Entrepreneurship and Innovation

Creativity:

"Creativity involves thinking outside of the box, looking at things in a different way and doing the unexpected!"

Innovation from Peter Drucker -"The Discipline of Innovation"

"Innovation is the specific function of entrepreneurship, whether in an existing business, a public service institution, or a new venture started by a lone individual in the family kitchen. It is the means by which the entrepreneur either creates new wealth-producing resources or endows existing resources with enhanced potential for creating wealth."

What is strategy?

"The patterns of decisions that shape the venture's internal resource configuration and deployment, and guide alignment with the environment"

Market Research definition

"The systematic and objective process of gathering, coding, and analyzing data for aid on making marketing decisions" Answers questions including: -who is the customer? who are the players? how can customer be reached?

Opportunity Space

(Global) Business Environment: Government regulations and competitors--> suppliers, company, customers

Guerrilla marketing is often used by entrepreneurs

-->Non-traditional, grassroots, captivating, and viral -->Creates word-of-mouth and buzz (huge Nike soccer ball on car)

U.S. Small Business Facts

-28.4 Million in 2012 -Employed 56 million/~1/2 of nation's private workforce -Created 2.2 million net new jobs (biggest gain in 1-4 employees category) -Women owned = 29% -Professional, scientific & tech services, other services, retail trade, construction, health care, and social assistance, and accommodation/food services

Promotional Activities

-Advertising -Personal Selling (prospecting, communicating, servicing, information collection and allocation) -Publicity (PR) -Sales Promotions (promotional mix)

Attributes of winning strategies...

-Cheaper -Better -Faster

Designing Firm's Value Solution...

-Customer Convenience -Price -Productivity -Simplicity -Image

Basic Strategy Categories are:

-Differentiation -Low Cost -Niche

Fatal Flaws of New Concepts

-It won't work, no real need, hidden traps, bad economics, no protection, limited life, customer education, inconvenience, extensive services requirements

Four Pillars of a New Venture

-Large and Growing Market -Strong Team -Excellent Financial Returns -Competitive Advantage (IP)

Key Areas for Assessing the Feasibility of a New Venture

-Market Issues -Organizational Issues -Technological Issues -Financial Issues

Why is Marketing so important?

-Must have and grow customer market -Difficult and expensive to bring new products/services to market -Differentiate product/service makes company distinctive and valuable -Switch marketing gears = attract new customer segments

Barriers to Creativity

-One "correct" answer -Being logical -Following the "rules" -Being practical -Becoming specialized -Avoiding Ambiguity -Fearing Mistakes/Failures -Believing you are NOT creative

Why is Entrepreneurship so Important?

-Primary source of new jobs in economy -Driving force in economy -Outstanding source of innovation -Is the essence of the "American Dream" -Creates wealth - advances society -ALSO: empower individuals to pursue professional career dreams

Strong Attributes of a Concept

-Significant Savings -Solves serious problem -Offers convenience -Integrates well -Clear market I.D. -Market barriers -Large and growing market -Big upside; low downside

What is a Business Model?

-Who are the customers? -What do the customers value? -How does our business make money? -What is the underlying economic logic of the venture?

First major advantage...

-You have to be first (or early) into the market -Need to capture large % of market quickly -Need to create switching costs so customers will stick with you -Very expensive = hard to win -First movers rarely win

Before moving forward, entrepreneurs must:

1) Assess their own financial reality 2) Identify key contacts in their networks 3) Reach out to sources of free advice and feedback

Business Canvas

9 different areas to fill out (Key partners, key activities, key resources, value proposition, customer relationships, channels, customer segments, cost structure, revenue model)

An entrepreneurial leader is...

An innovator who recognizes and seizes upon opportunities; develops and executes strategies to capitalize on marketable ideas; and creates employment and wealth for themselves and their communities.

Entrepreneurial Mindset

Core Competencies: -Innovation/creativity -Opportunity recognition and assessment -Strategic business planning -Management and leadership -Negotiation and conflict resolution -Financial analysis and budgeting -Sales and market analysis -Verbal and written communications -Team-building -Risk Management -Willingness to try - and possibly fail

Economic Logic...

Differentiators, Vehicles, Arenas, Staging

Environmental Assessment: PEST Model - Political/Legal

Federal,state, and local laws and regulations that could affect opportunities: -Taxes -Environmental Regulations -Employment Laws -Political Climate -Trade Laws -General Government Regulation

Entrepreneurs must acquire market data and information...

Four main categories are... 1) Product attributes important to customers 2) Customer behavior indicating a willingness to pay 3) Trends 4) Customer preference locations Two main types: 1) Secondary (economical, already published) 2) Primary (collected directly for specific purposes) -Groups surveys, experiments

Questions to Spur Creativity:

Is there a new way to do it? Different twist? Do the opposite? Rearrange parts? Put it to other uses? Combine ideas? What else could we make? Borrow or adapt it?

Opportunity Checklist

Key Success Factors; Customer, Competition, Vendors, Government, Global Environment Trends, Market Size, Price-Rate-Value, Market Growth, Distribution

Competitive Analysis

Knowing your competition -Who are they -where are they -what are their strengths and weaknesses -who are their customers -how do they advertise and promote -what is the basis of competition

SWOT Analysis - Opportunities

Opportunities (positive external factors) -Untapped market potential -New product or geographic market -Significant potential market growth -Emerging technologies -Deregulation -Global market opportunities -Increasing market fragmentation

Timmons Model for Success

Opportunity, Entrepreneur, Resources all interact with each other and also with "Fits & Gaps - Business Plan" Uncertainty found everywhere

See Yourself...

