University of BelgradeFaculty of Organizational Sciences

Management of Technology and Development

Technological innovation and Entrepreneurship

Students

David Lazi788/13Dunja Kokotovi 522/13Nikola Ivanovi780/12Uro Gordi583/13

Mentor:prof. dr Maja Levi-Jaki

Belgrade, May 2015

ContentsIntroduction3Entrepreneurship3Technological innovation4Global challenges for new ventures in the present6Examples of young, innovative companies7Shazam7WhatsApp9Oculus rift11Conclusion and future predictions14Literature15

Introduction

Entrepreneurship

Entrepreneur is aloanwordfromFrench. It is defined as an individual who organizes or operates a business or businesses. Credit for coining the termentrepreneurgenerally goes to the French economistJean-Baptiste Say, but in fact the Irish-French economistRichard Cantillondefined it first.[footnoteRef:2] Also entrepreneurs are defined as people who take risk, have leadership attributes and more initiative than others. An entrepreneur should have the ability and personality to lead its business in a right direction by planning every single step, and should be able to adapt with the changing environment.An important role of an individual entrepreneur is the role of a creator of new technological and economical combinations[footnoteRef:3]Therefore, they are viewed as innovators in many aspects- innovators of products or services, innovators of technology, etc. Since the entrepreneurship is based on finding and fulfilling new needs on the market it also includes finding new products or services or finding new ways of producing them. [2: http://en.wikipedia.org/wiki/Entrepreneurship] [3: Ekonomika poslovanja, Ili B., Milievi V., 2009 ]

Entrepreneurship can also be defined as thecapacityand willingness todevelop, organize andmanageabusiness venturealong with any of itsrisksinorderto make aprofit. The most obvious example of entrepreneurship is the starting of newbusinesses.In economics, entrepreneurship combined with land, labor, natural resorces and capital can produce profit.Entrepreneurial spirit is characterized by innovation and risk-taking, and is an essential part of a nation's ability to succeed in an ever changing and increasingly competitive global marketplace.Entrepreneurship is very important because of multiple reasons.Entrepreneurs create businesses that hire people. Their businesses require a number of hands to help them translate their vision into reality. It all starts of with one persons vision that turns into a shared vision for the rest of his/her team.Entrepreneurs pay taxes, and that tax paid by entrepreneurs further contributes to the state income that is used to contribute to facilitating state services, i.e. Health Care.Entrepreneurs create demand for products which in turn creates jobs for other businesses.Buying raw materials for their businesses will in return create other businesses and more jobs will be created as well.

Entrepreneurs stimulate the economy by instilling confidence in people and through the jobs and businesses they create, are vital to the GDP equation.By creating job opportunities for people, an entrepreneur provides wealth to the people. They tend to start a new business with innovation like providing the best quality product within low price so that people can save their money and get the best product. This strengthens the economy of a country. For this purpose Government also welcomes entrepreneurs to start their business.Entrepreneurs introduce new technologies in the market. There is always a fresh angle and a new way of doing things / providing services. They create new products and provide new services to the market.Therefore people in society need to switch from the mentality of classifying the small business sector as a separate small entity, when in fact it is the core foundation for big businesses and our economy.

Technological innovation

Technologyis the making, modification, usage, and knowledge oftools,machines, techniques,crafts,systems, and methods of organization, in order to solve a problem, improve a pre-existing solution to a problem, achieve a goal, handle an applied input/output relation or perform a specific function.[footnoteRef:4] It can also refer to the collection of such tools, including machinery, modifications, arrangements and procedures. Technologies significantly affect human as well as other animal species' ability to control and adapt to their natural environments. The term can either be applied generally or to specific areas: examples includeconstruction technology,medical technology, andinformation technology. [4: http://www.journals.elsevier.com/technovation/]

