How to evaluate a market opportunity

Here is a framework I have been developing over the past year to help identify a possible market opportunity and its potential.

General Market Overview

Country Profile

Geographical Location

Economic Situation

Industry Trends

- market size

- growth/decline

- industry shift/focus

- Total Addressable market versus Total available market

Industry Leaders

- market share (graphs)

PEST

Porters’ Five Forces

Demographic Breakdown

The Population ?

Market Size and Structure in particular industry

Market Size by value (€) and forecasts

Breakdown by sector

Channels of Distribution

Comment on importance of other factors

TALC position & consequence

Company Overiew

Name, Sectore, Location, Directors, Sales by Market, Key customers

Offering

Product/Service Offering

Type of clients

How do they sell their product

Who are the main competitors in the existing markets

Value proposition/unique selling point

Core competency definition (tools)

Competition from other manufacturers in the market (ranked by turnover)

Name

Contact Info.

No. Employees

Turnover

Market share

- description/key points to note

Critical Success Factors

KPI

Competitive Analysis

SWOT versus Competition

Tendency to Buy Matrix

http://www.brs-inc.com/models/model6.asp

Market Development Strategy Checklist

- Commercialisation tool

Competitor Scan (proj comm. tool)

Competitor analysis framework (proj. comm.. tool)

Competitor array (proj. comm.. tool)

Profiles of Key distributers

Executive Summary and Recommendations

The marketing mix (project comm. Tool)

Marketing communications mix (DDART)

Customer profiles (project comm. Tool)

- customer attitudes (project comm.. tool)

Whole product solution (DDART)

Positioning statement (DDART)

Partnership give/get matrix (DDART)

Economic analysis?(DDART)

Nine point strategy checklist? (DDART)

Define the competitive reason to buy (Tools)

Reality test (DDART)

Analysis 5 forces (DDART)

Countering Adoption Risks (tools)

Perfect Competition

Was embarrased I couldn't recall exactly this was earlier, I had first learned it while preparing for school exams. Here is a refresh for you:

Perfect competition is an economic model that describes a hypothetical market form in which no producer or consumer has the market power to influence prices.

Perfect competition requires that the following five parameters be fulfilled. In such a market, prices would normally move instantaneously to equilibrium. However, perfect competition does not rule out economic bubbles, in which the concept of equilibrium prices is not meaningful.

Atomicity
An atomistic market is one in which there are a large number of small producers and consumers on a given market, each so small that its actions have no significant impact on others. Firms are price takers, meaning that the market sets the price that they must choose.

Homogeneity
Goods and services are perfect substitutes; that is, there is no product differentiation.

Perfect and complete information
All firms and consumers know the prices set by all firms (see perfect information and complete information).

Equal access
All firms have access to production technologies, and resources (including information) are perfectly mobile.

Free entry
Any firm may enter or exit the market as it wishes (see barriers to entry).

The model is in most cases only a distant approximation of real markets, with the possible exception of certain large street markets. In general, few, if any of the conditions listed above will apply in real markets. For example, firms will never have perfect information about each other, and there will always be some transaction costs. In a perfectly competitive market, there will be both allocative efficiency and productive efficiency.

• Allocative efficiency occurs when price (P) is equal to marginal cost (MC), at which point the good is available to the consumer at the lowest possible price. It describes an allocation of resources such that no possible reallocation could make one agent (producer or consumer) better off without making at least one other agent worse off.
• Productive efficiency occurs when the firm produces at the lowest point on the average cost curve (AC), implying it cannot produce the goods any more cheaply. This would be achieved in perfect competition, since if a firm was not doing it another firm would be able to undercut it by selling products at a lower price. Achievement of a specific level of output or objective using the most cost-effective means

In contrast to a monopoly or oligopoly, it is impossible for a firm in perfect competition to earn abnormal profit in the long run, which is to say that a firm cannot make any more money than is necessary to cover its costs. If a firm is earning abnormal profit in the short term, this will act as a trigger for other firms to enter the market. They will compete with the first firm, driving the market price down until all firms are earning normal profit. On the other hand, if firms are making a loss, then some firms will leave the industry, reduce the supply and increase the price. Therefore, all firms can only make normal profit in the long run.

