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On Finding Fertile Ground
Ziya G. Boyacigiller
This presentation was created and given by Ziya
Boyacigiller who was leadin...
Finding Fertile Ground
Identifying Extraordinary
Opportunities for New Ventures
by Dr. Scott A. Shane
Ziya G. Boyacıgiller...
It does not take much strength
to do things, but it requires a
great deal of strength to decide
what to do.
Ziya G. Boyaci...
Ziya G. Boyacigiller (c) 2005
EMBA 4
Making of a successful
entrepreneur…
Q: What separates successful
entrepreneur from t...
Ziya G. Boyacigiller (c) 2005
EMBA 5
Improve Odds of Success…
The number one predictor of new
business failure is the indu...
Ziya G. Boyacigiller (c) 2005
EMBA 6
Analyze Industry using “Five
Forces” model
Ziya G. Boyacigiller (c) 2005
EMBA 7
Entry & Exit Barriers
determine quality of returns (profit)
EXIT BARRIERSENTRYBARRIERS
Ziya G. Boyacigiller (c) 2005
EMBA 8
Technology & Success
Generally, entrepreneurs are more
successful if they start
techn...
Ziya G. Boyacigiller (c) 2005
EMBA 9
Technology
From Wikipedia
Technology is a broad concept that deals
with the usage and...
Ziya G. Boyacigiller (c) 2005
EMBA 10
Ziya G. Boyacigiller (c) 2005
EMBA 11
What is Technology?
Technology is the useage of knowledgeknowledge in
ways that make...
Ziya G. Boyacigiller (c) 2005
EMBA 12
Ask yourself:
1. Is there continuous change in the
market, industry?
• Change  Prob...
Ziya G. Boyacigiller (c) 2005
EMBA 13
Features of a Successful
Entrepreneur are…
Despite decades of effort to identify the...
Ziya G. Boyacigiller (c) 2005
EMBA 14
First 2 Rules for
Entrepreneurial Success:
1. Select the right industry
2. Identify ...
Ziya G. Boyacigiller (c) 2005
EMBA 15
Rule 1:
Select the right industry
a) Knowledge conditions
b) Demand conditions
c) In...
Ziya G. Boyacigiller (c) 2005
EMBA 16
Rule 1: Select the right industry
(a) Knowledge conditions
 Level of complexity of ...
Ziya G. Boyacigiller (c) 2005
EMBA 17
Stop! Don’t Do It!
1. Don’t start a business without
investigating how favorable the...
Ziya G. Boyacigiller (c) 2005
EMBA 18
Rule 1: Select the right industry
(b) Demand conditions
 Magnitude of customer dema...
Ziya G. Boyacigiller (c) 2005
EMBA 19
Stop! Don’t Do It!
1. Don’t start a business in a small market;
you can just as easi...
Ziya G. Boyacigiller (c) 2005
EMBA 20
Rule 1: Select the right industry
(c) Industry Life Cycles
 Early-on, competition i...
Ziya G. Boyacigiller (c) 2005
EMBA 21
Sweet Spot

Ziya G. Boyacigiller (c) 2005
EMBA 22
Stop! Don’t Do It!
1. Don’t wait until a business is
mature to enter it.
2. Don’t wa...
Ziya G. Boyacigiller (c) 2005
EMBA 23
Rule 1: Select the right industry
(d) Industry Structure
 Capital intensity vs labo...
Ziya G. Boyacigiller (c) 2005
EMBA 24
Stop! Don’t Do It!
1. Don’t start a business in a capital intensive
industry.
2. Don...
Ziya G. Boyacigiller (c) 2005
EMBA 25
2. Identify valuable
opportunities
a) Changes in technology
b) Changes in political ...
Ziya G. Boyacigiller (c) 2005
EMBA 26
2.Identify valuable opportunities
(a) Changes in technology
 Magnitude of new techn...
Ziya G. Boyacigiller (c) 2005
EMBA 27
2.Identify valuable opportunities
(b) Political and regulatory change
 Productivity...
