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I - Purpose. Purpose of this Presentation: Present the basic concept underlying a dissertation thesis titled:
E N D
1. A Strategy Crafting ConceptforIndependent, Growth-Oriented,Entrepreneurial Startup Ventures
Daniel K. Hudak
Dingman Center Presentation
July 12, 2006
2. I - Purpose Purpose of this Presentation:
Present the basic concept underlying a dissertation thesis titled:
A Strategy Crafting Approach for the Special Case of the Independent, Growth-Oriented, Entrepreneurial, Startup Venture
3. II - Objective
Create a simple intuitive approach that facilitates
crafting a creative idea into a unique and
definitive new venture strategy
This approach is designed to achieve two objectives:
1. Incorporate relevant academic knowledge at the right time and place to compliment the entrepreneurs intuitive insight
2. Facilitate insight into the alternate opportunities and strategies inherent in the entrepreneurs creative vision
4. III Key Assumptions The Inherent Assumption
The right academic knowledge on strategy
Applied at the right decision point in the strategy crafting art
Can compliment the entrepreneurs intuitive insights and yield an enhanced new venture strategy
5. Other Assumptions: This approach is designed for a Special Case: The Independent, growth-oriented, entrepreneurial startup venture in the US business culture
This approach is limited to the creation of an
over-arching qualitative entrepreneurial strategy.
6. Relevant Knowledge Assumption: Academic knowledge is considered relevant if the knowledge
- Provides a fundamental theory applicable to the special case
- Simplifies the application of a significant complex theory
- Is compressible to its basic essential without losing value
- Possess an intuitive appeal and understanding
- Offers potential solutions to unique entrepreneurial problems
- Can be presented consistent with the entrepreneurs mindset
The initial academic knowledge set is derived from analysis of the literature review
This knowledge set will be tested by subsequent research
7. III Design Approach
Basic Approach
A Five step approach was used to design the entrepreneurial strategy crafting approach:
Determine the specific objectives to be accomplished
Conduct the literature research
Determine the initial relevant academic knowledge
Design the strategy crafting decision process
Incorporate the academic knowledge into the approach
8. IV Literature Search
9.
13. The Basic Design
The proposed strategy crafting design was developed iteratively, by trial and error, based on consideration and synthesis of the following academic concepts:
Traditional strategic management models +
Mintzbergs theory of strategy crafting
Eisenhardts strategy as simple rules
Janiss vigilant problem solving
Kaplin & Nortons strategy maps
Simons satisficing concept
14.
The Design Overview
A three-phase strategy crafting approach focused on three critical decisions encountered in the art of strategy crafting:
Envision the range of opportunities
Assess the feasibility of opportunities
Craft the new venture strategy
Overall design is presented at Figure 1 & Table 1 Following
16.
Table 1 - Entrepreneurial Strategy Crafting Approach Design
18. VII Concept Detail by Phase
Each of the three phases constitutes a selfcontained decision-oriented flow with its own sequence of actions
Can be best visualized as a three dimensional flow matrix
Each concept phase will be accessed by active links to allow focus on only the relevant consideration
20. Figure 2 - Phase I - Envision the Opportunities
21. Table 2 - Phase I Academic Knowledge for Consideration
24. Figure 3 Phase II Feasibility Assessment
25. Table 3a - Phase II Feasibility Assessment: Simple Decision Rules
27. Table 3b - Phase II Feasibility Assessment: Proto-strategy Defining Characteristics
30. Phase III Strategy Crafting
Crafting is accomplished by comparatively evaluating. selecting or combining the proto-strategies using:
entrepreneurial insight
relevant academic knowledge
Relevant Academic knowledge is unique to each individual entrepreneurial startup venture
It will vary significantly by entrepreneurial venture.
One set of knowledge does not fit all.
To design entrepreneurial strategy crafting approach suitable for general use
Address new ventures differing needs for academic knowledge
Avoid overloading the entrepreneur with non relevant academic knowledge.
31.
A Decision Tree Approach
Each proto-strategy has inherent characteristics, or discriminators, that favor certain types of strategy consideration
Use the inherent characteristics to channel strategy crafting into certain paths based on a few fundamental strategy decisions
The strategy crafting decisions made at each decision point naturally filters the academic knowledge that will be relevant at future Points
A Two-orders of Discrimination:
The first order serves to configure the proto-strategy as to its basic type
- either a cost-leadership strategy or a differentiation strategy
The second order serves to configure each type by its base of strategy:
- either a market based strategy or a resource based strategy
32.