The term innovation means finding new ways of doing something, usually improving the existing processes, systems, products, services or any other thing. It can also be defined as a new thing that breaks onto the market, but we would have to be very careful with using this term, since it is similar yet not equal to terms invention and improvement.When we say invention, we refer to a new created idea or method, while innovation refers to the use of a better and, as a result, novel idea or method.[footnoteRef:5] [5: McKeown, Max 2008]

When we compare terms innovation and improvement we should say that innovation differs from improvement in that innovation refers to the notion of doing something different rather than doing the same thing better.Thetechnological innovation systemis a concept developed within the scientific field ofinnovationstudies which serves to explain the nature and rate oftechnological change.A Technological Innovation System can be defined as a dynamic network of agents interacting in a specific economic/industrial area under a particular institutional infrastructure and involved in the generation, diffusion, and utilization of technology.The approach may be applied to at least three levels of analysis: to atechnologyin the sense of a knowledge field, to aproductor an artifact, or to a set of related products andartifacts aimed at satisfying a particular (societal) function.With respect to the latter, the approach has especially proven itself in explaining why and how sustainable (energy) technologies have developed and diffused into a society, or have failed to do so.[footnoteRef:6] [6: http://en.wikipedia.org/wiki/Technological_innovation_system]

Technological innovation has an increasingly great impact in accelerating the globalization. It increases the rate of the technological and sometimes of social and cultural processes so it changes the environment, the market, companies and customers needs, production, etc.According to we can say there are three types of innovation.[footnoteRef:7] [7: Christensen, Clayton M.(1997),The innovator's dilemma: when new technologies cause great firms to fail]

1) Sustaining innovation- does not create new markets or value networks but rather only evolves existing ones with bettervalue, allowing the firms within tocompeteagainst each other's sustaining improvements. Sustaining innovations may be either "discontinuous"(i.e. "transformational" or "revolutionary") or "continuous" (i.e. "evolutionary"). EvolutionaryAn innovation that improves a product in an existing market in ways that customers are expecting. (E.g.,fuel injection) Revolutionary (discontinuous, radical)An innovation that is unexpected, but nevertheless does not affect existing markets. (E.g., theautomobile)2) Disruptive innovations- Adisruptive innovationis aninnovationthat helps create a newmarketandvalue network, and eventually disrupts an existing market and value network (over a few years or decades), displacing an earlier technology.Sustaining innovations are typically innovations intechnology,whereas disruptive innovations change entiremarkets. For example, the automobile was a revolutionary technological innovation, but it was not a disruptive innovation, because early automobiles were expensive luxury items that did not disrupt the market forhorse-drawn vehicles. The market for transportation essentially remained intact until the debut of the lower pricedFord Model Tin 1908.

Global challenges for new ventures in the present

Most of the challenges and dificulties for new ventures in todays environment come out of its complexity. The environment of any company in the present cannot be looked upon as an isolated microsystem due to the globalization and integration of every aspect of business, economics, politics, social and cultural aspects. There are no more strict boundaries, or we could even say there are no more boundaries at all between economies and industries of the world. If we are focusing on one venture, and mind only local and national influences, we would make a serious mistake, because we would overlook many chances for the business but also many threats or unexpected occurences.So there are many problems related to prediction of future events in the global market, where a sole venture, especially a young and small one, has a minor impact, and where things are changing fast. The second big issue for venures is precisely the speed of the changes, where the trends arent longterm. That means that even start-up which was perspective, successful and promising in the beginig, could fall behind, if it isnt constantly changing simultaneously with the market, technology, competetion and consumers needs.One big issue could also be the right choice of technology for the startup. It should be efficient and effective for the type of product or service the firm is producinng and offering on the market. Defining technology strategy could be very helpful.Technology strategy is the overall plan which consist of objective(s), principles and tactics relating to use of the technologies within a particular organization. Such strategies primarily focus on the technologies themselves and in some cases the people who directly manage them. The strategy can be implied from the organization's behaviors towards technology decisions, and may be written down in a document.[footnoteRef:8] [8: Floyd, S.W. & Wolf, C. (2010) 'Technology Strategy' In: Narayanan, V.K. & O'Connor, G.C. (eds.) Encyclopedia of technology and innovation management]

