Engineering Entrepreneurship

Engineering Entrepreneurship Ron Lasser, Ph.D. EN 0062 Class #9 11-03-06

Stages of Venture Development Stage 4 Mature Stage 5 Innovation or Decline Stage 3 Growth Stage 2 Start Up Stage 1 Pre- Start Up

The TA Life Cycle Landscape • Early Market – great excitement • The Chasm – great despair • The Bowling Alley – niche based adoption • The Tornado – mass-market adoption • Main Street – after market development • End of Life – obsolescence and retirement Main Street The Tornado Early Market End of Life The Chasm The Bowling Alley

The Logic of Failure • “The modern world is made up of innumerable inter-related subsystems, and we need to think in terms of these interrelations” • “Real improvement can be achieved if we understand the demands that problem solving places on us and the errors that we are prone to make when we attempt to meet them” • “… it is far from clear whether good intentions plus stupidity or evil intentions plus intelligence have wrought more harm in the world.” Source: The Logic of Failure By Dietrich Dorner

Situation #1 – LK & J Systems • Les Kaman is an entrepreneur who has a background in theoretical physics, his plays the violin in his spare time, but he realized that in the making of integrated circuits the topology of the wafer substrate is critical for optimizing production • Les is a CEO who likes to have his hands in all the pots and if there are not enough on the stove, he likes to create pots so as to keep everyone busy and is a workaholic • The purpose of his technology is to measure the height variation of the surface of a silicon wafer using a non-contact short pulse radio frequency, similar to how radar profiles the landscape for low flying military fighters • The result is then used to find the most level spots on the wafer to use as sites when using photolithographic methods to manufacture integrated circuits • Les hired Bill Players as VP of Engineering and Mary Balmer as VP of Manufacturing • Bill is more of a management guru, then a technical person • Mary has a strong background in mechanical engineering and process design • Jason Lambkin is a very bright electrical and computer engineer who has discovered a problem in the software used to display the wafer landscape as a 3D plot on computer monitor • The problem relates to very complicated digital signal processing technology • Les and Bill do not understand the software aspects of the problem, however, Mary understands the impacts

Les Kaman • You invented the radio frequency technology and you like to show that you are smart and know it all • You like to start new project teams when you don’t like the answers you hear from your staff since you are the boss • You have absolutely no software background • You want people to work long hours giving up weekends and holidays to get the job done • Wants to be on the project team to help solve the problem • Wants to make the decision himself, suggesting what to do, but never ordering people to do it

Bill Players • Engineer by training, but went for an MBA • Doesn’t know the technology any more – gets scared when asked a question – turns to his technical subordinates to get the answers saying it is their job to know the answers • Knows Les has no software knowledge and likes to be on the project team to direct traffic and have things done his way • Is afraid of Mary who he believes is better technically then he is • Looks to her for the answers rather than his own staff • Will not make a decision for fear Les will over turn it • Likes to find out how long the technical solution will take to complete

Mary Balmer • Very competent, very formal • Only addresses peers or bosses, not the technical people • Knows the solution is to hire a software consultant, but does not want to say out loud, for this would be insulting to her peer Bill • Tries to get Bill to come to this conclusion without saying it • Usually takes Les’s side except when Les wants to be part of a project team • Likes to make decisions, but want Les to approve it • Wants to know the impact on the manufacturing process

Jason Lambkin • Thinks his bosses are jerks • Knows more but asks questions rather than insulting them • Came to the start-up because of the technology, but has learned that key to success is rapid decision-making • Understands the technology, knows the solution is to re-write the filter parser by recoding in C++ using a bit slice technology • If asked about this can go into more detail about the technology: e.g., need to use an imaginary low pass filter encoded using lexical grammar that parses the telemetry data to select which bits are processed and which bits are ignored • However, cannot relate this technical solution to how long it will take or what impact on the manufacturing process

Situation #2 – Print Magic • Neil Gould is a egotistical business guy who has been successful in the clothing business • He comes up with the idea to computerize printing on T-shirts to customize whatever anyone wants on their clothing • The technical team drifts from the original concept of T-shirts to printing customized messages on photo-greeting cards • Neil’s company manufactures 3000 units of the photo-card machine selling it to one of the largest photograph developers PicGraph in the US • The machine damages 8 photographs per 100 in the first big Christmas season causing PicGraph to lose millions of dollars and have angry customers due to having their orders redone or be delayed • PicGraph demands a meeting with Neil’s company

Situation #2 Continued • Neil meets with Ed Tagucci and Linda Symartousoli of PicGraph • Neil brings along Aviva Hallipen a mechanical engineer to discuss how they will fix the problem

Neil Gould • You are the founder • You take things personally • You are in full control; you make every decision • You don’t listen, you interrupt as soon as you have an idea to fix the problem • You are not technical, but you want to be, and you make it appear that you do know what you are talking about • You want it done quickly so you can get on to the next thing, you get bored easily and want to delegate full control which you do; however, you still have opinions and want to make the final decision • You are not patient

Ed Tagucci • You are the VP of Operations; you make the place run • You are not a quiet person • You want it done, and done now • You have little patience for companies that screw up • You blame the people who manage the companies and want them to take it personally; you want a real commitment to get it done; you want to see milestones and a schedule; but you will not tell this to the Print Magic, you ask questions to get them to show you how they are going to do it • You want this fixed in 3 months; no excuses, ifs, ands, or buts; they need to find a way to meet your timeline

