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Murray Slides

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  • 1. Technology Strategy for Start-Ups Professor Fiona Murray Sloan School of Management E52-551 fmurray@mit.edu
  • 2. Technologies Markets How will we create value? Can we capture this value despite competition? Do we have the organizational capabilities necessary to deliver it? Foundations of Technology Strategy
  • 3. Do all scientific ideas have economic potential? Potential Economic Value of idea Value of Scientific idea
    • Not Very Useful
    -Can’t Implement -Cost / Processes -Social Constraints -No “Market” X X X X X X
  • 4. Is it the case that great ideas = pots of money? Economic value captured by the startup Economic value potential created Betamax VHS Philips Xerox Parc
    • Competition
    • Standards
    • Managerial Oversight
    & Investors
    • Licensing Strategy
    X EMI- CT Scanner GE-CT Scanner X X Microsoft
  • 5. Two main areas of technology strategy
    • Value creation
      • Does this technology or scientific idea create something of value for customers?
    • Value capture
      • Can we capture the economic value inherent in this idea in the face of competition?
  • 6. What is a business model?
    • Business model =
      • How do you plan to make money?
    • Way you decide to transform your scientific ideas into economic value
  • 7. The Business Model Mediates Between the Technical and Economic Domains
    • Business Model:
    • ¥ market
    • ¥ value proposition
    • ¥ value chain
    • ¥ cost and profit
    • ¥ value network
    • ¥ competitive strategy
    Technical Inputs: e.g. feasibility, performance Economic Outputs: e.g. value, price, profit Measured in technical domain Measured in social domain
  • 8. Value Creation
    • What is your value proposition?
    • What does this idea do for a group of customers?
    • Valuable attributes belong to products not technologies
    Technology Product/ solution Market
  • 9. Many technologies can be used in different ways ….
    • Which customers are most willing to pay?
    • Where is this the most significant improvement?
    • Which applications are the most technology do-able?
    • Which applications are on the path to progress?
    Technology e.g. e-Ink Product/solution Product/solution Product/solution e.g. Signage e.g. eNews e.g. eBooks
  • 10. Value Capture
    • Can we protect our competitive advantage (value proposition)?
    • How will we deliver value to customers?
    What protective layer can we wrap around our technology, product & customers? Technology Product/ solution Market
  • 11. Four key ideas for start-ups:
    • Intellectual property
      • Controlling the knowledge underlying an innovation
    • Secrecy
      • No-on else knows how to do this
    • Speed
      • Moving rapidly beyond current competition & keeping ahead
    • Lock-in customers
      • Making it costly for customers to switch or becoming the standard
  • 12. Many ways to deliver value to customers …
    • Product or service?
    • How far along the value chain?
    • Interaction with competitive advantage & protection
    Technology e.g. combo-chem Product Service Drug discovery e.g. Library h’ware & s’ware e.g. Library service e.g. Pharmaco firm
  • 13. Evolution of your technology strategy: example of Millennium Build Revenue: Apply technology to different problems thru service contracts and maintain IPR Build Assets: Use alliances to develop key assets & new technologies Firm founding: Based on narrowly defined gene technology Forward Integrate: Move down the value chain internally & thru acquisitions
  • 14. Key Questions that MUST be addressed
    • Does this idea create economic value?
      • What is the value proposition of the product?
      • What is the market segment?
    • Can we capture this economic value?
      • Can we protect our competitive advantage
      • Where in the value chain are we focused – how do we deliver the value?

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