The Physics of Entrepreneurship

The Physics of Entrepreneurship

Entrepreneurship has for a long time been viewed as a creative process rather than a scientific process. However, thanks to work done by the likes of Michael Porter and more recent initiatives such as the E-Myth and The Startup Genome, there have been attempts to create a scientifically verifiable theory about entrepreneurship. However, this is not the case but simply tries to draw lessons from physics and apply the same to entrepreneurship. Following in the footsteps of Dan Cobley, head of marketing at Google, who in a TED Talk, drew some very interesting parallels between physics and marketing, here we compare the four laws of thermodynamics to the entrepreneurial initiative.

Zeroth Law

The law states that if A+B=C then A=B. If you are entrepreneur, the first thing, and probably the most challenging, is coming up with a product that will not only compete well but also create a niche market that is big enough. However, for many people, either due to little market research or to inexperience will jump into a market with a new product that serves a particular market. Unbeknownst to them there is already another product that is already serving that very same market. In terms of the zeroth law of thermodynamics, if your product (A) is added to your competitor’s product (B) to serve the same market (C) then product A (yours) and B (your competitor) are similar and therefore lack differentiation and competitive edge. Lesson to learn: Don’t get into a market unless you can differentiate effectively.

First Law

The law states that there are two types of physical process; energy transfer as work and energy transfer as heat. Starting an entrepreneurial initiative requires a lot of input. For many entrepreneurs, this input is in the form of money and time. There are many tasks at hand and the reality is that sometimes there is too much to do at once. Drawing from the first law, we can therefore conclude that there are tasks that yield results (work) and there are those that result in burnout (heat). Lesson to learn: learn to differentiate between work and busyness; both take up energy but only one produces results.

Second Law

The law of entropy states that physical processes are irreversible. As an entrepreneur, the most important question you must ask yourself is whether you want to be an entrepreneur in the first place. As the law states, there are some things that are actually irreversible. This law can also be looked at in a different way. This law also states that energy cannot be destroyed but is only converted. If you do decide to become an entrepreneur, learn the art of flexibility and adaptation, let no effort go to waste but convert it into a something beneficial, even if only just a lesson learned.

Third Law

The law states that it is impossible to cool a perfect crystal down to exact zero. So yes, maybe you do have a perfect idea and you have the perfect plan to make it work, physics says it’s not going to happen as you think it will. Instead, this law should teach you that even if you have a perfect idea (a perfect crystal), chances are you will not be able to nail it perfectly (cool it to exactly absolute zero). So expect pitfalls, variances and the overarching reality that there will be unavoidable failures coming your way.

Darwin & the Demon- Failure to Innovate

In the article “Darwin & the Demon,” it is said that “failure to innovate equals failure to differentiate equals failure to garner the profits and revenues needed to attract capital investment.” The Internet is about constant innovation. So how can existing companies best deconstruct old processes and organizations to take advantage of opportunities presented by the Internet?

So let’s first understand the statement here that is presented to decompose the different factors. To start with innovation, the literal meaning of the term is to bring change or renew an existing thing. Today, the focused need is to change the way we're doing things and find a better way. Every investor or venture capitalist in today is looking at how the company is adapting to the new terms of work and technology. That is all about innovating and bringing something new to challenge the silos. The better a company is at innovating, the better the chances of creating a differentiating factor than that of its competitors and eventually being able to take market share. Existing companies can only better themselves by knowing what they are good at. Now comes the business architecture practice. Understand the companies core capabilities to see where you stand and what makes you “YOU”. Once you've identified that, start exploiting the internet to explore what others in the same segment are doing. Gather data, use analytics and statistics to substantiate this gut feeling. Post or try to carry out a survey on something like, "What should you stop doing?", "Continue Doing?" and "Start Doing?". This will give you some perspectives on what your company needs. Create a capability assessment to understand what is the best process or product that is unique about you, try and strengthen it, and focus on the 80/20 principle. The internet is a great source of information, so the more you exploit it the better.

Click the link below for a copy of the full article:

http://apps.business.ualberta.ca/mlounsbury/techcom/readings/darwin%20and%20demon.pdf

Elevator Pitch: LetsLearn.com

For high-school and college students located anywhere in Massachusetts, who face academic difficulty, want a refresher or just need a study group, LetsLearn.com is an online teaching and collaboration service that brings students together from across the state, and offers licensed tutors when needed. Unlike, Cramster.com, LetsLearn is not just a tutoring service but instead it is a collaboration experience of students brought together to encourage, motivate and educate each other.

LetsLearn.com - Our First Customer!

Discuss who is most likely to be your company's first customer.

Since we are based in Massachusetts, I suggest we start in this state, based on the following facts:

• A quick Internet search for statistics of Mass schools revealed that there are 1831 organizations falling under the public schools umbrella. http://profiles.doe.mass.edu/search/search.aspx?leftNavId=
• There are more than 100 colleges in Mass, making it the perfect area for startup.
• Moreover, which state is at the top of the college ranks? In other words, if we can be successful here, it will work to our benefit since we can leverage having the best colleges in the world in Mass, which can be considered a lead in the global education industry.

What does this customer typically buy?

