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Idea Generation and Competitive Advantage. Paula Jensen Industrial Engineering Instructor ENGM 625. 1. There are risks and costs to a program of action. But they are far less than the long-range risks and costs of comfortable inaction. John F. Kennedy.

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idea generation and competitive advantage

Idea Generation and Competitive Advantage

Paula Jensen

Industrial Engineering Instructor

ENGM 625

slide2

1

There are risks and costs to a program of action. But they are far less than the long-range risks and costs of comfortable inaction.

John F. Kennedy

Economic Growth & the Technology Entrepreneur

Summary

What drives global entrepreneurship?

The entrepreneur provides the creative force in order for capitalism (free enterprise) to work. Entrepreneurs strive to make a difference in our world and contribute to its betterment. They are also motivated by achievement, independence, and the accumulation of wealth.

Chapter 1: Summary

Technology Ventures: From Idea to Enterprise

slide3

An Attractive

Opportunity

Finding the Right

Opportunity

1

  • Timely
  • Solvable
  • Important
  • Profitable
  • Favorable Context

Economic Growth & the Technology Entrepreneur

TheSweetSpot

  • Like to do the tasks
  • Like the challenge
  • Committed to do what is necessary
  • Skilled at the neededtasks

Interests, Passions, Commitment

Capabilities & Skills

Chapter 1: Figure 1.1 - Finding the Right Opportunity

Technology Ventures: From Idea to Enterprise

slide4

1

Economic Growth & the Technology Entrepreneur

Waves of innovation throughout history

Chapter 1: Figure 1.5

Technology Ventures: From Idea to Enterprise

slide5

1

Economic Growth & the Technology Entrepreneur

Dynamic Capitalism is the process of wealth creation characterized by the dynamics of new, creative firms forming and growing and old, large firms declining and failing.

Creative Destructionis the entrepreneurial activity of destroying old models and creating new models of doing business.

Chapter 1: concept

Technology Ventures: From Idea to Enterprise

slide6

2

Opportunity and the Concept Summary

In the field of observation, chance only favors minds which are prepared.

Louis Pasteur

Summary

How can an entrepreneur identify and select a valuable opportunity?

The choice of an opportunity and the decision to act is a critical juncture in the life of an entrepreneur. With the decision to act, the entrepreneur prepares a business summary for the venture that is used to test the new venture with potential investors, employees, and customers.

Chapter 2: Summary

Technology Ventures: From Idea to Enterprise

slide7

2

Opportunity and the Concept Summary

Six steps to

acting as an

entrepreneur

Chapter 2: Figure 2.1

Technology Ventures: From Idea to Enterprise

nine categories of opportunities
Nine Categories of Opportunities
  • Increase value of a product or service
  • New applications of existing technologies
  • Creating mass markets
  • Customization for individuals
  • Increasing reach
  • Managing the supply chain
  • Process innovation
  • Increasing the scale of the firm
evaluating opportunity
Evaluating Opportunity
  • Capabilities:is it consistent with mission, knowledge base ?
  • Novelty:does product have sufficient differentiating qualities that it creates value for the customer ?
  • Resources:are the available resources sufficient for the venture ?
  • Return:is expected return consistent with the risk of the venture ?
  • Commitment:is the entrepreneurial team sufficiently passionate about the venture that they can commit ?
slide10

2

Opportunity and the Concept Summary

Types of Opportunity:

Opportunity Pull:

the size of the opportunity attracts opportunity seekers to attempt to exploit it.

Example:

A drug to mitigate the effect of Alzheimer’s disease.

Chapter 2: concept

Technology Ventures: From Idea to Enterprise

slide11

2

Opportunity and the Concept Summary

Types of Opportunity:

Capability Push:

a new technology or capability causes a search for new applications.

