ENT600 - Technopreneurship, Short Note

CHAPTER 1 DEFINE TECHNOPRENEUR A form of entrepreneurship and business leadership focused on identifying high-potential, technology-intensive business opportunity for possible exploitation into new product or service, based on revolutionary breakthrough in technology or technological advancement. FACTORS MOTIVATING TECHNOPRENEUR i. Timely: current need, unmet demand or problem; be at right time. ii. Solvable: problem that can be solved in near future with accessible resources. iii. Important: a customer deems their problem or need as important aspect. iv. Profitable: customer will pay for the solutions and allow the enterprise to profit. v. Context: a favorable regulatory and industry situation. SOURCES OF INTELLECTUAL CAPITAL: i. Human capital: - There are combination of knowledge involving skill of the entrepreneurial team and business employees. ii. Organizational capital: - The management structure and peripherals that support the human capital. iii. Social capital: - The relationships and quantity of relationships that the business maintains with its suppliers, partners and customers. 4 ENTREPRENEURSHIP KEY DIMENSIONS i. Risk:  Elements of uncertain outcomes or event inherent in the process of exploiting opportunity and start business - be either low risk or high risk. - Entrepreneur take risks to obtain higher rewards that come from higher risk - while carefully evaluate the risk first; risk can give either advantages or disadvantages.  Achievement acquired from calculated, thought out approach where anything possible is done to identify and minimize potential problems. ii. Creativity & Innovation:  Entrepreneurship characterized by specific effort of bringing something new and different to the market.  Creativity focuses on thinking of new things  Innovation focuses on doing new things. iii. Opportunity Exploitation:  Focused on taking advantages or exploiting previously unexploited opportunity.  Results in creation of a new enterprise or business along with the wealth associated with it.  New enterprise: beneficial to the society and make positive changes. iv. Pro-activeness:  The tendency to act on information, ideas and opportunity in timely and speedy manner.  Classified as acting at the right time and manner in superiority of an idea or opportunity.  Differentiate between successful, less successful or failure. PHASES OF ENTREPRENEURIAL PROCESS i. Idea Search & Generation Phase:  a.k.a opportunity formation or discovery phase.  The business idea involves creating new technology or adapting existing one. ii. Idea Evaluation & Development Phase:  Characterized by efforts to better understanding of how to bring the idea or opportunity into full-fledge economic activity or business. iii. Idea Exploitation Phase:  Characterized by the decision to pursue business opportunity or not.

CHAPTER 2 DIFFERENCE BETWEEN CREATIVITY, INNOVATION & INVENTION CREATIVITY INNOVATION The production of new and useful Specific instrument of idea as well as the ability to entrepreneurs, where they can Definition discover new way of looking exploit change as opportunity for problem and opportunity. different business or service. Outcome

Ability to use imagination in developing new idea, things or solutions.

Ability to apply creative solution to problems and opportunity to enhance people’s live

INVENTION A product of research.

Not all inventions lead to commercially viable outcome.

TECHNIQUES IN STIMULATE & DEVELOP CREATIVE THINKING SKILL i. Problem reversal: see things at the opposite, inside-out or upside-down to understand that things. ii. Forced analogy: gain new insights - force relationship between almost everything. iii. Brainstorming: generate ideas based on principle of suspending judgments. iv. Lateral thinking: explore multiple possibilities from different perspective rather than pursuing conventional single approach. v. Attribute listing: separate thing into smaller parts and develop ideas to improve on them. PHASES OF CREATIVE PROCESS PHASE 1 - BACKGROUND OR KNOWLEDGE ACCUMULATION  Study subject matter background by reading, discussion with experts, researchers in the field.  Expose entrepreneurs to variety of perspective on the subject matter. PHASE 2 - MIND INCUBATION PROCESS  Individual immerses himself in the data allowing subconscious mind to muse or ponder on the information gathered.  Distance from subject matter and letting subconscious mind working on it allow creativity to burst. PHASE 3 - IDEA EXPERIENCE  Occur when discovering solution or new solution. Idea may appear suddenly or may come incrementally and begin formulating the solution.  Getting more ideas by imaging about the project and always keep a notebook to record emergence of ideas at odd hours. PHASE 4 - EVALUATION & IMPLEMENTATION  Stage that require discipline, courage and perseverance.  More possibilities of failure.  Testing idea before the best workable ideas is put into final form and successfully implemented.

