Archive for category Entrepreneurship
Centers of Innovation: Innocentive
Posted by Billy in Entrepreneurship on April 6, 2010
One organization that embodies innovation and open thinking as a private organization is a company called Innocentive. So far, I am very impressed with their goals and purpose as a company and the business model they are employing. The following is from their website “about us” page:
Founded in 2001, InnoCentive built the first global web community for open innovation, enabling scientists, engineers, professionals and entrepreneurs to collaborate to deliver breakthrough solutions for innovative R&D-driven organizations. InnoCentive Seekers, who collectively spend billions of dollars on R&D, submit Challenges to the InnoCentive Marketplace where more than 200,000 engineers, scientists, inventors, business people, and research organizations in more than 200 countries are invited to solve them. Solvers who deliver the most innovative solutions receive financial awards ranging up to US$1,000,000. InnoCentive’s Seekers include commercial, government and non-profit organizations such as Procter & Gamble, Avery Dennison, Pendulum, SAP, Eli Lilly and Company, Janssen, Solvay, GlobalGiving and The Rockefeller Foundation.
The concept is based on a community that harbors the connection of “Seekers” and “Solvers” or crowd-sourcing. The organizations that participate as seekers are essentially inviting outside participation into the R&D process which exponentially expands the reach and capability of their R&D efforts by engaging minds from around the world and rewarding them accordingly. This is a cooperative effort to solve the worlds problems, find solutions to needs, and develop improvements to civilization and society. All as a for-profit, free enterprise! The profit motive and market forces will guide the organization to create many of the most important and practical innovations and I look forward to following and participating. Check them out here!
Make or break it by your business model design
Posted by Billy in Business Theory & Strategy, Entrepreneurship on March 22, 2010
Many entrepreneurs I run into on a regular basis are extemely “fly by the seat of their pants” type business owners. They are “movers and shakers” and go from “zero to hero” rather quickly. These types tend to grow faster than most and also run into substantial problems faster than most. Growth is a “double-edge sword” if you are not ready for it… (wow, enough buzz phrases yet?). I work closely with one that has built up and nearly lost it all several times! Granted, the economy played some tricks on this person but how necessary was it? During the hot times, enough money was flying out of the business on hair-brained ideas to have likely floated the business through some rough waters if a more strategic approach had been taken. The challenge faced by most of the “entrepreneurial faith” is when to say no to an opportunity or the next “shiny object” that will apparently make business double in no time. I’ve taken this bait enough times to be bigger than Deloitte if it were true. We tend to spread ourselves, our organizations, and our budgets too thin.
So what is the secret?
Well, it is important to first setup your business’ set of core values, mission, and vision. These are meant to be guiding lights within the organization and decision making processes. Without real parameters, it is difficult to know when to say no. But these alone can be difficult to judge by as each scenario is different. Well, if they are built into a model-of-sorts that can almost decide for you, life gets much easier.
Enter the Business Model…
I would venture to guess that more than 9 out of 10 businesses have not put together a business model. Now, naturally you have one (however poor it may be) just by doing business. The fact remains that most entrepreneurs think through aspects of their business model but in a compartmentalized fashion, never putting all the pieces together in a more holistic approach. This model is meant to take most key aspects of your business and put them together to make sure they play well. It is also key to keep it relatively simple otherwise it becomes nothing but a fun, theoretical exercise in your final year of graduate school (fun being loosely defined). The process of thinking through it will definitely bring a certain level of clarity but having a model you can use will transform the way you do business and make decisions. It has also been said that a great entrepreneur with a mediocre model will fail while a mediocre entrepreneur with a great model will gain phenomenal success.
So what is a Business Model?
Well, it is define as follows by Alexander Osterwalder, in his book “Business Model Generation“:
A business model describes the rationale of how an organization creates, delivers, and captures value.
Their are a few key elements to consider when putting together your model. I will list these here as they are the next step in your own design. Define these elements for your business.
- Value Proposition – what you offer to your customer, your product or service that creates value.
- Customer Profiles – ideal customer
- A revenue model – how you make money
- Distribution Methods – from value proposition to customer directly
- Fulfillment Process – from your business to value proposition
- Cost Structure
- Competition, competitive strategy
- Resource Management
- Value Network position – recognition of position in overall value network, i.e. from raw materials provider to partners to end users.
