I need a discussion done for week 5 and response to 2 other classmates for my JWI 575: New Business Ventures and Entrepreneurship

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JWI_575_RTC_W5_lecture_1188.pdf

© Strayer University. All Rights Reserved. This document contains Strayer University confidential and proprietary information and may not be copied, further distributed, or otherwise disclosed, in whole or in part, without the expressed written permission of Strayer University. JWI 575 RTC – Week 5 Lecture Notes (1188) Page 1 of 5

JWI 575 New Business Ventures and Entrepreneurship

Week Five Lecture Notes

© Strayer University. All Rights Reserved. This document contains Strayer University confidential and proprietary information and may not be copied, further distributed, or otherwise disclosed, in whole or in part, without the expressed written permission of Strayer University. JWI 575 RTC – Week 5 Lecture Notes (1188) Page 2 of 5

PHASES OF A STARTUP VENTURE What it Means Once an entrepreneur commits to setting up a startup business to market a new product or service, it helps to understand the likely phases of growth that will take place as the enterprise develops. In the early stages, the business will have an intimate, flexible culture, with a simple structure, limited financial resources, and a few employees who have to “wear many hats” and fulfill multiple business roles.

Later on, if the business is successful, the company will have become larger and more complex, with multiple departments and numerous employees. As the company grows in size and complexity, the culture will inevitably become less flexible and adaptable. It will take on the characteristics of an established corporate culture, as opposed to an innovative startup culture. The founder may leave but, whether this happens or not, the company will now need to design and implement the types of systems and policies that regulate larger organizations.

Why it Matters

• Understanding the phases of growth of a startup helps entrepreneurs manage the business well • While the flexible culture of a startup may be stimulating, it won’t work for a larger company • It is important to implement appropriate systems and policies as the business grows and matures

“Don’t wait to develop the perfect product or service. Good enough is good enough. There is time for refinement later. It’s not how great you start – it’s how great you end up.”

Guy Kawasaki

© Strayer University. All Rights Reserved. This document contains Strayer University confidential and proprietary information and may not be copied, further distributed, or otherwise disclosed, in whole or in part, without the expressed written permission of Strayer University. JWI 575 RTC – Week 5 Lecture Notes (1188) Page 3 of 5

THE STARTUP JOURNEY

The launch of a new company is the start of a journey. Understanding the stages of that journey will help you know how to prepare and plan well for the future of your new business. If your small business successfully grows into a large company, its systems and its culture will change. Your company will begin to feel more corporate and less intimate than in the early days.

As with growth in people, although the details will vary, the pattern of growth in companies is fairly predictable. A startup business has six distinct stages from inception to maturity:

1. A lone visionary has nothing but an idea and some slides to pitch

2. A small founding team launches a company

3. Early prototypes and customers are identified, and a product or service starts to take shape

4. A real product ships to real customers, but in minimal quantities and with no significant revenues

5. Products start to ship at scale and revenues begin to come in consistently

6. Large-scale operations produce significant revenues, along with a quest for new growth

Along the way, lots of things will change. The ownership structure of the company and the composition of its Board of Directors will evolve. In the first stage, you are the sole owner, with no Board in place. But as you seek out investors and add Board members, you will often need to offer them ownership stakes. Once stock options come into play, the power dynamic shifts and investors gradually take positions on the Board.

Board composition will also shift as your business grows. Initially, you will want Board members who are good at product refinement and can tolerate uncertainty, as well as people who can make key introductions to early customers and partners. At this stage, the Board will try to hold you accountable to product development milestones, and will be less concerned about manufacturing at scale. As you mature, however, you will need a different set of Board members, the type of people who can provide advice and oversight to a mature company.

Navigating a Changing Culture

Even if your venture is not based on a disruptive technology, you will still face many challenges along the way as you scale up. An important element to consider is the venture’s evolving culture – that is, how it feels to work at your company, how work gets done, and how decisions get made.

As you grow, the social behaviors and norms of your workplace will change. When the entire company is just three people, you all might decide to go out for dinner to celebrate a milestone. You might invite spouses and kids, or even have the company pay for the dinner. This can be a gracious thing to do in a small company where maintaining a sense of community and a close-knit culture is important.

But a close-knit small business culture doesn’t scale. In a company with 10,000 employees, you are not going to bring the company to a halt and go out to dinner with everyone. Be aware of the company traditions you create, and notice when it is time to make changes. Don’t let the startup practices that work for a small, close-knit group of innovators become too engrained, since in that case you may have trouble undoing them later.

