Engineer to Entrepreneur

Engineer to EntrepreneurEngineering 499 Capstone Project , Winter 2013

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Engineer to EntrepreneurDavid Mayes, Lecturer: UBC Faculty of Management

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Engineer to EntrepreneurEngineering 499 Capstone Project, Winter 2013

David Mayes

Lecturer, Faculty of Management

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Lecturer Introduction:

UBC Faculty of Management

ENGR 499, Engineering Capstone Project

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ENGR 499, Engineering Capstone ProjectInstructor Introduction

David Mayes: UBC Faculty of Management

LinkedIn Profile: http://www.linkedin.com/in/mayo615

UBC Office: EME 4151 (250) 807-9821 / Hours by appt.Email: david.mayes@ubc.caMobile: (250) 864-9552Twitter: @mayo615

Experience: Executive management, access to venture capital, International business development, sales & marketing, entrepreneurial mentorship, technology assessment, strategic planning, renewable energy technology.

Intel Corporation (US/Europe/Japan), 01 Computers Group (UK) Ltd, Mobile Data International (Canada/Intl.), Silicon Graphics (US), Sun Microsystems (US), Ascend Communications (US/Intl.), P-Cube (US/Israel/Intl.), Global Internet Group LLP (US/Intl.), New Zealand Trade & Enterprise.

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Agenda

• Engineer to Entrepreneur:• Common Business Misperceptions

• What is Entrepreneurship?

• The need for Competitive Advantage

• UBC Library “entrepreneurship”resources

• UBC Small Business Accelerator

ENGR 499, Engineering Capstone Project, Winter 2013Engineer to Entrepreneur

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Engineer to Entrepreneur:

Common Misperceptions

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ENGR 499, Engineering Capstone ProjectEngineer to Entrepreneur: Common Misperceptions

Misconception # 1:

“Everybody Loves “Cool New Technology”

• Not exactly!• Assess commercial viability first!• Listen to potential customers• Validate with third party market research

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Misconception # 2:

“I need to go-it-alone to insure quality & design elegance”

• Working alone or only with other engineers sounds good, but…

• You need a team with diverse skills to build a thriving business

• Think “business management” from the outset

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Misconception # 3:

“Marketing is fluff and selling is black magic”

• If you build it, they will NOT necessarily come!

• In reality, many “best designs” lose to competitors with better marketing• Intel 8086 was a “DOG!”

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Misconception # 3:

“Marketing is fluff and selling is black magic*”

*UBCO Library

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Davidow, William, (1986); Marketing High Technology: An Insider’s View, New York, The Free Press

Misconception # 4:

“We need to maximize functionality before we focus on customers”

• You can’t engineer the right functionality UNTIL you focus on listening to customers

• Customers will buy only the functionality they need and want…nothing more

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Misconception # 5:

“A good engineer hates unpredictability and risk”

• A good entrepreneur embraces risk• Engineer driven solutions are often too

little, too late…if they ever ship!• Managing risk is good; trying to eliminate

risk is bad

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Misconception # 6:

“We can’t worry about making money until we get it built”

• If you can’t make money, it isn’t a business• Business and market constraints are key

determinants of “getting it right”• Getting it right at the wrong cost = failure

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Misconception # 7

“Outside financing causes loss of control and undue pressure to deliver”

• Funding turbocharges a startup company• “Smart money” adds management value• Canadian gov’t grants focus on pure R&D

• “Grantsmanship” is bad business strategy• Angels and VC’s focus on making money

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ENGR 499, Engineering Capstone ProjectEngineer to Entrepreneur

Suggested Reading*

Uppuluri, Krishna (2011), Engineer to Entrepreneur, The First Flight, self-published, Krishna Uppuluri

* UBCO Library

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Agenda

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What is

Entrepreneurship?

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ENGR 499, Engineering Capstone ProjectWhat is Entrepreneurship?

Entrepreneurial Opportunity

• An economically attractive and timely opportunity that creates value.

• The best opportunities exists only for the entrepreneur who has the interest, resources, and capabilities required to succeed.

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The First Consideration: Your “Character”

• Self-analysis: Do you have what it takes to be an entrepreneur?• Discuss your personality, capabilities, strengths

and weaknesses with a mentor who knows you.• Listen!• Are you a visionary leader?• What about the chemistry with your team?

