Engineer to Entrepreneur

Engineer to Entrepreneur
Engineering 499 Capstone Project , Winter 2013
©David Mayes 1

David Mayes, Lecturer: UBC Faculty of Management
©David Mayes 2

Engineering 499 Capstone Project, Winter 2013
David Mayes
Lecturer, Faculty of Management
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Lecturer Introduction:
UBC Faculty of Management
ENGR 499, Engineering Capstone Project
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Instructor Introduction
David Mayes: UBC Faculty of Management
LinkedIn Profile: http://www.linkedin.com/in/mayo615
UBC Office: EME 4151 (250) 807-9821 / Hours by appt.
Email: david.mayes@ubc.ca
Mobile: (250) 864-9552
Twitter: @mayo615
Experience:
Executive management, access to venture capital, International business development,
sales & marketing, entrepreneurial mentorship, technology assessment, strategic
planning, renewable energy technology.
Intel Corporation (US/Europe/Japan), 01 Computers Group (UK) Ltd, Mobile Data
International (Canada/Intl.), Silicon Graphics (US), Sun Microsystems (US), Ascend
Communications (US/Intl.), P-Cube (US/Israel/Intl.), Global Internet Group LLP (US/Intl.),
New Zealand Trade & Enterprise.
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Agenda
• Engineer to Entrepreneur:
• Common Business Misperceptions
• What is Entrepreneurship?
• The need for Competitive Advantage
• UBC Library “entrepreneurship”resources
• UBC Small Business Accelerator
ENGR 499, Engineering Capstone Project, Winter 2013
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Engineer to Entrepreneur:
Common Misperceptions
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Engineer to Entrepreneur: Common Misperceptions
Misconception # 1:
“Everybody Loves “Cool New Technology”
• Not exactly!
• Assess commercial viability first!
• Listen to potential customers
• Validate with third party market research
©David Mayes 8

Misconception # 2:
“I need to go-it-alone to insure quality &
design elegance”
• Working alone or only with other
engineers sounds good, but…
• You need a team with diverse skills to
build a thriving business
• Think “business management” from the
outset
©David Mayes 9

Misconception # 3:
“Marketing is fluff and selling is black magic”
• If you build it, they will NOT necessarily
come!
• In reality, many “best designs” lose to
competitors with better marketing
• Intel 8086 was a “DOG!”
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Misconception # 3:
“Marketing is fluff and selling is black magic*”
*UBCO Library
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Davidow, William, (1986); Marketing High Technology: An Insider’s View, New York, The Free Press

Misconception # 4:
“We need to maximize functionality before
we focus on customers”
• You can’t engineer the right functionality
UNTIL you focus on listening to
customers
• Customers will buy only the functionality
they need and want…nothing more
©David Mayes 13

Misconception # 5:
“A good engineer hates unpredictability and
risk”
• A good entrepreneur embraces risk
• Engineer driven solutions are often too
little, too late…if they ever ship!
• Managing risk is good; trying to eliminate
risk is bad
©David Mayes 13

Misconception # 6:
“We can’t worry about making money until
we get it built”
• If you can’t make money, it isn’t a business
• Business and market constraints are key
determinants of “getting it right”
• Getting it right at the wrong cost = failure
©David Mayes 14

Misconception # 7
“Outside financing causes loss of control
and undue pressure to deliver”
• Funding turbocharges a startup company
• “Smart money” adds management value
• Canadian gov’t grants focus on pure R&D
• “Grantsmanship” is bad business strategy
• Angels and VC’s focus on making money
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Suggested Reading*
Uppuluri, Krishna (2011), Engineer to Entrepreneur, The First Flight, self-published, Krishna Uppuluri
* UBCO Library
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Agenda
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What is
Entrepreneurship?
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What is Entrepreneurship?
Entrepreneurial Opportunity
• An economically attractive and timely
opportunity that creates value.
• The best opportunities exists only for the
entrepreneur who has the interest, resources,
and capabilities required to succeed.
©David Mayes 19