© Strayer University. All Rights Reserved. This document contains Strayer University confidential and proprietary information and may not be copied, further distributed, or otherwise disclosed, in whole or in part, without the expressed written permission of Strayer University. JWI 575 RTC – Week 5 Lecture Notes (1188) Page 4 of 5

Another element of your business that will change as you grow is how to distribute decision-making. When your company only has a handful of employees, it is easy for all of you to sit in a room, and hash out the details of a major decision for several hours until you agree how to proceed. That approach will not work well in a large company. Everyone cannot participate in each major decision; the business now needs an executive team.

People who are good at building consensus and managing complex decisions are not always good individual contributors. Early on in a startup, you may only need people who are good at building and refining products, but these people are not necessarily good at managing processes in large organizations. As your company grows, you will have to supplement your staff with people who have different skills, and ensure that they are integrated smoothly into the organization. Decision-making, levels of management, and delegation patterns will all change as your staffing needs evolve.

Let’s look at a real-world example. Imagine you are the founding CEO and you have two engineers building the product who report to you. You all talk together multiple times per day as you refine the product. The engineers value this close communication with the founder. A year later, your company includes several departments and a total of 30 employees. You may alienate your innovative engineers when you ask them to report to someone else. But it is a trade-off that you have to make; you can no longer manage all employees as your direct reports. If the engineers never saw this change coming, they will feel resentful and may even leave the company. To avoid this type of unintended consequence, you must be candid with your team; invest time up front with your key early employees, to make sure they understand the way your management structure must evolve.

Letting Go

One of the most interesting transitions for you and your company is the moment when you decide to step aside from the business you have built. Your company has reached a new level of maturity. And with maturity comes new responsibilities. What is the best way forward for the founder when the company is past the startup stage?

Now you have created a successful business, you may feel it is time to move on. You may be the type of entrepreneur who likes to keep creating new ventures. The business might also have outgrown you. It may need people with operational skills that you do not have. This can be a complicated and emotionally charged moment. Other people will take over your vision, and you feel as if you are giving up part of your identity. Even founders who feel ready to move on to new ventures often find it hard to make the break. They have been so invested in their new idea and its realization that letting go is a challenge. Many venture capitalists and Board members tell stories about the time when they had to take a passionate founder “out for a long walk” to explain that it is in the company’s best interest now for him or her to move on to other pursuits.

There are many ways to implement such a transition, depending on the circumstances. Sometimes compelling reasons dictate that a founder make a clean break from the company. In this case, celebrate the departing founder’s contribution and make it known to all who remain that new management is in charge. Sometimes, the culture of the company is intertwined with the founder. The founder’s presence could be critical to the future success of the team. In this case, you could move the founder from the CEO position to be the Board Chairman, leaving him or her time for other activities. Alternatively, if the founder still wants a full-time role and is able to navigate such a change of status in the organization, he or she might take a VP position leading research and development of new product strategies.

© Strayer University. All Rights Reserved. This document contains Strayer University confidential and proprietary information and may not be copied, further distributed, or otherwise disclosed, in whole or in part, without the expressed written permission of Strayer University. JWI 575 RTC – Week 5 Lecture Notes (1188) Page 5 of 5

GETTING THE MOST OUT OF THIS WEEK’S CLASS

As you read the materials and participate in class activities, stay focused on the key learning outcomes for the week:

• Identify the stages of starting up a business or developing a new initiative

Think about the phases of an entrepreneur’s journey that are described in this lecture. How long do you imagine the various phases might last? Do you think there are parallel phases for an intrapreneur who launches a venture within an existing company? How long would you expect those to last? Had you realized previously the close link between the growth phase that a startup company is in and the nature of its workplace culture? Do you think an intrapreneurial venture can have a significant impact on the culture of the wider organization? If so, what type of impact would you expect it to have?

• Explore the types of resources needed to launch an innovative venture

Both entrepreneurs and intrapreneurs need a wide range of resources to launch and grow their ventures. Some resources common to both are the initial idea, prototypes of the product, prospective customers, a small team to implement the launch, and advocates or partners to provide a community of support for the venture. How about the differences? An entrepreneur is likely to need external funding resources to a much greater extent than an intrapreneur. What other differences do you see in the resource needs for the two types of innovator? For example, does an entrepreneur need to do more marketing, or maybe just a different kind of marketing? In what ways is the internal networking that an intrapreneur needs to do different from the external networking required for a startup venture?

• Discuss activities and events that can support a successful launch

Whether your venture is a standalone new business or an initiative within a larger existing company, it is important to get the word out about your venture, so as to garner support, alert potential customers, attract investors and partners, and generate excitement about the new venture. What activities and events do you think are the most appropriate ones to achieve these goals? Will you hold one large launch event, or multiple smaller ones? Should your events have a party vibe or would it be better to strive for a more businesslike ambiance? How about social media? An Internet presence is important for any business in today’s marketplace, but which channels and sites will serve you best during the launch phase? How will you decide where to focus your online marketing efforts?