sgu - entrepreneurship part 4 [special subject]

Rev. 0 – 09/08/031

SWISS GERMAN UNIVERSITY

Hernanto Wiryomijoyo / BA / Bachelor / Entrepreneurship

Engineering Entrepreneurship

Part 4 [Special Subject]

Rev. 0 – 09/08/032



Process Model of Innovation and Entrepreneurship

• Hierarchical process modeling was developed by L. Marran (Hewlett Packard Labs) to model manufacturing systems,

• Adaptation made by M. S. Fadali (Electrical Engineering Department, University of Nevada, Reno) under sponsorship of The Lemelson Foundation; to provide simple introduction to innovation and entrepreneurship.

Rev. 0 – 09/08/033



Context Diagram for Invent & Market

Rev. 0 – 09/08/034



Structural Diagram for Invent & Market

Rev. 0 – 09/08/035



Context Diagram for Screen New Idea

Rev. 0 – 09/08/036



Structural Diagram for Screen New Idea

Rev. 0 – 09/08/037



Context Diagram for Design & Build Prototype

Rev. 0 – 09/08/038



Structural Diagram for Design & Build Prototype

Rev. 0 – 09/08/039



Context Diagram for Build Product

Rev. 0 – 09/08/0310



Structural Diagram for Build Product

Rev. 0 – 09/08/0311



Context Diagram for Market & Sell

Rev. 0 – 09/08/0312



Structural Diagram for Market & Sell

Rev. 0 – 09/08/0313



Some Fundamentals of International Entrepreneurship

• Reformulated definition of entrepreneurship is jointly influenced by two distinct traditions which the arena of inquiry emerges that continue to evolve– entrepreneurship and international business.

• Theoretical models and frame works to further development to guide and refinements.

• Implementation of network theory - Important role for international entrepreneurs, networks and cooperation to successful new venture operations.

• Learning theory and knowledge management.

Rev. 0 – 09/08/0314



Reformulated Definition• Wright & Ricks, 1994:

Highlighted international entrepreneurship as newly emerging research direction of the arena including:

1. Comparisons of entrepreneurial behavior in multiple countries and cultures,2. Organization behavior that extends across national borders and its entrepreneurial.

• McDougall & Oviatt, 2000:International entrepreneurship is a combination of innovative, proactive, and risk-seeking behavior that crosses national borders and is intended to create value in organizations.

• McDougall & Oviatt, 2003:International entrepreneurship is the discovery, enactment, evaluation, and exploitation of opportunities – across national borders – to create future goods and services.

Rev. 0 – 09/08/0315



Theoretical Models & Frame Works• Johanson and Vahlne, 1977:

Established the Uppsala model based on their study of Swedish manufacturing firms that:• Showed internationalization activities were targeted to physically close markets,• Used the less committed models of entry, such as export.

• McDougall & Oviatt, 1994:Established the elements of a theory of international new ventures, firms are said:

• To own certain valuable assets,• To use alliances and network structures to control a relatively large percentage of vital

assets,• To have unique resource that provides a sustainable advantage and is transferable to a

foreign location.

• McDougall & Oviatt, 1999:Identified the foundation of process theory for international entrepreneurship were:

• Rapidly changing computer, communication and transportation technology,• The primary blocks were political economy, industry conditions, firm effects, and the

management.

Rev. 0 – 09/08/0316



Network Theory

• McDougall & Oviatt, 1994:introducing the networking theory of ‘alternative governance structures’ to control many assets through ownership due to lack of sufficient resources in the new international ventures.

• Alvarez & Barney, 2001 and etc.:Firm use the networking including:

1. To gain access to resources,2. To improve their strategic positions,3. To control transaction costs,4. To learn new skills,5. To gain legitimacy,6. To cope positively with rapid technological changes.

Rev. 0 – 09/08/0317



Learning Theory & Knowledge Management

• Autio et. al., 2000:• Defined as ‘the process of assimilating new knowledge into the organization's

knowledge base’,• Introducing the concept of ‘learning advantages of the newness'.

• Zahra et. Al., 2000 and etc.:There is rich opportunity for the use of learning theory in the study concerning :

• Knowledge management, • International diversification, • International expansions,• Alliances, and • Networking.

Rev. 0 – 09/08/0318



Knowledge Based Small-Medium Enterprises (KB-SME)

Rev. 0 – 09/08/0319



Engineer’ Role in Entrepreneurship• Yet, we know that global competitiveness depends on the R&D capability

of firms,• Internationally, R&D the single most important success factor:

• U.S. spends dollars 2:1 in R&D• Germany is 1:1 in R&D• Japan allocates 1:2 for R&D

• Business people have long recognized the effective competitive strategy of R&D spending.

• R&D is a critical part of the Product Life Cycle

Engineers + Technology

Rev. 0 – 09/08/0320



The Product Life Cycle

Rev. 0 – 09/08/0321



PLC’s Definition

1. Product Life Cycle is the period of time when the product is:• defined by sales demand (customers are the best new

product developers)• product introduction• growth• maturity• Decline

2. Every product will eventually become obsolete because:• cost of production is too high• other, competitive products appear• technologically/performance poor• design out of fashion, etc.

Rev. 0 – 09/08/0322



R&D in the Product Life Cycle

Rev. 0 – 09/08/0323



Engineers

Before we get deeply into the topic, we must examine the people who are involved in the R&D function: the engineers.