Example:
A number of strawberry stands opposite each other on a road selling punnets of strawberries freshly picked by their attendant from the nearby field.

"If we build they will come"

The idea that the superior product will win out in the marketplace pervades much of the product development literature (e.g., Cooper 1987; Gruenwald 1985; Kleinschmidt and Cooper 1991). However, the history of technology is full of examples that contradict this notion.

Sony's BetaMax, considered by many to be a better
machine (Perry 1988; Cusumano, Mylonadis, and Rosenbloom 1992), lost the market to the VHS format videocassette player largely due to not meeting the needs of consumers. Similarly, compact disk technology provides unparalleled sound reproduction capabilities, including increased dynamic range. Yet, for many consumers, louder highs and softer
lows were a nuisance. Soon, compact disk players incorporated a 'CD-r' button, to provide for a reduction in dynamic range for certain listening environments such as automobiles. This ironic situation shows how product attribute superiority does not always lead to customer satisfaction.

So the lesson seems to be, If we build what they want they will come.

The Whole Product Example - VHS versus BetaMax

"The whole product" model also provided a convincing explanation of why VHS had thrashed Betamax. VHS offered a bigger choice of hardware at lower cost, the tapes were cheaper and more easily available, there were a lot more movies to rent, and so on. That is they had a better whole product offering.

If you were to take yourself out on the high street to pursue the latest video you would see VHS recorders more readily available to rent, while the video shop would have three walls of VHS movies and only one for Betamax.

Indeed, the main thing that didn't fit was the idea was that Betamax was "technically superior". SLooking at the two,there was absolutely no visible difference in picture quality, and some reviews had found that VHS's quality was superior.

Many "knew" Betamax was superior -- that was the received wisdom, even at the time - and maybe it was, in a lab. But no one was buying a lab test rig. In terms of "the whole product", VHS was clearly superior, so that's the way the customer went. Along with everybody else.

Betamax had owned the market, but lost it because Sony got one simple decision wrong. It chose to make smaller, neater tapes that lasted for an hour, whereas the VHS manufacturers used basically the same technology with a bulkier tape that lasted two hours (What do you think the customer wanted?). Instead of poring over the sound and picture quality, reviewers could simply have taken the systems home. Their spouses/children/grandparents and everybody else would quickly have told them the truth. "We're going out tonight and I want to record a movie. That Betamax tape is useless: it isn't long enough. Get rid of it."

Betamax was the first successful consumer video format, and at one time it had close to 100% of the market. All of the video machines in use and all of the pre-recorded movies were Betamax. It had a de facto monopoly, and an element of lock-in (because of tape incompatibilities). It lost because, at the time, it could not do what consumers wanted: record a whole movie unattended. And although Betamax playing times were extended, they never caught up with VHS.

Other elements of the oft-repeated Betamax story are also wrong. For example, while Sony was certainly slow to bring in other manufacturers, it had tried to license it to rivals such as JVC before VHS was even launched. Betamax was not generally more expensive: Sony had to slash its original high prices but generally it was competitive. Indeed, after it had lost the market, Betamax machines were often cheaper than VHS ones.

And at the beginning, there was no comparative shortage of Betamax movies to rent: actually, they were all Betamax.

Even if Betamax had been "technically superior", it wouldn't have mattered. VHS users have long had the chance to upgrade to the compatible SuperVHS format with superior picture quality. But rather than demanding better pictures for today's TV sets, consumers have shown more interest in LP (Long Play) modes that reduce the picture quality to provide longer recording times.

VHS won because "the whole product" did what people wanted at a price they were willing to pay. And when people use the VHS v Beta analogy, they are not indicating a market failure but their own ignorance.

While being technologically driven is essential, managers must remember whose perceptions of superiority ultimately lead to product success. It is imperative that the customer deems the product "superior".

The Whole Product

No geeks, have ever come across the concept of "the whole product", though it is well known to marketing people. Real people may not be aware of it, but the "whole product" model is an accurate description of the way they buy things.

When someone buys a Wintel(Windows Intel) PC, they are buying the ability to choose from dozens of models from hundreds of hardware suppliers, or have one built to order, or build one themselves. They are buying the ability to access hundreds of peripherals, hundreds of thousands of applications, and millions of websites that work best with their system.

