Character Traits
Academics have sought to identify common traits that influence entrepreneurial behavior and attempt to link these traits to successful business outcomes (Steers, Sanchez-Runde, and Nardon 2012). Success in this area of endeavor has been limited. There are probably a number of reasons for this outcome. First, character traits found to be significant in relation to entrepreneurs are often similar to those found among other successful people such as politicians and outstanding sports people (Chell, Haworthy, and Brearley 1991). Second, there are a number of methodological problems measuring traits, including the fact that traits may change over time. Third, entrepreneurial success is usually because of the influence of a mix of variables such as the emergence of a viable technology, access to resources, and prevailing market demand.
Playbook Guideline 11: Do not attempt to categorize people, because technological entrepreneurs come in all different shapes and size
Vision
Vision can be considered as an overarching sense of purpose that drives current and future endeavors. In “how-to-do” manuals and academic texts, some authors insist that vision is a mandatory requirement from day one in order to ensure success. This perspective is supported by the evidence of the activities of some start-up businesses (Ashcroft, Holden, and Low 2009). From the outset, for example, Anita Roddick, the founder of The Body Shop, had the vision of wanting to create skin-care products made from natural ingredients and to avoid testing new products on animals, which was common practice among large manufacturers (Entine 1995).
Witt (1998) opined the technological entrepreneur often has no well-defined vision at the outset, but instead is single-mindedly committed to solving a scientific or technological problem. Only once they have solved the identified problem is much thought given to using the solution as the basis for a commercial venture. Only at this latter juncture does an “emergent market vision” develop. Furthermore, this vision often requires revision over time as the entrepreneur gains further understanding of what is involved in the creation and operation of a successful business.
Witt posited that a conception of a new business consists of subjective, sometimes idiosyncratic imaginings in the mind of the potential entrepreneur of what entity is to be created and how it is to be structured. This is because the business conception will be based on the entrepreneur’s interpretation of information in relation to the relevance and meaning for their imagined business venture. Conversion of the business conception into an explicit framework tends to occur when the entrepreneur is required to communicate their vision to others such as potential customers and investors. This is because the vision provides a framework that permits them to understand the purpose of the new business idea. Once the new business is created, the vision can be important to the employees. Where the entrepreneurial business is not understood by the employees, it is difficult for the entrepreneur to create and sustain employee enthusiasm and motivation.
Playbook Guideline 12: Do not worry about vision, this often only emerges at a later date as understanding of the preferred technical solution emerges
Evolving a Personal Vision into an Entrepreneurial Proposition
Case Aims: To illustrate how an individual’s vision may provide the basis for a viable, technology-driven entrepreneurial business
Anderson (1992) was deeply affected by the death of her father due the fact that in the 1950s, medical technology had been unable to diagnose his worsening heart condition. The outcome was a career in medical technology to find new ways of improving diagnostic techniques. One day, she was contacted by Dr. Stephen Boros at St. Paul Children’s Hospital, who was treating baby boy born with a rare disorder that caused the child to stop breathing whenever he fell asleep. Carbon dioxide, or CO2, in the blood controls the depth and frequency of breathing. To get the breathing rate just right, Boros sought a way of noninvasively measuring the baby’s oxygen and CO2.
Anderson, working on her kitchen table, developed a machine that permitted noninvasive measurements. This success prompted Anderson to convert her personal ideas into an entrepreneurial vision of creating a new business manufacturing machines and creating software that could enhance the medical profession’s ability to diagnose heart and lung disease. The new company was known as Medical Graphics. Anderson’s initial activities, as in most start-ups, were to make herself responsible for everything. Within a few years, Medical Graphics achieved over $3 million in sales by supplying a range of unique, noninvasive diagnostic solutions to the health care industry. With the aim of accelerating growth, the company diversified into nonmedical markets and expanded overseas. Eventually, the stress of running the business became excessive and Anderson stood down as the chief executive officer (CEO).
The board brought in experienced “professional managers.” These individuals focused on the conventional approach of improving the bottom line and formalizing internal operational systems. During visits to the company, Anderson noticed a decline in motivation and enthusiasm, especially among the key research staff, and realized the conventional approach to managing had been accompanied by a loss of her original entrepreneurial vision.
