LEUVEN planning as a way to prepare for new venture creation & new business development
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This document discusses approaches to business planning for new venture creation and new business development. It explains that planning allows entrepreneurs to learn before doing through testing assumptions and reducing risks. While some argue planning is unnecessary or a waste of time, the document reviews learning theory showing that planning facilitates faster decision-making and understanding of the business. It then discusses competitive analysis as an important part of planning, highlighting the need to understand customers, competitors, and partners to develop insights.
![Learning Theory
• “planning allows people to make faster decisions than they
would with trial-and-error learning by facilitating the rapid
discovery of missing information (Ansoff, 1991)”
• “[some] literature stresses the importance of the business
planning process as it helps in understanding the mechanics of
the intended business and enables learning (Sexton and
Bowman-Upton, 1991).”
• “proactive learning because it expands the founder's
knowledge about the intended business and reduces decision-
making uncertainty (Delmar and Shane, 2003; Armstrong,
1982)”
• “Through learning, entrepreneurs improve their access to
financial capital as well as the effectiveness of business
approach and their chances of founding success
(Castrogiovanni, 1996).” 33](https://image.slidesharecdn.com/h9vuwwo6twampcuvdgvw-140512031248-phpapp02/85/LEUVEN-planning-as-a-way-to-prepare-for-new-venture-creation-new-business-development-33-320.jpg)
![How to study the competition?
• Through the eyes of your customer
o How do [will] they choose
• Competition = competing products
• Through the eyes of your competitor
o How could they react to your value proposition
• Competition = able to change its products to [better] beat you
• Through the eyes of your partners
o Why should they prefer to partner with you
• Competition = understanding what partners appreciate
• Etc.
52](https://image.slidesharecdn.com/h9vuwwo6twampcuvdgvw-140512031248-phpapp02/85/LEUVEN-planning-as-a-way-to-prepare-for-new-venture-creation-new-business-development-52-320.jpg)
LEUVEN planning as a way to prepare for new venture creation & new business development
- 3. Planning as a way to prepare for new venture creation & new business development 02-10-2012 Wynand Bodewes
- 4. Today 4 • 18.00 - 19.00 o To plan a business you need to have identified an “entrepreneurial opportunity o What could be reasons to plan • 19.00 - 20.00 o What could be approaches to plan
- 5. How can one identify opportunities?
- 6. By using patents as inpiration 6
- 7. Patents • Claim to represent a novel solution to a problem • Often, a single solution can be used to solve multiple problems • Help you focus on problems that you otherwise would not have known or observed • May provide an unfair-advantage 7
- 8. It is NOT about the patent, but about the solution that it provides to a PROBLEM.
- 9. “I invest in management, not ideas.” EUGENE KLEINER VENTURE CAPITALIST 9
- 10. Finding Fertile Ground • Fertile ground = Problem + Solution • Hence, you have two issues • what problem? • what solution? • Where to start? o From problems? • to learn that there is no solution (within reach)? o From solutions? • to learn that there is no (REAL) problem? 10
- 11. Finding Fertile Ground • Over the years I (and others) have learned that student- teams often have great difficulty finding fertile ground when they start from problems that they already know. o Leads to business plans that not only present unattractive business propositions, but that also trigger too little learning 11
- 12. Technology = know how to (solve a problem) For example: “Natural Sourcing B.V. will deliver a cheaper and environmentally friendly input material to cardboard manufacturers, of equal fibre quality, and at a stable price and supply” 12
- 13. Finding Fertile Ground • Starting from a technological domain forces you explore new territory • Technologies are often patented o Preferably use a technology for which you can get a “license to use”, otherwise you will have to try and “invent around” o That is why you MUST work with a patent (solely) owned by a Belgian university, or public research institute • Use the patent (only) as a source of inspiration 13
- 14. Let’s generate ideas! Get the picture: read the description of the patented technology (next slide) and come up with ideas for its applications.
- 16. Self-Cleaning Glazing Sheet • “This invention relates to self-cleaning glazing sheets, to multiple glazing units or laminates, windows and facades comprising self- cleaning glazing sheets.” • “Self-cleaning glazing sheets have a hydrophilic surface. Rain or other water which contacts the hydrophilic surface will spread over the surface and wash dirt away from it. It is beneficial to glaze windows with self-cleaning glazing sheets because they require less cleaning than ordinary windows.” • “A particularly useful type of self-cleaning glazing sheet is one whose hydrophilic coating is photocatalytically active.” 16
- 17. Let’s generate ideas! Come up with ideas for its applications. you have 5 minutes.
