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The Early
Market
Te
c
En hnol
thu og
sia y
sts
The
Chasm
Vis
io
na
rie
s
The
Mainstream
Market
Pr
ag
ma
tis
Co
n
ts
ser
va
Sk
tiv
es
ep
ti
cs
Key Words...
Entrepreneurship Venture Models Driving Forces
Venture Capital Growth Phases Technology
Life Cycle The Chasm Model The Transilience
Map Diffusion Curve Technology Strategies
Knowledge Creation Process Innovation
Management First Mover Advantage Technology
Acquisition Core Technologies Technology
Portfolio Patent Management Intellectual
Property Innovation Types Kano Model R&D
New Technologies Risk Bubble Diagram
Technology Evolution E-Business Models Growth
Strategies Start-up Private Equity Financing
Life Cycle Product Innovation Process
High
Inventor
Entrepreneur
Promoter
Manager,
Administrator
CREATIVITY
AND
INNOVATION
Low
High
GENERAL MANAGEMENT SKILLS, BUSINESS
KNOW-HOW, AND NETWORKS
High
Low
ATTRACTIVENESS
OF VENTURE
OPPORTUNITY
High
Low
ENTREPRENEURS FIT AND BALANCE
Value Creation
Customers
Employees
Allocating risks
and returns
Slicing the value pie
Cash-Risk-Time
High Growth
Maturity
Most
Most
Higher potential,
growth-minded ventures
Higher potential,
growth-minded ventures
ENTREPRENEURIAL
CHANGE AND
UNCERTAINTY
Mature, bureaucratic
dinosaurs
Least
Least
Least
Most
ADMINISTRATIVE
Entrepreneurial domain
Administrative domain
ENTREPRENEURIAL
High Growth
Driven by:
Maturity
Most
Driven by:
Organization: Formal
CHANGE AND
UNCERTAINTY
Driven by:
Driven by:
Administration/trustees
Few owners
Product focus
A specific product
Burdensome resource requirements Resource ownership
Least Organization: None or too rigid
Organization: Formal
Least
Least
Most
ADMINISTRATIVE
Entrepreneurial domain
Administrative domain
Financial strategy
Degrees of strategic freedom:
Time to OOC
Time to close
Future alternatives
Risk/Reward
Personal concerns
Financial
requirements
Driven by:
Burn rate
Operating needs
Working capital
Asset requirements
and sales
Business strategy
Marketing
Operations
Finance
Value creation
Typically
5 to 10 year
window
Portfolio Companies
Provide capital
Use capital
MONEY
Limited partners
Pension funds
Individuals
Corporations
Insurance companies
Foreign Endowments
MONEY
Opportunity
Creation
recognition and
execution
Entrepreneurs
IPOs/Mergers/Alliances
Return of principal
plus 75-85% of
capital gain
EQUITY
Value-creation
and harvest
Growth Phases
Phase 1
Phase 2
Phase 3
Phase 4
Phase 5
Large
5. Crisis of ?
4. Crisis of
RED TAPE
3. Crisis of
CONTROL
SIZE OF
ORGANIZATION
2. Crisis of
AUTONOMY
1. Crisis of
LEADERSHIP
4. Growth through
COORDINATION
3. Growth through
DELEGATION
2. Growth through
DIRECTION
1. Growth through
CREATVITY
Small
Young
5. Growth through
COLLABORATION
AGE OF ORGANIZATION
Evolution stages
Revolution stages
Mature
Not Obvious
Black Holes
Home Runs
CONCEPT
Filling Stations
Squirrel Cages
Obvious
Small
Large
GROWTH / ULTIMATE FINANCIAL POTENTIAL
High
Laissez-faire
Management
Professional
Management
Entrepreneurial
Management
Bureaucratic
Management
DELEGATION OF
RESPONSIBILITY
Low
Low
High
USE OF FORMAL CONTROL MECHANISMS
Innovators
Technology Enthusiasts
Early Adopters
Visionaries
Early Majority
Pragmatists
Late Majority
Conservatives
Laggards
Skeptics
The Chasm
The Early
Market
The
Chasm
Te
Vis
c
En hno
ion
thu log
ari
y
s ia
es
sts
The
Mainstream
Market
Pr
ag
ma
ti
Co
s ts
ns e
rv a
tiv
e
Sk
ep
tic
s
s
High
Revolutionary
VC Backed
Startups
UNCERTAINTY
Marginal
Corporate
Low
Low
High
Regular
Corporation
SCALE
Uncertainty: unqualifiable and immeasurable risk
Scale:
On Innovation
Why do firms innovate?
