Innovation and Entrepreneurship: Techniques and Applications
(4 days)
This is a sample course outline. Courses can be modified to fit your needs and schedule.
Course Background
Whether you are an executive looking to take your business to the next level or an entrepreneur launching a new business, this course helps you address the various issues of building new ventures. We explore the skills and practices necessary to effectively assess opportunities and to make sound business decisions in developing an innovative new company. We’ll also help cultivate the management skills and perspective needed at all stages of a new venture’s development.
Objectives
- Source, identify, and evaluate business opportunities
- Develop a well-defined initiative from an opportunity
- Develop a framework for managing conflicting priorities
- Sell the idea to key constituents: employees, partners, vendors, customers
- Attract resources necessary to pursue the opportunity
- Manage and grow the business into a sustainable enterprise
- Cultivate flexibility and evolve the strategy as the business develops
- Create and monetize value for the organization’s stakeholders
Topics Covered
Day 1—Evaluating the Opportunity
We begin the program by evaluating a number of unique opportunities. Through the following cases, we develop tools and techniques to analyze opportunities and industries and to identify factors critical to success.
- Zipcar: Refining the Business Model. Zipcar is a start-up organized around the idea of "sharing" car usage via a membership organization. This case describes several iterations of the Zipcar business model and financial plan. These iterations include a very early version and a version developed just prior to the launch of the business, as well as data from the first few months of operations. Students are called on to analyze the underlying economics and business model, plus discover how these assumptions hold up as the business actually rolls out.
- What’s the BIG Idea? CEO Michael Collins must decide if and how a process he developed to further innovation in the kids' industry could port over to other industries. The process was based on Collins' experiences as an inventor and venture capitalist, and it allowed his company to become an intermediary between inventors and innovation-seeking companies. While process seemed to be working well in the kids' industry, Collins had to decide what would "travel" to a different vertical.
- Keurig. Nick Lazaris becomes Keurig's third CEO in three years after one founder was fired and the other decided to leave the company. He inherits a company that has made several abortive attempts to launch its new coffee brewing system. Now problems with crucial suppliers threaten the next proposed launch plan.
- Joint Juice. Joint Juice is a start-up in the new-age beverage category. The company has a patented formula for producing a glucosamine beverage, the only one on the market. (Glucosamine is a nutritional supplement believed to help rejuvenate joints and treat arthritis.) The company has made slow progress in its initial phase, but as the case ends, it has an opportunity to go national with two of the nation's largest grocery chains. Does Joint Juice know enough to go national? What investments would be required for this strategy? What alternative strategies are available? Can the company grow while continuing to experiment and learn? Or must it lock in its strategy in order to have any chance of executing successfully?
Day 2—Assembling Resources
We turn to the topic of assembling the various resources required to build a successful enterprise. What resources are necessary, and how does an entrepreneur gain access to them?
- E Ink: Financing Growth. A set of financial and strategic decisions confront the management of a company trying to develop a technology for creating "electronic ink." If successful, the company will be able to create "radio paper," essentially turning a piece of paper into a computer monitor that has all the characteristics of paper but is digitally controlled.
- KiOR: Catalyzing Clean Energy. Biofuels start-up KiOR was developing a proprietary technology with the potential to dramatically impact the emerging renewable energy landscape: a process that converted cellulosic biomass into "bio-crude," a hydrocarbon mixture with properties similar to those of crude oil. KiOR had been operating as a virtual organization. But with venture financing in place, founder and chief technology officer Paul O'Connor and the KiOR board needed to decide where to headquarter their business.
- Keurig. Nick Lazaris becomes Keurig's third CEO in three years after one founder was fired and the other decided to leave the company. He inherits a company that has made several abortive attempts to launch its new coffee brewing system. Now problems with crucial suppliers threaten the next proposed launch plan.
- Sirtris Pharmaceuticals: Living Healthier, Longer. The CEO of Sirtris, a company focused on the development of drugs to treat the diseases of aging, must decide whether to: (i) form a strategic alliance with an established pharmaceutical firm, (ii) create a nutraceuticals business that will generate immediate revenues, and (iii) in-license one or more compounds to diversify the company's scientific base. The entrepreneurs must think about how each of these decisions will affect the value of the firm, and whether any represent hedges against the risk the company faces. The case also raises issues surrounding the identity of start-ups. Specifically, if Sirtris diversifies into nutraceuticals, will this jeopardize its reputation in the scientific community? And how valuable is this reputation?
