ENT4183 Midterm
what is an industry and its boundaries
a group of firms producing products that are close alternatives for each other and serve the same customers boundaries are •The scope of products and services •Geographic scope
director
gathers and inspires the team
an opportunity
is a favorable juncture of circumstances with a good chance for success
window of opportunity
period of time which you have none to low competition
Storyteller
conveys a compelling narrative about the project
entrepreneurial commitment
dedication of the time and energy necessary to bring the enterprise to initiation and fruition
brainstorming rules
defer judgment capture all ideas encourage wild ideas hold one convo at a time build on other ppl's ideas be visual go for volume
Experience Architect
designs compelling experiences that go beyond mere functionality
Hurdler
develops a knack for overcoming and outsmarting potential obstacles.
set designers
transforms physical environments to facilitate the work of innovative team members.
Radical (Disruptive) Innovation
uses new modules and new architecture to create new products. Ex: the Internet
When to enter the market
when they estimate the marginal benefit of additional knowledge is less than the payoff of entry
the sweet spot
where an individual's or team's passions and capabilities intersect with an attractive opportunity
Disruptive Innovations
•Challenging because they introduce a set of attributes to a marketplace different from the ones that mainstream customers have historically valued •Products often initially perform unfavorably along one or two dimensions of performance that are particularly important to those customers •May initially serve a niche market
sustainable competitive advantage
•Competitive advantage brings together the firm's core competencies and its strategic relationship within its industry. •A firm uses its distinctive competencies to manage its innovation, efficiency, product quality, customer relations, and supplier relations in order to differentiate it product and manage its costs.
Sense of Urgency
•Due to a shortfall of customers, the firm acts to build capacity to design, build, and sell its products. •Inevitable delays slow down the buildup of capacity. •As capacity increases, the firm expects customers to buy, but may experience delay as customers consider the purchase. •A slow-down in the growth of customer buildup results in sales shortfall, increasing sense of urgency.
Potential Barriers to Entry
•Economies of Scale •Cost advantages independent of scale •Product differentiation •Contrived deterrence •Government regulation •Switching Costs
6 resources for a creative enterprise
•Knowledge in the required domain and fields and knowing what is new •Capability to recognize connections, redefine problems, and envision and analyze possible practical ideas and solutions •Inventive thinking about the problem in novel ways •Motivation toward action •Opportunity-oriented culture and openness to change •Contextual understanding that supports creativity and mitigates risk
alignment tools
•The business plan can be used to align the interests of all the participants of a new venture. •The business plan explains how the people, the resources, and the opportunity can be linked to a deal that will hopefully benefit all stakeholders - employees, investors, suppliers, and allies.
how can knowledge be enhanced?
•by engaging deeply with potential customers through conversations and observations. •Knowledge can be applied across different domains. •Research shows that teams that include problem solvers from disparate but analogous markets outperform teams in which members all have expertise in the target market.
Entrepreneurial Attractiveness equation
EA= (Y+I) - (W+R)
entrepreneurial capital
EC= entrepreneurial competence x entrepreneurial commitment
incremental innovation
characterized by faster, better, and/or cheaper versions of existing products
how many new ventures survive the first three years
1/3
Utility equation
U=f(Y, I, W, R, O)
Porter's Five Forces- immediate forces within industry
threat of entry, threat of substitute, supplier power, buyer power, and competitive rivalry
Factors to Exploit in Independent Invention
1. Business interests, capabilities, and experiences of the entrepreneurial team 2. Characteristics of the industry in which the invention will be exploited 3. Characteristics of the invention a.Importance of the invention b.Radicalness of the invention c.Breadth of patent protection of the IP
3 Elements of Concept Summary
1. Explain the problem or need and identify the customer. 2. Explain the proposed solution and the uniqueness of the solution. 3. Tell why the customer will pay for the solution.
