1. Lecture 2

2. Vocab Quiz… Barrier to Entry Return on Captial SWOT Switching Costs
First-mover advantage
Emergent Industries
Follower strategy
Three Types of competitive tactics
Position, Resources, Emergent

3. Praise competitors. Learn from them
Praise competitors. Learn from them. There are times when you can cooperate with them to their advantage and to yours.
George Mathew Adams
Summary
How can ventures create a strategy to fit the new business opportunity?
Every new venture has a strategy or approach to achieve its goals. The strategy is developed using the business model, an understanding of the industry, and the context and the key factors for success.
Chapter 4: Summary
Technology Ventures: From Idea to Opportunity

4. A strategy is a plan or road map of the actions that a firm or organization will take to achieve its mission and goals, but it is not static.
Chapter 4: concept
Technology Ventures: From Idea to Opportunity

5. The Management Process for Developing a Strategy
Develop the vision and mission statement, and business model.
Describe the firm's core competencies, its customers, and its competitive advantage.
Describe the industry and context for the firm and describe the competitors.
Determine the firm's strengths and weaknesses in the context of the industry and environment.
Describe the opportunities and threats for the venture.
Identify the key factors for success using the six forces model.
Formulate strategic options and select the appropriate strategy.
Translate the strategy into action plans with suitable measures and controls.
Chapter 4: Table 4.1
Technology Ventures: From Idea to Opportunity

6. Are these the “six forces”?
Profitability/Success
Chapter 4: Figure 4.2
Technology Ventures: From Idea to Opportunity

7. 5. Bargaining power of complementors 6. Bargaining Power of suppliers
1. Firm Rivalry
2. Threat of entry by new competitors d
Note: Firms are represented by a circle  represents firm a. The size of the circle indicates the size of revenues of the firm. The six forces are numbered for clarity. The rivalry of the firms is shown as a vortex of competition. a
4. Bargaining Power of customers
3. Threat of Substitute Products
Chapter 4: Figure 4.3
Technology Ventures: From Idea to Opportunity

8. Highly productive pilots, ground and flight crews. Low costs
Organizational
Environmental
1. STRENGTHS:
Highly productive pilots, ground and flight crews.
Low costs
1. OPPORTUNITIES:
Ability to add scheduled flights to new cities.
Low prices enable market share growth
2. WEAKNESSES:
Inability to provide non-stop long distance travel
2. THREATS:
Inability to secure new gates at airports.
Competition from a potential low cost rival such as JetBlue
SWOT analysis for Southwest Airlines
Chapter 4: Table 4.4
Technology Ventures: From Idea to Opportunity

9. Potential Barriers to entry into an industry Economies of Scale
Barriers to entry are factors that make it costly for companies to enter an industry.
Potential Barriers to entry into an industry
Economies of Scale
Cost advantages Independent of Scale
Product Differentiation
Contrived Deterrence
Government Regulation
Switching Costs
Chapter 4: Table 4.5
Technology Ventures: From Idea to Opportunity

10. Distinctive competencies lead to competitive advantage.
Chapter 4: Figure 4.5
Technology Ventures: From Idea to Opportunity

11. Four Common Types of Strategies and Their Characteristics
Chapter 4: Table 4.6
Technology Ventures: From Idea to Opportunity

12. Principle 4
A clear road map (strategy) for a new venture states how it will act to achieve its goals and attain a sustainable competitive advantage.
Chapter 4: Principle 4
Technology Ventures: From Idea to Opportunity

13. Briefly describe the strategy of the BI program using the questions of Figure 4.2 and using success rather than profitability as the desired outcome.
Chapter 4: Exercise
Technology Ventures: From Idea to Opportunity

14. VENTURE CHALLENGE
Develop a SWOT analysis using the format of table 4.4.
Select your strategic approach from table 4.6.
Describe your strategy in one or two sentences that could be circulated to your employees and allies.
Chapter 4: Venture Challenge
Technology Ventures: From Idea to Opportunity

15. 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.
Chapter 5: Summary
Technology Ventures: From Idea to Opportunity

16. Emergent industries:
Newly created or newly recreated industries formed by product, customer, or context changes [Barney 2002].
Chapter 5: Concept
Technology Ventures: From Idea to Opportunity

17. First Mover Potential Advantages and Disadvantages
Chapter 5: Table 5.2
Technology Ventures: From Idea to Opportunity

18. Three Types of Industries and Their Characteristics
Chapter 5: Table 5.1
Technology Ventures: From Idea to Opportunity

19. Complement: A complement to a product is any other product that makes the first one more attractive to the customer.
The Value Network
Customers
Competitors
The New Venture
Complimentors
Suppliers
Chapter 5: Figure 5.3
Technology Ventures: From Idea to Opportunity

20. 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.
Chapter 5: concept
Technology Ventures: From Idea to Opportunity

21. 3. The Characteristics of the Invention
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 Invention
a. Importance of the invention — Economic value and potential payoff
b. Radicalness of the invention — differentiation of the invention from its predecessors
c. The breadth of patent protection of the intellectual property
Chapter 5: Table 5.3
Technology Ventures: From Idea to Opportunity

22. The New Business Formation Process for an Invention
Chapter 5: Figure 5.6
Technology Ventures: From Idea to Opportunity

23. The Expected Trajectory of a Disruptive Innovation
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.
The Expected Trajectory of a Disruptive Innovation
High
Range of performance required in the mainstream market
Performance
Expected Trajectory
Current performance of the innovation
Low
Now
Time
Chapter 5: Figure 5.7
Technology Ventures: From Idea to Opportunity

24. Six Resources for A Creative Enterprise
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
Chapter 5: Table 5.4
Technology Ventures: From Idea to Opportunity

25. The Creativity Process Describe The Problem
Start
Describe
The Problem
Reframe and Start Again
Build a Prototype
and Show It to the Customer
Incubation Period: Observe and
Study the Problem
Evaluate
and
Test the Ideas
Intuitive Thinking,
Brainstorming
Insights, Ideas,
Inventive Thinking
Chapter 5: Figure 5.10
Technology Ventures: From Idea to Opportunity

26. 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
Chapter 5: Table 5.5
Technology Ventures: From Idea to Opportunity

27. The four steps to achieve a favorable technology innovation.
Technology Factors
Feasibility
Performance
Manufacturability
Business Model
Vision
Target Market
Value Proposition
Strategy
Industry and Competitor Analysis
Expected Competitive Advantage
The four steps to achieve a favorable technology innovation.
Expected Economic Results
Revenue
Profitability
Return on Capital
Time to Profitability
Chapter 5: Figure 5.11
Technology Ventures: From Idea to Opportunity

28. An innovation strategy builds on creativity, invention, and technologies, acting within a value network, to effectively commercialize new products and services for its customers.
Chapter 5: Principle
Technology Ventures: From Idea to Opportunity

29. VENTURE CHALLENGE
Describe your venture in terms of timing of entry as illustrated by figure 5.1
Create a value network for your company as outlined in figure 5.3.
Create a partnership strategy as discussed in section 5.3.
Summarize your technology and innovation strategy.
Chapter 5: Venture Challenge
Technology Ventures: From Idea to Opportunity