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Bioentrepreneurship > Module 1 - Entrepreneurial Strategy > Flashcards

Module 1 - Entrepreneurial Strategy Flashcards

1
Q

What two types of startups are there?

A

1) Small-/medium-sized Enterprise (SME)
2) Innovation-Driven Enterprise (IDE)

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2
Q

What is an SME?

A

Small-/medium-sized Enterprise
- Like a baker, bike-shop, clothing store etc

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3
Q

What is an IDE?

A

Innovation-Driven Enterprise (IDE)
- Like FaunaPhotonics, it’s science/innovation-driven, meaning there is technology or knowledge behind it.

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4
Q

How does SME and IDEs differ?

A

SMEs:
- Linear income over time.
Small, low scalability, low amount of jobs.
- Local.
- No need for big investments.
- Sole proprietor/family businesses
- No need for competitive advantage for establishment or growth (interesting!)
- “Non-tradable jobs”

IDE:
- Negative cashflow (needs investment) in the start and then quick increase to reach a peak sales (maybe a patent cliff).
- High scalability (both on sales and jobs) because they are based on innovation (something new).
- Founding teams and boards. I.e. more diverse ownership base including external capital providers
- Competitive advantage is crucial!
- Tradable jobs (can be performed elsewhere than locally)

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5
Q

What is the challenge with IDEs?

A
  • Coming up with the idea, BUT, not only! It’s also about choosing how to implement the idea to create and capture value (ie. strategy)
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6
Q

What is strategy?

A

Strategy is how a firm creates & captures economic value over time

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7
Q

What is WTP?

A

Willingness to pay - the maximums a customer is willing to pay for a certain product

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8
Q

What is ROIC?

A

Return on Invested Capital

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9
Q

What is the Value created?

A

Value Created is the gap between the customers WTP and the Cost of Inputs

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10
Q

What is the thing with WTP and price?

A

You don’t know where the limit is, so often the price is lower than WTP

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11
Q

What is the Value Captured?

A

The gap between Price and Costs of Inputs

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12
Q

How can Value Capture and Value Creation be visualized?

A

In a 2x2 with x = Capture and Y = Creation

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13
Q

What is the idea about customer segments and value creation and capture?

A

Different segments can have different value capture and creation for a specific product.
- Think inhalable chocolate vs. inhalable insulin

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14
Q

What four choices do you have to do as entrepreneur in the these choice matters framework?

A

1) Choose competition
2) Choose Customers
3) Choose technology
4) Choose identity

Underlined by:
1) Value Creation Hypothesis
2) Value Capture Hypothesis

Entrepreneurial Strategy Is About Choosing Among
Alternative Visions for an Idea & Company

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15
Q

Online grocery platforms in the 1990s consisted of?

A

Webvan and Peapod

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16
Q

What was the differences between Peapod and Webvan?

A

Webvan:
- Vertically integrated (the whole value chain)
- High capital requirements
Substitute for traditional supermarkets

Peapod:
- Focused on ordering system and logistics
- Smaller capital requirement
- A complement to traditional supermarkets

SO:….Fundamental very different strategies of two companies with access to somewhat alike resources and opportunity

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17
Q

What happened to Webvan and Peapod?

A

Webvan:
- Spent 1 billion USD and bankrupt two years after IPO (took learnings from here though and made Kiva (sold for 775mio usd to amazon), but Webvan failed horribly!

Peapod:
- Partnered and was acquired
- Highly profitable niche business

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18
Q

What 3 attributes are inherent of startups?

A
  • Freedom: Multiple alternative paths for a given idea
  • Constraint: Cannot pursue all paths at the same time
  • Uncertainty: Positive feedback induces additional search
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19
Q

What is the Paradox of Entrepreneurship?

A
  • Choosing between alternative strategic commitments
    requires knowledge that can only be gained through
    experimentation and learning.
  • Yet, the process of learning and experimentation
    results in (at least some) commitment that forecloses
    particular strategic options.
  • Irreversible Commitments

1) Choosing between alternative strategic commitments
requires knowledge that can only be gained through
experimentation and learning.

2) The process of learning and experimentation results in
commitment that forecloses particular strategic options

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20
Q

What is entrepreneurial strategy?

A

The set of choices a founder (or their team) makes to test specific value creation and capture hypotheses

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21
Q

Which three entrepreneurial strategy principles should you remember?

A

1) Choices matter (paradox of entrepreneurship)
2) These Choices Matter (Entrepreneurial strategy with choosing competition, customers technology etc.)
3) These Choices Matter Together (The 2x2 with 4 different models)

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22
Q

Explain Choice Matters

A

Why do Entrepreneurs need a Strategy?
* Prioritize
* Uncertainty
* Irreversible Commitment
(paradox of entrepreneurship)
* Coherent Choices
* A roadmap for Experimentation

Two equally viable ex ante ideas…. learning about either requires partial commitment Learning about Blue can make Red unviable!

