Creating Competitive Advantage through Technology and Innovation in

Technopreneurship

Togar M. Simatupang

School of Business and Management

Bandung Institute of Technology

Presented on “the International Conference on Engineering Management and Industrial Technology” (ICEMIT2015)

10-12 December in Medan, Indonesia

Overview

• Introduction

• Competitive Advantage

• Technopreneurship

• Innovation Theory

• Inclusive Innovation Framework

• Concluding Remarks

2

Introduction

• Key questions answered within the presentation include: – What are the key changes of persistent innovation? – What steps are critical for technopreneurship to bring

innovations to the marketplace? – What innovation strategies are valuable for ventures

and societies to establish and maintain a competitive advantage?

• A framework is proposed for examining the innovation process in technopreneurship, and quickly transition into exploring how to successfully bring innovations to market.

3

Competitive Advantage

4

• Difficult for competitors to imitate • Commercially exploitable with present capabilities • Provides significant value to customers • Timely

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Knowledge Economy

The knowledge economy is the use of knowledge (savoir, savoir-faire, savoir-être) to generate tangible and intangible values.

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Circular Economy

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Need for Innovation

• Inovation is critical to economic change

• Responses to change in business environment:

– “adaptive response” – Incremental Innovation

– “Creative response” – Radical Innovation

Joseph Schumpeter “The Theory of Economic

Development”

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Innovation Driven Economy

Imitation Incremental Innovation

Radical Innovation

Cross-Border Trade Investment Driven Trade Innovation Driven

Economy

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Entrepreneurship

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The Nature of Business

•Practical Institution

•Accountability

•Value

•Pressure

Business

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Value in the marketplace

Expose your value

Sell your value

Deliver your value

Capture your value

Reinforce your value Personal Value:

• Income • Career • Worksload

Business Value: • Revenue • Costs • Services

Technical Value: • Processes • Systems • People

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The Quadruple Fields of Business

Management

Entrepreneurship

Administration

Stewardship

Re

gulate

D

elib

erate

Continuum Stage Lifecycle Stage

Concern for Purpose

Structu

ral Spe

cification

13 Source: Simatupang (2015)

Management versus Entrepreneurship

Causation

• For predictable situations

Effectuation

• For uncertain situations

Effects are Predicted

Need to manage the causes

Causes are given Need to manage

the effects

Planned approach Top-down Managerial logic Predication based: to the extent we can predict the future, we can control it.

Emergent approach Bottom-up Entrepreneurial logic Control based: to the extent we can control the future, we don’t need to predict it.

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What is Entrepreneurship

General

• The practice of consistently converting good ideas into profitable commercial ventures.

• An entrepreneur searches for change, responds to it, and exploits opportunities. – Peter Drucker

Academic

• The scholarly examination of how, by whom, and with what effects opportunities to create future goods and services are discovered, evaluated, and exploited. – Shane, S. and Venkataraman, S.

(2000), “The promise of entrepreneurship as a field of research”, Academy of Management Review, Vol. 25, No. 1, pp. 212-226.

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Towards ‘Entrepreneurism’

• Y = f(L,C) Capitalism and Socialism

• Y = f(L,C,K) the Knowledge Economy

• Y= f(L,C,K,E) the Entrepreneurial Society?

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Technopreneurship

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Technopreneurship

• Technology based business: A set of processes to deliberately identify and

undertake activities to acquire new information, test assumptions, and uncover new technological options and organize discovery-driven activities as a project, with beginning and end points in time, specific deliverables, and a work plan to produce those deliverables.

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The connections between technology-based innovation and entrepreneurship

Source: http://epicenter.stanford.edu/page/about 19

Technology is...

• The word technologyu comes from two greek words, translated literally techne and logos – Techne means art, skill, craft, or the way, manner, or

means by which aa thing is gained.

– Logos means word, the utterrance by which inward throught is expressed, a saying or an expression.

