Entrepreneurship & Intrapreneurship

1. Entrepreneurship & Intrapreneurship

2. Entrepreneurship • The process of uncovering and developing an opportunity to create value through innovation and seizing that opportunity without regard to either resources (human and capital) or the location of the entrepreneur—in a new or existing company (Churchill, 1992: 586).

3. Entrepreneurship Characteristics • Commercial leanings • Lack of structure/self-control • Visionary tendencies • Risk-taking/appetite for uncertainty • Persistence • Doer/high initiative • Charisma and extroversion

4. Entrepreneurship Characteristics • High-energy level • Strong self-image • Team building skills/uses contacts and connections • Views failure as learning • Commitment and fun

5. Entrepreneurs vs Managers

6. Intrapreneurship Characteristics • Understands the environment • Visionary and flexible • Creates management options • Encourages teamwork • Encourages open discussion • Builds a coalition of supporters • Persists

7. Intrapreneurship Environment • New ideas encouraged • Trial and error encouraged. Failure ok! • Resources available and accessible • Long time horizon • Appropriate reward system • Sponsors and champions available • Support of top management

8. “It is the customer who, in the end, determines how many people are employed and what sort of wages companies can afford.” Lord Robens

9. Strategy in High Technology Industries

10. High Technology Industries • Rapidly changing scientific knowledge underlying attribute for competition • R&D/Sales • Battle over technical standard, format, and dominant design • Set by decree, cooperation, public domain, but mostly through consumer choices

11. Benefits for Standards • Compatibility • Reduce consumer uncertainty • Reduce production costs • Increase in complementary products – Network effects – which greatly enhances sustainability • Lock outs and switching costs

12. Winning Format Wars • Ensure complementary products • Killer applications • Razor and blade strategy • Cell phones, printers, satellite TV/radio, video games • Cooperative competition • Licensing

13. TV Industry – Paradigm Shifts Black & White TV

14. Color TV Black & White TV

15. Color TV Black & White TV

16. Big Screen TV Color TV Black & White TV

17. Big Screen TV Color TV Black & White TV

18. HDTV Big Screen TV Color TV Black & White TV

19. HDTV Incremental evolution included remote controls,cable ready tuners, stereo sound systems, screen-in-a-screen, etc Big Screen TV Color TV Black & White TV

20. Competitive Dynamics • Competitive action within an industry. • Strategic and tactical action does not occur within a vacuum • What industries have high competitive dynamics? • What sort of actions/tactics are taken?

21. Drivers of Competitive Dynamics • numerous/equally balanced competitors • slow growth • high fixed/storage costs • lack of differentiation/switching costs • high exit barriers • Etc… Competitive Dynamics Rivalry

22. Competition in the Pharmaceutical Industry • Reps tripled to 90K last 10 years • 12B on sales force, 2.76B on ads • Managed care bet – Pfizer from 14th to 1st • 529 visits yearly, average length – 2.5 min • 8% remember • Glaxo can reach 80% of the Drs in a week • “Is this necessary. No, but if my competitors do it and I can’t, then I’m at a disadvantage. This has been an arms race in the worst possible manner.”

23. Types of Competitive Responses • First Movers - initial competitive action • advantages and disadvantages • Fast Followers or Capable Competitors- respond quickly to first movers • Late Entrants - day late and a dollar short

24. Winners vs. Losers Xerox vs. Apple vs. IBM vs. Wintel Sony vs. Matsushita Polaroid vs. Kodak vs. Digital Atari vs. Nintendo/Sega/Sony /Microsoft.

25. Relationship between Innovation and Performance Dependent on industry conditions 1) Appropriability 2) Sustainability are both a function of: • a) legal protection • b) complementary resources • c) complexity of innovation

26. Appropriability Patents judged important in 65% of pharmaceuticals, 30% in chemicals, but only 10% in electrical, instrumentation, motor vehicles, office equipment, rubber & textiles Lead time advantages, learning curves, sales and service networks more effective than patents.

30. The Logitech Saga • Fortune’s one of 25 cool places to work • CEO complained in a 4AM phone call to their advertising agency that Logitech’s ads “failed to breakthrough the clutter of “tech and spec” in the computer publication he was reading.”

31. The Logitech Saga • Woolward & Partners responded to the wake-up call by developing a campaign featuring a series of improbably human images that included fat men in beanies, a urinating baby boy, and fully-clothed nuns splashing in the surf

34. The Logitech Saga • “After a twelve-year roller-coaster ride of profit and loss, leadership and anarchy, attention and ignorance, Logitech is now plagued with recreating itself. The company has been plagued with inefficient manufacturing, mixed marketing messages, and ill-conceived product ventures. In 1995, despite a 40% market share, the company lost $17 million. The company with advertisements featuring a peeing baby or a nose picking (Henry) Kissinger is dead”

35. The Logitech Saga • “We didn’t want to be in mice. They seemed beneath our intelligence. We wanted to be a software company, like Microsoft.” • “I don’t know where I am going, but I’m on my way.” • “We are the most critical users of our products. Customer need recognition is limited by their understanding of technology - they don’t know what is possible.”

36. Sound Familiar? • “This is what customers pay us for - to sweat all these details so it’s easy and pleasant for them to use our computers. We’re supposed to be real good at this. That doesn’t mean we don’t listen to customers, but it is hard for them to tell you what they want when they have never seen anything remotely like this.”