Technology Entrepreneurship

Dr. Ram Babu Roy

RMSoEE, IIT Kharagpur

Note: This study material has been prepared using various sources available on internet, research papers, books
etc. for the purpose of classroom discussions only.
Opportunity Recognition
• Technology entrepreneurs are different from non-technology
entrepreneurs.
• Their success depends on scientific and technological development,
combining the skills and capabilities of technologists and others to create
a successful business.
• Recognizing a business opportunity is a great way to begin.
• Business opportunity: A product or service that creates significant value
for customers and offers significant profit potential to the entrepreneur
• Identifying a problem to solve – defining and refining the problem
• Need to be sure that the problem exists
• Describe it in some details before investing in solution processes
Opportunity Recognition
• An opportunity is a favorable juncture (point in time) of
circumstances with a good chance for success or progress.
• There is timeliness to every opportunity
• An entrepreneur identify and evaluate opportunities while striving to
find one that fits their capabilities, interests, and resources.
• It is the job of the entrepreneur to locate new ideas and to put them into
action.
• Being alert to potential business opportunities, actively searching for
and gathering information about them, communicating them,
addressing customer needs and evaluating the viability of such
potential entrepreneurial activities
Entrepreneurial Opportunity Recognition
• Opportunity recognition defined as:
• “perceiving a possibility for new profit potential through the founding and forming of
a new venture, or the significant improvement of an existing venture”
• “the process of perceiving the possibility of a profitable new business or a new
product or services”
• “the cognitive process (or processes) through which individuals conclude that they
have identified an opportunity”
• “process of perceiving lucrative and achievable opportunities by which a business
concept can be established”
• Focuses on using mental capabilities to create a prospect, which helps
individuals to be sure that an opportunity is worth exploiting.
• Not only required for creating new ventures; it can also be required after a
venture is established, or during the life cycle of the firm
Six steps to acting as an entrepreneur
Identifying the Opportunity

Determining the Entrepreneur’s

capabilities and interests

Evaluating the opportunity

Deciding to act on the opportunity

or look elsewhere

Writing a summary of the concept

Testing the summary and the

concept with potential customers
and investors
Opportunity Recognition Process
• How can entrepreneurial opportunities be recognized in a given
context?
• What are the factors that determine the opportunity recognition
process?
• What are the contextual factors associated with entrepreneurial
endeavour?
• How do these contextual factors impact the factors that determine
the opportunity recognition process?
• What are the most important resources/capabilities required for the
opportunity recognition process?
Types of Opportunity
• Opportunity Pull:
• the size of the opportunity attracts opportunity seekers to attempt to exploit
it.
• Example:
• A drug to mitigate the effect of Alzheimer’s disease.

• Capability Push:
• a new technology or capability causes a search for new applications.
• Example:
• Digital Television
Categories of Opportunity
• Increasing the value of a product or a service
• New applications of existing means or technologies
• Creating mass markets
• Customization for individuals
• Increasing reach
• Managing the supply chain
• Convergence of industries
• Process innovation
• Increasing the scale of the firm
Framework for the Opportunity Recognition
• Identification of the factors that determine the opportunity recognition
process
• There are a considerable number of factors - main reasons for inconsistent and
rival views on the opportunity recognition phenomenon.
• Vital to consider the context when recognizing entrepreneurial
opportunities
• Important to find an optimal mixture of resources/capabilities to
guarantee effectiveness in the process of entrepreneurial opportunity
recognition.
The conceptual framework
Entrepreneurial Endeavours
• Challenge of operating in a complex and ever-changing environment,
leading to growing uncertainty
• Need to behave entrepreneurially and signal such behaviour to their
stakeholders and the surrounding community
• ‘Entrepreneurial endeavours’ - a continuum of behaviours that range from
Kirznerian market adjustment to Schumpeterian waves of creative
destruction
• Commercializing innovations, establishing incubations, and entering into
joint ventures with business companies
• Encouragement and enablement of stakeholders to be more
entrepreneurial
Identify and select a valuable opportunity
• Great opportunities are often disguised as difficult problems
• “A problem well stated is a problem half solved” – Charles Kettering
• Critical juncture
• Choice of an opportunity
• Decision to act or not act on a good potential opportunity
• Select the opportunity that affords the best chance of success within
the context of the marketplace
• Prepare a business summary for the venture
• Test the new venture with potential investors, employees, and
customers
Characteristics of an attractive opportunity
• Timely—a current need or problem
• Solvable—a problem that can be solved in the near future with
accessible resource
• Important—the customer deems the problem or need important
• Profitable—the customer will pay for the solution and allow the
enterprise to profit
• Context—a favorable regulatory and industry situation
Evaluating an opportunity
• Utility function, U = f(Y,I,W,R,O)
• A function of income, independence, work effort, risk, other working
conditions
• The opportunity cost of an action is the value (cost) of the forgone
alternative action
• Put together a good management team that can execute the strategy
for the opportunity
• quality of the opportunity
• market assessment
• feasibility of implementation
• differentiation of the product
 Evaluating An Opportunity
Characteristics of
• Positive attitudes Entrepreneurial Teams
• Acceptance of risk and demanding effort
• Capabilities matching the needs 100% • Timeliness
• Willing to make the commitment • Favorable industry
• Passionate about the opportunity conditions
• Future conditions
50% appear favorable

