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Summary Technology Ventures. From Idea to Enterprise
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Technology Ventures, From Idea to Enterprise. 4th International Edition. ISBN 978-1-259-25275-4
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Summary Technology Ventures From idea to enterpriseChapter 1: The role and promise of entrepreneurship
Entrepreneurs strive to make a difference in our world and to contribute to its betterment. They
identify opportunities, mobilize resources, and relentlessly execute on their visions.
1.1 ENTREPRENEURSHIP IN CONTEXT
Entrepreneurs are people who identify and pursue solutions among problems, possibilities among
needs, and opportunities among challenges.
Entrepreneurship is more than the creation of a business and the wealth associated with it. It is
focused on the creation of a new enterprise that serves society and makes a positive change.
Entrepreneurs seek to achieve a certain goal by starting an organization that will address the needs of
society and the marketplace. They are prepared to respond to a challenge to overcome obstacles and
build a business.
For an entrepreneur, a challenge = a call to respond to a difficult task and the commitment to
undertake the required enterprise.
Opportunity = a favorable juncture of circumstances with a good chance for success or progress.
It is the job of the entrepreneur to locate new ideas, to determine whether they are actual
opportunities, and, if so, to put them into action.
Entrepreneurship = the nexus (= schakel) of enterprising individuals and promising opportunities.
The first step is to identify the hypotheses associated with an idea: what assumptions is the
entrepreneur making when conducting that an identified problem is really a problem and that a
proposed solution is a good and realistic solution? Then, the entrepreneur can test these hypotheses
by engaging with knowledgeable individuals, such as potential customers, employees, and partners.
Through these small experiments, the entrepreneur not only develops contacts and mentors critical
for executing upon an idea, but also learns more about the opportunity, and what changes may be
necessary to make it viable. In this way, entrepreneurship is akin to the scientific method, in that
entrepreneurs seek to gather data in connection with hypotheses, and they refine their ideas based
upon their findings.
Three key things necessary to creating a successful startup:
- Start with good people.
- Make something that people actually want and are willing to pay for.
- Spend as little money as possible while you validate the market and your product acceptance by
buyers.
Four steps to starting a business:
1. The founding team or individual has the necessary skills or acquires them.
2. The team members identify the opportunity that attracts them and matches their skills. They
create a solution to match the opportunity.
3. They acquire (or possess) the financial and physical resources necessary to launch the business by
locating investors and partners.
4. They complete an arrangement or contract with their partners, with investors, and within the
founder team to launch the business and share the ownership and wealth created.
,Entrepreneurship is centrally focused on the identification and exploitation of previously unexploited
opportunities.
1.2 ECONOMICS AND THE FIRM
Society, operating at its best, works through entrepreneurs to effectively manage its material,
environmental, and human resources to achieve widespread prosperity. Entrepreneurs are the
people who arrange novel organizations or solutions to social and economic problems.
For a nation as a whole, its wealth is its food, housing, transportation, health care, and other goods
and services. A nation is wealthier when it has more of these goods and services. Nations strive to
secure more prosperity by organization to achieve a more effective and efficient economic system. It
is entrepreneurs who organize and initiate that change.
Almost all variation in living standards among countries is explained by productivity, which is the
quantity of goods and services products from the sum of all inputs, such as hours worked and fuels
used.
Natural capital Economy Beneficial outputs
Financial capital Entrepreneurs as agents of
progress
Intellectual capital Undesired waste outputs
Natural capital = those features of nature, such as minerals, fuels, energy, biological yield, or pollution
absorption capacity, that are directly or indirectly utilized or are potentially utilizable in human social
and economic systems.
Financial capital = financial assets, such as money, bonds, securities, and land, which allow
entrepreneurs to purchase what they need to produce goods and services.
Intellectual capital = the talents, knowledge and creativity of people in the organization, the efficacy
of its management systems, and the effectiveness of its customer and supplier relations. = Sum of the
knowledge assets of an organization.
