Finding Fertile Ground: Identifying Extraordinary Opportunities for New Ventures
By admin • Jun 30th, 2009 • Category: Business
Finding Fertile Ground: Identifying Extraordinary Opportunities for New Ventures
by: Scott A. Shane
en | Wharton School Publishing
0131423983 9780131423985 9780132044912
Finding Fertile Ground: Identifying Extraordinary Opportunities for New Ventures
By Scott A. Shane
Publisher: Wharton School Publishing
Number Of Pages: 256
Publication Date: 2004-07-29
ISBN-10 / ASIN: 0131423983
ISBN-13 / EAN: 9780131423985
Product Description:
The first complete framework for successful high-tech entrepreneurship! Most efforts at starting a new business fail. But yours can succeed if you find the right market and understand the key success factors. This book shows how. Drawing on compelling new research, Dr. Scott Shane reveals the drivers behind the world’s successful knowledge-intensive startups, and helps you align the same drivers behind yours. Discover how to identify business opportunities that can support high-growth tech-based businesses, and refine your concept for even greater potential. Learn how to predict demand for products that don’t exist yet… measure adoption and diffusion patterns… protect intellectual property… create high barriers to entry… exploit competitors’ weaknesses… manage risk in high-risk ventures… and much more.
Identify your best market opportunity — and be the first to exploit it
Clear, engaging, practical coverage of the challenges unique to high tech startups
Proven solutions for managing risk, innovation, and intellectual property
Based on new research on high-tech success factors by one of the world’s top experts
For every potential entrepreneur, investor, and team member — from biotech to manufacturing, telecom to robotics
Simply put, Finding Fertile Ground gives you the tools you need to beat the odds, win… and win big.
Summary: Almost Worthless Dumbed Down Material
Rating: 2
There is very little in this book that is not obvious.
Essentially the book is a list of don’t. Don’t make a product unless people are willing to buy it. Don’t create a business without a real need. Products don’t sell themselves, etc.
Unfortunately the author gives little guidance on how to determine if your idea fits into any of his don’t. Essentially you are not given the tools you need. If you get it wrong he can say "Well you did not figure out what the customers wanted". True but useless.
There are a couple of things mentioned that may not be obvious to most readers. The impact of technical standards is one example.
I doubt this book will help many people.
Summary: Common Sense Primer for Technology Entrepreneurs Both Aspiring and Established
Rating: 4
Aspiring technology entrepreneurs should pay heed to Scott A. Shane, an economics and entrepreneurship professor at Case Western Reserve University, as he has written a comprehensive, easy-to-absorb primer on how to build a solid foundation for such a venture. Divided into ten chapters, the book covers fundamental factors such as assessing market appetite and focusing on opportunities that others have neglected and then delves into the more challenging areas of diving first into uncharted territory and protecting intellectual property.
The ten sections covered are: (1) industry selection; (2) key market opportunities; (3) evolution of technology; (4) isolation of market needs; (5) customer adoption; (6) exploitation of competitive weaknesses; (7) intellectual property; (8) returns on innovation; (9) organizational structure; and (10) risk and uncertainty. Shane focuses on technology not as a defining factor of the venture but in the broader sense as the primary means toward creating new products, exploiting new markets, finding creative ways of organizing, incorporating new raw materials, and identifying new processes to meet customer needs. Within this schema, he encompasses biologically-based technologies and those related to manufacturing as well as the more traditional realm of information technology.
Through his thoughtful analysis, the author does a compelling job of debunking two common myths. First, he shows that dot-com busts have been less indicative of the inherent risk of online ventures than they have of poor strategy and that new restaurants and retail stores are far riskier alternatives. Second, he illustrates how the us-versus-them mindset people have about entrepreneurs is self-debilitating, i.e., personal characteristics have less to do with successful entrepreneurs than structural factors in explaining performance. With the Horatio Alger legacy indelible in our memories, we have been raised to think special human qualities make entrepreneurs who they are, meaning they represent a special breed who work harder, take greater risk and retain a purer vision. Empirical evidence proves that such qualities are not as important as isolating those valuable opportunities and running with them. In fact, those qualities so admirable at the beginning of a venture can jaundice into counterproductive hubris.