50% 100% Characteristics

100% 0% 50%
of the Context
Resources

• Novelty of the product

50% • Potential for sustainable long-
• Capable of securing
access to the human, term success
financial, and physical • Potential for good ROI
resources required by the 100% • Potential for a growing market
• Good risk-versus-reward balance
opportunity Characteristics of • Customers are known and
the Opportunity responsive
Evaluating An Opportunity
• An opportunity exists within its industry and market context
• Given the context, a new venture can achieve a good fit to match the
opportunity with
• Team competencies
• Resources,
• Strategy
• Execution
The seven domains of attractive opportunities

Both markets and industries must be examined on the macrolevel and the microlevel
Process of evaluating an opportunity
• Capabilities: consistent with the capabilities, knowledge, and
experience of the team members
• Novelty: significant novel, proprietary, or differentiating qualities.
Does it create significant value for the customer—enough so that
the customer wants the product and will pay a premium for it?
• Resources: attract the necessary financial, physical, and human
resources consistent with the magnitude of the venture- Amenable
to financing
• Return: Is the expected return of the venture consistent with the
risk of the venture? Profit potential
• Commitment: Are they passionate about the venture?
• Durable: will persist over a reasonable time
 Finding the Right Opportunity
• Timely An Attractive
• Solvable
Opportunity
• Important
• Profitable
• Favorable Context

The
Sweet
• Like to do the tasks Spot
• Skilled at the needed
• Like the challenge tasks
• Committed to do what is
necessary
Interests,
Passions,
Commitment Capabilities & Skills
Major unknowns for a Startup
• What is the right business model?
• Will it scale?
• What will competitors do?
• What will be the unexpected glitches in the supply chain?
• Is there really a market for the product or services as conceived?
• If so, how big is it?
• Can succeed only if enough people recognize this value and are
willing to pay for it.
• What the customer is interested in? Cost or convenience or ???
Customer and Market
• What is the problem you are trying to solve for your customers or
users?
• How many people have this problem?
• Market size? Growth rate?
• Are the potential customers aware of the problem? Or latent need
• How will your solution benefit customers or users?
• What market share your product may capture over next few years?
• Is another product or service from your competitors can serve the
demand?
• How can you reach the potential customer and make a transaction?
Market Evaluation Template
Aspects of Market Evaluation Confidence and unknowns
Problem- trying to solve
Customer benefit from solution
Market size
Market growth rate
Market share
Competitors
Customer awareness of need
Customers
Reaching customers

Expect twists and turns – or pivots – in the entrepreneurial journey

Lean Startup
• Focuses on finding a repeatable and scalable business model
• Iterative and nonlinear – not a step-by-step path
• Take experimental approach to home in right problem– reduces risk
• 3 Key elements
• Business model canvas – captures hypotheses about your business
• Customer Development – feedback - customer, vendor, and partners
• Agile Development – create prototypes – minimum viable product (MVP)
• Iterate on your product design – continually evaluate your idea
Corporate Entrepreneurship
• Technology entrepreneurship can happen in any size of company and
result in new business lines and products.
• Create an entrepreneurial culture that supports to pursue new
products and business areas
• Large technology companies (Apple, Google, Microsoft etc.)
• Can bring much needed, good, knowledge-based jobs that help create
greater employment security.
• Critical to understand that technology entrepreneurship is a
collaborative activity that requires strong skills in working with other
people.
Teamwork in Entrepreneurship
• Effort to create a good team to drive innovation and entrepreneurship
• Must complement one another
• Mutual respect
• Employ people who can work under pressure
• Focus on skill and capability building
Social Entrepreneurship
• Apply an entrepreneurial approach to address social challenges.
• Important contribution to improving peoples’ lives
• Needs more unreasonable people – irrational thinkers
• The reasonable man adapts himself to the world; unreasonable one
persists in trying to adapt the world to himself. Therefore, all the
progress depends on unreasonable man.
• George Bernard Shaw (1903- Man and superman)

Ref: https://www.youtube.com/watch?v=Vvq9YgoJabY&t=159s
Social Entrepreneurship
• Try to break through the status quo – most innovation comes from
unreasonable people
• Microfinance – lending to poor people
• Balancing growth and inequality
• Employ artistic people
• Changing the system – hearts and minds of people
• Share economy – car, home, office space
• Achieving change through innovative business model – everyone can
become a change agent
• Transformation of capitalism –> starts with the success is measured by the
social impact
• Be brave, bright, true, and social