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TECHNOLOGICAL
ENTREPRENEURSHIP
IAN CHASTON
Technology-Driven
vs
Market-Driven Innovation

Technological Entrepreneurship

Ian Chaston
Technological
Entrepreneurship
Technology-Driven vs Market-Driven Innovation

ISBN 978-3-319-45849-6 ISBN 978-3-319-45850-2 (eBook)
DOI 10.1007/978-3-319-45850-2
Library of Congress Control Number: 2016961238
© The Editor(s) (if applicable) and The Author(s) 2017
This work is subject to copyright. All rights are solely and exclusively licensed by the Publisher, whether
the whole or part of the material is concerned, specifically the rights of translation, reprinting, reuse of
illustrations, recitation, broadcasting, reproduction on microfilms or in any other physical way, and trans-
mission or information storage and retrieval, electronic adaptation, computer software, or by similar or
dissimilar methodology now known or hereafter developed.
The use of general descriptive names, registered names, trademarks, service marks, etc. in this publication
does not imply, even in the absence of a specific statement, that such names are exempt from the relevant
protective laws and regulations and therefore free for general use.
The publisher, the authors and the editors are safe to assume that the advice and information in this book
are believed to be true and accurate at the date of publication. Neither the publisher nor the authors or
the editors give a warranty, express or implied, with respect to the material contained herein or for any
errors or omissions that may have been made.
Printed on acid-free paper
This Palgrave Macmillan imprint is published by Springer Nature
The registered company is Springer International Publishing AG
The registered company address is: Gewerbestrasse 11, 6330 Cham, Switzerland
Ian Chaston
University of Auckland
Auckland, New Zealand

v
Since the sub-prime mortgage debacle in America and the sovereign debt
crisis in Europe which resulted in the onset of the Great Recession, very
few firms in mature manufacturing and service sectors have been able
to sustain the level of profitability they enjoyed at the beginning of the
twenty-first century. Furthermore, as the Chinese economy’s growth rate
has slowed, this has caused a massive decline in profitability in commod-
ity sectors such as mining and oil production. However, as dramatically
demonstrated by Apple and Google becoming the world’s most valuable
companies, a commitment to entrepreneurship remains the most effec-
tive strategy for sustaining wealth generation for both organisations and
entire nations.
The benefits offered by entrepreneurship have not gone unnoticed
in the academic community, with most universities now offering mod-
ules or entire programmes dealing with this management philosophy.
However, most programmes exhibit a number of weaknesses. First there
is the tendency to consider entrepreneurship and small business as being
synonymous, when in reality most small firms are non-entrepreneurial,
operating as ‘me too’ propositions offering the same product or service
as their competitors. Second, by focusing upon small and medium-sized
enterprises (SMEs) some of these programmes fail to provide coverage of
the managerial processes in large firms which also engage in entrepreneur-
ial activities. Third, and possibly most importantly, these programmes
Preface

vi Preface

usually focus upon market-driven entrepreneurship. This process begins
with the customers creating demand pressures permitting the identifica-
tion of new market opportunities which provide the basis of entrepre-
neurial activity leading to the development of a radically new product or
service proposition.
The concern which must exist in relation to this latter weakness is that,
as demonstrated by firms such as Apple and Google, the most economi-
cally impactful entrepreneurial outcomes are the result of what Joseph
Schumpeter, the father of modern entrepreneurship theory, described
as ‘creative destruction’, leading to the decline and sometimes the total
disappearance of existing mature industrial sectors. Schumpeter opined
that the most successful form of innovation was technology driven, with
scientific breakthroughs and R&D experimentation preceding market
opportunity analysis or the development of a viable business proposition.
Hence Schumpeter did not see entrepreneurship as a demand-driven
process, but rather that it is entrepreneurship that forces changes in out-
put and consumer tastes. Furthermore he viewed entrepreneurs not as
individuals responding to market opportunities, but as individuals devel-
oping their own personal vision of what will be successful and relying,
when launching their new product, upon intuition that significant mar-
ket demand will eventually develop for their proposition.
Given that Schumpeter’s theories about entrepreneurship are some-
what different to that of market-driven entrepreneurial processes, the
purpose of this text is to provide the reader with additional knowledge
and understanding of the concepts associated with the exploitation and
management of technological entrepreneurship.
Chapter 1 reviews recent economic trends, the nature of entrepreneur-
ship and the differences between technology-driven and market-driven
entrepreneurial activity. Chapter 2 examines the traits and behaviours of
the technological entrepreneur. This is followed in Chap. 3 by coverage
of the leadership issues associated with creating and managing entrepre-
neurial enterprises.
Opportunity recognition is a critical aspect of successful entrepre-
neurship. The nature of this process in relation to idea generation and
subsequent development activities of the technological entrepreneur are
examined in Chap. 4. The source of entrepreneurial opportunities is not

Preface vii
restricted to events within core market systems but can also emerge as the
result of change in the macro-environment. Chapter 5 reviews the nature
of these latter sources of change and examines how they can lead to the
identification of new opportunities.
Chapter 6 examines the nature of the competencies required of indi-
viduals and organisations in order to successfully engage in technological
entrepreneurship. The initial launch of entrepreneurial products or ser-
vices usually occurs based upon an intuitive rather than a logic-based stra-
tegic philosophy. The way emergent strategies are created, develop and
evolve over time as a result of market experience is covered in Chap. 7.
Chapter 8 reviews the nature of the processes associated with the effec-
tive management of technological entrepreneurship. Although develop-
ment of new products and services tends to receive most attention in
the literature, in some industries fundamental change can result from
entrepreneurial process developments which impact the internal value-
added activities within an organisation. Chapter 9 considers exploiting
new knowledge to support the entrepreneurship process.
A characteristic of many developed-nation economies is that the ser-
vice sector now provides the majority of these countries’ GDP. Chapter
10 reviews how technological entrepreneurship has contributed towards
enhancing the growth and expansion of service-sector organisations.
Another characteristic of developed economies is the exponential rise in
the cost of healthcare, reflecting the influence of advances in medical
treatment and the demand pressures caused by population ageing. It is
vital for the ongoing success of these economies that ways can be found
to stabilise or even reduce healthcare costs. Chapter 11 reviews how tech-
nological entrepreneurship is contributing towards healthcare cost stabi-
lisation. This is followed by the final chapter which examines some of the
current advances in science and technology and assesses how exploitation
of these might provide the basis for future entrepreneurial outcomes.
Ian Chaston
Auckland, New Zealand

ix
1 Entrepreneurship 1
2 Technological Entrepreneurs 25
3
Leadership and Structure 49
4
Opportunity Emergence and Evolution 73
5 Macroenvironment 95
6 Competence 119
7 Strategising 141
8 Managing Process 169
9
New Knowledge Acquisition 191
Contents

x Contents
10
The Service Sector 215
11 Healthcare 241
12 Emerging Futures 267
Index289

xi
List of Figures
Fig. 1.1 A comparison of entrepreneurial processes 10
Fig. 1.2
Inputs and outputs within the technological
entrepreneurship ecosystem 18
Fig. 2.1 Alternative new proposition development 37
Fig. 3.1 Alternative innovation philosophies 66
Fig. 5.1 A market system model 96
Fig. 7.1 The strategising process 146
Fig. 7.2 Emergent strategy development and revision 148
Fig. 7.3 Alterative innovation propositions 160
Fig. 7.4 Strategy re-alignment 161
Fig. 10.1
Gap-based quality factors in financial services provision 221

xiii
Table 3.1 Leader role change 55
Table 6.1 Three modes of entrepreneurial decision making 133
Table 7.1 Innovation typology and attributes 157
Table 12.1
Examples of how AI is being utilised in the financial
services sector 281
List of Tables

1
© The Author(s) 2017
I. Chaston, Technological Entrepreneurship,
DOI 10.1007/978-3-319-45850-2_1
1
Entrepreneurship
Introduction
For thousands of years, the exploitation of natural resources, harvesting
of crops and raising of livestock have been important sources of wealth
generation for various nations across the world. The drawback of these
sources of wealth is that these goods are all commodities. Because most
customers are seeking the same standard product proposition, there is
often very little difference between available sources of supply. As a con-
sequence the lowest possible price is usually the prime determinant of
market success.
The role of price is of little concern to commodity producers when
consumption is rising and available production capacity is less than cur-
rent market demand. When these conditions prevail, organisations and
sometimes entire nations can become extremely wealthy. A contrasting
situation, however, occurs when consumption declines and available out-
put is greatly in excess of current need. Under these conditions customers
can demand lower prices and over time the prevailing price may be driven
below the cost of production as producers strive to sustain revenue.

2
In the second decade of the twenty-first century, many of the world’s
commodity markets are facing the adverse impact of falling prices. The
primary cause of this is the slowdown in China, the world’s second-largest
economy, coupled with continued weakness in many developed-nation
markets. For over a decade China’s rapid economic expansion provided
what many perceived as insatiable demand for natural resources such as
coal, oil and iron ore. In response to this new opportunity, numerous
commodity producers invested in output expansion, which in turn led
to economic growth in their respective countries. History provides these
producers with numerous examples of what happens in commodity
markets when consumption declines and output continues to increase.
Yet despite this reality and the apparent certainty that eventually China’s
economic growth would begin to slow, producers continued to invest in
capacity expansion across sectors such as agriculture, energy and min-
ing. The inevitable outcome was the emergence of over-supply in many
of the world’s commodity markets and a consequent dramatic decline
in prices.
As softening in demand emerged, larger producers embarked on cost
cutting which reinforced the downward price spiral. This is despite the
fact that the decline in world iron ore prices has already led to produc-
tion cutbacks, rising unemployment, a fall in the value of the Australian
dollar and a downturn in that country’s economy. Meanwhile global
players such as BHP Billiton and Rio Tinto have continued to sustain
ore production, despite plunging prices within the industry. Based upon
past downturns, observers are assuming this strategy is designed to force
smaller producers out of business, thereby reducing total industry capac-
ity (Anon 2015).In the world’s oil market, prices had already been weak-
ened by the advent of fracking in America (Melek 2015). Declining costs
for fracking led US producers to extract increasing amounts of oil. In
an attempt to halt such activities and drive higher-cost producers out
of business, OPEC nations, led by Saudi Arabia, began extracting more
oil. This appears to have had little impact other than to further depress
world prices and cause the major Western oil giants to cut back on future
exploration plans (Kisswani 2015).

3
White Gold
Case Aims: To illustrate the risks associated with a nation’s reliance upon
commodity goods to sustain economic growth
Since the first arrival of European settlers, wealth generation in New
Zealand has been highly reliant upon agricultural output. Since World War
II dairy farming has become the most dominant agriculture sector. Key
problems for New Zealand are the country’s remote location relative to
overseas markets and the fact that milk is a highly perishable product. This
situation led in 2001 to the creation of Fonterra, which was granted a near
monopoly over the purchase of milk and assigned the task of using milk as
a raw material to move the country further up the food industry value
chain. The ultimate aim was to replicate the success of firms such as Kraft
and Nestle (Baldwin 2015).
Baldwin opined that although raw milk production in New Zealand has
risen dramatically, Fonterra’s success in moving into branded goods has
been limited. As a consequence the strategy of the company has been to
invest in continually expanding its capability of converting raw milk into
milk powder.
New Zealand’s location and reputation for high quality has proved impor-
tant in exploiting the growing demand for milk powder in China. The result
was that as the Chinese economy continued to expand, New Zealand
enjoyed a period of unprecedented economic growth. Furthermore, due to
the country’s conservative banking-sector practices and public-sector spend-
ing, it was not adversely impacted by the Great Recession caused by the
sub-prime mortgage crisis in America and the European sovereign debt cri-
sis. As a consequence by 2013 New Zealand’s self-perception was of a coun-
try enjoying a ‘golden age’ of wealth generation.
As with any commodity, however, Fonterra faced the risk that ongoing
success and profitability relied upon rising market demand and minimal
milk-powder capacity expansion elsewhere in the world. By 2013 other
countries began to expand milk-powder production capacity and seek a
foothold in Asian markets. An added problem was that the decision by the
EU to ban exports to Russia in response to the crisis in the Ukraine has
meant European producers have redirected their efforts to develop new
markets in the Far East.
By 2013 the adverse implications of an economic downturn in China were
very obvious because New Zealand’s immediate neighbour Australia was
already facing problems sustaining export prices for that county’s two key
commodities, coal and iron ore. Despite these warning signals, New Zealand
farmers continued to increase herd size and Fonterra sustained an ongoing
investment plan to further expand milk-powder processing capacity (Martin
2014).
(continued)
1 Entrepreneurship

