introduction to technology entrepreneurship 2009

Technology EntrepreneurshipTheory to Practice Seminar

Tarek Salah KamelManagement of Technology MSc., Nile University

tarek.kamel@nileu.edu.eg

• This introduction training was developed initially for the “Entrepreneurship Education Initiative” between Intel and the Arab Science and Technology Foundation (ASTF) using part of the Intel+UC Berkeley Technology Entrepreneurship Challenge training materials.

• http://entrepreneurship.berkeley.edu/main/GEEI.html

• This customized version for Egypt is for a 1 full-day FREE seminar for Egyptian Universities senior students (Engineering, Science, …etc.) to prepare them to the concepts of Entrepreneurship and Innovation.

AGENDA

1. Introduction to Entrepreneurship 2. Entrepreneurial Process3. Opportunity Identification4. Business Strategy5. Business Plan Writing Basics6. Startup Company Valuation Model7. Introduction to Marketing

1. Introduction to Entrepreneurship

AN ENTREPRENEUR?!

REAL ENTREPRENEURS!

INVENTION VERSUS INNOVATION

INVENTION• It’s is either a concept of a

creation of a novel technology. It could be a product, a process or a previously unknown system.

INNOVATION• It’s is the creation of a new

product, service, or process within an organization. It’s the introduction into the marketplace, either by utilization or by commercialization of a new product, service or process

INVENTION VERSUS INNOVATION

WHAT IS ENTREPRENEURSHIP?

Business Entrepreneurship (Companies) or Social Entrepreneurship (NGOs)

EGYPTIAN EXAMPLES! (BUSINESS & SOCIAL)

WHAT IS ENTREPRENEURSHIP?

A critical component of a complex dynamic process to bring innovations into market

ARE YOU AN ENTREPRENEUR?

Why do you think people want to be entrepreneurs?– .. – ..– ..– ..– ..– ..– ..– ..– ..

HOW YOU KNOW YOU FIT AS AN ENTREPRENEUR?

Check online questionnaire on:– http://www.venturelab.ucf.edu/resources_bizplan.html 1. FastTrac Personal Vision Assessment

Step 1

•Establish Personal Criteria

Step 2

•Establish Professional Criteria

Step 3

•Establish Financial Criteria

Step 4

•Write your Vision Statement

Open File

HOW YOU KNOW YOU FIT AS AN ENTREPRENEUR? Check online questionnaire on:

– http://www.venturelab.ucf.edu/resources_bizplan.html 2. FastTrac Entrepreneurial Readiness Assessment

•Understanding Entrepreneurship (15 Questions)

•Understanding Investors and Business Issues (45 Questions)

•The Start-Up Process (32 Questions)

• You receive full recommendation on your answer for the 92 questions in the assessment that you should thoroughly investigate Open File

THE ENTREPRENEUR

1. Self starter, defines goals as he or she goes alone.

2. Does the important things by himself or herself.

3. Not a good delegator, strong need to control.

4. Charismatic leader, but hard to follow.

5. Extremely strong drive and capacity for work.

6. Reward oriented for money, visible rewards (cars, boats, clubs, etc.) community admiration for accomplishments, prerequisites.

7. Excellent problem-solving abilities.

8. Innovative thinker.

9. Realistic, takes moderate and well calculated risks.

10. Committed to the company.

THE PROFESSIONAL MANAGER

1. Career oriented with well defined goals.

2. Accomplishes tasks through people.

3. A good delegator and motivator.

4. Good leader and people person.

5. Competitive and politically astute.

6. Reward oriented for cash, visible rewards, status, prerequisites.

7. Experience, ability, and accomplishments are evident.

8. Plays by the rules, not a risk taker.

9. Committed to self, more than company.

CASE STUDY: OSBORNE COMPUTER COMPANY

The personal computer (PC) market began in the middle 1970’s.

Adam Osborne decided to package all the PC components together as a portable computer (July, 1981).

In two months the company had its first $1,000,000 in sales.

By the second year the net revenues reached $100,000,000.

Consumers were interested in a larger, more standard 80-characters display

What do you think happened?!

The personal computer (PC) market began in the middle 1970’s.

Adam Osborne decided to package all the PC components together as a portable computer (July, 1981).

In two months the company had its first $1,000,000 in sales.

By the second year the net revenues reached $100,000,000.

Consumers were interested in a larger, more standard 80-characters display

What do you think happened?!

Company Bankruptcy after 6 months!!

Osborne lagged in his R&D efforts to introduce the large screen model

Osborne delayed the generation of needed capital through public offering for 6 months

Kaypro, a competitor, took advantage of the weak points and introduced the larger screen model in the perfect time for market demands.