- Key Partnerships
- Core Purpose defined – mission, vision, and core values or principles.
I will elaborate on these points in future posts and unveil the construction of the model itself. For now, begin working through the above mentioned points, defining them for your own idea or business. Once you have a workable model, you will be able to forge ahead with more confidence and surety that you are making wise business decisions.
Fill your organization with Entrepreneurs!
Posted by Billy in Business Theory & Strategy, Entrepreneurship on March 8, 2010
The major key to sustained success is connected innovation. That is, continual innovations and improvements to products and practices based on research, feedback, and general connectedness with the serviced demographic. Innovation is a key characteristic of the entrepreneur. Every day, entrepreneurs start businesses, have success, and fail. One of the main factors in this lack of sustainability is not their entrepreneurial spirit but their inability to translate that into an organization. They either are completely unable to transition from small startup to larger organization or in that transition, lose what made them successful in the first place and allow inefficient, ineffective bureaucracy to infiltrate based on old assumptions of “the way to do it”. The transition to growth is crucial for sustained success just as the connected innovation that generated the business idea in the first place.
So how do you maintain that power within an organization of 10, 50, 100, 1000, or even 10,000? An effective organization will be made up of two types of people: Entrepreneurs and Intrapreneurs. You’re likely familiar with entrepreneurs but what is an intrapreneur? The popular Wikipedia includes this entry:
Intrapreneurship is the act of behaving like an entrepreneur, except within a larger organization… In 1992, The American Heritage Dictionary acknowledged the popular use of a new word, intrapreneur, to mean “A person within a large corporation who takes direct responsibility for turning an idea into a profitable finished product through assertive risk-taking and innovation”. Intrapreneurship is now known as the practice of a corporate management style that integrates risk-taking and innovation approaches, as well as the reward and motivational techniques that are more traditionally thought of as being the province of entrepreneurship.
Entrepreneurs will be found at the head of the organization as owners, key executives, and department heads. Intrapreneurs will essentially make up the rest of the organization. The key to success, therefore, is instilling the responsibility, trust, respect, and expectations of entrepreneurship throughout the organization and within each position. Read the rest of this entry »
The Scope of Innovation: a pivotal movement for survival and prosperity
Posted by Billy in Entrepreneurship, Trends & Ideas on March 2, 2010
As any regular reader will know, two of my most popular topics or themes are entrepreneurship and congruent with that, innovation. Well, I want to share a theory of mine regarding innovation. I don’t know if “theory” is the right word but it works for me. It is a concept that I think a fair amount about. It is the solution to many of our society’s and planet’s problems. And, guess what… it includes innovation!!
Common discussions in today’s society include efficiency, uses of limited resources, care of the environment, and related topics. This are concerning and critical issues but one piece of the discussion that is often missing is the opportunities that lie ahead. This includes innovation, technology, and more. Many of the discussions are in a closed box as though we will never innovate or improve again and are left to find improved efficiency with what we have. The result is always lackluster performance with incremental influence and essentially no solution to today’s issues. Take examples such as cap & trade. Scientific evidence suggests little, if any, measurable improvement by such enacted measures. So why do we, as a society, interest ourselves in the wasted resources (in this case, increased economic costs), for little result? Again, the discussion and solution are discovered within the closed box and the supporting groups and individuals feel doing something is better than nothing, even without favorable result. So what happens when we up top the box? Welcome to the key of societal development.
The New DIY, Community Enterprise: “Atoms are the New Bits”
Posted by Billy in Business Theory & Strategy, Entrepreneurship on January 25, 2010
Well, Chris Anderson over at WIRED just published yet another article that is sure to get its fair share of praise. I’m sure it will gain a following and eventually be another book, following up “Free” and “The Long Tail“, both of which essentially started as articles in the mag. I will start by saying I’m a fan of Chris and his work. Those two books are some of my favorite business-ish books. Well, on to the article. This latest incarnation of thought is titled “The New Industrial Revolution” as it is emblazoned on the cover of the February 2010 issue, or “Atoms are the New Bits” as titled within (I don’t know what they want it called). The line of thought in this piece can be seen not only in Chris’s previous works but many strains of it can be seen throughout WIRED over the past few years. One of the key points that I’d like to highlight regards community & open-source development.