• Technology is the making, modification, usage, and knowledge of tools, machines, techniques, crafts, systems, and methods of organization, in order to solve a problem, improve a pre-existing solutions.

• It is an applied science.

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What is Technopreneurship?

Entrepreneurship Technopreneurship Technology

• Product and Service

• Process Technology

• Enabling Technology

• Business Ideating

• Business Planning

• Business Modeling • Value proposition

• Value chain

• Customer target

Technology Business Model

Innovation

The use of technology as an integral and key element in the transformation of

goods and services.

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Examples of Technopreneurship

From Start-ups (organic and early adopters)

• Search Engine in Google

• Social Network in Facebook

• Online Auction in eBay

• Sykpe (low end inno for telephone)

From Corporations (organic and early majority)

• iPhone from apple (harward and OS)

• Logistics tracking in UPS

• Digital photography in Kodak (high end prof photographer) in Fuji (low end children’s toy)

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Packaging Revolution

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Three Questions in Technopreneurship

• What problems in society (consumers) do you want to solve with technology? – Thomas A. Edison wants to bring light to the people with

technology (light bulb) and not candles

• What makes your invention (product diffrentiation) different from what is already in the market? – Steve Jobs did not create computers, but he brought

computers from government and corporation use to the mass people

• What is the improvement from the existing technology? – Can your invention (product) be better, faster, more

efficient and effective than the previous ones?

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What’s the difference between “old tech” and “new tech”?

Source: Corporate History at http://www.sosro.com/en/sejarah-perusahaan

The idea to sell ready to drink tea in bottle was formulated in 1969 and a bottled tea plant of PT SINAR SOSRO was established in 1970, the first ever of bottled ready-to-drink tea plant in Indonesia and the world.

Brewed Tea

Carbonated Drink

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10 times better

• As a good rule of thumb, proprietary technology must be at least 10 times better than its closest substitute in some important dimension to lead to a real monopolistic advantage.

• The clearest way to make a 10x improvement is to invent something completely new.

• Every great business is built around a secret that’s hidden from the outside.

Peter Thiel

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Examples of Disruptive Technologies

• Amazon Retail

• iTunes Music industry

• Airbnb Hotels

• Uber Taxis

• Gojek Motorcycle Taxi

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The seven questions every business must answer

1. The Engineering Question: Can you create breakthrough technology instead of incremental improvements?

2. The Timing Question: Is now the right time to start your particular business?

3. The Monopoly Question: Are you starting with a big share of a small market?

4. The People Question: Do you have the right team?

5. The Distribution Question: Do you have a way to not just create but deliver your product?

6. The Durability Question: Will your market position be defensible 10 and 20 years into the future?

7. The Secret Question: Have you identified a unique opportunity that others don’t see?

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How To Build The Future

• 1 to n = horizontal progress (copying things that work)

• Go from 0 to 1 Make vertical progress (do new things)

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Technology Management Decision Support Tools

Source: http://www.ifm.eng.cam.ac.uk/research/ctm/ctmtools/

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Innovation Theory

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Innovation is...

• Inn-no-va-tion n

– A creation (a new device or process) resulting from study and experimentation

– The act of introducing something new

• Innovation is the successful implementation of creative ideas

– A new idea, method or device.

– The process of making improvements by introducing something new.

– the process of translating new ideas into tangible product.

– the successful exploitation of new ideas.

– A creative idea that is realized.

– Change that creates a new dimension of performance.

• Innovation means creative solutions to real problems result from study and experimentation can actually be implemented

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Knowledge to Innovation

Determinants

• R&D and Technology

• Human Capital

• Networks

Knowledge

• Understanding of facts, information, descriptions, or skills, which is acquired through experience or education by perceiving, discovering, and learning.

Innovation

• Something new or an improvement that allow the firm to obtain an advantage

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Innovation

• Two persistent questions:

– What produces innovation?

• How might we nurture it?