So the main problem on starting a new venture is the risk, which is tied to many factors. It can be related to the situation on the market, demand for the product/service, especially if it cannot be predicted or it is completely new.Many new business owners have a good idea, but greatly overestimate the size of their potential market. Or perhaps they misunderstand what that market truly wants. Not every idea has a marketor, more importantly, a market thats willing to pay for that idea. Either way, without a product for which consumers are willing to part with cash to own, entrepreneurs will be going nowhere fast.

Examples of young, innovative companies

Some examples of young and innovative companies which have had a lot of success in the all-changing environment due to good ideas, new technologies, effective management and finding satifying new needs among the comsumers are Shazam, WhatsApp, Oculus Rift, Water-Gen, Twitter and many others.

Shazam[footnoteRef:9] [9: http://www.shazam.com/company]

Shazamis a commercial smartphone-based music identification service, with its headquarters in London, England. The company was founded in 1999 by Chris Barton, Philip Inghelbrecht, Avery Wang and Dhiraj Mukherjee.Shazam uses a smartphone's built-in microphone to gather a brief sample of music being played. It creates anacoustic fingerprintbased on the sample, and compares it against a central database for a match. If it finds a match, it sends information such as the artist, song title, and album back to the user. Some implementations of Shazam incorporate relevant links to services such asiTunes, YouTube,SpotifyorZune.In February 2014 IT experts discovered that the Android version of Shazam surreptitiously sends private data to at least two advertising portals.

HistoryThe company was founded in 1999 by Barton and Inghelbrecht, who were students atUniversity of California, Berkeley, and Mukherjee, who worked at a London-based internet consulting firm called Viant. In need of a digital signal processing specialist, the founding team then hired Wang, who was a PhD student fromStanford University. As of September 2012, Wang is the only member of the original team to remain in the company, and serves as Shazam's Chief Scientist. Rich Riley, a former Yahoo! executive, was appointed to the role of CEO in April 2013 to prepare the company for a stock market flotation.Riley replaced Andrew Fisher, who was hired fromInfospaceinto the CEO role in 2005 to strengthen industry partnerships and grow the userbase.Fisher now becomes executive chairman.The first partnership was with Entertainment UK, part of Woolworths, whom they approached to digitise their music catalogue of 1.5 million songs in return for permission to create a proprietary database. As the service grew to have a worldwide userbase, it needed to keep its database up-to-date, which it does by having relationships with labels globally.By December 2008, the database had grown to 8 million songs. In February 2013, Shazam announced a partnership with the music storeBeatport, adding its library ofelectronic musicto the service.On 3 April 2013, Shazam announced an exclusive partnership withSaavn, an Indian online music streaming service. The deal will add nearly 1 million songs inIndian languagesto Shazam's database

Innovations in ShazamShazam for iPhone 2.0 debuted on 10 July 2008, with the launch of Apple's App Store. The free app simplified the service by enabling the user to launch iTunes and buy the song directly if the user was on a Wi-Fi. It was also possible to launch the iPhone YouTube app, if a video was available.In 2008, the service struggled to identify classical music.Shazam launched on theAndroid platformin October 2008. so, the Android app connected toAmazon's MP3 storeinstead of iTunes. Alongside the iOS 3 update in July 2009, Shazam updated its app to include a number of new features: marking the tag with GPS coordinates; sending tags to others as 'postcards', enabling them to buy the song; and Twitter integration.Shazam offers three types ofapplications; a free-to-try program simply called Shazam, their pay-to-play program called Shazam Encore, and their most recent addition called (Shazam)RED, launched in 2009.In late 2009 Shazam launched Shazam Encore and introduced a 5-song limit on the number of tags per month on the free version. However, the limit was removed in late 2011 following a trial on Android devices.Shazam Encore was always unlimited and free of banner ads, until September 2012 when they started adding banner ads listing the words "Presented by" when tagging TV shows. Encore features easy access to play tags in Spotify and Pandora. (Shazam)RED is identical to Shazam Encore in features and price but a portion of the application payment for (Shazam)RED purchases is donated to support HIV/AIDS prevention, as part of theProduct Redcampaign(together with other brands such asNike,Apple,American Express,Converse, and Girl). The campaign's mission is to prevent the transmission of the HIV virus from mother to child by 2015 (the campaign's byline is "Fighting for an AIDS Free Generation").

