MGMT 554 Essential Skills in New Venture Management

1. MGMT 554Essential Skills in New Venture Management Week 2 Dr. Young

2. MGMT 554Essential Skills in NVM • Entrepreneur and Enterpriser as change agents in new businesses or other organizations • Enterprisers: • Enact change in any circumstance • Generalizablility of skills and abilities

3. MGMT 554Essential Skills in NVM • We know that new businesses create jobs, create individual wealth, create innovation, increase overall philanthropy, etc. • Most businesses are small businesses (G & B) • 82% report sales less than $100,000 • 85% employ less than 20 people • Given these facts, explain why large business dominant in economic impact • Largest 9% of US corporations control 97% of all corporate assets

4. MGMT 554Essential Skills in NVM • Small businesses are the typical start for innovation and expansion into large and/or high-growth firms: • E.g., Amazon, Apple, Cisco, eBay, Microsoft, Oracle and others (see Exhibit 1.1) • Presuming that these business bring value to the economy and society, what other benefits does small business growth provide? Link life cycle to value, does this change your answer?

5. MGMT 554Essential Skills in NVM • Give an example of blind variation and intentional variation. • What insights might these concepts hold for entrepreneurs or enterprisers? • Are these concepts relevant only for the emergence stage of a start-up?

6. Products/services often come from work toward something But the result may not have been the original idea or purpose

7. Wife of scientist working on temperature resistant covers for rail trains… Several inventors working on concept…Edison worked from purchased patent some say… Meant to develop new adhesive, but didn’t become solid enough… colleague used it for personal use… Bell working on transmitter… Bette Graham developed a tempera paint to cover mistakes (1940’s) and called it “Mistake Out”…IBM rejected purchase opportunity…Gillette bought the co. in 1975 for $47.5 m… PC technology turned down by Hewlett-Packard, IBM and others… A tonic from coca leaves created by Dr. Pemberton…mistakenly carbonated?... An original attempt at a chocolate biscuit…

8. MGMT 554Essential Skills in NVM • Which of Microsoft’s decisions were blind, which were intentional?

9. MGMT 554Essential Skills in NVM Kawasaki – Chapter 1 Make meaning – it’s your life Make mantra – constant thoughts (don’t forget the visuals) Get going – thinking realistically and concretely -- prototype

10. MGMT 554Essential Skills in NVM Kawasaki – Chapter 1 Prototyping is particularly important: The business you plan may not be the business that is enacted or accepted by customers (link this to blind or intentional variation, G&B)

11. MGMT 554Essential Skills in NVM Kawasaki – Chapter 1 Gartner & Bellamy - Chapter 1 Think about a business and its main product or service. Who are the stakeholders? How might each stakeholder group define excellence?

12. MGMT 554Essential Skills in NVM Kawasaki Think about your business in terms of needs and serving others – e.g. what you find important, what the world needs, etc. You can make money any number of ways, but you can’t find daily fulfillment in the same number of ways

13. MGMT 554Essential Skills in NVM • Can you do what you love, take full ownership, implement your ideas, and have potential for great wealth in any organization? • New ventures are attractive to many people across ethnicities, gender, ages…for a variety of reasons

14. MGMT 554Essential Skills in NVM • Salary.com survey of small business compensation: • Average base salary approximately $141,000 to $395,000 • This survey includes CEO of small and medium-sized business and business owners • Forbes and other sources (c.g., executive pay watch www.aflcio.org/paywatch) report CEO’s of 500 largest corporations earn, on average, millions annually

15. MGMT 554Essential Skills in NVM Example – Society is changing, what do people need? SSPDirect.com – 2003 Mother/daughter team Myrna and Risa Arin Sell computer hardware that helps seniors use technology (e.g., magnified screens, big keys, etc.) • From: Entrepreneur, May 2006

16. MGMT 554Essential Skills in NVM Example – I’m really good at it Facebook – 2004, Mark Zuckerberg, a Harvard student (21) programming since the sixth grade Developed online technology for students to use to share all types of information (pictures, profiles, etc). Now available on 2100 college campuses and 22,000 High Schools in the U.S. From: Entrepreneur, June 2006

17. MGMT 554Essential Skills in NVM Example – I can do this better or different than my employer (and they won’t listen to me) Kayak.com – 2004, Steve Hafner and Paul English Steve Hafner was VP at Orbitz Travel search engine (search only, no products), sells advertising space From: Entrepreneur, June 2006

18. MGMT 554Essential Skills in NVM Example – A huge part of the market is not being served ColorsNW – 2001, Robert Jeffrey, Jr. Regional (Northwest) magazine on multiculturalism. Sales projected to be $1.2 million in 2006. From: Entrepreneur, June 2006

19. MGMT 554Essential Skills in NVM Example – Those losers fired me Bark Busters Franchise – 2004, Christie Price (54) Former marketing executive dealt with unexpected layoffs by starting over From: Entrepreneur, June 2006

20. MGMT 554Essential Skills in NVM Example – I like it (it’s important to me) OrganicBouquet.com– 2001, Gerald Prolman (46) Has 27 years experience in natural/organic products industry. Wanted socially and environmentally sound change. Online organic flowers. Pays growers a premium but competitively priced due to low marketing costs. From: Entrepreneur, May 2006

21. MGMT 554Essential Skills in NVM • What you know + What you like + What people need + What people like + … = Success

22. MGMT 554Essential Skills in NVM • Get into pairs or groups of 3 people. • Take something that one of you has with you and brainstorm on how to improve the item to meet a need or better serve people.

23. MGMT 554Essential Skills in NVM Kawasaki Define your business model – the process of how your business works from obtaining raw materials to reaching your customers. Draw a business model for a local business you frequent.

24. MGMT 554Essential Skills in NVM Kawasaki - Weave a MAT Milestone: broad objective such as “reach breakeven” or “finalize product specifications” Assumptions: list those things that you don’t know (with data) but guess/hope/assume Tasks: make a to-do list and do it

25. MGMT 554Essential Skills in NVM Kawasaki When you get going: -Think Big -Find soulmates -Polarize people (take a side, approach) -Use prototype as market research

26. MGMT 554Essential Skills in NVM Kawasaki – Chapter 2 Positioning 1. Why did you start the business 2. Why should customers use your product 3. Why should people want to work with you

27. MGMT 554Essential Skills in NVM Kawasaki - Be inspiring and energizing • Keep statements positive • Stay customer focused (vs. organization focused) • We want to provide you with… vs. • We want to be a market leader in… • Remember to “market to your employees”

28. MGMT 554Essential Skills in NVM Kawasaki Some notes about the reading: Not academic, see author’s background Be careful who you get feedback from in the beginning

29. MGMT 554Essential Skills in NVM • Most authors agree that understanding self and defining goals are important to success • Disposition, cognition, (Gartner & Bellamy) affect, etc. interact to drive enterprisers

30. MGMT 554Essential Skills in NVM • What interesting points have you found from your article research?

31. MGMT 554Essential Skills in NVM For next time: Read and understand the assigned readings Work on the self-assessment packet by completing parts 1 and 2 Get your article summary together for next week if you didn’t present today