4

The Industrial Revolution
By the beginning of the eighteenth century Great Britain had become the
world’s wealthiest nation. This was achieved by using the supply sources
provided by the British Empire and the activities of organisations such as
the East India Company to dominate international trade in commodities.
At this time the world’s economies were predominantly agrarian and most
manufacturing was undertaken as cottage industries using hand tools or
very simple, basic machines. This scenario was changed forever, however,
when Great Britain demonstrated that the entrepreneurial application of
new technology to industrialise a society can provide the basis of a new,
even more powerful source of wealth generation (Moykr 2001).
A number of factors contributed to Britain’s role as the birthplace of
the Industrial Revolution. It had significant deposits of coal and iron ore,
which proved essential for industrialisation. Additionally, Britain was not
only a politically stable society but the world’s leading colonial power,
whose colonies served both as a source of low-cost raw materials and as a
marketplace for manufactured goods (Allen 2011).
The country’s textile industry was transformed by industrialisation as
the result of a series of innovations which led to ever-increasing pro-
ductivity requiring less human involvement. James Hargreaves invented
the spinning jenny, a machine that enabled the simultaneous produc-
tion of multiple spools of thread. The machine improved with Samuel
Compton’s development of the spinning mule and subsequently Edward
Cartwright’s power loom which mechanised the process of weaving cloth.
In 2014 the world milk-powder market followed the pattern of other
commodity markets in moving from boom to bust. The weakening Chinese
economy and competition from elsewhere in the world resulted in a col-
lapse in milk-powder demand that required Fonterra to slash farm-gate
milk prices. With dairy products representing almost 25 % of total exports
and milk prices now being lower than the cost of production, recognition
of the adverse impact of these events was reflected in a decline in the value
of the New Zealand currency in 2016 and concerns that these events might
mean the country within a couple of years moving from economic growth
into recession (Gray 2016).
(continued)

5
Together these technological advances permitted the establishment of the
world’s first factory-based production systems (MacCleod 1992).
The other critical development necessary for Britain’s successful indus-
trialisation was the steam engine. Thomas Newcomen developed the
first practical steam engine which was used primarily to pump water out
of mines. The Scottish inventor James Watt improved on Newcomen’s
design enabling the steam engine to power machinery critical to the
creation of Britain’s factories. The steam engine also had an important
role in improving transportation through the development of the steam
locomotive to haul goods and people on railways, and steam power to
replace sail in the world’s vitally important maritime industry (Nuvolari
and Verspagen 2009).
Developments in the iron industry also played a central role in the
Industrial Revolution. Abraham Darby developed a cheaper, easier
method of producing cast iron, using coke in place of charcoal-fired
furnaces. Subsequently Henry Bessemer developed the first inexpensive
process for mass-producing steel. Both iron and steel became essential
materials used to make everything from appliances and tools to machines,
ships, buildings and industrial infrastructure (Berry 1999).
Industrial advances can share the same problem as commodities when
imbalances in supply and demand lead to price volatility. This occurs as
firms and nations, having observed the success of a new industry, eventu-
ally acquire an understanding of the relevant technology and expand total
available production. In some cases this can result in industrial goods
acquiring the same characteristics as natural resources with extreme vola-
tility ultimately leading to the failure of major firms. This outcome is
exemplified by the major downturn in the output of the iron and steel
industry in Western economies during the twentieth century, which has
more recently been exacerbated by China seeking to sustain its revenues
by increasing the export of its lower-priced output.
Even where commoditisation does not occur, once markets enter matu-
rity and capacity continues to increase, the increasing level of competi-
tion may lead to price wars and a massive decline in the scale of wealth
generation in one or more nations. Such proved to be case for British
industry in the late nineteenth century as countries such as Germany
and America adopted a model of generating economic growth through
1 Entrepreneurship

6
industrialisation. Usually the only way to avoid this outcome is to seek
new ways of exploiting technology as the basis for creating new forms of
industrial output. Unfortunately for a number of reasons Britain’s busi-
ness community ignored this reality, and it was left to Germany and the
USA to instigate the next industrial revolution based upon exploiting
chemicals, electricity and the internal combustion engine (Doepke and
Zilibotti 2005).
Entrepreneurship
The French economist Jean-Baptiste Say is usually credited with invent-
ing the term ‘entrepreneurship’ in the early nineteenth century. At the
time the concept was not seen as important by mainstream economists,
who perceived changes in wealth generation as primarily influenced by
factors such as population growth and variation in savings ratios (Dorobat
2014). It was not until the 1920s that the Austrian economist Joseph
Schumpeter challenged classic economic theory, proposing an alterna-
tive paradigm for explaining fundamental economic change. Schumpeter
(1934) focused upon the events surrounding the first industrial revolu-
tion. He noted that profits declined when technologies matured and that
the emergence of new technologies permitted other nations to overtake
Britain’s manufacturing capabilities. He described this process as ‘creative
destruction’, with entrepreneurs exploiting a new technology that pro-
vides the basis for the creation of entirely new industries while at the
same time existing, mature industries become increasingly unable to sus-
tain wealth generation.
Schumpeter’s primary focus was upon the kind of entrepreneurship
in which a new technology such as the internal combustion engine pro-
vides, often during an economically turbulent period, the basis for new
small businesses and as a result of creative destruction can over time
become a nation’s new primary source of wealth generation. These types
of operations were to become known as Schumpeter Mark 1 industries
(Langlois 2007). Schumpeter perceived entrepreneurs not as individuals
responding to market opportunities, but rather as developing their own
personal vision of what will be successful and relying upon their intu-

7
ition, when launching their new product, that significant market demand
will eventually develop for their proposition. He identified five types of
opportunity:
1. The production of new products or totally new qualities of an existing
product
2. The introduction of new production methods
3. The creation of new forms of industrial organisation
4. The opening up of new markets
5. The opening up of new sources of supply.
Subsequently Schumpeter (1954) turned his attention to existing larger
firms. His conclusion was that these latter types of organisations were less
likely to engage in creative destruction. Instead they tended to engage in
‘creative accumulation’, exploiting their accumulated knowledge in the
development of the next generation of products and services. This latter
scenario is seen as a deepening of innovation based around a small num-
ber of large firms continuing to dominate an industrial sector through
sustained exploitation of their superior knowledge, thereby maintaining
market leadership. This can be contrasted with creative destruction which
involves a widening of innovation through new firms entering the mar-
ket and successfully challenging incumbents by exploiting new forms of
technology (Dolfsma and Gerben 2014).
Entrepreneurial Destruction
Case Aims: To illustrate how the emergence of the entrepreneurial Internet-
based sharing economy is adversely impacting existing, long-established
service businesses
Advances in computing, the advent of the Internet and the emergence of
new technologies such as the smartphone can be considered the basis for
the latest industrial revolution. This situation has led to the emergence of
new forms of creative destruction. One form of creative destruction is being
achieved by new companies engaged in what has become known as the
‘sharing economy’. This involves new entrepreneurial companies such as
the taxi firm Uber exploiting the technology to support Web platforms that
bring together individuals who have under-utilised assets with people who
would like to rent those assets in the short term (Cusumano 2015).
(continued)
1 Entrepreneurship

8

An Alternative Perspective
Academic theories are rarely without their critics, and such is the case
with entrepreneurship. Israel Kirzner (1973) rejected Schumpeter’s
proposition that entrepreneurs develop new propositions without initial
Uber started life in San Francisco as a private limousine service. Then in
2010 the company launched a smartphone app that enabled potential cus-
tomers to call for a ride, get a price quote and then accept or reject it. The
providers of the ride are independent drivers who pay Uber a commission
for being linked to customers. The regulations that apply to conventional
taxi companies do not usually apply to Uber drivers, so these individuals can
provide customers with lower-cost rides in smaller, less expensive cars. To
expand their fleet of drivers Uber now helps individual drivers get loans to
buy new cars enabling them to deliver the service. Not being required to
meet certain regulations in relation to the provision of transportation ser-
vices, such as insurance, training of drivers and licences, means Uber can
always outcompete the existing taxi firms. This capability is understandably
perceived as a source of creative destruction to the point that legal action
to ban the company has been introduced in some cities across the world.
Uber drivers can also decline to provide service when they do not like the
requested destination. This also is a behaviour that existing taxi companies
cannot exploit since they are obliged to offer standardised prices and pro-
vide service to anyone who calls (Das 2015; Gevero and Alves 2015).
Another example of the sharing economy is provided by Airbnb. This
started in 2007 in San Francisco when the founders had extra rooms to rent
and decided to offer a low-cost air mattress and bed and breakfast to attend-
ees at a local conference. They created a website targeting cities with confer-
ences and signed up people with spare rooms. Subsequently the company has
expanded by offering the service to anybody looking for low-
cost accommo-
dation. By September 2014, Airbnb had expanded to 800,000 room listings in
190 countries and claims to have attracted 17 million customers. This has been
achieved by a massive expansion in the company’s accommodation portfolio
which now ranges from cheap spare bedrooms to luxury vacation homes
(Helm 2014). Not surprisingly the hotel industry has reacted strongly to this
threat by demanding that city regulators take action over what may be
breaches of regulations regarding private hosting and subletting (Fox 2016).
There is also the potential for a major loss in tax revenues in those cities
where there are a large number of hotels generating a high level of valued-
added taxes. A similar problem exists at a national level because firms are
required to pay corporation tax and it is possible that some Airbnb operators
are not declaring this source of income to their governments (Kurtz 2014).
(continued)

9
reference to the influence of market forces. Kirzner’s viewpoint is that
entrepreneurs are engaged in moving resources from areas of low produc-
tivity to a different area where profitability has the potential to be much
higher. The catalyst for such action is the entrepreneur’s profit motive
and being alert to new market opportunities which can be exploited
through some form of innovation in relation to a product, service or
industrial process. Schumpeter, by contrast, did not see entrepreneurship
as a demand-driven process, but rather as forcing changes in output mix
and consumer tastes.
Available evidence seems to indicate that Schumpeter’s and Kirzner’s
perspectives are equally valid. This perspective can be seen in the distinc-
tion made between technology-driven and market-driven entrepreneur-
ship (Habtay 2012). Technology-push entrepreneurship occurs where
scientific breakthroughs and RD experimentation precede market
opportunity analysis and the development of a viable business proposi-
tion. In contrast, market-driven entrepreneurship begins with customers
creating demand pressure, permitting the identification of new market
opportunities as the basis for the innovation that precedes a firm’s likely
investment in product or service development activities. This form of
entrepreneurial change typically emerges when a market originally created
as the result of disruptive technological entrepreneurship has matured,
and market-driven entrepreneurship based around a revised business
model becomes a more likely strategy for sustaining a firm’s ongoing suc-
cess (Moore 2004).
Habtay proposed that the start point for market-driven entrepreneur-
ship is the discovery of viable new customer value propositions. The sec-
ond component is the identification of a viable customer segment. The
third dimension is a market structure that permits the creation of a busi-
ness model consisting of a system of interdependent activities enabling
the focal firm to effectively exploit the identified market opportunity.
The fourth element is the identification of a strategy which provides a
sustainable advantage over the competition. Hence successful business
model innovation is customer-centric. Nevertheless the exact nature of
the customer value proposition may not be identified in advance of mar-
ket launch, but instead evolves over time as the firm gains greater under-
standing of potential customer needs (McGrath 2010).
1 Entrepreneurship

10
As illustrated in Fig. 1.1, in the case of technology-driven entrepre-
neurship it is new scientific or technological knowledge which results
in a push for development, eventually leading to a commercially viable
outcome. Market opportunity entrepreneurship can be considered as a
pull-
directed process because recognition of potential customer need is
the catalyst which prompts the development activity. It should be recog-
nised, however, that in responding to market pull, exploitation of new
scientific or technological knowledge may be required to create a viable
commercial solution.
Scienfic/
Technological
Discovery
Recognion
of potenal
applicaon
Further
Research
Idea Converted
into a Viable
Technology
Market
Launch
Known
Scienfic or
Technological
Problem
Recognion
of Potenal
Soluon
Exisng
Scienfic/
Technology
Recognion
of New
Applicaon
Market
Opportunity
Idenficaon
Recognion
Of Potenal
Opportunity
Product/
Service
Development
Market Research to Validate
Market
Acceptance
MARKET-PULL ENTREPRENEURSHIP
TECHNOLOGY-DRIVEN ENTREPRENEURSHIP
Fig. 1.1 A comparison of entrepreneurial processes
The Healthy Living Opportunity
Case Aims: To illustrate the approach to market-driven entrepreneurship in
relation to exploiting an identified opportunity to exploit a culture shift
One entrepreneurial opportunity resulting from a cultural shift in recent
years is that of consumers becoming more concerned about their health
and seeking ways of shifting to a healthier diet to reduce the risk of disease
and to improve their general state of health. These consumers have devel-
oped a sceptical attitude towards health claims on products offered by
major firms and have become increasingly interested in natural ingredients
which are known, and sometimes medically proven, to improve health
(Datamonitor 2009).
(continued)

