Technology Entrepreneurship An introduction to using technology as the cornerstone for competitive a

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Technology Entrepreneurship An introduction to
using technology as the cornerstone for
competitive advantage for Entrepreneurship and
Intrapreneurship

• Dr. Steven Walsh
• University of New Mexico
• Mgt. 514

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Outline

• The Syllabus Intro
• Why start a High tech enterprise
• Everything starts with Problem Definition

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Introduction Syllabus
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Week 1 August 24th

• Introduction
• Discuss class syllabus
• Why start a business
• It all starts with a problem

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Week 2 August 31st

• Entrepreneurship and Economic development theory
• Attributes of Successful Business Plans
• Shenhar 1-3
• Some potential projects

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Week 3 Sept 7th

• Vacation

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Week 4 Sept 14th

• Lecture on economics of new firm formation
• Opportunity selection
• Initiate project selection.

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Week 5 Sept 21st

• Shenhar 4-7
• Technology Description
• How to partner

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Week 6 Sept 28th

• Technology Commercialization versus technology
  development
• from problem to product
• market focus versus market development

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Week 7 October 5th

• Teambuilding,
• hiring
• Outsourcing

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Week 8 October12th

• The value of Intellectual property
• Return firm description with comments.

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Week 9 October 19th

• Writing an Executive Summary
• Choosing a legal form
• The problem with problems first solutions rarely
  works out.

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Week 10 October 26th

• Financial projections
• cash flow and income statements.
• Financial ratios
• Creating proforma statements.

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Week 11 November 2nd

• Valuing a firm
• The long term perspective

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Week 12 November 9th

• Team meetings with instructor to discuss
  performance on industry analysis.

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Week 13 November 16th

• Discuss resolution of client firm issues.
• Is the firm growth -- glamour or core?

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Week 14 November 23rd

• Instructor/Team meetings to discuss final written
  assignment.

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Week 15 November 30th

• Catch up
• Presentations

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Week 16 December 7th

• Presentations

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Why start a High Tech Business? Debunking
Entrepreneurial Urban legends How to start a
new business. Define teams for semester's
work. Trend analysis. Week of August 24th
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Outline

• Introduction
• Entrepreneurship Fact and Fiction
• General presentation on firm success rate
• Preparing and Entrepreneurial Business assessment
  
• Business Plan general info
• MOT Tools

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COURSE OBJECTIVES

•  To provide an understanding for the issues in
  Technology Entrepreneurs and Intrapreneurs
• To provide value to interested professionals from
  the varied backgrounds.
• Technology based entrepreneurship three
  components sales, some sort of transformation
  process and bookeeping
• Basic understanding of the funding stages in a
  emergent firm
• To provide professionals an understanding of the
  difficult and often vexing process of technology
  Entrepreneurship

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Why have the course?

• Entre /Intrapreneurship is a good Carrer option
• Few in a single industry or company for life?
• This choice is a basis for job and wealth
  creation
• Help understand the process and responsibilities
  of being your own boss!

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Entrepreneurial Plan Development

• All result in BP
• Work on a problem you are currently faced with

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Debunking some myths

• How Many make it?
• Nature of Nurture?
• Are BP necessary?
• Are their differing types?
• What two management courses?
• Do I have to be good at everything?

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What is Social Entrepreneurship

• Economically speaking it is where Startups
  shares economic value with some portion of the
  society
• Many have a Noble Mission
• Many firm startups can be defined in this manner

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What percent of Entrepreneurial firms make it?

• 10 ?
• 30 ?
• 100
• More - less

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What about Net New Jobs

• Do large firms dominate or Entrepreneurial firms?
• How about over 10 years
• How about in times of recession?
• Where were Intel, Wal-Mart, Microsoft in 1970 for
  example?

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Are BP necessary?

• Yes
• no

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How many types of BPs

• 1
• 10
• 100

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What type is best

• It depends ?

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Does best technology always win ?

• What do economist say
• What about reality?

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Definitions of Success?

• Pay taxes?
• 40 times return in 5 years
• Internal satisfaction?
• How does fortune 500 stack up?

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What Two Management Courses?

• Which two management Courses does a technologist
  need to start a business?
• Accounting?
• Marketing?
• Strategy?
• What is the right response?

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All foirms

• Gotta count things
• Gotta make something
• Gotta sell something

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Do You have to be good at everything?

• The Transformation Process
• The Sales and Marketing of the product
• Book keeping, accounting and cash flow
• All three, 1 of the above

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Is there a Process?Some elemental tools

• How to segment tools for developing a business
  case
• Death of the Myth
• SWOT
• Entrepreneurial Assessment

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Learning to be a conscious Incompetent
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Four Steps of Management Technology Cognizance

• Unconscious Incompetent
• All born that way and means we should be managed
  rather than manage
• Conscious Incompetent
• The step that all managers interfacing with
  technology must at least attain
• Conscious Competent
• The death of the myth of the professional manager
• Unconscious Competent
• Ted Williams - Difficult to mentor

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Why start a firm
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Why Start a high tech business?

• to fulfill personal ambitions and interests
• Money and power
• to improve their life style and/or employ their
  children and close relatives
• World Peace?
• How about You

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Why Start a high tech business?

