SGU - Entrepreneurship Part 4 [Special Subject]

Rev. 0 –
1
SWISS GERMAN UNIVERSITY
Hernanto Wiryomijoyo / BA / Bachelor / Entrepreneurship
Engineering Entrepreneurship
Part 4 [Special Subject]

Rev. 0 –
2
Process Model of Innovation and Entrepreneurship
• Hierarchical process modeling was developed by L. Marran (Hewlett Packard Labs)
to model manufacturing systems,
• Adaptation made by M. S. Fadali (Electrical Engineering Department, University of
Nevada, Reno) under sponsorship of The Lemelson Foundation; to provide simple
introduction to innovation and entrepreneurship.

Rev. 0 –
3
Context Diagram for Invent & Market

Rev. 0 –
4
Structural Diagram for Invent & Market

Rev. 0 –
5
Context Diagram for Screen New Idea

Rev. 0 –
6
Structural Diagram for Screen New Idea

Rev. 0 –
7
Context Diagram for Design & Build Prototype

Rev. 0 –
8
Structural Diagram for Design & Build Prototype

Rev. 0 –
9
Context Diagram for Build Product

Rev. 0 –
10
Structural Diagram for Build Product

Rev. 0 –
11
Context Diagram for Market & Sell

Rev. 0 –
12
Structural Diagram for Market & Sell

Rev. 0 –
13
Some Fundamentals of
International Entrepreneurship
• Reformulated definition of entrepreneurship is jointly influenced by two
distinct traditions which the arena of inquiry emerges that continue to
evolve– entrepreneurship and international business.
• Theoretical models and frame works to further development to guide and
refinements.
• Implementation of network theory - Important role for international
entrepreneurs, networks and cooperation to successful new venture
operations.
• Learning theory and knowledge management.

Rev. 0 –
14
Reformulated Definition
• Wright & Ricks, 1994:
Highlighted international entrepreneurship as newly emerging research direction of the
arena including:
1. Comparisons of entrepreneurial behavior in multiple countries and cultures,
2. Organization behavior that extends across national borders and its entrepreneurial.
• McDougall & Oviatt, 2000:
International entrepreneurship is a combination of innovative, proactive, and risk-seeking
behavior that crosses national borders and is intended to create value in organizations.
International entrepreneurship is the discovery, enactment, evaluation, and exploitation of
opportunities – across national borders – to create future goods and services.

Rev. 0 –
15
Theoretical Models & Frame Works
• Johanson and Vahlne, 1977:
Established the Uppsala model based on their study of Swedish manufacturing firms that:
• Showed internationalization activities were targeted to physically close markets,
• Used the less committed models of entry, such as export.
Established the elements of a theory of international new ventures, firms are said:
• To own certain valuable assets,
• To use alliances and network structures to control a relatively large percentage of vital
assets,
• To have unique resource that provides a sustainable advantage and is transferable to a
foreign location.
Identified the foundation of process theory for international entrepreneurship were:
• Rapidly changing computer, communication and transportation technology,
• The primary blocks were political economy, industry conditions, firm effects, and the
management.

Rev. 0 –
16
Network Theory
introducing the networking theory of ‘alternative governance structures’ to control many
assets through ownership due to lack of sufficient resources in the new international
ventures.
• Alvarez & Barney, 2001 and etc.:
Firm use the networking including:
1. To gain access to resources,
2. To improve their strategic positions,
3. To control transaction costs,
4. To learn new skills,
5. To gain legitimacy,
6. To cope positively with rapid technological changes.

Rev. 0 –
17
Learning Theory & Knowledge Management
• Autio et. al., 2000:
• Defined as ‘the process of assimilating new knowledge into the organization's
knowledge base’,
• Introducing the concept of ‘learning advantages of the newness'.
• Zahra et. Al., 2000 and etc.:
There is rich opportunity for the use of learning theory in the study concerning :
• Knowledge management,
• International diversification,
• International expansions,
• Alliances, and
• Networking.

Rev. 0 –
18
Knowledge Based Small-Medium Enterprises (KB-SME)

Rev. 0 –
19
Engineer’ Role in Entrepreneurship
• Yet, we know that global competitiveness depends on the R&D capability
of firms,
• Internationally, R&D the single most important success factor:
• U.S. spends dollars 2:1 in R&D
• Germany is 1:1 in R&D
• Japan allocates 1:2 for R&D
• Business people have long recognized the effective competitive strategy of
R&D spending.
• R&D is a critical part of the Product Life Cycle
Engineers + Technology

Rev. 0 –
20
The Product Life Cycle

Rev. 0 –
21
PLC’s Definition
1. Product Life Cycle is the period of time when the product is:
• defined by sales demand (customers are the best new
product developers)
• product introduction
• growth
• maturity
• Decline
2. Every product will eventually become obsolete because:
• cost of production is too high
• other, competitive products appear
• technologically/performance poor
• design out of fashion, etc.

Rev. 0 –
22
R&D in the Product Life Cycle

Rev. 0 –
23
Engineers
Before we get deeply into the topic, we must examine the people who are
involved in the R&D function: the engineers.
"As a group, engineers probably create more value than any other segment of
the economy." - J. Baty
Who Are They? - It is the engineer, not the scientist, the banker, the business-
person, the salesperson or stockbroker who creates new:
• products and materials
• chemicals and machines
• computers and robots
• satellites and ICBM's
• artificial hearts, etc. etc.

