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Masters in Engineering and Management of Technology Masters in engineering Design. Entrepreneurship and New Venture Creation Rui Baptista. Preliminaries. Introductions Course Objectives and Content Class Schedules and Readings Deliverables and Student Evaluation Student Projects.

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Masters in engineering and management of technology masters in engineering design

Masters in Engineering and Management of TechnologyMasters in engineering Design

Entrepreneurship and New Venture Creation

Rui Baptista


Preliminaries
Preliminaries

  • Introductions

  • Course Objectives and Content

  • Class Schedules and Readings

  • Deliverables and Student Evaluation

  • Student Projects

Entrepreneurship – Rui Baptista


The entrepreneurial revolution and the entrepreneurship process

The Entrepreneurial Revolution and the Entrepreneurship Process


Entrepreneurship and small firms
Entrepreneurship and Small Firms

Research findings by the U.S. Small Business Administration

  • Small businesses represent 99 percent of all employers

  • Small businesses provide about 75 percent of net new jobs

Entrepreneurship – Rui Baptista


Small business and its disadvantages
Small Business and its Disadvantages

Entrepreneurship – Rui Baptista


Innovation since world war ii
Innovation Since World War II

  • Small entrepreneurial firms

    • Responsible for half of all innovation

    • Credited with 95 percent of all radical innovation

Entrepreneurship – Rui Baptista


“What astonishes me in the US is not so much the marvelous grandeur of some undertakings as the innumerable multitude of small ones”

Alexis de Toqueville, Democracy in America, 1835

Entrepreneurship – Rui Baptista


Mega entrepreneurs who started in their 20s
Mega-Entrepreneurs Who Started in Their 20s grandeur of some undertakings as the innumerable multitude of small ones”

  • Microsoft—Bill Gates and Paul Allen

  • Apple Computers—Steve Jobs and Steve Wozniak

  • Dell Computers—Michael Dell

  • Federal Express—Fred Smith

  • Oracle—Larry Ellison

  • Amazon.com—Jeff Bezos

  • eBay—Pierre Omydiar

  • Nike—Phil Knight

  • Yahoo! —David Filo and Jerry Yang

  • Cisco—Len Bosack, Sandra Lerner and Kirk Lougheed

  • Google.com—Larry Page and Sergey Brin

Entrepreneurship – Rui Baptista


New industries launched by the e generation
New Industries Launched by the E-Generation grandeur of some undertakings as the innumerable multitude of small ones”

  • Personal computers

  • PC software

  • Biotechnology

  • Wireless communications/handheld devices

  • Healthy living products

  • Cellular phone services

  • CD-ROM

  • Internet publishing

  • Internet shopping

  • Virtual imaging

Entrepreneurship – Rui Baptista


R d expenditure and economic growth
R&D Expenditure and Economic Growth grandeur of some undertakings as the innumerable multitude of small ones”

Entrepreneurship – Rui Baptista


Entrepreneurship and gdp growth
Entrepreneurship and GDP Growth grandeur of some undertakings as the innumerable multitude of small ones”

Entrepreneurship – Rui Baptista


Self employment rates in the oecd 1972 2002
Self-employment Rates in the OECD 1972-2002 grandeur of some undertakings as the innumerable multitude of small ones”

Entrepreneurship – Rui Baptista


Global entrepreneurship monitor gem 2004 total entrepreneurial activity
Global Entrepreneurship Monitor grandeur of some undertakings as the innumerable multitude of small ones”(GEM) 2004:Total Entrepreneurial Activity

Entrepreneurship – Rui Baptista


Gem 2004 opportunity based entrepreneurial activity
GEM 2004: grandeur of some undertakings as the innumerable multitude of small ones”Opportunity Based Entrepreneurial Activity

Entrepreneurship – Rui Baptista


Gem 2004 necessity based entrepreneurial activity
GEM 2004: grandeur of some undertakings as the innumerable multitude of small ones”Necessity Based Entrepreneurial Activity

Entrepreneurship – Rui Baptista


Entrepreneurship and economic growth
Entrepreneurship and Economic Growth grandeur of some undertakings as the innumerable multitude of small ones”

  • High level of entrepreneurial activity equals above average economic growth

  • Portugal: above world average in self-employment rates; below world average in entrepreneurial activity

  • Reduced entrepreneurial activity in high tech sectors

Entrepreneurship – Rui Baptista


High growth technology ventures started in the lisbon region
High Growth Technology Ventures Started in the Lisbon Region grandeur of some undertakings as the innumerable multitude of small ones”

Entrepreneurship – Rui Baptista


Entrepreneurship
“Entrepreneurship” grandeur of some undertakings as the innumerable multitude of small ones”