- 18. Generating Ideas more ideas are generated when brainstorm individually and in a team focused ideas are generated when you put constraints
- 19. Generating ideas Come up with ideas for the building industry You have 5 minutes
- 20. Business planning • Why should you learn how to do proper business planning? o As soon as they are printed, they are out of date. – They are founded on endless assumptions. o Creating them distracts you from "real work" • Hmm, you may not need to plan to start a business, yet for novice-entrepreneurs it may be helpful to “think aloud” how a possible venture would operate. o Thought experiment o Motivational device o Pedagogical instrument 20
- 21. Finding your opportunity • We have a few opportunities for you • NVC: patents from LRD • NBD: proposals via VKW • Find your own opportunity 21
- 22. So what about planning?
- 25. Will business planning help? • its value varies systematically with – the type of founding environment, – the type of activities pursued in planning, and – the effort devoted to specific activities. • planning is to be embedded in a founding environment that determines which rationale should govern planning activities. – Munificent – Trade-off (speed versus comprehensiveness) • planning has an important impact on the achievement of venture development milestones • in some contexts, exhaustive planning is inferior to a more selective planning approach • Gruber, M. 2007. Uncovering the value of planning in new venture creation: A process and contingency perspective. Journal of Business Venturing, 22(6): 782-807. 25
- 26. 26
- 27. Business planning for NVC & NBD • Presents a credible outlook on what could become profitable business o Based on assumptions, informed guesses, and profound insight on: • People • Opportunity • Context • Risk & Reward • Enables learning before doing – Cheaper, faster and/or safer • May act as a screening device – Management (NBD) – You and your helpers (NVC) 27
- 28. Course materials • University library o Belfirst (Chambers of Commerce info on Belgium firms) • Toledo/Blackboard o Sheets o Course manual o Links to relevant websites and competitions o Cases o Readings • Book o Will be available as an eBook 28
- 29. Why engage in business planning?
- 30. Reasons to plan 30 • Learn before doing • Reduce likelihood of failure • Rally support from others • Mimic successful entrepreneurs • Behave professionally • Demanded by stakeholders • Dampen one’s own overconfidence
- 31. Reasons not to plan • Everything is hard to predict, especially the future • Parralysis by analysis • Ineffective learning • Inefficient learning • Will be outdated the moment you print it • Does not help 31
- 32. So who is right here? 32
- 33. Learning Theory • “planning allows people to make faster decisions than they would with trial-and-error learning by facilitating the rapid discovery of missing information (Ansoff, 1991)” • “[some] literature stresses the importance of the business planning process as it helps in understanding the mechanics of the intended business and enables learning (Sexton and Bowman-Upton, 1991).” • “proactive learning because it expands the founder's knowledge about the intended business and reduces decision- making uncertainty (Delmar and Shane, 2003; Armstrong, 1982)” • “Through learning, entrepreneurs improve their access to financial capital as well as the effectiveness of business approach and their chances of founding success (Castrogiovanni, 1996).” 33
- 34. Learning through planning “By checking the internal consistency of different assumptions (e.g., is the hiring plan consistent with the projected level of sales?), business planning can improve the accuracy of founders’ assumptions.”
- 35. Theory of Planned behavior • “planning facilitates goal attainment in many domains of human action (Cyert and March, 1964; Simon, 1964; Smith, Locke, and Barry, 1990)” • “We find that business planning reduces the hazard of disbanding, and facilitates both product development and venture organizing activity.” • “by setting concrete objectives for the future, planning helps people develop specific steps for the achievement of their goals (Brews and Hunt, 1999) • “self-set goals have greater motivational properties than relative performance goals (Locke and Latham, 1980). 35
- 36. Myths debunked Great entrepreneurs do not need plans Planning is a waste of time Investors invest in people, not in plans Planning increases likelihood of success We understand the effect of planning
- 37. Hence, it is not about whether to plan, but when to plan and how to plan
- 42. How to plan 42 • What needs to be learned o Risk o Return o Feasibility • Technical • Competitive • Operational • Financial • What needs to be communicated o Legitimacy o Understanding o Professionalism o Ability
- 46. Approaches to business planning: Let us explore competitive analysis
- 47. Why study the competition? • Competitive strategy o How will we beat the competition • Understand how customers choose and what they value o How will we compare • How much time did it take them o What may we expect • How do they do o How have their margins developed • What is the nature of the industry o Concentration, churn, density 47
- 51. Planning challenge • Develop the best insight possible o Put in enough effort o Know what data to collect o Know how to use that data to develop insight o With no budget & limited time • Important to know what you are doing o This may signal your qualities o Garbage in, garbage out 51
- 52. How to study the competition? • Through the eyes of your customer o How do [will] they choose • Competition = competing products • Through the eyes of your competitor o How could they react to your value proposition • Competition = able to change its products to [better] beat you • Through the eyes of your partners o Why should they prefer to partner with you • Competition = understanding what partners appreciate • Etc. 52
- 53. Business planning • Assumptions testing o Primary o Secondary • Will they buy • How much will they buy • How much will they pay • What will it cost • How much will we make (€) 53