WhatsApp

WhatsAppis aninstant messagingapp forsmartphonesthat operates under asubscription business model. Theproprietary,cross-platformapp uses theInternetto send text messages, images, video, user location and audio media messages. In January 2015, WhatsApp was the most globallypopular messaging appwith more than 700 million active users.In April 2015, WhatsApp reached800 million active users.WhatsApp Inc., based inMountain View, California, was acquired byFacebookon February 19, 2014, for approx. US$22 billion.

History and innovations in WhatsApp

WhatsApp Inc., was founded in 2009 byBrian ActonandJan Koum, both former employees ofYahoo!. After Koum and Acton leftYahoo!in September 2007, the duo travelled toSouth Americaas a break from work. At one point they applied for a job at Facebook but failed.For the rest of the following years Koum relied on his $400,000 savings from Yahoo. In January 2009, after purchasing an iPhone and realizing that the seven-month-oldApp Storewas about to spawn a whole new industry of apps, he started visiting his friend, Alex Fishman inWest San Josewhere the three would discuss "...having statuses next to individual names of the people," but this was not possible without an iPhone developer, so Fishman introduced Koum to Igor Solomennikov, a developer in Russia that he had found on RentACoder.com. Koum almost immediately chose the name "WhatsApp" because it sounded like "whats up," and a week later on his birthday, on February 24, 2009, he incorporated WhatsApp Inc. in California. In June 2009,Applelaunchedpush notifications, letting developers ping users when they were not using an app. Koum updated WhatsApp so that each time the user changed their statuses, it would ping everyone in the user's network.In August 2009, WhatsApp 2.0 was released with a messaging component and the active users suddenly swelled to 250,000. Koum visitedActon, who was still unemployed while managing another unsuccessful startup and decided to join the company.In October Acton persuaded five ex-Yahoo friends to invest $250,000 in seed funding, and as a result was granted co-founder status and a stake. He officially joined on November 1. After months at beta stage, the application eventually launched in November 2009 exclusively on theApp Store for the iPhone. Koum then hired an old friend who lived in Los Angeles, Chris Peiffer, to make theBlackBerryversion, which arrived two months later.WhatsApp was switched from a free to paid service to avoid growing too fast, mainly because the primary cost was sending verification texts to users. In December 2009 WhatsApp for the iPhone was updated to send photos. By early 2011, WhatsApp was in the top 20 of all apps in Apple's U.S. App Store.The founders agreed to take $7 million fromSequoia Capitalon top of their $250,000 seed funding, after months of negotiation with Sequoia partnerJim Goetz.By February 2013, WhatsApp's user base had swelled to about 200 million active users and its staff to 50. Sequoia invested another $50 million, valuing WhatsApp at $1.5 billion.In November 2013, Whatsapp introduced a new feature known as Read Receipts which alerts senders when their messages are read by recipients. Within a week, Whatsapp introduced an update allowing users to disable this feature.In a December 2013 blog post, WhatsApp claimed that 400 million active users use the service each month.As of 22 April 2014, WhatsApp had over 500 millionmonthly active users, 700 million photos and 100 million videos are shared each day, and the messaging system handles more than 10 billion messages each day.On August 24, 2014, Koum announced on hisTwitteraccount that Whatsapp had over 600 million active users worldwide. WhatsApp added about 25 million new users every month or 833,000 active users per day.With 65 million active users, about 10% of the total worldwide users, India is the largest single country in terms of number of users.On February 19, 2014, months after a venture capital financing round at a $1.5 billion valuation,Facebookannounced it was acquiring WhatsApp for US$19 billion, its largest acquisition to date. Facebook, which was advised by Allen & Co, paid $4 billion in cash, $12 billion in Facebook shares, and an additional $3 billion in restricted stock units granted to WhatsApp's founders (advised byMorgan Stanley),KoumandActon. Employee stock was scheduled to vest over four years subsequent to closing.The transaction was the largest purchase of a company backed by venture capitalists to date. Days after the announcement, WhatsApp users experienced a loss of service, leading to anger across social media.By early January 2015, WhatsApp reached a new milestone of 700 million monthly active users with over 30 billion messages being sent every day.In April 2015,Forbespredicted that between 2012-2018, the telecommunications industry will lose a combine total of $386 billion because ofOTTservices like WhatsApp andSkype. In the same month, WhatsApp had over 800 million active users.