  • “Entrepreneur” is someone who engages in the creation of a new business with the aim of achieving success, growth and profits

  • A large self-employment rate (i.e. high percentage of small businesses) does not mean a country is highly entrepreneurial:

    • Many people become self-employed through acquisition and by joining the family business

    • Many people become self-employed out of necessity, i.e. due to the lack of a better income-generating alternative

Entrepreneurship – Rui Baptista


Entrepreneurship a way of thinking reasoning acting
Entrepreneurship – a way of thinking, reasoning, acting grandeur of some undertakings as the innumerable multitude of small ones”

  • The heart of the process is the creation and/or recognition of opportunities

  • It requires the willingness to take calculatedrisks

  • Entrepreneurship can occur, of fail to occur, in firms that are old and new, small and large

  • Entrepreneurship involves continued renewal

  • The classic expression of entrepreneurship is the start-up company

Entrepreneurship – Rui Baptista


Opportunity
“Opportunity” grandeur of some undertakings as the innumerable multitude of small ones”

  • Opportunity is a set of favorable circumstances associated with a business idea that award it good chances of progress and future success

  • The main function of the entrepreneur is to discover, screen and implement business ideas/opportunities

  • Entrepreneurship can therefore be understood as the activity of identifying and exploiting new business opportunities

Entrepreneurship – Rui Baptista


The start up
The Start-up grandeur of some undertakings as the innumerable multitude of small ones”

  • Startup company—an innovative idea that develops into a high growth company

    • Qualities of a startup company

      • Strong leadership from the main entrepreneur

      • Complementary talents and outstanding team work of team members

      • Skill and ingenuity to find and control resources

      • Financial backing to pursue opportunity

Entrepreneurship – Rui Baptista


The entrepreneurial process
The Entrepreneurial Process grandeur of some undertakings as the innumerable multitude of small ones”

  • It is opportunity driven

  • It is driven by a lead entrepreneur and an entrepreneurial team

  • It is resource parsimonious and creative

  • It depends on the fit and balance among resources and needs

  • It is integrated and holistic

Entrepreneurship – Rui Baptista


Commonly shared characteristics of successful entrepreneurs the behaviorist approach
Commonly Shared Characteristics of Successful Entrepreneurs grandeur of some undertakings as the innumerable multitude of small ones”—The ‘Behaviorist’ Approach

  • They seek out new opportunities, looking for the chance to profit from change and disruption in the way business is done

  • They pursue opportunities with discipline and perseverance

  • They pursue only the very best opportunities and avoid exhausting themselves and their organizations by chasing after every option

  • They focus on execution—specifically, adaptive execution

  • They are able to engage the energies of everyone in the company

  • Entrepreneurship is neither confined to certain types of individuals nor organizations—it is easier to find in smaller and younger enterprises because the conditions favoring its development are more likely to be present

Entrepreneurship – Rui Baptista


Administrator trustee vs entrepreneur promoter

Control/ownership of maximum resources grandeur of some undertakings as the innumerable multitude of small ones”

Structure stability:

Organizational: hierarchy

Market: maturity/concentration

Risk minimization

Opportunities: evolutionary commitment, strategic consensus

Opportunity search and recognition

Rapid commitment to pursuit of opportunity

Structure Change:

organizational: adaptable, co-ordinated

Market: rapid growth and change

Acceptance of controlled risk

Resources:

Limited control

Gradual, efficient use

Administrator/Trustee vs. Entrepreneur/Promoter

Entrepreneurship – Rui Baptista


Leadership
Leadership grandeur of some undertakings as the innumerable multitude of small ones”

Entrepreneurship – Rui Baptista


Increasingly fast emergence of new technology
Increasingly Fast Emergence of New Technology grandeur of some undertakings as the innumerable multitude of small ones”

  • Time for new technologies to reach 25% of the U.S. Population

    • Household electricity (1873)—46 years

    • Telephone (1875)—35 years

    • Automobile (1885)—55 years

    • Radio (1906)—22 years

    • Television (1925)—26 years

    • Videocassette recorder (1952)—34 years

    • Personal computer (1975)—15 years

    • Cellular phone—13 years

    • World Wide Web—7 years

Entrepreneurship – Rui Baptista


Disadvantages of large corporations christensen
Disadvantages of Large Corporations grandeur of some undertakings as the innumerable multitude of small ones”(Christensen)

  • Characteristics of giant corporations in the face of radical innovation

    • Hierarchical in structure

    • Leadership as managing and administering from the top down

    • Rewards/incentives for “the largest” (assets, budgets, etc.)

