NEW ENTREPRENEUR-FRIENDLY MANAGEMENT APPROACHES

An Overview Bob Kolodney May 3, 2012

20

TH

CENTURY STATE OF THE ART

STRATEGIC POSITIONING

Michael Porter’s Five Forces That Affect Competitive Advantage Supplier Power Threat of Degree of Rivalry Threat of New Entrants Substitutes Buyer Power

MANAGEMENT BY OBJECTIVES (Peter Drucker)

BUSINESS PLAN

Executive Summary Concept Objectives Market Analysis Production Marketing Technology Organization/People Financial Projections Ownership Exhibits

EVALUATION OF BUSINESS PLAN

KEY ELEMENTS (William Sahlman) 1) People 2) Opportunity 3) Context 4) Risk/reward

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USEFUL RATIOS FOR ORIENTATION AND CASH MANAGEMENT

Break-even = Fixed costs / (Average price per unit – Average cost per unit) Quick Ratio = Cash and Equivalent + Accounts Receivable/ Current Liabilities Acid Test = Current Assets – Inventory / Current Liabilities Inventory Turnover = Sales/Inventory Alternatively, Inventory Turnover = Cost of Goods Sold/Average Inventory The Key Metrics for your Business

FOUR NECESSARY TALENTS ON THE VENTURE TEAM (Ichak Adizes)

- Vision (Entrepreneurial skill) - Execution (Energetic, persistent accomplishment) - Administration (Repeatable processes for consistency) - Human relations (For integration, motivation)

EMOTIONAL INTELLIGENCE (Daniel Goleman)

PERSONAL COMPETENCE: SELF AWARENESS SELF-MANAGEMENT SOCIAL COMPETENCE: SOCIAL AWARENESS RELATIONSHIP MANAGEMENT

ROSEN’S PARADOXICAL TRAITS OF TOP LEADERS Realistic Optimism Constructive Impatience Confident Humility

MANY OTHER TOOLS/Visions Such As:

TQM/Continuous Quality Improvement Re-engineering Balanced Scorecard

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Matrices:

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SWOT

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Growth-Share

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Risk-Potential Reward Competitive Environment Fish and other Popular Movements The Momentum Effect (Stakeholder mobilization)

GREAT INSIGHTS AND TOOLS, BUT:

Huge Failure Rate of New Ventures Even for VC-Backed Firms (70% do not earn back capital invested) Many Kamikaze Efforts 10-30-60 Untamed Rampant frustration, wasted effort and capital

SOME 21

ST

CENTURY DEVELOPMENTS

DISRUPTIVE INNOVATION (Clayton Christensen and Colleagues): KEY ORIENTATION – Differentiate between Disruptive Innovations and Sustaining Innovations and Act Accordingly COMPONENTS OF BUSINESS MODEL 1) Value Proposition 2) Resources 3) Processes 4) Profit formula CLASSIFICATIONS OF BUSINESS MODELS (Archetypes) 1) Solution Shop 2) Value Adding Process Business 3) Facilitated Network

BLUE OCEAN STRATEGY (W. Chan Kim)

Key Orientation: Craft product/service value proposition to differentiate from competition, satisfy “non customers”, open up new market space and avoid head-to head competition FOUR ACTIONS TO CHANGE ELEMENTS OF PRODUCT/SERVICE OFFERING: 1) Eliminate 2) Reduce 3) Raise 4) Create For a Strategic Canvas Different from the Rest of the Industry

LEAN STARTUP (Steve Blank, Eric Ries) KEY ORIENTATION: The Startup as an Experiment – A Series of Learning Experiences

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Principal Components: Build-Measure-Learn Feedback Loop Minimum Viable Product Small Batch Approach Validated Learning/Learning Milestones Innovation Accounting/Actionable Metrics Persist or Pivot Decisions 5 Whys Continuous Innovation Organization

CO-CREATION (C.K. Prahalad and Disciples) KEY ORIENTATION – Creation of New Products, Services, Experience and Enhanced Value through Collaboration THE CO-CREATION APPROACH:

- Create Collaboration - Between Employees, Between

Employees and People outside the Firm , Most Notably Customers (also Suppliers, Distributors, Retailers)

- Create a Community and an Engaging Experience - Like a Huge Suggestion Box, but Much More - Social Media Can Magnify the Impact - The Process of Turning Zombies into Live Players - An Art to Do it Effectively - Some Control Relinquished - Notable Successes: Starbucks, Nike

SO – WHERE ARE WE?

Entrepreneurship: “A messy business – like making babies…we haven’t figured out how to automate it” Joe Lassiter

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It’s still like the study of the Genome and the Brain: We have a lot to learn; We have started to figure out what’s inside the black box of a successful New Venture; Still, Entrepreneurship = Extreme Management But, We are living in the best period for it in history; Communications and analytical technology let us move faster and cheaper; The Business School Professors have developed remarkable patterns for us to channel our thoughts and actions.

CONGRATULATIONS TO OUR ALL OUR NVC COMPETITORS THANKS FOR YOUR TIME AND EFFORT GOOD LUCK!