Technology Entrepreneurship - Making Business Sense


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Presentation prepared and delivered by Mr. Sohan Babu Khatri to finalists of Pivot Nepal on April 13, 2013 in one of the coaching classes.

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Technology Entrepreneurship - Making Business Sense

  1. 1. Technology EntrepreneurshipMaking Business SenseBy: Sohan Babu KhatriCEO Learn | Consult | ResearchThree H Management
  2. 2. Sohan Babu Khatri - IntroductionProfessional Engagements:• CEO – Three H Management Pvt. Ltd• Director of Board – Grand Bank Nepal Ltd , Just-One-Nepal, SCDRR-NepalAdjunct Faculty:• Ace Insititute of Management• Kathmandu College of Management• London Chamber of Commerce and Industries – International QualificationBackground:• Bachelor’s of Civil Engineering (BE Civil) - Pulchowk Campus, Institute of Engineering, Nepal• Masters of Business Administration (MBA - Finance and Marketing), Bangalore University, India• Certified Financial Manager (CFM), Centre of Financial Management, Bangalore• Licensed International Financial Analyst (LIFA) - Charter Holder – International Research Association, Cambridge, Massachusetts
  3. 3. Technology + Business
  5. 5. COMMON SENSE =
  6. 6. On Ideas If a man makes a better mousetrap than his neighbor, though he builds his house in the woods, the world will make a beaten path to his door. Ralph Waldo Emerson 6
  7. 7. Business Concept The manufacturer who waits for the world to beat a path to his door is a great optimist. But the manufacturer who shows this “mousetrap” (and its value) to the world, keeps the smoke coming out his chimney. O.B. Winters 7
  8. 8. Mother of IDEA ?OPPORTUNITY Learn | Consult | Research
  9. 9. Opportunity Recognition & Business ConceptPaying attention to both the external world and your internal mind set. 10
  10. 10. OPPORTUNITY RECOGNITION An opportunity is not an idea nor is it a business concept. 11
  11. 11. An Opportunity is External• It is in the environment• It is a need to be fulfilled• It is a want to be addressed• It is a fear to be relieved• It is time limited (window of opportunity)• It is not a technology, service, or product but an application to situation 12
  12. 12. Ideas vs. Concepts• Ideas are often seeing a need, want or fear and saying, “Lets meet that”• Ideas are sometimes a technology hunting for an application or “opportunity”• Concepts are when you put a technology together with the customer/market perspective and understand the business and revenue models that lead to sales. 13
  13. 13. Opportunity, Ideas & Concepts• Good ideas are not always good opportunities nor viable concepts.• Concepts are built using ideas & entrepreneurial creativity in real time & address real problems.• Opportunities are attractive, durable, timely, and anchored in a product or service which creates real value for its buyer and end user.• Concepts provide Need or Want Satisfaction, Pain and/or Suffering Relief.• Opportunities yield measurable net benefits to the entrepreneur and to society. 14
  14. 14. Opportunity Recognition• Opportunities are also situational – The Window of Opportunity• Opportunities take form in real world conditions – Changing conditions – Leads and lags – Knowledge gaps – Chaos and/or confusion – Inconsistencies – Uncertainties 15
  15. 15. The Window of Opportunity I was seldom able to see an opportunity until it ceased to be one.