Anderson decided to return. To reawaken understanding of her vision and to reinstill a common purpose, she focused on communicating to everybody that the primary role of the company was to prevent heart and lung disease, the leading causes of death and rising health care costs. To reinforce this message, she withdraw the company from all markets not directly related to this area of health care provision and put new innovative product development as the company’s most important task.
Playbook Guideline 13: Never let the bean counters take over and destroy the technological entrepreneurial vision
Opportunity Orientation
The majority of new products or services are the consequence of the acquisition of market information, which identifies customer dissatisfaction or an unfulfilled need. Large organizations, especially in branded consumer goods markets, rely heavily on market research to assess consumer awareness, attitudes, and usage patterns. The advent of Big Data has provided firms with the ability to access and analyze much larger datasets by linking formal market research with real-time data from sources such as their own websites and social media. The potential drawback of relying on market data to identify new opportunities is when the customer is not able to articulate a specific future need (Key and Hufenbach 2014).
Technological entrepreneurs are less likely to be concerned with accessing market information at the outset of a new project. This is because their motivation involves either seeking to discover a new application for existing or emerging technology, or alternatively, they believe the focus should be about researching a new approach to solving a known problem. As a consequence, they will tend to postpone any consideration of the commercial viability of their idea until progress has been achieved about validating that technology is capable of providing a viable solution. Even at this stage, the entrepreneur will often initiate market entry on the basis of strong self-belief or intuition that an adequate level of customer demand will eventually emerge (Gregoire and Shepherd 2012).
Playbook Guideline 14: Do not expect market research to define a technological opportunity because, often, nobody has any idea that market demand exists
Exploiting Latent Need
Case Aims: To illustrate how a technical solution provided the basis for an entirely new market opportunity
Kozo Ohsone, the head of Sony’s tape recorder division, exhibited the classic technological entrepreneurial philosophy of putting development of technical or scientific solutions ahead of market opportunity. His attitude was reflected in the development of a light-weight miniature recorder that permitted the user to listen to music through headphones, but which could not record. Akio Morito, the Sony Chairman, perceived the intrinsic appeal of a portable device offering excellent sound quality, and despite others inside the company concerned about the lack of a recording capability, Morito authorized the creation of a production operation to manufacture what was to become known as the Sony Walkman (Beamish 1999).
Upon market introduction, major Japanese retailers were not enthusiastic, believing that there would be no customer demand for what they perceived was a miniature tape recorder that did not record. Within a few weeks of launch, some very creative marketing activities, aimed primarily at young people, generated a high level of word-of-mouth interest, which soon resulted in massive market demand. The reason for the Walkman’s success was the product was personal and portable, untethered from a fixed location, thereby delivering freedom of listening in any situation. As such, it created a new market that would at a later date be exploited by products such as Apple’s iPod.
Playbook Guideline 15: Focus on developing a viable technological solution and postpone thinking about market opportunity until later
Creating a Technical Solution
Case Aims: To illustrate how developing a new solution provided the basis for creating a highly successful business.
British entrepreneur James Dyson is motivated to finding new technological solutions to known problems. He identified that the problem with conventional vacuum cleaners is as the bag fills with dust, the suction power declines. Observing in an industrial sawmill a cyclonic separator for removing dust from the air, he believed the same concept could work in a vacuum cleaner. It was this idea that led to the development of his world-beating invention, the Dual Cyclone bagless vacuum cleaner (Anon 2006).
Developing the final product took five years of and involved testing 5,127 prototypes. He showed his final prototype to makers of domestic appliance manufacturers. They were not interested (Schaer 2015). Eventually, he decided to manufacture the product himself. Once in production, Dyson soon discovered the lack of interest among appliance manufacturers was matched by the same level of disinterest among major UK retailers. Hence, he was only able to get distribution in two mail order catalogs and a few small independent retailers. Eventually, the breakthrough finally came in 1995 when Dyson, through a personal contact, was able to achieve distribution in Comet, a large UK retailer.
Playbook Guideline 16: Recognize that persistence is a necessary attribute for technological entrepreneurial success
Foresight
Having established a successful business based on a technological entrepreneurship, the problem is how to avoid being overtaken by changes in technology or by new market entrants. The widely utilized conventional approach to use strategic planning to define future action is of little use when seeking to respond to major changes. This is because the approach is based on extrapolating past events (Farrington, Henson, and Crews 2012).