4 steps to achieving a favorable technology innovation
1. Technology Factors •Feasibility•Performance•Manufacturability 2. Business Model •Vision•Target Market•Value Proposition 3. Strategy •Industry and Competitor Analysis•Expected Competitive Advantage 4. Expected Economic Results •Revenues•Profitability•Return on Capital•Time to Profitability
5 step process of evaluating an opportunity
1. capabilities 2. novelty 3. resources 4. return 5. commitment
Steps in creating a business model
1. create a vision 2. write mission statement 3. state the value proposition 4. create biz model
4 stages in the customer development process
1. customer development 2. customer validation 3. customer creation 4. company building then iterate
elements of a business model
1. customer selection 2. value prop 3. differentiation and control 4. scope of product and activities 5. org design 6. value capture for profit 7. value for talent
creativity process
1. describe the problem 2. incubation period: observe & study the problem 3. intuitive thinking and brainstorming 4. insights, ideas & inventive thinking 5. evaluate and test ideas 6. build a prototype, show to customer reframe and start again
four steps to starting a business
1. founding team has the necessary skills or acquires them 2. team identifies the opportunity that attracts them and matches their skills. they create a solution to match the opportunity 3. acquire/possess the financial and physical resources necessary to launch the biz by locating investors and partners 4. complete an arrangement with their partners investors and founder to launch the biz
9 categories of opportunity
1. increasing value of a product or service 2. new applications of existing means or technologies 3. creating mass markets 4. customization for individuals 5. increasing reach 6. managing the supply chain 7. convergence of industries 8. process innovation 9. increasing scale of the firm
4 elements of business plan alignment tool
1. people 2. resources 3. opportunity 4. deal
5 values offered to a customer
1. product 2. price 3. access 4. service 5. experience
3 stages of a story
1. set the stage 2. introduce the dramatic effect 3. reach a resolution
5 characteristics of an attractive opportunity
1. timely 2. solvable 3. important 4. profitable 5. context
what does a firm need to be competitive
1. unique and valuable resources and the ability to exploit the resources 2. a unique ability to manage common resources Ideally, a firm's core competencies will be rare, difficult for others to imitate, and difficult to substitute. (VRIO or VRINE)
Six Questions for Creating a Dynamic Strategy
1. why are we pursuing this objective? 2. when will we act and at what speed? 3. where will we be active? 4. what will differentiate our product? 5. how will we achieve our objective? 6. with whom will we compete and cooperate?
Elements of an Executive Summary
1.Business concept, including the problem and its solution 2.Market, customer, and industry analysis 3.Marketing and sales strategy 4.Organization with key management and allies 5.Financials, including 3+ years of summary projections 6.Financing history and investment offering
Management Process for Developing a Strategy
1.Develop vision, mission, and business model. 2.Describe firm's core competencies. 3.Describe industry and context for firm/competition. 4.Determine firm's strengths and weaknesses. 5.Describe the venture's opportunities and threats. 6.Identify key factors for success. 7.Formulate strategic options; select appropriate one. 8.Translate strategy into action plan with measures/controls.
Ten Common Mistakes or Gaps in a Business Plan
1.Solutions or technologies looking for a problem 2.Unclear or incomplete business model and value proposition 3.Incomplete competitor analysis and marketing plan 4.Inadequate description of the uncertainties and risks 5.Gaps in capabilities required of the team 6.Inadequate description of revenue and profit drivers 7.Limited or no description of the metrics of the business 8.Lack of focus and sound mission 9.Too many top-down assumptions such as "we will get 1 percent market share" 10.Limited confirmation of customer demand or pain
open source innovation
A collection of many firms and individuals collaborating to develop and deploy an innovation Ex: Wikipedia, YouTube
business plan
A document that describes the opportunity, product, context, strategy, team, required resources, financial return, and harvest of a business venture. •Used to attract talented individuals, resources, and investors to the venture. •a blueprint for the business, enabling the team to clearly see the plan of action.
Follower Strategy
A firm learns from the pioneer's mistakes and exploits the market potential created by the pioneer. Followers in an emergent industry can also benefit from the additional time to develop, commercialize, and exploit new products, preserving their resources as they wait for the opportunity to materialize
Concept Summary
A simple statement of the problem being addressed and how the venture will solve it
entrepreneurial competence
Ability to 1) recognize opportunity and 2) gather and manage the resources necessary to capitalize upon the opportunity
Table of Contents of Biz Plan
Executive Summary I.Opportunity and Market Analysis II.The Solution and Concept III.Marketing and Sales IV.Product Development and Operations V.Team and Organization VI.Risks VII.Financial Plan and Investment Offering Appendix, Detailed Financial Plan
Elements of a business plan
Executive summary Opportunity: quality, growth potential Vision: mission, objective, core concept Product or service: value proposition, business model Context: industry, timeliness, regulation Strategy: entry, marketing, operations, market analysis Organization: structure, culture, talent Entrepreneurial team: capabilities,commitment Financial Plan: assumptions, cash flow, profit Required resources: financial, physical, human Uncertainties and risks Financial return: return on investment Harvest: return of cash to investors and entrepreneurs
Invention vs. Innovation
Invention = the development of a product or a process for the first time Innovation = the application of that product or process and its adoption by the market •Only about 6% of inventions developed by independent inventors actually reach a market .•It is a long road from invention to commercialization.