CHAPTER 3 DEFINE ENTREPRENEURIAL OPPORTUNITY Situation in which new product, services and processes introduced and sold at greater than the cost of production. CONCEPT OF “WINDOW OF OPPORTUNITY” i. Entrepreneur must hit the “Window of opportunity” for which the opportunity exited. ii. Defined as short period of time during which an opportunity must be acted or missed. iii. Describe the time period in which a firm can realistically enter new market. iv. Deemed to be “open” or “close” to denote degree of attractiveness at a particular time. v. Term “open” refer to opportunity lending itself to be exploited at that time because it has value and potential for wealth creation. vi. Term “close” refer to opportunity potential diminished due to being exploited by another entrepreneur or that period of time is out-of-date or obsolete. OPPORTUNITY ANALYSIS PROCESS

EVALUATING ENTREPRENEURIAL OPPORTUNITY INTERNAL FACTORS 1. Capabilities: The ability or quality such as knowledge, experience, and skill necessary to develop business venture. 2. Resources: Include financial, physical and human resources consistent with the magnitude of business venture. 3. Interest: The will or passion to pursue the business venture. EXTERNAL FACTORS 1. Market: Involves determining the market size and potential customer. 2. Financial: Determining the incurred cost in developing business venture, 3. Technical: Determining the requirements to proceed with the idea that include machineries, raw materials, the processes and infrastructure. 4. Economic forces: Direct impact on level of disposable and customer buying patterns. 5. Social and cultural trend: Understanding impact of social and cultural trend on new product, service, and business idea, a fundamental price of opportunity recognition puzzle. 6. Technological advance: Provide opportunity to help people satisfy basic needs and desire more convenient way. 7. Political and regulatory changes: New regulators lead to new business and opportunity to start firms and help companies comply with the laws.

CHAPTER 4 WHY CONDUCT FEASIBILITY STUDY? i. To determine whether the idea is viable or worth pursuing. ii. Surface new opportunities. iii. To provide quality information for decision making.

COMPONENT OF FEASIBILITY STUDY [MARKET, TECHNICAL, ORGANIZATIONAL, FINANCIAL] MARKET FEASIBILITY STUDY Definition: An assessment of market’s overall appeal for the product or service being proposed. Aspect: i. Product or services - before enter the market, it should meet the prospective customer needs and wants. Product: defined as anything that can be offered to a market for attention, acquisition, or use that might satisfy a need or want (Kotler, 2008). Service: defined as any activity or benefit that one party can offer to another, essentially intangible and doesn’t result in ownership of anything (Kotler, 2008). ii. Customers: Refer to individuals and household, business organization local as well as international and government organization that buy a product and service for consumption - target market for organization’s product and service. iii. Market Demand: Refer to the local potential purchase expected from target market - normally expressed in units or Ringgit. Information on market demand is critical in determining the viability of proposed product or service. Market demand can be calculated base on population of the target market, number of houses in the target market or competitor’s sales. iv. Competitors: Refer to other business that provides similar, substitute or alternative product/service to the same market segment. In competitors analysis, the business not only has to identify who are the major competitor but also the number of competitors in the market. The presence of the competitors can effect immensely on the success of the business product/service that enter the market. v. Market Shares: Refer to the portion of the market that the business can control after taking consideration market demand and the competitors’ position in the same market - normally in form of percentages of total demand. TECHNICAL FEASIBILITY STUDY Definition: Determine whether the business has the necessary technology and equipment to the produce of intended product/service. Aspect: i. Technology equipment The business should identify the type of technology to be used and need to know whether the technology is accessible for purposed business venture. Must also identify types of equipment required. The cost of technology and equipment needs to be included in determining the feasibility of the venture. The ability to obtain the technology and equipment will affect the start-up timeline. ii. Materials The business should identify the types, quantity and quality of raw materials required. A list of suppliers for the raw materials needs to be identified and contractual arrangements with the suppliers need to be made to ensure the organization’s supply uninterrupted. The cost of raw materials should also be satisfactory and within budget.