11
Innovation
Innovation contains four dimensions: (1) product versus process; (2) rad-
ical versus incremental; (3) competence-enhancing versus competence-
destroying; and (4) architectural innovation (Datta et al. 2015). Product
innovation results in the outcome of an improved or new product or
service proposition. Process innovation is an internally oriented activity
aiming to improve the effectiveness and efficiencies of production, such
Natural products which have attracted widespread attention are the
‘superfruits’ such as acai, cranberry, blueberry and goji berry, many of which
are believed to offer specific health benefits. One fruit which has attracted
strong interest is the pomegranate. This fruit contains a high proportion of
natural polyphenols, are a powerful antioxidant that may help fight a vari-
ety of conditions including premature ageing, cardiovascular conditions
and certain types of cancer (Todd 2005).
In 2002 LLC of Los Angeles launched a pomegranate juice drink, ‘POM
Wonderful’. The brand name cleverly exploits the name of pomegranate
variety that the company grows in California to imply that this is a superior
product compared with other health juices on the market. The first product
line consisted of pomegranate juice and pomegranate juice blended with
other fruits such as blueberry and mango. The uniquely shaped bottle looks
like two pomegranates stacked on top of each other which is an effective
on-shelf in-store merchandising device. The launch of the juice drink was
extremely successful, with sales going from zero to over $150 million in only
six years. The success of POM has been enhanced by its increased use in the
foodservice arena, with bars starting to serve ‘Pomtini’ (a pomegranate-
based martini) and restaurants adding pomegranate lemonade to their
menus.
The company has expanded its product line to include a range of pome-
granate teas, iced coffee and POMx Pills which contain a higher concentra-
tion of antioxidants. To underpin and enhance the reputation of the entire
product line, the company has funded a wide range of studies across areas
such as blood flow, cardiovascular disease, prostate cancer, erectile dysfunc-
tion and diabetes. The company’s widely publicised involvement in medical
research has increased consumers’ belief in the credibility of POM Wonderful
and the role of antioxidants in keeping people healthy (Datamonitor 2009).
However in 2010 the company encountered problems with the Federal
Trade Commission relating to the availability of scientific evidence to sup-
port the company’s promotional message about how antioxidants contrib-
ute to helping people avoid ill-health (McPherson 2015; Williamson 2015).
(continued)
1 Entrepreneurship

12
as reducing costs or improving the quality of output, with the added
benefit that it may facilitate future product innovation (Schilling 2006).
Radical innovations are totally different from any previous offerings
because they create very different new products, services, processes or
delivery systems. Radicalness is a function of uniqueness when compared
with current offerings or processes. The most radical innovations are
new, exceptionally different products, services or processes. In contrast,
incremental innovation involves adaptations and refinements of existing
products, services, processes or delivery systems (Burgelman et al. 2006).
It is often the case that once a radical innovation has created a unique
competitive advantage, the entrepreneurial organisation may then seek
to sustain market dominance by engaging in incremental innovations.
An example is provided by Microsoft which, having radically altered the
approach to the provision of computer software for PCs, has sought to
retain market leadership through successive releases of its new Windows
operating system and its suite of Office software products.
In competence-building innovation, an organisation’s existing knowl-
edge base can usually be exploited to develop an improved or new propo-
sition. The attraction of this approach is that the activities provide an
incremental financial return on existing competences. In the case of radical
innovation, the organisation often lacks certain key knowledge and com-
petences to effectively complete the development project. Consequently
additional investment will often be necessary to acquire new capabilities.
This activity may be accompanied by existing competences being rendered
obsolete. An example of this outcome in the field of consumer electronics
was the industry’s move from transistors to printed circuit boards.
Organisational architecture is based upon the relationships and inter-
actions which a firm has created to optimise performance within a sup-
ply chain. A new firm will encounter obstacles becoming accepted as a
member of an existing sectoral architecture. One way of overcoming this
problem is to create a new, innovative alternative architecture. Such was
the case with Michael Dell. At a time when other PC manufacturers were
using either a sales force or a network of distributors to generate sales, he
entered the market using direct marketing and mail order to service cus-
tomer needs. Over time Dell has continually sought to add competitive
advantage by further architectural innovation and has created a distinc-
tive global, virtual supply network (Lawton and Michaels 2001).

13
Retaining Leadership in the Innovation Stakes
Case Aims: To illustrate that technological innovation demands a long-term
commitment to retaining market leadership through superior capability
In the 1920s, Henry Ford engaged in technological entrepreneurship by
importing production processes he had observed in Chicago’s meat-packing
plants into the car industry. His new approach was so successful that a new,
rapidly accepted industry convention was established: to be successful, a
high-volume car manufacturer must be capable of utilising mass-
production
manufacturing in order to supply customers with a low-cost, standard prod-
uct. The other convention which emerged was that, due to the cultural
variations between nations, the dominant suppliers in most markets tended
to be domestic producers. Although before World War II manufacturers
engaged in innovation, this tended to be of an incremental nature, leading
to product improvements such as automatic gearboxes, power steering and
hydraulic brakes (McKinely and Starkey 1994).
After World War II, price continued to be the critical factor influencing
the purchasing decision of the average customer. This implied that success-
ful firms needed to maximise manufacturing productivity. Less effort was
put into either conventional or entrepreneurial innovation. Instead, in
order to remain competitive, the primary focus was to achieve economies
of scale. This was usually delivered through industrial mergers between
domestic producers, eventually leading to only one or two firms dominat-
ing each home market in the West (e.g. Ford and General Motors in America;
British Leyland, subsequently Rover Group, in the UK; Volkswagen in
Germany; Fiat in Italy, Renault and Citroen in France). As these firms gained
experience in manufacturing technology to further optimise productivity,
there was a convergence in car design. This led to the standard volume-car
specification being based upon front-wheel drive and four- or six-cylinder
engines (Helper and Henderson 2014).
The OPEC oil crisis of the 1970s sparked much higher customer interest in
fuel economy, offering both European and Japanese producers the oppor-
tunity to break into the largest car market in the world, the USA. While the
US car makers were struggling with the joint problems of learning how to
make smaller cars and manage in what had become a highly unionised pro-
duction environment, the Japanese were left to experiment with un-
conventional concepts such as robotics, Just In Time (JIT) to further enhance
productivity and Total Quality Management (TQM) to improve ‘build qual-
ity’. Their success in these areas permitted them to become global players in
the world car market. Furthermore their new approaches to manufacturing
soon became the standard which other major firms have had to adopt in
order to remain significant high-volume producers.
Many Japanese advances in manufacturing which took firms such as
Toyota and Honda to market leadership were achieved by being willing to
act entrepreneurially and challenge industrial conventions established by
(continued)
1 Entrepreneurship

14
the major Western manufacturers. Once their entrepreneurial ideas were
recognised as being superior to existing conventions, their new ideas were
adopted by other organisations and became the new conventions within a
given sector (Townsend and Calantone 2014).
Long lead times can exist between concept identification, completion of
fundamental research and the ability to launch a new product based upon
a new technology. An example of being prepared to make this level of com-
mitment to technological entrepreneurship is provided by Toyota. Long
before the American or European car manufacturers had exhibited any con-
cerns over rising oil prices, Toyota as the world’s leading automobile manu-
facturer had the strategic insight to change vehicle transportation from a
dependence on hydrocarbons to utilising other types of fuels. Their first
product was the highly successful hybrid, the Prius. Since Toyota launched
the Prius the company has focused on continuous innovation to improve
this vehicle and to expand the company’s hybrid product line (Rapp 2007).
Toyota’s fundamental operating philosophy has always been to build
‘better products at lower costs’. To this end, Toyota has developed unique
production systems designed to eliminate all forms of waste. The knowl-
edge of all individuals within the organisation is highly valued and exploited
to the full through emphasis on improving personal job roles and working
environments. As nations seek to respond to global warming, Toyota has
focused on exploiting technological innovation to manufacture environ-
mentally friendly cars offering lower emissions and improved fuel economy.
Recently the company has exploited Japan’s capabilities in consumer elec-
tronics to evolve the car into a mobile telecommunications device. The ulti-
mate aim is to equip their new cars with a communications platform and a
smart function capability to enhance car safety and to optimise energy con-
sumption (Gao and Low 2014).
The expected next development in alternatives to cars using petrol is the
fuel-cell vehicle, or FCV. These vehicles run on electricity generated by com-
bining hydrogen with oxygen, with only water vapour created as a by-
product. Two major constraints, similar to the initial hurdle facing electric
cars, are the high development costs and the lack of re-fuelling infrastruc-
ture. Toyota’s entrepreneurial solution is to offer its fuel-cell components
and FCV patents to others free of charge until 2020, plus approximately 70
patents for the installation and operation of hydrogen fuelling stations.
Although the move risks Toyota compromising its leadership in FCV tech-
nology, the decision is perceived as less important than the need to stimu-
late an industry-wide effort to rapidly expand the required infrastructure to
achieve market penetration for the new technology. Toyota’s decision
comes ahead of the launch of its new fuel-cell sedan, the hydrogen-powered
Mirai, in the USA and Europe in 2015 (Muller 2015).
(continued)

15
Definitions
Currently there is no single definition of entrepreneurship accepted by
all in the academic community. The Oxford English Dictionary defines
entrepreneurship as the activity of individuals who ‘attempt to profit by
risk and initiative’. Most people would associate this somewhat broad
perspective with a wide range of activities, only some of which would be
perceived as entrepreneurial.
The term entrepreneurship is increasingly appearing in academic lit-
erature and being applied to an ever-widening range of different situa-
tions; some of these applications are, arguably, not entirely appropriate.
For example, the Global Entrepreneurship Monitor (GEM) operated by
Babson and the University of London regards the number of individu-
als indicating an interest in starting a new small business as a measure of
entrepreneurial activity within a nation. This is despite the fact that most
of these individuals will not engage in what could be considered an entre-
preneurial endeavour. Instead the vast majority will become involved in
‘me too’ propositions, such as opening a shop, hairdressing or garden
maintenance.
The topic of entrepreneurship has also become increasingly popular
as a higher education subject. However, examination of course content
reveals that many of these programmes focus exclusively on the creation
and management of small firms. This is despite the fact that some of the
world’s most successful companies are utilising entrepreneurship as the
cornerstone of their activities for acquiring and sustaining competitive
advantage in increasingly volatile and unstable world markets (Fayolle
2008; Trividi 2013).
In an attempt to propose a definition which could provide an accu-
rate framework for determining whether an individual or an organisa-
tion can be considered entrepreneurial, Chaston (2016) focused upon
the fundamental importance of this very specific form of innovation. He
posited that, generically, the outcome of all innovation is some form of
change. In the majority of situations, however, the conventional exploi-
tation of innovation aims to achieve an incremental improvement in a
product, service or process. The magnitude of change does not require
1 Entrepreneurship

16
any significant behaviour shift by customers or the need to acquire new
understanding in order to be able to utilise the innovation. Examples of
conventional innovation in the world of branded goods include a deter-
gent that has better whitening power or the addition of new flavours to
expand the variety of canned soups that are made available to consumers.
This situation can be contrasted with entrepreneurial innovation, where
there is a fundamental change in an existing product, service or process,
or the introduction of a proposition that is totally new to the world. In
such cases significant education of the potential user is necessary to gain
widespread market adoption. Even more importantly, entrepreneurial
innovation will usually have the potential to replace existing proposi-
tions, in some cases on a scale that renders these latter goods completely
obsolete. On this basis, Chaston proposed the following definition:
Entrepreneurship is an activity which disrupts existing market conventions or
leads to the emergence of totally new conventions.
If the validity of the above definition is accepted, the role of technology-
driven change can be defined as follows:
Technological entrepreneurship is an activity involving the exploitation of a
new or existing technology which disrupts existing market conventions or leads
to the emergence of totally new conventions.
Convention Disruption
Case Aims: To illustrate how an entrepreneurial idea can emerge and evolve
over time as the founders gain understanding of the potential for market
disruption
At the beginning of the saga that led to the creation of the first Apple
computer, Steve Jobs’ primary interest was to eventually start a business. It
was his close friend Steve Wozniak who first had the vision of creating a
personal computer (Brandon 2014). This occurred when he attended a
meeting at which there was a presentation of the Altair computer. What
engaged his interest was the Altair’s usage of a microprocessor as the basis
for the machine’s central processing unit. Wozniak had already been design-
ing a terminal with a keyboard and monitor that could be connected to a