Oculus rift

The Oculus Rift is a new virtual reality headset that lets users step inside their favorite games and virtual worlds. The Rift uses custom tracking technology to provide ultra-low latency 360 head tracking, allowing users to seamlessly look around the virtual world just as they would in real life. Every subtle movement of their head is tracked in real time creating a natural and intuitive experience. The Oculus Rift creates a stereoscopic 3D view with excellent depth, scale, and parallax. Unlike 3D on a television or in a movie, this is achieved by presenting unique and parallel images for each eye. This is the same way eyes perceive images in the real world, creating a much more natural and comfortable experience. It provides an approximately 100 field of view, stretching the virtual world beyond peripheral vision. Users view of the game is no longer boxed in on a screen and is only limited by what his eyes can see. The combination of the wide field of view with head-tracking and stereoscopic 3D creates an immersive virtual reality experience.

History

Through Meant to be Seen (MTBS)'s 3D discussion forums, Palmer Luckey, the founder of Oculus, developed the idea of creating a new head-mounted display that was both more effective than what was then on the market, and inexpensive for gamers.

Coincidentally, John Carmack had been doing his own research and happened upon Luckey's developments. After sampling an early unit, Carmack favored Luckey's prototype and just before the 2012 Electronic Entertainment Expo, Id Software announced that their future updated version of Doom 3, which would be known as BFG Edition, would be compatible with head-mounted display units.During the convention, Carmack introduced a duct taped head-mounted display based on Luckey's Oculus Rift prototype, which ran Carmack's own software. The unit featured a high speed IMU and a 5.6-inch (14 cm) LCD display, visible via dual lenses, that were positioned over the eyes to provide a 90 degrees horizontal and 110 degrees vertical stereoscopic 3D perspective.

The Oculus developer kit was an initial version financed by a Kickstarter campaign, which sought to get the initial Oculus Rift into the hands of developers to begin integration of the device into their games. Since then, four different iterations of the hardware have been revealed to the public.