  16. 16. The Window of OpportunityMarket Size(RevenuePotential) Time (Years) 17
  17. 17. Recognizing OpportunitySeek it Actively Learn | Consult | Research
  18. 18. Watch Trends • Social • Political • Economic • Technological • Demographic • Global • Local 19
  19. 19. The External Environment Macro-Environment Industry Demographics Economic Environment Competition Customers FIRM Suppliers Social Substitutes Global Political/Legal Technological 20
  21. 21. Questions to Answer• Can we convert this opportunity into some profitable business concept ?• Is this really an adequate business opportunity and concept?• Is this one I/we want to pursue?• What resources are required to exploit it?• How do I/we acquire them?• How do I/we manage the operation?• How and when do I/we harvest? 22
  22. 22. Differentiating BetweenOpportunities Revenue Potential Small Big C o Obvious Most small Highly n businesses competitive c e High p Black holes potential Not Obvious ventures t s 23
  23. 23. The Ideal Growth Market (Example)1. Over 50 million in total size, 100 million derivable2. Growing at a rate significantly greater than real GNP, 25-50% reasonable3. Sufficiently fragmented or non-competitive to allow a new entry to grow to 25-50 million or more in sales within 5 years4. Amiable to profit making by a new entry at the rate of at least 10% after tax on sales within 2 to 3 years after start up – High technology requires very high contribution margin5. Politically and socially acceptable to traditional sources of finance once established – Bank loans – IPO or sale to larger corporation 24
  24. 24. An adequate top line isfundamental to a modest bottom line. Learn | Consult | Research
  25. 25. Market Realities Impact Opportunities Supply$/UnitPriceCost Demand Quantity/Time Period 26
  26. 26. Harvest Issues (Bottom Line) • Profitability • Positive Cash flow • ROI on Required I • Investor Demands/Expectations • Value at exit • Life style issues –Personal wants –Family issues • Sustainability • Social Value Added • Environmental Value Added 27
  27. 27. Differentiation Issues• Technology• Service• Team, talent, fit• Channels of distribution and marketing• Pricing• Opportunistic, adaptive 28
  28. 28. Principles of Opportunity Seeking • Systematically analyze all sources • Go out: – look, – ask, & – listen • Keep it simple, stay focused • Start small (specific) • Aim for leadership • Be market focused, be market driven • Don‟t do too much at once • Innovate for future • Focus on Opportunity rather than Risk 29
  29. 29. Keep all your five senses active
  30. 30. Don‟t forget your sixth Sense
  31. 31. Concept Feasibility• Compelling Interest• Customer Opportunities• Customers• Venture Concepts• Financial Resources• Entrepreneurial Team• Venture Evaluation 32
  32. 32. Compelling Interest“Choose a job you love, and you will never have to work a day in your life.” –Confucius 33
  33. 33. Customer Opportunities“The secret of life is to be ready for the opportunity when it comes.” –Benjamin Disraeli 34
  34. 34. Customers “I cannot give you the formula for success, but I can give you the formula for failure...which is: try to please everyone.” –Herbert Bayard Swope 35
  35. 35. Venture Concepts "Vision is the art of seeing things invisible.” –Jonathan Swift 36
  36. 36. Financial Resources "Happiness is a positive cash flow.” –Fred Adler 37
  37. 37. Entrepreneurial Team "The true entrepreneur acknowledges that he or she cannot succeed alone." –Dr. An Wang 38
  38. 38. Reality Check "Never tell me the odds." –Han Solo in "Star Wars" 39
  39. 39. Venture Evaluation "Confidence is what you feel before you comprehend the situation." –Old Proverb 40
  40. 40. Success "Success, as I see it, is a result, not a goal." –Gustavae Flaubert 41
  41. 41. SUCCESS CRITERIAIT IS NOT ONLY MONEY!!! • Growth • Profitability • Technological Innovation • Market Impact • Institutionalization of Success 42
  42. 42. Conclusion Be Realistic, but Demand the Possible 43
  43. 43. Some more about opportunity andbusiness concept Learn | Consult | Research
  44. 44. Identifying Opportunities Analyzing the Product- (Service-) Market Scope existing Market (developed) new improve market market diversification; existing penetration; gain extend market scope market share (e.g. go international) Product (Service) develop new products; simultaneous product- product diversification and market new diversification 45
  45. 45. Key Business Concepts Business What is the basic principle behind model the business? Revenue How do you plan to make money? model What are your sources of income? How do you plan create value? Value What is the commercial proposition? proposition What is the customer going to pay for? 46
