Technology ventures : from idea to enterprise PDF
Preview Technology ventures : from idea to enterprise
Final PDF to printer Technology Ventures From Idea to Enterprise Thomas H. Byers Stanford University Richard C. Dorf University of California, Davis Andrew J. Nelson University of Oregon bbyyee2233442299__ffmm__ii--xxxxiiii..iinndddd ii 1111//1188//1133 33::3344 PPMM Final PDF to printer TECHNOLOGY VENTURES: FROM IDEA TO ENTERPRISE, FOURTH EDITION Published by McGraw-Hill Education, 2 Penn Plaza, New York, NY 10121. Copyright © 2015 by McGraw-Hill Education. All rights reserved. Printed in the United States of America. Previous editions © 2011, 2008, and 2005. No part of this publication may be reproduced or distributed in any form or by any means, or stored in a database or retrieval system, without the prior written consent of McGraw-Hill Education, including, but not limited to, in any network or other electronic storage or transmission, or broadcast for distance learning. Some ancillaries, including electronic and print components, may not be available to customers outside the United States. This book is printed on acid-free paper. 1 2 3 4 5 6 7 8 9 0 DOC/DOC 1 0 9 8 7 6 5 4 ISBN 978–0–07–352342–2 MHID 0–07–352342–9 Senior Vice President, Products & Markets: Kurt L. Strand Vice President, General Manager, Products & Markets: Marty Lange Vice President, Content Production & Technology Services: Kimberly Meriwether David Managing Director: Thomas Timp Brand Manager: Raghothaman Srinivasan Editorial Coordinator: Samantha Donisi-Hamm Marketing Manager: Heather Wagner Director, Content Production: Terri Schiesl Content Project Manager: Melissa M. Leick Buyer: Susan K. Culbertson Media Project Manager: Sandy Schnee Cover Image Steel structure: Getty Images; Binary Code: Glow Images; Test Tubes: Comstock Images/Jupi- terimages; Android Tablet: McGraw-Hill Education, Mark Dierker, photographer. Compositor: Laserwords Private Limited Typeface: 10.5/12 Times New Roman Printer: R.R. Donnelley All credits appearing on page or at the end of the book are considered to be an extension of the copyright page. Library of Congress Cataloging-in-Publication Data Dorf, Richard C. Technology ventures : from idea to enterprise / Thomas H. Byers, Stanford University, Richard C. Dorf, University of California, Davis, Andrew J. Nelson, University of Oregon.—Fourth edition. pages cm Dorf’s name appears first on the earlier editions. ISBN-13: 978-0-07-352342-2 (alk. paper) ISBN-10: 0-07-352342-9 (alk. paper) 1. Information technology. 2. Entrepreneurship. 3. New business enterprises. I. Byers, Thomas (Thomas H.) II. Nelson, Andrew J. III. Title. HC79.I55D674 2014 658.1’1—dc23 2013033982 www.mhhe.com bbyyee2233442299__ffmm__ii--xxxxiiii..iinndddd iiii 1111//1188//1133 33::3344 PPMM Final PDF to printer DEDICATION For our wonderful families. We warmly recognize their love and commitment to this publication that will help others create important enterprises for the benefit of all. THOMAS H. BYERS, RICHARD C. DORF, ANDREW J. NELSON bbyyee2233442299__ffmm__ii--xxxxiiii..iinndddd iiiiii 1111//1188//1133 33::3344 PPMM Final PDF to printer ABOUT THE AUTHORS Thomas H. Byers is professor of management science and engineering at Stanford University and the founding faculty director of the Stanford Technology Ventures Program, which is dedicated to accelerating technology entrepreneur- ship education around the globe. He is the first person to hold the Entrepreneur- ship Professorship endowed chair in the School of Engineering at Stanford. He also is a Bass University Fellow in Undergraduate Education. He is a principal investigator and the director of the NSF’s Engineering Pathways to Innovation Center (Epicenter), which seeks to spread entrepreneurship and innovation edu- cation across all undergraduate schools. After receiving his B.S., MBA, and Ph. D. from the