technology ventures: from idea to enterprisechapter 5: summary there’s a better way to do it. find...
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Technology Ventures: From Idea to EnterpriseChapter 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
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Chapter 5: Concept
Emergent industries:
Newly created or newly recreated industries formed by product, customer, or context changes [Barney 2002].
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Technology Ventures: From Idea to Enterprise
Chapter 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
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Technology Ventures: From Idea to Enterprise
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. I f 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
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Chapter 5: Table 5.2 Technology Ventures: From Idea to Enterprise
Chapter 5: Table 5.3
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
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Technology Ventures: From Idea to Enterprise
Chapter 5: Figure 5.3
DescribeThe Problem
DescribeThe Problem
Evaluateand
Test the Ideas
Evaluateand
Test the Ideas
Build a Prototypeand Show It to the
Customer
Build a Prototypeand Show It to the
Customer
Intuitive Thinking,Brainstorming
Intuitive Thinking,Brainstorming
Insights, Ideas,Inventive ThinkingInsights, Ideas,
Inventive Thinking
Incubation Period: Observe and
Study the Problem
Incubation Period: Observe and
Study the Problem
Start
Reframe and
Start Again
Creativity Process
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Technology Ventures: From Idea to Enterprise
Chapter 5: Figure 5.4 – Four types of innovation
Types and sources of innovation
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Basic design concepts
Technology Ventures: From Idea to Enterprise
Chapter 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.
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Technology Ventures: From Idea to Enterprise
Chapter 5: Table 5.4
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 Inventiona. Importance of the invention — Economic value and
potential payoffb. Radicalness of the invention — differentiation of the invention from its predecessorsc. The breadth of patent protection of the intellectual
property
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Technology Ventures: From Idea to Enterprise
Chapter 5: Figure 5.6
New Technical Knowledge
New Invention
Characteristics of the Invention:
ImportanceRadicalnessPatent Scope
Availability of resources required for this venture
The capabilities and knowledge of the entrepreneurial team
The characteristics of the Industry in which the invention will be
Will this invention be exploited as a new venture led by this team?
New Firm
YES
NO
The New Business Formation Process for an Invention
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Technology Ventures: From Idea to Enterprise
Chapter 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
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Technology Ventures: From Idea to Enterprise
Chapter 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
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Technology Ventures: From Idea to Enterprise
Chapter 5: Figure 5.8
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.
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Chapter 5: Figure 5.10
Complement: A complement to a product is any other product that makes the first one more attractive to the customer.
The New Venture
Customers
ComplementorsCompetitors
Suppliers
The Value Network
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Technology Ventures: From Idea to Enterprise
Chapter 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.
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Chapter 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.
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Technology Ventures: From Idea to Enterprise
Chapter 5: Venture Challenge
VENTURE CHALLENGE1)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 5.4.
4)Summarize your technology and innovation strategy.
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