1. Components of an Entrepreneurial Venture
Vietnam eMBA
Components of an Entrepreneurial Venture

2. Innovating to Differentiate and Create a Market Niche
An ‘Innovation’ is:
Invention + Commercialization
Freeman, The Economics of Industrial Innovation
A new way of doing things that is commercialized
Porter
The new knowledge in an innovation can be either
Technological, or
Market related

3. Fundamental Equations
Innovation = Invention + Commercialization
Capabilities = Assets + Competences
In the present economy
Demand is driven by innovation
Supply is constrained by capabilities

4. Understanding Innovation
Innovation occurs on;
Technology
Market channels and packaging of technology
Architectural rearrangement of existing components
Integration of new component technologies
Theories and frameworks precede and motivate commercialization of technology
Business models and figures of merit precede innovation

5. Innovation = Change
Change management is an essential part of innovation management
Change destroys old competitive advantages,
And introduces new ones
Success requires:
Ability to collect and use information about the competitive environment
The nature of information that can be scanned from the environment

6. What the Consumer Sees
Overall desirability of features is measured by a figure of merit
A quantity used to characterize the performance of an item relative to other products
often used as a marketing tool to convince consumers to choose a particular brand
Unfortunately, each feature carries with it both desirable and undesirable characteristics

7. Toolsets Quiz & Organize with a Mind Map
Ask Questions: Customer Experience is dynamic
Who?
… is with customers while hey use the product
How much influence do they have
If we could arrange it, who would we want the customer to be with …
What?
… Do our customers experience when the use the product
… needs provoked our offering
What else? … might customers have on their minds
When? … do our customers use this ..
Where? … are our customers when they use this
How? … do customers learn to use the product .

8. Toolsets Overview of Feature Set
Prioritize and choose the major features of Beats’ innovation
Review the main innovation features with a feature-attribute map for the entire innovation
Basic
Discriminator
Energizer
Positive
Nonnegotiable
Differentiator
Exciter
Negative
Tolerable
Dissatisfier
Enrager
Neutral
So What?
Parallel

9. Toolsets Consumption Chain Analysis
Determine the main steps in consumption
You should only list the 3 or 4 most important steps
These will determine whether the potential customer proceeds to the next step (good)
Or leaves the consumption process (not good)

10. Toolsets Feature-Attribute Map the 3-4 Key Steps in the Consumption and Manage those 3-4 Steps
Identify Discriminators and Energizers
Describe how you will manage each of these features of the consumption process
Basic
Discriminator
Energizer
Positive
Nonnegotiable
Differentiator
Exciter
Negative
Tolerable
Dissatisfier
Enrager
Neutral
So What?
Parallel

11. E-Marketing Three Approaches
Keywords (Google’s Adwords)
Social (Facebook Ads)
Banner (Demand Side Platforms, e.g. Distlry)
Video (Hulu, Youtube)
You need to define many things about your product and services before building a campaign

12. Platforms

13. Platforms

14. Three Challenges
Framing
Venture Capital
Communication

15. The Communication Challenge
Provide a ‘lead in’ which will ‘hook’ your listener (the elevator pitch)
Provide a brief ‘sales pitch’ presenting the major components of your innovation and business
Consider what parts you most want to emphasize about the business model
Describe your business in one paragraph (equivalent to the 25 second pitch)
Numbers
Behavioral model and capabilities required
Strategy model
Investment Risk
A summary financial analysis to show risk and ROI for the project
Answer your investors question:
Why should I give you My money?"

16. The Framing Challenge What Is the Real Business Problem?
Accurately define your customers and what motives them
Properly framing a problem in terms of
the reality of the situation and
the objectives of the organization
is an important step in the decision-making process.
Mental frames act to channel our thinking and are important tools to help navigate complex decisions

17. The Venture Capital Challenge
What is your business worth, and why?
Your new venture competes in two markets:
Product
Financial
How will you tie this to your business model
tying narrative to numbers
What are the activities, operations and products?
What are the significant environmental influences?
major competitive forces outside management control
How does value flow through your business model?
What is the Net Present Value of future activities

18. Channels + Venture Capital Challenge
Determine the main steps in consumption chain – conversion cone
One of these should be your AdWords campaign
Venture Capital Challenge
What is your business worth, and why?
Costs of each of the consumption chain activities
How will these expenditures keep the customer from leaving the chain-cone
Conversion value, rate and risk

19. Innovation
The Key to Successful New Business

20. Fundamental Equations
Innovation = Invention + Commercialization
Capabilities = Assets + Competences
In the present economy
Demand is driven by innovation
Supply is constrained by capabilities

21. 20 Most Innovative Companies
Innovation Premium = NPV (income from existing businesses + plus anticipated growth)- Market Capitalization
From Innovators DNA (Harvard Business Press, 2011)
Apple for the past several years has topped the list
It delivers great consumer experience with outstanding design
But not necessarily that much new technology
It has become very profitable in the process
How?

