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Ism 80 lecture notes
- 1. Strting a New Technology Company = Innovation & Entrepreneurship<br />Overview<br />Problem: How does one create a new technology company?<br />Approach/Process: 5 key steps<br />Setup a VISION, a MISSION and Business Goals for the company<br />Like: how much Revenue you hope to make<br />Growth (%)<br />Product Strategy<br />Generate Ideas for products and services<br />Design and develop the product/service<br />Resources needed (people, equipment, space, ¡)<br />Timing (when?)<br />Market Strategy<br />Market segmentation of the products and potential customers<br />Market sizing ($)<br />Market Mix (the 4 p¡¯s)<br />Product (features,¡)<br />Price<br />Promotion (advertising,¡)<br />Placement (distribution channels,¡)<br />Business Strategy<br />What industry/market combination is your company operating in? (consumer electronics industry, healthcare industry¡)<br />Who are tehe major players (or companies) in that industry? <br />What is the competitive strategy of each player?<br />How is your company going to operate in that space?<br />Financial Strategy<br />Cash flows (revenues, costs, profit) for 3-5 years<br />Funding<br />Who will finance the new company? (friends and family, government, venture capital,¡)<br />Financial structure (ownership, shares and stock,¡)<br />How do you obtain the necessary funding?<br />These Five steps (^^) have to be performed concurrently as opposed to sequentially. <br />Skills To be learned in this course<br />Problem Solving <br />Da Vinci circa 1450s<br />Edison around 1850s<br />How to start a new technology company<br />Tools, Methods within each of the five steps<br />Applications<br />Covered in lectures and homework<br />Mastery of the tools<br />Through the comprehensive midterm and final<br />By creating a startup as part of a team project<br />HW ¨C every other Thursday<br />Team Project Report ¨C every other other thursday<br />Idea Generation: One Popular method for idea Generation is: <br />STRUCTURED BRAINSTROMING<br />Idea Generation<br />Quantity of ideas (not quality) is emphasized<br />No criticism<br />Quantity is more important that quality<br />¡°wilder the better¡±<br />one person should act as a facilitator and another person records ideas as they are being generated.<br />Todays Problem: Highway 17 is extremely dangerous, especially when it rains.<br />Generate: 30 ¨C 50 ideas to make highway 17 safer<br />Structure the ideas into 3 groups<br />A: ideas of immediate usefulness (¡°low-hanging¡± fruit)<br />B: ideas for further exploration<br />C: radically new approaches<br />Agenda:<br />Review<br />Project teams<br />Project kick-off & hw number 1<br />Problem solving<br />Product/service dissection ¨C (reverse engineering)<br />Project Kick-off<br />2 levels of brainstorming<br />Level 1:<br />Brainstorm on societal/customer/market needs (25-50 needs):<br />i.e. clean drinking water for everyone<br />better transportation<br />alternate fuels¡.etc.<br />Level 2:<br />reduce to 3-5 for close examination<br />get specific within the ideas/needs<br />specify ideas to solve or satisfy these needs<br />Create a project proposal<br />main body - A prioritized list of 5-7 ideas, with a brief description of each idea (2-3 pages).<br />Include an appendix (larger set of needs and ideas generated with all details of brainstorming activities)<br />Structured problem solving<br />High-level process: <br />Define the real problem<br />Plan the approach (a set of steps)<br />Execute the plan<br />Check your work<br />Learn/Generalize (drawing conclusions)<br />Product/service dissection ¨C (reverse engineering)<br />Comment: The word ¡°product¡± refers to a spectrum of offereing.<br />Before we can create new products and services, we need to understand how to analyze (or dissect) existing products<br />Step 1: Problem definition<br />What does the product do? (functions)<br />What is the form of the product? (how are the functions realized)<br />Step 2: Plan the approach<br />How does the product work?<br />Define function and form in a more formal fashion<br />Create a structured (organized) diagram that relates the functions to the form<br />Draw conclusions at the end about the product that was dissected.<br />Step 3: Execute the approach<br />Understand how the product works<br />Find a real product and play with it<br />Define function and form<br />Function is a noun-verb combination that indicates the purpose, i.e., what a product does, or what a sub-system does, or what a component does.<br />Agenda:<br />Review<br />Product Dissection<br />HW #1<br />Function Structure<br />Review<br />The importance of having and using a structured problem solving approach<br />There are 5 key steps outlined in the last lecture<br />We applied this method to ¡°product dissection¡±<br />See handout for details<br />Product dissection<br />The FAST (function analysis system technique)<br />Is a systematic (structured) way of organizing the functions (whys) and the forms (hows) of a product service<br />Key idea: organize the product in a FAST diagram with the whys to the right and the hows to the left<br />Product Dissection<br />Useful hints (for complex products like our hw)<br />Draw a little sketch of the system you are trying to dissect and make a list of the key subsystems and components <br />Work from both ends of the FAST diagram; the process is an ITERATIVE TRIAL and ERROR process<br />The FAST diagram stops when you reach the level of subsystems and components in your list<br />HW PROBLEM NUMBER 1<br />Step 1: define the real problem<br />Assess existing home computers and then develop guidelines or recommendations for improving home computers with respect to each one of these needs<br />What are user (customer) needs?