Idea Generation and Competitive Advantage

1. Idea Generation and Competitive Advantage Paula Jensen Industrial Engineering Instructor ENGM 625

2. 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

3. 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

4. 1 Economic Growth & the Technology Entrepreneur Waves of innovation throughout history Chapter 1: Figure 1.5 Technology Ventures: From Idea to Enterprise

5. 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

6. 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

7. 2 Opportunity and the Concept Summary Six steps to acting as an entrepreneur Chapter 2: Figure 2.1 Technology Ventures: From Idea to Enterprise

8. 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

9. 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 ?

10. 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

11. 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

12. 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

13. 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

14. 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

15. 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

16. Video • Micro Trends – Mark Penn YouTube Video

17. 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

18. 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

19. 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)

20. 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

21. 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

22. 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

23. 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

24. Product Development Process t Introduction Growth Maturity Decline

25. EVALUATE t Idea Concept Develop Test Market Introduction Growth Maturity Decline Product Development Process

26. 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

27. 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

28. 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

29. 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

30. Competitive Advantage • Create a vision • Mission statement • State the value proposition • Create the business model • Describe the core competencies & competitive advantage • Act

31. 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.

32. 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

33. 3 Vision and the Business Model The Value Proposition defines the company to the customer. Chapter 3: Concept Technology Ventures: From Idea to Enterprise

34. 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

35. 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

36. 3 Vision and the Business Model Elements of A Business Model Chapter 3: Table 3.8 Technology Ventures: From Idea to Enterprise

37. 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

38. Value Proposition

39. Business Model • Customer selection • Value proposition • Differentiation • Scope of product/activities • Organizational design • Value capture for profit • Value for talent

40. 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

41. Business Model

42. 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.

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