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Finding Fertile Ground: Identifying Extraordinary Opportunities for New Ventures

Book Description

"This book provides a strong foundation for impending entrepreneurs to aid in

determining the possible positive outcomes of the venture."

—Marcy Freed, President, VitalStim, Inc.

"This book deals very bravely with the opportunity of technology entrepreneurship. This is a great, courageous effort."

—Jerome S. Engel, Executive Director, Lester Center for Entrepreneurship and Innovation, University of California, Berkeley

"Finding Fertile Ground provides a terrifically engaging perspective on the mindset

of the successful entrepreneur. Scott Shane's well-structured analysis and thought-provoking conclusions give would-be entrepreneurs a great set of tools to use in assessing opportunities and risks. I highly recommend this as a 'must-read' for

anyone considering starting a new venture."

—David Courtney, Executive Vice President and Board Member of TiVo, Inc.

"Truly great technology startup opportunities are very rare and therefore very hard to identify. Scott Shane's new book is unique because it helps technology entrepreneurs systematically analyze their idea, step by step through ten major screens, much like the prospector screens away dirt to expose any nuggets of gold. It is a must read for entrepreneurs determined to build only great high tech businesses."

—Ian C. MacMillan, Academic Director: Snider Entrepreneurial

Research Center, Sullivan Professor of Management

The Wharton School, University of Pennsylvania

"If you don't have the money to pay for this book now, give the bookstore an IOU.

Your chances of being able to pay it back with high interest will rise with every chapter. The author and I share two core beliefs: the critical importance of selling, and the need for potential entrepreneurs to be tech savvy, even if they are not techie."

—Kenneth P. Morse, Managing Director, MIT Entrepreneurship Center

The author of over 50 scholarly articles on entrepreneurship and innovation management,

Dr. Shane's books include A General Theory of Entrepreneurship, Foundations of Entrepreneurship, Entrepreneurship: A Process Perspective, and Academic Entrepreneurship. He edits the Innovation and Entrepreneurship Division of the leading scholarly journal, Management Science. Dr. Shane holds a Ph.D. from

The Wharton School, University of Pennsylvania.

Most efforts at starting a new business fail. But yours can succeed if you find the right

business opportunity and understand the key success factors. This book shows how.

If you're starting a business, your best odds of success are in high technology industries: not just computing and telecom, but also biotech, aerospace, electronics, manufacturing and materials, medical devices, pharmaceuticals, robotics, and other knowledge-intensive fields. This book is the first complete framework for entrepreneurs who want to start high technology businesses.

The author identifies the key factors associated with long-term success. You'll discover how to identify market opportunities and competitor weaknesses, evaluate customer needs, manage risk and uncertainty, predict product adoption and diffusion, structure your organization, and protect intellectual property. Along the way, Shane shows how to account for crucial issues such as network externalities, and the emergence of dominant designs and technical standards.

Unlike other books on entrepreneurship, this one offers solutions specifically targeted at high tech startups. There's no better way to find your best opportunities.

Indispensable tools for every high-tech entrepreneur, manager, and investor

The right market and more: what it'll take to be "the next Google"

Assess the market potential for products nobody's even imagined before

Beat the biggest players—from the smallest garage Overcome your largest, most established competitors

Create powerful barriers to entry and imitation Keep your markets to yourself—no matter how big they grow

© Copyright Pearson Education. All rights reserved.

