Description
Brief file in regard to launching new ventures jump starting innovation for entrepreneurs and business owners.
LNV 1 of 4
A NEW LANDSCAPE
FOR ENTREPRENEURS
Today’s entrepreneurs, along with small and midsize business owners, face a host of challenges as
they work to harness promising opportunities and avoid local and global threats. In this interview,
LYNDA M. APPLEGATE, Henry R. Byers Professor of Business Administration at Harvard Business School
(HBS), discusses the issues central to her recent research on building new ventures and leading radi-
cal business innovation in the face of signi?cant market, technological, and regulatory turbulence.
Q: What are some of the external factors that today’s
entrepreneurs and business owners need to consider in
their funding strategies?
The pace of innovation, a signi?cantly more complex
business environment, and globalization have raised the
bar for entrepreneurs and business owners. The window
of opportunity, for instance, is smaller today. Entrepre-
neurs are under incredible time pressure: they must act
quickly before a competitor moves in. Those competitors
may be large ?rms or private equity ?nanced ?rms with
access to signi?cant resources; they also may be ?rms
in developing markets with access to labor markets at a
fraction of the cost of those in developed markets.
Indeed, in the past, entrepreneurship was a local phe-
nomenon—companies started small and grew slowly.
But today, a company may be global from the start: it
might launch in Massachusetts; source technology or
procurement services in India; outsource manufacturing
in China; and seek customers worldwide with the help
of the Internet.
Another key factor is the regulatory environment, which
has created a greater need for ?nancial transparency and
for professionalism in governance and accounting. These
were once primarily the concerns of public companies,
but now even small companies are coming under scrutiny.
Q: How has the funding environment changed in recent
years?
When starting new ventures or taking a small business to
the next level, entrepreneurs and business owners must
consider multiple ?nancing options, from self-funding to
strategic investors to venture capital and other forms of
private equity. They must choose a mix that best suits a
speci?c venture at a certain point in its evolution, always
keeping in mind whether they intend to keep their new
business independent or to sell it at a later date.
I have seen two major changes begin to in?uence how
entrepreneurs and business owners think about the
?nancing realm. The ?rst change is the recent increase
in money slated for private equity expansion—especially
later-stage ?nancing for small established ?rms. To
create new value, savvy ?nancial investors and large
established players are buying niche players in frag-
mented industries. This consolidation play is becoming
increasingly popular. An investor might take several
smaller niche businesses and put them together with an
infusion of capital to create a new entity with expanded
potential. In one recent class, I asked 165 business
owners whether a strategic investor or a private equity
investor had ever offered to buy their company as part
of an expansion deal. The majority raised their hands—
this is dramatically different from just ?ve years ago.
www. exed. hbs. edu
“The pace of innovation, a signi?cantly more complex business environment,
and globalization have raised the bar for entrepreneurs and business owners.”
Launchi ng New Vent ur es: J ump- St ar t i ng I nnovat i on f or Ent r epr eneur s and Busi ness Owner s
LNV 2 of 4
The second major change in how new ventures and small
businesses are ?nanced is that angel investing has become
more institutionalized. In the United States last year, the
amount of angel capital for funding new businesses was
greater than the funding from venture capital (VC).
Angel investors are active investors. In fact, they typically
are experienced entrepreneurs and business owners who
have built successful businesses in the past. As a result,
they can contribute their experience to the business. In
addition, most angel investors are investing their own
money. Therefore, they have more ?exibility than the
typical VC investor in the amount of money they invest
and in the type of exit strategy they expect.
Q: In light of these changes, how should entrepreneurs
and business owners approach their ?nancing strategies?
I always advise entrepreneurs and business owners to
consider the type of business they wish to build before
they make decisions regarding ?nancing. Do they plan to
build a high-growth ?rm or a lifestyle business? The size
of the overall opportunity, and how easy or dif?cult it will
be to build the business, in?uences the amount and type
of ?nancing you need.
These factors also in?uence the risk you face and how it
is managed. Will the new business serve as a disruptor to
established players in the industry or to the customers they
serve? Disruptive innovations often require more capital
and take more time to build and implement. Risk levels
are often high and may include technical, market, resource,
and implementation risk, which must be managed closely.
As such, ?nancial investors can syndicate and minimize
the risk of disruptive innovations to any one party.
Q: What are some of the key skills needed by entrepre-
neurs today?
At the highest level, entrepreneurs must know how to
assess opportunities critically and dispassionately. Once
a good opportunity has been identi?ed, entrepreneurs
must be able to develop effective plans for building the
“go-to-market” product or service, putting the right organi-
zation and partnerships in place, acquiring the necessary
funding, and engaging market adoption.
Over the past several years, the qualities of a successful
entrepreneur have de?nitely changed. In the past, entre-
preneurs had the luxury of taking their time in developing
the skills required to build a sustainable business. Now,
however, they often are required to evolve their strategy
and build organizational capabilities much more quickly.
This requires that their personal leadership capabilities and
the governance model of the business keep pace. Smart
entrepreneurs realize this and ensure that they have the
necessary mentors and development opportunities well
before they are put to the test.
www. exed. hbs. edu
“Personal leadership is important,
but teams build companies.”
A NEW LANDSCAPE
FOR ENTREPRENEURS
RISK PROFILE OF INNOVATIONS BY TYPE
Launchi ng New Vent ur es: J ump- St ar t i ng I nnovat i on f or Ent r epr eneur s and Busi ness Owner s
Key Risk Key Risk
Key Risk Key Risk
LNV 3 of 4
www. exed. hbs. edu
Q: What leadership capabilities do ?rms need to build?
