Innovation in Small Companies

Innovation in

Small Companies

Mike Bartlett

MIT Enterprise Forum DFW

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The Pace of Innovation is Increasing

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Innovation Outsourcing

“No internal R&D group can possibly predict, evaluate or cover all possible designs or competitive positions.”

Outsourcing Innovation: The New Engine of Growth

by James Brian Quinn, July 15, 2000

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Why Outsource Innovation?

• Big company overhead and inertia.

• Keeps the R&D cost off the books.

• Small companies don’t own a factory.

• Buying a company gives good press.

Innovation in most Big Companies is just not working!

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Where Is the Innovation?

• 64% of net new jobs in the US over the last 15 years came from small business and a substantial portion of those new jobs were created by the high growth, high impact small businesses. (Source: Brookings Institution)

• Not to be confused with the Main Street businesses: restaurants, car repair shops, dry cleaners, and the myriad of other small operations who contribute little net job growth.

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Basic Requirements of a High Growth Start-up Company

1. “Fire in the Belly”

2. A great idea!

3. Technical Skills in building and running a company.

4. Funding

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Who Does a Start-Up?

Source: Robert W. Fairlie, Kauffman Index of Entrepreneurial Activity.

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Baby Boomers

• Boomers have broader job skills

• Better access to capital – both their own savings and through personal networks

• Also at a life stage where starting a business is less risky and more attractive.

76M Boomers retiring could drive a new Entrepreneurship Boom on their own!

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Generation Y

• Generation Y may be the most entrepreneurial generation ever.

Percentage of respondents 18 – 29 years of age who wanted to:

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Why the US Leads?

• Culture

• Direct access to the world’s biggest consumer market

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A Great Idea?

• Probably the biggest barrier to a successful new company.

• Need “Domain Knowledge” from working in a field for several years to identify the needs and gaps.

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2011 Angel Investments ($’s)

Source: Angel Resource Institute – 2011 Halo ReportMarch 29, 2012 Mike Bartlett 12

Entrepreneurship Training

• Can Entrepreneurship be taught?

• More than 2,000 college and universities in the United States, about two-thirds of the total, now offer a course in entrepreneurship (Kauffman Foundation).

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Basic Requirements of a High Growth Start-up Company

1. “Fire in the Belly”

2. A great idea!

3. Technical Skills in building and running a company.

4. Funding

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Funding Sources

• Friends & Family – to validate the product

• Angels and Private Investors

• Federal Grants - SBIR

• VC’s (if you can find one)

• The best funding source – Customers!

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Summary

• The pace of innovation is accelerating

• Driven largely by small companies

• Boomers plus Gen Y will lead

• Primary areas: Social and Healthcare

• It will affect the future for all of us!

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How Are You Involved?

• Start or Join a Small Company

• Help a Start-up– Mentoring– Funding

• Teach Entrepreneurship

• Help improve the Innovation climate in Texas & the US

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