5 Summary Innovation Strategies There’s a better way to do it. Find it! Thomas Edison Summary How can an entrepreneur build an effective strategy based on innovation that will lead to a sound technology venture? An innovation strategy is structured to effectively commercialize new products and services for its customers. Using an idealized model of a window of opportunity, the entrepreneur can decide when to act. The entrepreneur needs to maintain a sense of urgency but avoid being too early or too late to market. Entrepreneurs establish and build a network of partners who work with them to achieve the new venture’s goals. Chapter 5: Summary Technology Ventures: From Idea to Enterprise

5 Innovation Strategies Emergent industries: Newly created or newly recreated industries formed by product, customer, or context changes [Barney 2002]. Chapter 5: Concept Technology Ventures: From Idea to Enterprise

5 Innovation Strategies Three Types of Industries and Their Characteristics Chapter 5: Table 5.1 Technology Ventures: From Idea to Enterprise

5 Innovation Strategies First Mover Potential Advantages and Disadvantages Chapter 5: Table 5.2 Technology Ventures: From Idea to Enterprise

5 Innovation Strategies Creativity is the ability to use the imagination to develop new ideas, new things, or new solutions. Six Resources for A Creative Enterprise Knowledge in the Required Domain and Fields — knowing what is new Intellectual Abilities to recognize connections, redefine problems and envision and analyze possible practical ideas and solutions Inventive Thinking about the problem in novel ways Motivation towards Action Opportunity Oriented Personality and Openness to Change Contextual Understanding that supports creativity and mitigates risks Chapter 5: Table 5.3 Technology Ventures: From Idea to Enterprise

5 Innovation Strategies Creativity Process Describe The Problem Start Reframe and Start Again Build a Prototype and Show It to the Customer Incubation Period: Observe and Study the Problem Evaluate and Test the Ideas Intuitive Thinking, Brainstorming Insights, Ideas, Inventive Thinking Chapter 5: Figure 5.3 Technology Ventures: From Idea to Enterprise

Types and sources of innovation Innovation Strategies 5 Types and sources of innovation Basic design concepts Chapter 5: Figure 5.4 – Four types of innovation Technology Ventures: From Idea to Enterprise

5 Innovation Strategies Importance reflects the magnitude of the economic value of an invention. Radicalness measures the degree to which an invention, regardless of economic value, differs from previous inventions in the field. Patent scope describes the breadth of intellectual property protection for the invention. Chapter 5: concept Technology Ventures: From Idea to Enterprise

5 Innovation Strategies The Factors that Influence the Entrepreneur to Exploit An Independent Invention 1. The Business Interests, Capabilities, and Experiences of the Entrepreneurial Team 2. The Characteristics of the Industry in Which the Invention Will Be Exploited 3. The Characteristics of the Invention a. Importance of the invention — Economic value and potential payoff b. Radicalness of the invention — differentiation of the invention from its predecessors c. The breadth of patent protection of the intellectual property Chapter 5: Table 5.4 Technology Ventures: From Idea to Enterprise

5 Innovation Strategies The New Business Formation Process for an Invention Chapter 5: Figure 5.6 Technology Ventures: From Idea to Enterprise

5 Innovation Strategies Disruptive or radical innovations introduce a set of attributes to a marketplace different than the ones that mainstream customers historically have valued, and the products often initially perform unfavorably along one or two dimensions of performance that are particularly important to those customers. The Expected Trajectory of a Disruptive Innovation High Range of performance required in the mainstream market Performance Expected Trajectory Current performance of the innovation Low Now Time Chapter 5: Figure 5.7 Technology Ventures: From Idea to Enterprise

5 Innovation Strategies The Elements of An Attractive Innovation Strategy A well defined customer A key customer benefit that is measurable in dollars Short period until economic payback and positive cash flow A high benefit to price ratio for the customer A proprietary advantage that can be maintained or defended The core competencies required to exploit the new technology are present or available to the new venture Access to the necessary resources Chapter 5: Table 5.5 Technology Ventures: From Idea to Enterprise

5 Innovation Strategies Technology Factors Feasibility Performance Manufacturability Business Model Vision Target Market Value Proposition Strategy Industry and Competitor Analysis Expected Competitive Advantage The four steps to achieve a favorable technology innovation. Expected Economic Results Revenue Profitability Return on Capital Time to Profitability Chapter 5: Figure 5.8 Technology Ventures: From Idea to Enterprise

5 Innovation Strategies Complement: A complement to a product is any other product that makes the first one more attractive to the customer. The Value Network Customers Competitors The New Venture Complementors Suppliers Chapter 5: Figure 5.10 Technology Ventures: From Idea to Enterprise

5 Innovation Strategies An innovation strategy builds on creativity, invention, and technologies, acting within a value network, to effectively commercialize new products and services for its customers. Chapter 5: Principle Technology Ventures: From Idea to Enterprise

5 Innovation Strategies Many people expect a car with a hydrogen fuel cell will be common within 10 years. Use table 5.5 and figure 5.1 to describe the potential for fuel cell vehicles. Chapter 5: Exercise Technology Ventures: From Idea to Enterprise

Innovation Strategies 5 VENTURE CHALLENGE Describe your venture in terms of timing of entry as illustrated by figure 5.1 Create a value network for your company as outlined in figure 5.3. Create a partnership strategy as discussed in section 5.4. Summarize your technology and innovation strategy. Chapter 5: Venture Challenge Technology Ventures: From Idea to Enterprise

5 DVD Video “Two Weird Ideas That Work” Innovation Strategies 5 DVD Video “Two Weird Ideas That Work” Bob Sutton (Stanford University) Chapter 5: DVD Video Technology Ventures: From Idea to Enterprise