The point is that when someone buys and uses a product, the technological aspects are a small and often uninteresting part of the decision, whether this be conscious or not. When you choose a new computer, you are also buying into a vast infrastructure of capabilities, services and support. These include the availability of cheap software on every high street, cheap hardware additions, and the ability to use the same format as your friends (to save a file and have it compatible elsewhere, or send it via email to another computer without problems), the ability to buy hardware such as a printer and know it will just work.

They are buying the choice of hundreds of magazines, thousands of books, and all the supporting services from educational courses to repair shops.

They are also buying the confidence that their system will keep progressing even if individual manufacturers fail.

In marketing terms, "the core product" - such as a car, a computer, or a video recorder - is just the start. You have to add on all the things like reliability, service and support (the expected product), its expansion capabilities (the augmented product), and its potential for future development (the potential product) to get "the whole product".

Since real people make real buying decisions based on "the whole product" (and if they didn't, we'd change the model), simpleminded comparisons of products by technological feature are very likely to get it wrong.

This model by Geoffery Moore in Crossing the Chasm was introduced to me last year as part of my masters degree course in ICT entrepreneurship. I have applied it where possible ever since.

Critical Mass

Heard this word in a business sense for the first time so I decided to look into it a little more.

"Critical mass is the minimum amount (of something) required to start or maintain a venture;
"the battle for the computer market has now reached critical mass";
"there is now a critical mass of successful women to take the lead";
"they sold the business because it lacked critical mass" ;
Factors involved in critical-mass considerations for technological management include the number of research programs and number of graduate students;

Therefore it is the scale or volume at which processes become self-perpetuating. The minimum size of a firm thought necessary to compete effectively.

Disruptive innovations - Friend or Foe

Ok, so I'm going to change direction now and look at two forces steerining the broadband internet.
File sharing and VOIP(Voice over internet protocol).
File Sharing
It wasn't until 2001 that filesharing really hit home with the emergence of Kazza by Niklas Zennström and Janus Friis. Pre 2001 napster reigned supreme. This service alloed users to download music for free from the internet. Though this was a form of file sharing it wasn't filesharing as we know it today. With napster all files were located on a central server and had to be downloaded from this central server. The further you were located on the internet the longer it took to download the file. Furthermore the more users requesting from the central server the more congested it became and slower. With P-2-P(peer to peer) technology, pioneered by Kazaa, users could now share amongst themselves directly excluding the centralised server. This meant the shortest path to the nearest user was utilised rather than going all the way to the central server.
VOIP
This technology was then utilised in the VOIP software Skype, from the same inventors. This meant that users could transmit voice data directly over an internet connection without the voice having to travel to a centralised location as in Kazaa. This allowed the voice to maintain utmost quality and allowed the network scale quickly as there was no need to augment a centralised location.
Disruptive innovations
These two offerings are what we refer to as disruptive innovations. A new technological innovation, product, or service that eventually overturns the existing dominant technology or product in the market.

"Disruptive innovations can be broadly classified into lower-end and new-market disruptive innovations. A new-market disruptive innovation is often aimed at non-consumption, whereas a lower-end disruptive innovation is aimed at main stream customers who were ignored by established companies. Sometimes, a disruptive technology comes to dominate an existing market by either filling a role in a new market that the older technology could not fill (as more expensive, lower capacity but smaller-sized hard disks did for newly developed notebook computers in the 1980s) or by successively moving up-market through performance improvements until finally displacing the market incumbents (as digital photography has begun to replace film photography).

By contrast, sustaining technology or innovation refers to the successive incremental improvements to performance that market incumbents incorporate into their existing product."

The dominant player in the Kazaa case would be the Movie Industry as Kazaa allowed a new method of accessing movies free of charge. While the dominant player in the Skype case would be the Telcos.

An interesting rebuke from Zennstrom when asked about the legality of his software:
"When radio stations started playing music the record companies started suing radio stations. They thought now that people could listen to music for free, who would want to buy a record in a record shop? But I think we all agree that radio stations are good stuff.

"And the VCR did the same thing: the movie industry thought nobody would ever watch movies any more.