College Students: These customers based in MA typically buy school related applications such as Connect+, Harvard cases, eBooks, etc. They also buy hardcover textbooks in the school bookstore or at off-campus book stores. This is not directly related to our product and service but when they start using these products they will need to have a good discussion group for a similar case but in another school or they might need a discussion with a subject matter expert for any particular field. They also might have questions/doubts etc. for which we can re-direct them to the appropriate tutor. The service that we provide is currently taking place in traditional mode where students and professors are limited to discussions only within their classes and at max within their schools. We will take it to another level by letting them cross the school boundaries.

High School Students: They typically purchase school supplies such as notebooks, pens, pencils, erasers, folders, binders, flashcards and rulers. They also spend money on school lunches and school events such as dances and high-school sporting events.

How do they buy it?

College Students: Faculty members and students typical buy the material mentioned from only the sources who own it. They also buy case solutions from websites like Cramster.com who only provide the solution to a problem which may or may be from a industry or subject matter expert. Also, Students do not have a platform to form groups and exchange ideas with each other on a specific case or topic. We are providing global exposure. Furthermore, They typically buy these products either with their hard earned money, which is generally not much or their parents purchase the products for them.

High School Students: Typically their parents purchase these products for them since most high-school students do not have a job. If they do have a job, they do not make enough money to spend on these things.

How do they become aware of it?
Students and faculty members typically become aware of the products and services from schools, peers, seminars, networking events, career fairs, social networking websites, and blogs and web searches.

The Age of the Consumer-Innovator

What is the role of consumers in product innovation?

Consumers today are smarter and more informed in their purchases. They play a big role in driving the product innovation as most companies today are bent towards their input. They are driven and motivated towards product innovation depending on the customer behavior. The alarming failure rate for new products has corporations looking to consumers to drive innovation in their markets, according to a report released by Forrester Research. Businesses, especially large corporations, are spending millions on product development and are under increased pressure to boost their ROI, Return On Investment, on a new product. That's leading them to give consumers a greater role in the process. They understand that this also improves customer loyalty and brand favorability. Research shows that customers are now more involved than ever before and they tend to show dissatisfaction in products more vocally. They provide feedback on what should be changed in the product to better suit them. This can be seen on many online blogs. A consumers dissatisfaction with a product is instantly spread over the internet through online community groups, and if it's a well known product, it's even more so.

Has this changed over time? Why or why not?

Product innovation is a critical process, which is necessary to bring a new product or service into the market. Product innovation often involves various aspects like idea generation, product design, detail engineering, market research as well as marketing analysis. According to a report released by Forrester Research, about 85% of the newly introduced products and services fail after a couple of years due to several reasons including the ignorance of consumers. Some of the roles of consumers in product innovation include:

Insight Provider: Companies can request and create a community of consumers, providing insights, identifying needs or evaluating ideas.

Customizer: Consumers can directly influence the final stage of the product development through adapting and selecting a predetermined set of product features as per their own preferences up to the extent to which firms’ value chain support it.

Co-Creator: Co-creation often involves all phases of innovation process such as idea generation, design & engineering, testing as well as launching phase of the product.

Creator: Innovation can also be initiated and driven by the consumers themselves. In such a situation; consumers often act as involved and independent value creators.

User: Consumer’s role as a “user” of a newly developed product can provide opportunity to test new product and its prototype.

Product Innovation Challenges

New Research Study Uncovers Product Innovation Challenges Facing Consumer Goods Manufacturers: Companies Generate Plenty of Product Ideas, But Post-Launch Results Fall Short of Goals

A new research study, specific to consumer goods manufacturers, is looking into product innovation and which challenges they are facing. The study focuses on consumer goods (CG) manufacturers and their investments in product innovation. It goes on to identify the major challenges manufacturers face in this pursuit. According to the research, when it comes to product innovation, companies aren’t having any trouble generating ideas, but the post-launch results are far from what’s expected. The survey showed that companies on average generate 25% of their revenues from products, which have been introduced within the past five years. However, only half of these new products achieve their profit goals. Some of the major causes of the profit shortfalls are a result of poor market analysis and lack of product differentiation.

Anyone can come up with ideas for new products. I can come up with a new toothbrush, even 100 different styles of toothbrushes, but if nothing sets it apart from the other products in the market, why is someone going to purchase my new product over the market leader? They will not. That is why it’s so important to conduct market research in the early stages of product development to ensure that there’s a place in the market for that item and to ensure that it’s positioned in the markets perfectly to reach profit expectations. Also, sometimes companies are so focused on getting new products out they don’t spend enough time looking at it’s profit margin. Oftentimes companies are so focused on increasing their top line, especially through new product launches that they don’t realize they are actually losing money manufacturing that product.

The study also identified the primary reason why good product ideas fail is because they get stuck between development and conception. When it came to execution of product ideas, nearly 60% of survey respondents indicated that the development resources were stretched too thin because of an excessive number of projects in the pipeline. Obviously a firm’s resources aren’t endless and it’s only reasonable that they will not be able to go forward with every product idea that comes to mind. It’s better to go forward with 2 good product ideas and to have the resources allocated so that there is sufficient support to bring the products to market. It’s less effective to have 10 products all moving through the R&D pipeline at the same time with fewer resources dedicated to each. It’s better to prioritize the new product ideas by importance and focus on those that show potential in the market.

For a copy of the article, click the link below:

http://www.businesswire.com/news/home/20111011005513/en/Research-Study-Uncovers-Product-Innovation-Challenges-Facing