M3-S2 - Session notes

Tech innovation risk dimensions

• Assess risks in different areas:
  • Probability of technical completion
  • Probability of commercialisation
  • Probability of economic profit

Multiply probabilities to get probabilty of succes.

Tech innovation project success rates:

• Depending on the degree of innovation litte chance for success

Examples from Biotech: very little chance of success and very big losses.

In practice pharma owns the market and sales channels. Biotech companies get the 'risk' part of the deal and Pharma owning the sales channel gets the 'reward'

Cash implications of technology

• Common tech venture challenges
  • Basics
  • Under-estimate, over-estimate cash requirements
  • Absence of 'Unfair advantage'
  • Too late, too early
  • Bumped off teh adoption life cycle: fall into the 'chasm'
  • Not offering a whole product
  • One-product wonder

Whole product:

• Generic product
• Expected product
• Augmented product
• Potential product

With respect to dealing with risk & return see also Innovation portfolio. In a startup company where do you start? How far 'breakthrough' would you like your new product be?

Entrepeneurs are risk takers??

• Entrepreneneurs do not have a higher willingness to knowingly take risks thyan the general population
• Perceive risk differently than the general population
• Lower perception of risk

"Entrepenuers do not need a greater willingness to take risks if they do not perceive the riskiness of their act"