Chapter # 3

Strategic Management
and Draft the Business
Model
 Success in any enterprise requires the
right product, methods, and workers,
and each must complement the others.
Joseph Burger

Summary
How do successful entrepreneurs create a compelling business
design for their new ventures?
To design a new business, the entrepreneur must cogently and clearly
describe the customers and their needs and how the new venture will
satisfy those needs.

Chapter 3: Summary Technology Ventures: From Idea to Enterprise

Technology Ventures: From Idea to Enterprise
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Vision and the Business Model

Example of a vision for an innovative firm

We strive to preserve and improve life through the innovation of

biomedical devices while supporting, training, and inspiring our
employees so that individual ability and creativity is released
and rewarded. Our goal is to be a leader in the industry by
2006 and be widely known throughout the world.

Chapter 3: Table 3.1 Technology Ventures: From Idea to Enterprise

Develop a clear vision and translate it
into a meaningful mission statement
 A vision is the entrepreneur’s dream of something
that does not yet exist. It provides direction, a basis
for decision-making and a source of motivation.
 A company’s vision statement incorporates the
values of its owner and is about more than just
making money.
 A clearly defined vision leads to a company’s mission
statement that includes a description of the business,
its products, its markets and customers, its
competitive distinction and its effects on the
community at large.
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Vision and the Business Model

Elements of a vision

Clarity: Easily understood, focused

Consistency: Holds constant over a time period, but adjustable
as conditions warrant
Uniqueness: Special to this enterprise
Purposeful: Provides reason for being

Chapter 3: Table 3.1 Technology Ventures: From Idea to Enterprise

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Vision and the Business Model

EXAMPLE
McDonald’s
vision is: low-priced, fast food in a clean restaurant for people
short on time.
Google’s vision is: online search that reliably provides fast and
relevant results.
Example of a vision for an innovative firm.
We strive to preserve and improve people’s lives through the
innovation of biomedical devices while supporting, training, and
inspiring our employees so that individual ability and creativity
are released and rewarded. Our goal is to be the leader in our
industry by 2012 and be widely known throughout the world for
devices that save and extend lives.

Chapter 3: Table 3.1 Technology Ventures: From Idea to Enterprise

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Vision and the Business Model

A mission statement is a description of the

course of action to implement the vision.

Possible elements of a mission statement

• Core Values • Competitive Advantage

• Customers and/or Stakeholders • Values Provided to Customer
• Products • Markets or Industry

Chapter 3: Table 3.3 - Elements of a Mission Statement Technology Ventures: From Idea to Enterprise
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Vision and the Business Model

Most mission statements are short—fewer than 100 words. The

mission statement should be a concise, clear explanation of the
purpose, values, product, and customer.

The eBay statement clearly describes its mission. An example of a

concise yet clear mission statement for an electronics firm is: “Our
mission is to design and manufacture electronic devices that serve the
needs of the aerospace industry on a timely basis and at reasonable
prices.”

Chapter 3: Table 3.3 - Elements of a Mission Statement Technology Ventures: From Idea to Enterprise
Example
Example
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Vision and the Business Model

The Value Proposition defines the company

to the customer.

Chapter 3: Concept Technology Ventures: From Idea to Enterprise

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Vision and the Business Model

The Value Proposition defines the company

to the customer.
Five values offered to a customer

1. Product: Performance, quality, features, brand, selection,

search, easy to use, safe
2. Price: Fair, visible, consistent, and reasonable
3. Access: Convenient, location, nearby, at-hand, easy to find,
in a reasonable time
4. Service: Ordering, delivery, return, check-out
5. Experience: Emotional, respect, ambiance, fun, intimacy,
relationships, community

Chapter 3: Table 3.6 Technology Ventures: From Idea to Enterprise

Example
 Company: AirBnB
 Mission: To create a world where anyone can belong
anywhere, and we are focused on creating an end-to-
end travel platform that will handle every part of your trip.
 Vision: Belong everywhere.
 Why it works:The Airbnb mission says, “we help you feel at
home,” while encapsulating the company’s goals for the
future. They explore a deeper sense of belonging in the
vision, tapping into the universal human desire their
company aims for.
 Value Preposition: When Airbnb began to disrupt the
hospitality industry, it needed to market to two separate
groups: guests who wanted a place to stay and hosts who
wanted to rent out their spaces. Their two-in-one value
proposition: Travelers benefit from a truly local experience
and hosts benefit from extra income
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Vision and the Business Model

Example of a value proposition:

Intel offers product as their primary value and
service as their secondary value.

