Documenti di Didattica
Documenti di Professioni
Documenti di Cultura
Volume I
10 9 8 7 6 5 4 3 2 1
KEYWORDS
List of Figures ix
List of Tables xi
Acknowledgments xiii
1 Introduction 1
1.1 The Entrepreneurial Engineer 1
1.2 Successful Entrepreneurial Ventures 2
1.3 Engineering Entrepreneurship Opportunities 3
1.4 Creativity, Invention, and Innovation 3
1.5 Entrepreneurship and Commercialization 6
1.6 Why Study Entrepreneurship 7
1.7 Outline of the Book 8
2 The Entrepreneurship Process 11
2.1 Introduction 11
2.2 Traditional Commercialization Process 13
2.3 Entrepreneurship Process 16
2.4 Summary 25
3 The Entrepreneurial Team 27
3.1 Introduction 27
3.2 Stages of Growth 28
3.3 Knowledge Workers 29
3.4 Team Formation 33
3.5 Supporting Network 36
3.6 Leadership 42
3.7 Summary 43
4 Marketing High-Tech Products 45
4.1 Introduction 45
4.2 Industry Analysis 45
4.3 Market Analysis 54
viii • Contents
We acknowledge and salute the great minds and personalities that have
forged entrepreneurial paths. They have pushed new technologies to
markets, and connected existing needs with technological capability to
improve the human condition. We encourage you to explore the many
excellent books that are available for expanded reading, and deeper dives
into specific elements of the entrepreneurial process that we cover in our
books.
CHAPTER 1
Introduction
It’s been widely reported that over 90 percent of all startups, including
high-tech ventures, fail. In spite of this statistic, entrepreneurship remains
a vibrant force in most economies, and tech startups continue to play an
important role in economic and quality-of-life growth. Presented with a
wide variety of reasons for failure of a new venture, budding entrepreneurs
find it difficult to draw any constructive conclusions that could guide them
through the startup process. Not only would a list of reasons for failure be
incomplete, it could also prove to be distracting, causing a focus on pre-
venting failure rather than on designing an outstanding product or service
with exceptional value for a customer.
This book is written for engineers who desire to start their own com-
panies and are looking for guidance in the entrepreneurial process. The
goal of the book is to turn the engineer into an entrepreneurial engineer, an
individual who keeps one foot solidly planted in the engineering profes-
sion while guiding the process of moving a product or service idea to the
marketplace. The terms “entrepreneurial engineer” or “engineer entrepre-
neur” are not oxymorons. Examples abound of engineers who have been
highly successful as entrepreneurs, demonstrating that one does not have
to forsake a career in engineering in order to become an entrepreneur. For
those engineers who are members of a startup but are reluctant to stray far
from the engineering discipline and take up the activities of the entrepre-
neur, the goal of the book is to help them understand the entrepreneurial
process as well as the way entrepreneurs think and the tools they use.
1.2 SUCCESSFUL ENTREPRENEURIAL
VENTURES
1.3 ENGINEERING ENTREPRENEURSHIP
OPPORTUNITIES
1.4.1 CREATIVITY
Idea
Preparation Incubation Illumination Verification
Germination
The creation of
1% of effort Invention something new Results in new
knowledge
between invention and innovation may appear subtle, but is important for
entrepreneurship. Thomas Edison was a prolific inventor with over 1,000
patents, but only a relatively few resulted in devices of social or economic
value, most notably the electric light bulb and the phonograph.
Edison’s comment that “Genius is one percent inspiration and
ninety-nine percent perspiration” is useful in pointing out the difference
in effort between an invention and an innovation. Of the total effort
required to transform an idea to a new product, process, or service, as
little as 1 percent could be expended in the invention phase while up
to 99 percent of the total effort may be required to commercialize the
invention (Figure 1.2). Whereas recognizing an invention only requires
a demonstration that the created device “works,” an innovation cannot
be claimed until the item or process has gone through four development
steps, including technology, business, strategy, and economic. First, the
technology must be shown to be feasible, have attractive performance
features, and manufacturable. Second, the technology must be developed
to the point that it demonstrates business value through its marketability
to a customer group. Third, an effective strategy must be articulated and
implemented for the marketing of that product. Finally, the technology
innovation must demonstrate favorable economic returns to the developer.