Table of Contents

  1. Finding Fertile Ground
    1. Acknowledgments
    2. Introduction
      1. The Purpose of This Book
      2. What I Mean by Technology
      3. How This Book is Different from Other Books
      4. What This Book Does Not Do
      5. Who Should Read this Book and When Should They Read It?
      6. The Sources of Knowledge Underlying the Book
      7. The Key Lessons
      8. An Overview of the Chapters
    3. 1. Selecting the Right Industry
      1. Looking at the Evidence
      2. Knowledge Conditions
      3. Demand Conditions
      4. Industry Life Cycles
      5. Industry Structure
      6. Summary
    4. 2. Identifying Valuable Opportunities
      1. Sources of Opportunities
      2. Technological Change
      3. Political and Regulatory Change
      4. Social and Demographic Change
      5. Changes in Industry Structure
      6. Forms of Opportunity: Beyond New Products or Services
      7. Types of Opportunities and the Relationship to Types of Innovation
      8. Locus of Innovation
      9. Recognizing a Valuable Opportunity
      10. Access to Information
      11. Better Information Processing
      12. Summary
    5. 3. Managing Technological Evolution
      1. Evolutionary Patterns of Development
      2. Projecting Foster’s S-Curves
      3. The Role of Dominant Designs
      4. Understanding Technical Standards
      5. Evolution in Increasing Returns Businesses
      6. Summary
    6. 4. Identifying and Satisfying Real Market Needs
      1. Identifying a Real Need
      2. Meeting a Real Need
      3. Gathering Information about Customer Preferences
      4. Why This Approach to Market Research Is Important to Entrepreneurs
      5. Absolute Necessities, Nice to Haves, and Things That Are Unnecessary
      6. Figuring Out an Economical Solution
      7. Offering Better Alternatives Than the Competition
      8. Understanding the Marketing and Selling Processes
        1. The Importance of Personal Selling
        2. Pricing New Products
      9. Summary
    7. 5. Understanding Customer Adoption
      1. Nature of Adopters
        1. Projecting Customer Adoption
        2. Capturing the Majority of the Market
        3. Selecting the Right Customers
      2. Understanding Market Dynamics
        1. The Trap of Static Estimates
        2. Diffusion and Substitution Patterns
      3. Summary
    8. 6. Exploiting Established Company Weaknesses
      1. Why Established Companies Win Most of the Time
        1. The Learning Curve
        2. Reputation Effects
        3. Cash Flow
        4. Scale Economies
        5. Complementary Assets
      2. Established Company Weaknesses That New Firms Can Exploit
        1. The Focus on Efficiency
        2. The Exploitation of Existing Capabilities
        3. The Need to Satisfy Existing Customers
        4. The Constraints of Existing Organizational Structure
        5. The Need to Reward People for Doing Their Jobs
        6. The Difficulty of Product Development in a Bureaucracy
      3. Opportunities That Favor New Firms
        1. Discreteness
        2. Human Capital Intensity
        3. General Purpose
        4. Uncertainty
      4. Summary
    9. 7. Managing Intellectual Property
      1. Copying Is Easy—And Harmful!
      2. Secrecy
        1. When Does Secrecy Work?
        2. Trade Secrets
      3. Patenting
      4. Summary
    10. 8. Appropriating the Returns to Innovation
      1. Obtaining Control over Resources
      2. Establishing a Reputation
      3. Learning Curves
      4. First Mover Advantage
      5. Complementary Assets
      6. Summary
    11. 9. Choosing the Right Organizational Form
      1. Cost of Exploitation
      2. Accelerating the Pace to Market
      3. Making Use of the Best Capabilities
      4. Nature of the Technology
      5. Managing Information Problems in Organizing
      6. Summary
    12. 10. Managing Risk and Uncertainty
      1. The Start-up Problem
      2. Risk Reduction Strategies
        1. Searching for Information
        2. Minimizing Investment
        3. Maintaining Flexibility
      3. Risk Reallocation Strategies
      4. Risk Perception Strategies
      5. Tools for Managing Risk and Uncertainty
      6. How Do Entrepreneurs Convince Stakeholders to Bear Risk?
      7. Summary
    13. Conclusions
      1. A Final Comment
    14. Notes
      1. Introduction
      2. Chapter 1
      3. Chapter 2
      4. Chapter 3
      5. Chapter 4
      6. Chapter 5
      7. Chapter 6
      8. Chapter 7
      9. Chapter 8
      10. Chapter 9
      11. Chapter 10
    15. List of Acknowledgments for Tables and Figures
    16. About the Audio CD
      1. Book Summary
      2. Author Interview
      3. Limited Warranty
      4. Technical Support