The renewed emphasis on innovation and entrepreneurship at all levels of the government and social frameworks. Endless federal and local programs and funding are available at a rate never imagined.
Educational systems including new courses, seminars, workshops, and student-run clubs and laboratories are increasingly prevalent. Most academic environments encourage this activity.
Available sources of capital in the form of new structures like crowdfunding to continued investments by venture and angel sources.
Increased attention to environmental, sustainability, and social issues that require new venture to support them.
Availability of incubation facilities created under the rubric of economic development.
A culture of startups in cluster environments like the Innovation Center in Boston. Existing real estate that has been scoped to allow and encourage this behavior.
Enabling technology that allows faster and more cost-effective creation of prototypes and products.
And of course, the Internet, which allows global outreach, almost instant marketing outreach, and instantaneous feedback.
A need to create new forms of employment for early stage careers.
The “rest of the world” is embracing innovation and entrepreneurship at breathtaking levels.
On this list of positive forces, there is the view of the entrepreneur. Some argue that the lure of high-performing and somewhat unrealistic expectations of the Facebook, Google, Amazon, and Apple are within the reach of many of the new projects. Traditionally, the public offering that results in a 10 times multiple was within expectation. It is possible that some projects will do exceptionally well, but they are the exception. Early stage investors are content when 1 in 10 investments yields higher results.
Although the expectations of upside liquidation results (the motivational “carrot”) need to be in focus, the reality of early stage environment also needs clarification. There are clearly a cohort of individuals who deal with the uncertainties of the early stage companies. Those same people may not be the group to later build the enterprise. Many times inexperienced entrepreneurs express surprise at the difficulty of managing the early stage ventures because of the lack of supporting capital or people.
Some of the reality attributes include:
Lack of recognition of either the brand or the product. This translates into longer and more expensive selling cycles. It also requires a different form of selling that relies on a term called “missionary” sales techniques where the context and need for the product (or service) needs to be identified before the sale can be considered. It’s an educational process that not all sales people can bridge.
Startup skepticism in the form of questioning the viability of the enterprise. Would General Motors (or any established organization) buy products or services from an early stage company whose very viability is questioned? Like so many specific early stage issues, this one can be countered by offering a preemptive license to the potential customer whereby they have the exclusive rights to manufacture product themselves if the startup can’t. Although this option is a bit complicated, it requires a mindset that is different from an established enterprise. This, in turn, requires the early stage team to adapt in ways a more mature enterprise would not be required to embrace.
Limited or immature organizational depth in early stage companies leads to an informal management style. Many entrepreneurs that I have spoken with have reported to be some of the best moments in their company’s evolution. In my company there was a period of time when we did not have a conference table because the mill in which we were located required an odd shaped table. That forced us to have a modest but custom size table. Those of us who were there all remember the informal “standup” meetings as memorable and efficient. This was probably romanticized over time, and the frustrations due to the lack of resources was real and stood in the way of accomplishing preset goals.
A startup was once likened to the barnstorming years of flight. Although this evokes images of the freedom of open cockpit flight, those planes cannot go very far and are considered quite unreliable. A modern Boeing 777 is capable of flying great distances and with accompanying records of significant reliability. What type of journey do you want to achieve?
A Finale
As the world’s commercial, political, and economic forces change at an ever accelerating rate, so the pressures to compete in more innovative and entrepreneurial ways increase. Central governments and local municipalities have responded to these changes with a myriad of tax incentives, regulatory and legal modifications, sweeping programs such as NSF funding, and the creation of local incubation and support activities. Academia has certainly responded with its endless litany of courses, research, publications, student-run competitions, and aggressive technology transfer operations.
Enabling these efforts has been dramatic influences of enabling technology in the form of Internet-based information exchange that could only have been dreamed about a few years ago. Actual models of new ideas can be generated in real time due to computer-driven 3D modeling and the low-cost rapid prototyping. New materials allow these ideas to move to reality almost instantaneously.
Moore’s Law, coined by Intel co-founder Gordon Moore in 1965, predicts that the number of transistors on an electronic chip would double each year. That trend has continued, but now the forecast is for doubling every eighteen months. That predicted dynamic has invigorated the design and implementation of electronic hardware and application software to be developed at an increasing pace anywhere in the world. Medical advances have led nearly to the ability to create genomic-based designer drugs and procedures to implement them. Robotics and automation have moved the use of these ideas to new levels of productivity.
This book looked at the process of commercial reality from the newfound wealth of new, innovative, and entrepreneurial ideas that derive from technology-based products and services. It presented a model that represents probable pathways to commercial realization of the ideas and examined the multiple forces that impact the probability of success in achieving these goals. It is certain that in order for us to successfully compete in the ever-changing world, new models and practitioners who can successfully implement them must be developed.
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1The Super-Cycle Lives: Emerging Markets Growth Is Key," November 6, 2013, https://www.sc.com/en/news-and-media/news/global/2013-11-06-super-cycle-EM-growth-is-key.html.
2Source: HBR.org.
3Source: HBR.org; Research by Catherine Tucker, Roger Smeets, Lauren Cohen, Umit Rurun, and Scott Kominers; Analysis by James Bessen
4Journal of Business Venturing 18, no. 2. (2003): 283–300.
5Reston Publishing, 1974.
6Sources: Robert W. Fairlie, Kaufman Index of Entrepreneurial Activity (2014), using data from Current Population Survey, US Census Bureau; Kauffman Firm survey.
APPENDIX A
Sample US Patent