Developer Kit 1

In August 2012, Oculus announced that the "dev kit" version of the Oculus Rift would be given as a reward to backers who pledged $300 or more on Kickstarter. There was also a limited run of 100 unassembled Rift prototype kits for pledges over $275 that would ship a month earlier.Developer kit preorders were made available for $300 on their website starting on September 26, 2012. These kits sold at a rate of 45 per minute for the first day, before slowing down throughout the week.While the first prototypes of the device used a 5.6-inch (14 cm) screen, the Rift developer kit uses a different 7-inch (18 cm) screen. The panel's pixel switching time is also significantly lower, reducing latency and motion blur when turning one's head quickly. The pixel fill is also better, reducing the screen door effect and making individual pixels less noticeable. The LCD is brighter and the color depth is 24 bits per pixel.The 7-inch screen also makes the stereoscopic 3D no longer 100% overlapping, the left eye seeing extra area to the left and the right eye seeing extra area to the right. The field of view (FOV) is more than 90 degrees horizontal (110 degrees diagonal), which is more than double the FOV of most competing devices, and is the primary strength of the device. The resolution is 1280800 (16:10 aspect ratio), which leads to an effective of 640800 per eye (4:5 aspect ratio). However, since the Rift does not feature a 100% overlap between the eyes, the combined horizontal resolution is effectively greater than 640.The weight of the headset is approximately 379 g, which is an increase of about 90 g in weight due to the increased screen size, and it does not include headphones.On March 25, 2014, Facebook announced that it had agreed to buy Oculus VR for $400 million in cash, $1.6 billion in Facebook stock, and an additional $300 million subject to Oculus VR meeting certain financial targets in a transaction expected to close in the second quarter of 2014.

Developer Kit 2

In March 2014 at GDC, Oculus announced the upcoming Devkit 2 (DK2) which began shipping in July 2014. It features several improvements over the first development kit, such as having a higher-resolution (9601080 per eye) low-persistence pentile AMOLED display, higher refresh rate, head positional tracking, a detachable cable, and the omission of the need for the external control box.In February 2015, Oculus announced that over 100,000 DK2 units had been shipped up until that point.

Upcoming Consumer version

A consumer-oriented version of the Rift is in development, which will be aimed at a general market and feature improved components. Improved head tracking, positional tracking, higher resolution, and wireless operation are some of the features under consideration for the consumer Rift. The consumer version of the Rift will have integrated audio. The headphones will use HRTF audio so that sounds can be better located in a three-dimensional space.

Conclusion and future predictions

The past decade has witnessed a significant rise in popular enthusiasm for entrepreneurs and entrepreneurship. This enthusiasm has been matched in the academic arena, resulting in a significant increase in the amount of research effort being devoted to the subject.' This increased attention seems justified given the growing evidence that new firm creation is a critical driving force of economic growth, creating new jobs, as well as enhancing federal and local tax revenues, boosting exports, and generally increasing national productivity.We can deduce that entrepreneurship, technology and innovation are interrelated, but are not necessarily related as a causal one-way process. These are not sequential concepts; each is a process that builds upon, as well as affects, the other two.Entrepreneurialactivity leads to innovation and then innovation leads totechnological change.From the past experience, available information and current situation we can say with certainty that the changes in the market will be even faster than they were up till now. Since the globalization and integration processes are moving fast forward, it is expected that the boundaries and trade barriers will be easing even more which will lead to even easier capital transfer and investing (which is very important for new ventures). In these conditions it is very easy to get required information and communicate, which makes the market more transparent and lets the consumers choose the best product/service they can get, but also lets entrepreneurs and firms find and implement the best possible technology they can use.The means of acquiring technology are also very important, because the costs and effectiveness of the technology will determine the profit or, in bottom line, the survival of the venture, and there are two possibile ways of obtaining them- buying or making your own technology.One of the most important things in the future will be making sustainable and environmentally-friendly innovations and technologies, since ecology and sustainable growth are present in every aspect of operation nowadays.

Literature

1) Ekonomika poslovanja, Ili B., Milievi V., 20092) McKeown, Max 20083) Christensen, Clayton M.(1997),The innovator's dilemma: when new technologies cause great firms to fail4) Floyd, S.W. & Wolf, C. (2010) 'Technology Strategy' In: Narayanan, V.K. & O'Connor, G.C. (eds.) Encyclopedia of technology and innovation management1) http://www.shazam.com/company2) http://en.wikipedia.org/wiki/Entrepreneurship3) http://www.journals.elsevier.com/technovation/4) http://en.wikipedia.org/wiki/Technological_innovation_system

10