17
Entrepreneurial Infrastructure
There is a romantic appeal about the single entrepreneur or small group
of entrepreneurs labouring away in a garage or university laboratory to
produce a completely new technological innovation and the subsequent
launch of a world-beating product or service proposition. Although
such events will continue to occur, in today’s world the frequency can
be expected to remain somewhat low. This is because as technology
becomes more complex, it is increasingly difficult for an individual or
small group of individuals to have the knowledge and resources that are
demanded during the development and commercialisation of radically
new technology-
based propositions.
Two of the world’s wealthiest companies in terms of market value are
Apple and Google, both of which are based in Silicon Valley, California.
The importance of this region as a leading source of entrepreneurial wealth
generation is illustrated by the fact that in 2010, the ZIP code 95054, in
the heart of Silicon Valley, produced more industrial patents than any other
minicomputer. His vision was to locate the microprocessor inside the termi-
nal and the idea of a stand-alone computer was created. Having assembled
his creation, he developed the code needed for the keyboard to display
letters on the computer screen (Isaacson 2011).
At this juncture Steve Jobs proposed that Wozniak’s idea could be used to
make money by building and selling the printed circuit boards which could
carry a microprocessor, offering eight kilobytes of memory that could be
programmed using BASIC. Their first potential customer was Paul Terrell
who owned a computer store, the Byte Shop. He was not impressed with
the circuit board idea and insisted he be supplied with assembled boards on
which the microprocessor was already installed. When Jobs delivered the
boards it became apparent that Terrell had expected a more complete
product which included a power supply, case, monitor and keyboard.
Terrell’s perspective, accepted by Jobs, acted as the catalyst for the vision of
PCs coming in a complete package based upon the hardware being encased,
the keyboard being built in, provision of a power supply and the inclusion
of appropriate software. The outcome was the world-famous PC icon, the
Apple computer. This product successfully challenged and disrupted exist-
ing conventions within the computer industry, eventually providing the
basis for a new world-wide global product convention (McCune 1996).
(continued)
1 Entrepreneurship

18
ZIP code in the USA. This small geographic area is ranked 17th in the
world for patent production when compared to all other nations (Engel
and del-Palacio 2011) and is the world’s leading ‘cluster of innovation’,
resulting in the ongoing success of firms located there. Within this cluster
new technologies are being developed at a much higher rate than elsewhere
in the world, reflecting an environment containing the capital, expertise
and talent able to support the development of new industries and new ways
of doing business. The cluster’s ecosystem is composed of start-ups, profes-
sional service firms that support the start-up process and mature enter-
prises which remain focused upon sustaining long-term growth through
ongoing emphasis upon technology-based entrepreneurship (Fig. 1.2).
In commenting upon the Silicon Valley ecosystem, Engel and del-
Palacio (2015, p. 38) noted that ‘resources of people, capital, and knowl-
edge are highly mobile and the pace of transactions is driven by a relentless
pursuit of opportunity, staged financing, and short business model cycles’.
These researchers posited that Silicon Valley, along with other centres of
innovation elsewhere in the world, are critically reliant upon entrepre-
neurs being supported by an infrastructure constituting venture capital
investors, mature corporations acting as strategic investors, universities,
government, RD centres and specialised service providers. They also
Access to Scienfic and
Technological Advances
Technological
Entrepreneurship
Technological
Entrepreneurial
Capability
Technological
Infrastructure
Exisng Market
Opportunies
New Market
Opportunies
Inter-organisaonal
Collaborave Environment
New to the World
Opportunies
Fig. 1.2 Inputs and outputs within the technological entrepreneurship
ecosystem

19
identified the following key behaviours within such ecosystems that
favour the development of high-potential technology-based entrepre-
neurial ventures:
1. A heightened mobility of resources such as people, capital and intel-
lectual property (IP)
2. An entrepreneurial process involving the relentless pursuit of opportu-
nity without regard for resource limitations
3. Increased velocity of business development
4. A strategic global perspective
5. A culture of alignment of interests and transaction structures that
reinforce the alignment
6. Incentives and goals that lead to an affinity for collaboration
7. The importance given to the development of global ties and bonds
with other technology-orientated entrepreneurs elsewhere in the
world.
Developing and exploiting new technology usually demands massive
expenditure. In the case of start-ups a critically important aspect of
Silicon Valley infrastructure is the presence of venture capitalists who
have both the expertise and ‘deep pockets’ to fund the activities of new,
emergent entrepreneurial firms. The key influence of these venture capi-
talists in Silicon Valley is to drive start-ups towards rapid value creation,
upscaling businesses and making an early exit. Venture investors also
help accelerate innovation through active involvement in governance,
recruiting and the creation of compensation policies to help align the
economic interests of all employees with the economic interests of the
investors.
Engel and del-Palacio (2015) noted that the large companies in the
area recognise the importance either of investing in new technology inter-
nally or of providing collaborative support for smaller firms. This scale
of expenditure is only possible because large companies such as Apple
and Google have accumulated huge cash reserves that can be made avail-
able to fund the commercialisation of new technologies (Kristoff 2011).
Other infrastructure components which Engel and del-Palacio consid-
ered important within a cluster of innovation are the presence of leading
1 Entrepreneurship

20
research-orientated universities, research centres and government fund-
ing for new technology development programmes. In the case of Silicon
Valley, Stanford University plays a key role both in undertaking research
and in educating the knowledge workers required by high-tech firms.
The other key sources of new knowledge are federally funded and com-
mercial research centres. These latter have been established either because
they are headquartered in the Valley (e.g. Hewlett-Packard or Cisco) or
because they wanted their researchers close to others who are engaged in
innovation and commercialisation of new technologies (e.g. IBM, Xerox
and Samsung).
Engel and del-Palacio concluded that of equal importance to the
components of Silicon Valley’s cluster of innovation are the behaviours
and interactions among these components. Critical behaviours include
mobility of resources, entrepreneurial processes of opportunity seeking,
innovation and experimentation, and taking a global strategic perspective
building upon international linkages with entrepreneurs based elsewhere
in the world.
A key aspect of resource mobility is that individuals are willing to
move between companies. As a consequence knowledge and techno-
logical understanding are shared as people move from one venture to
another. The mobility of new technology is protected by intellectual
property rights but is often assisted through licensing agreements with
universities and corporations via spin-outs and out-licensing to harvest
value from non-core technology assets. Many major enterprises in Silicon
Valley have also established corporate venture centres which engage in
start-up acquisitions and support open innovation processes to promote
enhanced mobility of ideas and inventions.
International linkages have a significant role within clusters of
innovation. Interpersonal networks are the driving force facilitating
critical resource acquisition, including raising capital, recruiting tal-
ent and attracting customers. In dealing with a resource-constrained
environment, entrepreneurs are often hampered by information asym-
metry in competition with larger firms. Strong interpersonal networks
overcome this problem by providing access to information, accelerat-
ing learning, facilitating exchanges, and reducing transaction frictions
and development costs (Cohen and Fields 1999). These are achieved

21
by trust established through relationships. In Silicon Valley there are
parallel networks within immigrant communities, especially among the
Indian, Chinese and Israeli engineers and scientists who have moved
to California. They are connected into their home countries’ networks
through alumni associations and family ties. These weak ties can lead to
the formation of long-distance business relationships, such as contracts
or employment relationships, which permit frequent and fluid mobility
of assets and people across borders, providing avenues for rapid sharing
and adapting to new knowledge and technologies.
Where connections between different clusters are strong, the pursuit
of shared projects and utilisation of resources go beyond efficiency to
mutual dependency. Such communities are often linked by individuals
who establish and maintain a presence in more than one cluster. The
individuals involved enhance trust and accelerate information exchanges.
In some cases this may lead to firms in one cluster becoming embedded
in the business and processes of others, manifesting unified values, tighter
interrelationships and business integration (Malairaja 2003).
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© The Author(s) 2017
I. Chaston, Technological Entrepreneurship,
DOI 10.1007/978-3-319-45850-2_2
2
Technological Entrepreneurs
Character Traits
Across a wide range of managerial situations, academics have sought to
identify specific traits of individuals who are successful in fulfilling an
assigned role in order to assess the potential for an individual to effec-
tively fulfil their managerial role. Although research has sought to iden-
tify the characteristics influencing entrepreneurial behaviour and to link
these to successful business outcomes (Steers et al. 2012), success in this
area of academic endeavour has been limited.
There are probably a number of reasons for this (Ogbonna and Harris
2000). Firstly, character traits found to be significant in relation to entre-
preneurs are often similar to those found among other successful people,
such as politicians and outstanding sports people (Chell et al. 1991).
Secondly, there are a number of methodological problems associated with
attempting to measure traits and also to handle the fact that a person’s
traits may change over time. Thirdly entrepreneurial success is probably
due to the influence of a mix of different variables such as the emergence
of a viable technology, access to resources and the nature of prevailing
market demand. The existence of such factors has caused some academics

such as Gartner (1988) to reject the concept that there is a clear link
between specific traits and the creation of entrepreneurial businesses.
Despite the problems with trait theory, comparative evidence provided
by the activities of successful entrepreneurs can be useful in generating
understanding of how certain behavioural patterns have contributed to
the achievement of creating and building successful businesses. Hence
identifying these patterns can be useful in seeking to understand how
personal behaviour may contribute to the generation of new successful
entrepreneurial outcomes. It is important to note, however, that many
such traits are also exhibited by non-entrepreneurial business people.
This situation would tend to suggest there are few if any unique traits
that can be used to differentiate between technology-driven and market-
driven entrepreneurship.
Vision
Vision can be considered as the overarching sense of purpose that drives
both current and future endeavours. In both ‘how-to-do’ manuals and
academic writings some authors insist that vision is a mandatory require-
ment for success. This perspective is also supported by the evidence of
the activities of some start-up businesses (Ashcroft et al. 2009). From the
outset, for example, Anita Roddick, founder of The Body Shop, had the
vision of wanting to create skincare products made from natural ingre-
dients, and that testing new products on animals, which was common
practice among large manufacturers, could be avoided (Entine 1995).
Witt (1998) opined that the technological entrepreneur often has no
well-defined vision at the outset but instead is single-mindedly committed
to solving a scientific or technological problem which has attracted their
interest. Only once they have either solved or believe they have solved the
identified problem is any thought be given to using their solution as the
basis for a commercial venture. Only at this latter juncture does an ‘emer-
gent market vision’ develop. Furthermore, this vision often requires revi-
sion over time as the entrepreneur gains further understanding of what is
involved in the creation and operation of a successful business.
26 Technological Entrepreneurship