The author also spends a good amount of time on the science of customer adoption and how it takes the form of an S-curve despite what many hope to be a more linear pattern. Accepting the S-curve is critical because it should shape the way an entrepreneur projects the timing of demand, product development and competitive response. The most interesting sections of the book focus on intellectual property protection and the criticality of patents in technology. Overall, Shane has written a valuable textbook for anyone smart enough to ask why versus how to start a new venture and what are the key ingredients to make it successful. Also included is a CD which has a summary of each chapter and an interview with the author.
Summary: The Ten Rules of Technology Entrepreneurship
Rating: 5
“Obviously, something separates successful entrepreneurs from the masses who try their hand at this activity every year. This book identifies the key differences between the successes and the masses – the selection of the right business concept to exploit a valuable opportunity. The central goal of this book is to provide you, as a potential or actual technology entrepreneur, with the tools necessary to identify the right business concept to exploit a valuable opportunity when you establish your business. Of course, the information provided in this book will not guarantee you success in a high-technology entrepreneurship. Much in the same way as having the right form for a jump shot will not guarantee that a basketball player will earn $20 million per year in the NBA, understanding what makes a business a good one for an entrepreneur to start will not guarantee that you, as an entrepreneur, will take a start-up public, replace the leading companies in an industry, or even to profitable. However, understanding the information in this book, and following the rules that it outlines, will dramatically increase the probability of a successful outcome (from the Introduction).”
In this context, Dr. Scott A. Shane divides this excellent study on entrepreneurship into ten chapters as the ten rules of technology entrepreneurship. He defines main idea behind the chapters with the following sentences:
• Chapter 1. Selecting the Right Industry: This chapter focuses on identifying the attributes that make an industry favorable to new firms. The first section provides empirical evidence of the differences in the favorability of different industries to new firms. The subsequent sections each review different dimensions of industry differences that influence the performance of new firms: knowledge conditions, demand conditions, industry life cycles, and industry structure.
• Chapter 2. Identifying Valuable Opportunities: To be successful, you need to start your new business in response to an opportunity to create a new product or service that meets customer needs that have not been satisfied adequately, or that satisfies customer needs in a much better way than established companies satisfy them. So, where do these opportunities come from? What form do they take? How do successful entrepreneurs match opportunities to innovation? How do successful entrepreneurs identify these opportunities? This chapter answers these questions.
• Chapter 3. Managing Technological Evolution: This chapter focuses on explaining several key characteristics of managing the process of technological evolution. The chapter:
- Explains why technologies follow evolutionary patterns that open up discrete points of transition that are valuable for entrepreneurs to exploit
- Describes the S-shaped pattern of technological development and the implications of this pattern for technology entrepreneurs
- Discusses the role of dominant designs and explains how these designs influence competition by entrepreneurial ventures
- Describes technical standards and how entrepreneurs can use strategic action to focus them around their products and services
- Explores increasing returns businesses, explaining both why increasing returns businesses exist, and how entrepreneurs should approach those industries to be successful
• Chapter 4. Identifying and Satisfying Real Market Needs: It explains how successful entrepreneurs go about identifying customer needs for high technology products and services in ways that go beyond the traditional market research methods of surveys and focus groups. The chapter provides insight into why and how the advantages of successful new firms lie in product development rather than in manufacturing or marketing. Finally, the chapter explains how successful technology entrepreneurs identify the key decision makers in purchasing decisions, as well as how these entrepreneurs price their new products and services to make them attractive to these decision makers.
• Chapter 5. Understanding Customer Adoption: This chapter focuses on some requirements that you need to meet if you are interested in securing customer adoption of your new products and services. You need to understand the likely distribution of adopters of their products and services to target their customer base effectively. You need to follow particular strategies to transition from innovators to the majority of the market. You need to select the right segment of the market on which to focus to transition to the majority of the market. You need to assess the size and growth rate of the markets that you are entering. You need to pay attention to the factors that affect the rate of influence diffusion and substitution of new technology products and services.
