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Engineering Entrepreneurship

Ron Lasser, Ph.D.EN 0062 Class #911-03-06

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Stages of Venture Development

Stage 1

Pre-Start Up

Stage 2

Start Up

Stage 3

Growth

Stage 4

Mature

Stage 5

Innovation or

Decline

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The TA Life Cycle Landscape

Early Market – great excitement The Chasm – great despair The Bowling Alley – niche based adoption The Tornado – mass-market adoption Main Street – after market development End of Life – obsolescence and retirement

Early Market

The Chasm

The Tornado

Main Street

End of Life

The Bowling

Alley

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The Logic of Failure “The modern world is made up of innumerable inter-

related subsystems, and we need to think in terms of these interrelations”

“Real improvement can be achieved if we understand the demands that problem solving places on us and the errors that we are prone to make when we attempt to meet them”

“… it is far from clear whether good intentions plus stupidity or evil intentions plus intelligence have wrought more harm in the world.”

Source: The Logic of Failure By Dietrich Dorner

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Situation #1 – LK & J Systems Les Kaman is an entrepreneur who has a background in theoretical physics,

his plays the violin in his spare time, but he realized that in the making of integrated circuits the topology of the wafer substrate is critical for optimizing production Les is a CEO who likes to have his hands in all the pots and if there are not enough

on the stove, he likes to create pots so as to keep everyone busy and is a workaholic

The purpose of his technology is to measure the height variation of the surface of a silicon wafer using a non-contact short pulse radio frequency, similar to how radar profiles the landscape for low flying military fighters

The result is then used to find the most level spots on the wafer to use as sites when using photolithographic methods to manufacture integrated circuits

Les hired Bill Players as VP of Engineering and Mary Balmer as VP of Manufacturing Bill is more of a management guru, then a technical person Mary has a strong background in mechanical engineering and process design

Jason Lambkin is a very bright electrical and computer engineer who has discovered a problem in the software used to display the wafer landscape as a 3D plot on computer monitor The problem relates to very complicated digital signal processing technology Les and Bill do not understand the software aspects of the problem, however, Mary

understands the impacts

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Les Kaman You invented the radio frequency technology and you

like to show that you are smart and know it all You like to start new project teams when you don’t

like the answers you hear from your staff since you are the boss

You have absolutely no software background You want people to work long hours giving up

weekends and holidays to get the job done Wants to be on the project team to help solve the

problem Wants to make the decision himself, suggesting what

to do, but never ordering people to do it

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Bill Players Engineer by training, but went for an MBA Doesn’t know the technology any more – gets scared

when asked a question – turns to his technical subordinates to get the answers saying it is their job to know the answers

Knows Les has no software knowledge and likes to be on the project team to direct traffic and have things done his way

Is afraid of Mary who he believes is better technically then he is

Looks to her for the answers rather than his own staff Will not make a decision for fear Les will over turn it Likes to find out how long the technical solution will

take to complete

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Mary Balmer Very competent, very formal Only addresses peers or bosses, not the technical

people Knows the solution is to hire a software consultant,

but does not want to say out loud, for this would be insulting to her peer Bill

Tries to get Bill to come to this conclusion without saying it

Usually takes Les’s side except when Les wants to be part of a project team

Likes to make decisions, but want Les to approve it Wants to know the impact on the manufacturing

process

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Jason Lambkin Thinks his bosses are jerks Knows more but asks questions rather than insulting them Came to the start-up because of the technology, but has

learned that key to success is rapid decision-making Understands the technology, knows the solution is to re-

write the filter parser by recoding in C++ using a bit slice technology

If asked about this can go into more detail about the technology: e.g., need to use an imaginary low pass filter encoded using lexical grammar that parses the telemetry data to select which bits are processed and which bits are ignored

However, cannot relate this technical solution to how long it will take or what impact on the manufacturing process

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Situation #2 – Print Magic Neil Gould is a egotistical business guy who has been

successful in the clothing business He comes up with the idea to computerize printing on

T-shirts to customize whatever anyone wants on their clothing

The technical team drifts from the original concept of T-shirts to printing customized messages on photo-greeting cards

Neil’s company manufactures 3000 units of the photo-card machine selling it to one of the largest photograph developers PicGraph in the US

The machine damages 8 photographs per 100 in the first big Christmas season causing PicGraph to lose millions of dollars and have angry customers due to having their orders redone or be delayed

PicGraph demands a meeting with Neil’s company

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Situation #2 Continued

Neil meets with Ed Tagucci and Linda Symartousoli of PicGraph

Neil brings along Aviva Hallipen a mechanical engineer to discuss how they will fix the problem

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Neil Gould You are the founder You take things personally You are in full control; you make every decision You don’t listen, you interrupt as soon as you have an

idea to fix the problem You are not technical, but you want to be, and you

make it appear that you do know what you are talking about

You want it done quickly so you can get on to the next thing, you get bored easily and want to delegate full control which you do; however, you still have opinions and want to make the final decision

You are not patient

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Ed Tagucci You are the VP of Operations; you make the place run You are not a quiet person You want it done, and done now You have little patience for companies that screw up You blame the people who manage the companies

and want them to take it personally; you want a real commitment to get it done; you want to see milestones and a schedule; but you will not tell this to the Print Magic, you ask questions to get them to show you how they are going to do it

You want this fixed in 3 months; no excuses, ifs, ands, or buts; they need to find a way to meet your timeline

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Aviva Hallipen You are the manager of the mechanical engineering design group and you do some

hands on design as well as project management of the other engineers Very bright and confident You speak only when you can contribute You are technical, but your special value is that you try to understand the problem in

detail, not just what is making the customer angry; your goal is to fix it and fix it right; you are not in a hurry to just jump through the hoop; you want to take time to understand the problem, make a plan, organize a team, make the changes, retest it, and ship it; realistically, this will take six months