As seen in both Free and The Long Tail, community and open-source are the future of industry, advancement, and entrepreneurship. Even large, blue chips are taking part to some degree. Take Microsoft’s decisions to open beta-test its latest Windows and Office packages as an example. Other companies are entirely based on these community participation models. This free or near-free participation and approach has been tested, and proven, with the web and the constant content generation found there. Now, as can be interpolated from the article title, the open-source and open availability of these digital bits is being translated into near-free atoms! Actual physical products and goods are the next step to prove the concept of opensource. As we translate all the content, development, and innovation of the web into physical products, entrepreneurial opportunity will explode and prices, competition, and innovation will accelerate at levels unseen. Now, resistance will obviously occur, but pressing forward will yield tremendous return. Threadless is one company that is a common example of this opensource bits-to-atoms process, and a good one at that. They have demonstrated the win-win possibilities of the model in creating not only more unique, high-quality products but at reasonable prices with low-overhead, high profit business returns. This is only the beginning, of course, as Chris introduces us to much more complex possibilities than t-shirts.
Take Local Motors as an example that he mentions. They have actually begun production on a car that was designed and voted on by a community, in fashion of Threadless’ t-shirts. It will be built mostly using “after-market” parts and assembled individually as orders come in. Interestingly, Local Motors follows a model described in another WIRED article found back in June here. Currently Local Motors is coming out as a niche company, giving little competition to the major car conglomerates but that will likely change as Local Motors develops or others come into the game. This is only the beginning! Local’s design-to-market turn around is a distant dream to any detroit competition. As Chris states:
the company says it can take a new vehicle from sketch to market in 18 months, about the time it takes Detroit to change the specs on some door trim.
Even better is the open availability of the design plans under creative commons license. This allows components, add-ons, mods, and more to be created by anybody, unveiling countless other business possibilities. This is just one example of companies taking technology, community, and open-source to the world of physical products, to “atoms”. Many other examples may not scale like Local Motors nor have the desire to do so. The fact is many small entrepreneurial ventures, with today’s technology and tools, have the opportunity to compete with the behemoths or simply fill niches that are untouchable by them. It is a beautiful thing to behold. And we aren’t talking about the digital realm here. This is manufacturing, production, products, this is atoms! With simple tools such as 3D printers (for less than a grand), access to custom limited-run manufacturing at remarkably affordable prices (thanks again internet), and open community feedback, the opportunity pool is much deeper than it used to be! Even nuclear power is being approached with this technique as I discussed here regarding yet another WIRED article. Like I said, this theme can be seen throughout their articles over the last while.
So what does all this mean for the entrepreneur? Well, if you haven’t picked it up already, its all about endless opportunity and open, community development of ideas! With that in mind, what do you think? Any other great examples of similar business models in use? Let me know!!
Jason Fried goes against the grain, always interesting
Posted by Billy in Business Theory & Strategy, Entrepreneurship on December 15, 2009
Episode 4 of 37 Signals’ podcast is Jason Fried’s speech at BIG Omaha 2009. As usual, he creates some friction with his viewpoints that often oppose the “trend & hype” of current venture buzz. I like it! I like the balance and alternative thinking that helps ground the entrepreneur. Listen to it here. and here is the quick and dirty summary from their site:
In this talk, Jason discusses what he’s learned at 37signals over the years. Topics covered: The idea that you should “fail early, fail often” is bogus. Plans are guesses. Interruption is the enemy of productivity. Sell your byproduct. Emulate chefs. Focus on what won’t change. If you want to do something, you’ve got to do it now.
Listen to it, I highly recommend it. If you feel the need, let me know what you think of the key ideas, namely:
- “Fail early, fail often” debunked.
- Planning is a joke, just live in the moment!
- Don’t talk to each other, its an interruption. Use tools instead.