• Investors will focus on three things:• “The team, the team, and the team.”

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Entrepreneurial Incentives

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Drawbacks of Entrepreneurship• Hard work

– Finding new customers and markets– Frustrations with financing, government, tax,

technology, and employment issues• Long hours

– 20% work more than 60 hours per week• Emotional loneliness• Strong possibility of failure• Disruptions to personal life

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Causes of Business Failure• Lack of managerial and financial abilities

• Fail to adapt to competitive environment

• A broad based study found the following:– 32% inadequate research and development– 23% lacked competitive advantage– 14% uncontrolled costs– 13% poorly developed marketing strategies– 10% poor market timing– 8% succumbed to competitor activities

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Characteristics of Artisan Entrepreneurs

• A person with primarily technical skills and little business knowledge:

– Paternalistic approach– Reluctance to delegate– Narrow view of strategy– Personal sales effort– Short planning horizon– Simple record keeping

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Characteristics of Opportunistic Entrepreneurs

• A person with both business skills and technical knowledge:– Scientific approach to problems– Willing to delegate– Broad view of strategy– Diversified marketing approach– Longer planning horizon– Sophisticated accounting

and financial control

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Four Routes to Entrepreneurship

Entering a family business

Opening a franchised business

Starting a new business

Buying an existing business

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Agenda

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The Need for Competitive Advantage

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ENGR 499, Engineering Capstone ProjectThe Need for Competitive Advantage

Creating a New Business

Entrepreneurs may start a new business from scratch due to several reasons:

• A new product or service

• Favourable conditions such as location, equipment, employees, suppliers or bankers

• To capitalize on competitors’ weaknesses

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Evaluative Criteria – Market Factors

Evaluative Criteria – Competitive Advantage

HMKNT 401, Introduction of EntrepreneurshipThe Need for Competitive Advantage

Evaluative Criteria - Economics

Types of Ideas That Evolve Into Start-ups

HMKNT, Introduction to EntrepreneurshipThe Need for Competitive Advantage

Competitive Advantage

• A firm offers a product or service that is perceived by customers to be superior to those of competitors, thereby promoting firm profitability

• To establish competitive advantage, a business owner needs to understand the nature of the environment– External – what business potentials exist– Internal – what the firm is able to do

Sustaining Competitive Advantage

•An established, value-creating industry position that is likely to endure over time

•Markets are dynamic and in constant flux

•Results include superior profitability, increased market share, and improved customer satisfaction

Assessing the Environment

• The Macroenvironment– A broad environment with its multiple factors

that affect most businesses in a society• STEEP – Sociocultural, Technological, Economic,

Environmental, Political/Legal

• Industry Environment– The combined forces that directly impact

a given firm and its competitors

Strategies That Capture Opportunities

• Broad-Based Strategy Options–Seek an advantage in cost or marketing

• Cost-Advantage Strategy and OptionsRequires the firm to be the lowest-cost

producer» WestJet began as a low-fare, no-frills airline

• Marketing-Advantage StrategyEmphasizing the uniqueness of the firm’s

product or service» WestJet is moving to differentiate based on quality service

Environmental and Organizational Impact on Opportunity Assessment

Core Competencies and Assessing the Organization

• Core Competencies• Value-creating organizational capabilities that are unique to

a firm

• Resources versus Capabilities• Resources are basic inputs that a firm uses to conduct

business (capital, technology, equipment, employees, etc.)• intangible and tangible resources

• Capabilities are the integration of several resources which are deployed together to the firm’s advantage.

HMKNT 401, Introduction to EntrepreneurshipThe Need for Competitive Advantage

Venture Feasibility Assessment Model

• Stage 1: Back-of-the-Envelope concept– Potential customers, technology available, match to

entrepreneur, financial feasibility» Decision: go or no go

• Stage 2: Research and Verification– Detailed analysis of customers, competition, HR

required, technical and financial feasibility» Decision: go or no go

• Stage 3: Refine the Concept– Detailed business plan

» Decision: go or no go

Taking the Plunge

• A Precipitating Event

An event, such as losing a job, that moves an individual to become an entrepreneur.Job terminationJob dissatisfactionUnexpected opportunity

Mullins, John. (2010) 3rd Edition. The New Business Road Test. Harlow, UK: Prentice Hall, Financial Times

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