When learning about a strategic option makes it more difficult to learn about an alternative strategic option, the choice of strategy determines the future scope of the venture

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23
Q

Explain These Choices Matter

A

Overlined by: Entrepreneurial Idea

1) Choose competition
2) Choose Customers
3) Choose technology
4) Choose identity

Underlined by:
1) Value Creation Hypothesis
2) Value Capture Hypothesis

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24
Q

Choosing your customer (from These Choices Matter) is important why?

A

The s-shape adoption cuvre, when you choose your ealy adopters/inovators, you choose a direction for your company.

Fitness wearables for humans is easier to transition to dogs, than fitness wearables for humans being transferred to dogs.

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25
Q

How can identify customer needs/a market opportunity?

A
  • Using the three bubbles and the sweetspot in the middle
    1) People “desirable”
    2) Business “viable”
    3) Tehcnichal “feasible”

Connecting with customers is the only way to truly understand their needs. - Observe how customers (not you) experience the product/service/problem.

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26
Q

What kind of needs are there?

A

Latent vs. Explicit
– Latent needs are those that customers may not be aware of and are not able to express in advance of the product, in contrast to explicit needs

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27
Q

How are you most likely to observe latent needs?

A

Latent needs are more likely to be identified through observation rather than asking. When addressed they can delight customers.

28
Q

Describe the elements of choosing your competition

A

“These Choices Matter Together”

  • Think of the 2x2 with X axis = Colloborate vs. Compete and Y axis = Execution vs. Control
29
Q

What are the benefits of control in the ““These Choices Matter Together”” framework?

A
  • Enhancing the Potential for Value Capture
  • Anchoring the Identity of the Organization
  • Creating a Foundation for Sustainable Competitive Advantage
30
Q

What are the benefits of execution in the ““These Choices Matter Together”” framework?

A
  • Speed
  • Enhancing the Potential for Value Creation
  • Adapting through Learning and Experimentation
  • Building Capabilities Tailored to Evolving Customer Needs
31
Q

What are the benefits of collaboration in the ““These Choices Matter Together”” framework?

A

*Enhancing Value Creation for Partners
* Supply Chain Firm
* Leveraging Existing Capabilities and Accessing Existing Customers
* Muting Competitive Pressure

32
Q

What are the benefits of competition in the ““These Choices Matter Together”” framework?

A
  • Enhancing Value Creation through a Novel Value Chain
  • Creating New Capabilities and Serving New Customers
  • Establishing Independent Bargaining Power
33
Q

Describe the four entrepreneurial strategy in the “These Choices Matter Together” framework

A

1) IP (Collaboration + Control)
2) Value Chain (Collaboration + Execution)
3) Architecture (Compete + Control)
4) Disruption (Compete + Execution)

34
Q

Think of the case “RapidSOS” and place the case in the four different strategies of the “These Choices Matter Together” framework

A

1) IP (Collaboration + Control): Maintain control of your innovation and find a way to create value in the existing market place. RapidSOS could keep tech proprietary and work with existing 911 services.
2) Value Chain (Collaboration + Execution): Focus on creating value for partners in the existing value chain. Execute quickly. RapidSOS could partner with insurance companies via an smartphone app
3) Architecture (Compete + Control): Create and control a new value chain based on a platform (architecture). Essential to protect IP. RapidSOS could replace traditional emergency service all together.
4) Disruption (Compete + Execution): Compete directly with the incumbants. Take them by suprise with fast execution. RapidSOS could serve a poorly served customer segemtn before moving on to a larger segment and trying to gain market share.

35
Q

What are most life science companies entrepreneurial strategy of the four?

A
  • Probably Collaborate / control = IP

You need to maintain your IP protection and often integrate into a value chain of healthcare systems.

Medtech could be more free and basically in any of the other qudrants and also more execution heavy.

36
Q

Is there one right choice of entrepreneurial strategy?

A

No!

  • For most entrepreneurial ideas , there are multiple potential commercialization paths , more than one of which w ill be equally viable
  • Choosing an Entrepreneurial Strategy requires choosing among alternative commercialization paths
  • Not only a choice of how to compete, but also a choice of customer, technology, and identity
  • Choosing an Entrepreneurial Strategy is harder (and more
    important!) for ideas with a higher potential level of impact.
37
Q

In the choices matters framework, what can entrepreneurs do?

A

Entrepreneurs continue search (without commitment) until they find at least two alternatives that are ex ante equivalent in expected value before making a choice.

38
Q

What is the real options approach to choices?

A

A real options approach. Learning through staged investments.

When learning about a strategic option makes it more difficult to learn about an alternative strategic option, the choice of strategy determines the future scope of the venture

39
Q

Why do you have to choose a customer?

A

If you choose everyone, you choose no one (it’s not specific enough)

40
Q

What is a latent need?

A

Latent needs are those not yet widely recognized by most customers, and not yet fulfilled by existing products.

Once fulfilled they become “must haves”

41
Q

Which five steps can be used to uncover customer needs?

