Innovation and entrepreneurship
The entrepreneurial process
...
Entrepreneurial process
1. Have an idea 2. Work on the implementation (the business plan) 3. Get the funding (family, banks, own) 4. Build the Company (business model, legal,...) 5. Manage and expand
Market launch strategy
1. Market sensing axis a) customer needs b) competitive intelligence c) Technology patterns and change d) Regulatory environment 2. Market and research tools a) traditional methods: surveys, focus groups b) new methods: Google analytics, smartphone and text messaging surveys, social media 3. Strategy selection, script and simulation
Market launch strategy of an innovation
1. Marketing sensing axis 2. Market research tools 3. Strategy selection, script and simulation
Protection of innovation (4 main types)
1. Patents (what makes things work) 2. Trade marks (signs and logos) 3. Copyright (automatic when the work is fixed, written or recorded) 4. Designs (appearance of a product/logo. ex. shape)
Different types of Business plans
60 second pitch Executive business plan (1 page) Full business plan (detailed) Operational business plan (for you)
Innovation diffusion
= Product lifecycle (development, introduction, growth, maturity, decline/further growth) and time when adopting the innovation.
What is the CVP analysis and how does it work?
Basic measurement of financial impact of innovation (Cost Volume Profit). It examines changes in profits in response to changes in sales volumes, costs and prices.
Protection of innovation: WIPO
Copyright, patent, trademark, industrial design, geographical indications
What are the three financial dimensions of innovation? (within the CVP, analysis)
Cost of producing innovation Forecast of sales Potential prices (differentiate price)
Innovation space (table)
Current (no change), Incremental change, Radical change Product/service: Market penetration, Product evolution, Product revolution Process-; efficiency, change/improvement, re-engineering Strategic-; focus, development, transformation
Marketing sensing axis
Customer needs Competitive intelligence Technology patterns and change Regulatory environment
What is innovation?
Definition: invention + exploitation
Main takeaways from group work Innovations should: may: can:
Innovation should - always think about the next step - know the complement product and its dynamic - see beyond the first market and see the market of the market - identify potential side effects and minimize it Innovation may - depend on raw materials availability Innovation can - be blocked by religions, cultures, laws and civilizations - be pushed and forced diffuse through regulations
Theories of diffusion: Rules to successful innovation transition to the market
Innovation strategy: - Leader - Follower Diffusion strategy: - Bring an individual advantage - Compatible with environment - Complexity of use - Ease to try Social adoption structure (diffusion) - Innovators - Early adopters - Early majority - Late majority - Laggards
Adoption curve
Innovators Early adopters Early majority Late majority Laggards
Business exits
Modified nike manoeuvre: just take it Liquidation: sell all assets, bankruptcy Sell to friendly buyer: employee, family Acquisition: sell to other company IPO: Public offering
The innovation process: NDP framework (cycle)
NDP = New Product Development 1. Ideas 2. Opportunity identification and concept definition 3. Planning design and market 4. Prototype development 5. Manufacturing development 6. Distribution and marketing 7. Market testing and launch 8. Post launch and product retirement
In a business plan: Management and staff, contains what?
Name and background of leaders Board of directors/advisers composition Organizational chart Key aspects - Accounting and Human resources, Operation Evolution of staff with growth
In a business plan: Executive summary, contains what?
Pitching that should incite interest Summary of the plan Same plan as the details Brief summary of each section (Not an introduction or preface)
12 different ways for companies to innovate
Platform, Process, Presence, Customer Experience Brand, Offerings, Solutions, Organization Valve capture, Networking, Supply chain, Customer
In a business plan: Financial projections, contains what?
Pro forma income statement Pro forma balance sheet Pro forma cash flow Investment plan Ratio analysis Assumptions (have at least three; realistic, pessimistic, optimistic)
Types of innovations
Product & services: Technological, marketing Process: Administrative/managerial, operations, technological Strategic: Re-imagining your growth strategy, business model, brand, merger & acquisition Social: how to meet social needs (working conditions, education, health etc.) Political: Legislation, institution, reform Philosophical: Define what is wrong and what is right
In a business plan: Product design and plan, contains what?
Product description Current stage of product development Needed development Challenges and risks in product Trade secret vs. patens
In a business plan: Marketing plan, contains what?
Product positioning (price vs. differentiation) Company image What prices and how Types of promotion Distribution system
In a business plan: Operational plan, contains what?
Production flowchart Supplies: what, frequency, cost Front office vs. back office
Definition of the roles and users of a business plan
Purpose: Execution intelligence tool, Investment tool Readers: Investors, Employees, Partners
Push innovation vs Pull innovation
Push: Create a product and push it to the market Pull: Ask the market, then create the product = driver for economic growth, basis of competitiveness for firms, regions and nations
SDP
SDP = Structured Development Plan
In a business plan: Industry analysis, contains what?
What industry are you entering? Size, growth rate and sales projection Industry structure Key success factors Trends (business, regulations...) Key players in the industry
How to generate ideas
- Brainstorming - Focus group - Internet trends research - 5 whys (don't stop at the first problem) - Mind gym (think of something impossible, how do you make it possible?)
Six characteristics of innovations
1. An objective with specificity on time, cost, performance 2. No previous experience 3. Integration of different expertise and knowledge 4. High risk 5. Learning curve 6. Fluctuating
Different emphasis of entrepreneurship (3st)
1. By economists: risk taker on commitment, risk taker on production, innovator and change agent 2. By sociologists: characteristics acquired or born with? NACH (McClelland), Manfred: external environment influence 3. Gartener definition: Four dimensions; environment, individual, process and organization
What is the CVP formula?
Break-even on minimal quantity to sale to stay in business. Break-even units = total fixed costs/unit contribution margin (unit contribution margin: unit price - unit variable cost) Break-even dollars = break-even units * unit price Or just do it like this: profit (0) = sales price per unit - variable unit cost - fixed costs and calculate
Sections of a business plan (IMPORTANT)
Executive summary (pitch, summary) Company description (mission, legal, name, status, logo) Industry analysis (growth, sales projection, KSF) Market analysis (target mkt, buyer behavior, competitors) Marketing plan (positioning, image, promotion type, distribution) Management and staff (background, board, HR) Operational plan (production forecast, supplier, front/back-office) Product design and plan (description, SWOT for product, trade secrets/patent) Financial projections (revenue expectation, balance sheet, assumptions)
In a business plan: Market analysis, contains what?
Market analysis Target market Market segmentation - Gender, Age, Race, Geography Buyer behaviour (frequency, place) Competitor analysis (SWOT...) - Current, Potential, Direct and indirect competitors
In a business plan: Company description, contains what?
Mission statement Name Legal form (ltd, sole...) Current status and milestone Intended headquarters Logo
Life cycle/Innovation cycle (Vernon model)
The Vernon model: 1. Introduction (invention, first in advanced countries) 2. Growth (manufactured elsewhere) 3. Maturity (outsourcing and standard) 4. Saturation (sales stagnant, look for new uses) 5. Decline (production and consumption in poor countries) But, it depends on what you are looking for. Ex. restaurant who's looking for spices won't manufacture elsewhere.
The portfolio concept (CEK model)
Why a portfolio? - Definition: investment in different things - Why: to spread the risk - How: offer different products Technological evolution - maximize the value of the portfolio - balanced portfolio - build strategy and flexibility into portfolio ex. Apple: iPod, iPad, MacBook, iPhone. McDonalds: burger, salad, fries
