1. Entrance Strategy and the Competitive Terrain

2. Three Phases of Entrepreneurship

3. Choosing Your Competitive Terrain
Each new business model
will demand shifts in your firm’s capabilities
to allow you to compete in new markets
with unfamiliar competitors
You will need to decide how ‘best’ to:
Choose your competitive terrain
To enter your chosen market(s)
And to marshal your assets, investments and competencies

4. Two Questions How do low-cost and differentiated products come about?
Why is it that some firms can offer them better than others?

5. Trajectory of your Markets and Capabilities
‘Vision’
Where you think your firm, product and market will be at some point in the future
Is how you summarize your view of the competitive trajectory you will take

6. Trajectories What is actually happening to Markets and Capabilities
Market trajectories are defined by whether
Firms competing in that market
Find competences obsolete
Or Assets obsolete
(capabilities = assets + competences)

7. Some Types of Change are More Common

8. What is Your Commitment to a Product Business segment portfolio ranking
Competition in multiple products/services/markets
May be ranked on different metrics
Decide what is important to your firm
And why

9. What’s Different about Innovation
Innovations distinguish themselves from more conventional investments in three ways:
(1) technology development and marketing both need intense, adaptive management;
(2) there is no history of investment performance which might yield insights in the value of the innovation; and
(3) the potential value of the innovation depends on future events and managerial decisions which cannot be foreseen.
This sets up impediments to commercializing an innovation that can make resource planning and investment extremely difficult.
Innovations are inherently riskier, with added risk compensated for by high returns
research suggests on average about three to four times as great as traditional products and services, but significantly higher for ‘blockbusters.’

10. Adaptive Execution Where the competition changes rapidly
Firms cannot compete with a static strategy that will remain valid for years
Rather strategy must be stated in terms of:
Condition  Response
Each competitive event needs to be met with a managerial response
These responses are the ‘Real Options’ that a manager has to respond to competition

11. Options on Strategic Decisions

12. Real Options Commonly Found in Innovation Strategy
Real options provide a richer language for innovators than their financial counterparts
Because real options take into account the manner in which management learns about their innovation, and
The particular steps that are taken to manage that risk of the life of the product or service
Real options in innovation come in three different forms
positioning,
scouting, and
stepping-stone options.

13. Positioning Options
Positioning options create the right to wait and see.
Investments that put the company in a position to capitalize on uncertain external events, should they occur
such as the emergence of a new market on the Internet or of a successful technology that has been competing for market dominance
Are positioning options
Such options are useful when the uncertainty you face is mostly out of your control but you need to be positioned to act in case fortune turns your way.

14. Positioning Option Example
AT&T, from about 1998 to 2003, spent billions of dollars on taking attractive positions,
Acquiring cable companies such as Tele-Communications and MediaOne;
Entering into joint ventures with British Telecom and Japan Telecom, and
Working with Microsoft for set-top box software
All in pursuit of a convergence of telephone, internet, gaming and television services on top of one technological platform
This is a market that AT&T could possible dominate with their network position;
but Microsoft, Sony and Nintendo may be in a better consumer position with their game consoles.
For AT&T, billions of dollars is a reasonable price to pay for a positioning option when you consider the size of the potential industry, which may represent $100 billions of dollars in annual revenue.

15. Scouting Options
Scouting options, can be considered as entrepreneurial experiments
They are investments made with the intention of discovering and/or creating markets for products and services
by deploying capabilities that you have (perhaps recently) developed in potential new arenas
They help you explore new terrain from your current competence base

16. Scouting Option Example
By staking out several contrasting positions in a market,
you can systematically pretest the market acceptance of an innovation
and test your coverage for adverse contingencies
Scouting options can also provide you information concerning what data needs to be tracked, and
Helps develop the scanning and intelligence systems that will ultimately be needed when the product or service comes to market

17. Stepping-Stone Options
Stepping-stone options are a series of small investments that lead you towards a larger goal one small step at a time (3M’s ‘small steps’
They are consciously staged attempts to sequentially discover new competences to pursue highly promising but very uncertain potential markets or technologies
You choose stepping-stone options when you want to expose your company to opportunities
in which there is high uncertainty both about the final shape of a high-potential market and
about the likelihood of being able to develop the necessary competences to serve it

18. Stepping-Stone Option Examples
Kyocera – a Japanese ceramics company – used stepping-stone options to pursue the industrial ceramics business in the 1960s
Instead of investing to crack high-level applications like automobile engine cylinders or turbine blades
as did many other smart companies, General Electric included
Kyocera initially invested in low-end applications for known niche markets
For instance, the company developed ceramic scissor blades for the textile industry
Through this initial effort, the company resolved considerable technical uncertainty, such as how to process clays and how to make precise edges with consistent quality
This created an initial technological competence which, as it evolved, took Kyocera along a trajectory of increasing technical sophistication
The firm is now a major global supplier of semiconductor chip substrates and other materials for the digital age