Basic design
concepts
Reinforced Overturned
Component or
Unchanged Incremental modular
Linkages
between
modules
Radical or
Changed Architectural disruptive
innovations occur when the linkages between modules are changed but the
basic design concepts are unchanged, resulting in changes in the overall
design of a system or the way its components interact with one another.
Finally, component or modular innovations occur when changes are made
to the basic design concepts of a component, but linkages between mod-
ules are unchanged, resulting in innovation to one or more components
that do not significantly affect the overall configuration of the system.
1.5 ENTREPRENEURSHIP AND
COMMERCIALIZATION
This book is organized into two volumes to take the budding entrepre-
neurial engineer through the various stages of creating the new venture.
Volume I is focused on high-level entrepreneurial theories, while volume II
is more activity based, guiding you through the tech start up process. In
Volume I, Chapter 2 begins by providing an overview of the entrepreneur-
ship process, that is, the process through which an entrepreneur transforms
an idea into a commercial reality, most likely through the creation of a new
venture. The chapter highlights key differences between traditional means
of developing products or services and the entrepreneurship process of
identifying customers and creating products of value for those customers.
The following three chapters elaborate on the entrepreneurship
process by presenting three essential components of an effective process:
team formation (Chapter 3), marketing high-tech products (Chapter 4),
and the product development process (Chapter 5). Chapter 3 covers
the critical issue of managing a new venture team composed of highly
motivated individuals representing a range of specialized disciplines
and interests. Chapter 4 discusses marketing high-tech products, distin-
guishing between the various market types and describing the nature of
high-tech markets. Chapter 5 presents several models for developing the
high technology product, emphasizing the need for speed and agility in
the development process. Finally, Chapter 6 ends Volume I by covering
major elements associated with the launch, operation, and exit of the high
tech venture.
Volume II contains six chapters geared toward activity-based learning
and technology entrepreneurship. Once an opportunity has been identi-
fied and assessed, a strategy for capitalizing on the opportunity needs to
be developed. Chapter 1 discusses the means for developing and testing
the business concept, that is, the description of the product or service to
be developed, the identification of the benefits to the customer, and the
strategy for distributing the product or service to the customer. Chapter 2
follows by showing the means by which the new venture team can add to
the business concept by creating the business model canvas, which cap-
tures the basic elements of the proposed enterprise including the value
proposition, customer segments, channels, customer relationships, reve-
nue streams, key resources, key activities, key partnerships, and cost struc-
ture. Protecting the firm’s intellectual property, be it patents, trademarks,
copyrights, or trade secrets, is covered in Chapter 3. An introduction to
entrepreneurial finance is provided in Chapter 4, followed by an overview
of the legal aspects of company formation in Chapter 5. Finally, Chapter 6
Introduction • 9
provides an overview of the business plan, slide deck, and pitch, key tools
that summarize your work in these two volumes, and sets you on the path
to venture creation.
PRACTICE
EXERCISE 1.1 ASSESS YOURSELF
Assessing your skills and desires is important before starting this technopre-
neur journey. In this exercise ask yourself the ten questions below. Rate your-
self on each question from highly negative (No) to highly p ositive (Yes), with
neutral in the middle (). Add up the totals for each column and sum your
overall score. A highly negative score suggests you may not be ready for this,
whereas a highly positive score suggests you are ready to go. We recommend
you complete the book and all exercises and try this first exercise again—you
might be surprised to find some of your answers change.
The mantra is not the slogan, but a saying that anyone involved in the
company or dealing with the company would easily associate with your
reason for existing as a venture. In this exercise take the first cut at creat-
ing a 3 to 5 word mantra for your venture idea. It might change over time
as you evolve and pivot, but should give you clarity and focus in working
through the planning and launch process.
