Rutgers Business School Chapter 5 - Growth, Innovation, & Entrepreneurship PDF

Introduction to Management 33:620:301 Chapter 5 Growth, Innovation, and Entrepreneurship Professor Hamilton  Summary y Part...

Introduction to Management 33:620:301 Chapter 5 Growth, Innovation, and Entrepreneurship Professor Hamilton  Summary y Part V ar 12 m m Su er ad Le as t Manager er Part IV en Leader ag 11 an em As M ag an M ce an t rm en rfo m 10 Pe ge en t ga En em e ag ye an plo sM “Done Well” 9 Em ce Part III ur Where are We Now? so Re an n m sig 8 Hu De n tio p za ss hi ni e rs ga sin eu 7 Or Bu en al pr ob tre Gl a En ing an d ag n, an 6 io M at ov “The Right Work” nn ,I t” th i gh ow 5 “R Part II Gr t’s k” ha or W tW g in ig h Do 4 “R e th ing tify en t ” en 3 Id e m e ll ag e W an on M of kD n or u tio tW ol igh 2 Ev “R Part I “Intro” t: en em ag an 1 M Chapter 5 – Learning Goals LG 5-1 Identify and describe the two main factors that increase the economic value of a business LG 5-2 Identify and describe the five basic options available to a business to create growth LG 5-3 Define innovation, and describe the three mechanisms that help the most innovative companies to be successful LG 5-4 Define Entrepreneurship and describe the key elements that help larger businesses create successful new ventures Drivers of Economic Value of a Business LG 5-1 1. Profitability 2. Growth Drivers of Economic Value of a Business LG 5-1 1. Profitability Ability to generate long-term positive 2. Growth cash flow necessary to provide an appropriate, risk-adjusted, rate of return on capital employed ROIC = NIAT/Equity + LT Debt Drivers of Economic Value of a Business LG 5-1 1. Profitability 2. Growth Rate of increase in net cash flows year over year Options for Creating Growth: LG 5-2 1. Existing products/services to current customers 2. Gaining new customers while retaining current customers 3. New products/services to current and new customers 4. Selling existing products/services into new markets 5. Entering completely new markets with new products/services What is Innovation? LG 5-3 Innovation is executing an idea which addresses a specific challenge and creates value for both the developer and the user Mechanisms for Successful Innovation LG 5-3 1. Use of Artificial Intelligence 2. Use of Technology Platforms 3. Use of Collaborative Ecosystems Mechanisms for Successful Innovation LG 5-3 1. Use of Artificial Intelligence Computer systems able to perform 2. Use of Technology Platforms tasks that normally require human intelligence 3. Use of Collaborative Ecosystems Mechanisms for Successful Innovation LG 5-3 1. Use of Artificial Intelligence 2. Use of Technology Platforms Provide a foundation for developing other business offerings 3. Use of Collaborative Ecosystems Mechanisms for Successful Innovation LG 5-3 1. Use of Artificial Intelligence Multiple organizations working 2. Use of Technology Platforms collaboratively to enable rapid development of new technologies, 3. Use of Collaborative Ecosystems products, and services Collecting and using data Access to IP (intellectual property) Merging physical and digital marketing channels Advancing new technologies What is Entrepreneurship? LG 5-4 Entrepreneurship is bringing forth novel ideas and concepts that I have an idea create value. To do this entrepreneurs often act with urgency, in unorthodox ways, so as to address the immediate challenges, and generate opportunities amidst uncertainty. How Do Large Businesses Create Successful New Ventures? LG 5-4 1. Top Leadership Commitment 2. Creating limited target areas aligned to core competencies of the business 3. Overcome the typical obstacles that stifle internal new ventures 4. Create separately funded business development organizations 5. Use innovation tools (tech platforms & collab. ecosystems) 6. Learn from prior ventures 7. Terminate unsuccessful ventures Alex Gorsky on Growth and Innovation Chapter 5 – Learning Goals LG 5-1 Identify and describe the two main factors that increase the economic value of a business LG 5-2 Identify and describe the five basic options available to a business to create growth LG 5-3 Define innovation, and describe the three mechanisms that help the most innovative companies to be successful LG 5-4 Define Entrepreneurship and describe the key elements that help larger businesses create successful new ventures  Introduction to Management 33:620:301 Chapter 5 Growth, Innovation, and Entrepreneurship Professor Hamilton