You ask about how the product is used to understand when the problems occur The product is simple to use; it uses a roll of foil that is transferred to the photo by using

heat. There is only one moving part the roll of foil which has to be specially threaded by the operator – special training is required to do this as if it is not aligned properly the foil can jam, then has to be rethreaded

You have test data to show that the foil will damage 8 pictures in 10,000 which is below the PicGraph spec of 10 per 10,000

One critical piece about the foil is they need to be stored in a cool place for they will expand when place near a heat source; this could then cause thread miscues due to the expansion of the foil

The critical equation is: thickness of the foil = 4.3 (10-3) inches/degree Fahrenheit times the temperature change over room conditions + the original thickness of the foil

If the temperature rises in the room more than 20 degrees it could be a problem; exposure to sunlight in windows could make the foil expand near its limit for damage for it takes 3 hours for the foil to return to normal

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Linda Symartousoli You have all the detail knowledge of the problem; your boss

Ed does not The problem occurs toward the end of a shift after the unit

is in operation for about 4 hours The operator has gone through the Print Magic training

course to thread the special; however, you know but fail to tell all that operators do get sloppy on other things toward the end of their shifts for the foil needs to be changed and they need to tally up their sales to transfer to the next shift and then punch out

You know the spec required is 4 damaged photographs per 10,000; this was changed twice and PrintMagic still believes the spec is 10 in 10,000

Also, you know that some of the foils have been stored on a shelf near the windows to advertise the different colors and could be warm due to the sunlight when threaded in the machine

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Situation #3 - EveryScan EveryScan is a start-up whose products are selling like wildfire The CS2100 commercial scanner has the best image sharpness, color

reproduction and performance far outreaching their competitors EveryScan received funding 18 months ago and scrambled to get their

product to market After 6 months they have ship no less than 30 scanners per day – an

amazing feat for each scanner has over 2000 parts, 8 microprocessors, and sophisticated optics that need to be aligned by computer

The company has approximately 95 people – 50 in manufacturing, 20 in engineering, and the rest in sales, quality, and management

Unfortunately, customers are calling for the power supply in the CS2100 spontaneously catches on fire

Kim Nazmer, head of the Quality department, has discovered EveryScan purchases a customized supplied designed exclusively for EveryScan

To make matters worse, the supply was designed by Abe Meggers, one of the co-founders of EveryScan and with the Anil Rampor of Power Systems

There is no documentation, no technical specification for the supply; when she spoke to Abe and Anil, they only remember it was designed in a day because of pressure to ship from the Board of EveryScan

What is Kim to do?

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Myth of the Entrepreneur Knowing how to do the technical work does

not mean you know how to build a business Working IN the business, not ON it The business is a product

If not outright failure, then failure to meet full potential

Being your own boss is not an entrepreneur Entrepreneur, manager, technician

Technician is dominant because that is how we have been trained to think

Thinking like a technician, keeps a business small

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Myth of the Entrepreneur Entrepreneur: replicate the core capabilities

or competencies, this builds the business Manager: construct business processes and

practices; find the vital few Business plan: about “What do I want?”; it

is a lifestyle choice Marketing: tell a story; all stakeholders

need to see themselves and play a role in your story

The dreaming room: the customer space: the problem space; you need to be comfortable with abiguity

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Entrepreneurs Acted without prior analysis of the situation Failed to anticipate side effects and long-term

repercussions Assumed that the absence of immediately

obvious negative effects meant that correct measures had been taken

Let over involvement in projects blind them to emerging needs and changes in the situation

Were prone to cynical reactions

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Characteristics of Demands placed on Decision-makers Complexity

Existence of many interdependent variables in a given system System of variables is interrelated if an action that affects or is meant to

affect on part of the system will also affect other parts of it Interrelated guarantees side effects and long-term repercussions

Dynamics – reality changes as do systems Must observe developmental tendencies and not just a single moment

Invisibility Not all information is visible Visible information is often not evidence due to lack of skills or

distraction Ignorance and mistaken hypotheses

Need to understand how certain actions taken will affect future Structural knowledge – how the variables in the system are related and

how they influence one another. Reality model – totality of assumptions about linkages between variables

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Steps in Planning and Action Formulate Goals Formulate models and gather information Prediction and extrapolation Planning of actions; decision making, and execution

of actions Review of effects of actions and revision of strategy Never as simple as steps given above because:

Never a simple progression Iterative process with frequent leaps back and forth Each step contains problems that need to be solved

which will be treated in turn

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Setting Goals Types of goals

Positive or negative Negative goals tend to be unclear or too general Convert to positive to gain specificity

General or specific Convert general into specific Requires adequate information Set intermediate goals according to the criterion to be most efficient and with high

probability of success Clear or unclear

Make goals understandable by all Validate all are in alignment

Simple or multiple Define links and contradictions between goals. Rank in terms of urgency and importance If two goals conflict

May need to find a less-than-ideal solution to achieve a balance Or solve only problem well and forget the other Reshape the entire system in such a way that the negative relationships disappear

Implicit or explicit Pursue implicit goals only achieving explicit goals Explicitly work for society; implicit work for individuals

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Why Failure? Mainly psychological reasons We don’t like complexity We don’t like to deal with complex situations or

problems and look for ways to simplify Slowness of human thinking to deal with reality Our tendency to economize, take short cuts We preserve a positive view of our own competence

Significantly shapes our direction and course of our thought process and actions

We think we are better than we really are Relatively slow speed with which the storage system

of the human memory can absorb new material We don’t think about problems we don’t have