Product
innovation
Novelty
Escaping from
perfect competition
Appropriability
(patent, secrecy...)
Consumers accept to
pay a higher price
Price > marginal cost
Monopoly rent
Economic
value
Process
innovation
Escaping from
perfect competition
Novelty
Appropriability
(patent, secrecy...)
NON INNOVATING
FIRMS
FIRMS INNOVATING
MAINLY IN PROCESSES
FIRMS INNOVATING
MAINLY IN PRODUCTS
Innovative strategy
of firms:
Active
price competitiveness
Technological
competitiveness
Stable productivity
Cost savings,
low quality
Competitive strategy:
External conditions
of markets and demand:
Outcomes for the firm:
Passive
price competitiveness
Stagnant
Losing out to
competitors
Growing
Stagnant
Growing
Stagnant
Growing
Falling or stable
market shares
Fast growing
market shares
Developm. of
new markets
Stable
value added,
falling employm.
with growth
of productivity
Slow growth of
value added, stable
employm. with growth
of productivity
Strong growth
of value added,
some employm.
growth
Switching costs
Contractual commitments
Durable purchases
Brand-specific training
Specialized suppliers
Search costs
Loyalty programs
BREAKTHROUGH
Architectural
Niche creation
Technology Market
Customers Production
Revolutionary
Regular
CONTINUITY
Organizational Capabilities
A
B
SM
SM
F1
F2
F3
F1
F4
F2
SM
F3
F1
F4
F2
F3
F4
P1
P2
P3
Functional matrix
Functional
D
SM
P2
P1
P3
P4 F1 F2
F3
SM
P1
P2
P3
Balanced matrix
P4
SM
P1
P2
P3
P4
F1
F4
F2
F3
F4
Project matrix
Project-led
organization
Project-based
organization
100
Winner
MARKET SHARE
(in %)
50
Battle zone
Loser
0
TIME
Takeoff
NUMBER
OF
USERS
Launch
TIME
VALUE
TO USER
Vicious
cycle
Potential Product
Augmented Product
Expected Product
Generic Product
Training
and
Support
Additional
Software
Generic
Product
Additional
Hardware
System
Integration
Cables
Installation
and
Debugging
Anything else
you would need
to achieve your
compelling reason
to buy
Company
SPECIALIST
Conservative
C
th ros
e C si
ha ng
sm
Technology
Enthusiasts
Developing the
Mainstream Market
Developing the
Early Market
Visionaries
GENERALIST
Pragmatist
Technology
Market
SKEPTICS
SPECIALIST
Product Company
Technology Market
Architecture
Schematics
Demos
Trials
Technology press coverage
Guru endorsements
Market share
Third party support
Standards certification
Applications proliferation
Vertical press coverage
Industry analyst endorsements
SKEPTICS
GENERALIST
Early Market
Prototypes
Pure
Science
Chasm
Technology
Enthusiasts
Visionaries
Conservatives
Pragmatists
PARADIGM
SHOCK
End of
Life
Main Street
Low
Bowling
Alley
Tornado
High
Low
APPLICATION
BREAKTHROUGH
Development of Technological
Entrepreneurial Regions
Available Capital
Venture Capital
Academic
Institutions
Scientific/
Technical
Knowledge
Technological
Enterprise
Trained
Individuals
Service Enterprise
Growth
Economic &
Employment
Growth
Successful
Spin-Off
Enterprise
Unsuccessful
High
TECHNOLOGY
Future
New
MARKET
Emerging
Existing
Low
Incremental
Existing
Radical
New Generation
INNOVATION
Core Competencies
Overall
Strategic Business
Units
Evaluation of:
Organizations
- Strengths
- Weaknesses
Environmental
- Opportunities
- Threats
Corporate Strategy
Technological
Strategy
Environmental
Analysis
Internal
External
Emerging
Technologies
Assessment
Technological
Forecast
Action
Plan
Competitive
Advantage
Continuous
Innovation
Knowledge
Creation
High
Cost
Reduction
Technology
Peripheral
Pull
RETURN
Product Line
Extension
Low
Low or
Negative
Push
Trend
Expanding
Market
RISK
High
Trend
Mature
Market
Radical
New Generation
TECHNOLOGY