Example:

Digital Television

Chapter 2: concept

Technology Ventures: From Idea to Enterprise

slide12

Team:

accept risk

knowledge base

commitment

100%

50%

Resources:

financial

processes

human

Context:

timeliness

industry conditions

market conditions

Opportunity:

novelty

potential market

good risk vs reward

slide13

Team:

accept risk

knowledge base

commitment

100%

Holiday Inn

50%

Resources:

financial

processes

human

Context:

timeliness

industry conditions

market conditions

Opportunity:

novelty

potential market

good risk vs reward

slide14

Team:

accept risk

knowledge base

commitment

100%

50%

Resources:

financial

processes

human

Context:

timeliness

industry conditions

market conditions

Electric

Auto

Opportunity:

novelty

potential market

good risk vs reward

trends
Trends
  • MicrotrendsvsMegaTrends
  • MicroTrends
    • Mark J. Penn --Pollster
    • Single Women Head of House Record
    • Soccer Moms decrease
    • Women majority of Car buyers
    • Men majority of Truck Buyers
    • Majority of purchasing power is 49 plus
video
Video
  • Micro Trends – Mark Penn YouTube Video
sources of ideas
Sources of Ideas
  • Consumers
  • Existing Companies
    • can we improve existing products
  • Distribution Channels
    • distributors keenly aware of market trends
  • Federal Government
    • Patent Office (Official Gazette)
    • Regulations (OSHA)
  • Research & Development
    • Ken Olsen
generating ideas
Generating Ideas
  • Focus Groups
    • 8-12 market group conceptualize new product need
  • Brainstorming
    • structured
      • central question is stated
      • each member gives idea in turn (no criticism)
      • ideas written on flip chart
      • ideas generated until all members pass
      • review written list for clarity and discard duplicates
    • unstructured
generating ideas1
Generating Ideas
  • Variations to Brainstorming
    • visual brainstorming
    • analogies/free-word association
    • 6-3-5 method
      • 6 people 5 minutes 3 ideas
      • pass sheets of 3 ideas to the right
      • 5 minutes 3 ideas which build on first 3
      • complete 6 rotations (or as many as there are members)
generating ideas2
Generating Ideas
  • Nominal Group Technique (NGT)
    • generate list of ideas (brainstorm)
    • each member rank orders ideas highest to lowest
    • idea with highest total score gets worked on first
    • Variations
      • One half plus one; eliminate half at a time until arrive at a manageable number
      • Multivoting; rate each idea on scale of 1 to 100
  • Problem Inventory Analysis
    • easier to relate to known products and criticize to arrive at a new product idea
creative problem solving
Creative Problem Solving
  • Checklist Method
    • modify, adapt, put to other uses, substitute, . . .
  • Free Association
    • similar to brainstorming - create chain of ideas
  • Forced Relationships
    • Isolate elements of a problem
    • Find relationships between elements
    • Record relationships in an orderly form
    • Analyze relationships to find ideas or patterns
    • Develop new ideas from patterns
creative problem solving1
Creative Problem Solving
  • Value Analysis
    • maximize value by constructively skimping
  • Attribute Listing
    • list attributes of a problem
    • e.g. SD has little economic development, what types of industry/products/services do well here
  • Matrix Charting
    • similar to house of quality
creative problem solving2

Market Need

Technology

Observation

Need

Analysis

Parameter

identification

Creative

synthesis

Realization

Creative Problem Solving
  • Big-Dream Approach
    • ideas should be conceptualized without constraints
  • Parameter Analysis
    • 2 aspects, parameter identification & creative synthesis

New Product

product development process
Product Development Process

t

Introduction Growth Maturity Decline

product development process1

EVALUATE

t

Idea Concept Develop Test

Market

Introduction Growth Maturity Decline

Product Development Process
evaluation criteria
Evaluation Criteria
  • Evaluation of market demand is most important criterion of a proposed new product idea
  • Competing producers, prices, and marketing strategies should be evaluated
  • New product compatible with existing management
  • New product should contribute to company’s financial structure
  • New product compatible with existing facilities
evaluation
Evaluation
  • Idea Stage
    • each new idea expressed in terms of values & benefits
    • consumers presented with cluster of ideas determine which should be pursued
    • Table 4.4 & 4.5
  • Concept Stage
    • refined product idea tested to determine consumer acceptance
    • conversational interview - consumers respond to statements that reflect product attributes, quality, reliability, price, promotion, distribution
evaluation1
Evaluation
  • Product Development Stage
    • consumer reaction to physical product is determined
    • consumer panel tracks use of product
    • consumer panel records virtues, deficiencies of product and competing products
  • Test Marketing Stage
    • New Coke
slide29

3

Vision and the Business Model

Success in any enterprise requires the right product, methods, and workers, and each must complement the others.