Ziya G. Boyacigiller (c) 2005
EMBA 28
2.Identify valuable opportunities
(c) Social / demographic change
 Alter peoples’ p...
Ziya G. Boyacigiller (c) 2005
EMBA 29
2.Identify valuable opportunities
(d) Changes in industry structure
 Firms die or m...
Ziya G. Boyacigiller (c) 2005
EMBA 30
How to exploit new technology
These 4 changes can open up opportunities by
allowing ...
Ziya G. Boyacigiller (c) 2005
EMBA 31
Why is knowledge important?
Start-ups can minimize imitation by
keeping trade-secret...
Ziya G. Boyacigiller (c) 2005
EMBA 32
Why did Bill Gates start
Microsoft?
Or, Steve Jobs start Apple?
Or, Husnu Ozyegin st...
Ziya G. Boyacigiller (c) 2005
EMBA 33
Why do some people but not others
identify a Valuable Opportunity:
1. Access to Info...
Ziya G. Boyacigiller (c) 2005
EMBA 34
Idea (+ Execution)
I developed a rule over the years that if I have an
idea (no matt...
Ziya G. Boyacigiller (c) 2005
EMBA 35
Winning at Execution
Requires
 Strong expertise
 Strong network
 Strong motivatio...
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Finding fertile ground

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Finding fertile ground

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Finding fertile ground

  1. 1. On Finding Fertile Ground Ziya G. Boyacigiller This presentation was created and given by Ziya Boyacigiller who was leading Angel Investor and a loved mentor to many young entrepreneurs in Turkey. We have shared it on the web for everyone’s benefit. It is free to use but please cite Ziya Boyacigiller as the source when you use any part of this presentation. For more about Ziya Boyacigiller’s contributions to the start-up Ecosystem of Turkey, please go to www.ziyaboyacigiller.com
  2. 2. Finding Fertile Ground Identifying Extraordinary Opportunities for New Ventures by Dr. Scott A. Shane Ziya G. Boyacıgiller Sabanci Universitesi Yonetim Bilimleri Fakultesi
  3. 3. It does not take much strength to do things, but it requires a great deal of strength to decide what to do. Ziya G. Boyacigiller (c) 2005 EMBA 3 Elbert Hubbard
  4. 4. Ziya G. Boyacigiller (c) 2005 EMBA 4 Making of a successful entrepreneur… Q: What separates successful entrepreneur from the masses that start businesses? A: The selection of the right business concept to exploit a valuable opportunity.
  5. 5. Ziya G. Boyacigiller (c) 2005 EMBA 5 Improve Odds of Success… The number one predictor of new business failure is the industry in which the firm is founded (with retail businesses and restaurants having extremely high failure rates). Q: What to do then?
  6. 6. Ziya G. Boyacigiller (c) 2005 EMBA 6 Analyze Industry using “Five Forces” model
  7. 7. Ziya G. Boyacigiller (c) 2005 EMBA 7 Entry & Exit Barriers determine quality of returns (profit) EXIT BARRIERSENTRYBARRIERS
  8. 8. Ziya G. Boyacigiller (c) 2005 EMBA 8 Technology & Success Generally, entrepreneurs are more successful if they start technology businesses. The professionals in the field, venture-capitalists and serial entrepreneurs, have a reason for picking technology businesses to work on…
  9. 9. Ziya G. Boyacigiller (c) 2005 EMBA 9 Technology From Wikipedia Technology is a broad concept that deals with the usage and knowledge of tools and crafts (processes), and how it affects the ability to control and adapt to the environment. … Other species have also been observed to have created and used technology, including non- human primates, dolphins, and crows.
  10. 10. Ziya G. Boyacigiller (c) 2005 EMBA 10
  11. 11. Ziya G. Boyacigiller (c) 2005 EMBA 11 What is Technology? Technology is the useage of knowledgeknowledge in ways that make it possible to ➦ create new products, ➦ exploit new markets, ➦ use new ways of organizing, ➦ incorporate new raw materials, or ➦ use new processes to meet customer needs. ( “new”  Significantly Differentiated  innovation)
  12. 12. Ziya G. Boyacigiller (c) 2005 EMBA 12 Ask yourself: 1. Is there continuous change in the market, industry? • Change  Problems  Solutions  Knowledge 1. Can we protect our knowledge? 2. Can we capture the value resulting from our knowledge?
