1. 1© 2003 Mark P. Rice Foundations of Business and Entrepreneurship Olin College November 10, 2003 Introduction to Technological Entrepreneurship Mark P. Rice, Ph.D. Murata Dean, and Jeffry A. Timmons Professor or Entrepreneurial Studies

2. 2© 2003 Mark P. Rice Agenda Presentation / Discussion: What is Tech E’ship? The Biomax® Case Study A Framework for Managing Tech E’ship Challenges

3. 3© 2003 Mark P. Rice THE SIMPLE ANSWER E’Ship in a Technology-Intensive Context What is Technological Entrepreneurship?

4. The Technological Entrepreneurship Continuum Discovery Invention Innovation E’ship THE ECONOMIC MARKET- PLACE © 2003 Mark P. Rice

5. 5 What is Entrepreneurship? A way of thinking and acting that is opportunity obsessed, holistic in approach and leadership balanced -- for the purpose of wealth creation. (Babson’s definition) Entrepreneurship is creative destruction. Dynamic disequilibrium brought on by the innovating entrepreneur, rather than equilibrium and optimization, is the norm of a healthy economy and the central reality of economic theory and practice. [Joseph Schumpeter, Austrian economist, 1911] The entrepreneur searches for change, responds to it, and exploits it as an opportunity. Innovation is the specific tool of entrepreneurs, the means by which they exploit change as an opportunity for a different business or a different service. [Peter Drucker 1985] Entrepreneurship is the pursuit of opportunity without regard to the resources currently under one's control. (Howard Stevenson)

6. 6© 2003 Mark P. Rice What is Entrepreneurship? Creating the New --- Destroying the Old  New Knowledge  New Products  New Processes  New Services  New Markets  New Business Models

7. 7© 2003 Mark P. Rice 1. Opportunity 2. People (Entrepreneurs) 3. Access to Resources  And the Fit Among These Three Elements. What are the key drivers of entrepreneurial success?

8. 8© 2003 Mark P. Rice  A match between a need in the marketplace and a product/service that meets that need. What is an opportunity?

9. Market Product or Service OPPORTUNITY RECOGNITION © 2003 Mark P. Rice

10. Market Product or Service OPPORTUNITY RECOGNITION PURSUIT OF OPPORTUNITY People / Organization Resources © 2003 Mark P. Rice

11. FLOW Creating New Technological Ventures: Enhancing the Flows of ……………… Technology People Capital FLOW New Ventures PURSUING OPPORTUNITY IN THE ECONOMIC MARKET- PLACE © 2003 Mark P. Rice

12. 12© 2003 Mark P. Rice Developing a Framework for Managing Tech E’ship Challenges Lessons from the Radical Innovation Research Project

13. 13© 2003 Mark P. Rice The Radical Innovation Research Project  Longitudinal Study of 12 Radical Innovation Projects in Ten Mature Firms  Launched in 1995  Multi-disciplinary team of faculty  Major grant from the Sloan Foundation  Partnership with the Industrial Research Institute  Harvard Business School Press published our book in December 2000 – Radical Innovation: How Mature Companies Can Outsmart Upstarts

14. 14© 2003 Mark P. Rice Radical Innovation Research Project: Qualifying Projects The project was established—with an identifiable team and funding. The company perceived that the innovation had the potential for significant strategic impact, via development of:  New to the world performance features,  5-10X (or greater) performance improvement, or  30 – 50% (or greater) reduction in cost

15. 15© 2003 Mark P. Rice Radical Innovation Research Project Phase I: The Companies and Their Radical Innovations  Air Products Oxygen Separation Technology  Analog Devices Air Bag Accelerometer  Dupont Biodegradable Polymer  Dupont Display Technology  General Electric Digital X-ray  General MotorsHybrid Vehicle  IBM Silicon Germanium Devices  IBM Electronic Book  Nortel Networks Internet Software Rental  UTC / Otis ElevatorBi-directional Elevator  Polaroid Memory Storage Device  Texas Instruments Digital Light Processor

16. 16© 2003 Mark P. Rice INCREMENTAL INNOVATION RADICAL INNOVATION Defining Radical Innovation High Low Market Uncertainty Technical Uncertainty Low High

17. 17© 2003 Mark P. Rice Defining Radical Innovation LOW HI Radical Innovation Organization Uncertainty Resource Uncertainty Technical Uncertainty Market Uncertainty Incremental Innovation

18. 18© 2003 Mark P. Rice The Nature of the Radical Innovation Lifecycle  Long term  Highly uncertain, unpredictable  Sporadic—stops and starts, deaths and revivals  Non-linear—idea generation throughout  Stochastic—key players come and go, priorities change, exogenous events are critical  Context dependent—history, experience, corporate culture, personalities, and informal relations all matter The tried and true management practices that work for incremental innovation are often inadequate for radical innovation.

19. 19© 2003 Mark P. Rice Review Handouts and Project Update  Figure 1. The Biomax® Lifecycle Timeline  Table 1. Discontinuities in the Biomax® Project Timeline  Figure 2. Project Uncertainties: Radical vs. Incremental Innovation  Figure 3: Project Uncertainties: Radical vs. Incremental Innovation –EXPANDED MODEL  Figure 4: The Three Dimensions of Project Uncertainty  Table 2. Categories of Uncertainty  Biomax Project Update

20. 20© 2003 Mark P. Rice Technical Uncertainty Resource Uncertainty Market Uncertainty Organization Uncertainty Challenge 1: Capturing Rad. Innov. Challenge 2: Living with Chaos Challenge 3: Market Learning Challenge 4: Business Model Challenge 5: Resource Acquisition Challenge 6: Transition Mgt. Challenge 7: Individuals and Infrastructure A Comprehensive Framework for Managing Radical Innovation