"But that technology enabled the movie industry to make much more revenue. The single largest revenue source for the movie industry is videos."

In a similar way fax machine companies might have wanted to sue the makers of email as the telegraph users wanted to sue the makers of the fax machine.
These disruptive innovations will always continue to develop and enrich our daily lives. They are intended to bring benefits to the user and because they can do this better and more cost-effictively than the incumbents, the incumbents become unnerved. They don't want to lose their dominat position to a technolgy that is superior to theirs. This is ofcourse a natural reaction on their behalf but what would have happened if the movie industry had won their lawsuit against the VCR companies or the music industry had won against the radio broadcasters. Develeopment and progression would have suffered and we would have had it alot more boring!
In the end with these innovations everyone wins, only the incumbents can't sit back in their dominant position. They are forced to change their offering or business model so it can fit with the new innovation. The new innovation can even serve as a new element of their business model. For example, how radio allows users to "buy now" the song they have just heard or how the major bulk of money for the movie industry in generated through videos.

Critical Success factors Versus Key Performance Indicators

As part of any balanced score card strategy evaluation one needs to have both objectives to be fulfilled and measurements of performance.

Critical Success Factor
CSF is a term for an organisation or project to achieve its mission. For example, a CSF for a successful Information Technology (IT) project is user involvement. A company may use the critical success factor method as a means for identifying the important elements of their success.

They are those things which must go right for the organisation to achieve its mission.

The advantages of identifying CSFs are that they are simple to understand; they help focus attention on major concerns; they are easy to communicate to coworkers; they are easy to monitor; and they can be used in concert with strategic planning methodologies. Using critical success factors as an isolated event does not represent critical strategic thinking. But when used in conjunction with a planning process, identifying CSFs is extremely important because it keeps people focused.

Clarifying the priority order of CSFs, measuring results, and rewarding superior performance will improve the odds for long-term success as well.

Things that are measured get done more often than things that are not measured.

Each CSF should be measurable and associated with a target goal. You don't need exact measures to manage. Primary measures that should be listed include critical success levels (such as number of transactions per month) or, in cases where specific measurements are more difficult, general goals should be specified (such as moving up in an industry customer service survey).

Example of Critical Success factors for Company XYZ:

Critical Success Factor	Source of CSF	Primary Measures & Targets
1. Increase # of customers	Industry	95% customer retention rate; 15% new customers per yr
2. Instal PC-based customer service ...hot line	Strategy	90% of customer queries answered in 1 hour
3. Increase # customer service reps	Strategy	3 reps per 100 customers
4. Restructure capital structure	Environmental	Lower cost of capital by 2%
5. Raise employee morale and ...productivity	Temporal	Increase employee retention rate to 95% / yr.

When setting standards, raising standards often raises results (and the reverse is also true).

A critical success factor is not a key performance indicator or KPI. Critical Success Factors are elements that are vital for a strategy to be successful. KPIs are measures that quantify objectives and enable the measurement of strategic performance.

For example: KPI = number of new customers CSF = installation of a call centre for providing quotations

For example: Mission = "Increase Average Revenue per Customer from £10 to £15 by EOY 2008" CSF="Reduce costs per customer" KPI = 'Average Revenue Per Customer'

KPIs are typically tied to an organization's strategy (as exemplified through techniques such as the Balanced Scorecard).

Categorising the KPIs

Key Performance Indicators define a set of values used to measure against. These raw sets of values fed to systems to summarize information against are called indicators. Indicators identifiable as possible candidates for KPIs can be summarized into the following sub-categories:

• Quantitative indicators which can be presented as a number.
• Practical indicators that interface with existing company processes.
• Directional indicators specifying whether an organization is getting better or not.
• Actionable indicators are sufficiently in an organization's control to effect change.

How it works

For each CSF, Key Performance Indicators (KPI’s) are identified to measure progress in achieving the objectives.
For each KPI, targets and actions can be aligned and assigned to ensure activity is focused on delivering the objectives.
Initiatives can be identified which will enable the targets to be achieved.

The BSC revisited -Customer Perspective

Kaplan and Norton do not disregard the traditional need for financial data. Timely and accurate funding data will always be a priority, and managers will do whatever necessary to provide it. In fact, often there is more than enough handling and processing of financial data. With the implementation of a corporate database, it is hoped that more of the processing can be centralised and automated. But the point is that the current emphasis on financials leads to the "unbalanced" situation with regard to other perspectives.