<br />How well do existing computers satisfy these needs?<br />How can we improve?<br />Step 2: Create a plan<br />What are the different types of home computers, and which type am I going to focus on?<br />Assumption: Focus on laptop? (<br />Identify key user needs for the home-computer (key functions, WHYs)<br />Identify the key subsystems of the home computer<br />Create a FAST diagram that relates <br />Assess how well existing home computers satisfy user needs (starting with your own experience, other users, internet research¡)<br />Create a table summarizing your assessment and providing guidelines + recommendations for improvement using structured brainstorming<br />Column 1: customer need, performance, UI/experience, reliability, price, etc¡<br />Column 2: assessment (use a scale)<br />Column 3: guidelines for improvement<br />Product Design<br />A useful tool in product design is the function structure (FS)<br />Question: Is there a solution-neutral representation (mental model) of existing products or new products that will enable us to create several different realizations of the product.<br />¡°solution neutral¡± does not suggest or imply a single solution<br />FS is useful for enetarting several alternative design concepts<br />Came in late¡.<br />Step 3: Create a morphological matrix, showing alternatives, called solution principles for each sub-function (refer to notebook)<br />Important note: the morphological matrix is constructed, one row (i.e. one sub-function) at a time. NOT one column at a time.<br />Step 4: combine the solution principles (in the morphological matrix) to create alternative design concepts<br />Use experience, logic, discussion, to determine appropriate combinations<br />Design concept 1: existing breathe-right nasal strip<br />It is the combination of a plastic spring strip to open the nasal passages, which attaches to the nose (how stuff works)<br />Step 5<br />Step 6: Select 1-2 feasible alternatives based on the slection criteria for further development<br />Criteria:<br />Performance (effectiveness, etc¡)<br />Price attractiveness<br />Safety<br />Project Phase 1: Need high-level criteria to narrow down the list of 5-7 potential ides (from the prelim proposal) to 1 or 2 ideas as a basis for a the startup<br />Criteria:<br />Technical feasibility of the idea. <br />Can it be physically realized in a reasonable amount of time and at a reasonable cost?<br />Commercialization potential of the idea<br />Is there a market for the idea?<br />Construct a 2x2 matrix<br />Agenda<br />Remarks on the morphological matrix<br />Product strategy<br />The resources need to develop the product<br />Expertise: skill sets, tools<br />Infrastructure: space, computing<br />Source: From where? Are we outsourcing?<br />Timing: when?<br />Business (competitive) strategy<br />Problem:<br />How do you characterize the industry/market in which the company (startup) wants to operate<br />What competitive strategy should a company adjust to successfully operate (ie make profit, grow) in that industry / market landscape?<br />Market => customer or buyer for the product<br />Industry => types of market<br />Consumer electronics industry, entertainment industry, health care¡<br />Players: competitors, new entrants, substitutes<br />Barriers to entry (of market)<br />Capital<br />Brand<br />Economies of scale<br />Etc¡<br />Near term/Long term strategy:<br />Near term for start-up is ¡°focus¡±<br />Long term: splits into cost effective or differentiated.<br />Step 3: development a business model how to deal with the different sets of players in the the undustry market landscape<br />For each force, F1¡, determine the strength (high, medium, low) of the key factors (called determinants) that influence the force see table 1 of the five forces handout <br />START OF LECTURE:<br />Agenda:<br />Complete the five forces business/competitive strategy discussion<br />HW #2<br />HW 2: Problem 2<br />Market and competitive analysis for the digital camera industry<br />Apple the structured problem solving approach<br />Step 1: define the problem<br />Understand and characterize the market (buyers & industry (competitors, suppliers, new entrants¡) for digital cameras.<br />Market analysis: 5-step process (lecture #5)<br />Industry analysis: 3-step process (lecture six + handout)<br />In particular, determine:<br />Types of digital camera products ¨C product segmentation<br />Types of digital camera customers (or buyers) ¨C customer segmentation<br />Manufacturers or makers of digital cameras ¨C competitors<br />Market size of the digital camera<br />Step 2: Plan<br />Do some internet-based research to collect the information needed<br />Create a document to collect and organize the information as you go along. (note that you may not obtain exactly the information you are looking for)<br />Chapter 1: Idea<br />It is a substitute for pen and paper<br />How to acquire/contact with a good set of collaborators<br />Be careful about sharing ideas (intellectual capital)<br />Chapter 2: The deal<br />Interaction with the venture capitalists<br />Competition between VC¡¯s benefits the entrepreneur<br />Chapter 3: Creation<br />Resources (people and physical)<br />Planning<br /> <br />