Witt posited that a business conception consists of subjective, some-
times highly idiosyncratic imaginings in the mind of the potential entre-
preneur of what business is to be created and how it is to be structured.
Because of these cognitive activities, at this stage the business conception
will be based upon the entrepreneur’s interpretation of incoming infor-
mation in relation to the relevance and meaning for the imagined busi-
ness venture and is largely tacit.
Conversion of the business conception into an explicit framework tends
to occur when the entrepreneur is required to communicate their vision
to others, such as potential customers and investors (Reid and Roberts
2011). It is this latter group for whom the existence of a vision is critically
important, because it provides a framework which permits them to under-
stand the purpose of the new business idea (Dushnitsky 2010). Once the
new business is created the vision is also important to the employees.
Where the entrepreneurial business is not understood by the employees
it is difficult for entrepreneur to create and sustain organisational success.
In contrast, where a vision has obvious appeal in terms of the employ-
ees’ needs, no great communicative efforts will be necessary to make the
employees believe in the overall purpose of the business and their desire
to make a positive contribution to ensure success (Reid and Ulrike 2012).
Evolving a Personal Vision into an Entrepreneurial Proposition
Case Aims: To illustrate how an individual’s personal vision may provide the
basis for a viable, technology-driven entrepreneurial business.
Kye Anderson (1992) was deeply affected by the death of her father due
to the fact that in the 1950s medical technology had been unable to diag-
nose his worsening heart condition. The outcome for her was a personal
vision of a career in medical technology to ﬁnd new ways of improving
diagnostic techniques. She worked for eight years in the cardio-pulmonary
laboratory at the University of Minnesota Hospital in Minneapolis and
taught herself computer programming in order to convert data such as
total lung capacity, oxygen consumption, carbon dioxide production and
blood pressure into computer graphics that could assist in achieving a more
accurate diagnosis of a patient’s medical condition.
This research was followed by working with transducers and electronic
analysers in an attempt to translate analogue data directly into digital infor-
mation and computer graphics. Her theory was that this knowledge would
(continued)

enable the invention of a machine which could measure enough parameters
to determine from a non-invasive analysis of a person’s breath whether they
were suffering from emphysema, asthma, bronchitis or a heart valve prob-
lem. At this time she had no plans to become an entrepreneur.
One day she was contacted by Dr. Stephen Boros at St. Paul Children’s
Hospital who was treating a baby boy born with a rare disorder that caused
the child to stop breathing whenever he fell asleep. Carbon dioxide (CO2) in
the blood controls the depth and frequency of breathing. Too much CO2 could
put the baby into a coma, too little would upset internal chemistry. The only
solution was to check CO2 by taking repeated blood samples, an awkward,
painful, slow process. Boros wanted to put a pacemaker on the nerve control-
ling the baby’s diaphragm, which might allow him to live a reasonably normal
life. To get the breathing rate just right, the doctor was seeking a way of
measuring the baby’s oxygen and CO2 non-invasively and he knew Anderson
had been working on finding a way to achieve this goal (Anderson 1992).
Anderson spent two weeks working on her kitchen table developing a
machine which could help Boros. The machine proved totally successful and
provided Boros with the data he needed to stabilise the baby’s condition.
Observing this outcome prompted Anderson to convert her personal ideas
into an entrepreneurial vision of a new business manufacturing machines
and creating software that could enhance the medical profession’s ability
to diagnose heart and lung disease (Anderson 1992).
The company was known as Medical Graphics. Anderson’s initial activities,
as in most start-ups, were to make herself responsible for everything. This
involved developing products, writing software, consulting with the doctors
as prospective customers, undertaking all the marketing activities, finding a
board of directors and managing the issuance of shares. Within a few years
Medical Graphics achieved over $3 million in sales by offering a range of
unique, non-invasive diagnostic solutions to the healthcare industry. With
the aim of accelerating growth the company diversified into non-medical
markets and expanded overseas. As this growth drove sales to over $7 mil-
lion, Anderson, like many other entrepreneurs, continued to try to lead all
key activities but eventually decided to step down as CEO (Anderson 1992).
Her departure permitted the board to bring in experienced ‘professional
managers’ and Anderson kept well away to let these individuals achieve
their aims. The company’s new focus was the conventional approach of
improving the bottom line and formalising internal operational systems.
During visits to the company she began to notice a decline in motivation
and enthusiasm, especially amongst her key research staff. Eventually she
realised that the conventional approach to managing the company had
been accompanied by a loss of her original entrepreneurial vision. Although
she accepted that profit is a necessary aim, the need to achieve 10 % after-
(continued)
(continued)

Opportunity Orientation
The majority of new products or services are the consequence of the acquisi-
tion of market information which identifies either customer dissatisfaction or
the emergence of an unfulfilled need. In recognition of the benefits of acquir-
ingthisknowledge,largeorganisations,especiallyinbrandedconsumergoods
markets, rely heavily on market research studies to regularly assess consumer
awareness, attitudes and usage patterns (Mele et al. 2015). Furthermore the
advent of big data has provided firms with the ability to access and analyse
much larger data sets by linking formal market research with real-time data
from sources such as social media sites. The potential drawback, however, of
relying upon market data to identify new opportunities is when the customer
is not able to articulate a specific current or future need. This lack of customer
ability is known as ‘latent need’ (Key and Hufenbach 2014).
Technological entrepreneurs are less likely to be concerned with access-
ing market information at the outset of a new development project. This
is because their motivation involves either seeking a new application for
existing or emerging technology, or researching a new approach to solv-
ing a known problem. As a consequence they will tend to postpone any
consideration of the commercial viability of their idea until progress has
been achieved over validating that technology is capable of providing a
viable solution. Even at this stage and especially in the presence of latent
need, the entrepreneur will often initiate market entry on the basis of
strong self-belief or intuition that an adequate level of customer demand
will eventually emerge (Gregoire and Shepherd 2012).
tax proﬁts should not, she believed, have been at the cost of ongoing
investment in research and development. During time away she had come
to understand that as a CEO she must learn to focus on important issues and
delegate non-essential activities to others (Anderson 1992).
Anderson decided to return. To re-awaken understanding of her vision
and to re-instil a common purpose, she focused on communicating to every-
body that the only role of the company was to prevent heart and lung dis-
ease, the leading causes of death and rising healthcare costs. To reinforce
this message she withdrew the company from all markets not directly
related to this area of healthcare provision and made new innovative prod-
uct development the company’s most important task.
(continued)

Exploiting Latent Need
Case Aims: To illustrate how a technical solution provided the basis for an
entirely new market opportunity
Kozo Ohsone, the head of Sony’s tape recorder division, encouraged his
staff to try new ideas and not worry about potential difficulties. In the late
1970s Masura Ibuka, Sony’s Honorary Chairman, explained to Ohsone his
interest in having a more lightweight tape recorder for playing music while
he was travelling. Ohsone’s solution was a miniature recorder which per-
mitted the user to listen to music through headphones, but which could not
record. Impressed with the prototype, Ibuka communicated his positive
views to Akio Morito, the Sony Chairman, who immediately perceived the
appeal of a portable device offering excellent sound quality. Despite con-
cerns inside the company about the lack of a recording capability, Morito
authorised the creation of a production operation to manufacture what
was to become known as the Sony Walkman (Anon 2004; Beamish 1999).
On its first introduction to the market major Japanese retailers were not
enthusiastic, believing that there would be no customer demand for what
they perceived was a miniature tape recorder that did not record. Within a
few weeks of launch some very creative marketing activities, aimed primar-
ily at young people, generated a high level of word-of-mouth interest
which soon resulted in massive market demand. This level of demand was
magnified by Sony entering overseas markets such as the USA. The reason
for the Walkman’s success was that the product was personal and portable,
delivering freedom of listening in any situation and creating a new market
which would at a much later date subsequently be exploited by products
such as Apple’s iPod (Chiesa and Frattini 2011).
Creating a Technical Solution
Case Aims: To illustrate how developing a new solution provided the basis
for creating a highly successful business
The British entrepreneur James Dyson is motivated to find new techno-
logical solutions to known problems. In 1979 he purchased what was
claimed to be the most powerful vacuum cleaner available but which, in his
view, failed to deliver the promised benefit. Dyson recognised that the
problem with conventional vacuum cleaners is that as the bag fills with
dust, the suction power declines. Prompted by observing in an industrial
sawmill a cyclonic separator for removing dust from the air, he believed the
same concept could work in a vacuum cleaner. It was this idea which would
eventually lead to the development of his world-beating invention, the
Dual Cyclone bagless vacuum cleaner (Anon 2006).
(continued)

Foresight
Having established a successful business based upon a technologi-
cal entrepreneurial vision, the problem facing management is how to
ensure they are not overtaken by changes in technology or new play-
ers entering the market. The conventional approach—business planning
to define future action—is of little use in responding to major change,
being based upon extrapolating from past events. Hence because only
weak signals exist during the early stages of newly emerging scientific or
technological discovery, examining existing information will be of little
benefit (Farrington et al. 2012).
The only solution to avoid being overtaken by technological advances
is for the organisation to develop foresight about new technologies,
market trends and the activities of potential competitors. Foresight
involves the active scanning and monitoring of the external environ-
ment. Analysis involves interpreting relevant environmental forces and
seeking to determine their impact. The benefit of foresight is to sup-
port the identification of trends, drivers, uncertainties and key future
influences. This knowledge provides the basis for guiding future entre-
preneurial technological developments and assessing the risks of fail-
ing to act to retain market leadership over the long term (Zahra and
Bogner 1999).
Developing the final product involved testing 5127 prototypes and took
five years, during which his wife taught art to support the family. When he
was finally satisfied he showed his prototype to makers of domestic appli-
ances. They were not interested (Schaer 2015). Eventually he decided to
start manufacturing the product himself. Once in production Dyson soon
discovered the lack of interest among appliance manufacturers was
matched by the same level of disinterest among major UK retailers. Hence
he was only able to distribute the product through two mail order cata-
logues and a few small independent retailers. The breakthrough finally
came in 1995 when Dyson achieved distribution in Comet, a large UK
retailer. (McNamara 2015).
(continued)

Within the German biotechnology industry Metzner and Reger
(2009) identified alternative types of foresight which assisted in the early
identification of emerging trends. These included:
1. The technology/science-driven approach
2. The network-oriented approach
3. The market-driven approach
4. The gatekeeper approach.
The existence of the biotechnology industry has been made possible by
close, collaborative relationships between universities and business. The
founders of biotechnology companies are typically academics. Linkages
with universities are positively associated with a firm’s innovative out-
puts as a result of their foresight activities. Methodical elements include
formal and informal RD discussions, scientific conferences and analy-
sis of academic publications. Many of the customers of these firms are
scientists or scientific institutions involved in publicly financed research
projects. The close relationship with such customers provides access to
knowledge of cutting-edge new technological or scientific outcomes,
which provides the basis of very early understanding of their potential for
commercialisation.
In the network approach, acquisition of new knowledge occurs as a
result of informal and formal networking by employees across the organ-
isation. This can be contrasted with the market-driven approach where
the focus is upon on the collection and systematic analysis of downstream
data from the healthcare sector and by monitoring competition. The
compilation of data occurs through feedback from sales staff, inquiries
from members of the medical profession and tracking content on selected
websites. Usually it is the firm’s marketing or business development unit
which is responsible for the early diagnosis of emerging trends. Market
data tend to emerge at a somewhat late phase in the RD process for
new next-generation products. Hence sole reliance upon this source may
delay trend identification and the subsequent initiation of research activi-
ties within the organisation (Uotila and Ahlqvist 2008).
The gatekeeper approach uses key persons in the company, such as lead
scientists who acquire information from participation in both formal and

informal networks. These gatekeepers are strongly networked, for exam-
ple by sitting on relevant national committees, assisting the organisation
of major academic conferences and interacting with funding agencies
and politicians. Where foresight activities are only carried out by the
gatekeepers, there is the risk that their control over information access
and opportunities and may create an excessively powerful influence over
trend identification and the RD programmes selected for progression
within the organisation (Hervas-Oliver and Albors-Garrigos 2014).
The activities of individual firms may be accompanied by government-
sponsored foresight programmes. The aim of these projects is to iden-
tify opportunities for exploiting science and technology as the basis for
enhancing the future prospects for national economic growth. The typi-
cal structure of such schemes is to draw upon the expertise among leading
academics and industrialists to examine emerging trends and to recom-
mend which areas of RD should receive priority in relation to govern-
ment funding (Calof and Smith 2009). The potential drawback to this
approach is that the advisers selected may be influenced by their bias for
and against certain areas of science, technology or industry sector. The
government may also favour ‘near-to-market’ opportunities over ‘blue-
sky’ technology which, over the longer term, has the potential to provide
the foundations for totally new industry sectors.
Exploiting Foresight
Case Aims: To illustrate how one high-tech company sustains a leadership
position in the face of major shifts in technology
John Chambers, the CEO of the American ﬁrm Cisco, joined the company
at an important moment, the start of the Internet revolution. The company,
a market leader in switches and connectors, was well placed to exploit
newly emerging technological entrepreneurial opportunities. Arriving at
Cisco, Chambers brought with him an important experience gained while
employed at IBM and Wang. This was that even great companies are imper-
illed when they miss a market transition. In the case of IBM the ﬁrm was
slow to identify and adapt to the shift from mainframe computers to mini-
computers (Hammer 2001). Wang did recognise the emergence of the PC,
but focused on the building of more powerful minicomputers when their
(continued)

primary attention should have been on software and applications
development. These experiences showed Chambers that when large com-
panies have a significant market share, they are often tempted to view
market disruptions as a possible threat instead of an opportunity. Hence
their focus remains on using current technology to continue to grow their
existing markets (Chambers 2015).
In the case of the Internet, Chambers recognised that firms such as Lucent,
Nortel and Alcatel were continuing to focus on telecoms and the use of
fibre optics to transmit data via telephone lines. In contrast he saw that the
Internet would totally change data interchange technologies and this pre-
sented new opportunities for Cisco. Having succeeded in becoming the
major player in switches and connectors to support Internet infrastructures,
subsequent technological changes that have influenced Cisco’s develop-
ment activities have included the shift from desktop computers to smart-
phones and tablets for accessing all information and the more recent move
by organisations to outsource their data storage to the cloud instead of
owning their own server systems. Most recently Cisco has moved to exploit
the emergence of the ‘internet of everything’ which is a technology that
involves fundamental shifts in relationships between people, processes,
data and objects, leading to the creation of new online communication
channels for numerous new kinds of devices.
Cisco has created a number of different ways of responding to emerging
technological change. First, when they make an early identification of a
shift, the firm engages in RD to develop the new technology. The second
approach involves their ‘Entrepreneurs in Residence’ programme. This pro-
vides financial support, mentoring and collaboration opportunities to
early-stage entrepreneurs working in areas where Cisco perceives huge
future potential. The hope is that some of these initiatives will result in
ideas becoming a reality and possibly being incorporated into the Cisco
operation. The third pathway is an acquisition of a smaller company which
permits access to the knowledge and capability currently not available
within Cisco. For example, in 2005 Cisco acquired the company Airespace to
accelerate its leadership in the field of Wi-Fi connections (Hochmuth 2005).
A fourth approach is what Cisco calls a ‘spin-in’. This involves assembling
a group of engineers and developers to work on a specific project, moving
them out of the company’s mainstream activities in order to create a start-
up environment. When the project is complete, the group members are
brought back into the main company. This approach provides the capability
to rapidly develop and launch innovative products, very often much more
quickly than potential competitors (Burrows and Robertson 2012).
Cisco does not always make the right decisions (Mehta et al. 2001).
Sometimes their foresight approach results in incorrect identification of the
(continued)
(continued)