• Survival of Your Business
• Four out of five new businesses fail in the
  first five years. - best guess
• 38 percent of all new businesses survive for six
  or more years and it is probable that as many at
  60 to 70 percent - Data 1977 through 1992, 2003
• Entrepreneurship and Dynamic Capitalism the
  Economics of Business Firm Formation and Growth,
  published in 1994 by Praeger
• U. S. Census Bureaus Characteristics of Business
  Owners
• Junfu Zhang in his 2003 for high tech only
• 5 year survival 72 to 76 , 10 year survival 42
  to 46

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Why Start a high tech business?

• Growing the economy
• Net new jobs
• Approximately 600,000 to 1,000,000 new businesses
  are formed every year in the U.S. or 50,000 to
  90,000 High tech companies
• Massachusetts
• 20 percent of the net new jobs created by 1984
  were from businesses newly formed in 1977-78
  100 by firms formed form 1976 to 1984
• Silicon Valley, Boston, and Washington D.C.
• newly formed high-tech firms less than five years
  old consistently created between 22 to 28 percent
  of all high-tech jobs existing in each year from
  1998 through 2001.
• It is new high-tech firms that create economic
  growth

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Why Start a high tech business?

• Expectations of Growth
• without growth, innovation cannot be sustained
  and the success you hope for may not be realized
• Growth Factors
• Funding
• Character of your science/technology in relation
  to potential buyers.
• Identifying the potential buyers and finding a
  way to reach out to them.
• Genetech 12 years Gen splicing

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Why Start a high tech business?

• Funding
• SV 10 Months, Boston 16 month, Av. 17 months
• Fewer than 100 of more than 2000
• Importance of Tech Difference
• high tech firms born in 1976-78 did not grow
  significantly until after six years
• growth lies in the character of the technology
• Some technologies, like recombinant DNA or gene
  splicing, are based on new science and are hard
  sells that require buyers to make significant
  changes in their behavior in order to gain the
  potential cost and/or quality advantages

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Why Start a high tech business?

• Other technologies derive from known science and
  are relatively easy to sell as they require few
  changes in buyer behavior and the advantages are
  quickly realized.
• Pathfinder moved from prototype to sales in under
  two years. Pathfinder and firms offering known
  technology are early growers, and more likely to
  obtain first round financing in their first year.
  The others have to plan on longer term success
  and growth.
• it is very important that your technology have
  clearly evident differences from other existing
  technology products
• Genetech - It was their third first product

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Why Start a high tech business?

• Identifying the Real Potential Buyers
• Until you have a product, you will have
  difficulty identifying the potential buyers
• Buyers have no interest in your technology
• Buyers want to see a product that solves a
  problem or creates a competitive advantage for
  them
• Identifying real buyers is especially difficult
  if you intend to sell the product to a large
  corporation
• Dialogic Inc. Consumer to OEM 2nd first Product
  

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Why Start a high tech business?

• Judging the Hard or Easy Selling Product
• Be skeptical of your judgment
• The more unique your technology the more
  difficult it is to explain
• Have a prototype
• Market research example

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It Starts with Problem Recognition
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From Problem to ProductHigh tech initiation and
Development

• Dr. Steven Walsh
• Albert Franklin Black Professor of
  Entrepreneurship
• Anderson School of Management
• University of New Mexico

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Outline

• Entrepreneurship and Intrapreneurship
• Introduction Evolution of thought
• Innovation process
• Technology development categorizations
• Some research on learning or experience curve

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Evolution of Thought

• Entrepreneurship starts with Problem
• Technology development as the pushing the state
  of technology along a critical dimension
• Technology development occurs throughout the
  different stages of the innovation process
• Technology development and the value chain
• Technology development as competency bundles
• Technology development bifurcated

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Opportunity Evaluation

• For intrapreneurial or entrepreneurial efforts
• Sun Tzu
• What should you do / what can you do
• Innovation process

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Problem to Product A way to review

• Technology Development Innovation Process
• Symptoms Problems
• Technology Commercialization is concerned with
  problem identification and concept generation
• Technology Maturation is focused on fusing a
  concept into a workable scaleable solution

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Model of the Process of Innovation (Marquis, 1969)
State of Technology
Search, experimentation calculation activity
Solution through invention
Recognition of technical feasibility
Fusion into design concept evaluation
Work out bugs scale-up
Implementation use
Solution through adoption
Information readily available
Recognition of potential demand
1. Recognition 2. Idea formulation 3. Problem
Solving 4. Solution 5. Development 6.Utilization
Diffusion
State of Societal Demand
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Technology Commercialization

• What should you do
• Problem Identification
• Symptoms
• Benefits and features
• Product planning
• Questions behind the questions

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How do you solve it

• Physical Products
• Service products
• Combination

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Product / Service Planning

• Product Planning exceptionally different
• Service Products
• Infrastructure or process centric
• Physical Products
• Product centric

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C.H.I.P.S.How Service Products differ from
Physical Products

• Co-production Both the service provider and
  consumer are part of the production process
• Heterogeneity Providers of services interact
  with the consumer
• Intangibility Service products are not
  physically measurable outputs as are physical
  products.
• Perishability Service products are not physical
  objects and as such cannot be stored or
  inventoried.