iii. Manpower The organization has to identify the technical workers required in producing the product/service - has to set appropriate skill and the number of technical numbers needed. iv. Location Location refers to the place where the proposed business or project is likely to be set up. Organization should find the location that near to market customer, near to raw material and major infrastructure. ORGANIZATIONAL FEASIBILITY STUDY Definition: Determine whether the business has the necessary and sufficient human resources to bring particular product/service idea to market successfully. Aspect: i. Organizational structure Identify responsibilities for each job position and the relationship among those positions. Technopreneur must form the right organization structure to accomplish the organization goals and missions. ii. Management team A group of individual responsible to bring product/service idea to market successfully. The organization evaluate the power and ability of its management team to requisite passion and expertise to lunch the venture. Necessary to identify the types of position needed and the qualification and experience required filling those positions. iii. Compensation Refer to monetary and non-monetary rewards in various form of payment including salary, sales commission, allowance, bonus, EPF and SOCSO contribution. iv. Supporting service Refer to the assistance and service given by private agencies and government. Organization should identify appropriate type of supporting services to launch the intended product/service. FINANCIAL FEASIBILITY STUDY Definition: An assessment of the financial aspect of the business. Aspect: i. Start-up capital The total cash required to start the business including the cost for purchase of non-current asset, working capital, development cost and other expenses. ii. Financial sources Option to utilize either: Internal financing - The funds provided by family, friends, partners or shareholders. External financing - The fund available from outside organization such as loans from financial institutions, venture capital, and business angel. iii. Profitability analysis Involve determining whether proposed venture is generating enough profit to make proposed venture feasible. To conduct a profitability analysis, a 3 year financial projection must be prepared including cash flow statement, income statement and balance sheet statement.

CHAPTER 5 NEW PRODUCT Any product “perceive to be new” in the mind of the consumers. NEW PRODUCT DEVELOPMENT (NPD) A process by which entrepreneur creates “newness” of the product physically for the purpose of selling it to the customers. CLASSIFICATION OF NEW PRODUCT A NEW PRODUCT i. A product whose technological characteristic differ slightly from those of previously produced product. ii. Such innovation involve radically new technologies, based on combining existing products in new uses, or derived from the use of new knowledge. IMPROVED PRODUCT i. An existing product whose performance has been significantly enhanced or upgraded. ii. Simple product may be improved through use of higher-performance components or materials, or complex product consists of numbers of integrated technical sub-systems improved by partial changes to one of the sub-systems. STAGE OF NPD PROCESS RESEARCH AND DEVELOPMENT Refer to organized effort directed toward discovering new knowledge, product or process - due to limited preliminary data which gives a critical step in new product development.

PRODUCT DESIGN Refer to the conceptual translation of new product idea or concept based on the design - includes product design and its architecture and required parameters to satisfy market need.

CONCEPT TESTING Refer to initial test apply to most new product designed - involves showing a preliminary description of the product or service to prospective customers to gauge customer interest and purchase intent.

BUILD PROTOTYPE Refer to the first physical depiction model of the new product or service - prototype used to elicit comments from designers and users to learn more about the product.

TEST MARKETING Refer to carried out prior to full-scale launching of a new product - new product introduced in test marketing to a representative sample of population to assess the market’s reaction.

COMMERCIALIZATION

CONCEPT TESTING DEFINITION: The initial test for most new product designed. Involve the process of using quantitative and qualitative methods to evaluate consumer response to a product idea prior to introduction of product to the market. PURPOSE:  Choose most promising alternative from set of alternative.  To get an initial notion of the commercial prospects of a concept.  To find out who interested in the concept.  To indicate direction of further development work. STEP INVOLVED:  Define purpose of the test  Choose survey population  Choose survey format  Communicate the concept  Measure customer response  Interpret the results METHOD OF COMMUNICATING PRODUCT CONCEPT:  Verbal description  Sketch  Rendering USABILITY OF NEW PRODUCT DEFINITION: A measure of a user’s experience when interacting with a product. To understand more about the product, factors that contribute in determine usability of new product must be considered. FACTORS: i. Ease of learning - require question on duration of learning product’s operation. ii. Efficiency of use - require question on speed the user need to complete necessary steps. iii. Memorability - require question about user memory ability in using the product another time. iv. Error frequency - require question on error occurrence the user made and the level of these errors to the product. v. Satisfaction - require question on user’s interest on operating the product. PRODUCT DIMENSION i. Features - the changing in application device for the product. E.g.: Usage of liquid instead of powder detergent ii. Quality specification - the changing in performance capabilities of the product. E.g.: New and improved washing detergent iii. Packaging - the changing in promoted image of the product E.g.: Use of bio-degradable packaging material iv. Price - the changing in the after-sales service for the product. E.g.: Frequency of service for motorcycle v. Technology - the changing in the availability of the products E.g.: Use of vending machines for top-up cards

