MG 298 Entrepreneurship
Class Notes and Lecture
Handouts
Creating the Opportunity
• The obscure, we see eventually. The
completely obvious, it seems, takes
longer.
• Edward R Murrow
Foundation Ideas
• A complete business model will
encompass two foundation concepts:
• 1. A concept of how customer value will be
created.
• A concept of how the new venture will
build, for itself, a structural competitive
advantage in providing that value.
Basic Forces Driving the Business
Model
Looking at the Business Drivers
• 1. Societal needs: Derive from the values,
aspirations, and worries (real or imagined)
of the culture in which the new enterprise
must dwell.
• Chiefly concerned with those societal
needs that can be expressed in the
market place.
Customer Value
• This is the sub set of societal needs that
can be recognized in the market place
• Maybe explicit or latent, unrecognized by
most entrepreneurs, or unarticulated by
the customers
• The value must be “real”
• “No enterprise ever rises above the value
of the problem it chooses to solve – Stan
Lapidus, entrepreneur
Insight and Technology
• Special insight into high- quality problems,
and the value of their resolution – drivers
• Insight alone is never enough – must build
a competitive enterprise by 2 means:
• 1. Combining technology that is well
matched to customer value
• 2. Creating an organization to deliver that
value and capture enough of it to become
self-sustaining
Technology and Innovation
• Technology can create a powerful lever in
building customer value.
• Technology should mesh well with the value
sought in the market (not necessarily high
tech)
• Technology requires a delivery platform – an
organization capable of delivering the product or
service, and capturing enough of the value to
retain interest of owners, employees, investors
Entrepreneurial Innovation
• This is the heart of the business model for
the new enterprise
• Entrepreneurial innovation adds to the
technology: processes, people, skills, and
equipment needed to deliver value to the
customers, and to capture enough of that
value to sustain the firm. (Theory of the
firm)
Distinctive Competency
• The combination of technology and entrepreneurial
innovation must be unique to your venture (not
available to competitors). It then becomes your
distinctive competency
*** Important to distinguish between
core competency and
distinctive competency (a core competency, however
powerfully established in an enterprise, does not become
distinctive, if rivals can easily duplicate it, or buy it in the
market place)
Examples of distinctive competency – Infosys, Nordstrom,
Southwest Airlines, Dell, Biocon, MindTree, etc.
Basic Forces Driving the Business
Model
• Success of the new venture becomes selfreinforcing: the better the firm becomes,
the better it can become.
• All elements of the business model must
work towards this end.
• Selective neglect of one element of the
business model, even while achieving
excellence in others, seems to be a recipe
for eventual disaster.
The Living Business Model
• Most entrepreneurs do not begin with an
entire business model, with complete
understanding, mature plans, and readyto-implement steps.
• Reality compels evolution
• Shape and refine your business model as
insight grows and experience
accumulates.
Business Model: The Ice
Harvesters
Business Model: The Ice
Manufacturers
The Dynamics of Market Change