Osborne announced he will introduce the bigger screen one while still has orders for the 1st model (large inventory) – A serious mistake.

Kaypro offered 5 million shares to the public in 1983 realizing $9 millions from the sale of part of their equity

CASE STUDY: OSBORNE COMPUTER COMPANY LESSONS

Entering a market with a new innovation gives a company an early advantage in sales (Leader)

New product concept creates new markets or alters old markets

If a company competes with innovation, it should plan to continue competing with innovation

All products have a finite life span. Timely product innovation should be part of every management’s technology strategy

The timing of announcements is very important

Capital formation and cash flow are very important for a growing business

Successful new ventures must be able to cope with the rapid market growth and with increasingly tough competition.

2. Entrepreneurial Process

KEY ELEMENTS NEEDED

Founding Team

Resources

Strategy

People

TechnologyMoney

A Business Plan

The Right Skills

The Right Personalities

THE FOUNDING TEAM – AN A TEAM

The Right Personalities

• Everyone should be:• A team player• A hard worker• Curious• Flexible• Good at listening

The Right Skills

• Need to have:• Personal achievers• Creative people• Managers• Domain Experts

RESOURCES

STRATEGY

STRATEGY - THE BUSINESS PLAN

3 Core Questions to Answer:

– What the company is

doing?– Why?– How?

Open File

Elaborate Business Plan

TECHNOLOGY ADOPTION LIFE CYCLE (TALC)

Innovators = Technology Enthusiast. People who are fundamentally committed to new technology … techies.Early Adopters = Visionaries. True revolutionaries in business and government to exploit new tech capabilities.Early Majority = Pragmatist. People who make the bulk of all technology infrastructure purchases and do not love technology for its own sake. They believe in evolution and not revolution.Late Majority = Conservatives. Pessimistic to gain any value from technology investment and are price sensitive and are unwilling to pay for any extra services.Laggards = Skeptics. Not to sell to these people but to sell around them

Laith Kassis (PICTI)

TECHNOLOGY ADOPTION LIFE CYCLE

Laith Kassis (PICTI)

Early Market

Mainstream Market

TheChasm

Crossing the Chasm

LINKING ALL TOGETHER

Early Market

Mainstream Market

TheChasm

Crossing the Chasm

The Valley of DeathScarce funding for early-stage innovation

LINKING ALL TOGETHER

DEVELOPING A NEW MODEL

ACTIONS TO START

Are you ready to start?!

3. Opportunity Identification

WHAT IS SCIENCE AND WHAT IS TECHNOLOGY?

– What ?

– Why?

– How ?

Carlson Consulting

WHAT IS SCIENCE AND WHAT IS TECHNOLOGY?

Technology, more than any other human endeavor, has the power to transform and improve our lives in every way!

– What ?

– Why?

– How ?

Carlson Consulting

TECHNOLOGY AND SOCIETY

SOCIETY, CUSTOMERS & STAKEHOLDERS

BUSINESS

SCIENCE & DISCOVERY

TECHNOLOGY

Carlson Consulting

TECHNOLOGY AND SOCIETY

SOCIETY, CUSTOMERS & STAKEHOLDERS

BUSINESS

SCIENCE & DISCOVERY

TECHNOLOGY

Products

Markets

Carlson Consulting

TECHNOLOGY DYNAMICS

BUSINESS

SCIENCE & DISCOVERY

TECHNOLOGY DYNAMICS

Product A

Product B

Carlson Consulting

TECHNOLOGY DYNAMICS

BUSINESS

SCIENCE & DISCOVERY

TECHNOLOGY DYNAMICS

Product A

Product B

Innovation

TechnologyPUSH

Market PULL

Technology PUSH Unknown value Business evolves Takes time

Market PULL Existing business Instant value

perspective Lower perceived risk

Carlson Consulting

OPPORTUNITY IDENTIFICATION

SOCIETAL MODEL

TECHNOLOGY

ECONOMY

POLITICS

CULTURE

• Societal Trends in:– Technology– Economic Regulation– Social/Cultural Behavior– Politics

• Identified problems• Market Gaps• Technology Forecasting

WHAT ARE THE MAIN GLOBAL TRENDS TODAY?

Technology Progress Economic Growth Improved Healthcare Increasing Mobility Environmental Decline Increasing De-Culturation

How to gain insight in trends business opportunities?