CHAPTER 6 INTELLECTUAL PROPERTY (IP) DEFINITION IP is defined as legal entitlement attached to expressed form of an idea, or some other intangible subject matter that enables the holder to exercise exclusive control over the use of IP. CONCEPT Any authorized use of creation or works by unauthorized parties is prohibited and protected by law. TYPES OF INTELLECTUAL PROPERTIES (IP) PATENT (Expired: 20 years from filing date) Definition: Exclusive right granted for an invention that provides a new way of doing things or offers a new technical solution to a problem Guideline: i. Pursue patent that are broad or commercially significant and offer a strong position - significantly novel proprietary. ii. Prepare patent plan in detail - outline the cost to develop and market the innovation. iii. Have your action relates to your original plan - stick to original plan during early stage of establishing patent. iv. Establish infringement budget - infringer may fear real damages, prepare realistic budget for prosecuting violation of patent. v. Evaluate the patent strategically - process usually take 3 years, must compare with lifecycle of proposed innovation or technology. Criteria: i. Functional/Technical The invention must relate to how something works, what it does, what it made of or how it is made. ii. New The invention must first time appear anywhere in the world. iii. Invention action The invention must be figured out by creative thinking in technical field and work hard. iv. Industrially applicable The invention must be capable of being made or use in an industry. COPYRIGHT © (Expired: Subsist during the author’s life plus 50 years after his death) Definition: Form of IP protection or exclusive right given to individuals who produce original work of art and literature, music, films, broadcasting, and computer programs. Protected Creations: i. Literary work E.g.: Novel, lyric, article, computer program and some type of database ii. Dramatic works E.g.: Theatre presentation & Stage plays iii. Broadcast E.g.: Documentary, live coverage of event iv. Recording E.g.: Sounds, film v. Artistic work E.g.: Painting, sculpture, collages, architecture, diagram, maps and logos INDUSTRIAL DESIGN The ornamental or aesthetic aspect of an article.

DIFFERENCE BETWEEN PATENT & UTILITY INNOVATION PATENT Exclusive right granted for an invention that provides a new way of doing things or offers a new technical solution to a problem. Patent is protected 20 years from filing date.

UTILITY INNOVATION Exclusive right granted for a minor invention which does not require satisfying the inventiveness test. Utility innovation is protected for 10 years from filing date.

CHAPTER 7 FINANCING NECESSITY i. To determine start-up cost Different size of business needed different types of start-up cost. ii. Fixed assets replacement At last, the fixed asset of the company will become obsolete and the company will have to reinvest in new fixed assets. iii. Growth The company needs financing to expand current operations or additional costs related to advertising, payroll, warehouse or research and development. PRE-SEED FINANCING Relatively small amount of capital provided to an inventor or entrepreneur to prove a specific concept for a potential by profitable business opportunity that still has to be developed and proven. The funded work may involve product development, but rarely involves initial marketing. KEY SOURCE OF FINANCING PRE R&D STAGE PRE-SEED FINANCING  At this phase, talk of a "company" is still premature. What usually exist are an immature idea and an incomplete management team, and there is no guarantee that the idea is technologically feasible or commercially viable. The preliminary financing in the first stage is obtained from individuals who are close to the entrepreneur and know him or her family and friends, private investors who are not organized in investing institutions, or incubators. The money is needed to support the development of the idea in order to promote the product at least to the stage in which its feasibility is proven and to write the business plan. ANGEL FINANCING  High net-worth individuals that represent as essential source of funding for early stage, high-risk ventures. Typically successful entrepreneurs, these investors offer expertise, experience, and contacts that can be invaluable to the new venture. Angel financing often work in groups to improve the efficiency of their due diligence and to allow them to complete larger deals. The most important considerations in the angel financing decision are the personal characteristics of the entrepreneur and the market-product potential of the business. Geography and industry focus are surprisingly unimportant. SELF, RELATIVE & FRIEND  The entrepreneurs own resources include not only their personal savings and assets, but also their debt capacities in obtaining limited amounts of external finance. The entrepreneur’s access to established source of external finance is limited. Hence, most entrepreneurs rely on their own resources, supplemented by funds from relatives and friends. GOVERNMENT’S FINANCING ASSISTANCE  Classified into government funding scheme and grants - This program will help the entrepreneur to running the small business and to achieve a goal. For example, Malaysian venture capital Management Berhad (MAVCAP) is committed purely to the technology sectors and will invest in the mix of local and overseas businesses.

