Engineer to Entrepreneur

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Guest lecture presented to UBC Engineering Capstone Project course, 2013. Common engineering misconceptions about starting a business and entrepreneurship. What is entrepreneurship? The need for competitive advantage. UBC new venture resources.

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Engineer to Entrepreneur

  1. 1. Engineer to Entrepreneur Engineering 499 Capstone Project , Winter 2013 ©David Mayes 1
  2. 2. Engineer to Entrepreneur David Mayes, Lecturer: UBC Faculty of Management ©David Mayes 2
  3. 3. Engineer to Entrepreneur Engineering 499 Capstone Project, Winter 2013 David Mayes Lecturer, Faculty of Management ©David Mayes 3
  4. 4. Lecturer Introduction: UBC Faculty of Management ENGR 499, Engineering Capstone Project ©David Mayes 4
  5. 5. ENGR 499, Engineering Capstone Project 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. ©David Mayes 5
  6. 6. 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 Engineer to Entrepreneur ©David Mayes 6
  7. 7. Engineer to Entrepreneur: Common Misperceptions ENGR 499, Engineering Capstone Project ©David Mayes 7
  8. 8. ENGR 499, Engineering Capstone Project 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
  9. 9. ENGR 499, Engineering Capstone Project Engineer to Entrepreneur: Common Misperceptions 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
  10. 10. ENGR 499, Engineering Capstone Project Engineer to Entrepreneur: Common Misperceptions 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!” ©David Mayes b
  11. 11. ENGR 499, Engineering Capstone Project Engineer to Entrepreneur: Common Misperceptions Misconception # 3: “Marketing is fluff and selling is black magic*” *UBCO Library ©David Mayes 11 Davidow, William, (1986); Marketing High Technology: An Insider’s View, New York, The Free Press
  12. 12. ENGR 499, Engineering Capstone Project Engineer to Entrepreneur: Common Misperceptions 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
  13. 13. ENGR 499, Engineering Capstone Project Engineer to Entrepreneur: Common Misperceptions 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
  14. 14. ENGR 499, Engineering Capstone Project Engineer to Entrepreneur: Common Misperceptions 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
  15. 15. ENGR 499, Engineering Capstone Project Engineer to Entrepreneur: Common Misperceptions 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 ©David Mayes 15
  16. 16. ENGR 499, Engineering Capstone Project Engineer to Entrepreneur Suggested Reading* Uppuluri, Krishna (2011), Engineer to Entrepreneur, The First Flight, self-published, Krishna Uppuluri * UBCO Library ©David Mayes 16
  17. 17. 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 Engineer to Entrepreneur ©David Mayes 17
  18. 18. What is Entrepreneurship? ENGR 499, Engineering Capstone Project ©David Mayes 18
  19. 19. ENGR 499, Engineering Capstone Project 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
  20. 20. ENGR 499, Engineering Capstone Project What is Entrepreneurship? 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.” ©David Mayes 20
  21. 21. Entrepreneurial Incentives ©David Mayes 21 ENGR 499, Engineering Capstone Project What is Entrepreneurship?
  22. 22. 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 ©David Mayes 22 ENGR 499, Engineering Capstone Project What is Entrepreneurship?
  23. 23. 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 ©David Mayes 23 ENGR 499, Engineering Capstone Project What is Entrepreneurship?
  24. 24. 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 ©David Mayes 24 ENGR 499, Engineering Capstone Project What is Entrepreneurship?
  25. 25. 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 ©David Mayes 25 ENGR 499, Engineering Capstone Project What is Entrepreneurship?
  26. 26. Four Routes to Entrepreneurship Entering a family business Opening a franchised business Starting a new business Buying an existing business ©David Mayes 26 ENGR 499, Engineering Capstone Project What is Entrepreneurship?
  27. 27. 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 Engineer to Entrepreneur ©David Mayes 27
  28. 28. The Need for Competitive Advantage ENGR 499, Engineering Capstone Project ©David Mayes 28
  29. 29. ENGR 499, Engineering Capstone Project 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 ©David Mayes 29
  30. 30. ENGR 499, Engineering Capstone Project The Need for Competitive Advantage Evaluative Criteria – Market Factors ©David Mayes 30
  31. 31. ENGR 499, Engineering Capstone Project The Need for Competitive Advantage Evaluative Criteria – Competitive Advantage ©David Mayes 31
  32. 32. HMKNT 401, Introduction of Entrepreneurship The Need for Competitive Advantage Evaluative Criteria - Economics ©David Mayes 32
  33. 33. ENGR 499, Engineering Capstone Project The Need for Competitive Advantage Types of Ideas That Evolve Into Start-ups ©David Mayes 33
  34. 34. HMKNT, Introduction to Entrepreneurship The Need for Competitive Advantage 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
  35. 35. ENGR 499, Engineering Capstone Project The Need for Competitive Advantage 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 ©David Mayes 35
  36. 36. ENGR 499, Engineering Capstone Project The Need for Competitive Advantage 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
  37. 37. ENGR 499, Engineering Capstone Project The Need for Competitive Advantage 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
  38. 38. ENGR 499, Engineering Capstone Project The Need for Competitive Advantage Environmental and Organizational Impact on Opportunity Assessment ©David Mayes 38
  39. 39. ENGR 499, Engineering Capstone Project The Need for Competitive Advantage 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
  40. 40. HMKNT 401, Introduction to Entrepreneurship The Need for Competitive Advantage 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 » Decision: go or no go • Stage 3: Refine the Concept – Detailed business plan » Decision: go or no go ©David Mayes 40
  41. 41. ENGR 499, Engineering Capstone Project The Need for Competitive Advantage 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 ©David Mayes 41
  42. 42. ©David Mayes 42 Mullins, John. (2010) 3rd Edition. The New Business Road Test. Harlow, UK: Prentice Hall, Financial Times Suggested Reading:
  43. 43. Agenda • Engineer to Entrepreneur: • Common Business Misperceptions • What is Entrepreneurship? • The need for Competitive Advantage • UBC Library Resources • UBC Small Business Accelerator ENGR 499, Engineering Capstone Project, Winter 2013 Engineer to Entrepreneur ©David Mayes 43
  44. 44. UBC Entrepreneurship Resources HMKNT 401 Introduction to Entrepreneurship ©David Mayes 44
  45. 45. 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 ©David Mayes 45
  46. 46. Agenda • Engineer to Entrepreneur: • Common Business Misperceptions • What is Entrepreneurship? • Start-up and the need for Competitive Advantage • UBC Library Resources • UBC Small Business Accelerator ENGR 499, Engineering Capstone Project, Winter 2013 Engineer to Entrepreneur ©David Mayes 46
  47. 47. UBC Small Business Accelerator Human Kinetics 401, Introduction to Entrepreneurship ©David Mayes 47
  48. 48. http://www.sba-bc.ca/ UBC Small Business Accelerator ©David Mayes 48
  49. 49. Additional Entrepreneurial Resources ENGR 499, Engineering Capstone Project ©David Mayes 49
  50. 50. • 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
  51. 51. Questions? ©David Mayes 51
  52. 52. ©David Mayes 52
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