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Don C Peterson   The Entrepreneurs Headset Jan 11 V2
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Don C Peterson The Entrepreneurs Headset Jan 11 V2


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This is a presentation I\'ve done a few times for the EMBA students at the University of Iowa. They pretended to really like it.

This is a presentation I\'ve done a few times for the EMBA students at the University of Iowa. They pretended to really like it.

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  • 2. Two Broad Categories of Opportunities“Winner Take All” “Many Winners” Example: Google  Most successful ventures are this type Lower odds of success  Higher odds of success  Dramatic when it works  Finding a niche  Winners accrue greater and  Differentiation is typically a greater market share challenge Big capital investment – VCs  Success is possible even in a seemingly crowded market Unique technology often key  Often low capital investment Speed-to-market  Hustle and quality can make  Network effect of product usage the difference  Patents can be critical
  • 3. Characteristics of “Many Winners” Markets Resource dependencies and/or geographic constraints  Forces industry fragmentation Typically rely heavily on key people  Chicago’s “star” real-estate agents are irrelevant in Minneapolis Often, even the best-known companies can’t get traction in a local market without the right people  Underserved, 2nd or 3rd tier markets can be gold mines
  • 4. Create Your Company’s Iceberg Successful companies are like icebergs. There’s a lot more to them than meets the eye. Many of the keys to success lie below the waterline, in the form of non-obvious, hard-to-replicate processes, cultural attributes, intellectual property and other intangible assets. Together, they enable a way of doing business and, hopefully, a defensible competitive advantage. These critical differences are typically driven by innovation that matters.
  • 5. Sorting Out Innovative IdeasTons of ideas will be generated byyou, your colleagues, yourcustomers, your uncle Fred.Many will suck, a good number willbe worth doing, and a few will be realdifference makers.You need to be able to sort them outquickly and reliably. Time andresources are precious.
  • 6. Make Sure Innovation Matters Can you clearly explain how the proposed innovation creates…  More value for your customer?  Don’t forget about risk reduction, which is often very valuable to customers  Increased barriers to entry for competition?  Without detracting from customer value  Enhanced profitability for your company?  Watch out for unintended consequences that reduce customer value Innovation that fails this test is worse than no innovation at all…  Consumes time and resources for no gain  Might even trigger a major setback
  • 7. Which Ideas to Implement?Evaluate how costly, andhow difficult each idea isto implement.Look for ways to pilotideas at low cost/risk, tovalidate the businessimpact and refine yourtarget.This will enable you toprioritize your “roadmap”of product/serviceenhancements, as wellas your operationalimprovement projects.
  • 8. Innovate Your Business Model Too! Most successful entrepreneurs continually think hard about how to create a differentiated product or service. But some business model features (e.g. pricing structure, contract terms, etc.) are also part of your customer’s experience with your product or service…so they too can be differentiating factors. Other business model features (e.g. employee incentives) can also make a huge impact on your customer’s experience. There are often many ways to create differentiation that matters by having a unique business model…even if your actual product or service is not unique.
  • 9. The Opportunity Filter Economic Value  Tendency to overstate expected revenue, understate costs when starting out Strategic Value  Will this deal improve my position for future opportunities? Opportunity Cost  What will we not be able to do if we pursue this business?  What about if we win it? Odds-To-Win  Do we have a realistic shot? Long-Term Commitment?  Be very careful of these, especially when in unfamiliar territory
  • 10. Making Tough Decisions Decision Trees Be careful not to fool yourself when assigning probabilities. It’s easy to make it come out the way you hope it will.
  • 11. All-Or-Nothing Bets  Pascal’s WagerIf the consequences of a wrongdecision are unbearable,especially if you cannot gaugethe probabilities of differentoutcomes, then it’s not wise tomake your decision using aprobability-based approach.
  • 12. Look for Asymmetrical Upside  Heads, I win!… …Tails, I don’t lose much!*  Look for situations where the penalty for failure is small compared to the reward for success  Most entrepreneurs have failures, so it’s important that your failures don’t eliminate your ability to try again  “Live to fight another day”  Many entrepreneurs don’t spend enough time considering what happens if their venture doesn’t work out  It’s not negative thinking to formulate a disaster plan in advance  Set your walk-away threshold* This saying was coined by a friend of mine, the near-legendary investor and entrepreneur, Mohnish Pabrai
  • 13. Great Reading Different: Escaping the Competitive Herd – Moon  How to succeed in a world where conformity reigns…but exceptions rule. Blue Ocean Strategy – Kim & Mauborgne  Win by playing a new game…that you create Selling the Invisible – Beckwith  Differentiate your intangible product Tuned In – Stull, Myers & Scott  How to figure out what will really hit home with your customers Brand Simple - Adamson  Stake out your unique position in the marketplace The Dahndo Investor – Pabrai  The “Heads I win…Tails, I don’t lose much!” approach to choosing opportunities Success – Gladwell  Entertaining stories about what it really takes to become a true expert The Dip – Goden  How to think about sticking with it vs. moving on The Checklist Manifesto – Gawande  Ensure consistent execution of critical tasks
  • 14. LinkedIn: Don C. PetersonTHANKS & GOOD LUCK! Don Peterson January 2011