"As a group, engineers probably create more value than any other segment of the economy." - J. Baty

Who Are They? - It is the engineer, not the scientist, the banker, the business-person, the salesperson or stockbroker who creates new:

• products and materials• chemicals and machines• computers and robots• satellites and ICBM's• artificial hearts, etc. etc.

Rev. 0 – 09/08/0324



Engineer’s Characters

1. The engineering profession is very demanding in terms of:• intelligence• education (both duration and intensity)• capacity to work hard• technical standards• professional standards• continuing education (technical obsolescence)

2. And - the product has to work!3. Ego - good ones are hard to find!4. But they are also poor in selling themselves and the

contributions they make to society5. Many times engineers are blamed for the misuse of the fruit of

their labors

Rev. 0 – 09/08/0325



Engineer’s Role in Startups1. In the typical small firm, the engineer's role is:

• not sitting around designing all day• looking for parts, machines, etc. in catalogues• fixing machine processes, inventing short-cuts• creating machines (cord folder)• retooling and creating prototypes• testing designs (theirs or others')• writing specifications, creating operators' manuals• setting production standards• supervising or acting as reference• drafting or checking drawings• attending review meetings• receiving/visiting with vendors• testing competitive products, etc., etc.

2. It is a wonder that any time is left for engineering.

Rev. 0 – 09/08/0326



The PLC in Startups

• New enterprises seldom have to worry about product/service obsolescence at the beginning, but the old adage must be well remembered:

"When a product is first introduced, it is already obsolete.“

• Thus, new products and planning for growth are vital functions for the R&D group.

• Entrepreneurs must continually monitor their product or service life cycle and react swiftly disregarding:

• motherhood feelings (sacred cows)• resist "it has worked well in the past“• "devotion" to old product lives.

Rev. 0 – 09/08/0327



Engineer’s Role in Product Improvement1. R&D people's creativity can be applied very well to these activities and get

lower product costs, higher quality and more profits.

2. Production methods:• work flow, instrumentation, handling process• quality process, standardization• capacity optimization, JIT

3. Automation:• robotics, computerized control, product scheduling

4. Use of human resources:• training, station scheduling, human factors• health and safety factors, education/development

5. Other:• energy utilisation, waste/by-product disposal• material efficiency

Rev. 0 – 09/08/0328



R&D as Part of Corporate Goals1. Consider R&D as goals set and aim to achieve them:

• set aside whatever funds are required regardless of• other considerations - an immensely difficult task!• R&D is not considered as a "cost-of-business."• funding is based on corporate objectives and goals• the entrepreneur must be committed to this plan!

2. Combine the above two to be most effective:• set a minimum budget for the R&D requirements.• allocate % of sales to reflect variable requirements• this is an easier sell internally because R&D "suffers" when everyone

else is (also benefits).

3. No matter which method is selected, the temptation is to make R&D (and advertising) the first budget cut when such cuts are required. Yet, both of these represent the firm's future!

Rev. 0 – 09/08/0329



Intellectual Property Protection

1. We will only touch on this subject, but it needs to be mentioned.2. Patents are for 17-20 years after granting date.3. Must be done in each country.4. "First-to-File" rule in North America.5. Costly and it must be defended.6. May be "got around" by design.7. Serious consideration must be given to keeping "trade secrets" against full

disclosure in a patent.8. Due to rapid changes and ever-shortened PLCs, a patent may be obsolete prior

to being granted.9. Only fundamental, strong ideas, useful for many years, are worth patenting.10. Appearance, form, packaging etc. may be protected

Rev. 0 – 09/08/0330



Technology Transfer1. While technology transfer is not strictly a financing mechanism, it is a short-

cut by starting from an advanced stage - thus, save money and time.

2. Technology available for licensing can be found in many places, some obvious; others not.

3. Universities are excellent sources of technology:• usually at "bench scale" stage• much information easily available• licensing can be advantageous• researchers available for consultation

4. Government laboratories: NRC, Defense labs, Dept. of Communications

5. Private industry: patents not used by the firm• prototypes, equipment, dies, may be available

6. Inventors: directly from individuals

Rev. 0 – 09/08/0331



Licensing Technology1. Obviously, this method has its negatives also, but these may be

outweighed by the benefits.

2. Royalty payments will be required.

3. The technology is not really yours (only licensed).

4. Others may be licensed also (if not exclusive).

5. If you develop further, ownership of these may be in question.

6. Remember, the Japanese license many of the most important technologies they make big profits on!

Rev. 0 – 09/08/0332



Bibliography(s)1. Fadali, M. S.: “A Hierarchical Process Model of Innovation and Entrepreneurship”, Sponsored by

The Lemelson Foundation.2. McDougall, P. P. & Oviatt, B. M.: “Some Fundamental Issues in International Entrepreneurship”,

Submitted to: Entrepreneurship Theory & Practice, July 2003.3. Butler, J. S.: “The Science of New Ventures: Combining Theory and Practice for Wealth and Job

Creation through Entrepreneurship”, 2002 Coleman Foundation White Paper.4. Paradi, J. C.: “Managing the R&D Function”, Course APS432 – Entrepreneurship and Business

Management, Center for Management of Technology and Entrepreneurship, Toronto, January 2003

sgu - entrepreneurship part 4 [special subject]

Documents