University of California, Berkeley, Dr. Byers held leadership positions in technology ventures including Symantec Corporation. His teaching awards include Stanford University’s highest honor (Gores Award) and the Gordon Prize from the National Academy of Engineering. Richard C. Dorf is professor of electrical and computer engineering and pro- fessor of management at the University of California, Davis. He is a Fellow of the American Society for Engineering Education (ASEE) in recognition of his outstanding contributions to the society, as well as a Fellow of the Institute of Electrical and Electronic Engineering (IEEE). The best-selling author of Intro- duction to Electric Circuits (9th ed.), Modern Control Systems (12th ed.), Hand- book of Electrical Engineering (4th ed.), Handbook of Engineering (2nd ed.), and Handbook of Technology Management, Dr. Dorf is cofounder of seven technol- ogy firms. Andrew J. Nelson is assistant professor of management and Bramsen Fac- ulty Fellow in innovation, entrepreneurship, and sustainability at the University of Oregon’s Lundquist College of Business. Dr. Nelson holds a Ph.D. and a dual B.A. from Stanford University, and an M.Sc. from Oxford University. He has received numerous academic awards, including recognition from the Kauffman Foundation, INFORMS, the NCIIA, and the Industry Studies Association. At the University of Oregon, he is the four-time recipient of the James E. Reinmuth MBA Teaching Excellence Award as well as the Business Advisory Council Undergraduate Teaching Award. iv bbyyee2233442299__ffmm__ii--xxxxiiii..iinndddd iivv 1111//1188//1133 33::3344 PPMM Final PDF to printer BRIEF CONTENTS Foreword, xi Preface, xiii I PART VENTURE OPPORTUNITY AND STRATEGY 1 The Role and Promise of Entrepreneurship 3 2 Opportunities 25 3 Vision and the Business Model 51 4 Competitive Strategy 67 5 Innovation Strategies 99 II PART CONCEPT DEVELOPMENT AND VENTURE FORMATION 6 The Business Story and Plan 121 7 Risk and Return 139 8 Creativity and Product Development 163 9 Marketing and Sales 183 10 Types of Ventures 213 III PART INTELLECTUAL PROPERTY, ORGANIZATIONS, AND OPERATIONS 11 Intellectual Property 243 12 The New Enterprise Organization 257 13 Acquiring and Organizing Resources 289 14 Management of Operations 307 15 Acquisitions and Global Expansion 329 v bbyyee2233442299__ffmm__ii--xxxxiiii..iinndddd vv 1122//1133//1133 99::3344 AAMM Final PDF to printer vi Brief Contents IV PART FINANCING AND LEADING THE ENTERPRISE 16 Profit and Harvest 349 17 The Financial Plan 371 18 Sources of Capital 395 19 Deal Presentations and Negotiations 439 20 Leading Ventures to Success 451 References, 473 Appendices, 493 Glossary, 581 Index, 590 bbyyee2233442299__ffmm__ii--xxxxiiii..iinndddd vvii 1111//1188//1133 33::3344 PPMM Final PDF to printer CONTENTS Foreword, xi Chapter 3 Vision and the Business Model 51 Preface, xiii 3.1 The Vision 52 3.2 The Mission Statement 54 3.3 The Value Proposition 55 I 3.4 The Business Model 59 PART VENTURE OPPORTUNITY 3.5 Business Model Innovation in AND STRATEGY 1 Challenging Markets 63 3.6 Spotlight on Stratasys 65 Chapter 1 3.7 Summary 65 The Role and Promise of Entrepreneurship 3 Chapter 4 1.1 Entrepreneurship in Context 4 Competitive Strategy 67 1.2 Economics and the Firm 7 4.1 Venture Strategy 68 1.3 Creative Destruction 12 4.2 Core Competencies 71 1.4 Innovation and Technology 14 4.3 The Industry and Context for a Firm 72 1.5 The Technology Entrepreneur 16 4.4 SWOT Analysis 76 1.6 Spotlight on Facebook 21 4.5 Barriers to Entry 77 1.7 Summary 21 4.6 Achieving a Sustainable Competitive Advantage 79 Chapter 2 4.7 Alliances 84 4.8 Matching Tactics to Markets 88 Opportunities 25 4.9 The Socially Responsible Firm 91 2.1 Types of Opportunities 26 4.10 Spotlight on Google 95 2.2 Market Engagement and Design 4.11 Summary 95 Thinking 31 2.3 Types and Sources of Innovation 35 Chapter 5 