  46. 46. Developing The Concept Statement• What customer needs and wants are presently going unsatisfied?• How will the requirements of present customers change?• What new end-use applications are likely to emerge?• What new technologies will be used to meet which needs of customer groups? 47
  47. 47. Developing The Concept• What will competitors do and what difference will this make?• What customer needs, wants, and fears are being addressed• What customer groups should the organization be getting in position to serve?• Is it going to be satisfy the bottom line ? For how long ?• How do we grow ? How do we change ? 48
  48. 48. Checklist For The Concept Presentation1. Important and Distinct Features2. Who are the target users/customers ?3. Why will they consume it ?4. Innovation Involved5. Role the concept plays in the industry6. What is the business model ?7. What is the revenue model ?8. How will the customer know you exist ?9. What are the bottom line achievements ?10. Why will your business run sustainably ? 49
  49. 49. Whom to Target ?Know your customers better than yourself Learn | Consult | Research
  50. 50. Market Segmentation: ConsumerMarkets Grouping customers is a more practical way of meeting needs than thinking of customers either as individuals or as one large mass. Groups should comprise those customers that respond to your products and services in similar ways. By planning a business around these customer groups, needs can be served effectively. Geographic Demographic Psychographic Behavioral 51
  51. 51. Consumer Markets: Product Adoption 34% 34% Rate of adoption 13.5% 16% 2.5% Innovators Early Early Late Laggards adopters majority majority 52
  52. 52. Market Segmentation: BusinessMarkets Business markets can be segmented with many of the same variables employed in consumer market segmentation, such as geography, benefits sought, and usage rate. Yet business marketers also use several other variables. Demographic Purchasing Personal variables approaches characteristics Operating Situational variables factors 53
  53. 53. Development of New Product /Customers/Markets Nature of Customers or Markets Technology Old New Old “No Promising Brainer” New Great Risky Potential 54
  54. 54. Sustainability - Growth 55
  55. 55. Basic Product Life Cycle Bad Good Great Risky 56
  56. 56. Venturing into the Unknown Problem A Problem B Problem C 57
  57. 57. Technology Products/ServicesFunctional Capabilities Vs. Benefits Learn | Consult | Research
  58. 58. Technology Assessment Functional Benefits Technology Capabilities 59
  59. 59. Example: Portable PCs►Functional Capabilities ►Benefits – Weight – Portablity – Size/Volume – Effective compute – Processor speed Mhz power – Battery life – Maximum time without power connection 60
  60. 60. Example: Fiberoptic Cable►Functional Capabilities ►Benefits – Low weight/size/cable – Easier to install; lower cost – Less signal attenuation – Fewer re-transmission – High message volume amplifiers capacity – More clear signals – Fast transmission – Easier to trouble shoot & – Immune to cross talk, RFI maintain and EMI 61
  61. 61. Example: DSL Line►Functional Capabilities ►Benefits – Uses existing twisted – No new line installation pair telephone line required – 15-20 times faster than – Enables service 56kbps dial up modem operators to sell more broadband services 62
  62. 62. Example: Email► Functional Capabilities ► Benefits – Multiple addressees – Easy mass mailing – Instantaneous, electronic – No delay transmission – Quick & easy response – One click reply & forward – Minimal – Stored addresses – No paper, no postage, no – Electronic message storage envelopes, no storage cabinets 63
  63. 63. The Value Triad – Be Clear Customer Value PropositionProduct Application 64
  64. 64. Value is what customers buy Learn | Consult | Research
  65. 65. Lifetime Value = Current Value + Potential Value
  66. 66. Example ►Customer: Owner of Bed & Breakfast Inn ►Product: A $350 Hobart table top mixer ►Application: Making pancakes for 10 guests every day ►Value Proposition: – “The Hobart mixer is a faster, more efficient mixer that is sturdier, reliable, and suitable for significant daily use”.
  67. 67. Another Version ►Customer/Buyer: U.S. Army ►User : Military cook/baker ►Application: Baking 500 cakes/day ►Product: $3,500 Large capacity, heavy duty, floor mounted industrial mixer ►Value proposition: – “This industrial mixer provides high capacity, high performance and very long term reliability”.
  68. 68. Technology and Business Learn | Consult | Research
  69. 69. Getting the right balance between technologicalinnovation and business acumen is critical for successful product development.
  71. 71. • Don‟t fall for one more than the other one.• Don‟t fall into Analysis Paralysis.• Don‟t be a better maker and poor seller• Don‟t be a better seller and poor maker• Have a right balance between both• Understand their complimentary relationship• Business and Technology needs to interact with each other better.
