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MG 298 Entrepreneurship. Class Notes and Lecture Handouts. Creating the Opportunity. The obscure, we see eventually. The completely obvious, it seems, takes longer. Edward R Murrow. Foundation Ideas. A complete business model will encompass two foundation concepts:
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MG 298 Entrepreneurship Class Notes and Lecture Handouts
Creating the Opportunity • The obscure, we see eventually. The completely obvious, it seems, takes longer. • Edward R Murrow
Foundation Ideas • A complete business model will encompass two foundation concepts: • 1. A concept of how customer value will be created. • A concept of how the new venture will build, for itself, a structural competitive advantage in providing that value.
Looking at the Business Drivers • 1. Societal needs: Derive from the values, aspirations, and worries (real or imagined) of the culture in which the new enterprise must dwell. • Chiefly concerned with those societal needs that can be expressed in the market place.
Customer Value • This is the sub set of societal needs that can be recognized in the market place • Maybe explicit or latent, unrecognized by most entrepreneurs, or unarticulated by the customers • The value must be “real” • “No enterprise ever rises above the value of the problem it chooses to solve – Stan Lapidus, entrepreneur
Insight and Technology • Special insight into high- quality problems, and the value of their resolution – drivers • Insight alone is never enough – must build a competitive enterprise by 2 means: • 1. Combining technology that is well matched to customer value • 2. Creating an organization to deliver that value and capture enough of it to become self-sustaining
Technology and Innovation • Technology can create a powerful lever in building customer value. • Technology should mesh well with the value sought in the market (not necessarily high tech) • Technology requires a delivery platform – an organization capable of delivering the product or service, and capturing enough of the value to retain interest of owners, employees, investors
Entrepreneurial Innovation • This is the heart of the business model for the new enterprise • Entrepreneurial innovation adds to the technology: processes, people, skills, and equipment needed to deliver value to the customers, and to capture enough of that value to sustain the firm. (Theory of the firm)
Distinctive Competency • The combination of technology and entrepreneurial innovation must be unique to your venture (not available to competitors). It then becomes your distinctive competency *** Important to distinguish between core competency and distinctive competency (a core competency, however powerfully established in an enterprise, does not become distinctive, if rivals can easily duplicate it, or buy it in the market place) Examples of distinctive competency – Infosys, Nordstrom, Southwest Airlines, Dell, Biocon, MindTree, etc.
Basic Forces Driving the Business Model • Success of the new venture becomes self-reinforcing: the better the firm becomes, the better it can become. • All elements of the business model must work towards this end. • Selective neglect of one element of the business model, even while achieving excellence in others, seems to be a recipe for eventual disaster.
The Living Business Model • Most entrepreneurs do not begin with an entire business model, with complete understanding, mature plans, and ready-to-implement steps. • Reality compels evolution • Shape and refine your business model as insight grows and experience accumulates.