The Unique Selling Proposition is a short

version of firm’s value proposition.

Example:

Intel has a USP:

The best product with great service.

Chapter 3: concept Technology Ventures: From Idea to Enterprise

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Vision and the Business Model

Elements of A Business Model

 Customer Selection Who is the customer?
Is our offering relevant to this customer?

 Value Proposition What are the unique benefits?

 Differentiation and Control How do we protect our cash flow and

relationships?
Do we have a sustainable competitive advantage?

 Scope of Product and What is the scope of our product activities?

Activities What activities do we do and which are
outsourced?
 Organizational Design What is the organizational architecture of the
firm?

 Value Capture for Profit How does the firm capture some of the total value
for profit?
How does the firm protect this profitability?

 Value for Talent Why will good people choose to work here?
How will we leverage their talent?

Chapter 3: Table 3.8 Technology Ventures: From Idea to Enterprise

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Vision and the Business Model

Dell Computer Business Model

• Customer Selection: High Relevance

Four Segments: Corporate, Government, Education, Consumer.
• Value Proposition: Unique Benefits
A customized computer at a good price with great service readily accessible via phone
or the Internet.
• Differentiation and control: Sustainable competitive advantage
Customized products via a direct sales channel on the phone or Internet with strong
service and customer relationships.
• Scope of Product and Activities
Desktop, laptop, and servers.
Strong supply chain management.
• Organizational Design
Divisional organization for each customer segment.
• Value Capture for Profit
Opportunities for cross-sell and up-sell. Avoid price as the key value and focus on
service and accessibility.
• Value for Talent: Learn, Grow, Prosper
Training, Learning, and Career Opportunities.

Chapter 3: Table 3.9 Technology Ventures: From Idea to Enterprise

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Vision and the Business Model

Identify and State the Firm’s Core Competencies

Example:
The core competency of Google is the design and operation of an
internet search engine.

Chapter 3 Technology Ventures: From Idea to Enterprise

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Vision and the Business Model

Competitive Advantage:
The competitive advantage of a firm is its distinctive factors that give it a
superior or favorable position in relation to its competitors.

A sustainable competitive advantage is a competitive advantage that

can be maintained over a period of time – hopefully, measured in years.

Chapter 3: concept Technology Ventures: From Idea to Enterprise

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Vision and the Business Model

The market value of a firm is:

MV = CA x D
CA = competitive advantage
D = duration

Chapter 3: Market Value Technology Ventures: From Idea to Enterprise

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Vision and the Business Model

Potential Sources of Competitive Advantage

Source Example
Efficiency - Low Costs Alcoa
Product Innovation Intel
Quality - Reliability Mercedes
Customer Responsiveness Dell
Manufacturing Innovation Toyota

Chapter 3: Table 3.11 Technology Ventures: From Idea to Enterprise

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Vision and the Business Model

Principle 3

The vision, mission, and value proposition, and business model embodied
within the business design firm and powered by a sustainable
competitive advantage can lead to compelling results.

Chapter 3: Principle 3 Technology Ventures: From Idea to Enterprise

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Vision and the Business Model

VENTURE CHALLENGE

1) Create a brief vision statement for your

venture.
2) State the value proposition for the venture.
3) Create a draft business model for the venture
using the elements of Table 3.8.
4) What are your venture’s core competencies
and competitive advantage?

Chapter 3: Venture Challenge Technology Ventures: From Idea to Enterprise