  72. 72. Value – ITC - ExampleA. Strategic Benefits• A1. Competitive Advantage A2. Alignment A3. Customer RelationsB. Informational Benefits• B1. Information access B2. Information quality B3. Information flexibilityC. Transactional Benefits• C1. Communications Efficiency C2. Systems Development Efficiency C3. Business Efficiency
  73. 73. Innovation Value Chain and Business Idea Generation Idea Conversion Idea Diffusion
  74. 74. Mobile Apps and Business SenseSome Issues and Cases Learn | Consult | Research
  75. 75. VIRALITY
  76. 76. VIRALITY
  77. 77. Mobile Apps and Business• Consumer app developers have used to efficiently acquire large user bases and why business app developers cannot leverage the same techniques.• Cross-promotional advertising on consumer apps can be a very effective and efficient user-acquisition technique.
  78. 78. Example • Dropbox is the quintessential paradigm of designing virality into a product. Users are incentivized to refer Dropbox because they receive free additional storage for doing so. • Additionally, the act of sharing a file with a friend inherently exposes Dropbox to new potential users and serves as a trigger for customers to talk about the service.
  80. 80. TRIGGERS• Triggers are events that spur an action.• In this particular context, triggers are actions that an app user takes that provide for an opportunity to discuss the application.• Expensify, a mobile app for business users to submit expense reports, has built in two word- of-mouth referral triggers: – 1) every time a user takes a picture of a receipt for expense reporting, they are triggered to talk about the app with the coworkers or clients present; – 2) the act of submitting an expense report triggers an explanation of the product to the person approving the report.
  81. 81. INCENTIVES• Incentives play on the concept that users are much more likely to actively refer a product if they receive some practical value for doing so.• Plangrid, an iPad app for managing construction-site blueprints, uses incentives to spread among the different companies that collaborate on construction sites.• Plangrid‟s value to each site user increases with each additional company and user that joins and adds to the project.• Thus, users have a practical incentive to refer the product to new target users.
  82. 82. VIRALITY INTO WORKFLOW• Lastly, building virality directly into the workflow of how a customer uses an app is a very effective way to expose the app to new potential users.• Doximity, a mobile professional network for physicians, has built virality into its product workflow through its secure messaging capability.• Doctors use Doximity to send HIPAA-compliant messages to other doctors.• Every message sent from a user to a doctor not yet on the platform exposes a new potential user to the product, because the message recipient must install Doximity to read the message.
  83. 83. ENTERPRISE/BUSINESS APP Learn | Consult | Research
  84. 84. KEY FOR ENTERPRISE APPS• Mobile-first business apps have to follow different rules for customer acquisition in order to achieve the scale and marketing efficiency of their consumer-focused brethren.• The key for enterprise apps is to focus on building virality into the product so users directly or indirectly spread the app within their target audience.• The mobile-first business apps that emerge victorious will be the ones that leverage triggers, incentives and workflow to kick their user acquisition flywheel into overdrive.
  85. 85. MOBILE APPS FOR BUSINESS AND ITS VALUETO THEM• Recession proof business: You can make real money now: 1 in 5 sales is currently made using a mobile application. Despite the current difficult economic trading conditions, 50% of mobile searches result in a sale, and it‟s set to grow exponentially• Rising market: The mobile apps market is set to grow to $119 Billion by 2015. Imagine how much money you will be making when the market improves. When the time comes, you‟ll be able to command a substantial share of the market as an established player
  86. 86. ……………• Low cost/low risk investment – it‟s the easiest way to start a business and get selling, requires little or no technical knowledge with our intuitive, user-friendly mobile app template interface• Quick wins – get up and running within 24 hours and start making money instantly with little effort – build a demo mobile app in minutes to show your clients
  87. 87. …………….• Make money while you sleep – Mobile App Reseller accounts get paid by their customers monthly so you can earn money automatically while you are not even working. Once you have a customer they stay a customer.• Secure income now! – get paid by selling repeat monthly mobile applications so you can build your monthly income on a regular basis
  88. 88. • Extends your sales opportunity: Spreads the business risk as it‟s possible to attack virtually any vertical sector so if one market is slow you‟ll find another easily that will pick up the slack• Future-proof your business – you‟ll be able to build a loyal client base. Mobile apps for business will help your clients sell more of their products and services, they can quickly see the return on investment, and will come back for more and more
  89. 89. …………..• Provides opportunity to up-sell and cross-sell – giving you the confidence that you will be able to generate a future income stream for yourself. The full complement of marketing tools provides ample opportunity to sell clients additional services on a continuous basis such as exhibitions, print and display, customer promotions with our “write once, send to all” technology• Peace of mind – fully backed up service by world- leading mobile apps development company Instant App Wizard, means you can roll out products with complete confidence as all IT functions, tutorials, and back-up marketing and support services are provided for you and your clients, now and in the future.
