Chapter 5- Entrepreneurship lecture International University- HCMcity

1. Technology Ventures: From Idea to OpportunityChapter 5: Summary
There’s a better way to do it, Find it!
Thomas Edison
How can an entrepreneur build an effective strategy
based on innovation that will lead to a sound
technology venture?
An innovation strategy is structured to effectively
commercialize new products and services for its
customers. Using an idealized model of a window of
opportunity, the entrepreneur can decide when to act. The
entrepreneur needs to maintain a sense of urgency but
avoid being too early or too late to market. Entrepreneurs
establish and build a network of partners who work with
them to achieve the new venture’s goals.
Summary

2. Technology Ventures: From Idea to OpportunityChapter 5: Concept
Emergent industries:
Newly created or newly recreated industries formed by
product, customer, or context changes [Barney 2002].

3. Technology Ventures: From Idea to OpportunityChapter 5: Table 5.2
Possible Advantages Possible Disadvantages
• Create the Standard and
the Rules
• Short-Lived Advantages Are Competed
Away
• Low Cost Position • Higher Development Costs
• Create and Protect
Intellectual Property
• Established Firms Circumvent or violate
patents and intellectual property
• Tie Up Strategic
Resources
• Cost of Attaining the Resources
• Increase Switching
Costs for the Producer
• High Uncertainty of Designing the Right
Product. If vision is wrong, then large
costs to switch
• Increase Switching
Costs for the Customer
• Customer is reluctant to buy when a
large cost to switch may be incurred
First Mover Potential Advantages and Disadvantages

4. Technology Ventures: From Idea to OpportunityChapter 5: Table 5.1
TYPE OF INDUSTRY
Mature Growing Emergent
Revenue Growth Slow Moderate Potentially Fast
Stability High Moderate Low
Uncertainty Low Moderate High
Industry Rules Fixed Fluid Unestablished
Competitiveness High Moderate Low or None
CHARACTERISTICS
Three Types of Industries and Their Characteristics

5. Technology Ventures: From Idea to OpportunityChapter 5: Figure 5.3
Complement:
A complement to a product is any other product that
makes the first one more attractive to the customer.
The New
Venture
Customers
ComplimentorsCompetitors
Suppliers
The Value Network

6. Technology Ventures: From Idea to OpportunityChapter 5: concept
Importance reflects the magnitude of the economic value of
an invention.
Radicalness measures the degree to which an invention,
regardless of economic value, differs from previous inventions
in the field.
Patent scope describes the breadth of intellectual property
protection for the invention.

7. Technology Ventures: From Idea to OpportunityChapter 5: Table 5.3
The Factors that Influence the Entrepreneur to Exploit An
Independent Invention
1. The Business Interests, Capabilities, and Experiences of the
Entrepreneurial Team
2. The Characteristics of the Industry in Which the Invention Will Be
Exploited
3. The Characteristics of the Invention
a. Importance of the invention — Economic value and
potential payoff
b. Radicalness of the invention — differentiation of the
invention from its predecessors
c. The breadth of patent protection of the intellectual
property

8. Technology Ventures: From Idea to OpportunityChapter 5: Figure 5.6
The New Business Formation Process for an Invention

9. Technology Ventures: From Idea to OpportunityChapter 5: Figure 5.7
Disruptive or radical innovations introduce a set of attributes to a
marketplace different than the ones that mainstream customers
historically have valued, and the products often initially perform
unfavorably along one or two dimensions of performance that are
particularly important to those customers.
Current performance of the innovation
Range of performance
required in the
mainstream market
Expected
Trajectory
Now Time
High
Performance
Low
The Expected Trajectory of a Disruptive Innovation

10. Technology Ventures: From Idea to OpportunityChapter 5: Table 5.4
Creativity is the ability to use the imagination to
develop new ideas, new things, or new solutions.
Six Resources for A Creative Enterprise
• Knowledge in the Required Domain and Fields — knowing what is new
• Intellectual Abilities to recognize connections, redefine problems and
envision and analyze possible practical ideas and solutions
• Inventive Thinking about the problem in novel ways
• Motivation towards Action
• Opportunity Oriented Personality and Openness to Change
• Contextual Understanding that supports creativity and mitigates risks

11. Technology Ventures: From Idea to OpportunityChapter 5: Figure 5.10
Describe
The Problem
Describe
The Problem
Evaluate
and
Test the Ideas
Evaluate
and
Test the Ideas
Build a Prototype
and Show It to the
Customer
Build a Prototype
and Show It to the
Customer
Intuitive Thinking,
Brainstorming
Intuitive Thinking,
Brainstorming
Insights, Ideas,
Inventive Thinking
Insights, Ideas,
Inventive Thinking
Incubation Period:
Observe and
Study the Problem
Incubation Period:
Observe and
Study the Problem
Start
Reframe and
Start Again
The Creativity Process

12. Technology Ventures: From Idea to OpportunityChapter 5: Table 5.5
The Elements of An Attractive Innovation Strategy
• A well defined customer
• A key customer benefit that is measurable in dollars
• Short period until economic payback and positive cash flow
• A high benefit to price ratio for the customer
• A proprietary advantage that can be maintained or defended
• The core competencies required to exploit the new technology are
present or available to the new venture
• Access to the necessary resources

13. Technology Ventures: From Idea to OpportunityChapter 5: Figure 5.11
Strategy
• Industry and Competitor Analysis
• Expected Competitive Advantage
Business Model
• Vision
• Target Market
• Value Proposition
Technology Factors
• Feasibility
• Performance
• Manufacturability
Expected Economic Results
• Revenue
• Profitability
• Return on Capital
• Time to Profitability
The four steps to
achieve a favorable
technology innovation.

14. Technology Ventures: From Idea to OpportunityChapter 5: Principle
An innovation strategy builds on creativity, invention, and technologies,
acting within a value network, to effectively commercialize new products
and services for its customers.

15. Technology Ventures: From Idea to OpportunityChapter 5: Exercise
Many people expect a car with a hydrogen fuel cell will be common
within 10 years. Use table 5.5 and figure 5.1 to describe the potential
for fuel cell vehicles.

16. Technology Ventures: From Idea to OpportunityChapter 5: Venture Challenge
VENTURE CHALLENGE
1)Describe your venture in terms of timing of entry as
illustrated by figure 5.1
2)Create a value network for your company as
outlined in figure 5.3.
3)Create a partnership strategy as discussed in
section 5.3.
4)Summarize your technology and innovation
strategy.

17. Technology Ventures: From Idea to OpportunityChapter 5: DVD Video
DVD Video
“Two Weird Ideas That Work”
Bob Sutton (Stanford University)