IC = HC + OC + SC
- Human capital (HC) = the combined knowledge, skill, and ability of the company’s
employees.
- Organizational capital (OC) = the hardware, software, databases, methods, patents, and
management methods of the organization that support the human capital.
- Social capital (SC) = the quality of relationships with a firm’s suppliers, allies, partners, and
customers.
Firms are more effective than individuals because (1) it has lower transaction costs and (2) the
necessary skills and talent are gather together in effective, collaborative work.
Entrepreneurial capital (EC) = a product of entrepreneurial competence and entrepreneurial
commitment.
- Entrepreneurial competence = the ability to (1) recognize opportunity, and (2) gather and
manage the resources necessary to capitalize upon the opportunity.
- Entrepreneurial commitment = a dedication of the time and energy necessary to bring the
enterprise to initiation and fruition.
EC = Ecomp. * Ecomm.
The entrepreneur in the new firm strives to build a firm that serves all its stakeholders well.
,1.3 CREATIVE DESTRUCTION
Dynamic capitalism = the process of wealth creation characterized by the dynamics of new, creative
firms forming and growing and old, large firms declining and failing. In this model, it is disequilibrium
– the disruption of existing markets by new entries – that makes capitalism lead to wealth creation.
New firms are formed by entrepreneurs to exploit and commercialize new products or services, thus
creating new demand and wealth.
Creative destruction = the process of new entrepreneurial firms and waves of change.
Schumpeter argued that the economy is in a perpetual state of dynamic disequilibrium.
Entrepreneurs upend the established order, unleashing a gale of creative destruction that forces
incumbents to adapt or die. Schumpeter argued that the concept of perfect competition is irrelevant
because it focused entirely on market (price) competition, when the focus should be on technological
competition. Creative destruction incessantly revolutionizes the economic structure from within,
destroying the old structure and creating a new one.
Rising output per worker comes from two sources:
- New technology
- Smarter ways of doing work
1.4 INNOVATION AND TECHNOLOGY
Technology includes devices, artifacts, processes, tools, methods, and materials that can be applied
to industrial and commercial purposes.
Modern entrepreneurial firms breed a constant flow of high-impact products that create value and
stimulate economic growth by bringing new methods, technologies, and ideas to the global
marketplace.
Modern entrepreneurial firms are at the forefront of the sixth wave, which places a special emphasis
on sustainability.
A clean energy system would consist of a mixture of energy generation, transmission, and utilization
in ways that best use natural resources and minimize environmental impacts.
For many, if not most, firms, intellectual capital is the organization’s most important asset, more
valuable than its other physical and financial assets. Many firms depend on their patents, copyrights,
and software, and the capabilities and relationships of their people. This intellectual capital,
appropriately applied, will determine success or failure.
Three factors make up entrepreneurial action:
1. A person or group who is responsible for the enterprise.
2. The purposeful enterprise.
3. Initiation and growth of the enterprise.
In the first type of enterprise, the entrepreneur engages in an innovative activity that results in novel
methods, processes, and products. The second form emphasizes the founding and management of a
business that builds upon and improves and existing product or service. The final means of
entrepreneurship is called rent-seeking or profit-seeking and focusses on the use of regulation
standards, or laws to appropriate some of the value of a monopoly that is generated somewhere in
the economy.
, 1.5 THE TECHNOLOGY ENTREPRENEUR
Leadership = the ability to create change or transform organizations. Leadership within an
organization enables the organization to adapt and change as circumstances require.
U = f (Y, I, W, R, O)
U = utility function
Y = income
I = independence
W = work effort
R = risk
O = other working conditions
Entrepreneurship pays off due to higher expected income and independence when reasonable levels
of risk and work efforts are required.
EA Entrepreneurial Attractiveness = (Y + I) – (W + R)
For each factor, we use a scale of 1 to 5 with 1 = low and 5 = high.
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