- Sell byproducts.
etc…
The Myth of Job Security
Posted by Billy in Business Theory & Strategy, Entrepreneurship on November 10, 2009
In an economy such as this, I may be beating a dead horse in discussing job security but for those who hang on to certain notions of this myth, my goal is to rewire thinking. The millenial generation (we’ll call them genYers) is developing far different thought processes than their baby boomer parents and older generations. During the first half of the 20th century, the key to the good life was putting in 30+ years at a company and retiring with the gold watch and a pension. As Donna Fenn puts it in her book “Upstarts”, entrepreneurship was compared to hocking watches on a street corner, essentially, looked down upon. One of the biggest arguments put forth is regarding job security. Ideas such as “better safe than sorry” permeate the discussions. A big strong company will take care of you and the whims of the market can’t take down the big boys like they can a small business. Being self employed is dangerous and risky. As the market has marched on, the truth has been quite different. Not that the small businesses are surviving any more than others but simply that the big boys can and do fail, leaving many unemployed. Even if complete failure isn’t the issue, cutbacks and downsizing lead equally to lost jobs. What I find very interesting is the fact that job security is basically lost when it is needed most. You might work for a large company for years with all this great security. Suddenly, the economy takes a turn for the worst and the word at the water cooler is big downsizing and your position is on the chopping block! The fact is, when you actually had job security is when everyone is doing well, including the small “risky” business.
Entrepreneurs have True Job Security
Job security ultimately is found Read the rest of this entry »
The Importance of Risk
Posted by Billy in Business Theory & Strategy, Entrepreneurship on November 3, 2009
Risk is an interesting beast. Generally speaking, the goal of each entrepreneur and investor is to mitigate risk to as near zero as possible. The less risk that exists the better, or at least, the less risk you personally must take on, the better. This is a fine policy that any savvy businessperson demonstrates. Interestingly, risk plays an important role when viewed from the macroeconomic perspective. On the micro level, we are all trying to eliminate it, but from the greater macro level, it is an important regulator and guide to innovation and progress. To artificially eliminate risk poses some interesting side effects that ultimately are undesired. Forms of artificial risk elimination would include government policy and intervention, public incentives and credits, promises of government support and bailout, etc. These forms of risk mitigation are immediately accepted by most who are offered but is it really for the best? Read the rest of this entry »
A fragmented “stealth” brand can be good? For some, YES!
Posted by Billy in Business Theory & Strategy, Entrepreneurship on October 26, 2009
Entrepreneur Magazine’s November issue featured an article regarding a new-ish concept that Starbucks has embarked upon. Many companies carry a common goal, a desire for international brand recognition and dominance. Well, in some industries, that may not be the way to go. Starbucks, one of those international branding phenomena, is actually “hiding” their brand within a few new locations. What?! Yes, they are practically invisible as the the backer of a few new shops being opened. With a billion dollar namesake, why would you forsake it? Well, coffee happens to be an area where indie is in. Local, hip, one-of-kind, shoot-from-the-hip, is desirable. People like their coffee shop, not some international cookie-cutter. The new “15th Ave Coffee & Tea” is just that, local, hip, and still Starbucks (although you may not realize it). The new coffee house features many ideas and innovations typically found only in local establishments with a coffee connoisseur founder. That is in-part because of the liberty given to the new shop to run as such. Protocols are a little more liberal but carry the support and resources of a powerhouse company in Starbucks. Also, Starbucks is not the only one embarking on this trend. As the article points out, Great Harvest Bread Co. has done this since the beginning. Similar ideas are coming out of Marriott Hotels and others.
The “When, Then” Syndrome of Entrepreneurs
Posted by Billy in Entrepreneurship, Productivity & Personal Growth on October 22, 2009
A common conundrum that entrepreneurs find themselves in is that of work-life balance. Even more so is a life-timing balance. Often we are financially unstable, working 80 hour weeks, failing and starting up again, and we continue to put off life saying that once we achieve “x”, then we will be ready. The common ones are marriage, children, vacations and travel, family time, personal time (not work related), etc. I find myself with this dilemma on a regular basis, and here I am preparing for my first kid, a baby boy due in February! I’m excited and have simply had to put those worries aside and know that I’ll figure it out. There’s always a way and it’s never as bad as you initially think. Sometimes you just need to make it happen!
Live life in spite of circumstance
Sometimes life must be lived regardless of what circumstance permits. Vacations and family time can only be passed on for so long before it grows too late. Entrepreneurship is consuming and, for those who haven’t realized it yet, LIFELONG! Read the rest of this entry »
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