MY VENTURE MANTRA:________________________________
Index
A C
Advisors Cash flow, 28, 97
cash compensation, 39–40 Chasm, 35, 58
entrepreneur, 39 Commodity, 54
selection of, 38, 39 Commodity market, 56
time expectations, 39 Company building, 24–25
Agile development process Compensation, 38–40
high-tech products, 82 Competitive uncertainty, 57
minimally viable product Component innovations, 6
development, 82 Computer industry, 46, 47
product development, 82–83 Conceptual technology, 77
Architectural innovations, 5–6, 73 Consultants, 40
Consumer pricing, 66
B Cost-benefit analysis, 47
Bargaining power Creative tension, 32
of customers, 51 Creativity, 4
of suppliers, 51–52 Customer
Barriers to entry, 55 creation, 24
Bayh-Dole Act, 41 development model, 22–23
Board of advisors, 38–40 discovery, 23
Board of directors validation, 23–24
closely held corporations, 37
fiduciary responsibility, 36–37 D
independent directors, 38 Degree of rivalry, 49–50
privately held corporations, 36 Demand-oriented pricing, 66
professional investor directors, Department of Defense (DOD),
37, 38 41
publically traded corporations, 36 Derivative product, 77
Breakthrough product, 77 Differentiated product, 48–49, 50,
Build-Measure-Learn feedback 56
loop, 20 Disruptive innovations, 5, 72
Business model, 15, 16 Disruptive product, 76
Buyer power, 51 Disruptive technology, 35, 48, 77
116 • Index
O Proven technology, 77
Oligopolistic markets Purchasing decisions
characteristics, 54–55 compatibility, 60
pricing strategies, 66–67 cost/benefit advantage, 60
Opportunities, 3 factors involved, 59
P R
Penetration pricing, 66 Radical innovations, 6, 61, 76
Peripheral equipment Rapid growth, 28
manufacturing, 47 Relationship marketing, 59
PEST analysis, 49 Research institutions, 41
PEST model Risk, 95
economic environment, 52–53 Risk categories, 95
political environment, 52 Rivalry, 49
social environment, 53
technology environment, 53 S
Pivot, 22 S-curves, 72–74
Platform product, 77 Segmented markets
Political environment, 52 characteristics, 55–56
Porter’s five force model, 49–52 pricing strategy, 66
Price, 65 product positioning, 63
Pricing strategies skimming, 66
oligopolistic markets, 66–67 Service providers, 40–41
segmented markets, 66 Skimming pricing, 66
Process development, 76–79 Small Business Innovation
Process innovation, 76 Research (SBIR) program, 41
Product development Small Business Technology
resources, 86–87 Transfer (STTR) program, 41
support Social environment, 53
consequences of lack of, 84 Stable growth, 29
innovation strategy, 87 Stage gate development process,
resources and commitment, 81–82
86–87 Stages of growth, 28–29
screening model, 84–85 Startups
successful NPD, 84 funding, 91
team culture embracing growth, 28
innovation, 87 lean, 19
Product innovation, 76 team formation, 34–35
Product innovation strategy, 87 Stevenson-Wydler Technology
Product life-cycle, 74–75 Innovation Act, 41
Product positioning, 62–63 Strategic leaders, 42
Professional investor directors, Strategic partners, 41
37 Substitute products, 51
Professionalism, 31 Supplier power, 51–52
Promotion, 63–65 SWOT analysis, 54
120 • Index
T V
Team culture, 87 Valuation, 92–94
Team formation Valuation techniques, 92
access to capital, 34 Value added premium, 67
entrepreneurial venture, 33–34 Value proposition, 16–17
experience in industry, 34 Value proposition canvas (VPC), 25
expertise in key areas, 34 Venture capitalists, 91–92
growth and expansion, 35–36 Venture funding
learning organization, 34 availability, 90
startup team, 34–35 ease of acquisition, 90
Technology financing documents, 94
constraints, 60 impact on venture, 90
diffusion, 57–58 time-sensitive supply–demand
drivers, 47 relationship, 90–91
environment, 53 valuation and negotiation, 92–94
life cycle venture capitalists, 91–92
architectural innovations, 73 Venture launching
dominant designs, 75–76 exit strategies
dramatic improvements, acquisition, 99–100
73–74 IPO, 101–103
materials innovations, 73 licensing, 99
performance improvement, operating, 100–101
72, 73 operations management
product/industry life cycles, growth, 97–98
74–75 plan vs. actual, 96–97
propeller technology, 72 risk assessment, 95
transistor performance, 73 venture funding
limitations, 72 financing documents, 94
push, 18 sources, 89–92
uncertainty, 57 valuation and negotiation,
Threat of new entries, 50–51 92–94
Traditional commercialization Venture team, 33–36
process, 13–15 Visionary leaders, 42
Traditional product development,
79–80 W
Transaction marketing, 58–59 Waterfall development process,
Types of innovations, 5–6 80–81