A

1) Gather raw data from Customers (Surveys, focus groups, interviews, observing product in use) - Do between 10-50 interviews of lead users (and extreme users) and stop process when no new needs are revealed.
2) Interpret raw data in terms of customer needs
3) Organize the Needs into a Hierarchy (step 1 + 2 yields 50-300 need statements) - organize into primary needs and further secondary needs underneath the primary ones.
4) Establish the Relative Importance of the Needs
5) Reflect on the Results and the Process

42
Q

What are lead users?

A

Lead users are customers who experience needs months or years ahead of the majority of the market and stand to benefit substantially from product innovations:

Particularly useful sources of data for two reasons:
(1) they are often able to articulate their emerging needs, because they have had to struggle with the inadequacies of existing products
(2) they may have already invented solutions to meet their needs.

43
Q

What are extreme users?

A

Extreme users are those who use the product in unusual ways or who have special needs. May uncover mainstream latent needs.

44
Q

How do you make an overview of the individual customers needs from an interview?

A

Customer data template with statement and the interpreted need from this.

Think: “I have to manually turn it on and off when
it gets too hot or cold.: –> Need = The thermostat maintains a comfortable
temperature without requiring user action.

45
Q

The entrepreneurial strategy compass is?

A

A go to market strategy model made up of a 2-by-2 with collaboration vs. competition and control vs. execution

46
Q

What characterizes the Intellectual Property Strategy in the entrepreneurial strategy compass?

A

1) IP (Collaboration + Control): Maintain control of your innovation and find a way to create value in the existing market place. Focus on being an idea factory.

47
Q

What characterizes the Value Chain Strategy in the entrepreneurial strategy compass?

A

2) Value Chain (Collaboration + Execution): Focus on creating value for partners in the existing value chain. Execute quickly.

48
Q

What characterizes the Architectural Strategy in the entrepreneurial strategy compass?

A

3) Architecture (Compete + Control): Create and control a new value chain based on a platform (architecture). Essential to protect IP.

49
Q

What characterizes the Disruption Strategy in the entrepreneurial strategy compass?

A

4) Disruption (Compete + Execution): Compete directly with the incumbents. Take them by surprise with fast execution.

50
Q

What is the test two, choose one method?

A

Entrepreneurs continue search (without commitment via cost-benefit analysis) until they find at least two alternatives that are ex ante (before events) equivalent in expected value before making a choice.

51
Q

Innovation is?

A

Invention (novel idea) + commercialization possibility

52
Q

Categories of innovation?

A

Incremental vs. disruptive

53
Q

What main innovation types are there?

A

1) Business model innovation
2) Network innovation (how a company connects to others to create value)
3) Product innovation
4) Service innovation
5) Channel innovation
6) Process innovation

54
Q

What two types on innovation are there in regards to “opennes”

A

Open (in-out license, outside firm boundaries) and closed innovation (Inside firm boundaries - idea to commercialisation)

55
Q

Innovation in networks functions how?

A

Network mapping in social networks can map individuals who are opinion leaders and can give insights into innovation and latent needs

56
Q

What is technology push vs. market pull?

A

The Market Pull approach attempts to provide products the market demands.

The Technology Push approach attempts to interest the market in new products based on new solutions

57
Q

S curves are?

A

Performance of a given technology. Often the incumbent technology is better until some time passes and the new technology surpasses the upper limit of the old technology which has plateaued here.

58
Q

SWOT analyses?

A

Internal and external factors of a company’s attributes

59
Q

What model can be used to get a market outlook on competition?

A

Porters five forces
1) Threat of new entries
2) Bargaining power of suppliers
3) Bargaining power of buyers
4) Threat of substitution
5) Rivalry among competitors

60
Q

What framework can be used to model the macro environment around a company?

A

PESTEL
Political, Economic, Social, and Technological, Environmental and Legal factors

61
Q

What is the strategic sweetspot?

A

The intersection between Competitors offerings, customer needs and company capabilities (should be outside competitor offerings)

62
Q

What are porters generic strategies?

A

X-axis: Competitive advantage (Lower cost vs. Differentiation)
Y-axis: Competitive Scope (Narrow vs. Broad)

1) Cost leadership (Low cost + Broad scope)
2) Cost focus (Low cost + Narrow scope)
3) Differentiation (Differentiation + Broad scope)
4) Differentiation focus (Differentiation + Narrow scope)

63
Q

What is the experience curve?

A

The idea that cost pr. unit decreases as the cumulative output increases and learnings increase.

64
Q

What are blue ocean vs. red ocean strategies?

A

Blue ocean:
- Create uncontested market space
- Make competition irrelevant
- Create and capture new demand

Red ocean:
- Compete in existing market
- Beat the competition
- Exploit existing demands

65
Q

What does FaunaPhotonics do?

A

FaunaPhotonics combines optical and data processing technologies to monitor insects to ensure sustainable crop utilization and to improve tools for pest control and biodiversity.

CEO: Michael Stanley Pedersen, PhD

Bioentrepreneurship (8 decks)

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