22. The most innovative companies (Forbes 2015)

23. The most innovative companies

24. Fast Company’s most innovative companies

25. The most innovative companies 10 years ago (Business Week)

26. Most Innovative Countries World Bank Statistics

27. Why Innovate?
Globalization, commoditization and automation make it difficult to be the low-cost high volume provider
Innovation is the key to market success for most firms

28. Outsourcing
The US, Europe, Korea and Japan are increasingly design centers
That rely on production in China and other countries with low labor cost and good infrastructure
But keep most of the profit for themselves
This is the predominant business model in the early 21st century for consumer goods

29. Intelligent Commercialization
Inventors often get the idea right
But the commercialization wrong
And someone else profits from their invention
The dot-com boom of
Which cost the U.S. economy between $5-10 billion
is an example of the flawed investment that can take place when invention is not matched with intelligent commercialization

30. What is Innovation? Innovation = Invention + Commercialization
Invention and Commercialization, in turn
Occur where companies and individuals have particular
Knowledge or competences, and
Assets, including intellectual property
Capabilities = Competences + Assets
Capabilities determine where a company can innovate
Assets can be purchased
Competences are more complex

31. Commercialization
Commercialization depends on managing the customer experience
Management starts by defining what the customer thinks is important
The ‘figures of merit’ of the innovation
This can be difficult, because many inventions have no obvious use at the time of their invention
Consider the laser, which wasn’t even patented by its inventors
But is now one of the most valuable commercial technologies in history

32. Thinking like an Innovator
Action oriented
Continually learning
Make innovation a habit
Search for the
Applications
Profit
Risks (technological, market, business)
In every invention

33. Innovation is about Making Money

34. Return and Fixed Asset Intensity show that Ideas, not Things, have Value

35. Waves of Innovation
Joseph Schumpeter observed that a healthy economy was not one in equilibrium, but one that was constantly being "disrupted" by technological innovation.
Russian economist, Nikolai Kondratieff, drew attention to waves of innovation in 1925,
Schumpeter's long business cycles – each unique, driven by entirely different clusters of industries.
water power, textiles and iron in the late 18th century;
steam, rail and steel in the mid-19th century; and
electricity, chemicals and the internal-combustion engine at the turn of the 20th century.
oil, electronics, aviation and mass production, is now in decline
knowledge-intensive industries of semiconductors, fiber optics, genomics and software, powered the expansion of the global economy at the end of the 20th century.

36. Changing Jobs

37. Innovation Shifts the Economy
Shifted Away
from the economics of scarce resources
(material, labor)
Shifted Towards
Increasing returns economics
(information, attention and coordination)

38. About the Text Theme: Building the profitable innovation company
Describe tasks
Provide tools
Survey activities
Identify people
Define management

39. The Innovation Cycle

40. The Innovation Workout Reversing Assumptions
Forcing yourself to “think outside the box”
This exercise is about reexamining what you think are the
underlying requirements,
objectives and
constraints
of a problem
Example: the 9-dot problem
What do you assume are the underlying requirements, objectives and constraints?

41. The Innovation Workout Reversing Assumptions

42. Workout: Identify the Components of the Apple Watch

43. Apple Watch Smartwatch announced on 9/9/ 2014
fitness tracking
health-oriented capabilities,
integration with iOS and existing Apple products and services
Available in three models, with a wide variety of case and band options
Compatible with the iPhone 5 and later iPhone models running iOS 8.2.
Scheduled for release in early 2015

45. Tech

49. Other Desirable (Expensive) Watches (competitors?)

50. Other Desirable (Expensive) Watches (competitors?)

51. What makes the Apple Watch a Potential Success?
Don’t say ‘The Apple Brand’ … that’s just lame
As if Apple just bundles soap
Their prior game changing performance is the reason they have the brand
… Or will this be a failure (will you buy it?)
To answer this question,
you need to define
(in some commo
n language)
what exactly the Apple Watch is!

52. Hardware? Or What? The Apple Watch can be viewed as a platform.
The Apple Watch can be viewed as hardware (a consumer appliance)
The Apple Watch can be viewed as software
with the hardware confining the access channels to the software
Like Xbox, or PS4
The Apple Watch could be purely a conduit to access data (time, social, health data)

53. Do the Following and Share
Make a case for the Apple Watch being either a
Platform
Hardware
Software, or
Conduit to access data (time, social, health data)
Describe customers in terms of Quizzing
A-Watch product in terms of 3 features
Marketing or distribution channels
The revenues (money flow) from the A-Watch