Aviva Hallipen • You are the manager of the mechanical engineering design group and you do some hands on design as well as project management of the other engineers • Very bright and confident • You speak only when you can contribute • You are technical, but your special value is that you try to understand the problem in detail, not just what is making the customer angry; your goal is to fix it and fix it right; you are not in a hurry to just jump through the hoop; you want to take time to understand the problem, make a plan, organize a team, make the changes, retest it, and ship it; realistically, this will take six months • You ask about how the product is used to understand when the problems occur • The product is simple to use; it uses a roll of foil that is transferred to the photo by using heat. There is only one moving part the roll of foil which has to be specially threaded by the operator – special training is required to do this as if it is not aligned properly the foil can jam, then has to be rethreaded • You have test data to show that the foil will damage 8 pictures in 10,000 which is below the PicGraph spec of 10 per 10,000 • One critical piece about the foil is they need to be stored in a cool place for they will expand when place near a heat source; this could then cause thread miscues due to the expansion of the foil • The critical equation is: thickness of the foil = 4.3 (10-3) inches/degree Fahrenheit times the temperature change over room conditions + the original thickness of the foil • If the temperature rises in the room more than 20 degrees it could be a problem; exposure to sunlight in windows could make the foil expand near its limit for damage for it takes 3 hours for the foil to return to normal

Linda Symartousoli • You have all the detail knowledge of the problem; your boss Ed does not • The problem occurs toward the end of a shift after the unit is in operation for about 4 hours • The operator has gone through the Print Magic training course to thread the special; however, you know but fail to tell all that operators do get sloppy on other things toward the end of their shifts for the foil needs to be changed and they need to tally up their sales to transfer to the next shift and then punch out • You know the spec required is 4 damaged photographs per 10,000; this was changed twice and PrintMagic still believes the spec is 10 in 10,000 • Also, you know that some of the foils have been stored on a shelf near the windows to advertise the different colors and could be warm due to the sunlight when threaded in the machine

Situation #3 - EveryScan • EveryScan is a start-up whose products are selling like wildfire • The CS2100 commercial scanner has the best image sharpness, color reproduction and performance far outreaching their competitors • EveryScan received funding 18 months ago and scrambled to get their product to market • After 6 months they have ship no less than 30 scanners per day – an amazing feat for each scanner has over 2000 parts, 8 microprocessors, and sophisticated optics that need to be aligned by computer • The company has approximately 95 people – 50 in manufacturing, 20 in engineering, and the rest in sales, quality, and management • Unfortunately, customers are calling for the power supply in the CS2100 spontaneously catches on fire • Kim Nazmer, head of the Quality department, has discovered EveryScan purchases a customized supplied designed exclusively for EveryScan • To make matters worse, the supply was designed by Abe Meggers, one of the co-founders of EveryScan and with the Anil Rampor of Power Systems • There is no documentation, no technical specification for the supply; when she spoke to Abe and Anil, they only remember it was designed in a day because of pressure to ship from the Board of EveryScan • What is Kim to do?

Myth of the Entrepreneur • Knowing how to do the technical work does not mean you know how to build a business • Working IN the business, not ON it • The business is a product • If not outright failure, then failure to meet full potential • Being your own boss is not an entrepreneur • Entrepreneur, manager, technician • Technician is dominant because that is how we have been trained to think • Thinking like a technician, keeps a business small

Myth of the Entrepreneur • Entrepreneur: replicate the core capabilities or competencies, this builds the business • Manager: construct business processes and practices; find the vital few • Business plan: about “What do I want?”; it is a lifestyle choice • Marketing: tell a story; all stakeholders need to see themselves and play a role in your story • The dreaming room: the customer space: the problem space; you need to be comfortable with abiguity

Entrepreneurs • Acted without prior analysis of the situation • Failed to anticipate side effects and long-term repercussions • Assumed that the absence of immediately obvious negative effects meant that correct measures had been taken • Let over involvement in projects blind them to emerging needs and changes in the situation • Were prone to cynical reactions

Characteristics of Demands placed on Decision-makers • Complexity • Existence of many interdependent variables in a given system • System of variables is interrelated if an action that affects or is meant to affect on part of the system will also affect other parts of it • Interrelated guarantees side effects and long-term repercussions • Dynamics – reality changes as do systems • Must observe developmental tendencies and not just a single moment • Invisibility • Not all information is visible • Visible information is often not evidence due to lack of skills or distraction • Ignorance and mistaken hypotheses • Need to understand how certain actions taken will affect future • Structural knowledge – how the variables in the system are related and how they influence one another. • Reality model – totality of assumptions about linkages between variables

Steps in Planning and Action • Formulate Goals • Formulate models and gather information • Prediction and extrapolation • Planning of actions; decision making, and execution of actions • Review of effects of actions and revision of strategy • Never as simple as steps given above because: • Never a simple progression • Iterative process with frequent leaps back and forth • Each step contains problems that need to be solved which will be treated in turn

Setting Goals • Types of goals • Positive or negative • Negative goals tend to be unclear or too general • Convert to positive to gain specificity • General or specific • Convert general into specific • Requires adequate information • Set intermediate goals according to the criterion to be most efficient and with high probability of success • Clear or unclear • Make goals understandable by all • Validate all are in alignment • Simple or multiple • Define links and contradictions between goals. • Rank in terms of urgency and importance • If two goals conflict • May need to find a less-than-ideal solution to achieve a balance • Or solve only problem well and forget the other • Reshape the entire system in such a way that the negative relationships disappear • Implicit or explicit • Pursue implicit goals only achieving explicit goals • Explicitly work for society; implicit work for individuals

Why Failure? • Mainly psychological reasons • We don’t like complexity • We don’t like to deal with complex situations or problems and look for ways to simplify • Slowness of human thinking to deal with reality • Our tendency to economize, take short cuts • We preserve a positive view of our own competence • Significantly shapes our direction and course of our thought process and actions • We think we are better than we really are • Relatively slow speed with which the storage system of the human memory can absorb new material • We don’t think about problems we don’t have

Engineering Entrepreneurship