The two discriminators combined
yield four possible strategy paths:
A - Low costmarket based strategy
B - low costresource based strategy
C - differentiationmarket based strategy
D - differentiationresource based Strategy
Evolutionary
Revolutionary
36. Table 4 Phase-III Strategy Evaluation: First Order Discrimination Strategy Type
40. Table 5 Phase-III Strategy Evaluation: Second Order Discrimination - Strategy Base
41. A Market Based Strategy
The existing market determines the strategy
Strategy is primarily dependent on the selected market and its industry forces
The strategy is limited to one market
*The market is selected for attractiveness to the creative idea
*The goal is to achieve a sustainable competitive position
*The strategy objective is to influence the market so as to improve the new ventures competitive position
Market based strategy is a competition driven zero sum game
This strategy is best employed in relatively stable market environments
42. A Resource Based Strategy
The new ventures resources determine the strategy
Strategy is based on the new ventures internal resources and competencies
*Resource-based strategy facilitates reactions to market changes
*A competency driven resource strategy can more quickly react to or even create change
Resource-based strategy can cross markets and industries
Best employed in environments of rapid market or technology change
43.
The above two strategy discriminators have configured the proto
strategies into four distinct strategy configurations, each of which
will:
follow a separate path for final evaluation and strategy crafting.
be subject to different sets relevant academic knowledge:
The four configurations are:
Configuration Path A *Cost Leadershipmarket based strategy
Configuration Path B *Cost Leadershipresource based strategy
Configuration Path C *Differentiationmarket based
Configuration Path D* *Differentiationresource based
D1 *Evolve the market
D2 *Create the market
As an illustration of the Phase III crafting process I will address one of the configuration paths D1
44. Table 8d.1 - Phase-III Strategy Evaluation; Differentiation Evolutionary Resource Based Strategy
45.
2: Prerequisite Requirements
Evolutionary resource based differentiation strategy
*Intellectual Capital
- the ability to outthink the competition
*Conversion Capability
- the ability to convert intangible assets into resources
*Core Competency Base
- the ability to develop a right set of core competencies
46.
3: Intellectual Capital Required
Identify and develop the basic core competencies
Goal is to continuously create diverse lines of unique products or services with differentiating attributes that that add customer value superior the competitors across multiple markets.
The differentiating attributes could include:
Improved performance
Additional/alternative capabilities
Expanded life
Increased reliability
Aesthetic appeal
Environmental or safety factors
47.
4: Conversion Capability
Ability to convert intangible intellectual assets into critical tangible resources and future core competencies
The new venture begins with limited resources, mostly intangible.
A key strategy consideration is how to convert limited resources, intangible ideas, and visions into:
*Tangible capabilities
*Core competencies,
*Strategic assets
*and finally, a sustainable competitive advantage.
This entrepreneurial conversion process requires;
Identification of the critical resources required for success
A method of gaining access to the critical resources
Combining the critical resources with the required competencies
48.
5: Core Competency Recognition
Core competencies are the collective learning and ability of the new venture
How will the new venture integrate diverse intellectual skills, operational capabilities, and multiple streams of technology to provide a significant contribution to customer value across multiple significant markets?
49.
6: Other Relevant Strategy Considerations
The evolutionary resource-based differentiation strategy allows
1. Increased flexibility Exploit the creative vision across the spectrum of products and services in multiple markets
Rapid adjustment to continuous or dramatic changes in key environmental or market conditions
2. Mitigated risk and uncertainty Multiple market dispersion reduces single market risk
Avoidance of major market disruption reduces risk
3. The value of multiple markets Creating new products in multiple markets allows the ability to seek premium pricing in multiple markets
50.
4.The risk of multiple markets multiple markets incurs the risk of dissipating the new ventures resources and efforts resulting in a potential lack of strategic focus.
5. Consider the impact of potential technological change
*What potential technological changes could significantly impact on the new ventures resource based differentiation strategy and when?
6. Consider the impact of globalization driven change
*What potential globalization factors could significantly impact on the new ventures resource based - differentiation strategy and when?
51. Conclusion The proposed entrepreneurial strategy crafting concept represents a significant first step towards:
A simple intuitive approach that facilitates crafting an entrepreneurial creative idea into a unique and definitive new venture strategy
A complement and enhancement to the entrepreneurs intuitive insight in crafting new venture strategy and inherent alternatives
An natural approach for incorporating relevant academic knowledge into entrepreneurial strategy
All subject to verification by stakeholder feedback of the initially proposed relevant academic knowledge,