• Chapter 6. Exploiting Established Company Weaknesses: This chapter identifies the specific weaknesses of established companies, and explains how you can go about exploiting them.
• Chapter 7. Managing Intellectual Property: This chapter:
- Discusses basic ideas behind appropriating the returns to innovation
- Explains why it is so easy for established firms to imitate the entrepreneurs’ new products and services, laying the groundwork for understanding why it is important to develop a plan for deterring imitation
- Discusses one of the most important parts of a plan for deterring imitation – the management of secrecy
- Discusses another important part of a plan for deterring imitation – the use of patents as a legal barrier to imitation
• Chapter 8. Appropriating the Returns to Innovation: This chapter discusses several ways to capture the returns to introducing new products and services, including obtaining control over resources, establishing a reputation, exploiting learning curves, becoming a first mover, and exploiting complementary assets in manufacturing, marketing, and distribution. Each of the sections discusses the conditions under which one of these approaches is effective.
• Chapter 9. Choosing the Right Organizational Form: This chapter explains when you are best off owning the various parts of the value chain, such as product development, manufacturing, and distribution, and when you are best off using market-based mechanisms, such as licensing, franchising, and strategic alliances, to control them.
• Chapter 10. Managing Risk and Uncertainty: This chapter:
- Explains how successful entrepreneurs manage uncertainty in the process of developing new technology companies
- Describes the problems that uncertainty imposes on new technology companies
- Explains why you must either reduce uncertainty or give shareholders a greater portion of returns as a way to manage the start-up problem
- Discusses the risk reduction strategies that you should employ
- Talks about the approaches you can use to reallocate risk to those better able to bear it
- Discusses the strategies that you can use to manage perceptions of risk
- Identifies two tools that you can use to manage risk: real options and scenario analysis
- Explains how you can convince stakeholders to bear risk for you
Strongly recommended
Summary: Read While You’re Thinking of Starting a Business
Rating: 5
I haven’t quite decided what to think of this book.
On the one hand, I believe he is quite right in saying that starting a computer software company that makes the Inc 500 is 823 times higher than the odds of starting a hotel that made the list. On the other hand I also believe he is correct when he says that you should understand the ground rules of the business you are entering. There’s a new Mexican restaurant a couple of blocks away. The owners are a man and wife recently come to our country. His chances of starting a software company are pretty slim. But they do good Mexican food. So far his restaurant looks to be quite successful.
This book contains information that would be of value to anyone thinking of starting a business, but it is really oriented to the technology fields. It presumes that you have some capability in some technology area. Perhaps as a computer type you might want to think of bioinformatics software rather than yet another word processor.
This book is excellent on how to evaluate technology opportunities. His chapter on managing intellectual property is hands down the best I’ve ever seen. His explanation of ‘crossing che chasm’ from the early adoptors to the mainstream user is very good.
The book, unusual for a business book contains a CD. On the CD is a short (20 minute or so) summary of the book. This gives you a good understanding of what you will be reading. And there is a discussion between Dr. Shane and a business leader on the overall concepts of the book.
I wouldn’t suggest you start a business without reading this book. Unless of course you don’t read English very well but you do cook good Mexican food.
Summary: Required reading if you are looking at a technology oriented venture
Rating: 5
The entrepreneurial spirit is alive and well in America. This is true even while forty percent of new businesses close in under a year and only twenty five percent make it to their eighth year. What determines which ones will be successful? While it is partly management skill and other business acumen it also depends in great part on picking the right venture. The purpose of this book is to help the reader find the right venture in the technology arena.
Throughout the book there are many instances of excellent advice condensed to only a few sentences in sidebars. The focus is on finding the right business instead of how to manage it or how to start it or similar information typically found in such books. The author’s point is well made when he states that reality dictates that a biotechnology firm simply has a better chance of success than a restaurant. But even within the technology arena many other factors must be considered including mature industries, competition, concentration of large companies, and others. This is truly a book about how to find and how to evaluate a potential opportunity in the technology field. For those looking to start a venture in the technology arena Finding Fertile Ground is required reading.
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