Collaborative Orientation
The existence of a conventional market-driven orientation, especially in
consumer goods markets, is demonstrated by regular outbreaks of brand
wars such as Macdonald’s versus Burger King (Goutam 2015) or Pepsi
versus Coca-Cola (Greising and Light 1998). Additional examples are pro-
vided by the adversarial nature of relationships between companies with
dominant purchasing power and their suppliers, the former, especially dur-
ing economic downturns, placing pressure on suppliers to reduce prices.
As a consequence of these real-world scenarios, many academic texts still
heavily focus upon the importance of managing the processes associated
with attacking and responding to competitive threats (McKelvey 2006).
Early evidence of the existence of a different managerial philosophy
was first identified by the Nordic business schools (Hjorth 2008). In their
research on business-to-business (B2B) markets they found that in many
cases success was strongly influenced by companies exhibiting a collabor-
ative orientation. At that time the conventional view of small businesses
was that most entrepreneurs work in isolation during the development
of new product or service propositions. This perspective is still widely
accepted and is mainly based on case materials concerning how a single
or small group of individuals working alone have been able to develop a
new (to the world) proposition. One such example is provided by Steve
potential for exploiting a new technology. In other cases the company has
commenced RD too early in relation to the emergence of actual market
opportunities. For example, the company started work on the ‘internet of
things’ only to discover the market was not yet at the point where there
was any signiﬁcant emerging demand. The decision, however, was to sus-
tain expenditure with the result that actual opportunities are beginning to
generate revenue.
Chambers (2015, p. 40) summarised the company’s approach to foresight
thus: ‘By the time it’s obvious you need to change, it’s usually too late. Very
often you have to be willing to make a big move even before most of your
advisers are on board. You have to be bold. And you need a culture that lets
you ﬁgure out how to win even without a blueprint.’
(continued)

Chen, Chad Hurley and Jawed Karim who, working together in a garage
in Menlo Park, California, created YouTube to permit the uploading and
sharing of video clips via the Internet (Newkirk and Forker 2007).
Despite such examples, however, research on the behaviour traits of
small business owner/managers has revealed that many such individuals
are very aware of seeking information, inputs and assistance by collabo-
rating with others. This is achieved by active participation in personal
or business networks. Successful entrepreneurs tend to start the process
of linking with others outside their business very early into the business
creation process. Personal networks often prove critical in gaining access
to free resources at a time when the new business is desperately short
of financial resources. These personal networks remain important even
after the business has reached the point where resource constraints are
no longer a critical issue (Jarvenpaa and Välikangas 2014). Concurrently
membership of business networks can assist in activities such as gain-
ing access to potential customers or identifying suppliers with specialist
knowledge who can assist offer critical assistance to ensure the successful
development of a new product or service. This form of collaboration is
based upon trust, self-interest and reciprocity. The existence of strong
network relationships is not just important at start-up but is often even
more critical as a new entrepreneurial enterprise seeks to implement plans
to achieve business growth (Dubini and Aldrich 1991).
The complexity of a successful outcome for an entrepreneurial proj-
ect in high-tech industries is complicated by the reality that one single
firm rarely has the knowledge and expertise to autonomously resource the
total project. As a consequence collaboration has become very important
(Chaston 2016). There are two forms of collaborative input: input col-
laboration which is necessary for the development of the new proposi-
tion; and output collaboration required to assist the successful market
entry of a newly created proposition. As illustrated in Fig. 2.1, this per-
spective leads to the existence of the following four different entrepre-
neurial pathways:
1. Autonomous Process: This pathway reflects that the entrepreneurial
development from idea through to market launch occurs without any
significant collaboration. Although this approach may occur in

market-driven situations, it is somewhat rarer in the case of technology-
driven projects.
2. Collaborative Development: This pathway involves interaction with
other individuals and organisations to resolve the technological prob-
lems encountered during development of an entrepreneurial
proposition.
3. Market Development: This pathway utilises the capabilities of others to
successfully build a market presence for the new technology-based
proposition.
4. Integrated Development: This pathway involves both inputs to solve
technological problems and assistance to implement a successful mar-
ket launch.
Autonomous
Process
Market
Development
Collaborave
Development
Integrated
Development
Low High
Minimal
Major
I
N
P
U
T
C
O
L
L
A
B
O
R
A
T
I
O
N
OUTPUT COLLABORATION
Fig. 2.1 Alternative new proposition development
Collaborative Development
Case Aims: To illustrate the important role of entrepreneurial collaboration
in the development of new, more technologically advanced next-genera-
tion products
The development of new or next-generation products involving complex
technologies can rarely occur without a manufacturer working closely with
other members of the supply chain. Furthermore key objectives within the devel-
opment process may demand radical change. This may be due to the emergence
(continued)

of new technology or demand shifts in the macro-environment which require
development of new technological solutions (De Haan and Mulder 2002).
Scenarios of this nature have occurred in the aircraft industry and will
continue to do so. Prior to World War II there were numerous companies
engaged in aircraft construction. Two major changes during this period
revolutionised aircraft design: the shift from wood to aluminium and the
introduction of the monocoque airframe. After the war, during which the
demand for technologies to fulfil military needs had been the dominant
influence, the aircraft industry developed the capability to build larger and
longer-range aircraft for civilian use. Initially these designs centred around
propeller power, but this technological regime was radically altered by the
introduction of the jet engine (Epstein 2014).
The success of any new aircraft design is critically dependent upon close
co-operation between manufacturers and engine designers, and the avail-
ability of materials and sub-systems around which the airframe can be con-
structed. During the 1950s and 1960s, the focus of new technology was on
achieving faster flight times and increasing capacity. In an attempt to
recover the ground lost to the American aircraft industry the British opted
to concentrate on speed and invested in the development of a supersonic
aircraft, the Concorde. Unfortunately the scale of the technological obsta-
cles was so great that the outcome was an aircraft with extremely limited
capacity and very high fuel consumption. Hence the project was able to
prove supersonic airline travel was technologically feasible but also a com-
mercial failure (McAllister et al. 2000).
In the meantime Boeing focused on the goal of increasing capacity. The
outcome was their world-beating 747, the first ‘jumbo jet’. The develop-
ment of such large aircraft required close co-operation with engine manu-
facturers such as GE and Pratt Whitney in order to build a new generation
of jet engines capable of lifting a jumbo into the air. The achievement of
greater thrust came at a cost, however, in terms of engines which were
noisy and consumed huge amounts of fuel.
By the 1980s as the rising cost of oil was reflected in the price of jet fuel, the
airline industry began to face problems sustaining profitability. Furthermore
as the number of aircraft increased in the skies over major metropolitan
areas, there were increasing problems over jet noise. Overcoming these two
factors demanded further advances in technology to increase operating effi-
ciencies and reduce noise levels. Initially the primary focus was on the devel-
opment of the next generation of more fuel-efficient and quieter jet engines.
The solution was to improve the engine ‘bypass’ ratio. Earlier-generation
engines had a low bypass ratio producing thrust from fast-moving air blast-
ing out of the rear of the engine. By increasing the size of the fan at the front
of the engine that draws in air, it proved possible to move a bigger volume of
air around the core of the engine. The increased bypass ratio improved fuel
efficiency and reduced engine noise (Varga and Allen 2006).
(continued)
(continued)

Market Collaboration
Case Aims: To illustrate the benefits in engaging in market collaboration to
educate potential customers over the benefits offered by new technology
The advent of a new technology often requires widespread promotional
activity in order to educate potential customers unaware of the benefit of
switching to the new product or service. In those cases where an original
equipment manufacturer (OEM) has a small number of customers, all of
whom purchase a significant quantity of total output, the educational
phase of the marketing process can be undertaken by the firm’s own sales
force. However in those markets where there are a large number of cus-
tomers, the cost of building relationships with potential customers can be
prohibitive. Under these circumstances the firm may need to rely upon col-
laboration with intermediaries willing to invest in undertaking the market
education process (Dahlquist and Griffith 2014).
This scenario is frequently encountered in the IT industry and has led to
the emergence of value-added resellers (VARs). These organisations work
closely with OEMs to provide them with the specialist knowledge required
by customers seeking to optimise their data management capabilities by
adopting the latest technological advances. Kalyanam and Brar (2005)
noted that one OEM which relies heavily on the VAR system to achieve
broad market coverage is Cisco. The VARs are considered as partners by
Cisco which provides support such as identifying demand opportunities and
assisting VARs to develop the necessary competences required by partners
to develop solutions based around Cisco’s products.
The increasing size of turbofans demanded much stronger wings which in
turn increase aircraft weight and reduce fuel efficiency. This problem neces-
sitated new technological solutions involving the development of lighter
materials to replace reliance on aluminium (Lind 2006). The outcome has
been a totally new industry based around advanced thermoplastic compos-
ite materials. In these composites one material acts as a supporting matrix,
providing the scaffolding over which an epoxy or resin is poured. The appli-
cation of high temperature and pressure makes the final product extremely
strong and much lighter than the alternative of using metal. As with most
new technologies, the successful utilisation of advanced composites has
demanded radical innovation in the formulation of these new materials
and the development of the manufacturing tools needed to produce, for
example, complete aircraft wings or tail planes. The manufacturers are
claiming that their latest generation of aircraft to incorporate these new
materials, such as the Boeing 787 Dreamliner, has weight savings that offer
a 20 % improvement in fuel efficiency (Flottau 2016).
(continued)

