MGMT 121B: Innovation to Market (B) Undergraduate Course, Spring 2014 LECTURER: Lamar Rutherford EMAIL: [email protected] PHONE: 310.710.2258 OFFICE LOCATION: 2E108 OFFICE HOURS: Mondays, 3:45-­‐4:45pm COURSE DESCRIPTION Innovation to Market B is the second course of a two-­‐course sequence that provides the basic skills needed to identify and transform both technical and non-­‐technical innovation into successful ventures. The course will provide students an introduction to the strategic and operational issues of developing an innovation into a competitive and sustainable business. This course focuses on business concepts identified in Innovation to Market A into a solid business model, business plan and commercially viable opportunity. We will examine strategic, financial and operational issues that impact a startup. Students, in teams will work to address these issues in their business plans so they can develop plans that are ready to be executed. The B course emphasizes examining the business model and how it impacts key decision for development of the business on both the revenue and cost structures. We will also look at developing cash flow analysis, start-­‐up costs, return on investment, funding and harvest strategies. Through case studies, industry examples and discussions, participants will learn the nuances of different business models and many of the challenges and opportunities faced by entrepreneurs as they evolve their businesses. Students will demonstrate their learning of this material through written and oral presentations. The course will utilize lectures, case studies, team projects, presentations, individual homework and guest speakers. The main project and several interim assignments are expected to be completed by the teams. This quarter-­‐length course is designed for upper division undergraduate students. OBJECTIVES Participants will: -­‐ Gain a greater understanding of how to calculate value for a business. -­‐ Learn how to build financial projections for their business models. -­‐ Better understand the trade-­‐offs and impacts of strategic decisions in terms of revenues and or costs. -­‐ Develop a greater understanding of good leadership and business management skills. -­‐ Increase their exposure to business challenges typically faced by start-­‐up businesses. -­‐ Improve their presentation skills. -­‐ Better understand issues related to funding, making deals and negotiations. -­‐ Work with their teams to write an effective business plan. REQUIRED COURSE MATERIALS Textbook New Venture Creation, Entrepreneurship for the 21st Century, Ninth Edition 2012 Stephen Spinelli, Jr and Robert Adams McGraw-­‐Hill, Irwin, New York, New York Course Reader MGT 121B – Innovation to Market (B) – For instructions on how to purchase the course reader from University Readers, please see the Course Content tab on TED. The assigned readings, cases and class schedule are given in the following course outline. Each student is expected to have completed the reading and case preparation for each class before the class starts. Homework is due as indicted in the schedule and will be turned in before class on the day it is due through TED. Each student is expected to be prepared to contribute to the classroom discussion. CLASSROOM PROCEDURE The course meets 19 times for 1 hour and 30 minutes each time. Class sessions will begin and end on time. Please be punctual so that you do not miss the initial thrust of the discussions or disturb others. If you need to miss a class please email me in advance. Keep in mind class participation is part of your grade. CLASS ASSIGNMENTS You are expected to read all assignments and prepare answers to the case preparation questions prior to class. Each individual is expected to turn in his or her own assignments unless they are team projects. However, I recommend you work in study groups to discuss the questions prior to completing your own write-­‐up. You are encouraged to work together to think through your answers, but still write up the answers on your own, not copy each other’s work. Come to class prepared to discuss your findings. CLASS AND TEAM PARTICIPATION Every class session will involve interaction in the form of class discussion. I expect each student to be prepared at all times to comment in any class session. To reinforce this expectation, I will randomly (e.g. cold call) on students during the ensuing discussion, both those who raise their hand and those who do not. Many of the sessions of this class will follow the case discussion format. I have found that the case method is one of the most effective means of sharpening your decision-­‐making abilities – requiring you to be an active participant in the resolution of a business problem – be it the concept, the model, the market research, market risk, technical risk, etc. This allows you to apply theories, concepts and analytical devices discussed in class or in the reading materials – be it this class or other related or relevant courses. The discussion forum provides you an opportunity to argue your position and to learn from others by listening to their comments and criticisms. The direction