3420 PPS Chapter 2.ppt

8/10/2019 3420 PPS Chapter 2.ppt

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2Entrepreneurship

Entrepreneurial Opportunities:

Their Origins, Forms, and

Suitability for New Ventures


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It still holds true that human beings are

most uniquely human when they turn

obstacles into opportunities.

--Eric Hofer (paraphrase)


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Entrepreneurial Opportunity

Situation in which a

person can develop a

new business ideathat has potential to

generate profit.


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Origins

Information that helps

people recognize

changes in theexternal world that

create new

opportunities.


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Opportunities from Change

Truly valuable entrepreneurial

opportunities come from an external

change that either

Makes it possible to do things that

had not been done before.

Makes it possible to do something in

a more valuable way.


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Change Leads to Potential

New technology

Political and regulatory shifts

Social and demographicchange

Potential


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Technological Change

Makes it possible for people

to do things in new and more

productive ways

The most important source ofentrepreneurial opportunity


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Political and Regulatory Change

Makes it possible to develop

business ideas to use

resources in new ways that

are either more productive, orthat redistribute wealth from

one person to another.


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Opportunities from Political and

Regulatory Change

Deregulation

Regulations that support particular

types of business activities

Regulations that increase demand

for particular activities or subsidize

firms that undertake them


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Social and Demographic Change

Alters demand for products and

services

Makes it possible to generate

solutions to customer needs that

are more productive than those

currently available


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Forms of Opportunity

Entrepreneurs develop business ideas

by

Developing new products and services

Tapping new markets

Formulating new methods of production

Identifying new raw materials

Developing new ways of organizingprocesses


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Success of New Firms

Industry differences influencing

new firm success:

Knowledge conditions

Demand conditions

Industry lifecycles

Industry structure


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Knowledge Conditions

New firms do better in:

Industries that have greater R&D

intensity

Industries in which public sector

organizations produce most of the

new technology

Industries in which small firms are

the better innovators


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Demand Conditions

New firms do better in:

Larger markets

Rapidly growing markets More heavily segmented markets


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Industry Life Cycles

New firms do better

When industries are young

Before a dominant design emerges


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New Firm Formation


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Industry Structure

New firms perform more poorly in

Capital-intensive industries

Advertising-intensive industries Concentrated industries (versus

fragmented industries)

Industries composed of mostlylarge firms


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Advantages of Established Firms

The learning curve

Established reputation

Positive cash flow

Economies of scale

Complementary assets


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Advantages for New Firms

Competence destroying change

Discrete products and services

Ideas embedded in human capital


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Competence Destroying Change

Large Companies

Locked into old ways

of thinking

Must cannibalizeexisting business

Hindered by

established routines Must seek to satisfy

existing customers

Small Companies

Can think in new

ways

No concerns withexisting business

Can form new

routines easily No existing customer

base to satisfy


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Innovation is a process

Taking ideas

Reform, test, refine and revise

Meet challenges and hurdles Creating a useful product or service that

has value


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Most innovations are incremental, slowly

improving products and processes

Innovation of technology

Internet

Computers

Digital cameras

Mobile phones

Etc

Innovation is an evolution


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3M: Re-thinking Innovation

CEOs support innovation

Strategy faced on two core themes:

Technological competence

Strong product development capabilities

Recognition of the power of association

Relationship building and synergistic ideas

Staff with technical knowledge working with thosewith market experience

Result is creative combination


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3M cont

Allowing for slack time

Setting stretch targets

Trial by fire Encourages innovative champions to take

non-linear ideas through the system

When process was not working,

implemented and innovation strategy


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Building an Innovative Organization

1. Recognition and reward. Throughout the company there are various

schemes which acknowledge innovative activity

for example, their Innovators Award whichrecognizes effort rather than achievement

2. Reinforcement of core values.

Innovation is respectedfor example, there is ahall of fame whose members are elected on

the basis of their innovative achievements.


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3. Sustaining circulation.

4. Allocating slack and permission to play. Allowing employees to spend a proportion of their

time in curiosity-driven activities which may leadnowhere but which have sometimes given thembreakthrough products.

5. Patience Breakthroughs like Post-its and Scotchgard were

not overnight successes but took 2-3 years to cookbefore they emerged as viable prospects to put intothe formal system.


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5. Acceptance of mistakes andencouragement of risk-taking.

A famous quote from a former CEO is often cited in this

connection: Mistakes will be made, but if a person isessentially right, the mistakes he or she makes are not asserious, in the long run, as the mistakes management willmake if its dictatorial and undertakes to tell those under itsauthority exactly how they must do their job

Management that is destructively critical when mistakesare made kills initiative, and it is essential that we have

many people with initiative if we are to continue to grow.


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6. Encouraging bootlegging.

Giving employees a sense of

empowerment and turning a blind eye to

creative ways that staff come up with to

get around the system acts as a counter to

rigid bureaucratic procedures.

7. Policy of hiring innovators. Recruitment approach is looking for

people with innovator tendencies and

characteristics.


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James Dyson

Recognized inefficiency of vacuumcleaners

Designed new processcyclone, based

on painting technology Took 4 years and 5127 prototypes

Changed the dominant design for vacuum

cleaners needing bags Others began to copy


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James Dyson inventions:

Dyson Ball Upright Vacuum Cleaner TV Ad -

James Dyson http://www.youtube.com/watch?v=LApWU34o0eY

Part 1/2 - James Dyson discuss innovation,

bringing new products to market and more http://www.youtube.com/watch?v=cz4NyqCmQs8

Airless Fan:

http://www.youtube.com/watch?v=Jryqq0hB5qY&f

eature=related
http://www.youtube.com/watch?v=LApWU34o0eYhttp://www.youtube.com/watch?v=cz4NyqCmQs8http://www.youtube.com/watch?v=Jryqq0hB5qY&feature=relatedhttp://www.youtube.com/watch?v=Jryqq0hB5qY&feature=relatedhttp://www.youtube.com/watch?v=Jryqq0hB5qY&feature=relatedhttp://www.youtube.com/watch?v=Jryqq0hB5qY&feature=relatedhttp://www.youtube.com/watch?v=cz4NyqCmQs8http://www.youtube.com/watch?v=LApWU34o0eY


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James Dyson Award -

http://www.youtube.com/watch?v=_GQwS

2lWon4

Solarball

http://www.youtube.com/watch?v=6aewm

2wnZ60&feature=fvwp&NR=1
http://www.youtube.com/watch?v=_GQwS2lWon4http://www.youtube.com/watch?v=_GQwS2lWon4http://www.youtube.com/watch?v=6aewm2wnZ60&feature=fvwp&NR=1http://www.youtube.com/watch?v=6aewm2wnZ60&feature=fvwp&NR=1http://www.youtube.com/watch?v=6aewm2wnZ60&feature=fvwp&NR=1http://www.youtube.com/watch?v=6aewm2wnZ60&feature=fvwp&NR=1http://www.youtube.com/watch?v=_GQwS2lWon4http://www.youtube.com/watch?v=_GQwS2lWon4


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Innovation

Requires some form of demand forsuccess

Knowledge (push) is not enough (better

mousetrap and the world will beat a pathto your door.Emerson)

Necessity is the Mother of Invention

innovation is often a response to a need(pull)


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Fordcar for everyman

Proctor and Gamblehousehold

products:

Soap, diapers, cleaners, toothpaste, etc

Innovative solutions for market problems


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Innovation is about:

Commercial Needs (B2B)

Consumer Needs (end user)

Social Needs (social innovation)

3420 PPS Chapter 2.ppt

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