– What are the outcome of innovation?

• How to predict which will succeed?

Innovation as a process

Innovation as a product

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The Innovation Process

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How do you innovate?

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The Ten Types of Innovation Larry Keeley (2013)

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Ten Types of Innovation

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Degrees of Product Innovation

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Degrees of Service Innovation

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Two critical innovation questions

How ambitious do we need to

be?

How can we innovate

differently?

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Do you have an innovation ambition?

• A novel creation that produces value

• Invest along a broad spectrum of risk and reward

• Transformation requires you to do things differently

• Key management dimensions of a total innovation system:

– Talent, integration, funding, pipeline, and metrics

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The Innovation Ambition

Matrix

Source: “Managing Your Innovation Portfolio” by Bansi Nagji and Geoff Tuff, HBR, May 2012. 45

Discover secrets of innovation What important truth do very few people agree with you on?

Conventions Secrets Mysteries

Easy Hard Impossible

Goals that can be satisfied with minimal

effort

Goals that can be satisfied with serious

effort

Goals that cannot be satisfied, no matter how much effort one makes

• What valuable company is nobody building? • Every correct answer is necessarily a secret:

something important and unknown, something hard to do but doable.

• If there are many secrets left in the world, there are probably many world changing companies yet to be started.

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The Innovation Matrix

Source: Making Innovation Work by Davila, Epstein, Shelton: Wharton School Publishing 2005.

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Inclusive Innovation

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Innovation Strategies for Competitive Advantage

• How to get an innovation to market

– How to compose the elements of an Innovation Portfolio

– How technology transfer fits into an Innovation Portfolio

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Inclusive Innovation

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Inclusive Innovation

Innovation Literacy

Innovation Capability

Tehnopreneurship Funding

Technopreneurship for Sustainable Development Goals

Social Technopreneurship

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Source: Seven Approaches to Unleash Innovation in your Company at http://advisium.net/blog/tag/pg/

Innovation Literacy

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Innovation Capability

Businesses create and improve their capability to innovate systematically in a broad range of innovation domains across all types of products and services, industries, and ways of doing business

Inspiration

Key Levers

Techniques and practices used to facilitate transformational

Change to accomplih objectives, e.g. product development (CAD/CAM), production (MTO/MTS),

logistics (DSS), sales (CRM/EDI)

The right mix of factors to generate value: either to increase the performance of the whole innovation step-by-step or to assure, that innovation projects meet their targets in-time, in-budget and in-quality.

Innovation Capability

Innovation Activities Engaging only in value-added activities

Innovation Output

How do we report on innovation?

Enablers

Ideation Implementation Review

What levers can be used to achieve similar results?

Imitation – Incremental – Semi-Radical – Radical

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Technopreneurship in Agriculture Value Chain

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Technopreneurship Fundings

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Technopreneurship for Sustainable Development Goals

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Local Economic Regional Development

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Social Technopreneurship

Source: UCIF - Unified Collaboration and Innovation Framework at http://www.laboranova.com/pages/tools/ideation-process.php?lang=DE

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Social Necessity

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Developmental Entrepeneurship

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Microsoft Unlimited Potential

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Concluding Remarks

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Concluding Remarks

• Human civilization undergoes different challenges that require different levels of innovation.

• Innovation is persistent in different eras of human civilization.

• Technopreneurship is the innovation of technology and business model.

• Technopreneurship is always developed based on accumulated observations and trial and error.

• Inclusive innovation is important to invite all stakeholders to solve problems, overcome bottlenexts, and improve social cohesion.

• Innovation is experimental and non-methodological and hence has several principles.

• New trends for inclusive innovation is composed of Innovation Literacy, Innovation Capability, Tehnopreneurship Fundings, Technopreneurship for Sustainable Development Goals, and Social Technopreneurship.

• Inclusive innovation creates value to all stakeholders not for a limited powerful stakeholder.

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Thank You

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