HINF 410 - Chapter 12
In regards to launching a new venture, 2. Entrepreneurial Resources Describe Human Resources
-most important asset of an entreperneurial firm is skilled and strong management -new ventures starting with teams of a number of entrepreneurs, are more successful then those launched by "lone wolf"
What are the 5 dimensions of EO?
1. Autonomy :willingness to act independently to carry forward the vision 2. Innovativeness: Firm's willingeness for innovation 3. Proactivness: high profits, retain image 4. Competitive Aggressiveness: firm's ability to outperform rivals 5. Risk Taking: Willingness to seize a venture opportunity
What are Porter's 4 generic strategies for entrepreneurial firms?
1. Cost Leadership -make decisions and changes quickly/easily for a new venture 2. Differentiation -all strategies involve some degree of differentiation 3. Focus in Cost 4. Focus in Differentiation *combination of all 4 is the best way to succeed
In regards to managing the innovation process, 3. Staffing to capture value from innovation What are 4 important human resource practices?
1. Creating Innovation teams w/ experiences skills 2. For employees seeking career advances, have them participate as part of their career climb 3. After people gain experience with new venture, transfer them to management positions 4. Seperate individual performance from innovation performance
What are the 4 steps to manage the innovation process?
1. Define the scope of innovation 2. Managing the pace of innovation 3. Staffing to capture value from innovation 4. Collaborating with innovation partners
In regards to launching a new venture, 1. Entrepreneurial opportunities Describe the 2 phases of opportunity recognition
1. Discovery -becoming aware of new business concept -often unexpected -may result from search or a solution to a problem 2. Evaluation -analyzing viability and strength of an opportunity, -Market potential -4 qualities of a viable opportunity (Attractive, achievable, durable and value creating)
What are the 3 factors for a successful venture launch?
1. Entrepreneurial opportunities 2. Entrepreneurial resources 3. Entrepreneurial leadership
In regards to managing the innovation process, 1. Define the scope of innovation, What are the 2 ways to define scope?
1. Focus on common technology 2. Focus on market theme
What are the 3 categories to new-entry strategies?
1. Pioneering new entry -creating new ways to solve old problems -meeting customers needs in unique ways -Pitfalls: risk of not be accepted by customers 2. Imitative new entry -Used by entrepreneurs with strong marketing orientation -ex. franchising 3. Adaptive new entry -strategy between pioneers and imitating -products/services that are somewhat new and sufficiently different -existing idea adapted to a specific situation -pitfalls: must be perceived as unique and fresh
What are the types of innovation?
1. Product vs. process 2. Radical vs. Incremental 3. Sustaining vs. disruptive
What are the 5 dilemmas related to innovation choices?
1. Seeds vs. Weeds 2. Experiences vs. Initiative 3. Internal vs. External staffing 4. Building capabilities vs. collaboration 5. Incremental vs. Pre-emptive launch
In regards to launching a new venture, 3. Entrepreneurial Leadership What are the 3 characteristics of leadership?
1. Vision -most important asset -must be able to share vision, communicate vision and make tough decisions about the vision 2. Dedication and Drive -reflected in hard work Dedication: intellectual commitment even facing misfortune Drive: Internal motivation 3. Commitment to excellence -best excellence is to hire people smart then themselves
What are the components of the innovators DNA?
Associating Questioning Observing Experimenting Networking
Creative Intelligence is driven by the core skill of what?
Association
Describe Blue Oceans and Red Oceans
Blue: -Market where there is little competition -Provider total profits at 61% Red: -Market has competitively crowded industry -Provider total profits at 39%
Describe Corporate Entrepreneurship (CE)
CE has 2 primary aims: 1. Pursuit of new venture opportunities 2. Strategic renewal CE uses fruits of innovation to help firms: -build new sources of competitive advantages -renew their value propositions Corporate new venture "intrapeurnuring" -building entrapreneural businesses within existing corporations
Describe Incremental vs. pre-emptive launch
Companies must manage the timing and scale of new innovative projects Incremental Launch: -less risky -requires few resources -serves as a market test -can undergo a project's credibility if too tentitive Large-Scale Launch -Requires more resources -Can effectively preempt a competitive response
Regarding CE, What are factoring influencing entrepreneurship?
Corporate culture Leadership Structural and action features Learning and reward systems Using teams in strategic decision-making Product oriented vs. service oriented etc.
