Timmons New Venture Creation

Entrepreneurship and Engineering Management

Sheryl Staub-French, PhD, [email protected] Professor, Civil Engineering

Coordinator, Engineering Management Program

T h e U n i v e r s i t y o f

B r i t i s h C

o l u m b i a

Engineers in Law and Business DevelopmentFebruary 4, 2004

Takeaways

1. A broad-based education is essential.

2. Entrepreneurship can you help you to understand the business context.

3. Establish your business philosophy.

IntroductionIntroductionIntroductionIntroduction

What is Entrepreneurship?

Reference: Harvard Business School and Babson College

“"Entrepreneurship is a management style that involves pursuing pursuit of opportunity without

regard to resources controlled.”

“Any attempt at new business or new venture creation, such as self-employment, a new business

organization, or the expansion of an existing business, by an individual, a team, or an

established business.”

“A way of thinking and acting that is opportunity obsessed, holistic in approach and leadership balanced – for the purpose of value creation.”

A Way of Managing and Leading!

1. Broad1. Broad1. Broad1. Broad----based Educationbased Educationbased Educationbased Education

Some Important Entrepreneurial Skills

Oral and written communication Basics of finance and accounting TeamworkCreativity and opportunity evaluation Real-time strategy and decision makingComfort with change and chaosRisk-takingEvangelism, selling, negotiation, and motivation thru influence and persuasion


Who is the entrepreneur?

Inventor Entrepreneur

Manager /Administrator

Promoter

CreativityAnd

Innovation

General management skills, business know-how, and networks

Low

High

High

Reference: Jeffry Timmons “New Venture Creation”


Common question: Can entrepreneurship be taught?

Asking the wrong question! The right question is….

Can Entrepreneurs Learn?

Entrepreneurship and Education


Reference: Ray Smilor

Engineering Management Education

Engineering Management at UBCBachelor of Science in Engineering with a Minor in CommerceMaster of Engineering with a sub-specialization in Engineering Management MBA Programs in Commerce

Entrepreneurship, Information Technology and Management, Supply Chain Management, …

Master of Management Program in Commerce(1) Management Information Systems, (2) Operations Research, (3) Transportation & Logistics

Engineering Management ProgramsMaster of Technology Management (e.g., U. of Waterloo)Master of Engineering Management (e.g., Stanford)


Engineering Management Sub-specialization

A program for graduate engineering students within the Faculty of Applied Science. Allows students to get a more balanced education in both technical and managerial subjects. Requires 12 credits in management courses, with the following 2 core courses:

APSC 541: Technology Entrepreneurship for Engineers APSC 540: Business Decisions for Engineering Ventures

http://www.civil.ubc.ca/ems/


Entrepreneurship and EducationEntrepreneurial Education1

Revolution in higher educationK-12 (30 states offer, 8 states require)

Entrepreneurship at UBC125 invention disclosures, 227 patents, $10.4M royalties2

MBA module on EntrepreneurshipCore Course in Engineering Management Sub-specialization: APSC 541: Technology Entrepreneurship for Engineers (may be offered to undergraduates in 2004-5)

Stanford Technology Ventures ProgramMission: accelerate high-tech entrepreneurship education and research across top engineering schools worldwide http://stvp.stanford.edu/

1Source: Jeffry Timmons “New Venture Creation”2Source: University-Industry Liaison Office


Business Plan

Fits and gaps

Source: Jeffry A. Timmons “New Venture Creation”

OpportunityOpportunityOpportunityOpportunityOpportunityOpportunityOpportunityOpportunity $$$ResourcesResourcesResourcesResourcesResourcesResourcesResourcesResources

TeamTeamTeamTeamTeamTeamTeamTeam

Ambiguity Exogenous Factors

LeadershipCreativity

Communication

A Model of the Entrepreneurial Process2. The Entrepreneurial Process2. The Entrepreneurial Process2. The Entrepreneurial Process2. The Entrepreneurial Process

Product IdeaThe world will NOT beat a path to the door of the inventor of the better mousetrapIdea itself does not have value, it’s all about execution“Being first” is over-rated It is one among many relevant variable factorsLook for DiscontinuitiesIP richHow much R, how much D

Source: Mark Leslie – Stanford University

R&d

2. The Entrepreneurial Process2. The Entrepreneurial Process2. The Entrepreneurial Process2. The Entrepreneurial Process

The MarketMarket demand

Who is the customer? Are they reachable?How will the product or service be priced? Costs to deliver?Market share and growth potential?

CompetitionCurrent competitors, strengths/weaknesses?How will the leader’s react and how quickly?Why can’t they do the same and put you out of business?

Market structure and sizeEmerging and/or fragmented market?Proprietary barriers to entry?

Margin analysisHelps to differentiate opportunity from ideaWhat is your business model?