Rev. 0 –
24
Engineer’s Characters
1. The engineering profession is very demanding in terms of:
• intelligence
• education (both duration and intensity)
• capacity to work hard
• technical standards
• professional standards
• continuing education (technical obsolescence)
2. And - the product has to work!
3. Ego - good ones are hard to find!
4. But they are also poor in selling themselves and the contributions they
make to society
5. Many times engineers are blamed for the misuse of the fruit of their
labors

Rev. 0 –
25
Engineer’s Role in Startups
1. In the typical small firm, the engineer's role is:
• not sitting around designing all day
• looking for parts, machines, etc. in catalogues
• fixing machine processes, inventing short-cuts
• creating machines (cord folder)
• retooling and creating prototypes
• testing designs (theirs or others')
• writing specifications, creating operators' manuals
• setting production standards
• supervising or acting as reference
• drafting or checking drawings
• attending review meetings
• receiving/visiting with vendors
• testing competitive products, etc., etc.
2. It is a wonder that any time is left for engineering.

Rev. 0 –
26
The PLC in Startups
• New enterprises seldom have to worry about product/service obsolescence at the
beginning, but the old adage must be well remembered:
"When a product is first introduced, it is already obsolete.“
• Thus, new products and planning for growth are vital functions for the R&D
group.
• Entrepreneurs must continually monitor their product or service life cycle and
react swiftly disregarding:
• motherhood feelings (sacred cows)
• resist "it has worked well in the past“
• "devotion" to old product lives.

Rev. 0 –
27
Engineer’s Role in Product Improvement
1. R&D people's creativity can be applied very well to these activities and get
lower product costs, higher quality and more profits.
2. Production methods:
• work flow, instrumentation, handling process
• quality process, standardization
• capacity optimization, JIT
3. Automation:
• robotics, computerized control, product scheduling
4. Use of human resources:
• training, station scheduling, human factors
• health and safety factors, education/development
5. Other:
• energy utilisation, waste/by-product disposal
• material efficiency

Rev. 0 –
28
R&D as Part of Corporate Goals
1. Consider R&D as goals set and aim to achieve them:
• set aside whatever funds are required regardless of
• other considerations - an immensely difficult task!
• R&D is not considered as a "cost-of-business."
• funding is based on corporate objectives and goals
• the entrepreneur must be committed to this plan!
2. Combine the above two to be most effective:
• set a minimum budget for the R&D requirements.
• allocate % of sales to reflect variable requirements
• this is an easier sell internally because R&D "suffers" when everyone
else is (also benefits).
3. No matter which method is selected, the temptation is to make R&D (and
advertising) the first budget cut when such cuts are required. Yet, both of these
represent the firm's future!

Rev. 0 –
29
Intellectual Property Protection
1. We will only touch on this subject, but it needs to be mentioned.
2. Patents are for 17-20 years after granting date.
3. Must be done in each country.
4. "First-to-File" rule in North America.
5. Costly and it must be defended.
6. May be "got around" by design.
7. Serious consideration must be given to keeping "trade secrets" against full
disclosure in a patent.
8. Due to rapid changes and ever-shortened PLCs, a patent may be obsolete prior
to being granted.
9. Only fundamental, strong ideas, useful for many years, are worth patenting.
10. Appearance, form, packaging etc. may be protected

Rev. 0 –
30
Technology Transfer
1. While technology transfer is not strictly a financing mechanism, it is a short-
cut by starting from an advanced stage - thus, save money and time.
2. Technology available for licensing can be found in many places, some
obvious; others not.
3. Universities are excellent sources of technology:
• usually at "bench scale" stage
• much information easily available
• licensing can be advantageous
• researchers available for consultation
4. Government laboratories: NRC, Defense labs, Dept. of Communications
5. Private industry: patents not used by the firm
• prototypes, equipment, dies, may be available
6. Inventors: directly from individuals

Rev. 0 –
31
Licensing Technology
1. Obviously, this method has its negatives also, but these may be
outweighed by the benefits.
2. Royalty payments will be required.
3. The technology is not really yours (only licensed).
4. Others may be licensed also (if not exclusive).
5. If you develop further, ownership of these may be in question.
6. Remember, the Japanese license many of the most important
technologies they make big profits on!

Rev. 0 –
32
Bibliography(s)
1. Fadali, M. S.: “A Hierarchical Process Model of Innovation and Entrepreneurship”, Sponsored by
The Lemelson Foundation.
2. McDougall, P. P. & Oviatt, B. M.: “Some Fundamental Issues in International Entrepreneurship”,
Submitted to: Entrepreneurship Theory & Practice, July 2003.
3. Butler, J. S.: “The Science of New Ventures: Combining Theory and Practice for Wealth and Job
Creation through Entrepreneurship”, 2002 Coleman Foundation White Paper.
4. Paradi, J. C.: “Managing the R&D Function”, Course APS432 – Entrepreneurship and Business
Management, Center for Management of Technology and Entrepreneurship, Toronto, January 2003

SGU - Entrepreneurship Part 4 [Special Subject]

Recommended

Recommended

More Related Content

What's hot

What's hot (12)

Viewers also liked

Viewers also liked (8)

Similar to SGU - Entrepreneurship Part 4 [Special Subject]

Similar to SGU - Entrepreneurship Part 4 [Special Subject] (20)

SGU - Entrepreneurship Part 4 [Special Subject]

Editor's Notes