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Product Planning

• Doing the Right thing
• Doing it Right
• A Moving Target

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The Chasm
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Beyond the Chasm

• Inside the Tornado

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Profit and sales volume - life cycles for a
typical product
Profit Revenue x 100,000
Maximum Profit
Maximum Sales Volume
Withdrawn from market
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Innovation
Growth
Maturity
Decline
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Sales Revenue x 1,000,000
3
3
Profit
2
Sales Volume
2
1
1
Years from Launch
Commercial launch
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Project cumulative cash flow diagram
What are the T and M risks? at what point?
Technical feasibility established
Time
M ? T ?
Cummulative Cash Flow
Production technology established
Break-even
M ? T ?
Market launch
M ? T ?
M ? T ?
Time Years
Market launch costs
Earnings from sales
Applied research
Prototype pilot plant costs
Manufacturing plant investment
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Technology Maturation

• What can you do
• Technology lifecycles
• Technology Readiness levels

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Technology Lifecycle
Natural limit to technology
Slow finish, nearing limit
Critical Dimension
Region of Maximum Rate of Progress
Critical dimension necessary for functionality
Slow start, No Knowledge
Time
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Competitive Technology Lifecycle
Critical Dimension
Traditional technology
Emergent technology
Time
Ex Vacuum tubes v. transistors Sail v.
steamships
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NASA TRL

• Technology Readiness Levels are a systematic
  measurement system that supports assessments of
  the maturity of a particular technology.
• Developed after Challenger Disaster

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NASA TRL Descriptions

• TRL1 Basic Principles observed and
  reported
• TRL2 Technology concept and/or application
  formulated
• TRL3 Analytical and experimental critical
  function and/or characteristic
  proof-of-concept
• TRL4 Component and/or breadboard validation in
  laboratory environment
• TRL5 Component and/or breadboard validation in
  relevant environment
• TRL6 System/subsystem model or prototype
  demonstration in a space environment
• TRL7 System prototype demonstration is a space
  environment
• TRL8 "Actual system completed and ""flight
  qualified"" through test and demonstration"
  
• TRL9 "Actual system ""flight proven"" through
  successful mission operations
• Mankins, John C.
• Advanced Concepts Office
• Office of Space Access and Technology, NASA

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The bottom Line

• Problems are different than symptoms
• A Customers Pain is a Symptom not a problem
• They way you identify, understand and bound a
  business problem is perhaps the most important
  underpinnings of a start up

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Marquis Model Explanation and Examples

• Dr. Steven Walsh

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Marquis and Insect Control by Pheromones
State of Technology - Pheromones
Recognition of technical Feasibility Use of
pheromones
Place extracted pheromones in box To demonstrate
Japanese beetles where attracted
Solution through invention
experimentation calculation extract pheromones
from feces
The problem Japanese beetle Control by means
other Insecticides
Implementation use
Work out bugs scale-up Developed
Bag-a-bug Scale up required The development of
and patent of Synthetic Pheromone
Fusion into design concept evaluation
Capture rather than kill Japanese beetles through
Use of pheromones
1. Recognition 2. Idea formulation 3. Problem
Solving 4. Solution 5. Development 6.Utilization
Diffusion
State of Societal Demand
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Marquis and the Laminar Flow Clean Room
State of Technology Aerosol suspension and
laminar air flow
25,000 to develop a prototype. Big success.
Solution through invention
Recognition of technical Feasibility Use of
laminar flow concepts
Demonstrated by calculation the value of
unidirectional flow and filtration to make
minimum particulate Environments
Patent Laminar flow clean room Concept
The symptom was Defective parts The problem
was The manufacturing Environment And
airborne Particulates
Fusion into design concept evaluation
Work out bugs scale-up Dr. Lovelace Surgical
Theaters
Implementation use RCA, WE etc.
Think or airborne Particulates as a Aerosol
suspension
1. Recognition 2. Idea formulation 3. Problem
Solving 4. Solution 5. Development 6.Utilization
Diffusion
State of Societal Demand
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Problem ID Excersise

• Two models

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outline

• Marquis Model
• KS Model

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Figure 1a Model of the Process of Innovation
without journey direction
State of Technology
State of Societal Demand
1. Recognition 2. Idea formulation 3. Problem
Solving 4. Solution 5. Development 6.Utilization
Diffusion
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Figure 1a Model of the Process of Innovation
without journey direction
State of Technology
State of Societal Demand
1. Recognition 2. Idea formulation 3. Problem
Solving 4. Solution 5. Development 6.Utilization
Diffusion
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Figure 1a Model of the Process of Innovation
without journey direction
State of Technology
State of Societal Demand
1. Recognition 2. Idea formulation 3. Problem
Solving 4. Solution 5. Development 6.Utilization
Diffusion
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Tools to take away

• Problem Identification, understanding bounding
• Marquis Model
• Kirchhoff Walsh Model
• Tech Commercialization
• Tech Maturation
• Physical Service Poducts