There is perhaps a need to include additional financial-related data, such as risk assessment and cost-benefit data, in this category.

The BSC revisited -Customer Perspective

Recent management philosophy has shown an increasing realisation of the importance of customer focus and customer satisfaction in any business. These are leading indicators: if customers are not satisfied, they will eventually find other suppliers that will meet their needs. Poor performance from this perspective is thus a leading indicator of future decline, even though the current financial picture may look good.

In developing metrics for satisfaction, customers should be analysed in terms of kinds of customers and the kinds of processes for which we are providing a product or service to those customer groups.

The BSC revisited - Business Processes Perspective

This perspective refers to internal business processes. Metrics based on this perspective allow the managers to know how well their business is running, and whether its products and services conform to customer requirements (the mission). These metrics have to be carefully designed by those who know these processes most intimately; with our unique missions these are not something that can be developed by outside consultants.

In addition to the strategic management process, two kinds of business processes may be identified:

a) mission-oriented processes. Mission-oriented processes are the special functions and many unique problems are encountered in these processes.

b) support processes. The support processes are more repetitive in nature, and hence easier to measure and benchmark using generic metrics.

The BSC revisited - Learning Perspective

This perspective includes employee training and corporate cultural attitudes related to both individual and corporate self-improvement. In a knowledge-worker organization, people -- the only repository of knowledge -- are the main resource. In the current climate of rapid technological change, it is becoming necessary for knowledge workers to be in a continuous learning mode. Government agencies often find themselves unable to hire new technical workers, and at the same time there is a decline in training of existing employees. This is a leading indicator of 'brain drain' that must be reversed. Metrics can be put into place to guide managers in focusing training funds where they can help the most. In any case, learning and growth constitute the essential foundation for success of any knowledge-worker organization.

Kaplan and Norton emphasize that 'learning' is more than 'training'; it also includes things like mentors and tutors within the organization, as well as that ease of communication among workers that allows them to readily get help on a problem when it is needed. It also includes technological tools; what the Baldrige criteria call "high performance work systems." One of these, the Intranet, will be examined in detail later in this document.

The Balanced Score Card

It was only last night when I was having a heated discussion about how an organisation should fulfill its strategies when I was introduced again to the term 'balanced score card'. I had heard it previously through my workings with AIESEC but hadn't really looked into it in too much depth. Looking into I realised I had implemented many of its elements in my previous projects, but never knew that there was a formalised method as such. Hmmm, Little did I know.

Balanced scorecard

This is a concept for measuring a company's activities in terms of its vision and strategies. Helping it adhere to its startegic management objectives and gain a clear prescription as to what should be measured in order to 'balance' the financial perspective.

• It gives managers a comprehensive view of the performance of a business.

• It is a strategic management system that forces managers to focus on the important performance metrics that drive success.

• It balances a financial perspective with customer, internal process, and learning & growth perspectives.
  

The system consists of four processes:
1. Translating the vision into operational goals;
2. Communicate the vision and link it to individual performance;
3. Business planning;
4. Feedback and learning and adjusting the strategy accordingly.

A Comprehensive view of business performance

The scorecard seeks to measure a business from the following perspectives:

+ Financial perspective - measures reflecting financial performance, for example number of debtors, cash flow or return on investment. The financial performance of an organization is fundamental to its success. Even non-profit organisations must make the books balance. Financial figures suffer from two major drawbacks:
o They are historical. Whilst they tell us what has happened to the organization they may not tell us what is currently happening, or be a good indicator of future performance.
o It is common for the current market value of an organisation to exceed the market value of its assets. Tobin's-q measures the ratio of the value of a company's assets to its market value. The excess value can be thought of as intangible assets. These figures are not measured by normal financial reporting.

+ Customer perspective - measures having a direct impact on customers, for example time taken to process a phone call, results of customer surveys, number of complaints or competitive rankings.

+ Business process perspective - measures reflecting the performance of key business processes, for example the time spent prospecting, number of units that required rework or process cost.