  • Cause of downfall

    • Slow to change archaic strategy

    • Slow to change outdated culture

    • Slow to recognize and incorporate entrepreneurship, entrepreneurial leadership, and entrepreneurial reasoning

Entrepreneurship – Rui Baptista


Radical innovation
Radical Innovation grandeur of some undertakings as the innumerable multitude of small ones”

Entrepreneurship – Rui Baptista


The timmons model of the entrepreneurial process
The Timmons Model of the Entrepreneurial Process grandeur of some undertakings as the innumerable multitude of small ones”

Communication

Opportunity

(2)

Resources

(4)

Business Plan

Fits and gaps

Ambiguity

Exogenous forces

Creativity

Team

(3)

Leadership

Uncertainty

Capital market context

Founder (1)

Entrepreneurship – Rui Baptista


Timmons Model: The Driving Forces grandeur of some undertakings as the innumerable multitude of small ones”

Opportunity

Resources

Context

Team

Entrepreneurship – Rui Baptista


Timmons model interpreted
Timmons Model Interpreted grandeur of some undertakings as the innumerable multitude of small ones”

  • The process starts with opportunity, not strategy, resources or planning

  • Opportunity recognition results from creativity, which is shared by the entrepreneur and the entrepreneurial team;

  • Creativity results from collision between academic learning and real world practice

  • Value Creation results from integration of opportunity and efficient use of resources

  • Combination of people, opportunity and resources coming together at a particular time may determine the chance for success

Entrepreneurship – Rui Baptista


Entrepreneurial traits
Entrepreneurial Traits grandeur of some undertakings as the innumerable multitude of small ones”

  • Minimize and control vs. maximize and own

    • Creativity—opportunity recognition and generation

    • Unique/not easily imitated (technological?) assets

    • Knowledge of the market and competition

    • People (entrepreneurial team) and motivation skills

    • Financial resources (identify needs)

    • Business plan

    • Implementation and management skills

    • Ability to devise a growth/exit strategy

Entrepreneurship – Rui Baptista


A descriptive model of the entrepreneurial process
A Descriptive Model of The Entrepreneurial Process grandeur of some undertakings as the innumerable multitude of small ones”

  • Entrepreneurial Interest

  • Generate Business Ideas—Opportunity Identification

  • Opportunity Evaluation/Assessment

  • Develop and Refine the Concept

  • Determine the Resources Required

  • Acquire the Necessary Financing/Partners

  • Develop the Business Plan

  • Implement and Manage

  • Harvest the Venture—Growth/Exit Strategy

Entrepreneurship – Rui Baptista


The entrepreneurial process i
The Entrepreneurial Process I grandeur of some undertakings as the innumerable multitude of small ones”

Entrepreneurial Interest

Generate Business Ideas/Opportunity Identification

What are my interests?

What am I passionate about?

What am I good at?

Do I want to be an entrepreneur?

Searching processes and methods

Unique assets and knowledge

Past business experience

Establish goals for the business

Preliminary resource needs

Entrepreneurship – Rui Baptista


The entrepreneurial process ii
The Entrepreneurial Process II grandeur of some undertakings as the innumerable multitude of small ones”

Venture Screening: Business/Opportunity Assessment

Develop and Refine the Concept

Changing Demographics

Size/Growth of Market; or

Emergence of New Market

New Technologies: products/processes

Regulatory Change

Social Change

Competitive advantages: potential for value creation

Define Products/Services, Processes

Target Customers

Define Competition

New Organizational Structures/Forms

Sales or Distribution Channels

Start Developing the Business Plan

Entrepreneurship – Rui Baptista


The entrepreneurial process iii
The Entrepreneurial Process III grandeur of some undertakings as the innumerable multitude of small ones”

Determine the Required Resources

Acquire the Necessary Financing/Partners

Marketing and Sales Expertise

Technical Expertise

Financing Needs

Distribution Channels

Sources of Supply

Licenses, Patents, & Legal Protection

Debt Supplier Financing

Equity Joint Ventures

Outsourcing Partnerships

Leasing Barter

Entrepreneurship – Rui Baptista


The entrepreneurial process iv
The Entrepreneurial Process IV grandeur of some undertakings as the innumerable multitude of small ones”

Developing the Business Plan

Implement and Manage

Growth/Exit

Detailed Concept/Opportunity Description

Detailed Operating Plan

Detailed Marketing Plan

Detailed Financial Plan

Management Team Agreement

Implementation of Plan

Monitor Performance

Payback to Resources Providers

Reinvestment/Expansion

Achievement of Performance Goals

Licensing of Rights Sell or Merge

Go Public – IPO Shut Down

Entrepreneurship – Rui Baptista


Entrepreneurship and innovation
Entrepreneurship and Innovation grandeur of some undertakings as the innumerable multitude of small ones”

  • Schumpeterian view: entrepreneur translates new scientific knowledge into new products/markets and/or processes in order to gain monopoly power