Exploring the Variety of Random
Documents with Different Content

their plan for the day was based on this first condition, and in an
army where every individual soldier must have the details of any
plan explained to him it is not easy to make fresh dispositions on the
field.
Indeed, a sort of panic seems to have taken hold of the enemy,
for without waiting for the Infantry attack to develop they fled
forthwith at great speed, galloping madly across the drift--as the
British proprietor of Welcome Farm told me--horsemen and guns,
pell-mell, in downright rout, pursued, so swift was their departure,
only by the shells of the Horse Artillery.
The losses in this brief affair were not large, and almost entirely
among the Cavalry. In those few minutes of firing on the ridge about
a dozen troopers had been hit. Lord Airlie was slightly wounded in
the arm, and Lieutenant Rose, Royal Horse Guards, was killed. He
had bee sent forward to see what lay beyond the further crest of the
hill, and found that deadly riflemen lay there waiting for a certain
victim. He fell pierced by several bullets, and lived only for half an
hour.
This officer was a most zealous soldier. Though possessed of
private means which would have enabled him to lead a life of ease
and pleasure, he had for several years devoted himself assiduously
to the military profession. He went to India as a volunteer during the
Tirah Campaign, and served with distinction on Sir Penn Symons'
staff--general and aide-de-camp both vanished now, as the foam
fades in the wake of a fast ship! From India he hastened to West
Africa, and in that vile and pestilential region won a considerable
reputation; indeed, he was to have received the Distinguished
Service Order for his part in recent operations there had not another

war intervened. He arrived at the Cape, scarcely a month ago, full of
hope and energy. This is the end; and while it is one which a soldier
must be ready to meet, deep sympathy will be felt for the father,
from whom the public necessities have now required two gallant
sons.
Though the disorderly and demoralised nature of the Boer flight
through Welcome Farm was known throughout the British Army, it
was not expected that so strong a position as the bluffs behind the
Vet River would be yielded without a shot fired. This, nevertheless,
proved to be the case, for when, on the morning of the 6th,
Hamilton resumed his advance, he found that no force of the enemy
stood between him and Winburg.
He therefore sent, shortly after noon, a staff officer, Captain
Balfour to wit, under flag of truce, with a letter to the mayor of the
town summoning him forthwith to surrender the town and all stores
therein, and promising that if this were done he would use every
effort to protect private property, and that whatever foodstuffs were
required by the troops should be paid for. This message, which was
duly heralded by the sound of a trumpet, concluded by saying that
unless an acceptance was received within two hours the General
would understand that his offer had been declined.
Thus accredited, Captain Balfour made his way into the town
and was soon the centre of an anxious and excited crowd of
burghers and others who filled the market square. The mayor, the
landdrost, and other prominent persons--indeed, all the inhabitants--
were eager to avail themselves of the good terms, and a satisfactory
settlement was almost arranged when, arriving swiftly from the
northeast, Philip Botha and a commando of 500 men, mostly

Germans and Hollanders, all very truculent since they were as yet
unbeaten, entered the town.
A violent and passionate scene ensued. Botha declared he
would never surrender Winburg without a fight. Dissatisfied with the
attentions paid him by Captain Balfour, he turned furiously on him
and rated him soundly. Several of the Free Staters had asked what
would be done to them if they laid down their arms. Balfour had
replied that they would be permitted to return to their farms, unless
actually captured on the field. This Botha held to be a breach of the
laws of war, and he thereupon charged the officer with attempting to
suborn his burghers. What had he to say that he should not be
made a prisoner? 'I ask favours of no Dutchman,' replied Balfour,
sternly.
'Arrest that man!' shouted Botha, in a fury; 'I shall begin
shooting soon.' At these shameful words a great commotion arose.
The women screamed, the mayor and landdrost rushed forward in
the hopes of averting bloodshed. The Boers raised their rifles in
menace, and the unarmed British envoy flourished his white flag
indignantly.
For several minutes it seemed that an actual scuffle, possibly a
tragedy, would occur. But the influence of the townsfolk, who knew
that their liberty and property lay in the hands of the Imperial
General, and that the great siege guns were even then being
dragged into effective range, prevailed, and Philip Botha, followed by
his men, galloped furiously from the square towards the north.
That afternoon General Ian Hamilton entered Winburg at the
head of his troops. Under a shady tree outside the town the mayor
and landdrost tendered their submission and two large silver keys.

The Union Jack was hoisted in the market-place amid the cheers of
the British section of the inhabitants, and, as each battalion
marching through the streets saw the famous emblem of pride and
power, bright in the rays of the setting sun, these feeble or
interested plaudits were drowned in the loud acclamations of the
victorious invaders.
Hamilton was expected to arrive on the 7th, if no opposition
was encountered, He had fought nearly every day, and reached the
town on the evening of the 5th.
CHAPTER X
THE ARMY OF THE RIGHT FLANK
Kroonstadt: May 16, 1900.
On the same day that Ian Hamilton's force won their fight at
Houtnek, to wit, the 1st of May, the advance of the main army
towards Pretoria, long expected, long prepared, long delayed,
began, and the Eleventh Division marched north from Bloemfontein
to join the Seventh, which was entrenched at Karree Siding. On the
3rd both Infantry divisions moved forward along the railway, their
left protected by Gordon's Cavalry Brigade and Hutton's Mounted
Infantry, and after a sharp cannonade drove the Boers from their
positions covering Brandfort and entered the town. The advance was
resumed on the 5th, and the enemy were again met with, this time
holding the line of the Vet River. Another artillery action ensued, in

which the British 5-inch and naval 4.7 guns were very effective, and
at the end of which the West Australians and other parts of Hutton's
Mounted Infantry force, pushed across the river in gallant style and
captured an important kopje. The Dutchmen then retreated, and the
Field-Marshal's headquarters on the 6th were fixed in Smaldeel. His
losses since leaving Bloemfontein had not amounted to twenty-five
men.
Ian Hamilton, in spite of the long marches his troops had made,
was impatient to push on from Winburg without delay, and, following
the track to Ventersburg, to seize the drifts across the Sand River,
twenty miles to the north. The great speed of his last movement had
outpaced the Boers, and their convoys were struggling along abreast
of, and even behind, the British column, trying vainly to slip across
our front, and join the burgher forces accumulating for the defence
of Kroonstadt. By marching forthwith--great though the strain might
be--the General hoped to secure the bloodless passage of the river,
and perhaps cut up some of these same toiling convoys. Accordingly,
having collected from the town about three days' stores--Sir Henry
Colvile helping him unselfishly with mule waggons--he set his
brigades in motion on the afternoon of the 6th, and marched nine
miles towards the Sand.
But Lord Roberts had decided to remain at Smaldeel until his
temporary bridge over the Vet River was made and the trains
running, and he did not choose to run the risk of the Boers
concentrating all their forces upon any single division of his army,
such as would be incurred if Hamilton pushed forward alone. The
principle was indisputable; but, of course, in practice it resolved itself
into another instance of balancing drawbacks, for delay gave the

enemy time to get his breath, and meant that the Sand River
passage would be opposed. Besides, if the Boers had flung all their
strength upon Hamilton, we were 7,000 bayonets, 3,000 horse, and
nearly forty guns, and would have beat them off with a shocking
slaughter. To us it seemed a great pity to wait; but to the Chief, in
whose eyes the Army of the Right Flank was but one column of that
far-flung line which stretched from Rundle near Senekal, along the
front of the main army to Methuen near Boshof, Hunter at
Warrenton, and Mahon far away on the fringe of the Kalahari desert,
it must have been a very small matter, and certainly not one
justifying any loss of cohesion in the general scheme. So I have no
doubt that it was right to make us halt on the 7th and 8th.
On the former of these two days of rest Lord Roberts sent for
General Hamilton to meet him at a point on the branch railway line
mid-way between Winburg and Smaldeel, and they had a long
private conference together. On the 9th, the whole army marched
forward again towards the Sand River. I rode with the General, who
managed somehow to find himself among the cavalry patrols of the
right flank guard, and we watched with telescopes three long lines of
dust in the eastward, which, under examination, developed into
horsemen and waggons marching swiftly north and turning more
and more across our front. It was clear that if we had pushed on
without halting, all these commandos would have been prevented
from reaching Kroonstadt. The General contemplated them hungrily
for some time, but they were too far off to attack, bearing in mind
the great combination of which we were a part. The flanking patrols,
however, exchanged a few shots.

The march was not a long one, and by mid-day we reached the
halting-place, a mile south of the river. The headquarters were fixed
in a large farm which stood close to the waggon-track we followed.
This farmhouse was certainly the best purely Dutch homestead I
have ever seen in the 500 miles I have ridden about the Free State.
It was a large square building, with a deep verandah, and a pretty
flower-garden in front, and half a dozen barns and stables around it.
The construction of a dam across the neighbouring spruit had
formed a wide and pleasant pool, in which many good fat ducks and
geese were taking refuge from the wandering soldier. At the back,
indeed, on all sides but the front of the farm, rose a thick belt of fir-
trees. Within the house the ground-floor was divided into three
excellent bedrooms, with old-fashioned feather-beds and quaint
wooden bedsteads, a prim but spacious parlour, a kitchen, pantry,
and storeroom. The parlour deserved the greatest attention. The
furniture was dark and massive. The boards of the floor were deeply
stained. In the middle was a good carpet upon which an ample oval
table stood. The walls were hung with curious prints or coloured
plates, and several texts in Dutch. One pair of plates I remember
represented the ten stages of man's life and woman's life, and
showed both in every period from the cradle to the grave, which
latter was not reached until the comfortable age of one hundred.
The woman's fortunes were especially prosperous. At birth she
sprawled contentedly in a cradle, whilst loving parents bent over her
in rapture, and dutiful angels hung attendant in the sky. At ten she
scampered after a hoop. At twenty she reclined on the stalwart
shoulder of an exemplary lover. At thirty she was engaged in
teaching seven children their letters. At forty, she celebrated a silver

wedding. At fifty, still young and blooming, she attended the
christening of a grandchild. At sixty, it was a great-grandchild. At
seventy she enjoyed a golden wedding. At eighty she was smilingly
engaged in knitting. Even at ninety she was well preserved, nor
could she with reason complain of her lot in life when, at a hundred,
the inevitable hour arrived. 'Be fruitful and multiply,' was the
meaning of a Dutch text on the opposite wall, and a dozen children
black and white (little Kaffirs, the offspring of the servants, playing
with the sons and daughters of the house) showed that the spirit of
the injunction was observed; and these are things with which the
statesman will have to reckon.
The inmates of the farm consisted of the old man, a venerable
gentleman of about sixty years, his dame, a few years younger,
three grown-up daughters, a rather ill-favoured spinster sister, and
seven or eight children or grandchildren of varying ages. There were
in all seven sons or grandsons--two were married and had farms of
their own; but all, including even one of fourteen, were 'on
commando' at the wars, some, perhaps, looking at us and their
home from the heights across the river.
The General politely requested shelter for the night, and a
bedroom and the parlour were placed at his disposal; not very
enthusiastically, indeed, but that was only natural. The staff settled
down in the verandah so as not to disturb the family. Ian Hamilton,
keenly interested in everything, began at once to ask the old lady
questions through an interpreter. She gave her answers with no
good grace, and when the General inquired about her youngest
fighting son--he of fourteen--her sour face showed signs of emotion,
and the conversation ended for the day. On the morrow, however,

just before he crossed the river, he had to come back to the
telegraph-tent pitched near the farm, and found time to see her
again.
'Tell her,' he said to the interpreter, 'that we have won the battle
to-day.'
They told her, and she bowed her head with some dignity.
'Tell her that the Dutch will now certainly be beaten in the war.'
No response.
'Perhaps her sons will be taken prisoners.'
No answer.
'Now tell her to write down on a piece of paper the name of the
youngest, and give it to my aide-de-camp; and then when he is
captured she must write to me or to the Hoofd-General, and we will
send him back to her, and not keep him a prisoner.'
She thawed a little at this, and expressed a hope that he had
been comfortable while beneath her roof, and then--for the guns
were still firing--he had to hurry away. But the aide-de-camp
remained behind for the paper.
During the time we spent in this homely place I made a
thorough inspection of the farm, especially the parlour, where I
found one very curious book. It was a collection of national songs
and ballads, compiled, and in part written, by Mr. Reitz. I afterwards
succeeded in buying another copy in Ventersburg; indeed, it has
been widely disseminated. The first part consists of patriotic Boer
poems--the Volkslied, the Battle of Majuba, the Battle of Laings Nek,
and other similar themes. The second half of the book is filled with
Reitz's translations of English songs and well-known ditties into the
taal. John Gilpin, besides being a burgher of credit and renown, was

eke a Field-Cornet of famous Bloemfontein. Young Lochinvar had
come from out of the Boshof district. The Landdrost's daughter of
Winburg found a lover no less faithful than a famous swain of
Islington. The pictures were mightily diverting. The old Field-Cornet
Gilpin--'Jan Jurgens,' as he called himself now--was shown galloping
wildly along, on a pulling Basuto pony, through the straggling streets
of, let us say, Ventersburg, his slouch hat crammed over his eyes, his
white beard flapping in the wind, while a stately vrouw, four
children, and a Kaffir, flung up their hands in mingled wonder and
derision.
One piece began:
Engels! Engels! alles Engels! Engels wat jij siet en
hoor.
Ins ons skole, in ons kerke, word ons modertaal
vermoor.
I cannot read Dutch, but the meaning and object of the book were
sufficiently clear without that knowledge.
F. W. Reitz, sometime President of the Free State, now State
Secretary of the Transvaal, looked far ahead, and worked hard. This,
the foundation-stone of a vernacular literature, was but one act in
the long scheme of policy, pursued, year in year out, with tireless
energy, and indomitable perseverance, to manufacture a new Dutch
nation in South Africa--the policy which, in the end, had brought a
conquering army to this quiet farm, and scattered the schemers far
and wide. But what a game it must have been to play! Only a little

