The 16th Annual The Nuts and Bolts of Business Plans MIT Course January 2005

Transcription

1 Background Image by MIT OCW. The 16th Annual The MIT Course January 2005 Joost Bonsen MIT Sloan Graduate Student Former Lead Organizer, MIT $50K Competition Joe Hadzima (MIT S.B., M.S. in Management; Harvard Law) Senior Lecturer, MIT Sloan School Managing Director, Main Street Partners LLC Image by MIT OCW. Yonald Chery MIT Course 6, PhD Candidate $50K Finalist, Founder Virtual Ink Mark Roberge 1

2 Technology Strategy for Start-Ups Professor Fiona Murray Sloan School of Management Professor Fiona Murray #1

3 Foundations of Technology Strategy Markets How will we create value? Technologies Do we have the organizational capabilities necessary to deliver it? Can we capture this value despite competition? Professor Fiona Murray #2

4 Do all scientific ideas have economic potential? -Not Very Useful -Can t Implement Potential Economic Value of idea X X X -Cost / Processes -Social Constraints -No Market X X Value of Scientific idea Professor Fiona Murray #3

5 Is it the case that great ideas = pots of money? -Competition Economic value captured by the startup & Investors -Standards X Microsoft -Licensing Strategy X GE-CT Scanner -Managerial Oversight VHS Philips Betamax X EMI- CT Scanner Xerox Parc Economic value potential created Professor Fiona Murray #4

6 Two main areas of technology strategy Value creation Does this technology or scientific idea create something of value for customers? Value capture Can we capture the economic value inherent in this idea in the face of competition? Professor Fiona Murray #5

7 What is a business model? Business model = How do you plan to make money? Way you decide to transform your scientific ideas into economic value Professor Fiona Murray #6

8 The Business Model Mediates Between the Technical and Economic Domains Technical Inputs: e.g. feasibility, performance Measured in technical domain Business Model: market value proposition value chain cost and profit value network competitive strategy Economic Outputs: e.g. value, price, profit Measured in social domain Professor Fiona Murray #7

9 Value Creation What is your value proposition? What does this idea do for a group of customers? Valuable attributes belong to products not technologies Technology Product/ solution Market Professor Fiona Murray #8

10 Many technologies can be used in different ways. Which customers are most willing to pay? Where is this the most significant improvement? Which applications are the most technology do-able? Which applications are on the path to progress? Technology e.g. e-ink Product/solution Product/solution Product/solution e.g. Signage e.g. enews e.g. ebooks Professor Fiona Murray #9

11 Value Capture Can we protect our competitive advantage (value proposition)? How will we deliver value to customers? Technology Product/ solution Market What protective layer can we wrap around our technology, product & customers? Professor Fiona Murray #10

12 Four key ideas for start-ups: Intellectual property Controlling the knowledge underlying an innovation Secrecy No-on else knows how to do this Speed Moving rapidly beyond current competition & keeping ahead Lock-in customers Making it costly for customers to switch or becoming the standard Professor Fiona Murray #11

13 Many ways to deliver value to customers Product or service? How far along the value chain? Interaction with competitive advantage & protection Technology e.g. combochem Product Service Drug discovery e.g. Library h ware & s ware e.g. Library service e.g. Pharmaco firm Professor Fiona Murray #12

14 Evolution of your technology strategy: example of Millennium Build Revenue: Apply technology to different problems thru service contracts and maintain IPR Firm founding: Based on narrowly defined gene technology Build Assets: Use alliances to develop key assets & new technologies Forward Integrate: Move down the value chain internally & thru acquisitions Professor Fiona Murray #13

15 Key Questions that MUST be addressed Does this idea create economic value? 1. What is the value proposition of the product? 2. What is the market segment? Can we capture this economic value? 3. Can we protect our competitive advantage 4. Where in the value chain are we focused how do we deliver the value? Professor Fiona Murray #14