Describe Experience vs. Initiative
Deciding who will lead an innovative project: Senior Managers: -Have experience and credibility -Tend to be more risk adverse Mid-Level Employees: -May be the innovators themselves May have more enthusiasm
In regards to launching a new venture, 2. Entrepreneurial Resources Describe Financial Resources
Factors determining required type of financial resources Types of financial resources: -bank financing -public financing -venture capital Angle Investors -private individuals investing their own money during the early stages of a new venture Venture Capital: - a form of private equity financing -raise money by selling shares in new venture
In regards to launching a new venture, 2. Entrepreneurial Resources Describe Government Resources
Financing Government contracting Training, counselling, support services
Regarding CE, Describe the 2 venturing approaches
Focused Corporate Venturing -CE activities are isolated from firms existing operations and are worked on by independent work units -Advantage: team members act independently -Disadvantage: failure to obtain resources and support Dispersed Corporate Venturing -All parts of organization and all org. members are engaged in intrapreneural activities -Advantage:Ability to change is a core capability -Disadvantage: Firms think they must change for the sake of change
In regards to managing the innovation process, 1. Define the scope of innovation, What are some questions to ask in this phase?
How much will the innovation cost? How likely is it to actually become commercially viable? How much value will it add? What will be learned if it does not pan out?
Describe Building capabilities vs. collaboration
Innovation projects normally require building new set of skills Firms can seek help: -from other departments -partner with other companies that bring resources and expertise Partnership: -creates dependencies and inhibits internal skills development -Sharing benefits of innovation may create conflict
Describe Internal vs. External Staffing
Innovative projects need competent staff to succeed People draw from inside the firm: -may have greater social capital -Know orgs. culture and routines -may not be able to think outside the box People drawn from outside the firm: -are costly to recruit, hire, train -may have difficulty building relationships
How does innovation relate to a balance scorecard?
It's one of the four elements
In regards to launching a new venture, 1. Entrepreneurial opportunities What are sources of opportunities?
New business start ups: -past work experiences -hobbies growing into innovation -Suggestions from friends -chance event Established firm: -customer needs -supplier suggestions -technological development For all firms: CHANGE
Decscribe the Blue Ocean strategy
Not all about finding a blue ocean, create one Elements of blue ocean strategy -create undoubted market space -Make the competition irrelevant -Create and capture new demand -Break the value-cost trade-off -pursue differentiation and low cost simutanously
In regards to managing the innovation process, Describe 4. Collaborating with innovation partners
Not every organization can go all the way from concept to commercialization by itself Innovation partners provide skills and insights
Describe Innovation
One of the most important sources of growth opportunities A force in external environments and a factor affecting internal choices Involves using new knowledge to transform organizational processes or create commercially viable products and services Key point: emphasis on Newness
Describe Product vs. Process Innovation
Product: -efforts to create product designs and applications of technology to develop new products for end users -occur in earlier stages of industry's lifecycle -associated with differentiation strategy Process: -improving the efficiency of an organizational process, specifically manufacturing systems and operations -later stages of industry lifecycle associated with cost leadership strategies
Describe Radical vs. Incremental Innovation
Radical: -Produce fundamental changes by major departures from existing practices -Usually occur because of technological change -Highly disruptive -Can transform company/revolutionize industry -May lead to patented product (ex. AI) Incremental: -Enhance existing practices or make small improvements in products and processes -May represent evolutionary applications to earlier radical innovations -extend or expand product line and skills -Minimize expenses/speed productivity (ex. frozen food)
In regards to launching a new venture, 2. Entrepreneurial Resources Describe Social Capital
Sources of social support: -prior jobs -industry organizations -local business groups "strategic alliances" is a type of social capital
Describe Entrepreneural Orientation (EO)
Successful CE needs EO Strategy making practices that businesses use in identifying and launching corporate ventures
Describe Sustaining vs. Disruptive Innovation
Sustaining: -extend sales in an existing market -Usually enable new products or services to be sold at a higher margin -May include either radical or incremental innovation (ex. internet) Disruptive: -Overturn markets by providing an altogether new approach to meeting customer needs -Technologically simple and less sophisticated then currently available products and services -Appeal to less demanding customers, seeking more convenient, less expensive solutions -Takes time to take effect -Become disruptive when they take root in a new market or low-end part of an existing market (ex. southwest airlines)
In regards to managing the innovation process, 1. Define the scope of innovation, Describe the Strategic Envelop
The scope of a firms innovative efforts Defines range of acceptable project One's radical innovation is anothers incremental innovation Shows how to learn from an innovation, even when it fails Gives direction to innovative efforts Seperates seeds from weeds
Describe Seeds vs. Weeds
There is an abundance of innovative ideas Deciding the merits of innovative ideas -Seeds - likely to bear fruit -Weeds - should be cast aside Dilemma: Some innovative projects require a considerable level of investment before merit can be determined
In regards to managing the innovation process, 2. Managing the pace of innovation Describe "pace of innovation"
Time that it will take for an innovation to realistically come to fruition Incremental Innovations: -6 months to 2 years -set milestones driven by goals and deadlines Radical Innovations: -10+ years -begin with a long period of exploration -strict timelines are unrealistic The pace is a source of competitive advantage
Why is innovation difficult?
Uncertainty about outcome Innovation process involves so many choices
In regards to launching a new venture, 1. Entrepreneurial opportunities Define opportunity recognition
a process of identifying, selecting and developing potential opportunities, strong enough to become new ventures