The First Consideration: Your “Character”
• Self-analysis: Do you have what it takes to be an
entrepreneur?
• Discuss your personality, capabilities, strengths
and weaknesses with a mentor who knows you.
• Listen!
• Are you a visionary leader?
• What about the chemistry with your team?
• Investors will focus on three things:
• “The team, the team, and the team.”
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Entrepreneurial Incentives
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Drawbacks of Entrepreneurship
• Hard work
– Finding new customers and markets
– Frustrations with financing, government, tax,
technology, and employment issues
• Long hours
– 20% work more than 60 hours per week
• Emotional loneliness
• Strong possibility of failure
• Disruptions to personal life
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Causes of Business Failure
• Lack of managerial and financial abilities
• Fail to adapt to competitive environment
• A broad based study found the following:
– 32% inadequate research and development
– 23% lacked competitive advantage
– 14% uncontrolled costs
– 13% poorly developed marketing strategies
– 10% poor market timing
– 8% succumbed to competitor activities
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Characteristics of Artisan Entrepreneurs
• A person with primarily technical skills and little
business knowledge:
– Paternalistic approach
– Reluctance to delegate
– Narrow view of strategy
– Personal sales effort
– Short planning horizon
– Simple record keeping
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Characteristics of Opportunistic
Entrepreneurs
• A person with both business skills and
technical knowledge:
– Scientific approach to problems
– Willing to delegate
– Broad view of strategy
– Diversified marketing approach
– Longer planning horizon
– Sophisticated accounting
and financial control
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Four Routes to Entrepreneurship
Entering a family
business
Opening a
franchised business
Starting a new
business
Buying an existing
business
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Agenda
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The Need for Competitive
Advantage
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The Need for Competitive Advantage
Creating a New Business
Entrepreneurs may start a new business from
scratch due to several reasons:
• A new product or service
• Favourable conditions such as location,
equipment, employees, suppliers or bankers
• To capitalize on competitors’ weaknesses
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Evaluative Criteria – Market Factors
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Evaluative Criteria – Competitive Advantage
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HMKNT 401, Introduction of Entrepreneurship
Evaluative Criteria - Economics
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Types of Ideas That Evolve Into Start-ups
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HMKNT, Introduction to Entrepreneurship
Competitive Advantage
• A firm offers a product or service that is
perceived by customers to be superior to those of
competitors, thereby promoting firm profitability
• To establish competitive advantage, a business
owner needs to understand the nature of the
environment
– External – what business potentials exist
– Internal – what the firm is able to do
©David Mayes 34

Sustaining Competitive Advantage
• An established, value-creating industry
position that is likely to endure over time
• Markets are dynamic and in constant flux
• Results include superior profitability, increased
market share, and improved customer
satisfaction
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Assessing the Environment
• The Macroenvironment
– A broad environment with its multiple factors
that affect most businesses in a society
• STEEP – Sociocultural, Technological, Economic,
Environmental, Political/Legal
• Industry Environment
– The combined forces that directly impact
a given firm and its competitors
©David Mayes 36

Strategies That Capture Opportunities
• Broad-Based Strategy Options
–Seek an advantage in cost or marketing
• Cost-Advantage Strategy and Options
Requires the firm to be the lowest-cost
producer
» WestJet began as a low-fare, no-frills airline
• Marketing-Advantage Strategy
Emphasizing the uniqueness of the firm’s
product or service
» WestJet is moving to differentiate based on quality service
©David Mayes 37

Core Competencies and Assessing
the Organization
• Core Competencies
• Value-creating organizational capabilities that are unique to
a firm
• Resources versus Capabilities
• Resources are basic inputs that a firm uses to conduct
business (capital, technology, equipment, employees, etc.)
• intangible and tangible resources
• Capabilities are the integration of several resources
which are deployed together to the firm’s advantage.
©David Mayes 39

HMKNT 401, Introduction to Entrepreneurship
Venture Feasibility Assessment Model
• Stage 1: Back-of-the-Envelope concept
– Potential customers, technology available, match to
entrepreneur, financial feasibility
» Decision: go or no go
• Stage 2: Research and Verification
– Detailed analysis of customers, competition, HR
required, technical and financial feasibility
• Stage 3: Refine the Concept
– Detailed business plan
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Taking the Plunge
• A Precipitating Event
An event, such as losing
a job, that moves an
individual to become
an entrepreneur.
Job termination
Job dissatisfaction
Unexpected opportunity
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©David Mayes 42
Mullins, John. (2010) 3rd Edition. The New Business Road Test. Harlow, UK:
Prentice Hall, Financial Times
Suggested Reading:

UBC Library “Entrepreneurship”
Resources
UBC-O Library Resources:
• UBC Library, Industry Research Resource Guide:
http://guides.library.ubc.ca/new_enterprise_development#tabs-6
• UBC, additional Industry and Market Research Resources:
http://toby.library.ubc.ca/subjects/subjpage2.cfm?id=660
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• entrepreneurship@ubc
• http://www.entrepreneurship.ubc.ca/
• UBC Industry Liasion Office (UILO)
• http://www.uilo.ubc.ca/pages/entrepreneurship/voucher
Additional UBC Resources
©David Mayes 50

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