Incremental
Existing
Existing
Emerging
New
MARKET
Future
Expertise
Technology, customers, markets,
expertise, patents, trademarks, trade
secrets
Invention
Implementation
Market space,
competitors, suppliers
Economic Power
Market
Penetration
Strategy
Mission
Vision
Technology
Elements
Market
Forecasts
Technology
Forecasts
Enterprise
Objectives
Programs
Mission Space
Technological
Space
General Needs
Technologies
Drives
Bounds
Increasing Detail
Specific
Requirements
Technological
Applications
Projects
High
RISK
Moderate
Low
Existing
Incremental
New
Improvement Generation
TECHNOLOGY
Radical
Leadership Team
Technological Potential
Make or Buy
Decision
Technologies
Structures
Processes
Product, Process
$
or Service
System
Functions
Keep or
Sell Decision
Needs
Technologies to
Meet Needs
Defining
Capabilities
Market Products,
Processes or Services
Core
Technologies
Core
Competencies
New
Technology
Vector
Core
Technology
Region
TECHNOLOGICAL
ATTRACTIVENESS
Aging
Technology
10
COMPETITIVE
TECHNOLOGICAL STRENGTHS
Turnaround
Strategy
Aggressive
Strategy
Substantial
Enterprise
Technological
Strengths
Critical
Enterprise
Technological
Weaknesses
Defensive
Strategy
Diversification
Strategy
Major
Technological
Environmental
Threats
(Go-for-it)
Strong technological
competitive position
(Niche)
I II
IV III
(Partnering)
Weak technological
competitive position
(No-Go or
Change it)
External Forces
Differentiating
Capabilities
Competencies and
Technologies
Enterprise
Business Strategy
Technological
Strategy
Internal Culture
Enterprise Internal Environment
Organizational
Learning
?
?? ?
?
?
?? ?
?
Future
Goals
Current
Strategy
Competitors
Response Profile
Strengths
Opportunity
Assumptions
Held about itself
and the industry
Weaknesses
Threats
Capabilities
Strengths and
weaknesses
Large
Volume
Stalemate
ROI
ROI
Few
NUMBER OF WAYS
TO ACHIEVE
TECHNOLOGICAL
COMPETITIVE
ADVANTAGE
Market share
Market share
Specialization
Fragmented
ROI
ROI
Many
Market share
Market share
Barriers of Entry to
Technological Market Space
Technological
Competitive
Differentiation
Competitive
Strategy
Later-Entrant
Distinctive Competencies
Resources
Competitive
Strategy
Cost
Differentiation
Economic
Factors
Pre-emption
Factors
Technological
Factors
Behavioral
Factors
Demand
Uncertainty
Pre-emptive
Investment
Technological
Innovation
Characteristics
Nature of Good
Entry
Scale
Product
Characteristics
Technological
Change &
Discontinuity
Market Type
Efficient
Scale-toMarket Size
Market
Evolution
Advertising
Intensity
Buyers
Investment in
Cospecialized
Assets
Response
Time
Later-Entrant
Advantages
Imitation Costs
Free-Rider Effects
Scope Economics
Learning from
Pioneers Mistakes
Scope
Economies
Overall Magnitude of First-Mover Advantage
Market Share Performance
Absolute
Relative
Profitability Performance
Return on Assets
Return on Sales
Seed Capital
& Early Stage
Early
Growth
Enterprise
Cash Flow
Later
Growth
Mezzanine
3rd
Public
Market
2nd
Initial
Public
Offering
1st
Valley
of Death
Break-even
point
Emerging Growth
Time
Enterprise
Financing
Break-Even Regions
Cash flow
Returned capital
breakeven
Cumulative revenue
P&L breakeven
Alternative Investments
Financial Strategy
Risk/Reward Space
Opportunity
Debt
Entrepreneurial concerns
Time to out of cash
Future alternatives
Equity
Other
Burn Rate
Operating
Requirements
Financial
Requirements
Business Strategy
Working Capital
Market Strategy
Asset Requirement
Technological Strategy
Financing Space
Highest cost for
enterprise
Preferred
stock
Subordinated
Debt
Stock
Options
Lowest cost