more patience, a little less pride and over-confidence, concessions
here, concessions there, anything to gain time, and then, some day-
-a mighty Dutch Republic, 'the exchange of a wealthier Amsterdam,
the schools of a more learned Leyden,' and, above all--no cursed
Engels.
I was considering these matters, only suggested here, when
messengers and the sound of firing came in from the eastward. The
news that small parties of Boers were engaging our right flank guard
did not prevent Hamilton riding over to meet the Chief, nor tempt us
to quit the cool verandah of the farm; but when, suddenly, at about
three o'clock, fifty shots rang out in quick succession, scarcely 500
yards away, every one got up in a hurry, and, snatching pistols and
belts, ran out to see what mischance had occurred. The scene that
met our eyes was unusual. Down the side of the hill there poured a
regular cascade of antelope--certainly not less than 700 or 800 in
number--maddened with fear at finding themselves in the midst of
the camp, and seeking frantically for a refuge. This spectacle,
combined with the hope of venison, was too much for the soldiers,
and forthwith a wild and very dangerous fire broke out, which was
not stopped until fifteen or twenty antelopes were killed, and one
Australian Mounted Infantryman wounded in the stomach. The injury
of the latter was at first thought to be serious, and the rumour ran
that he was dead; but, luckily, the bullet only cut the skin.
Thus disturbed, I thought it might be worth while to walk up to
the outpost line and see what was passing there. When I reached
the two guns which were posted on the near ridge, the officers were
in consultation. Away across the Sand River, near two little kopjes,
was a goodly Boer commando. They had just arrived from the east

of our line of march, and having skirted round our pickets had set
themselves down to rest and refresh. Spread as they were on the
smooth grass, the telescope showed every detail. There were about
150 horsemen, with five ox-waggons and two guns. The horses were
grazing, but not off-saddled. The men were lying or sitting on the
ground. Evidently they thought themselves out of range. The
subaltern commanding the guns was not quite sure that he agreed
with them. Some Colonial Mounted Infantry officers standing near
were almost indignant that the guns should let such a chance slip.
The subaltern was very anxious to fire--'really think I could reach the
brutes'; but he was afraid he would get into trouble if he fired his
guns at any range greater than artillery custom approves. His range
finders said '6,000.' Making allowances for the clear atmosphere, I
should have thought it was more. At last he decided to have a shot.
'Sight for 5,600, and let's see how much we fall short.' The gun
cocked its nose high in the air and flung its shell accordingly. To our
astonishment the projectile passed far over the Boer commando,
and burst nearly 500 yards beyond them: to our astonishment and
to theirs. The burghers lost no time in changing their position. The
men ran to their horses, and, mounting, galloped away in a
dispersing cloud. Their guns whipped up and made for the further
hills. The ox-waggons sought the shelter of a neighbouring donga.
Meanwhile, the artillery subaltern, delighted at the success of his
venture, pursued all these objects with his fire, and using both his
guns threw at least a dozen shells among them. Material result: one
horse killed. This sort of artillery fire is what we call waste of
ammunition when we do it to others, and a confounded nuisance
when they do it to us. After all, who is there who enjoys being

disturbed by shells just as he is settling himself comfortably to rest,
after a long march? And who fights the better next day for having to
scurry a mile and a half to cover with iron pursuers at his heels?
Even as it was an opportunity was lost. We ought to have sneaked
up six guns, a dozen if there were a dozen handy, all along the
ridge, and let fly with the whole lot, at ranges varying from 5,000 to
6,000 yards with time shrapnel. Then there would have been a
material as well as a moral effect. 'Pooh,' says the scientific
artillerist, 'you would have used fifty shells, tired your men, and
disturbed your horses, to hit a dozen scallawags and stampede 150.
That is not the function of artillery.' Nevertheless, function or no
function, it is war, and the way to win war. Harass, bait, and worry
your enemy until you establish a funk. Once he is more frightened of
you than you are of him, all your enterprises will prosper; and if fifty
shells can in any way accelerate that happy condition, be sure they
are not wasted.
The afternoon passed uneventfully away, though the outposts
were gradually drawn into a rifle duel with the Dutch sharpshooters
in the scrub across the river. In the evening the General returned
from his conference with Lord Roberts, and told us the passage was
to be forced on the morrow all along the line. The Army of the Right
Flank would cross by the nearest drift in our present front. The
Seventh Division inclining to its right would come into line on our
left. The Field-Marshal, with the Guards and the rest of Pole-Carew's
Division, would strike north along the line of the railway. French,
with two Cavalry brigades and Hutton's Mounted Infantry brigade,
was to swing around the enemy's right and push hard for
Ventersburg siding. Broadwood from our flank, with the Second

Cavalry Brigade, and such of the Second Mounted Infantry Brigade
as could be spared, was to be thrust through as soon as the Boer
front was broken, and try to join hands with French, thus, perhaps,
cutting off and encircling the Boer right. The diagram--it is not a
map--on page 172 will help to explain the scheme.
DIAGRAM TO EXPLAIN THE PASSAGE OF
THE SAND RIVER, MAY 10, 1900. The dotted
lines show what was proposed; the
continuous lines show what was done. The
crosses indicate the Boers.

The operation of the next day was one of the largest and most
extended movements of the war, although, probably from this cause,
it was attended by very little loss of life. Upon the British side six
Infantry and six Mounted brigades, with rather more than 100 guns,
were brought into action along a front of over twenty-five miles. The
Boers, however, still preserved their flanks. Upon the west they
succeeded in holding up French, and on the east they curled round
Hamilton's right and rear so that his action here, which in its early
stages resembled that afterwards fought at Diamond Hill, was of a
piercing rather than a turning nature. But in thus amazingly
extending their scanty forces, which, altogether, did not number
more than 9,000 men, with twenty-five guns, the enemy became so
weak all along their front that the attacking divisions broke through
everywhere, as an iron bar might smash thin ice, with scarcely any
shock.
On the evening of the 10th, the British forces, in their extended
line, lay spread along the south bank of the river, just out of cannon-
shot of the Boer positions on the further side. French, indeed, did
not rest content with securing his ford twelve miles to the west of
the railway, but pushed his two brigades across before dark. The
wisdom of this movement is disputed. On the one hand, it is
contended that by crossing he revealed the intention of the
Commander-in-Chief, and drew more opposition against himself the
next day. On the other, it is urged that he was right to get across
unopposed while he could, and that his purpose was equally
revealed, no matter which side of the river he stayed. During the
night Ian Hamilton, at the other end of the line, seized the drift in
his front with a battalion, which promptly entrenched itself. Tucker,

who proposed to cross near the same point, despatched the
Cheshire regiment for a similar purpose. The single battalion was
sufficient; but the importance and wisdom of the movement was
proved by the fact that the enemy during the night sent 400 men to
occupy the river bank and hold the passage, and found themselves
forestalled.
At daybreak the engagement was begun along the whole front.
I am only concerned with Ian Hamilton's operations; but, in order
that these may be understood, some mention must be made of the
other forces. French advanced as soon as it was light, and almost
immediately became engaged with a strong force of Boers, who
barred his path, and prevented his closing on the railway as
intended. A sharp Cavalry action followed, in which the Boers fought
with much stubbornness; and the Afrikander Horse, a corps of
formidable mercenaries, even came to close quarters with Dickson's
brigade, and were charged. French persevered throughout the day,
making very little progress towards the railway, but gaining ground
gradually to the north. Although his casualties numbered more than
a hundred, he was still some distance from Ventersburg siding at
nightfall. The centre attack properly awaited the progress of the
flanking movements, and was, during the early part of the day,
contented with an artillery bombardment, chiefly conducted by its
heavy guns. Tucker and Hamilton, however, fell on with much
determination, and were soon briskly engaged.
Ian Hamilton began his action at half-past five, with his heavy
guns, which shelled the opposite heights leisurely, while the Infantry
and Cavalry were moving off. The Boer position before us ran along
a line of grassy ridges, with occasional kopjes, which sloped up

gradually and reached their summits about a mile from the river. But
besides this position, which was the objective of the force, the
Boers, who held all the country to the east, began a disquieting
attack along our right and right rear, and although the Mounted
Infantry, and principally Kitchener's Horse, under Major Fowle, held
them at arm's length throughout the day, the firing in this quarter
caused the General some concern, and occupied the greater part of
his attention.
At six o'clock the Twenty-first Brigade began to cross the river,
and Bruce-Hamilton, stretching out to his left, soon developed a
wide front. The Boers now opened fire with two or three field-guns
and a 'pom-pom,' which latter was quickly silenced by our heavy
pieces. At the same time, the Nineteenth Brigade, who were
containing the enemy's left, became engaged with their skirmishers
in the scrub by the river. The four batteries of Field Artillery also
came into action, and were pushed forward across the drift as soon
as sufficient space was gained by the Infantry. At a little after seven
the head of General Tucker's Division appeared on the plain to our
left, and that determined officer thrust his men over the river in
most vigorous style. Moreover, seeing Bruce-Hamilton committed to
an assault, he swung two of his own batteries round to the
eastward, and so rendered us material assistance.

IAN HAMILTON'S ACTION AT THE SAND
RIVER, MAY 10, 1900. The crosses indicate
the Boers.
Both Smith-Dorrien, who directed the two Infantry brigades,
and Ian Hamilton were fully alive to the grave dangers of crowding
too many troops on to a narrow front, and the Infantry attack was
very sparingly fed with supports, until it became completely
extended. This condition was attained about eleven o'clock, when

the Camerons were sent across the river to clear the scrub and
prolong the line to the right. Bruce-Hamilton now had his
deployment completed, and with an admirable simultaneity the
whole of the assaulting Infantry rose up and advanced together
upon the enemy's position, covered by the heavy fire of twenty-six
guns. The panorama was now very extensive. Far away to the left
the smoke of lyddite shells, and the curious speck of the war-balloon
high in the clear air, showed that the centre was engaged. The
whole of the Seventh Division had crossed the Sand, and were now
curving to the north-west amid a crackle of fire. Before us the slopes
were sprinkled with brown dots moving swiftly upwards. The crest of
the ridge was fringed with exploding shells. For a few minutes the
Boers fired steadily, and the dust jumped amid the Sussex Regiment
and the City Imperial Volunteers. But both Infantry and Artillery
attacks were far beyond the capacity of the defence to resist, and by
noon the whole of the heights beyond the Sand were in the British
possession.
Ian Hamilton had meanwhile ordered baggage and Cavalry to
cross. Broadwood was over the enemy's position almost as soon as
the Infantry. He proceeded to move in the direction of Ventersburg
siding. The enemy, however, had covered themselves with a strong
rearguard, and the Cavalry were soon opposed by three guns and a
force of riflemen of considerable numbers. Whether Broadwood
would have thought it worth while to make here the effort which he
afterwards made in the action of Diamond Hill, and order a charge,
is uncertain; for at this moment a misunderstanding arose which
induced him to change his plans altogether.

The Boer pressure on our right rear had been growing stronger
and stronger all the morning, and at length Hamilton, wishing to
check the enemy sharply, so as to draw his rearguard over the river
after his baggage, told his chief of artillery to find him a battery.
Now it happened that only one of the two horse batteries, 'P,' had
been able to go with the Cavalry, the other, 'Q,' being too tired to
keep up. The chief of artillery therefore proposed to send for the
tired battery. Unfortunately, by some mistake, either in giving or
taking the order, the orderly was sent for 'P' instead of 'Q.' The man,
a sergeant-major, galloped across the river, and, understanding that
the matter was urgent, hurried after Broadwood, overtook him just
as he was becoming engaged, and demanded the battery.
Broadwood, who knew that Hamilton would never deprive him of his
guns except for some very urgent reason, sent them at once,
abandoned his movement to the north-west, which indeed was now
impracticable without artillery, and concluding that the rearguard
was seriously involved, turned sharply to the east to assist them.
Explanations arrived too late to make it worth while to revert to the
original plan, and, perhaps, seeing that French was unable to make
Ventersburg siding, it was just as well that Broadwood did not try
alone.
Broadwood's latest movement, or the action of the artillery, or
the knowledge that the British had successfully forced the passage
of the river at all points, induced the Boers who were assailing the
rearguard to desist, and the musketry in that quarter gradually died
away. Meanwhile, by the exertions of Lieutenant-Colonel Maxse, the
baggage had mostly been dragged across the river, and Ian
Hamilton made haste to overtake his victorious Infantry, who had

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