MG647 Innovation and Entrepreneurship
Sources of Business Opportunities - 3
Prof . Rajendra K Lagu School of Management IIT Bombay
Viable Business Proposition
• Some product or service that delivers “Value” to a set of customers • “Value” is a customer-centric (outside-in) perspective • Think like a customer – put yourself in the “customer’s shoes” • Think Bottom-up and Top-Down • Top Down: Market split in market segments • Bottom Up: Set of customers grouped to a market segment
3.1 Prof . R.K.Lagu Sources of Business Opportunities 3.2
Prof . R.K.Lagu
Sources of Business Opportunities
Pitfalls in Customer Feedback
• • • • • Customers may simply not know (Walkman, Palmtop) Customers may have difficulty comprehending or they may misunderstand (Building a prototype helps) Customers may not have time (attention-scarce economy) Customers may bluff for a variety of reasons Getting detailed feedback will be too expensive
Entrepreneur as a Visionary must Anticipate
• • • • • • Analyze all the changes that are happening in the target market Estimate the time constants of changes – fast or slow Worry about the fickleness of customer tastes (especially fashions, movies) Make reasonable guesses Validate your hypotheses at each stage as new field data arises Study human psychology or consumer behaviour
Sources of Business Opportunities 3.4
Prof . R.K.Lagu
Sources of Business Opportunities
3.3
Prof . R.K.Lagu
Change as a Source of Opportunity
• Status-quo is good for incumbent players (established companies) – they have products or services, smooth operations, established business models, loyal set of customers, functional teams …… Change brings in disruption – that in consumer tastes, cost structures, business models, expectations, level of expertise needed, distribution channels, payment mechanisms, availability of finance Change produces a level-playing field which is actually loaded in favour of a new player because of his flexibility, adaptiveness
Sources of Business Opportunities 3.5
Examples of Entrepreneurs Exploiting Change
• • • • • Japanese car manufacturers (1973) Microsoft (1976-78) Yahoo (1990s) Amazon and Dell (1990s) Infosys (1989)
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Counterexample Google
Prof . R.K.Lagu Sources of Business Opportunities 3.6
Prof . R.K.Lagu
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Broad Categories of Change
• • • • • Demographic – whole population (age distribution) Economic – Emerging markets Socio-Cultural -- Value systems, role models Technological -- Variety, performance, cost Political – democratic, authoritarian/totalitarian regimes. Free market vs socialistic policies (Britain in early 1980’s) Legal and Regulatory -- liberalization (internal and external), enforcement of IP protection laws
Sources of Business Opportunities 3.7
Demographic Changes
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Prof . R.K.Lagu
Median age Working population as the % of total population Life expectancy Healthcare and Social Security Needs Urban-Rural Ratio Literacy Male-Female ratio
Sources of Business Opportunities 3.8
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Prof . R.K.Lagu
Socio-Cultural Changes
• • • • • • • Value systems -- globalization and local assertions Accepted norms of behaviour Approach towards sexuality Role of religion and spirituality Pursuit of expertise, knowledge, wealth, possessions Aspirations, fears, desires, anxieties Measure of “time” – attention span, priorities, conveniences
Sources of Business Opportunities 3.9
Technological Changes
• Availability and wide-spread assimilation of technology
– Information Technology and it pervasiveness
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Costs and disposable incomes Performance, variety, ease of acquisition Cross applications – interdisciplinary developments Comfort level of technology usage Examples: CD ROM drives and mobile phones
Sources of Business Opportunities 3.10
Prof . R.K.Lagu
Prof . R.K.Lagu
Economic Changes
• • • • • • • Gross Domestic Product and Per Capita Income Level of exports and imports Inflation and interest rates Availability of credit at all levels Size of the middle class Various growth rates – industrial growth, productivity growth, exports growth Level of unemployment
Sources of Business Opportunities 3.11
Political and Regulatory Changes
• • • • • • Transition from centrally planned to market economy (India, 1991) Transition from communism to “market socialism” (China, 1978-1980) Regulated, protected, closed economy No IPRs (copyrights, patent laws) Contract Enforcement and right to property Labour and land reforms
Sources of Business Opportunities 3.12
Prof . R.K.Lagu
Prof . R.K.Lagu
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India in the New Millennium
• • • • • • “Young” country with rising literacy and prosperity GDP growth rate of 6-7 % per annum Growing middle class Liberal, business like values, tolerant to sexuality, pursuit of wealth Role of Religion ?? High unemployment, imbalance in the development
India in the New Millennium
• • • • Passages of IP laws (new patent regime) Respect in the global community (functional democracy) Atmosphere conducive to business -- no xenophobia, no insularity, no misplaced importance to “self-reliance” Well developed “Institutions” – judiciary, capital markets, stock exchanges, media (free and independent), educational institutions, regulatory bodies (SEBI, FDA, ISI) Great place to be for entrepreneurs
Sources of Business Opportunities 3.14
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Prof . R.K.Lagu Sources of Business Opportunities 3.13
Prof . R.K.Lagu
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