Passion, Energy, Experience & Knowledge ("Long Pole in the tent"), Time, Personality, and Capital ($) All are Seed Resources

Factors Influencing New Venture Formation

Personal Attributes: -higher internal locus of control, desire for financial success, recognition, joy risk tolerance Environmental Factors: -Attitudes towards entrepreneurship, pressures, access, responsibilities

Be attentive to customer adoption behavior...

Product Diffusion Curve (bell curve) -Innovators, Early Adopters, Early Majority, Late Majority, Laggards --> Complex products = slower

Pricing and the Product Life Cycle

Product Life-Cycle Stage: Introductory Stage (unique product, non-unique product), Growth Stage, Maturity Stage, Decline Stage Pricing Strategy: Skimming, Penetration, Consumer Pricing, Demand-Oriented Pricing, Loss Leader Pricing)

Pricing you product/service:

Profit = Revenues - Expenses Revenues = Price x Quantity

Idea-to-Opportunity Transition

Seed of an Idea (passion + professional experience)... ---Idea (idea multiplication)... ------Viable Opportunity

SWOT Analysis - Strengths

Strengths (Positive Internal Factors) -Core competencies -Innovative capacity -Management quality -Proprietary technology -Competitive protection -Financial strength -Effective strategies

Market Segmentation...

The identification of distinct heterogeneous buying groups, and the development and implementation of a marketing strategy to fit each group segment according to: -Type of buyer -Geography -Demographics -Time of use -Benefits Sought -Buyer Attitudes

SWOT Analysis - Weaknesses

Weaknesses (Negative Internal Factors) -Inadequate financial resources -Inexperienced management -Inadequate facilities -Marketing/distribution problems -Negative reputation -Ineffective strategies -Operational inefficiencies

Environmental Assessment: PEST Model - Social

Trends in society that could affect opportunities: -Aging -Income -Purchasing Habits -Consumer Attitudes -National/International Movements

Environmental Assessment: PEST Model - Technological

Trends in technology that can affect opportunities: -New Technologies -Rate of change in technology -Relative importance of technology to customers/firms

Sources of Innovation

Unexpected occurrences: -Novocaine: invented for surgery Incongruities: -Shipping: roll-on/off containers Process Needs: -Portable Generators Industry/Market Changes: -Health Care: out-patient, clinics Demographic Changes: -Club Med... exotic travel Knowledge-based Concepts: -Computer...

Consider these 3 topics before expanding geographically...

1) Customers (follow them) 2) Vendors (use the same?) 3) Distribution (same?)

The Business Model

1) Describe how venture obtains resources, people, money, materials, and other inputs 2) Tells who the venture produces the product for, the conditions of sale and delivery, marketing and cash flow Revenue and Cost Models--> ---Sources of Revenue ---Cost of Goods Sold ---Operating Expenses

10 D's of Entrepreneurship

1) Dream 2) Decisiveness 3) Doers 4) Determination 5) Dedication 6) Devotion 7) Details 8) Destiny 9) Dollars 10) Distribute

The 9 F's of Successful Companies

1) Founders 2) Focused 3) Fast 4) Flexible 5) Forever-innovating 6) Flat 7) Frugal 8) Friendly 9) Fun

Ways to drive growth (3 ways)...

1) Franchising 2) Product Mix Expansion 3) Geographic Expansion

Types of Innovation

1) Invention 2) Extension 3) Duplication 4) Synthesis

Franchising has 3 main benefits:

1) Replicability (established and proven methods) 2) New sources of revenue (royalties and fees from franchisees) 3) New capital funds growth -Franchising works best with service business that are easy to replicate.

Tenets of the Timmons Model

1) The Opportunity 2) The Lead Entrepreneur and Management Team 3) The Resources

Happiness is a Positive Cash Flow!

1) Understand the difference between profits and cash flow: 2) Profit is measured as a gain or loss on the income statement, but... (doesn't accurately reflect cash flows of company) 3) Cash flow measures the flow of cash during a given time-frame

Market Planning Process

Aiming for target market -Four P's: Product, Place, Price, Promotion

Definition of Entrepreneurship from Schumpeter

An entrepreneur is the person who destroys the existing economic order by introducing new products and services, by introducing new methods of production, by creating new forms of organization, or by exploiting new raw materials.

Defining the Concept

Conceptual Model: -Where is the value? -To whom? -For what? -Where? -Made by whom? -Marketed by whom? -Financed by whom?

Entrepreneurs face unique marketing challenges...

Limited by: -Financial and Managerial Resources -Time -Market Information Muddling decision-making with personal biases and beliefs Establishes poor relations with multiple audiences

Environmental Assessment: PEST Model - Economics

Macroeconomic forces that could affect opportunities: -Employment -Interest Rates -Business Cycles -Inflation -Wages -Expectations

Entrepreneurial Framework

New venture creation and existing business expansion has many integrated, moving parts than need to be in alignment to maximize opportunities (resources, commercial/legal, education/training, cultural norms, market openness, R&D transfer, etc.)

Marketing Mix = WAYS you employ MEANS to achieve ENDS

The 4 P's (product, place, price, promotion) are derviced from your choice of target segment and positioning All 4 variables are interdependent... a change to one may require a change to others

Understanding the customer... The four "Who's" of Marketing...

The Customer Profile: -Demographics (age, gender, income) -Psychographics (innovative, risk-averse, etc.) -User-term Characteristics -Heavy/passive users, level of usage 1) The User 2) The Decision Maker 3) The Buyer 4) The Influencer

SWOT Analysis - Threats

Threats (negative external factors) -New strong competitors -Increased demands from customers -Substitute product demand -Slow market growth -Changing customer preferences -Adverse demographic shifts