To avoid being overtaken by technological or scientific advances requires foresight about new technologies, market trends, and the activities of potential competitors. Foresight involves scanning the external environment and provides the basis for identifying new trends, drivers, uncertainties, and other key factors of future influence. This knowledge can guide future entrepreneurial technological developments; thereby avoiding the risks associated with failing to act in time to avoid to losing market leadership (Zahra and Bogner 1999).
Within the German biotechnology industry, Metzner and Reger (2009) identified foresight as being critical in the early identification of emerging trends within the German biotechnology industry. The evolution of the industry has been reliant upon the formation of close collaborative relationships between universities and business. The founders of biotechnology companies are typically academics. Linkages with universities are associated with a firm’s innovative outputs. These links are reliant upon formal and informal R&D discussions, attendance at scientific conferences, and analysis of academic publications. Many of the early customers of these firms are scientists or scientific institutions involved in publicly financed research projects. Close existing relationships with such customers provide access to knowledge of leading-edge, new technological or scientific outcomes, permitting the early identification of commercial potential well ahead of competition.
Playbook Guideline 17: Remain in close contact with the individuals who are the leaders in their fields of science or technology
Networks
New knowledge acquisition in entrepreneurial organizations often occurs as a result of informal and formal networking. This can be contrasted with the market-driven organizations where the focus is on the collection and systematic analysis of market data and monitoring competition. Unfortunately, data from market sources tends to emerge at a very late phase in the scientific and technological processes associated with the launch of next generation of products. Hence, reliance upon market sources may severely hamper trend identification, thereby placing the organization in the unenviable situation of launching a “me too” proposition after competition has already established a strong market share for their new product or service (Uotila and Ahlqvist 2008).
In the entrepreneurial organization, individuals, such as lead scientists, acquire information from their participation in formal and informal networks. These information gatekeepers are very active networkers, involved in activities such as being members of relevant national committees, assisting the organization of major academic conferences, and interacting with funding agencies and politicians. However, where foresight activities are the sole preserve of gatekeepers, there is the risk that their control over information access and opportunities may create an excessively powerful influence over trend identification and the selection of R&D programs inside the organization (Hervas-Oliver and Albors-Garrigos 2014).
Playbook Guideline 18: Ensure there is democracy of opinion within the organization to avoid one single individual determining all entrepreneurial development activities
The activities of individual firms may be accompanied by government-sponsored foresight programs. The aim of these projects is to identify opportunities for exploiting science and technology as the basis for enhancing the future prospects for national economic growth. The typical structure of such schemes is to draw upon the expertise among leading academics and industrialists to examine the emerging trends and to recommend which areas of R&D should receive priority in relation to government funding (Calof and Smith 2009). The potential drawback is that, the selected advisors may be influenced by their bias for and against certain areas of science, technology, or sector of industry. It can also be the case that the government may favor “near-to-market” opportunities. This philosophy can be detrimental to adequate funds remaining available for pure science or “blue sky” technology, which has the potential to provide the foundations upon which to build totally new sectors of industry.
Playbook Guideline 19: Be prepared to go you own way when opinions and plans being articulated by others seem incorrect or uninformed
Exploiting Foresight
Case Aims: To illustrate how one high-tech company sustains a leadership position in the face of major shifts in technology
John Chambers, CEO of the American firm Cisco, joined the company at an important moment, namely the startpoint of the Internet revolution. The company as the market leader in switches and connectors was well placed to exploit newly emerging technological entrepreneurial opportunities. Chambers brought with him experience gained while employed at IBM and Wang. These experiences showed Chambers that when large companies have a significant market share, they are often tempted to ignore emerging market disruptions, and instead, focus on using current technology in seeking to continue to grow existing markets (Chambers 2015).
In the case of the Internet, Chambers recognized that firms such as Lucent, Nortel, and Alcatel were continuing to focus on telecoms and the use of fiber optics to transmit data via telephone lines. He understood that the Internet would totally change data interchange technologies and presented new opportunities for Cisco. The company’s subsequent development activities have responded to opportunities such as the shift from desktop computers to laptops, smartphones, and tablets, and the move by organizations from owning their own server systems to outsourcing their data storage to the cloud. Cisco’s most recent move has been to exploit the emergence of the “Internet of everything” involving fundamental technological shift toward the creation of new online communication channels for numerous, new kinds of devices.
