Entrepreneurship & Intrapreneurship

Entrepreneurship  The process of uncovering and developing an opportunity to create value through innovation and seizing that opportunity without regard to either resources (human and capital) or the location of the entrepreneur— in a new or existing company (Churchill, 1992: 586).

Entrepreneurship Characteristics  Commercial leanings  Lack of structure/self-control  Visionary tendencies  Risk-taking/appetite for uncertainty  Persistence  Doer/high initiative  Charisma and extroversion

Entrepreneurship Characteristics  High-energy level  Strong self-image  Team building skills/uses contacts and connections  Views failure as learning  Commitment and fun

Entrepreneurs vs Managers EntrepreneursManagers Rewards Doing what they like. Independent Corporate rewards. Promotion, staff, office, money Activity Direct involvement Delegation Risk Moderate risk taker Avoids risk Status Not concerned about status symbols Represents power and position Relationshi ps Deal-making and reciprocity Relies upon the hierarchy Time orientation Time orientation years. Short term Decisions Follows dreams with decisions Follows directives

Intrapreneurship Characteristics  Understands the environment  Visionary and flexible  Creates management options  Encourages teamwork  Encourages open discussion  Builds a coalition of supporters  Persists

Intrapreneurship Environment  New ideas encouraged  Trial and error encouraged. Failure ok!  Resources available and accessible  Long time horizon  Appropriate reward system  Sponsors and champions available  Support of top management

“It is the customer who, in the end, determines how many people are employed and what sort of wages companies can afford.” Lord Robens

Strategy in High Technology Industries

High Technology Industries  Rapidly changing scientific knowledge underlying attribute for competition  R&D/Sales  Battle over technical standard, format, and dominant design Set by decree, cooperation, public domain, but mostly through consumer choicesSet by decree, cooperation, public domain, but mostly through consumer choices

Benefits for Standards  Compatibility  Reduce consumer uncertainty  Reduce production costs  Increase in complementary products – Network effects – which greatly enhances sustainability Lock outs and switching costsLock outs and switching costs

Winning Format Wars  Ensure complementary products  Killer applications  Razor and blade strategy Cell phones, printers, satellite TV/radio, video gamesCell phones, printers, satellite TV/radio, video games  Cooperative competition  Licensing

TV Industry – Paradigm Shifts Black & White TV

Color TV

Black & White TV Color TV

Black & White TV Color TV Big Screen TV

Black & White TV Color TV Big Screen TV

Black & White TV Color TV Big Screen TV HDTV

Black & White TV Color TV Big Screen TV HDTV Incremental evolution included remote controls,cable ready tuners, stereo sound systems, screen-in-a- screen, etc

Competitive Dynamics  Competitive action within an industry.  Strategic and tactical action does not occur within a vacuum  What industries have high competitive dynamics?  What sort of actions/tactics are taken?

Drivers of Competitive Dynamics  numerous/equally balanced competitors  slow growth  high fixed/storage costs  lack of differentiation/switching costs  high exit barriers  Etc… Rivalry Competitive Dynamics

Competition in the Pharmaceutical Industry  Reps tripled to 90K last 10 years  12B on sales force, 2.76B on ads  Managed care bet – Pfizer from 14 th to 1 st  529 visits yearly, average length – 2.5 min 8% remember8% remember  Glaxo can reach 80% of the Drs in a week  “Is this necessary. No, but if my competitors do it and I can’t, then I’m at a disadvantage. This has been an arms race in the worst possible manner.”

Types of Competitive Responses  First Movers - initial competitive action  advantages and disadvantages  Fast Followers or Capable Competitors- respond quickly to first movers  Late Entrants - day late and a dollar short

Winners vs. Losers Xerox vs. Apple vs. IBM vs. Wintel Sony vs. Matsushita Polaroid vs. Kodak vs. Digital Atari vs. Nintendo/Sega/Sony /Microsoft.

Relationship between Innovation and Performance Dependent on industry conditions 1) Appropriability 2) Sustainability are both a function of: are both a function of: a) legal protectiona) legal protection b) complementary resourcesb) complementary resources c) complexity of innovationc) complexity of innovation

Appropriability Patents judged important in 65% of pharmaceuticals, 30% in chemicals, but only 10% in electrical, instrumentation, motor vehicles, office equipment, rubber & textiles Lead time advantages, learning curves, sales and service networks more effective than patents.

The Logitech Saga  Fortune’s one of 25 cool places to work  CEO complained in a 4AM phone call to their advertising agency that Logitech’s ads “failed to breakthrough the clutter of “tech and spec” in the computer publication he was reading.”

The Logitech Saga  Woolward & Partners responded to the wake-up call by developing a campaign featuring a series of improbably human images that included fat men in beanies, a urinating baby boy, and fully-clothed nuns splashing in the surf

The Logitech Saga  “After a twelve-year roller-coaster ride of profit and loss, leadership and anarchy, attention and ignorance, Logitech is now plagued with recreating itself. The company has been plagued with inefficient manufacturing, mixed marketing messages, and ill-conceived product ventures. In 1995, despite a 40% market share, the company lost $17 million. The company with advertisements featuring a peeing baby or a nose picking (Henry) Kissinger is dead”

The Logitech Saga  “We didn’t want to be in mice. They seemed beneath our intelligence. We wanted to be a software company, like Microsoft.”  “I don’t know where I am going, but I’m on my way.”  “We are the most critical users of our products. Customer need recognition is limited by their understanding of technology - they don’t know what is possible.”

Sound Familiar?  “This is what customers pay us for - to sweat all these details so it’s easy and pleasant for them to use our computers. We’re supposed to be real good at this. That doesn’t mean we don’t listen to customers, but it is hard for them to tell you what they want when they have never seen anything remotely like this.”