Technology-based Success
The success of this type of venture comes from high levels of Core Competence, Product Market Match, Net Buyer Benefit, Margins, Volume, Purchase Frequency, Long-term Need, and access to Resources.
Ironically, the reason that it is not higher on the "Keep It" axis stems from its source of strength: technology. And, since the pace at which many technologies change is rapid, levels of Scarcity and Non-appropriability erode as the "newness" of an initial New Combination fades. Thus, this type of venture most likely will have medium levels of New Combination and Ambiguity, supported by quite low levels of Uncertainty (insurable risk).
Figure 1: "B/K" Diagram
ADVICE:
To foster the longevity of successful technology-based ventures, the key is to utilize presently plentiful resources to work "on" the business--creating a venture that encourages more New Combination-based Innovation, which in turn forms the foundation of Scarce, Non-appropriable products and/or services.
This approach starts with an aggressive approach toward the management of Ambiguity, which if addressed while the venture is thriving, will continue to generate adaptations of the venture to its rapidly changing environment.
Figure 2: Target "Bulls-eye" Diagram
Venture Example:
This case was prepared by Team Lynx as an entrepreneurship project at the University of Victoria. It is designed to illustrate the venture archetypes used in the New Venture Template through story and case description. Though the case is based on a true story and actual businesses, its name and likeness has been altered. The case is quite brief, so you should be able to read it quickly
Eric Schmit was reflecting on the tremendous success his high-tech software company had enjoyed from such humble beginnings. But even in success he could not let up and this was beginning to tire him out. Millennium produced software for the high-flying telecommunications industry. Their products were part of the computer telephony business. This was a new but tremendously competitive market, growing exponentially, with 5 or 6 firms competing to be the industry leader.
After graduating in computer science in the late 1980's, Eric thought that a rest was in order and took up residence in Aspen to devote his main effort to skiing and mountain biking. To help pay for things he took a job in a local computer store selling computers and keeping his skills current. It was during this time that Eric began to appreciate the substantial changes that were on the horizon as it became obvious that telephone and computer technology would eventually merge.
The merging of telephony and computers became his passion and he devoted most of his spare time towards developing software to facilitate the integration. His first real business break came when he was able to convince a former classmate, who now worked for a large telecom supply company in Denver, that his software could open up new markets. The telecom supply company bought into the idea and within 2 years, Millennium had 3 or 4 other major accounts under development. Although his product was new to the market when it was developed, the competition was close behind and within months a comparable product was on the market . The battle for development of the best product was fierce. The field was revolutionary and would be around for a long while, but the individual products had a relatively short life. The edge for Eric was that customers loved his products because they incorporated more flexibility at a lower cost.
Millennium generated large profits, increasing substantially each year. Although competition was intense, the demand was incredible. Rivals competed on product and not price. Eric felt that if his company stumbled, and didn't keep its product near the top of the heap, he would quickly run out of clients. Competition, industry mergers, and government regulation could create major threats very quickly. Eric generated a network of allies who made a point of keeping him up to date on competitors' products, government policies and corporate gossip. There was no room for complacency in this business.
None of Millennium's software was copyright protected. Protection in software was a lengthy process and by the time a competitor could reverse engineer the product it would be outdated and replaced with a new version. Millennium had a little breathing room with its clients as compatibility and re-training issues made switching products costly. However, Millennium had only a few very large customers, so there was always a risk that a merger or strategic alliance could reduce the number of clients and lead to demands for lower pricing.
Eric was slightly uncomfortable with the work habits of his crew, there seemed to be a lot of paid break time and unnecessary perks. But, projects were always changing, crews were switching personnel to adapt to the new projects and the stress level was high, so Eric kept his thoughts to himself and took consolation in the high profits Millennium was currently making.