for enterprise
RISK PLANE
Senior Debt
COST PLANE
FFF
VCs
Entrepreneur
PERCEIVED
RETURN
Moderate
Low
Realistic
Investors
Banks
Low
Moderate
PERCEIVED RISK
High
High
RISK
Moderate
High
Moderate
Low
Low
Incremental
Radical
Existing
New Generation
TECHNOLOGY
RETURN
High
RISK
Moderate
New
Low
Developing
Existing
Low
Moderate
High
POTENTIAL
MARKET GROWTH
MARKET
DEVELOPMENT
STAGE
100
80
ANNUAL
RETURN
(%)
60
40
20
High
Moderate
Low
0
Seed &
Early
Later
Mezzanine Buy-out
Early Stage Growth Growth
or IPO
ENTERPRISE
STAGE
RISK
Data from
Venture
Capitalist
80
EXPECTED
ANNUAL
RETURN
(%)
Davenports Risk/
Return Space
60
40
20
0
Low
Moderate
Risky
INVESTMENT RISK
Most
Risky
Low
High
Life-style
High-growth
Marginal
Successful
and
growing
Three-Dimensional Technological
Management Model
Management skills
Management roles
SKILLS &
EXPERTISE
Critical functions
Managerial functions
Functional Management
Technology buildup
Preproject
Resources
Project
ASSETS
Production
Marketing
Service
Procedures
PROCESSES
Structure Strategy
Culture
Technology Relatedness
Degree of Competitiveness
Decision
Mechanism
Degree of Protection
Managerial Capabilities
Life of Technology
Enterprise Experience with External Technology
External
Technology
Acquisition
High
HUMAN
RESOURCES
ORIENTATION
Life
style
focus
Team
focus
Public Enterprise
Low
Unfocused
Authority
focus
Growth
Early Stage
Start-up
Low
High
GROWTH ORIENTATION
DEVELOPMENT
STAGE
Mission &
Strategy
Customer
Satisfaction
Value
Improvement
Enterprise
Learning
Benchmarking
Strategic
framework
Controlling of
project portfolio
(innovation
controlling)
Fast
project
realization
Management
of pre-project
phase
Tools
(methods)
Create innovative
environment
Technological Challenges
Managing the
USE of Technology
Rapidly
Changing
Technologies
Slowly
Changing
Technologies
Managing the
CREATION of Technology
Knowledge
Acquisition
Concept
Investigation
Basic
Design
High
Ability
to Influence
Outcome
INDEX OF
ATTENTION
AND INFLUENCE
Actual
Management Activity
Profile
Low
Prototype
Building
Pilot
Production
Manufacturing
Ramp-Up
GROWING
IMPORTANCE
Building
Seamless
Innovation
Processes
180
160
IMPORTANCE
LEVEL
(NEXT 5 YEARS)
140
120
Linking Technology
to Business
Changing Culture
and Values in R&D
Building/Leveraging
Competences
100
80
Managing for
R&D Efficiency
Managing R&D
in a Global World
60
Rethinking
Technology Management DECLINING
IMPORTANCE
40
40
60
80
100
120
140
160
180
200
Technological Progress I
Base
Technology
PERFORMANCE
OF THE
TECHNOLOGY
Key
Technology
Pacemaker
Technology
Technological Progress II
Higher
Potential
PERFORMANCE
OF THE
TECHNOLOGY
Old
Technology
New
Technology
Core Competencies:
Open Markets, Difficult to Imitate
Processes
Core
Competencies
Technologies
Capabilities
Company View
High
High
Competency 1
Competency 5
Market View
Competency 4
Competency 6
Low
Competency 2
Competency 3
Trade
Partnering
Space and
Replenishment
Management
Service
Excellence
Electronic
Data
Interchange
Trade
Marketing
Service
Innovation
Category
Management
Space
Management
Promo
Management
Customer
Partners
Core Competency
End Customer
Delight
Expectation
Trend
Management
Delight and
Loyalty
Measurement
Capabilities
Processes
Sub-Processes
Customer
Database
Resources
Investing
Pilot project
STRATEGIC
RELEVANCE
Optimizing
Observation
Desinvesting
TECHNOLOGICAL MATURITY/
STRENGTH (INTERNAL VIEW)
Technical
core competencies
MarketInformation
flow
Product
platforms
Product groups
Individual products
Market segments
Customer needs
Technology
flow
Vision
