M3-S6 - Session notes
- Idea generation
- Conceiving
- Exploring
- Shaping
- Conversion
- Screening
- Funding
- Development
- Diffusion / Exploitation
- Entry
- Chasm cross
- Exploitation
- Leverage
Value creation only happens in diffusion / exploitation. Eric Wood suggested to turn the whole phasing around: first enter to the market and get some customers with someone else product. Example was a scientist with unique bio product, started with competitors product to get customers. Moving on from there.
Some propositions for consideration: P1: Value creation potential is only as good as the weakest link in your innovation / entrepreneurship value P2: The most commonly neglected component is the last which is also the most important for value creation P3: Limiting the number of projects at the conversion stage is even more important for an entrepreneurial venture P4: The failure to recognize flawed assumptions is the single greatest constraint on value creation. P5: A primary task of managers and entrepreneurs is to create an environment in which flawed assumptions are likely to be recognized quickly and acted on appropriately
Exploit before you explore "As a strategy the gold medalist consistently chose to pursue exploitation over exploration initiatives" "... Henry Wellcome... wanted to make name for himself as a medical pioneer" "... the first of many occasions that the firm exploited someone else's invention" "... a me-too product like Zantac could never win more than 50% of the market... Galxo decided to put a price premium to stress its superiority over Tagemet" "... once again buying, rather than buildling its pipeline.
"Risk to value creation in the portfolio" Three mechanisms:
- Duplication
- Do not pursue projects that are too similiar, possibly competing for resources
- Omision
- Gap's in execution (marketing, development): you need every function
- Alignment
- Product does not solve a 'customer pain'
Realistic goals for a disciplined portfolio approach
- Greater formalization of strategic purpose, priorities, and project selection criteria, desirable project characteristics
- Improved communication of these
- More effectively manage expectations of project stakeholders
- Highlight dangers of project overload & non-availability of critical resources
- Highlight imbalances, gaps
- Presever resources for 'special case' projects
- Highlight need to reexamine strategic purpose
- Improve team cooperation, commitment
- But selection process:
- Wil not be scientific or objective
- Must leave scope for management judgement
Portfolio techniques
- Value maximization
- Balance alignments
- Strategic methods
- Yime & Resources
- Risk & Reward (bubble)
- Scoring
- The danger is that these techniques are killing the conversion
Method perspective
- Strategic methods
- Financial methods
- Scoring model
- Bubble diagrams
40% of businesses only use financial methods (Cooper et al 2001)
Consideration in the selection the method
- Simplicity
- Ease of use
- Suspectability to manipulation
- Usefulness for drawing in different perspective
Weighted Scoring Method Capable of incorporating
- Market attractiveness
- Timing
- Risks
- Company Competence
Summary:
- Preserve resource for exploitation
- Displined portfolio metohds need to focus on improving conversations
- Do not only use financial methods