and quality of the discussion is the collective responsibility of the class, not the sole responsibility of the instructor. EVALUATING CLASS PARTICIPATION Class participation will be graded on your readiness, willingness and the quality of your comments and their contribution to the discussion. TEAM PROJECTS Every student will participate in a team project. Teams will be made up of 5-­‐7 students. You may request your team members (please submit to me by the third class) otherwise I will randomly assign every student to a team. The team will be graded as a group. Each group will be responsible for team assignments, i.e. presentation and business plan. If your team cannot resolve a problem amongst yourselves please meet with me. COMPUTER OR PHONE USE IN CLASS You will not be allowed to use your computers or phones in class. Slides from class will be available on TED after each class. ATTENDANCE You are expected to attend every class. You are responsible for the material covered in class whether you attend or not. I realize that despite your best efforts you might miss a class. Please inform me if you have missed (or will miss) a class. If you miss a class you must still submit the homework, in ADVANCE of the beginning of class for any planned absences, after class for any emergencies. ACADEMIC INTEGRITY Integrity of scholarship is essential for an academic community. As a member of the Rady School, we pledge ourselves to uphold the highest ethical standards. The University expects that both faculty and students will honor this principle and in so doing protect the validity of University intellectual work. For students, this means that all academic work will be done by the individual to whom it is assigned, without unauthorized aid of any kind. The complete UCSD Policy on Integrity of Scholarship can be viewed at: http://senate.ucsd.edu/manual/appendices/app2.htm How the Honor Code applies to this course: You are encouraged to discuss all class readings and assignments with anyone. I encourage you to form study groups and meet regularly to discuss the assignments. However, you still must complete the case and chapter assignment homework on your own. GRADES Students will be evaluated based on performance on the following: Requirement % of Grade Class Participation 30% Homework 25% Team Project 40% Rady Research Project 5% Please Note: There are fewer readings and assignments towards the end of the course to allow more time for the students to complete their team projects. PARTICIPATION IN EXPERIMENTS: 5% of your grade is based on participating in the Rady School Research Participant Pool. You can get credit if you take part in two experiments. Each experiment will take up to one hour. For information on how to participate in the participant pool, please visit http://rady.ucsd.edu/behavioural-­‐lab/ STUDENTS WITH DISABILITIES A student who has a disability or special need and requires an accommodation in order to have equal access to the classroom must register with the Office for Students with Disabilities (OSD). The OSD will determine what accommodations may be made and provide the necessary documentation to present to the faculty member. The student must present the OSD letter of certification and OSD accommodation recommendation to the appropriate faculty member in order to initiate the request for accommodation in classes, examinations, or other academic program activities. No accommodations can be implemented retroactively. Please visit the for further information or contact the Office for Students with Disabilities at (858) 534-­‐4382 or [email protected] OFFICE HOURS I will be available from 3:45pm-­‐4:45pm on Mondays, or by appointment. COURSE OUTLINE Concept Required Reading Assignments Wk 1, class 1 – 3/31 Review Chapter 8, Business Prepare for quiz on common Plan Table of Contents, pg business terms. -­‐ Class logistics 250 (NVC) -­‐ Introductions -­‐ Forming teams -­‐ What makes a good opportunity -­‐ Business Plan components -­‐ Teams -­‐ Quiz on important Biz terms Wk 2, class 2 – 4/7 HBS Articles Prepare Case Questions: Linda A. Hill, Maria T. 1. Compare and contrast -­‐ Finish discussion on Farkas, “A Note on Team Coach Knight and key terms Process”, HBS Case No. 9Coach K’s Leadership -­‐ Effectiveness of 402-032, October 4, 2001, styles. What are his Different Leadership pp. 1-17 basic assumptions about styles motivation, leading and -­‐ Cases: Coach Knight: "What Makes a Leader?" human nature? The Will to Win and Not IQ or technical skills, Coach K: A Matter of says Daniel Goleman 2. Who is more effective? the Heart Why? Under what -­‐ Leadership conditions would you -­‐ Maclean Palmer case HBS Cases: Scott A. Snook, Leslie A. hire Coach K? Coach -­‐ Team selection Perlow, Brian J. DeLacey, Knight? Coach K: A Matter of the Heart, HBS Case No. 9-406- 3. Describe two other 044, Rev. December 1, 2005 pp. 1-12 leadership styles you have experienced. Scott A. Snook, Leslie A. Perlow, Brian J. DeLacey, Coach Knight: The Will To Win, HBS Case No. 9-406043, Rev. December 1, 2005, pp. 1-14 4. Think of a time when someone else (manager, coach, teacher, parent) motivated you to perform