TeamEntrepreneurial Leader

Learns and teaches – faster, betterDeals with adversity, is resilientExhibits integrity, dependability, honestyBuilds entrepreneurial culture and organization

Quality of the teamRelevant experience and track recordMotivation to excelCommitment, determination and persistanceTolerance of risk, ambiguity, uncertaintyTeam focus of controlAdaptabilityLeadershipCommunication



ResourcesMinimize and control versus maximize and own

You don’t need all the resources in place to succeedMoney follows high potential opportunities with a strong management team

Different types of resourcesFinancial resourcesAssetsPeopleYour business plan

Think cash last!!!!!Understand and marshall resources, don’t be driven by them

Doing more with less is a powerful competitive weapon

$$$



Business Plan

Fits and gaps




2. The Entrepreneurial Process2. The Entrepreneurial Process2. The Entrepreneurial Process2. The Entrepreneurial ProcessCase Example of Entrepreneurial Process

Yahoo! 1995Product

Hierarchical organization of WWW linksBuilds hand-crafted, intuitive paths“Not just a directory but a media property.”

MarketCurrent Demand: 2M users after one yearCurrent Market Size: 40M users of internetProjected Market Size: 200M users by 2000, $2B in web-based advertising

ResourcesBusiness plan, use of Netscape network

TeamJerry Yang and David Filo Source: Jeffry A. Timmons “New Venture Creation”

$$$


Business Plan

Fits and gaps





The Deal

Yahoo! 1995

Assemble a complete management team

$4M valuationVC offers $1M for 25% ownership

Social EntrepreneurshipEntrepreneurial approaches to social problemsNot a new phenomenon Blurring of sector boundaries

Innovative not-for-profit venturesSocial purpose ventures Hybrid organizations: for-profit and not-for-profit

Mission-related impact becomes the central criterion, not wealth creation Difficult to assess value: markets don’t work well

Valuing social improvementsPublic goods and harmsBenefits for people who cannot afford to pay

Reference: Gregory Dees: “The Meaning of Social Entrepreneurship”


Hamed Shahbazi in APSC 541

Thursday February 5 from 5-6:30 in CEME 1202Founder and CEO of InfoTouchUBC Civil Engineering graduate of 1997Top 50 Canadian technology growth companiesDeloitte and Touche Fast 50 award


Ethics and Corporate Responsibility

Why is it important?Its your name!Corporate Optics Brand ManagementCorporate IdentityThere are many reasons - Its good business!!

Its not just good to be profitable, its very profitable to be good.Can you be successful without it?

Reference: Hamed Shahbazi

3. Your Business Philosophy3. Your Business Philosophy3. Your Business Philosophy3. Your Business Philosophy


The Warren Buffett WayWho is Warren Buffett?The greatest investor in the world ($36B worth)Renowned for recognizing and picking great leaders to drive his companiesHis overall business philosophy on leadership is based on I.E.I.

INTEGRITYENERGYINTELLIGENCE

Can’t have two out of three



Challenges

Too much emphasis on making a “Fast Buck”Not enough focus on value creationCompensation without value creation leads to issues with commercial sustainability which eventually lead to LOSSUsually business transactions that are not win-win



The Solution

Driving real value for fair compensation“Fair” is not only based on customer perception (micro-viewpoint) but also the big picture – supply and demand as well as other elements. Value is always proportional to compensationCall it “business homeostasis”



The Process

Process is just as important as the end gameEveryday business negotiations are the very building blocks of value creationHarvard Law’s Negotiation Program calls this Mutual Gains Negotiation



Value Creation Inside-out

Value Creation internally within a company is just as important as creating value for a corporation’s external stakeholders

What does this mean?Encouraging personal developmentBy helping employees fulfill their personal goals, the company can realize its greatest ambitionsTireless incentive based encouragement of integrity, respect and innovation contribute to a better working environment – this enhances productivity.



Ethics Policies

Severe forms of frustration in the organization are symptoms of culture failure.

Managerial action to merely deal with symptoms of frustration instead of preventing its causes deepens the existing culture failure.

Culture failure is a leading cause of failing to meet one's corporate responsibilities.



Ethics Policies

Do you want to just appear to have corporate responsibility, or do you want to truly have corporate responsibility?

It takes more than words and policies. It takes a commitment to ethical reasoning skills and an ethical operating culture.

However, long term sustainable success is just not possible without it



Video of David Neeleman

Founder and CEO of JetBlue

Conclusions

Be patientTreat people with respectFind a job that you enjoyThink Big!

Entrepreneurship and Engineering Management

Sheryl Staub-French, PhD, [email protected] Professor, Civil Engineering

Coordinator, Engineering Management Program

T h e U n i v e r s i t y o f

B r i t i s h C

o l u m b i a

Engineers in Law and Business DevelopmentFebruary 4, 2004

Timmons New Venture Creation

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Transcript of Timmons New Venture Creation