+Learning and growth perspective - measures describing the company's learning curve -- for example, number of employee suggestions or total hours spent on staff training.

The specific measures within each of the perspectives will be chosen to reflect the drivers of the particular business. The method can facilitate the separation of strategic policymaking from the implementation, so that organisational goals can be broken into task oriented objectives which can be managed by front-line staff.
It can also help detect correlation between activities. For example, we might find that the internal business objective of implementing a new telephone system can help the customer objective of reducing response time to telephone calls, leading to increased sales from repeat business.

You can't improve what you can't measure

So metrics must be developed based on the priorities of the strategic plan, which provides the key business drivers and criteria for metrics that managers most desire to watch. Processes are then designed to collect information relevant to these metrics and reduce it to numerical form for storage, display, and analysis. Decision makers examine the outcomes of various measured processes and strategies and track the results to guide the company and provide feedback.

So the value of metrics is in their ability to provide a factual basis for defining:

• Strategic feedback to show the present status of the organisation from many perspectives for decision makers
• Diagnostic feedback into various processes to guide improvements on a continuous basis
• Trends in performance over time as the metrics are tracked
• Feedback around the measurement methods themselves, and which metrics should be tracked
• Quantitative inputs to forecasting methods and models for decision support systems
  

Some Useful Liks on implementing the BSC

http://www.2gc.co.uk/pdf/2GC-PS050616.pdf

http://www.2gc.co.uk/pdf/2GC-RSS.pdf

http://www.2gc.co.uk/pdf/2GC-SMESME.pdf

http://www.2gc.co.uk/pdf/2GC-BSCEVA.pdf

http://www.2gc.co.uk/forum/viewtopic.php?t=75

Cross Functional teams

We mentioned this buzz word in the previous post. But what exactly are they?

A CFT consists of a group of people working toward a common goal and made of people with different functional expertise. It could include people from finance, marketing, operations, and human resources departments. Typically it also includes employees from all levels of an organization. Members may also come from outside an organization (in particular, from suppliers, key customers, or consultants). They respond to broad objectives, but not to specific directives. A non-business yet good example of cross-functional teams are music bands. Songs are the result of collaboration and participation, and the goals are decided by consensus.

Strategic management

Ever since my switch from a strictly technically mindset to a more business and "entrepreneurial mindset" one of the areas I have been most interested in is strategic management.
For those of you not familiar with this term, it is

the managerial process of forming a strategic vision, setting objectives, crafting a strategy, implementing and executing the strategy, and then over time initiating whatever corrective adjustments in the vision, objectives, strategy, and execution are deemed appropriate to keep the operations aligened to the startegy or to change the strategy to fit best external factors.

Strategic management is necessary for every company whether a startup or a global corporation. It can even used to help steer projects (school, work) to succes.
Usually employed by the team leader/CEO/Managing Director, it provides the overall drection to the whole enterprise.
The last part of the definition is important, "to change the strategy to best fit external factors". Having a great strategy is only half the battle, keeping it great is the second half. And you don't always have control of that. Enterprises can fail despite 'excellent' strategy because the world changes in a way they failed to understand. A strategy must connect with purpose, vision and likely current and future trends.

Strategic management can be seen as a combination of strategy formulation and strategy implementation, but strategy must be closely aligned with purpose.

RStrategy Formulation

involves:

• Doing a situation analysis: both internal and external; both micro-environmental and macro-environmental.
• Concurrent with this assessment, objectives are set. This involves crafting vision statements (long term view of a possible future), mission statements (the role that the organization gives itself in society), overall corporate objectives (both financial and strategic), strategic business unit objectives (both financial and strategic), and tactical objectives.
• These objectives should, in the light of the situation analysis, suggest a strategic plan. The plan provides the details of how to achieve these objectives.

AKA: Where you are now| Where you want to go | How to get there

(SWOT, PEST, Core competence identification, 5 forces,..)

Strategy Imlementation

involves:

• Allocation of sufficient resources (financial, personnel, time, technology support)
• Establishing a chain of command or some alternative structure (such as cross functional teams)
• Assigning responsibility of specific tasks or processes to specific individuals or groups
• Managing the process. This includes monitoring results, comparing to benchmarks and best practices, evaluating the efficacy and efficiency of the process, controlling for variances, and making adjustments to the process as necessary.
• When implementing specific programs, this involves acquiring the requisite resources, developing the process, training, process testing, documentation, and integration with (and/or conversion from) legacy processes.