Cisco has created a number of different ways of responding to emerging technological change. One approach is for the firm to engage in R&D to develop new technologies. The second approach involves their “Entrepreneurs in Residence” program. This provides financial support, mentoring, and collaboration opportunities to early-stage entrepreneurs working in areas where Cisco perceives huge future potential. The third pathway is acquisition of a smaller company, which provides access to the knowledge and capability currently not available within Cisco. For example, in 2005, the company Cisco acquired Airespace to accelerate its leadership in the field of Wi-Fi connections. A fourth approach is what Cisco calls a “spin-in.” This involves assembling a group of engineers and developers from the existing workforce to work on a specific project and moving them out of the company’s mainstream activities in order to create a start-up environment.
Cisco does not always make the right decisions (Mehta, Schlosser, and Hjelt 2001). Sometimes, their foresight approach results in incorrect identification of the potential for exploiting a new technology. In other cases, the company has commenced R&D too early in relation to the emergence of actual market opportunities. For example, the company started work of the “Internet of things” only to discover the market was not yet at the point where there was any significant emerging demand. Their decision, however, was to sustain expenditure until actual market opportunities began to generate revenue.
Chamber’s (2015) summarized the company’s approach to foresight by saying “By the time it’s obvious you need to change, it’s usually too late. Very often you have to be willing to make a big move even before most of your advisers are on board. You have to be bold And you need a culture that lets you figure out how to win even without a blueprint.”
Playbook Guideline 20: Early movers exploit foresight to generate greater wealth than later entrants into the same market
Collaborative Orientation
Conventional marketing management practices usually place strong emphasis activities to combating competitive threats and the protection of market share. This operational philosophy is exemplified by the regular outbreaks of brand wars such as Macdonald’s versus Burger King or Pepsi versus Coca-Cola. Such real-world scenarios have resulted in some academic texts continuing to primarily focus on managing the processes associated with attacking and responding to competition (McKelvey 2006).
Evidence of a different managerial philosophy was first identified by the Nordic business schools in the 1970s (Hjorth 2008). In their research on business-to-business (B2B) markets, it was found that in many cases, success was strongly influenced by companies exhibiting a collaborative orientation. Research on the behavior traits of small business owner or managers also revealed a similar orientation (Dubini and Aldrich 1991). This form of collaboration is based on trust, self-interest, and reciprocity. The existence of strong network relationships is not just important at start-up, but may become even more critical as a new enterprise seeks to achieve business growth (Jarvenpaa and Välikangas 2014).
The complexity of a successful outcome for an entrepreneurial project within high-tech industries is complicated by the reality that, rarely no one single firm has the knowledge and expertise to autonomously resource the total project. As a consequence, collaboration in high-tech sector in recent years has become a critical component in terms of increasing the probability for project success (Chaston 2016).
Playbook Guideline 21: Collaborators are more likely to enjoy sustained success than loners when engaged in technological entrepreneurship
Collaborative Development
Case Aims: To illustrate the important role of entrepreneurial collaboration in the development of new, more technologically advanced next-generation products
The development of new or next-generation products involving complex technologies can rarely occur without a manufacturer working closely with other members of the supply chain. Furthermore, the key objectives within the development process may demand a radical change. The may be due to the emergence of new technology or customer demand shifts, which require development of new technological solutions (De Haan and Mulder 2002).
The success of any new aircraft design is critically dependent on close co-operation between the manufacturers, engine designers, and the availability of materials and subsystems around which the airframe can be constructed (Epstein 2014). By the 1980s, in the face of rising cost of fuel, the airline industry began to face problems sustaining profitability. Furthermore, as the number of aircraft increased in the skies over major metropolitan areas, there were increasing problems over jet noise. Overcoming these two factors demanded further advances in technology to increase operating efficiencies and reduce noise levels. Initially, the primary focus was on the development of the next generation of more fuel-efficient and quieter jet engines, requiring ongoing co-operation within the aerospace supply chain. The solution was to improve the engine “bypass” ratio, which enhanced fuel efficiency and reduced engine noise (Varga and Allen 2006).