IN THE PAST
Platforms
Product family
Individual products
TODAY
Knowledge
Information
Volume
Data
Patent
Secret
Strategy
Valium
Coke
Sony Walkman
Competitive
Advantage
INTELLECTUAL CAPITAL
Human
Resources
STRUCTUAL CAPITAL
Intellectual
Assets
Human
Resources
Intellectual
Assets
Intellectual
Property
Human Capital
Documents
Drawings
Programs
Data
Inventions
Processes
Experiences
Know-how
Skills
Creativity
Intellectual Property
Patents
Copyrights
Trademarks
Trade Secrets
Semiconductor Masks
Unfocused Strategy
Codification Strategy Increase the absolute level of codification
across all dimensions of codification and
knowledge.
Tacitness Strategy
Focused Strategy
For each type of organizational knowledge
decrease the level of codification on those
dimensions of codification which transfer
knowledge fastest and most accurately.
Patent selling,
buying, licensing
Identification of
Patent weaknesses
Infringement of
Patents
Intellectual
Property Management
Patent search
Patent Mapping
with competitors
patents
Patent strategy
Patent abstracts
Patent
writing
Brain Maps
Key Know How holder maps
(competitors)
Clear
Extension
for
Eastman
Technology Push
Technology Risk
Existing Business
MARKETS
Known to
Industry
Unknown
Market to
World
Technology
& Market PushLarge Risk
Market Push
Market Risk
Incremental
for Eastman
New to Eastman
TECHNOLOGY TYPE
Implementation
Project
planning
Market &
Product concept
Detailed specs
Detail Design
Potential influence
Product specifications
and costs
Prototype
Freezing Point /
Release of
tools any jigs
Structured processes
etc.
Types of Innovation:
Cost of Change is Important
High
Aircraft
turbines
Software
Multimedia
electronics
Cars
TECHNOLOGY
INTENSITY
Cosmetics
New restaurant
concept
Low
Low
High
Team
(Heavyweight team)
Specialists
Specialists
Coordination
Management
Rapid
Clear priority
Rapid
Slow
Big control circ
Slow
Project leader
difficult position
Line / Project
Subculture
Spec know-how
Functional
+
_
Stable environment
Integration
Pressure of time
Task-Force
Fire brigade
New business
Independent
Cooperation
or Competition
Independent
with
Influence
Interdependent
Dependent
with
Influence
Dependent
without
Influence
Compliance
Coalition
Direct
Control
Structural
Control
Decentral
R&D
Polycentric
decentralized
R&D
Integrated
R&D Network
Competences
R&D Hub
Model
Tapping
Central
R&D
Ethnocentric
centralized
R&D
Competition
Costs
External
Orientation
Geocentric
centralized
R&D
Cooperation
Strategy
Product
program
Goals
Development
Integration
and test
Production
Introduction
Target Costing
Marketing information system
Creativity techniques
Conjoint Analysis
Pilot
lot
Excitement
Performance
DEGREE
OF
ACHIEVEMENT
Basic
Market
Pull
Market
Requirements
Field Operations
Customers
Product
Management
Product
Creation
Process
Technology
Push
Core
Competencies
Skills
Technologies
Resources
Technology
Management
Product Planning
Harmonization with Field Operations
Resources Check
Idea Backlog
New
Products
Technology Forecasting
Market Strategy
Definition of Future
Core Competencies
Evaluation of
Technology Portfolio
Gap-Analysis
Actions
Road Maps,
R&D projects
Resource
Allocation
R&D
Organization
Human
Resources
Outsourcing
High
Invest
Pilot project
Strategic impact is recognized
Pilot projects with scantly budgets,
High-Risk-High-Impact-Projects
External partner helps to build up
internal competence
STRATEGIC
IMPACT
Optimize
Core Competence, but strategic
impact is medium or rather
decreasing
ROI should be lined up in the
short term
Observation
