ENTREPRENEURIAL MANAGEMENT

MGT246 Introduction to

Entrepreneurship

Professor Haibo LIU

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To dos

 Group o Case writeup submission on Method, group-based

submission

o Call for one group for case presentation (2 extra points!) Only one group, first come first served.

 Individual reflections o I2. IDEO shopping cart video

o No submission required ©2015 John

Wiley and Sons

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About Zoom

 Switch on your camera (facilitate discussion and keep you focused)

 Display name: first name, last name

 Please note that Zoom automatically logs your attendance (duration you are online). Please make sure your display name is consistent with your registered name (otherwise I cannot tell it is you).

 How:

 Click on the “Participants” button at the top of the Zoom window

 Next, hover your mouse over your name in the “Participants” list on the right side of the Zoom window

 Click on “Rename”

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 What is an elevator pitch?

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Business models

The purpose of a business model is to provide a clear representation of where and how value is created and can be captured.

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Examples of business models

• A theatre - uses scripts, actors, scenery, lighting and music to create a theatrical experience which the audience values.

• How about an insurance company?

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 What is a Business Plan?  Why use business model?

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Why use business models?

• To provide a clear representation of where and how value is created and can be captured. o To provide a helpful checklist of areas to consider in

making sure the idea and the route to creating value with it is well thought out.

o To provide a roadmap for how an innovation can create value – it won’t just happen, it needs a framework.

• To provide a way of sharing the idea with others o Easier to tell an interesting story o Makes the business vision explicit. Eg. to venture

capitalists or to innovation teams o From ideas to implementation 8

Key components of business model

 What? – the value proposition.  By whom? – the supply side.  For whom? – the demand side.  How? – the key activities by the supply side to create value

for the demand side.

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Business model canvas

10Alex Osterwalder, invented the Business Model Canvas , co-founded strategyzer.com

Budget Airlines (Business Model Canvas)

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https://www.youtube.com/watch?v=wlKP- BaC0jA&list=PLBh9h0LWoawphbpUvC1DofjagNqG1Qdf3&index=3

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Strategy

Value Proposition

 How the innovation represents something new which customers will value over what they currently have.

 If it is an existing market: What is your unique selling proposition? Why would customers buy your product? What are the weaknesses of existing competitors?

 If it is a new market: Why hasn’t someone already done this? What challenges that other competitors have that you can overcome (with your resources)?

 https://strategyzer.com/training/courses/mastering- value-propositions#preview

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Target Market

 Markets are made of people with different needs: the more you can separate out different groups the sharper your targeting

 Who are the most important target customers?  Do we want to target one segment or reach many with

slightly different offers?  What do your customers try to achieve? What are their

current pain points? Which aspects your product or service appeal to them?

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About prototyping

 What is prototyping?

 What are the three recommendations for prototyping?

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About prototyping

 What are the three recommendations for prototyping? o Focus on your business model (the bigger picture)

o Don’t fall in love with your first idea (iterative process)

o Test your models early (how?)

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Examples of “BAD” value propositions  We offer the best product in the industry

 For whom, in what aspects  We serve all the customers

 Be specific, what are their pain points, what needs are not met  We provide everything that our customers need

 Be realistic. This usually means you haven’t studied your target customers well, or your idea is too fuzzy.

 We are cheaper, or the cheapest  Low price is good, but that should not be the only claim  It is not a competitive strategy, and it does not last.

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Examples of “great” ideas

 Unmet needs, inconveniences that happen around you, but usually taken for granted

 Norms, habits or rules that are different from what you are used to, usually from another industry, domain, country or culture

 Ideas that focus on the emotions of your target customers (more about this when we learn about Design Thinking)

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Business model innovation

• Business model ‘innovation’ is about creating new models or changing existing ones to maximize the value created

• Does business model innovation require the discovery of new products or services, or new technology?

• Are most business model innovations disruptive innovations?

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Examples of business model innovation

 ‘Servitization’ in which manufacturing operations are increasingly being reframed as service offerings. o Rolls-Royce redefined its business model as ‘power by

the hour’ o Chemical companies are increasingly looking to provide

rental models in which they offer services to support the effective use of their products rather than simply delivering bulk chemicals

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It is All about Process

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Searching for Entrepreneurship Opportunities  How

 Who  Where  When

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Searching for Entrepreneurship Opportunities  How/where to find the next great idea?

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Searching for Entrepreneurship Opportunities  Dyson

 Warby Parker  Crate and Barrel

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Dyson (James Dyson)

 In 1978 Dyson, having grown impatient with clogged air filters in his Ballbarrow factory, built a cyclone particle collector similar to devices used in larger industrial plants, such as sawmills.

 Adapting this solution to home vacuum cleaners, he worked for the next five years, testing a few thousands of prototypes, before he produced a satisfactory model

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https://www.britannica.com/biography/James-Dyson

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Warby Parker (Jeff Raider, Neil Blumenthal, David Gilboa)

 Every idea starts with a problem. Ours was simple: glasses are too expensive.

 We were students when one of us lost his glasses on a backpacking trip. The cost of replacing them was so high that he spent the first semester of grad school without them, squinting and complaining. (We don’t recommend this.)

 The rest of us had similar experiences, and we were amazed at how hard it was to find a pair of great frames that didn’t leave our wallets bare. Where were the options?

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https://www.warbyparker.com/history

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Crate and Barrel (Gordon and Carole Segal)

 When we went to the Caribbean for our honeymoon, we found a couple of stores in the Virgin Islands with Scandinavian designs and good prices. One day I was washing the dishes we had bought and said, "There's got to be other young couples with good taste and no money like us. Why don't we open a store?“

 They offer chic, contemporary designs at affordable prices

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www. fortune.com

What

 The different kinds of opportunity being sought in terms of incremental or radical change

 4P: product, process, position, paradigm

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Who

 Different players involved in the entrepreneurial process

 The growing engagement of more people inside and outside the organization

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Exploit or explore?

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Where: Exploit or explore?

• Exploit (Exploitation) – innovations built on what we already know in mainly incremental fashion. What we did in the past will play a strong role in shaping what we do next.

• Explore (Exploration) – innovation, venturing into new fields and opening up innovation space.

• Which one is more risky?

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