at your best. Why were they effective? Review Ch 9, pgs 279-288 (NVC) 5. Think of a time when you motivated others to perform at their best. Why were you effective? Ch 9 Maclean Palmer case (NVC), pgs 302-313 6. What are your basic assumptions about motivation, leading and human nature? Case Prep Questions: Maclean Palmer, pg 302 (NVC), #1-5 Wk 3, class 3 – 4/14 -­‐ Calculating Value -­‐ Projections -­‐ Midwest Lighting Case Study Paul Mirabella, Entrepreneur and former GE Executive “What Makes an Effective Executive” by Peter F. Drucker “Managing Oneself” by Peter F. Drucker Chapter 13 (NVC)Entrepreneurial Finance, pgs 375-383 Summary of Team Concept (one per team) Case Prep Questions: Midwest Lighting Case, pg 384, #1-4 Midwest Lighting Case, (NVC) pgs 384-393 Wk 4, class 4 – 4/21 -­‐ Presentation Skills -­‐ Nathaniel Broughton, Entrepreneur “Heartbreak Hill” by Joseph Prepare you top 3-5 P Kahn, Inc. Magazien, April Marketing and Sales Tactics 1988 for your Business Ideas (one per team) “Innovation: The Classic Traps,” by Rosabeth Moss Kanter “Marketing Myopia,” by Theodore Levitt Wk 5, class 5 – 4/28 -­‐ Obtaining Venture and Growth Capital -­‐ Franchises -­‐ Mike Bellobuono case Chapter 12 (NVC), pgs 353364 Individual Presentations William A. Sahlman, “Some Thoughts on Business Plan”, HBS Case No 9-897101, November 1995, pp.132 Mike Bellobuono Case (NVC), pgs 365-374 Case Prep Question: If you were Mike Bellobuono would you do the franchising deal with Fred DeLuca? Individual presentations Review Chapter 8, A Framework to develop a Busines Plan, pgs 256-­‐266 Wk 6, class 6 – 5/5 -­‐ Obtaining Venture and Growth Capital -­‐ Zipcar Case Chapter 14, pgs 395-415 Mary Hart, Micheal J. Robers, Julia D. Stevens “Zipcar: Refining the Business Model”, Case No 9-803-096, Rev: May 9th, 2005 Review Chapter 14 study questions, pg416, #2, 3, 5, 6 Case Prep Questions: 1. Evaluate this potential venture and the progress that Chase has made. 2. What is the business model, and how has it changed between December 1999 and May 2000? What do the data from actual operations in September say about how the business model is playing out in practice? Does this data give you comfort or concern? 3. What actions should Chase take as a result of the September operating results? 4. What is the strongest argument Chase could make to a potential investor about the attractiveness of the venture? What, specifically, should her elevator pitch be at the Springboard forum? Wk 7, class 7 – 5/12 -­‐ Financials – The Deal: Valuation, Structure and Negotiation -­‐ Lightwave Technology Case Calculating Valuations HBS Article William E. Fruhan Jr, “Note on Alternative Methods for Determining Terminal Value”, HBS Case No. 9-­‐298-­‐ 166, June 8, 1998, pp 1-­‐8 Read Ch 15, pgs 433-444 Case Prep Questions: Lightwave Technology Products, pg 456 #1-4 Lightwave Technology Case, pg 445-452 William A. Sahlman, R. Matthew Willis, “The Basic Venture Capital Formula”, HBS Case No. 9-­‐804-­‐042, Rev. February 5, 2004, pp 1-­‐6 Wk 8, class 8 – 5/19 -­‐ Operations -­‐ Pandora Radio case -­‐ Obtaining Debt Capital -­‐ Leading Rapid Growth, Crises, and Recovery -­‐ Guest Speaker, Conan Barker, Owner Freightliner Truck Dealerships & Repair Shops. Willy Shih, Halle Tecco, “Pandora Radio: Fire Unprofitable Customers?” – HBS Case No. 9-610-077, Rev. November 18, 2010, in Course Reader “Disruption is Good Ignoring it is Bad” Edward Prewitt (CIO), May 7th, 2007 “What is Strategy” by Michael Porter Ch 16, pgs 511-527 (NVC) Case Prep Questions: 1. Map out the key elements of Pandora’s business model. As you apply theory to your analysis of where this company is today, ask yourself what are the key indicators that tell Westergren whether his model is working or not. 2. Should Westergren and Kennedy follow the advice of the junior partner? 3. Given the current state of the company, should Westergren and Kennedy want funding from the VC that they just visited? How did they get into the situation that they did? 4. Among the possible options for their high usage customers, which would you pursue and why? Wk 9, class 9 – 5/26 Memorial Day NO CLASS!! Wk 10, class 10 – 6/2 -­‐ Leading Rapid Growth, Crises, and Recovery -­‐ Guest Speaker Kirk Cypel -­‐ Family Business -­‐ Harvest -­‐ Presenting Review Finals Week, June 13th, 7-10pm - Presentations Chapter 17, pgs 493-510 (NVC) Guide to Persuasive Presentations, Harvard Business Review Review Ch 17 Study Questions, pg 510, #2, 7, 8 and 10 Business plans due (one per team) Ch 18, pgs 525-542 (NVC) Ch 19, pgs 559-565 (NVC) Presentations (one per team) ADDITIONAL RECOMMENDED READINGS • The E-­‐Myth Revisited: Why Most Small Businesses Don't Work and What to Do About It, Michael Gerber • The Art of the Start, Kawasaki (Managing Director of Garage Technology Ventures), Portfolio Penguin, 2003. • Launching New Ventures, Allen, HoughtonMifflin, 2006 • Bringing New Technology to Market, Allen (Director of Technology Commercialization at USC), Prentice Hall, 2003 • The Tipping Point by Malcolm Gladwell -­‐ On how trends start and spread. • Outliers by Malcolm Gladwell -­‐ To better understand why some individuals excel.