MVP
Minimum Viable Product-has only the core features of a product in order to be deployed into the marketplace in a lean startup setting
Macro Environmental Forces
Political, Economic, Socio-Cultural, Technological, Environmental, and Legal (PESTEL)
creativity
The ability to use the imagination to develop new ideas, strategies, business models, or solutions. a core competency of most new ventures. •Creative ideas often arise when creative people look at established solutions, practices, or products and think of something new or different.
The story of your business plan
The creation of an appealing and coherent story may be a useful form of communication for entrepreneurs in the attempt to attract interest and support for their idea and plan. inspires belief in their motives, character social benefits, wealth-creating possibilities, and capacity to reach their goals.
Architectural Innovation
changes the way components of a product are linked together
challenge
a call to respond to a difficult task and to make the commitment to undertake the required enterprise
core competencies
a firm's unique capabilities and resources that enable it to implement its business model and thus deliver a valuable product or service to its customers.
strategy
a plan that integrates a firm's goals and capabilities
unique selling proposition (USP)
a short version of a firm's value prop. often used as a slogan or summary phrase Ex: FedEx USP is Positively, absolutely overnight.
7 Domains of Attractive Opportunities
a way to examine both markets and industries on the macro and micro levels. then the team is evaluated across multiple dimensions. 1-3 a part of team domain 1. missions, aspirations 2. ability to execute 3. connectedness Market domain Macro level. 4: market attractiveness Mirco level. 5: target segment and benefits Industry domain Macro level: 6. Industry attractiveness Micro level: 7: sustainable advantage
caregiver
anticipates and attends to customer needs.
demand pull
beginning with a market need. the need could be filled with several different potential products
technology push
beginning with a technological capability
factors people use to determine whether to act as entrepreneurs
benefits: independence, financial success, self-realization, innovation, roles negatives: risk, work effort and stress
Four stages of industry life cycle
emergence, growth, maturation, decline
cross-pollinator
explores other industries and setting and borrows relevant ideas from them
Many companies were _____ ________ and did not succeed
first movers
first-mover advantage
gain a firm attains when it is first to sell a new product or enter a new market
collaborator
helps to bring diverse groups together.
three elements of intellectual capital
human capital, organizational capital, and social capital IC= HC + OC + SC
business design
incorporates the selection of customers, its offerings, the tasks it will do itself and those it will outsource, and how it will capture profits. done successfully it represents an improvement over existing alternatives
4 types of innovation
incremental, architectural, component/modular, radical/disruptive
Modular innovation
innovation of new components and modules but without disrupting the overall pattern of connections b/w modules
innovation
invention that has produced economic or social value in the marketplace
An economic system
is a system that produces and distributes goods and services
internal factors of innovation engine
knowledge, imagination, and attitude
Anthropologist
observes behaviors and develops a deep understanding of how people interact with products, services, and each other.
Entrepreneur
people who identify and pursue solutions among problems, possibilities among needs, and opportunities among challenges
Triple Bottom Line
people, planet, and profit; measures an organization's social, environmental, and financial performance
Know First Mover Potential Advantages and Disadvantages
pg 102 basically advantages are that the create standards and can drive up costs for producers and customer disadv are high development and resource costs, customer are reluctant to switch and short lived advantage before competition
experimenter
prototypes new ideas continuously
external factors of innovation engine
resources, habitats, and culture
Mission statements are
short- usually less than 100 words
firm's mission and purpose
society, market, technology, suppliers, workers and associates, customers, competitors
value proposition
states who the customer is and describes the values offered to this customer
capability
the capacity of the firm, or a team within the firm, to perform some task or activity, thus the capabilities of a firm include the collective learning in the organizations, the skills of its people, and its ability to coordinate and integrate know-how and proprietary knowledge
Business Model Innovation
the capacity to reconceive existing biz models in new ways that create new value for customers Ex: Uber and AirBnB
Opportunities often lie at
the intersection of social and technological change
Entrepreneurship
the nexus of enterprising individuals and promising opportunities
the design process
the organization and management of people, concepts, and information utilized in the development of the form and function of a product •The role of design, in part, is to mediate between the novel concept and established institutional needs
Dynamic Capitalism
the process of wealth creation characterized by the dynamics of new, creative firms forming and growing and old, large firms declining and failing.
productivity
the quantity of goods and services produced from the sum of all inputs such as hours worked and fuels used
business model
the resulting outcome of the business design process
Economics
the study of the productions, distribution, and consumption of goods and services
opportunity cost
the value (cost) of the forgone alternative action
what is the purpose of industry analysis
to determine whether it is attractive or not
important part of attitude
•maintaining a willingness to experiment and the drive to push through challenges to solve problems. •Research shows that a human mind is malleable and that people who maintain a positive and learning-oriented attitude have different brain activity than people who do not