  13. 13. Ziya G. Boyacigiller (c) 2005 EMBA 13 Features of a Successful Entrepreneur are… Despite decades of effort to identify the special features of successful entrepreneurs, there really are NONE! Academic research on entrepreneurship has shown that the effect of business opportunities on the performance of new ventures is so large that it swamps the effect of entrepreneur’s characteristics.
  14. 14. Ziya G. Boyacigiller (c) 2005 EMBA 14 First 2 Rules for Entrepreneurial Success: 1. Select the right industry 2. Identify valuable opportunities
  15. 15. Ziya G. Boyacigiller (c) 2005 EMBA 15 Rule 1: Select the right industry a) Knowledge conditions b) Demand conditions c) Industry Life Cycles d) Industry Structure
  16. 16. Ziya G. Boyacigiller (c) 2005 EMBA 16 Rule 1: Select the right industry (a) Knowledge conditions  Level of complexity of the production process (aerospace/higly complex vs. paper-bag/nothing to think about)  New knowledge creation required for products and services (%R&D spending required) (pharmaceutical/R&D intensive vs. dry cleaning/little-to-no R&D)  Codification of knowledge (steel-reinforced-concrete-building design/mostly on paper vs. analog-chip design/mostly in the brain)  Where the innovation that supports new products and services is made (semiconductors [Intel/industry] vs. superconductors [MIT/universities])  Distribution of value added from {manufacturing & marketing} vs. {product development & innovation} (automobiles vs internet software)
  17. 17. Ziya G. Boyacigiller (c) 2005 EMBA 17 Stop! Don’t Do It! 1. Don’t start a business without investigating how favorable the industry is to new firms. 2. Don’t fight the odds. Don’t start a business in an industry that is unfavorable to start-ups.
  18. 18. Ziya G. Boyacigiller (c) 2005 EMBA 18 Rule 1: Select the right industry (b) Demand conditions  Magnitude of customer demand for products or services (“marginal cost”) (major drugs vs minor drugs)  Rate of growth of demand (new customers  low response from incumbents)  Heterogeneity of that demand across customer segments (water vs. clothing) (“niche segments”  growth “under the radar”)
  19. 19. Ziya G. Boyacigiller (c) 2005 EMBA 19 Stop! Don’t Do It! 1. Don’t start a business in a small market; you can just as easily start one in a large market. 2. Don’t start a business in a slow growth market, your competition will respond fiercely. 3. Don’t start a business in an unsegmented market; the incumbents will kill your business.
  20. 20. Ziya G. Boyacigiller (c) 2005 EMBA 20 Rule 1: Select the right industry (c) Industry Life Cycles  Early-on, competition is less  no established leader in market yet  Learning curve disadvantages don’t exist yet in new markets  Standards don’t exist in new markets, gives a chance to new businesses to compete (MS Office vs all others…)  Early is bad, late is bad… Attracting customers when there is double digit growth is easier.
  21. 21. Ziya G. Boyacigiller (c) 2005 EMBA 21 Sweet Spot 
  22. 22. Ziya G. Boyacigiller (c) 2005 EMBA 22 Stop! Don’t Do It! 1. Don’t wait until a business is mature to enter it. 2. Don’t wait until after a dominant design has emerged to start your business.
  23. 23. Ziya G. Boyacigiller (c) 2005 EMBA 23 Rule 1: Select the right industry (d) Industry Structure  Capital intensity vs labor/knowledge intensity (steel vs. textile/game software)  Advertising intensity (scale & time)  Concentration of industry (pharmaceuticals vs. dry cleaning) (powerful incumbents, collusion, market share from smaller competitors)  Average firm size (small size means lower risk, economies of scale in purchasing),
  24. 24. Ziya G. Boyacigiller (c) 2005 EMBA 24 Stop! Don’t Do It! 1. Don’t start a business in a capital intensive industry. 2. Don’t start a business in an advertising intensive business. 3. Don’t start a business in a concentrated industry. 4. Don’t start a business in an industry in which the average sized firms are large.