Joseph Burger

Summary

How do successful entrepreneurs create a compelling business design for their new ventures?

To design a new business, the entrepreneur must cogently and clearly describe the customers and their needs and how the new venture will satisfy those needs.

Chapter 3: Summary

Technology Ventures: From Idea to Enterprise

competitive advantage
Competitive Advantage
  • Create a vision
  • Mission statement
  • State the value proposition
  • Create the business model
  • Describe the core competencies & competitive advantage
  • Act
vision
Vision
  • Clarity
  • Consistency
  • Uniqueness
  • Purposeful

We strive to preserve and improve life through the innovation of biomedical devices while supporting, training, and inspiring our employees so that individual ability and creativity is leased and rewarded. Our goal is to be the leader in our industry by 2006 and be widely known throughout the world.

slide32

3

Vision and the Business Model

A mission statement is a description of the course of action to implement the vision.

Possible elements of a mission statement

• Core Values

• Customers and/or Stakeholders

• Products

• Competitive Advantage

• Values Provided to Customer

• Markets or Industry

Ex. Our mission is to design and manufacture electronic devices that serve the needs of the aerospace industry on a timely basis and at reasonable prices.

Chapter 3: Table 3.3 - Elements of a Mission Statement

Technology Ventures: From Idea to Enterprise

slide33

3

Vision and the Business Model

The Value Proposition defines the company to the customer.

Chapter 3: Concept

Technology Ventures: From Idea to Enterprise

slide34

3

Vision and the Business Model

The Value Proposition defines the company to the customer.

  • Five values offered to a customer
  • Product:
    • Performance, quality, features, brand, selection, search, easy to use, safe
  • Price:
    • Fair, visible, consistent, and reasonable
  • Access:
    • Convenient, location, nearby, at-hand, easy to find, in a reasonable time
  • Service:
    • Ordering, delivery, return, check-out
  • Experience:
    • Emotional, respect, ambiance, fun, intimacy, relationships, community

Chapter 3: Table 3.6

Technology Ventures: From Idea to Enterprise

slide35

3

Vision and the Business Model

Example of a value proposition:

Intel offers product as their primary value and service as their secondary value.

The Unique Selling Proposition is a short version of firm’s value proposition.

Example:

Intel has a USP:

The best product with great service.

Chapter 3: concept

Technology Ventures: From Idea to Enterprise

slide36

3

Vision and the Business Model

Elements of A Business Model

Chapter 3: Table 3.8

Technology Ventures: From Idea to Enterprise

slide37

3

Vision and the Business Model

Dell Computer Business Model

• Customer Selection: High RelevanceFour Segments: Corporate, Government, Education, Consumer.• Value Proposition: Unique Benefits A customized computer at a good price with great service readily accessible via phone or the Internet.• Differentiation and control: Sustainable competitive advantage Customized products via a direct sales channel on the phone or Internet with strong service and customer relationships.• Scope of Product and Activities Desktop, laptop, and servers. Strong supply chain management.• Organizational DesignDivisional organization for each customer segment.• Value Capture for Profit Opportunities for cross-sell and up-sell. Avoid price as the key value and focus on service and accessibility.• Value for Talent: Learn, Grow, ProsperTraining, Learning, and Career Opportunities.

Chapter 3: Table 3.9

Technology Ventures: From Idea to Enterprise

business model
Business Model
  • Customer selection
  • Value proposition
  • Differentiation
  • Scope of product/activities
  • Organizational design
  • Value capture for profit
  • Value for talent
business model dell
Business Model (Dell)
  • Customer Corp, Govt, Ed, Indiv
  • Value customized computer
  • Differentiation direct sales, service
  • Scope desktops, laptops, servers
  • Organization divisional by customer seg
  • Value capture focus on service, access
  • Value for talent career opportunities
core competencies
Core Competencies

Core competency of Google is the design and operation of a software search engine. It is the dominant online search engine. While starting as a search tool for finding information on diverse subjects, it has also become a tool for people searching for an online site selling a product of interest.

sustainable competitive adv
Sustainable Competitive Adv.
  • High quality Toyota
  • Service Starbucks
  • Price Wal-Mart
  • Mrkt Segment Dell
  • Product Breadth Amazon
  • Innovation Medtronic
  • Intellectual Prop. MicroSoft