Strategy formulation and implementation is an on-going, never-ending, integrated process requiring continuous reassessment and reformation. Strategic management is dynamic - partially planned and partially unplanned.

Strategic Inflection Points

There are critical points at which a strategy must take a new direction in order to be in step with a changing business environment. These critical points of change are called strategic inflection points.

"a strategic inflection point is a time in the life of a business when its fundamentals are about to change. That change can mean an opportunity to rise to new heights. But it may just as likely signal the beginning of the end. Strategic inflection points can be caused by technological change but they are more than technological change. They can be caused by competitors but they are more than just competition. They are full-scale changes in the way business is conducted, so that simply adopting new technology or fighting the competition as you used to may be insufficient." Andrew S. Grove, Intel

He goes on to give examples:

"In the mid-eighties, the Japanese memory producers brought upon us an inflection point so overwhelming that it forced us out of memory chips and into the relatively new field of microprocessors. The microprocessor business that we have dedicated ourselves to has since gone on to cause the mother of all inflection points for other companies, bringing very difficult times to the classical mainframe computer industry."

"The fact that an automated teller machine could be built has changed banking. If interconnected inexpensive computers can be used in medical diagnosis and consulting, it may change medical care. The possibility that all entertainment content can be created, stored, transmitted and displayed in digital form may change the entire media industry. In short, strategic inflection points are about fundamental change in any business, technological or not."

"You need to plan the way a fire department plans: It cannot anticipate where the next fire will be, so it has to shape an energetic and efficient team that is capable of responding to the unanticipated as well as to any ordinary event. Understanding the nature of strategic inflection points and what to do about them will help you safeguard your company's well-being."

Reasons why strategic plans fail

• Failure to understand the customer
  • Why do they buy
  • Is there a real need for the product
  • inadequate or incorrect market research
• Inability to predict enviromental reaction
  • What will competitors do
    • Fighting Brands
    • Price Wras
      
  • Will government intervene
• Over-estimation of resource competence
  • Can the staff, equipment, and processes handle the new strategy
  • Failure to develop new employee and management skills
• Failure to coordinate
  • Reporting and control relationships not adequate
  • Organizational structure not flexible enough
• Failure to obtain senior management commitment
  • Failure to get management involved right from the start
  • Failure to obtain sufficient company resources to accomplish task
• Failure to obtain employee commitment
  • New strategy not well explained to employees
  • No incentives given to workers to embrace the new strategy
• Under-estimation of time requirements
  • No critical path analysis done
• Failure to follow the plan
  • No follow through after initial planning
  • No tracking of progress against plan
  • No consequences for above
• Failure to manage change
  • Inadequate understanding of the internal resistance to change
  • Lack of vision on the relationships between processes, technology and organization
• Poor communications
  • Insufficient information sharing among stakeholders
  • Exclusion of stakeholders and delegates

Caveat

Although important, too much direction can stifle creativity, especially if it is rigidly enforced. In an uncertain and ambiguous world, fluidity can be more important than a finely tuned strategic compass. When a strategy becomes internalized into a corporate culture, it can lead group think. It can also cause an organization to define itself too narrowly - market myopia.

(Marketing myopia: organizations was constricted in terms of what they, too narrowly, saw as the business they were in - e.g. oil companies redefining their business as energy rather than just petroleum.

Marketing hyperopia - a better vision of distant issues than of near ones.

Marketing macropia - meaning an overly broad view of your industry.

)

Next question then, Are you an entrepreneur?

Why not try out these two tests.

The Entrepreneur Self-Test was developed by the Rural Entrepreneurship Initiative. This assessment was designed to help an individual identify and understand his/her entrepreneurial potential.
http://www.tvaed.com/pdf/entrepreneur_self_test.pdf

The Startup Journal Entrepreneurship Aptitude test.
http://www.startupjournal.com/specialreports/smallbusiness/1q.htm

So what is an entrepreneur, and could you spot one if you saw one?