  90. 90. VALUE – EXAMPLESUnderstand others business if its your businessto sell them your product Learn | Consult | Research
  91. 91. 1. Geo-Targeted Push Notifications• A band on tour could notify fans in a particular city that tickets there are nearly sold out or remind concert-goers to show up early so they don‟t miss the opening act• A national chain could easily send city- or region- specific notifications about special offers based on what users in that area are interested in• A restaurant could boost loyalty by sending a special offer to customers who had been in the past year but not in the last two months• A store could announce a sale on umbrellas coupled with a weather alert to nearby users when it‟s predicted to rain soon
  92. 92. 2. Additional Sales Opportunities• One of the single biggest opportunities for businesses to leverage mobile apps is that smartphones have opened a whole new world of shopping and engagement opportunities. Interactions between customers and businesses have grown to become geo-agnostic. The morning commute, waiting in line for movie tickets and sitting in a doctors office are all places people could be using their smartphones to shop your store or engage with your brand.• These pockets of free time that were previously biased toward reading, can now be used by consumers for so much more. A mobile app maximizes opportunities for reaching users in these new pockets of time. A push notification might remind users of a nearly abandoned shopping cart, bringing them back into the shopping experience.
  93. 93. 3. Geo-Targeted Advertising• The classic targeted ad story goes something like this: A potential homeowner is stuck in traffic on his daily commute home and looks out his window to read a sign on a new housing development that says, “If you lived here, you’d be home by now.”• Now multiply that times a billion and you‟ve got the power of modern, smartphone-powered targeted advertising. These smart ads can target users by their specific location, displaying ads that are geographic and contextually optimized.• Businesses can make on-the-fly tweaks to campaigns based on what works in a particular geographic location. They can also display coupons to potential users nearby or help users find the business by advertising directly on a map.
  94. 94. 4. Dynamic Offers• When you tie in technologies like push notifications and geotargeting, magical things start to happen. Businesses can use data collected through geotracking and ad campaigns to deliver just-in-time offers. .• For example, movie theaters and very time-sensitive inventory that goes to waste at a particular time and can‟t be recovered. The theater could track and send a coupon to users who are nearby and looked up information about showtimes but didn‟t make a purchase.• A bar with a slow night could offer an impromptu extended happy hour to past patrons who are nearby.
  95. 95. 5. Pushing Through the Funnel• Ever walked into a store, shopped around a bit, and then walked out without making a purchase? That‟s called a "bounce." Online, users bounce for a variety of reasons and on mobile the reasons are even greater. Users might not have a credit card handy, typing in account information is considered too tedious or they simply get distracted and put their phone back in their pocket.• Fortunately, one way to combat transaction abandonment is through automatic address fill-in. Using a phone‟s GPS, transactional apps can detect a user‟s location and automatically fill in address data.• Seamless, the leading online food delivery service, has been aggressively marketing its mobile apps that automatically detects a user‟s location to fill in a delivery address and display restaurants able to deliver there.
  96. 96. 6. Data Gathering• One of the really powerful tools available to online businesses is that they can easily track every move customers make from the moment a user lands on the site. What engaged users and what turned them off?• Where, exactly, in the online store did a user go and what did they do when they got there?• These are really easy questions for webmasters to answer, but good luck figuring that out in brick-and- mortar store.• That is, unless you‟re using the Wi-Fi signals emitted from smartphones in your customers pockets and purses. Tracking signals from mobile devices is opening a whole new world of analytics and data- gathering opportunities for retailers stuck in the physical world.
