Faculty
Professor Ron Adner
Objectives
COURSE OVERVIEW
The essence of entrepreneurship is new combinations – combinations of ideas, resources, partners, customers – in the effort to create new market space. The entrepreneurial challenge is one of selecting among the many potential combinations that you see, and then finding a way to organizing the venture (whether startup, corporate, or non-profit) that will allow you to realize your ambition for the opportunity.
In this course we will examine the challenges of entrepreneurial innovation. How should we approach the challenge of picking the right opportunity, aligning the right partners, and targeting the right market and, perhaps most importantly, setting the right expectations for a new venture.
We will focus on the challenges and opportunities confronted by venture leaders. However, we will also consider the perspective of non-entrepreneur stakeholders (e.g., analysts, investors, partners, employees) who are not directly in charge of the new venture, but are directly impacted by its success, and must conduct their own due diligence before committing their allegiance and resources. We will develop a set of analytic lenses that will help us assess the potential of new opportunities and to strategize about how to best exploit them.
The course will tend to take an external, strategic, view on the entrepreneurial challenge. It will not focus on (critical) internal management questions such as how to foster the creativity and teamwork which is necessary to generate the entrepreneurial ideas in the first place. Hence, we will start our analyses after at the point where the business plan for a venture is already well articulated and proceed to conduct our analyses from there. (Of course, these analyses may then lead us to modify the original plans).
The course uses a combination of cases and readings. The cases are often drawn from technology-based settings. Note, however, that the course discussions hinge on managerial, not technical issues – a technical background is neither required nor expected for fruitful participation.
Requirements
Materials
Materials will be either in the course packet or handed out in class. There is no text book.
Grading
Evaluation
Class Participation 30%
Main Project and Presentations 45%
Mini Project 25%
COURSE ASSIGNMENTS
Main Project
The major assignment for the course is a group project. The project examines how firms approach entrepreneurial opportunities. In keeping with the spirit of the class, the project will examine how an innovation of your choosing was brought to market and the ways in which the opportunity was structured and exploited.
The first part of the project will develop the context for the innovation: the relevant markets and industries that it affects; the technological and organizational issues that it raises; the broad expectations for the size of the opportunity and the timing of its realization.
The second part of the project will examine the approach(es) taken by the relevant firm(s) to commercializing the innovation. The project will compare and analyze the strategies pursued, e.g.: examining such issues as timing and choice of entry mode; construction of the supply chain; perception of value creation and value capture; approaches to market definition and segmentation; level of resource commitments; exit strategies and the reversibility of commitments; differences in market expectations as gleaned from firm announcements; expectations for market growth vs. substitution; etc.
A separate executive summary will be submitted along side the final project and will serve as the core reading for the final class meeting.
The more specific the innovation, the more narrow the definition of the market, the better. For example, it is better to focus on magnetic bar code readers than inventory management; digital imaging than printing technologies; online mortgage brokerage than e-finance.
The last meeting of the class is structured as a mini-conference, the core of which are the group projects. The group projects will be kept to all participants and serve as the basis of discussion. Using our own investigations into the management of innovation, we will compare findings across the different technology initiatives, evaluate the applicability of the lessons learned during the period, and develop a clearer understanding of the critical drivers of successful innovation.
You are encouraged to use any and all sources in researching the project – newspaper accounts, trade journals, analyst reports, personal interviews, etc. A complete list of references should be included.
The projects will be evaluated on four dimensions: First the insight offered by the analysis – does it go beyond describing what happened to shed light on the fundamental causes. Second the quality of the analysis and how well it integrates the concepts developed in the course. Third the readability of the paper and readers’ access to the ideas presented. Fourth how relevant, useful, and well supported are the lessons and recommendations presented.
Mini Project
In addition to the main course project, each group must also submit a shorter analysis of an industry, company, or business problem that pertains to one of two themes. The mini-projects will inform the corresponding class sessions.
Option 1: Old-Technology Strategy.
Present and analyze a case in which an ‘old’ technology, product, service, or business project was (1) pushed out of its home market by a new, dominant, substitute; but (2) was able to reestablish itself in a new market niche.
Option 2: Ecosystem Strategy
Present and analyze a case in which multiple parties are attempting to collaborate to create a new value proposition.
Additional details and specific dimensions for analysis will be discussed during the first class meeting.
DUE DATES
Main project
- Proposal-----------------------------------Session 5
- Project + separate executive summary-----Monday, Nov. 9 @ 11am
- Presentation-------------------------------Session 17-18
Mini project
Option 1: Old-Technology Strategy-----Monday, October 5
Option 2: Ecosystem Strategy----------Monday, October 12
Note: Whenever possible, projects will be posted online.
Schedule
Sessions 1 and 2 (double session) -Thursday
Sept. 17
The Challenge of Opportunity
Case:
The Bell-Western Union Patent Agreement of 1879, INSEAD
Question:
1. Did Western Union make the right decision?
Session 3 – Friday
Sept. 18
Setting Expectations for New Ventures
Case:
Hewlett-Packard: The Flight of the Kittyhawk A + B, HBS
Questions:
Was the Kittyhawk a well managed venture?
