Innovation in Small Companies

Innovation inSmall Companies Mike Bartlett MIT Enterprise Forum DFW

The Pace of Innovation is IncreasingMarch 29, 2012 Mike Bartlett 2 2

Innovation Outsourcing “No internal R&D group can possibly predict, evaluate or cover all possible designs or competitive positions.” Outsourcing Innovation: The New Engine of Growth by James Brian Quinn, July 15, 2000March 29, 2012 Mike Bartlett 3

Why Outsource Innovation?• Big company overhead and inertia.• Keeps the R&D cost off the books.• Small companies don’t own a factory.• Buying a company gives good press.Innovation in most Big Companies is just not working!March 29, 2012 Mike Bartlett 4

Where Is the Innovation?• 64% of net new jobs in the US over the last 15 years came from small business and a substantial portion of those new jobs were created by the high growth, high impact small businesses. (Source: Brookings Institution)• Not to be confused with the Main Street businesses: restaurants, car repair shops, dry cleaners, and the myriad of other small operations who contribute little net job growth.March 29, 2012 Mike Bartlett 5

Basic Requirements of a High Growth Start-up Company1. “Fire in the Belly”2. A great idea!3. Technical Skills in building and running a company.4. FundingMarch 29, 2012 Mike Bartlett 6

Who Does a Start-Up? Source: Robert W. Fairlie, Kauffman Index of Entrepreneurial Activity.March 29, 2012 Mike Bartlett 7

Baby Boomers• Boomers have broader job skills• Better access to capital – both their own savings and through personal networks• Also at a life stage where starting a business is less risky and more attractive.76M Boomers retiring could drive a new Entrepreneurship Boom on their own!March 29, 2012 Mike Bartlett 8

Generation Y• Generation Y may be the most entrepreneurial generation ever. Percentage of respondents 18 – 29 years of age who wanted to:March 29, 2012 Mike Bartlett 9

Why the US Leads?• Culture• Direct access to the world’s biggest consumer marketMarch 29, 2012 Mike Bartlett 10

A Great Idea?• Probably the biggest barrier to a successful new company.• Need “Domain Knowledge” from working in a field for several years to identify the needs and gaps.March 29, 2012 Mike Bartlett 11

2011 Angel Investments ($’s)March 29, 2012 Mike Bartlett Source: Angel Resource Institute – 2011 Halo Report 12

Entrepreneurship Training• Can Entrepreneurship be taught?• More than 2,000 college and universities in the United States, about two-thirds of the total, now offer a course in entrepreneurship (Kauffman Foundation).March 29, 2012 Mike Bartlett 13

Basic Requirements of a High Growth Start-up Company1. “Fire in the Belly”2. A great idea!3. Technical Skills in building and running a company.4. FundingMarch 29, 2012 Mike Bartlett 14

Funding Sources• Friends & Family – to validate the product• Angels and Private Investors• Federal Grants - SBIR• VC’s (if you can find one)• The best funding source – Customers!March 29, 2012 Mike Bartlett 15

March 29, 2012 Mike Bartlett 16

Summary• The pace of innovation is accelerating• Driven largely by small companies• Boomers plus Gen Y will lead• Primary areas: Social and Healthcare• It will affect the future for all of us!March 29, 2012 Mike Bartlett 17

How Are You Involved? • Start or Join a Small Company • Help a Start-up – Mentoring – Funding • Teach Entrepreneurship • Help improve the Innovation climate in Texas & the USMarch 29, 2012 Mike Bartlett 18

Innovation in Small Companies

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