No budget available
Technology-owner is responsible
Visit exhibitions, congresses
Study magazines
Cooperation with universities
Low
Desinvestment
No competitive advantages
within the next 5 or 10 years
Resources should decrease
and be freed for new
technology potentials
Low
High
INTERNAL RESOURCES
INFORMATION
EXCHANGE
high
COORDINATION
SUPPORT
high
low
high
CREATIVITY
PROMOTION
high
DEVELOPMENT OF
INFORMAL NETWORK
Tacit
Knowledge
High
Va Variants
ria
nt
s
Low
Low
High
INTRODUCTION OF
NEW TECHNOLOGIES
Pearls
PROBABILITY OF
TECHNICAL SUCCESS
10M
REWARD (NPV)
White Elephants
(difficult to kill)
Low
Oysters
Very high
MARKET
RISK
Moderate
Very low
Very low
Moderate
TECHNOLOGY RISK
Very high
Food/Pharm
Project B
Sugar
Cat/Chem
Process
Project D
Project C
Project F
MARKET
SEGMENTS
Nuclear
Drink Water
Industrial
Water
Project E
Other
Defend
Grow
New
Application
New Fundamental
Business
STRATEGIC INTENT
Ecstasy
We have
an order!
Yes
it is!
The
customers
like it!
It
works!
It
works!
New costs
look great
We need help
Documentation
done!
We dont
have enough
resources
The market
estimate
was wrong
and inventory
We have all
the sizes
No, he
loves it
They
need
all the
sizes
Failures in
field trail
and the
approvals
We need
documentation
Its not
proprietary
I have an idea
and orders
Installation
problem!
It
doesnt
always
Despair
Well
make it
We have
a fix
Costs are
too high
Sounds great
They
like it
Costs are
better
Deliveries
are late
Serveral
failures
reported
Time
Japan
Europe
PDC
W-CDMA
Wideband CDMA
GSM
GPRS
UTMS
Universal Mobile Telecommunications
System (same as W-CDMA)
EDGE
TDMA
CDMA
Code Division Multiple Access
1997
1998
1999
2000
CDMA 2000
upgrade
2001
2002
CDMA 3G Standard
2003
Key: 2 G
2004
2.5 G
2005
3G
B2B Marketplace
Buyer 1
Platform 1
Seller 1
Buyer 2
Platform 2
Buyer 3
Buyer 4
Seller 2
Platform 3
Seller 3
Platform 4
Seller 4
Eprocurement
Online
R&D
Suppliers:
Energy
Equipment
Non-core
products
Online
construction
facilitator
E-transmission
control
E-shop
E-monitoring
Online
Meter reading
B2E
E-trading
Risk
manager
online
Information
Exchanger
Customers:
online
billing
Idea webgenerator
Finance
ASP
Online
Customer
Service
Large
Small/Medium
Residential
Network
companies
Energy
producers
Market
forecaster
Marketing
Capacity
broker
Risk
management
Aggregator
Value chain
integrator
E-trade &
auctions
Sales
Billing
Sale agt
price
comparer
Customer
Service
Energy
saver
Energy
purchasing
Product
development
Consumption
analyst
Retail
market
place
Virtual
Community
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Usage rights
1. Drawpack.com allows the customer an unlimited but not exclusive right to
use the provided services, products and diagrams.
2. The services, products and diagrams that the customer has received can
be copied, edited, saved and used by the customer for their personal and
commercial use.
3. The customer is prohibited from providing the service, products and
diagrams on professional download levels in the area of audio, video and
software transmission. This includes providing the services, products and
diagrams via download against payment or free of charge. The customer is
prohibited providing the services, products and diagrams on internet servers
or on websites with public access.
4. The customer is prohibited providing identical or similar services to those
provided on www.drawpack.com with the services, products and diagrams.
5. Any infringements against the above usage rights will lead to legal action.
All rights are reserved to www.drawpack.com