TREND COUPLING MATRIX

Carlson Consulting

TREND COUPLING MATRIX

Carlson Consulting

TREND COUPLING MATRIX - EXAMPLE

Carlson Consulting

CASE STUDY IN GROUPS

• Groups of 5.• For the following trends, try to deduce the coupling matrix:

– Fresh Water shortage in 2015 by 75%– People are using GPS equipment the same they are using mobile today– Google is selling Geo-maps with details up to 20M below sea level.– Visa entry by Arabs to Arab states is canceled– Nanotechnology is able to desalinate salty water at a 90% lower price

than today.– Computer prices are at 90% lower price, with today’s processing power.– 1st human robot assistant came into market in 2015.

“What If?” Scenario Analysis

THE POWER OF TECHNOLOGY FORECASTING

Trend Analysis

Road Mapping

Scanning

Expert Judgment

Technology Foresight

Scenario Planning

Carlson Consulting

FUTURING LESSONS

Cornish’s Lessons: Prepare for what you will face in the future

Anticipate future needs

Use poor information when necessary

Expect the unexpected

Think long term as well as short term

Dream productively

Learn from your predecessors

Carlson Consulting

DO ALL INDUSTRIES HAVE EQUAL OPPORTUNITES?

How to Analyze the Attractiveness of a Certain Industry?!

PORTER INDUSTRY ANALYSIS MODEL – 5 FORCESPORTER MODEL

The Importance of structural analysis of Industries is to relate companies to the industry or industries, in which they are competing!!

•How to position a company within its industry?•How to create an effective strategic planning process?

CASE STUDY: DIGITAL IMAGING IN THE 90s

In 2007180 New Models!

From over 27 vendors were

released

CASE STUDY: DIGITAL IMAGING IN THE 90sExisting Competitors

Company Name Revenues

Apple Computer Inc $9.2 billion

Canon $19.3 billion

Dycam $1.7 million

Eastman Kodak $13.6 billion

Fuji Photo Film Co. $11 billion

Polaroid Corp $2.3 billion

Sony Corp $37 billion

CASE STUDY: DIGITAL IMAGING IN THE 90s Bargaining Powers

Bargaining power of Buyers (low to medium) In 1980’s cost of electronic imaging systems rapidly declined because

user’s tolerances for complexity fell and image quality requirements rose. For Professional photographers & Journalists there were potential

rewards of saving time & money in processing.

Bargaining power of Suppliers (high) High Resolution & Lower cost CCD Sensors were developed at Sony,

Matsushita, NEC, Sharp, Samsung & Goldstar. Image Science research were in corporate laboratories.

CASE STUDY: DIGITAL IMAGING IN THE 90s Potential Entrants

Unique Technological & Competitive Strengths Low Entry Barrier

CASE STUDY: DIGITAL IMAGING IN THE 90s Substitutes

Searching for other products that can perform the same function as the anticipated product. (Medium)

Traditional Camera + Scanner, $800 to $1500 (PC)

Traditional Camera + PhotoCD player, $300 (TV)

Still-video, $1000 to $4000 (TV)

Traditional Video + Frame Grabbers , $350 (PC)

Camcorder, $800 (TV)

CASE STUDY: DIGITAL IMAGING TODAYPlenty of Manufacturers

CASE STUDY: DIGITAL IMAGING TODAYMany Products

75 Models!!

65 Models!!

70 Models!!

60 Models !!

CASE STUDY: DIGITAL IMAGING TODAYMany Products … Which are not differentiated!

180 New Models from over 27 vendors are

released in 2007 alone

CASE STUDY: DIGITAL IMAGING TODAYAPPLY PORTER MODEL

Entry Barrier (High) Economy of Scale. Slow Industry Growth. High Developed Experience. Yet, no Product Differentiation.

Rivalry (Intense) Competition on quality, high specifications, ease of use,

connectivity & price.

Entry Barrier (High) Economy of Scale. Slow Industry Growth. High Developed Experience. Yet, no Product Differentiation.

Rivalry (Intense) Competition on quality, high specifications, ease of use,

connectivity & price.

Buyers bargaining power (High) Mobile phone Cameras are approaching qualities of normal

commercial satisfaction.

Threat from a substitute (High) Mobile Phone cameras

Supplier Bargaining power (still High) Technology components are used in many other industries

THE 5 COMPETITIVE FORCES

Porter Interview Movie

4. Business Strategy

WHAT IS STRATEGY?

The basic purpose of strategy is for a company to make a series of Moves to achieve a Sustainable Competitive Advantage.

What is Strategy?

WHAT IS STRATEGY?

To be effective, the moves require careful analyses of:(i) The industry environment and (ii) The firm’s internal resources, capabilities, and competencies.

