Proposition 1: Opportunities emerge from
changes in knowledge, technology, economic,
political, social, and demographic conditions.
Proposition 2: Recognition depends on
previous experience which enables people
to see links between previously unconnected
changes, knowledge, or events.
16. Product Opportunity Gap
Social:
Social and Cultural
trends, Historical
trends Product
Opportunity Gap
Technology:
Emerging technologies
Re-evaluating existing
Economic: technologies
State of the Economy, Level of
Disposable Income, Changing
Investment Opportunities
17. Discontinuous opportunities: The source of radical innovation
Adjacent Discontinuous
New Opportunities Opportunities
Markets Exploit current assets Create new markets
and capabilities and new products
Status Quo
Grow market Adjacent
share and profit
Existing Opportunities
Markets (business expansion,
Increase primary
not new business
market demand
development)
Existing Products/ New Products/
Technology Technology
18. … which create disproportionate wealth relative to adjacent
opportunities
14%
38%
Discontinuous
61%
opportunities
Adjacent
86% opportunities
62%
39%
Type of new
Business launch Revenues Profits
Source: Chan & Mauborgne (1997)
20. Sustaining vs. Disruptive Technologies
Sustaining technologies focus on
improvements of importance to existing
customers. Existing companies best with
incremental innovation.
Disruptive technologies create a new value
proposition, reach new markets and customers.
New companies better at disruptive, radical
innovation.
21. Creating Competitive Advantage
• Competitive Advantage
– Something that the firm does better than any of
its competitors.
– Goal: To have a sustainable competitive
advantage
• Requires that the advantage:
– Must be valued by customers
– Not easily duplicated by competitors
22. Technology and Competitive
Advantage
Technology
Competitive Value
Competitive Advantage Creation
Dynamics
23. Major Strategic Questions
• Should we create our own new
technology and innovations
internal to the firm?
OR
• Should we acquire technology from
external sources like acquisition or
strategic alliances?
24. Dimensions of Internal
Innovation
1. Goal of internal innovation is for the firm
to outperform its competition.
2. Internal innovation involves many
individuals, capabilities, and resources.
3. Resources are critical to the innovation
process. (Human, Physical, Financial)
25. Reasons for Using External Innovation:
1. The firm’s product line falling behind competitors.
2. A new competitor enters the market, which will change the
dynamics of the industry.
3. The firm discovers its processes are not as efficient and/or
effective as those of its competitors.
4. The firm believes its current products or processes are not
going to be successful in the future.
5. Expansion into new markets and/or new products is
achieved faster.
26. Technology S - Curve
P
P e
r r
o f
d o
u r
c m
t a
n
c
e
Time
28. S – Curve Strategy
P
P e 3rd Technology
r r
o f
d o 2nd Technology
u r
c m
t a
n 1st Technology
c
e Time
29. Managing Along the S – Curve
P
P e Managing 3rd Technology
r r Growth
o f
d o 2nd Technology
u r
m Managing
c
a Transitions
t
n 1st Technology
c
e Time
30. Management Implications
•Technology shifts before investment recovery
•Management focus often fragmented
•Engineering strength often misused
• Marketing becomes a problem introducing
new technology over the old one
•Difficult to manage the ROI in important
technology.
31. The Process of Technology Commercialization
Commercializing New Technologies, Vijay K. Jolly, Harvard Business School Press, 1997, p. 4
32. Technology Commercialization Process
Imagining Incubating Demonstrating Promoting Sustaining
Product Build products & Build markets
Creating unique Proving product Build
planning product ideas viability prototypes introduce to & improve
steps markets products
Build initial Develop
Business Find resources to
Find interested markets &
build prototypes & market growth
planning people & money
identify markets plan market strategies
expansions
steps
Resource Needs
People Small Moderate Medium Large
Physical None Moderate Medium Large
Financial None Moderate Large Largest
33. Technology Assessment
1. Understand Technology
2. Discover Possible Uses of Technology
3. Understand Markets for Uses
4. Determine How to Deliver Value
34. How Companies Develop
1.Small Business Entrepreneurship – 95%+ of business
2.Scalable Startup Entrepreneurship – receive most
investment
3.Large Company Entrepreneurship – innovation as
variants of existing core products; disruptive innovation
difficult.
4.Social Entrepreneurship - innovation to solve social
needs
35.
36. Search for Execution of
Business Model Business Model
37. Build a Customer Development Process
Product Development
Concept/ Product Alpha/Beta Launch/1st
Bus. Plan Dev. Test Ship
Customer Development
? ? ? ?