- edocs, Inc. In this interactive exercise, participants must negotiate a venture capital investment in edocs, an Internet company aimed at revolutionizing the online bill presentment market.
Day 3—Managing Uncertainty and Growth
We address some of the many challenges involved in managing an entrepreneurial enterprise. How do managers make strategic decisions that improve the chances of success? What structures and procedures need to be in place as the organization grows? How do managers plan for and react to uncertainty? What impacts do dramatic growth have on the organization?
- Parenting Magazine. Robin Wolaner is negotiating with representatives of Time Inc. about investing in a project to launch a new magazine called Parenting. The negotiations have reached an impasse. Among the issues to be considered: How do you assess the opportunity that Wolaner has identified? How much money does Wolaner need? From whom should the capital be raised? Is the proposed deal with Time Inc. reasonable? From whose perspective? What changes, if any, should be made to the deal?
- Jim Sharpe: Extrusion Technology. Jim Sharpe has decided to purchase and run a small company. This case lets us explore his acquisition-financing proposal. We will also discuss how Sharpe should manage the company, and what he needs to do going forward.
- Greenbriar Growth Partners. Greenbriar is a case about a very active private equity investor serving on the board of one of his portfolio companies. Whose interest does John Isenhower represent: his firm’s, the private equity firm's, or the portfolio company’s? And what is he to do when their interests may not be entirely aligned? In addition, what should the independent directors do when they feel he is being too aggressive? The case raises powerful questions about the boards of companies with dominant (whether controlling or not) shareholders.
- Linear Air: Creating the Air Taxi Industry. Linear Air is an air taxi start-up established to take advantage of the emergence of very light jets, which incorporate new technology that cuts jet operating costs by about 40%. Air taxis could make use of the 5400 smaller regional airports throughout the U.S., potentially revolutionizing air travel. But the nascent air taxi industry doesn't yet exist, and there are competing conceptions of what the industry should look like. The founder must evaluate what customer segments to target, what business model to utilize, how to encourage development of the industry ecosystem, and more broadly how to help shape the industry so that it does not develop a highly competitive structure akin to the existing airline industry.
- Pandora Radio: Fire Unprofitable Customers? Pandora Radio is at a crossroads. Founder Tim Westergren has just been told by a well-known venture capitalist to get rid of his unprofitable customers in order to lower costs. But Westergren is not sure that such actions are consistent with his company's business model. Pandora Radio is the largest Internet music stream site, and its rapidly growing user base loves the free customizable music stream under an advertising supported model. Pandora must pay royalties for every song streamed and has other variable costs that scale linearly with hours consumed. However, it has taken no steps to restrict the amount of usage among its heaviest and most loyal users. Can Pandora make its model work when a significant percentage of its users cause it to lose money?
Day 4—Managing Innovation, Harvesting Value
Managing Innovation, Harvesting Value
- Managing Innovation and Nypro, Inc. Nypro is the world's leading injection molder of precision plastic parts, operating a global network of 21 plants. Nypro's strategy is for each plant to offer identical capabilities because its customers are global companies with worldwide sourcing needs. The case describes the way Nypro manages product and process innovation across the global plant network.
- Wyeth Pharmaceuticals: Spurring Scientific Creativity with Metrics. Describes the reorganization of the drug discovery organization at Wyeth Pharmaceuticals and focuses on the decisions to (1) centralize decision-making within drug discovery and (2) institute numerical metrics for the progression of compounds through the Wyeth pipeline. Can scientific activity be evaluated with numerical metrics? To what extent can research and development be structured as a process? How decentralized should decision making be in commercial research and development?
- GSK’s Acquisition of Sirtris: Independence or Integration? Sirtris, a biotechnology firm, is being acquired by pharmaceutical company GSK. What terms of the acquisition are important to Sirtris’ management and shareholders? What is likely to change at Sirtris after the acquisition? How much should GSK integrate Sirtris into its existing research and development organization?
- Knoll Furniture: Going Public. This case examines the decisions of John Lynch, president and CEO of Knoll Furniture, to go public in early 1997. Knoll went private in an LBO in 1996 and Warburg Pincus, the LBO sponsor, wants Lynch to take Knoll public. Lynch needs to weigh the positive and negative issues of a public offering.