“…competitive advantage…is tougher to create and sustain with each passing year….(but)…As hard as it has become to create an edge, some smart organizations are finding new ways to do it…a few standouts …keep creating new competitive advantages, over and over…” Business Week, (Aug. 21-28, 2006, p. 80)

Internal Analysis Tools External Analysis Tools

WHAT IS STRATEGY?

Strategy Long-Term DirectionTactics Short-Term Direction

Strategic Thinking Reasoning about the Long-TermTactical Thinking Reasoning about the Short-Term

Reasoning Inferring consequences from assumptions

Strategy A change-in-direction for long-term future’s prosperity

Long-Term Business Survival requires to strategic capabilities: Ability to Prosper Ability to Change

WHAT TOOLS TO USE TO FORMULATE STRATEGY?

STRATEGIC BUSINESS MODEL

How a company generates profit?

• Target Customers• Fulfillment & Support• Pricing Structure

• Core Competencies• Strategic Assets

• Suppliers/Partners• Other Key Relationships

• Business Mission• Product/Market Scope• Basis for differentiation

Core Strategy Partnership Network

Customer Interface

Strategic Resources

EXAMPLE

5. Business Plan Writing Basics

ONLINE TRAINING ON WRITING YOUR BUSINESS PLAN

Small Business Administration (SBA)“How to Write a Business Plan”: http://app1.sba.gov/training/sbabp/index.htm

Small Business Administration (SBA)“Developing a Successful Business Plan”: http://www.paloalto.com/sba/course.cfm

Small Business Administration (SBA)“Online Training Courses”: http://www.sba.gov/services/training/onlinecourses/index.html

Small Business Administration (SBA)Another Assessment Tool : http://web.sba.gov/sbtn/sbat/index.cfm?Tool=4

3 Core Questions to Answer:

– What the company is

doing?– Why?– How?

BUSINESS PLAN PROCESS OVERVIEW

Step1 • Opportunity Identification

Step2 • Idea Feasibility Analysis (Test Assumptions)

Step3 • Industry and Market Analysis

Step4 • Building an Effective Business Model

Step5• Team and Company Structure, Operations and

Product Development, Marketing Strategy, Technology Strategy, Financial Projections

Step6 • Write and Present the Business Plan

6. Startup Company Valuation Model

3 FACTORS THAT ADD VALUE TO A STARTUP

Adding Technology Value

Adding Market Value

Adding Management Value

7. Introduction to Marketing

IS THIS MARKETING?

Prof. Tarun Sony

RADICAL CHANGES IN MARKETING: CC DV TP

Philip Kotler

Create … Communicate … Deliver … Value … to a Target Market … at a Profit

3 BUSINESS IN MARKETING

Brand Management

Customer Management

Product Management

VALUE CHAIN MODEL OF THOUGHT

Prof. Tarun Sony

Customers

• Estimate Market Potential (size, growth rate)

• Understand Customer Behavior (wants & needs, segmentation, preferences and buying patterns)

Competitors

• Industry Structure Analysis

• Competitor Response Profiles

Company

• Economic Analysis• Company Fit

(strengths, weaknesses, objectives, culture, etc.)

Product Strategy

• Provide goods/services consistent with chosen positioning and target segment

Pricing Strategy• Product

revenue (capture consumer value)

• Communicate value to the customer

• Provide incentives to the channel

• Establish barriers to entry

Promotional Strategy

• Building awareness & get distribution

• Convey information

• Develop positive associations/identity

• Increase intent to purchase

Distribution Strategy• Match

channel services to target market needs

• Motivate and manage channel members’ behavior

• Collect information about end users

A MORE HOLISTIC VIEW

Prof. Tarun Sony

SO WHAT DOES A MARKETING PLAN CONTAIN?

Prof. Tarun Sony

Actionable decisions With backup for decision

• Strategic– Target marketing decisions– Value proposition– Analysis of marketing

opportunities

• Tactical– Product features– Promotion– Merchandising– Pricing– Sales channels– Service

THE INFORMATION TECHNOLOGY (IT) EFFECT

The spread of information and communications technology is fundamentally changing the nature of

marketing strategy and operations.

EXAMPLE: PALM JEBEL ALI

Palm Jebel Ali

Tarek Salah KamelManagement of Technology MSc., Nile University

Tarek.kamel@nileu.edu.eg

Have a clear vision and go achieve it!

Thanks

introduction to technology entrepreneurship 2009

concepts of entrepreneurship

social entrepreneurship

osborne computer company

good leader

good delegator

personal computer pc

technology foundation

portable computer

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