19. Understand where your Options Fit

20. Why we are spending money on them What they do When do we stop them
For example: One firm’s Project Portfolio Mapped in Technology -Operations and Market Space
Eight e-Marketing projects
, , , , , , , and 
Where they fit
Why we are spending money on them
What they do
When do we stop them

21. The most important sales are your first three sales
Your first three sales of any particular combination of features that you envision for your innovation should be seen as qualitatively different from all other sales
They not only provide you with your first real feedback on the innovation;
but they also provide the basis for word-of-mouth and viral marketing, both good and bad

22. Lead-steer customers
Who should you choose as your first three customers?
Lead-steer customers are opinion leaders in their industry, who are likely to be well regarded by their peers.
Corporations like those on the "most-admired" lists published in magazines such as Business Week are prime candidates for lead-steer customers.
Individuals who represent a segment that is highly desirable to you might be more appropriate for your particular innovation.
The objective is to use these customers' enthusiasm about your innovation and business model to

23. Adaptive Execution Where the competition changes rapidly
Firms cannot compete with a static strategy that will remain valid for years
Rather strategy must be stated in terms of:
Condition  Response
Each competitive event needs to be met with a managerial response
These responses are the ‘Real Options’ that a manager has to respond to competition

24. First 3 Customers Lead-steer customers
Opinion leaders in their industries
Highly regarded by peers
Customers with blogs, review or other sites

25. When to be a ‘First Mover’
Many dot-com investments were predicated on getting the money to become a ‘first mover’ in a field
In order to compete for ‘eyeballs’ (network effects)
Faith in the ‘first mover advantage’ is usually misplaced

26. Who are your Competitors
Who are your Competitors? How do you expect them to respond to your entry?
Other firms in your market, or producing substitutes for your product
Will try to limit your success in the best way they can.
Depending on the scale of their business
And their commitment to this market
Capacity to produce is High
Capacity to produce is Low
Commitment to enter market is Low
Sleeping Dogs
(track them)
Bystanders
(monitor)
Commitment to enter market is High
Combatants
(Your main focus)
Skirmishers
(selective in their responses due to resource limits; monitor)

27. What Entry Tactics should you Choose?
Objective: Avoid debilitating competitive interaction
By using speed, skill and surprise
Rather than your scarce resources
Assets should be bought only as a last resort
As in war, there are a limited set of battle proven tactics available for entry

28. Your first 3 Customers are your Most Important!
They should be Lead-steer customers
Opinion leaders in their industries
Highly regarded by peers
Customers with blogs, review or other sites
These will help you to test your assumptions about attribute maps and consumption chains

29. When to be a ‘First Mover’
Many dot-com investments were predicated on getting the money to become a ‘first mover’ in a field
In order to compete for ‘eyeballs’ (network effects)
Faith in the ‘first mover advantage’ is usually misplaced

30. Competitors cannot let your Entry go Uncontested
Other firms in your market, or producing substitutes for your product
Will try to limit your success in the best way they can.
Depending on the scale of their business
And their commitment to this market

31. State why you categorize them as such
Who are your Competitors? How do you expect them to respond to your entry?
State why you categorize them as such
Usually because of their market power, the coreness of the product to their capabilities, and their interest in this market
Capacity to produce is High
Capacity to produce is Low
Commitment to enter market is Low
Sleeping Dogs
(track them)
Bystanders
(monitor)
Commitment to enter market is High
Combatants
(Your main focus)
Skirmishers
(selective in their responses due to resource limits; monitor)

32. What Entry Tactics should you Choose?
Objective: Avoid debilitating competitive interaction
By using speed, skill and surprise
Rather than your scarce resources
Assets should be bought only as a last resort
As in war, there are a limited set of battle proven tactics available for entry

33. Entrance Tactics Analogies from Warfare
Offensive tactics
Rapid dominance
Planned attack / frontal assault
Flanking maneuver
Pincer movement
Double envelopment
Attrition warfare
Interdiction / control of lines of communication and supply
Preemptive attack
Raiding
Divide and Conquer
Guerrilla Warfare
Defensive tactics
Mutual support
Scorched earth policy
Booby traps
Center Peel
Trench warfare
Hedgehog defense
Deception Tactics
Stealth and Camouflage
Disinformation
Feint
Force multiplication

34. Innovation Workout Force Field Analysis

35. Big Bikes

36. Technology Acceleration in Motorcycles

37. Triumph’s Market Position

38. Triumph’s Market Position

39. Polaris Financials