DIVERSIFICATION STRATEGY Involves branching out into new products and new territories - business diversify made because being in single industry can be risky, new technology or product and fast changing customer preference can destroy a particular business. Two types:  Related diversification strategy - which refers to a situation where business diversifies into another area that is strategically fit with existing business. Meant to allow the business to capitalize on synergies such as transfer and share valuable expertise, technology know-how and other competitive capabilities to consolidate related activities into single operation to achieve low cost and capitalize on well-established brand name.  Unrelated diversification strategy - which refer to situation where a business diversifies into another area that is totally different from existing business activities. May be carried out in order to distribute and spread the risk of doing business across different industries, when the business is currently operating in an attractive industry and there is a need to look for other possibilities.

CHAPTER 8

COMMERCIALIZATION OF RESEARCH & DEVELOPMENT (R&D)  Product of R&D will not generate revenue unless successfully commercialized. Commercialization refers to efforts taken to introduce new technology-based products to the market with the aim of gaining commercial return. The commercial value of a research is measured by the contribution of research findings to the development of new process, services or product.  Improved product work better, which may translated into lower total cost for the use of the product over its lifecycle. Less costly products reduce the cost of acquisition and hence increase the total market size.  Each raises different issues - new product must anticipate changes in the customer behavior based on design created in commercialization process, and assess the cost customer willing to pay for it. Case: development of Internet access tools.  The improved product has to identify limitations in current products and identify how an improvement can be made based on technology. Case: CD - initial cost is higher than some functional equivalent but offers better performance, convenient to use.  Less costly product tries to maintain the performance level of existing product but use technology to reduce costs. Case: development of personal computer system.

CHAPTER 9 GROWTH STRATEGIES ANSOFF MATRIX New

Market Development

Diversification

Market Penetration

Product Development

Existing

New

Market Existing

 Market penetration seeks to increase market share for existing products or services in existing markets. Market penetration is especially affective when current market not yet saluted, current market usage can be increase, market share if major comparative are in the decline but industry sales are increasing, increased economies of scale and sales and marketing expenditure are highly and positive correlated historically.  Market development strategy involves introducing present product or services to new groups of customers. These new group may come from new geographical areas or different demographic market. Market development may also beyond national boundaries as they reduce the overall risks associated with fluctuations of demand in existing market.  Product development involves increasing sales by improving or modifying present product or service. It may be employed when a business has successful products that are in the maturity stage of the product life cycle. A business operates in an industry that is characterized by rapid technological environment. Major competitive offer better quality products at compatible price and a business have strong R&D capabilities.  Diversification strategies involve branching out into new products and new territories. Business diversify are made because being in single industry can be risky and new technologies, new products or fast changing customers preference can destroy a particular business.

CHAPTER 10 ENDING A BUSINESS 1. RETRENCHMENT  Occurs when a business regroup by reducing cost and asset to reverse declining sales and profit.  Includes activities such as selling off asset to raise the needed cash, pruning product line, close-down poor performing business, reduce number of employees and declaring bankruptcy. 2. DIVESTMENT  Done cautiously by selling part of the venture cash to be reinvested in more promising business - used when a business has pursued a retrenchment strategy but failed to accomplish and need improvement.  A business need more resource to be competitive, when one particular division is responsible for a business overall poor performance and doesn’t fit well with the rest of the business. 3. LIQUIDATION  Involve the selling of part of company’s assets for their tangible worth - recognition of defeat.  Undertaken when both retrenchment and divesture is unsuccessful - enable stockholders to minimize losses. 4. HARVESTING  Strategy pursued by a business in effort to cash out and harvest the profit.  In contrast, it associate more with the owner’s personal reason for terminating the venture - reason may include boredom and burn out, lack operating and growth capital, no heirs to leave business to, aging and heath problems and desire to pursue interest.