38. Customer Discovery: Step 1
Customer Customer Customer Company
Discovery Validation Creation Building
• Stop selling, start listening
– There are no facts inside your building, so get outside
• Test your hypotheses
– Two are fundamental: problem and product concept
39. Customer Validation: Step 2
Customer Customer Customer Company
Discovery Validation Creation Building
• Develop a repeatable and scalable sales
process
• Only earlyvangelists are crazy enough to buy
40. “Pivoting” is changing a fundamental part of the
business model. It can be simple: recognizing that your
product was priced incorrectly. It can be more complex:
your target customer needs to change, the feature set
is wrong, you chose the wrong sales channel or your
customer acquisition programs are ineffective.
41. Customer Discovery: Step 3
Customer Customer Customer Company
Discovery Validation Creation Building
– Goal is to create end-user demand and drive that
demand into the sales channel.
– Marketing message will be different based on the
kind of market being entered and the customers
being sought
– Brand building and heavy advertising work in
existing markets but not so much in new markets.
42. Customer Discovery: Step 4
Customer Customer Customer Company
Discovery Validation Creation Building
– Where the company transitions from informal,
learning, and discovery to formal departments of
Sales, Marketing, Business Development
– Build departments to exploit early market
success
– Add employees to meet demand for products
43. Nine Blocks of the Business Model
1. Customer Segments
2. Customer relationships
3. Value propositions
4. Channels
5. Key Resources
6. Key Activities
7. Key Partners
8. Revenue streams
9. Cost Structure
Business Model Generation, Alexander Osterwalder & Yves Pigneur,
2010
44. Business Model Canvas
Key Value Customer
Partners Key Proposition Customer Segments
Activities Relations
Key
Channels
Resources
Cost Structure Revenue Streams
45. Customer Segments
Mass Market: focus on one large group; i.e., consumer
electronics
Niche Market: specific segments; i.e., supplier-buyer
relationships like auto parts manufacturers
Segmented: different needs and problems; i.e., banks and
professional services (engineering, consultants)
Diversified: unrelated segments; i.e., Amazon selling products
and providing computer services
Multi-sided platforms: credit card companies; i.e., card
holders and merchants
46. Value Proposition: Five Key Values
• Product: Performance, quality, features, brand, easy to use,
safe.
• Price: Fair, visible, consistent, reasonable.
• Access: Convenient location, found in reasonable time.
• Service: Ordering, delivery, return, check-out.
• Experience: Emotional, respect, ambiance, fun, intimacy.
• One value selected to dominate value proposition, a second
to differentiate, and remaining three meet the industry norm.
47. Channels
Communication: marketing message, raising
awareness, customer evaluation
Distribution: delivering value proposition
Sales: places to purchase product or services
Finding the right mix of channels is crucial to bringing a value
proposition to market.
48. Channel Own Partner
Types
Direct Indirect
Sales Web Own Partner
Wholesale
Force Sales Stores Stores
Channel Phases
1. Awareness: How to raise awareness of products?
2. Evaluation: How do customers evaluate products?
3. Purchase: How and where do customers buy?
4. Delivery: How do we deliver value proposition?
5. After Sales: How provide post-purchase support?
49. Customer Relationships
Motivations: Customer acquisition, customer
retention, Boosting sales (upselling)
Personal Assistance
Dedicated Personal Assistance
Self-service
Automated service
User communities
Co-creation of innovative products
50. Key Resources
Physical: facilities, buildings, equipment
Human: especially for creative industries
Financial: sources of funding
Intellectual: patents, copyrights,
partnerships, customer databases
51. Key Activities
Production: designing, making, delivering
Problem solving: consulting, services,
hospitals
Platform/network: software, networks,
social media, brands, platform promotion
52. Key Partnerships
Strategic alliances between non-competitors and
financial sources
Strategic partnerships with competitors
Joint Ventures
Buyer-supplier relationships to assure reliable
supplies
54. Cost Structure
Cost-driven model: minimize costs, low
prices, maximum automation, extensive
outsourcing, process innovation
Value-driven model: value creation, premium
values, personalized service, product
innovation
Economies of scale Economies of scope
Fixed costs Variable costs
55. Business Model Canvas
Key Key Value Customer Customer
Partners Activities Proposition Relations Segments
Key Channels
Resources
Cost Structure Revenue Streams
56. Business Model Canvas – SWOT Analysis
I KP KA VP CR CS
n Strengths
t Weaknesses
e
r
n
a
KR C
l
E
x
t Opportunities Threats
e C$ R$
r
n
a
l
Helpful Harmful
60. Business Model Canvas for Apple iTunes
KP KA VP CR CS
Hardware Lovemark
Record Design
Companies Seamless Switching
Marketing Costs
Music Mass
Experience market
OEMs KR C
People Retail stores
Brand Name Apple stores
iPod hardware Apple.com
iTunes software
C$ R$
People Manufacturing iTunes stores
Marketing and sales Large hardware revenues
Some music revenues
61. ENCOURAGING ENTREPRENEURSHIP
• Show how to take part in the world
• Meet and know older entrepreneurs
• Access to technologies and capital
• Tax benefits and other incentives
• Entrepreneurship education