  97. 97. 7. Compete Anywhere• Many brick-and-mortar retailers complain about showrooming, the practice whereby shoppers visit a physical store to inspect the goods in person all the while intending to ultimately make their purchase online, where prices are usually cheaper.• While the traditional retailer might be on the losing end of that transaction, the customer and online retailer are winning.• Price comparison tools are helping etailers drive additional traffic and sales. Amazon, for example, even went so far as to offer a $5 discount to shoppers who scanned items using their price comparison tool.
  98. 98. ……………• Mobile apps are helping businesses increase revenue largely by increasing efficiency.• Instead of advertising to broad spectrum, users can be narrowly targeted.• Businesses can lure back customers who haven‟t been in a while but are nearby.• Customers can shop during small pockets of time that would have previously gone to waste.• Businesses can precision-discount inventory in the last moments before it would have gone to waste.• And all these little efficiencies are resulting in more revenue for businesses while, by and large, enhancing the overall experience for users.
  99. 99. For Social AppsSocial EntrepreneurshipAnd Sustainability of Business Learn | Consult | Research
  100. 100. Triple Bottom Line
  101. 101. Triple Target
  102. 102. Triple Achievements
  103. 103. Triple Destinations
  104. 104. The Social Enterprise Spectrum Purely philanthropic Purely commercial Motives, M Appeal to goodwill Mixed motives Appeal to self- ethods & interest Mission driven Mission driven & Goals market driven Market driven Social value Social & economic Economic value value Subsidised rates or Market-rate prices beneficiaries Pay nothing mix of full of payers & those who pay nothing Below-market capital, or Key stakeholders capital Donations & mix of donations & Market-rate capital grants market-rate capital Below-market wages, or Market-rate workforces Volunteers mix of volunteers and compensation fully paid staff Special discounts, or mix suppliers Make in-kind of in-kind & full price Market-rate prices donations donations
  105. 105. Why Create Social Value?• Businesses are motivated by profit-creation whereas social projects have to be driven towards social value creation.• As a result most successful social entrepreneurs that face various challenges share the same philosophy or a strategic service vision, that is, a set of ideas and actions that maximizes the leverage of results over efforts directed toward well-defined targets and supported with highly- focused operating strategies.• It is necessary for Social entrepreneurs not only to create social value for its „customers‟ i.e. its target group but also its „investors‟ i.e. its donors.• Social entrepreneurs generate social capital when they create channels in which individuals can contribute to their communities and to the welfare of others
  107. 107. A Short Story• Two boys walking in a forest• Come across a ferocious grizzly bear charging towards them• The first boy calculated that the bear will overtake them in 17.3 seconds and have no chance of escape
  108. 108. The story continues• The second boy puts on his running shoes• The first says, you are crazy, you cannot outrun the bear• The second says, true, but all I have to do is outrun you.
  109. 109. What it takes to be entrepreneurial in a not-for-profit setting? HAVE THAT OR FACE THE BEAR
  110. 110. Non-Profit View• Pursuit of Opportunity• Rapid Commitment• Ability to Change & Adapt• Multistage Decision Making• Using Other People‟s Resources• Managing Networks & Relationships• Value Creation
  111. 111. For social service and arts organizations remember innovation and being entrepreneurial is as important to you as a technology based business. The alternative is the BEAR.
  112. 112. FINALLY Learn | Consult | Research
  113. 113. The Entrepreneurial Success (ES)FormulaES = [ Idea + (Men x Management x Markets)] x Passion  leadership  effective teambuilding/teamwork  motivation and incentives  efficient decision making structure  appropriate management systems  conductive organizational culture (climate) 117
  114. 114. Paagal – Laxmi Pd. Devkota
  115. 115. ………….. -
  116. 116. …………. -
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  120. 120. Conceive IT ! Believe IT ! Do IT !For that, you need to be MADenough to the world which is NORMAL enough Learn | Consult | Research
  121. 121. Best of Luck !!By: Sohan Babu KhatriCEO Learn | Consult | ResearchThree H