What would you do differently?
Session 4 – Wednesday
Sept. 23
Innovating along the Value Chain
Case:
Vallourec's Venture into Metal Injection Molding, HBS
Questions:
The case concludes by describing several decisions Honnart is facing. What do you recommend he do, and why do you think he should follow your advice.
How do the problems of innovation in early stages of the value chain differ from the problems of innovating in end-use products?
Session 5 – Thursday
Sept. 24
The Changing Basis of Competition
Case:
Studio Realty, HBS
Reading:
Allan N. Afuah, Nick Bahram: “The Hypercube of Innovation” Research Policy 24(1995)51-76 (Focus on pages 51 to 62)
Questions:
How did the Electronic Open House affect the different various players in the real estate industry?
What is the basis of competition among Realtors?
Would the internet have made a difference to Connor's success?
Session 6 - Wednesday
September 30
Standards and Alliances: Organizing others for fun and profit
Case:
PixTech, Inc., INSEAD
Reading:
Doz, Yves and Hamel, Gary. (1997) The Use of Alliances in Implementing Technology Strategies. in Tushman, Michael and Anderson, Philip (eds.) Managing Strategic Innovation and Change. Oxford University Press: NY.
Questions:
What is your assessment of PixTech's approach to constructing its value chain?
Is PixTech's position in the alliance sensible? Sustainable?
What problems or opportunities do you foresee for the alliance?
Session 7 – Thursday
October 1
Innovating in Ecosystems
Reading:
Adner, Ron (2006) “Match Your Innovation Strategy to Your Innovation Ecosystem.” Harvard Business Review, 84(4): 98-107.
Question:
What aspects of the traditional approach to strategy and management need to be reconsidered in the context of ecosystems?
Session 8 and 9 (double session) – Wednesday
October 7
Confronting Substitute Threats
Case:
Continuous Casting Investments at USX Corporation, HBS
Reading:
Adner, Ron (2004) "A demand based perspective on technology life cycles," Advances in Strategic Management, 21:25-43.
Questions:
Should Kappmeyer sign the proposal?
What criteria would you use to assess the new threat posed by an innovation?
Session 10 – Thursday
October 8
Old Technology Strategy
Reading:
Mini Projects
Session 11 and 12 (double session) – Wednesday
October 14
Creating, Adding, and Capturing Value
Case:
Formula One Motor Racing, HBS
Reading:
Brandenburger, Adam and Stuart, Harborne (1996) "Value Based Business Strategy," Journal of Economics and Management Strategy. 5:5-24.
Exercise: Forming a Multi-Party Alliance
Be prepared to play the alliance game in class.
What is Ecclesteins added value to Formula One racing? How has it changed over time?
How much value has he captured? How has he managed to do it?
How sustainable is his position?
Session 13 – Thursday
October 15
Ecosystems Redux
Reading:
Mini Projects
Session 14 - Thursday
October 29
Restructuring the Value Chain
Case:
“iMotors: New competition in used cars” (A) and (B), INSEAD
Reading:
Subramanian Rangan and Ron Adner (2001) Profits and the Internet: Seven Misconceptions. MIT/Sloan Management Review. July.
Questions:
What is the biggest threat confronting iMotors?
What are the key enablers of the business model?
Does iMotors have a competitive advantage in the industry? if so, is it sustainable?
Does iMotors’s value proposition give away too much to the customer too cheaply?
Session 15 - Wednesday
November 04
Project Portfolios and Technology Platforms
Case:
Linking Technology and Innovation: Materials Technology Corporation, HBS
Reading:
Wheelwright, Steven C. and Clark, Kim B. (1992) Creating Project Plans to Focus Product Development. Harvard Business Review. 70(2): 70-82.
Questions:
How would you characterize the various projects MTC has undertaken according to the framework of Wheelwright and Clark?
Is this the right set of projects for MTC?
If you were advising Spencer Quinn on how to build MTC into a successful company, what you tell him?
Session 16 - Thursday
November 05
Exit Strategies
Case:
Vermeer Technologies (A), (B), and (C), HBS
Reading:
“Judo Strategy” by David B. Yoffie and Michael Cusumano, HBR Jan-Feb 1999
Questions:
What did Ferguson do right in establishing Vermeer and developing a viable first product? What did he do wrong?
Would you have taken the VC money and relinquished the position of CEO to an outsider?
What criteria should Vermeer use to decide between being acquired by Microsoft vs. Netscape vs. waiting to go public? Which would you have chosen?
Monday, November 9
Project and separate executive summary due 11AM - Drop Box - Tuck 205J
Session 17 & 18 (double session) - Wednesday
November 11
Project discussions and wrap up
Reading:
Executive summaries of course projects.
