ENTREPRENEURSHIP SEMINAR Lesson 2 The entrepreneurial firm Prof. Vittorio de Pedys Why we need entrepreneurs: an idiot proof of approach GDP contribution of private companies in Piedmont: breakdown by year of foundation Millions of Euros, 2007 3.000 2.500 200200 biggest Piedmont’s companies le maggiori imprese piemontesi remaining 14.400 companies le restanti 14.400 imprese 2.000 1.500 1.000 500 0 <1900 1900 -’10 ‘10-’20 ‘20-’30 ‘30-’40 ‘40-’50 ‘50-’60 ‘60-’70 ‘70-’80 ‘80-’90 ‘902000 ‘002005 Source: AIDA (BvDEP, 2008) 2 New products enter the market at higher speed Roger Best, Market-Based Management, 2nd ed. … beginning of life cycle lasts less; start ups have less time to exploit their advantage Technology Adoption Life-Cycle – buying motives Pragmatists: Stay with the herd! Visionaries Get ahead of the herd! Conservatives Hold on! Skeptics No Way!! THE CHASM Techies: Try it!! Innovators Early Adopters Early Majority Late Majority Laggards Innovators THE CHASM Early Adopters Early Majority Buy-in Pressure Technology Personal Vision Reference Group None other Visionaries Price Point Low Leadership Required No Potential New! Innovative Vision Safe/Easy Leading Effective/High return High Level Consultancy Lots of Services Some Consultancy Messages Services Content Apprentice-ship Training Partnership High Late Majority Laggards Competition from E.M. Only Viable Option other Pragmatists Competitor Pragmatists not an issue Market/Med. Market/Low. Market/Low. Strong Contender Market Leader Monopoly/ Commodity Business Pragmatics Safe/Easy Leading Effective/High return Few Only choice None Some firm’s slow growth is written in their dna D. Birch, A Haggerty e W. Parsons1 classify firms in: elephant: big firms that do not grow mice: small firms that produce income for their promoters and their families gazelle: firms with high growth rate Annual sales bigger than 1 mio€ Roughly 10 employees Sales growth in last 3 year Sales doubled in last 3 years Cumulated profit positive in last 4 years “organic” growth ( internal) 1 Birch, David, Haggerty, Andrew and Parsons, William (1995), “Who’s Creating Jobs?“ Boston: Cognetics 6 Management team is the key ingredient in successful start ups The entrepreneur must learn to do different things in different stages of its growth : be creative direct good managers delegate good managers coordinate managers that direct other managers COOPERATION Cooperate with his group of managers COORDINATION DELEGATION CREATIVITY LEADERSHIP Rielaborazioni STEP di: N.C. Churchill, V.L.Lewis – The five stages of small business growth – Harvard Business Review May-June1983 7 I settori a più alta intensità di innovazione secondo Eurostat Eurostat ha individuato una suddivisione delle attività industriali e dei servizi che fa emergere più chiaramente i Settori a più alta intensità di innovazione, sia per il livello di competitività interno al settore che per l’elevato tasso tecnologico intrinseco. FABBRICAZIONE DI PRODOTTI FARMACEUTICI E DI PRODOTTI CHIMICI E BOTANICI PER USI MEDICINALI FABBRICAZIONE DI MACCHINE PER UFFICIO, DI ELABORATORI E SISTEMI INFORMATICI HIGH TECHNOLOGY INDUSTRIAL SECTORS FABBRICAZIONE DI PRODOTTI FARMACEUTICI E DI PRODOTTI CHIMICI E BOTANICI PER USI MEDICINALI FABBRICAZIONE DI APPARECCHI PER LE COMUNICAZIONI FABBRICAZIONE DI APPARECCHI MEDICALI, DI APPARECCHI DI PRECISIONE HIGH TECHNOLOGY KNOWLEDGE INTENSIVE SERVICES 21/12/2015 POSTE E TELECOMUNICAZIONI INFORMATICA E ATTIVITÀ CONNESSE RICERCA E SVILUPPO 8 Capitale, tecnologia e management team sono i fondamenti per la creazione d’impresa Capitale: le risorse finanziarie presenti vanno rese accessibili in ogni fase dello sviluppo Fondi pubblici: Nazionali (Sviluppo Italia: titolo II) Regionali (Docup: misura D3) Fondi privati (Business Angel, Venture Capital): Italiani e Stranieri Tecnologia: le idee vanno individuate e valorizzate, di solito esistono in abbondanza nelle Università e nelle imprese Presso le Università: sfruttando economicamente i brevetti esistenti, incrementando la brevettazione, spingendo la ricerca verso il mercato Presso le imprese esistenti che operano nei settori a crescita intensiva: promuovendo gli spin-off aziendali Management team: le capacità imprenditoriali sono la risorsa chiave che deve essere assicurata Incrementando le competenze manageriali di chi vuole fare impresa Diffondendo la cultura e il rischio imprenditoriale presso professori, ricercatori, studenti e dipendenti delle imprese 21/12/2015 9 Capital is added in stages in the differents phases of the firms’ creation 3F theoretically should exit ... External financing IPO Internal financing Venture Capital Business Angels Bank lending Founder Family Seed Start-up Early Stage Sustained growth 10 Ancora 3F negli aumenti di capitale Nel 50% dei casi in cui subentrano Manager Finanziatori o Partner Finanziari nell’aumento di capitale delle SUI benchmark, i soci promotori non hanno più il 51% delle quote. Chi è entrato? 