Entrepreneurship

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Entrepreneurship Intrapreneurship
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Entrepreneurship

• The process of uncovering and developing an
  opportunity to create value through innovation
  and seizing that opportunity without regard to
  either resources (human and capital) or the
  location of the entrepreneurin a new or existing
  company (Churchill, 1992 586).

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Entrepreneurship Characteristics

• Commercial leanings
• Lack of structure/self-control
• Visionary tendencies
• Risk-taking/appetite for uncertainty
• Persistence
• Doer/high initiative
• Charisma and extroversion

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Entrepreneurship Characteristics

• High-energy level
• Strong self-image
• Team building skills/uses contacts
  and connections
• Views failure as learning
• Commitment and fun

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Entrepreneurs vs Managers
Entrepreneurs Managers
Rewards Doing what they like. Independent Corporate rewards. Promotion, staff, office, money
Activity Direct involvement Delegation
Risk Moderate risk taker Avoids risk
Status Not concerned about status symbols Represents power and position
Relationships Deal-making and reciprocity Relies upon the hierarchy
Time orientation Time orientation - 5 - 10 years. Short term
Decisions Follows dreams with decisions Follows directives
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Intrapreneurship Characteristics

• Understands the environment
• Visionary and flexible
• Creates management options
• Encourages teamwork
• Encourages open discussion
• Builds a coalition of supporters
• Persists

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Intrapreneurship Environment

• New ideas encouraged
• Trial and error encouraged. Failure ok!
• Resources available and accessible
• Long time horizon
• Appropriate reward system
• Sponsors and champions available
• Support of top management

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• It is the customer who, in the end,
• determines how many people are employed and what
  sort of wages companies can afford.
  Lord Robens

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Strategy in High Technology Industries
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High Technology Industries

• Rapidly changing scientific knowledge underlying
  attribute for competition
• RD/Sales
• Battle over technical standard, format, and
  dominant design
• Set by decree, cooperation, public domain, but
  mostly through consumer choices

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Benefits for Standards

• Compatibility
• Reduce consumer uncertainty
• Reduce production costs
• Increase in complementary products Network
  effects which greatly enhances sustainability
• Lock outs and switching costs

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Winning Format Wars

• Ensure complementary products
• Killer applications
• Razor and blade strategy
• Cell phones, printers, satellite TV/radio, video
  games
• Cooperative competition
• Licensing

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TV Industry Paradigm Shifts
Black White TV
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Color TV
Black White TV
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Color TV
Black White TV
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Big Screen TV
Color TV
Black White TV
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Big Screen TV
Color TV
Black White TV
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HDTV
Big Screen TV
Color TV
Black White TV
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HDTV
Incremental evolution included remote
controls,cable ready tuners, stereo sound
systems, screen-in-a-screen, etc
Big Screen TV
Color TV
Black White TV
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Competitive Dynamics

• Competitive action within an industry.
• Strategic and tactical action does not occur
  within a vacuum
• What industries have high competitive dynamics?
• What sort of actions/tactics are taken?

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Drivers of Competitive Dynamics

• numerous/equally balanced competitors
• slow growth
• high fixed/storage costs
• lack of differentiation/switching costs
• high exit barriers
• Etc

Competitive Dynamics
Rivalry
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Competition in the Pharmaceutical Industry

• Reps tripled to 90K last 10 years
• 12B on sales force, 2.76B on ads
• Managed care bet Pfizer from 14th to 1st
• 529 visits yearly, average length 2.5 min
• 8 remember
• Glaxo can reach 80 of the Drs in a week
• Is this necessary. No, but if my competitors do
  it and I cant, then Im at a disadvantage. This
  has been an arms race in the worst possible
  manner.

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Types of Competitive Responses

• First Movers - initial competitive action
• advantages and disadvantages
• Fast Followers or Capable Competitors- respond
  quickly to first movers
• Late Entrants - day late and a dollar short

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Winners vs. Losers

• Xerox vs. Apple vs. IBM vs. Wintel
• Sony vs. Matsushita
• Polaroid vs. Kodak vs. Digital
• Atari vs. Nintendo/Sega/Sony /Microsoft.

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Relationship between Innovation and Performance

• Dependent on industry conditions
• 1) Appropriability
• 2) Sustainability
• are both a function of
• a) legal protection
• b) complementary resources
• c) complexity of innovation

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Appropriability

• Patents judged important in 65 of
  pharmaceuticals, 30 in chemicals, but only 10
  in electrical, instrumentation, motor vehicles,
  office equipment, rubber textiles
• Lead time advantages, learning curves, sales and
  service networks more effective than patents.

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The Logitech Saga

• Fortunes one of 25 cool places to work
• CEO complained in a 4AM phone call to their
  advertising agency that Logitechs ads failed to
  breakthrough the clutter of tech and spec in
  the computer publication he was reading.

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The Logitech Saga

• Woolward Partners responded to the wake-up call
  by developing a campaign featuring a series of
  improbably human images that included fat men in
  beanies, a urinating baby boy, and fully-clothed
  nuns splashing in the surf

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The Logitech Saga

• After a twelve-year roller-coaster ride of
  profit and loss, leadership and anarchy,
  attention and ignorance, Logitech is now plagued
  with recreating itself. The company has been
  plagued with inefficient manufacturing, mixed
  marketing messages, and ill-conceived product
  ventures. In 1995, despite a 40 market share,
  the company lost 17 million. The company with
  advertisements featuring a peeing baby or a nose
  picking (Henry) Kissinger is dead

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The Logitech Saga

• We didnt want to be in mice. They seemed
  beneath our intelligence. We wanted to be a
  software company, like Microsoft.
• I dont know where I am going, but Im on my
  way.
• We are the most critical users of our products.
  Customer need recognition is limited by their
  understanding of technology - they dont know
  what is possible.

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Sound Familiar?

• This is what customers pay us for - to sweat all
  these details so its easy and pleasant for them
  to use our computers. Were supposed to be real
  good at this. That doesnt mean we dont listen
  to customers, but it is hard for them to tell you
  what they want when they have never seen anything
  remotely like this.

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