technology entrepreneurship

Tech Entrepreneurship Andrew Maxwell MBA P.Eng Lecture 3

How would you go about monitoring and evaluating the new products being offered by existing companies? Is this a viable technique for generating new ideas? Why or why not?

Which do you think is more important in evaluating a new technology business opportunity, the management or the technology?

Key points from last week
Cognitive foundations
Sources of new opportunities
Market based
Technology based
Dynamics which affect start ups and existing companies
Entrepreneurial process
Decision making process

Agenda for this week
Assessing the need
For products in new companies
For products in existing companies
Market dynamics
Technology adoption patterns
Segmenting market
Identifying first customers (exercise)
Identifying market size
Developing “Go to market strategy”

Assessing the need
For products in new companies
For products in existing companies

Pain killers vs vitamins
Pain killers solve an existing problem of which people are already aware. If they do this better than current solutions, customers need to have them.
Vitamins provide enhancements to current solutions, in some cases providing benefits customers were not even previously aware of, they are therefore nice to have.

Assessing the need
What is the need?
Can you meet it?
Can you sell it for more than it costs you to produce?
How will competitors react?

How do existing companies identify needs:
Talk to existing customers
Look for enhancements to current products.
Focus on improving existing technology

Market Dynamics
Knowledge base: R & D intensive, Locus of Innovation, Innovation process
Market: Size, Growth, Segmentation
Industry: Life cycle, Design stage
Industry structure: Capital intensive, Economies of scale/brand, Concentration, Smaller firms

Limits on existing companies
Core rigidities
Tyranny of current market
User myopia

Technology adoption patterns
Characteristics of adopters
Diffusion of innovation
Crossing the chasm

Bell curve and S curve

Diffusion of innovation
Category
innovators (2.5%),
early adopters (13.5%),
early majority (34%),
late majority (34%)
laggards (16%),
Characteristics
innovators - venturesome, educated, multiple info sources, greater propensity to take risk
early adopters - social leaders, popular, educated
early majority - deliberate, many informal social contacts
late majority - skeptical, traditional, lower socio-economic status
laggards - neighbours and friends are main info sources, fear of debt
Five stage model for the diffusion of innovation:
Knowledge - learning about the existence and function of the innovation
Persuasion - becoming convinced of the value of the innovation
Decision - committing to the adoption of the innovation
Implementation - putting it to use
Confirmation - the ultimate acceptance (or rejection) of the innovation
Source Rogers, E. Diffusion of Innovation 1983

Crossing the chasm
between the Early Adopters and the Early Majority. Many (most) high tech ventures fail trying to make it across this chasm.
􀂾 Early Adopters are the rare breed of visionaries "who have the insight to match an

Segmenting market
Identify the specific applications by business need

Identifying first customers
Make a list of all the identified applications
Develop an understanding of their buying decision
Examine the issues of how to get to these customers and how they are influenced
Identify what resources and time will be required to enter this market.

Identifying market size
Three stages:
Based on initial customer segment, identifying potential of short term market, growth in that market and competitive reactions.
Identifying additional market segments which can be served using the same technology and as much as possible of same infrastructure
Identifying parallel market opportunities
Role of market research and market validation

Example
Heat treatment for repairing varicose veins:
Who is the customer?
What is the route to market?
What does the S curve look like?
How big is the market segment?
How do you drive speed of adoption and long term adoption levels?
What are the secondary or parallel market opportunities?

Exercise
For the specific opportunity, identify:
What need it fills
Is it a pain killer or vitamin
Who will be first customers
What will be the value proposition
For the specific opportunity, identify:
The potential market size in North America for the initial market segment
Additional market segments and quantify them.
(make any assumptions you want but be prepared toio state them)

Opportunities
High speed ink jet technology which can print on glass, ceramics and plastics, creating high quality image which is indestructible (i.e. can be put through a dishwasher).
Cooling technology which directly connects to CPUs in computers, to super cool them, allowing them to be over-clocked for increased performance.
Super sweet sugar, which creates a natural sugar which is four times sweeter than traditional sugar, therefore having one quarter of the calories.
A vehicle immobilization system, which is always on, and can be self installed, significantly reducing the chance of car theft.
A technology which combines photo images with GPS coordinates, providing a web based geo-specific photo archiving tool.
A motor which is water powered, and can therefore be used in environments where electricity or normal motor lubricants create significant problems.
A street hockey net, which is much more robust than traditional nets and can be assembled in less than 1 minute.
A pillow which is automatically cooled, allowing individuals suffering from migraines and other medical conditions significant pain relief

Developing “Go to market strategy”
Importance of personal selling
Crossing the chasm
Wikinomics

Commercialization Roadmap Revenue $$$ cover “sins” Relationships Bring Dollars $$$ to Show it works for the Customer I Believe in you $$$ Money Pursuit Distribution centric  Market centric Customer centric  Distribution centric Technology centric  Customer centric Faith in idea  Technology centric Attitude Shift First Customer Demands Beta Configuration & Testing Customer Driven Features Market Opportunity & Impact Technology Capitalization Demands Licensing Considerations Business Resources Business Proposition Business Market Demands Channel Options Competitive Position Market Dynamics Sales Take the Order. Activate Stakeholder Participation Embed the Customers voice Prove Assumptions Goal Launch Maximize Align Validate S E L L Stages of the CIC process for guiding innovation to be market -ready I N V E N T Critical Factor Assessment Multiple Application Assessment

Opportunity assessment
A short document, identifying and quantifying the opportunity (not the business, not the financials). Provides enough data to decide if it is worth looking at the opportunity in detail, including:
What is the product or service, the underlying technology and the business model?
How have you validated that the market/opportunity exits (personal research, third party feedback)?
Who are current/future potential competitors, how will you compete?
How will you make money and how much can you make?
What are the longer term opportunities for growth?
How much time/resource do you need to get to these levels of results?
What needs to be done to turn this opportunity into a viable venture?
Do you need to attract external finance? If so can you make a strong case for potential investors (including identifying a likely exit strategy)?
Have you created an entrepreneurial team with suitable background and experience?

Food for Thoughts
Explain how the internet enables innovation by enhancing early adoption rates of innovative technologies.
What do you think the manufacturers of hybrid cars should do, to enhance the rate of adoption.
Perform a conjoint analysis on cell phones..

technology entrepreneurship

by andrewmaxwell on Feb 22, 2007

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