The increasing size of turbofans demanded much stronger wings, which in turn increased aircraft weight and reduced fuel efficiency. This problem necessitated new technological solutions involving the development of lighter materials to replace reliance upon the ongoing use of aluminum (Lind 2006). As with most new technologies, the successful utilization of advanced composites demanded radical innovation in the formulation of these new materials and the development of the manufacturing tools needed to produce such as complete aircraft wings or tail planes. The manufacturers are claiming that their latest generation of aircraft, which incorporate these new materials such as the Boeing 787 Dreamliner, has the weight savings which offers a 20 percent improvement in fuel efficiency.
Entrepreneurial Self-Efficacy
Self-efficacy refers to an individuals’ conscious belief in their own ability to successfully undertake a particular task (Bandura 1997). It is an important determinant of human behavior. Individuals tend to avoid tasks about which they have low self-efficacy, while being drawn toward tasks about which they have high self-efficacy. Individuals with a strong sense of self-efficacy in a given domain are likely to approach difficult problems in that domain with persistence and are less likely to be deterred by high levels of complexity.
Chen, Greene, and Crick (1998) developed the construct of entrepreneurial self-efficacy (ESE) to describe the degree to which individuals believe that they are capable of performing the tasks associated with new venture management. Forbes (2005) noted that ESE can influence an individual’s willingness to engage in entrepreneurship and the behavior of those who are already entrepreneurs. ESE affects potential entrepreneurs, because individuals’ intentions to found new businesses are a function of the extent to which they perceive that it is both feasible and desirable to progress a specific business idea (Krueger and Brazeal 1994). In the case of existing businesses, ESE can influence the willingness to engage in further innovative activities. Additionally, ESE can influence how well entrepreneurs in existing businesses discharge their responsibilities as managers of new projects. In contrast, low levels of self-efficacy are associated with performance-inhibiting behaviors, such as indecision, distraction, and procrastination. Furthermore, individuals with high levels of ESE are better able to recognize new opportunities as these emerge.
Playbook Guideline 22: Strong self-efficacy is a critical attribute for a successful technological entrepreneur
ESE Exemplar
Case Aims: To illustrate how entrepreneurial success breeds even stronger entrepreneurial self-confidence
Involvement in successful ventures such as PayPal permitted Elon Musk to entertain his entrepreneurial dream of becoming involved in space research with his ultimate aim of creating a settlement on the planet Mars (Williamson 2014). Having visited Moscow to determine the cost of purchasing rockets from the Russians, Musk decided he could build more affordable rockets. He estimated that by applying vertical integration and modular approach to software engineering, it would eventually be possible to reduce launch prices by a factor of 10 and still enjoy a 70 percent gross margin in renting out this capacity to others. This resulted in Musk founding his new entrepreneurial venture SpaceX, which has the long-term goal of creating a spacefaring civilization (Kluger 2012).
Musk is the CEO of the Hawthorne, a California-based company. SpaceX develops and manufactures space launch vehicles. Within seven years, SpaceX designed the family of Falcon launch vehicles and the Dragon multipurpose spacecraft. In September 2009, SpaceX’s Falcon rocket became the first privately funded liquid-fuelled vehicle to launch a satellite into the earth’s orbit (Knapp 2012). SpaceX was awarded a contract from the National Aeronautics and Space Administration (NASA) in 2006 to develop and test a new launch vehicle for transporting cargo to the International Space Station (ISS). In 2012, the SpaceX Dragon vehicle berthed with the International Space Station, making history as the first commercial company to launch and berth a vehicle on the ISS. SpaceX is the largest private producer of rocket motors in the world and holder of the record for highest thrust-to-weight ratio for any known rocket motor.
Musk’s other passion is to develop solutions to the growing problem of global warming, and in 2004, became a major investor in the Tesla company (Stringham, Miller, and Clark 2015). Initially intending to avoid involvement in day-to-day operations, his perception of the technological and managerial weaknesses within the company’s senior management team caused Musk to assumed leadership of the company as the new CEO. Tesla’s first product was the electric sports car, the Tesla Roadster. Subsequently, the company developed and launched their four-door Model S sedan. In addition to focusing on expanding the company product range, Tesla also sells electric power-train systems to companies such as Daimler, Mercedes, and Toyota.