One day when Christopher Robin and Winnie-the-Pooh and Piglet were all talking together, Christopher Robin finished the mouthful he was eating and said carelessly: “I saw a heffalump today, Piglet.”
“What was it doing?” asked Piglet.
“Just lumping along,” said Christopher Robin. “I don’t think it saw me.”
“I saw one once,” said Piglet. “At least I think I did,” he said. “Only perhaps it wasn’t.”
“So did I,” said Pooh, wondering what a Heffalump was like.
“You don’t often see them,” said Christopher Robin carelessly.
“Not now,” said Piglet.
“Not at this time of year,” said Pooh.

The above might illustrate most peoples view of entrepreneurs. We know they exist, think we know what they are but can we actually characterise them? and if so how do we do so?

Most commonly, the term entrepreneur applies to a person who establishes a new entity to offer a new or existing product or service into a new or existing market, whether for a profit or not-for-profit outcome.

As a risk bearer:
Richard Cantillon, an Irish man living in France, was the first to introduce the term entrepreneur and his unique risk bearing function in economics during the early 18th century. He defined an entrepreneur as an agent who buys factors of production at certain prices in order to combine them into a product with a view to selling it at uncertain prices in future. Uncertainty is defined as a risk, which cannot be insured against and is incalculable.

As an organiser:
Jean–Baptiste Say, an aristocratic industrialist, developed the concept of entrepreneur a little further. His definition associates entrepreneur with the functions of co-ordination, organisation and supervision. According to him, an entrepreneur is one who combines the land of one, labor of another and the capital of yet another, and, thus, produces a product.

As someone willing to engage in uncertainty:
Frank Knight, in his seminal contribution to economics Risk, Uncertainty and Profit (1921), defines uncertainty as a primary attribute of his entrepreneurship theory. If there were no uncertainty no losses would be made. Risk is calculable, uncertainty is not. Entrepreneur is a person who is willing to put his career and capital on an uncertain venture.

As a leader:
More recently, researchers such as R. B. Reich have argued that leadership, management ability, and team-building should be added to the definition.

So know that we kinda know what they are, Where do the come from?

Well there are two principal theories. The "supply" theory and, you guessed it, the "demand" theory.
Supply: Entrepreneurs are born, not made. Some people have the personality traits that make a good entrepreneur. As John G. Burch 1996 described them:
* A desire to achieve
* Hard working
* Desire to work for themselves
* Nurturing quality
* Acceptance of responsibility Some entrepreneurs may be driven more by altruism than by self-interest.
* Reward orientation: Desire to achieve, work hard, and take responsibility, but also with a commensurate desire to be rewarded handsomely for their efforts; rewards can be in forms other than money, such as recognition and respect.
* Optimism: Live by the philosophy that this is the best of times, and that anything is possible.
* Orientation to excellence: Often desire to achieve something outstanding that they can be proud of.
* Organization: Are good at bringing together the components (including people) of a venture.
* Profit orientation: Want to make a profit; but the profit serves primarily as a meter to gauge their success and achievement.

In academic circles however, the "demand" theory is now generally more prevalent.
The demand theory holds that entrepreneurs emerge out of the combination of entrepreneurial opportunities and people who are well-positioned to take advantage of them. Thus, anyone who encounters the right conditions might become an entrepreneur, if they find themselves in a position where they find a valuable problem that they alone can solve.

So, hopefully now you have a better understanding of what an entrepreneur is and how they are formed. In my opinion they are formed from a hybrid of the two theories. No matter how could an opportunity is, if one doesnt have a propensity towards risk and a desire to work very hard for many hours alone then the individual will sit snug in the arms of employment and let the opportunity pass by; until it is maybe discovered by someone more willing to pursue the endeavour.

“A journey of a thousand miles must begin with a single step.”

After much debating (no pun intended) and deliberating I decided to go with aul Lao Tzu's the Chinese founder of Taoism quote as the first subject of the first post of what I hope will be many more useful and interesting ones.
Having always intended to setup an account I have never wanted to take that initiall belegauering signing up process. But today I decided to get it over and done with, we're in action!
So what is this blog going to be about then, why should I waste my looking at this blog when I could be working? Well to be honest I can't tell you right now, but after a few posts I'll get back to you!