2.4 Trends and Convergence 38 Innovation Strategies 99 2.5 Opportunity Evaluation 40 2.6 Spotlight on Solazyme 46 5.1 First Movers versus Followers 100 2.7 Summary 47 5.2 Imitation 106 vii bbyyee2233442299__ffmm__ii--xxxxiiii..iinndddd vviiii 1111//1188//1133 33::3344 PPMM Final PDF to printer viii Contents 5.3 Technology and Innovation 8.3 Product Prototypes 174 Strategy 107 8.4 Scenarios 177 5.4 New Technology Ventures 111 8.5 Spotlight on Teva Pharmaceuticals 178 5.5 Spotlight on AgraQuest 115 8.6 Summary 180 5.6 Summary 115 Chapter 9 Marketing and Sales 183 9.1 Marketing 184 II 9.2 Marketing Objectives and Customer PART CONCEPT Target Segments 185 DEVELOPMENT AND VENTURE 9.3 Product and Offering Description 187 FORMATION 119 9.4 Brand Equity 189 9.5 Marketing Mix 190 Chapter 6 9.6 Social Media and Marketing The Business Story and Plan 121 Analytics 195 6.1 Creating a New Business 122 9.7 Customer Relationship Management 197 6.2 The Concept Summary and Story 123 9.8 Diffusion of Technology and 6.3 The Business Plan 127 Innovations 200 6.4 The Elevator Pitch 131 9.9 Crossing the Chasm 202 6.5 An Annotated Table of Contents 132 9.10 Personal Selling and the Sales 6.6 Spotlight on Amazon 135 Force 206 6.7 Summary 136 9.11 Spotlight on DirecTV 208 9.12 Summary 209 Chapter 7 Risk and Return 139 Chapter 10 Types of Ventures 213 7.1 Risk and Uncertainty 140 7.2 Scale and Scope 148 10.1 Legal Form of the Firm 214 7.3 Network Effects and Increasing 10.2 Independent versus Corporate Returns 152 Ventures 217 7.4 Risk versus Return 157 10.3 Nonprofit and Social Ventures 219 7.5 Managing Risk 157 10.4 Corporate New Ventures 222 7.6 Spotlight on Dropbox 159 10.5 The Innovator’s Dilemma 227 7.7 Summary 159 10.6 Incentives for Corporate Entrepreneurs 229 Chapter 8 10.7 Building and Managing Corporate Creativity and Product Development 163 Ventures 230 8.1 Creativity and Invention 164 10.8 Spotlight on Twitter 237 8.2 Product Design and Development 169 10.9 Summary 237 bbyyee2233442299__ffmm__ii--xxxxiiii..iinndddd vviiiiii 1122//1122//1133 22::4455 PPMM Final PDF to printer Contents ix III 13.3 Location and Cluster Dynamics 294 PART INTELLECTUAL 13.4 Vertical Integration and Outsourcing 297 PROPERTY, ORGANIZATIONS, 13.5 Innovation and Virtual AND OPERATIONS 241 Organizations 300 13.6 Acquiring Technology Chapter 11 and Knowledge 301 Intellectual Property 243 13.7 Spotlight on Netflix 303 13.8 Summary 304 11.1 Protecting Intellectual Property 244 11.2 Trade Secrets 245 Chapter 14 11.3 Patents 246 Management of Operations 307 11.4 Trademarks and Naming the Venture 249 14.1 The Value Chain 308 11.5 Copyrights 251 14.2 Processes and Operations 11.6 Licensing and University Technology Management 311 Transfer 251 14.3 The Value Web 316 11.7 Spotlight on Apple 253 14.4 The Internet and Operations 320 11.8 Summary 253 14.5 Strategic Control and Operations 322 14.6 Spotlight on Clean Harbors 325 Chapter 12 14.7 Summary 325 The New Enterprise Organization 257 Chapter 15 12.1 The New Venture Team 258 Acquisitions and Global Expansion 329 12.2 Organizational Design 262 12.3 Leadership 265 15.1 A cquisitions and the Quest for Synergy 330 12.4 Management 269 15.2 Acquisitions as a Growth Strategy 332 12.5 Recruiting and Retention 271 15.3 Global Business 336 12.6 Organizational Culture and Social 15.4 Spotlight on Alibaba 343 Capital 274 15.5 Summary 343 12.7 Managing Knowledge Assets 279 12.8 Learning Organizations 281 12.9 Spotlight on Intuit 286 IV 12.10 Summary 286 PART FINANCING AND LEADING THE ENTERPRISE 347 Chapter 13 Acquiring and Organizing Resources 289 Chapter 16 Profit and Harvest 349 13.1 Acquiring Resources and Capabilities 290 16.1 The Revenue Model 350 13.2 Influence and Persuasion 292 16.2 The Cost Model 351 bbyyee2233442299__ffmm__ii--xxxxiiii..iinndddd iixx 1122//1133//1133 99::3355 AAMM
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