  25. 25. Ziya G. Boyacigiller (c) 2005 EMBA 25 2. Identify valuable opportunities a) Changes in technology b) Changes in political and regulatory rules c) Changes in social and demographic factors d) Changes in industry structure
  26. 26. Ziya G. Boyacigiller (c) 2005 EMBA 26 2.Identify valuable opportunities (a) Changes in technology  Magnitude of new technology (nanotechnology)  Generality of the change vs single-purpose (laser)  Commercial viability of the change (space shuttle)  Effect of new technology on industry dynamics– changes how companies compete (IP – VoIP, IPTV)
  27. 27. Ziya G. Boyacigiller (c) 2005 EMBA 27 2.Identify valuable opportunities (b) Political and regulatory change  Productivity enhancing change (deregulation of telecom)  Shifts value from one set of economic factors to another – from consumers to manufacturers, non-productive change (body-bags in cars)  Increases demand (car-seats for babies)  Support subsidies and other resources result in reduced costs and make products/services common (technoparks)
  28. 28. Ziya G. Boyacigiller (c) 2005 EMBA 28 2.Identify valuable opportunities (c) Social / demographic change  Alter peoples’ preferences and creating new demand (markets) (women in work-force take-out and frozen food)  Social trend (deodorant)  Demographic trend (population ages  geriatric health care, or Istanbul now is best city for young people)  Shift in perception or demand (chicken with hormones, red-meat raises LDL cholesterol)
  29. 29. Ziya G. Boyacigiller (c) 2005 EMBA 29 2.Identify valuable opportunities (d) Changes in industry structure  Firms die or merge  Firms split or diversify businesses  Firms shift focus (hub-and-spoke operation  point-to-point airlines like Southwest)
  30. 30. Ziya G. Boyacigiller (c) 2005 EMBA 30 How to exploit new technology These 4 changes can open up opportunities by allowing older products and services to be: i. produced with new production methods (mini-mills for steel), ii. using new raw materials (plastics or ceramics replacing metals), iii. organized in new ways (Amazon, Dell), iv. for sale in new markets (shock freezing vegetables).
  31. 31. Ziya G. Boyacigiller (c) 2005 EMBA 31 Why is knowledge important? Start-ups can minimize imitation by keeping trade-secrets (knowledge), which is done more easily when making use of new raw materials, new production methods, new forms of organizing to produce old products and services, and by targeting new markets.
  32. 32. Ziya G. Boyacigiller (c) 2005 EMBA 32 Why did Bill Gates start Microsoft? Or, Steve Jobs start Apple? Or, Husnu Ozyegin start Finansbank?
  33. 33. Ziya G. Boyacigiller (c) 2005 EMBA 33 Why do some people but not others identify a Valuable Opportunity: 1. Access to Information (experts, social networks, customers) 2. Better Information Processing (in digital watches-Swiss vs. Japanese, in operating systems- Xerox vs. Apple) i. Extrapolating from incomplete information ii. Schemas (analogs/antilogs) from prior experience iii. Seeing information as opportunity, not risk iv.iv. CreativityCreativity (seeing what others don’t see)
  34. 34. Ziya G. Boyacigiller (c) 2005 EMBA 34 Idea (+ Execution) I developed a rule over the years that if I have an idea (no matter how creative it may be) I can almost be sure that someone in the world has also thought of it already. Great ideas without the ability to execute are useless. Success comes as much from our ability to execute an idea, as from the idea itself.
  35. 35. Ziya G. Boyacigiller (c) 2005 EMBA 35 Winning at Execution Requires  Strong expertise  Strong network  Strong motivation • discipline and patience • will to succeed • will “to find a way” when faced with challenges

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