  • Drucker’s view: innovation is a specific function of entrepreneurship—it is the means by which the entrepreneur either creates new wealth-producing resources or endows existing resources with enhanced potential for creating wealth

Entrepreneurship – Rui Baptista


Sources of innovation new business ideas
Sources of Innovation/New Business Ideas grandeur of some undertakings as the innumerable multitude of small ones”

Entrepreneurship – Rui Baptista


Market pull opportunities innovations
Market-Pull Opportunities/Innovations grandeur of some undertakings as the innumerable multitude of small ones”

  • Oriented primarily towards satisfying the needs of a specific market

  • Tend to occur when customers are technologically sophisticated

  • Occurs more frequently with older technologies

  • Are mostly incremental innovations where an established market bases its perceptions of opportunity on known technologies

Entrepreneurship – Rui Baptista


Technology push or capability push opportunities innovations
Technology-Push or Capability-Push Opportunities/Innovations grandeur of some undertakings as the innumerable multitude of small ones”

  • Oriented primarily towards increased technical performance

  • Require that scientists and engineers have direct experience with users in order to apply new technology successfully

  • Technical information lies mostly with the innovators, while users tend to be relatively unsophisticated

  • Are often the major source of radical changes in market and organizational structures

Entrepreneurship – Rui Baptista


Opportunity recognition innovation and new venture strategies

Old Products grandeur of some undertakings as the innumerable multitude of small ones”

New Products

Opportunity Recognition: Innovation and New Venture Strategies

Old Markets

New product variants, features, services

Market niches

New geographical markets or new users

Significant innovation, new product and market

New Markets

Entrepreneurship – Rui Baptista


A typology of new venture opportunities i
A Typology of New Venture Opportunities (I) grandeur of some undertakings as the innumerable multitude of small ones”

  • Increasing the value of a good or service to the consumer: ex.: improvements in quality, accessibility, image...

  • New applications for existing technologies and resources: ex.: use of magnetic cards (already used as credit cards) in hotel doors

  • Creation of mass markets: ex.: automobiles, disposable cameras and shavers; personal computers

  • “Customization”: ex.: Dell, BMW

  • New sales platforms: ex.: Amazon.com

Entrepreneurship – Rui Baptista


A typology of new venture opportunities ii
A Typology of New Venture Opportunities (II) grandeur of some undertakings as the innumerable multitude of small ones”

  • Mass distribution: ex: Wal-Mart; Worten; Continente

  • Discontinuities and changes to the environmental context: ex.: regulation and de-regulation of trade and markets; government policy; internet

  • Process innovation: ex:mass production (Ford, Intel) “hubbing” (FedEX)

  • Consolidation: ex: cost reduction in declining industries (Blockbuster)

Entrepreneurship – Rui Baptista


Descontinuities as opportunities
Descontinuities as Opportunities grandeur of some undertakings as the innumerable multitude of small ones”

Sources of Discontinuities:

  • Radical innovation: new technological knowledge, technology convergence – nanotechnologies, genetics, computer science, biosensors

  • Society – cultural changes, life style and preference changes

  • Government policy: environmental regulations, market de-regulation and privatization

  • Demographics – aging of the population; growing urban poulation

Entrepreneurship – Rui Baptista


Accidental innovation
Accidental Innovation grandeur of some undertakings as the innumerable multitude of small ones”

  • Levi Strauss: Denim Blue Jeans (originally intended for tents)

  • Clarence Birdseye: frozen foods

  • Charles Goodyear: vulcanization of rubber

  • Percy Spencer: microwave oven

  • Arthur Fry (3M): Post-it

  • Peter Dunn & Albert Wood (Pfizer): Viagra

Entrepreneurship – Rui Baptista


Technological trends and market opportunities
Technological Trends and Market Opportunities grandeur of some undertakings as the innumerable multitude of small ones”

  • Life sciences: biogenetics, biometrics, stem cells

  • ICTs: diffusion and increasing application of wireless devices; VOIP; voice recognition interface; security software, smarcards

  • Security verification devices

  • Nanotechnology and biosensors

  • Robotics: new uses in security, search and rescue

  • Energy: hydrogen and hydrocarbon (fuel cells)

Entrepreneurship – Rui Baptista


Society trends and market opportunities
Society Trends and Market Opportunities grandeur of some undertakings as the innumerable multitude of small ones”

  • Increase in geriatric population

  • Rise of the middle class in developing countries

  • Greater ethnic and cultural diversity in urban centers

  • Greater religious diversity; more secular vs. more religious societies

  • Convergence in access to higher education and codified/embodied knowledge

  • Increasingly important role played by ICTs and the media in everyday life

Entrepreneurship – Rui Baptista


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