75% benchmark resto del campione 53% 41% 31% Senza 3F all’inizio 24% 15% 12% 12% 6% 3F Manager Finanziatori Partner Finanziari 5% Partner Industriali o Strategici 6% 2% Altro Domanda a Risposta Multipla: le percentuali sono calcolate sul totale dei rispondenti, 17 benchmark e 65 resto del campione. 21/12/2015 11 Innovation… To define the form of your initiative you must understand and design the Business Model VALUE PROPOSITION Product or service that helps customers to do more effectively, conveniently and affordably a job they’ve been trying to do PROFIT FORMULA Assets and cost structure, margins, scale, and velocity required to cover them RESOURCES People, technology, products, facilities, equipment, brands, cash that are required to deliver this value proposition to the targeted customers. Process automatically followed become Culture. PROCESSES Ways of working together to address recurrent tasks in a consistent way: training , development, manufacturing, budgeting, planning, etc. 14 Different Measure of Performance Performance The Third Dimension of the Disruptive Innovation Model Sustaining Strategy Bring a better product into an established market Low-End Disruption Adress overserved customers With a lower-cost business model Time New-Market Disruption Compete against nonconsumption Time 15 Different Measure of Performance Performance The Role of Business Model Innovation in the Process of Disruption Time 3. New Value Network • Customers • Distribution • Suppliers 2. Business Model Innovation Time 16 Business models built around job to be done Company Job-to-be-Done Integration IKEA I need to furnish this place today Furniture design for take-it-home-yourself packaging; childcare; things to cover floors, hang on walls, outfit kitchen Onstar Whatever happens, I want to be sure that my family and I will be taken care of. I need place of mind Live advisors integrated with local police emrgency systems; Crash & activity sensors througouht vehicle enabling a montly email on vehicle wellness; factory-install despite asynchronous qualification cycles of mechanical and electronic products Disney Theme Parks 1955-1985 I want a warm and loving escape with my family into a fantasy Animated films that create characters and stories; Disney’s “Wonderful World of Color” weekly TV show to bring fantasy home; Theme parks SAS Institute I need to make the right decision, and the safe decision Data analysis software; decision support tools; data warehousing; virtualization to facilitate access to additional data FedEx I need to get this from here there with perfect and certainty as fast as possible Air transportation; Memphis hub; ground pickup & delivery; real-time tracking Hilti I need to finish this construction job on time and on budget Hilti leases tools as a service, rather than owing them. It maintains the inventory of tools on its customers’ construction sites Microsoft Office I need a persuasive document that clearly communicates and makes me look good Word processing, data analysis &graphics software; web browser; etc. Mayo Clinic I need a precise diagnosis of & recommended therapy for my disease Practiced processes for converging physicians for multiple specialties onto each patient. Mayo is integrated into training its own doctors Other Examples ___________________________________________ _______________________________ __________________________________________________ ____________________________________ 17 Four areas support the good quality of an initiative Innovation Consumers Innovation is the capacity to do something useful for consumers in a different way. Consumers must have a need to be satisfied in a different way(feel the pain). Consumers must be available (distribution network) and they have the possibility to spend. Do in a different way does not (only) mean do in a technologic way. Current and future competitors fix the structure of the sector. The current dynamics between Consumers and Competitors and in 5 and 10 years determine the development of the market. Know How, Demand, Life Cycle and competitors fix the interest of a sector. Competitors Market The growth rate of the market and the breaking points of the sector represent entrepreneurial opportunities. 18 Business Model Template JOB (VALUE PROPOSITION) RESOURCES PROFIT FORMULA PROCESSES 19 R&R Business Model JOB (VALUE PROPOSITION) • Spend time together • Involve themselves in a game where skills and luck are important • Give as a present something the allows the above mentioned • … RESOURCES • Reiss industry experience, credibility and contacts • Sales force plug and play • TV guide brand and ad allowance • … PROFIT FORMULA PROCESSES • Very low fixed capital invested and fixed costs (design fee) • 34% Contribution margin. Price: 12.5$, variable cost 8.225 (Manufacturing/Assembly 3.1, TV Guide Royalty 10%, Designer 5%, Ad Allowance 5%, Heller Factor 1%, Sales Commission 20%) • BE reached with the first sales to department stores • … • Manage a network of skilled and independent sale rep • Involve and manage the manufacturer (Swiss Colony) and the factor (Heller) • Dealing at the same time with two different resellers • Capability to act quickly • … 20