John Kotter, leadership guru and Konosuke Matsushita
Professor of Leadership, Emeritus at Harvard Business
School, calls on executives to ensure that their ?rms
focus on both leadership and management. Leadership
activities are all about transforming—innovating the
strategy of a ?rm or developing new capabilities required
to take a company to the next level. Management activi-
ties, on the other hand, ensure that the company can
execute today’s strategy—setting challenging goals and
delivering results. As such, these leadership and man-
agement capabilities may be focused on stakeholders
and processes inside or outside the ?rm.
A NEW LANDSCAPE
FOR ENTREPRENEURS
A team approach to creating successful new ventures
True innovators are focused on the long-term improvements that they can make to the
company and in the industry at large. By establishing a strong team spanning all four
quadrants, entrepreneurs can create a foundation for success as the company evolves.
WHAT % OF TIME DO YOU SPEND DOING THE FOLLOWING LEADERSHIP ACTIVITIES?
Leading
“Transforming”
External
“Strategy”
Internal
“Organization”
Managing
“Executing and Delivering Results”
Building New
Capabilities
Mentoring &
Motivating
Innovating
New Business
Development
Monitoring & Control
Managing Resources
Measuring
Performance
Selling To Customers
Managing
Customer/Partner
Relationships
At various points in the company’s development, the
emphasis on leadership and management, as well as
the focus on external or internal stakeholders, may differ.
The savvy entrepreneur and business owner, however,
knows how to assemble a team with complementary
outlooks and skills so that all of these areas receive
the right amount of attention today—and for the long
term. Personal leadership is important, but teams build
companies.
Launchi ng New Vent ur es: J ump- St ar t i ng I nnovat i on f or Ent r epr eneur s and Busi ness Owner s
LNV 4 of 4
In accordance with Harvard University policy, Harvard Business School does not discriminate against any person on the basis of race, color, sex or sexual orientation, gender identity, religion, age,
national or ethnic origin, political beliefs, veteran status, or disability in admission to, access to, treatment in, or employment in its programs and activities. The following person has been
designated to handle inquiries regarding the nondiscrimination policies: Ms. Nancy DellaRocco, Harvard Business School, Soldiers Field, Boston, MA 02163-9986 U.S.
©2007 President and Fellows of Harvard College
www. exed. hbs. edu
LYNDA M. APPLEGATE is the Henry R. Byers Professor
of Business Administration at Harvard Business School,
where she teaches courses in entrepreneurial man-
agement and in technology and innovation. An active
international consultant, Applegate has served on the
boards of directors and advisory boards of public and
privately held companies, and as a policy adviser to the
World Bank, the NASDAQ Stock Exchange, and govern-
ments around the world. She currently chairs the HBS
Executive Education Owner/President Management
(OPM) Program and a new program, Launching New
Ventures: Jump-Starting Innovation for Entrepreneurs
and Business Owners.
A NEW LANDSCAPE
FOR ENTREPRENEURS
Q: How do entrepreneurs and business owners acquire
the necessary skills and insights to help their companies
succeed?
While it is true that some people have more of an en-
trepreneurial spirit, the truth is that the ability to launch
and build a successful new company in this fast-paced
and complex world also requires a disciplined, strategic
outlook.
That is why HBS Executive Education recently created
a program to meet the speci?c needs of entrepreneurs
and business owners of small and midsize companies.
Launching New Ventures: Jump-Starting Innovation for
Entrepreneurs and Business Owners helps you to under-
stand how to evolve strategy—as well as the capabilities
required to execute that strategy—in order to deliver
superior business value in a rapidly changing world. This
new program is an outgrowth of a previous HBS Alumni
program entitled, The Entrepreneur’s Toolkit, which was
sponsored by Ed Hajim (HBS MBA ’64), serial entrepre-
neur and current chairman and CEO of MLH Capital.
Over the past decade, we have seen a number of busi-
ness “disruptors”—such as the Internet, new business
models, and globalization—which create not only great
opportunities, but also unique challenges. Launching
New Ventures will provide the practical insights, skills,
and tools that you need to leverage disruptive opportuni-
ties and address new challenges.
Launchi ng New Vent ur es: J ump- St ar t i ng I nnovat i on f or Ent r epr eneur s and Busi ness Owner s
doc_202785490.pdf
Brief file in regard to launching new ventures jump starting innovation for entrepreneurs and business owners.
LNV 1 of 4
A NEW LANDSCAPE
FOR ENTREPRENEURS
Today’s entrepreneurs, along with small and midsize business owners, face a host of challenges as
they work to harness promising opportunities and avoid local and global threats. In this interview,
LYNDA M. APPLEGATE, Henry R. Byers Professor of Business Administration at Harvard Business School
(HBS), discusses the issues central to her recent research on building new ventures and leading radi-
cal business innovation in the face of signi?cant market, technological, and regulatory turbulence.
Q: What are some of the external factors that today’s
entrepreneurs and business owners need to consider in
their funding strategies?
The pace of innovation, a signi?cantly more complex
business environment, and globalization have raised the
bar for entrepreneurs and business owners. The window
of opportunity, for instance, is smaller today. Entrepre-
neurs are under incredible time pressure: they must act
quickly before a competitor moves in. Those competitors
may be large ?rms or private equity ?nanced ?rms with
access to signi?cant resources; they also may be ?rms
in developing markets with access to labor markets at a
fraction of the cost of those in developed markets.
Indeed, in the past, entrepreneurship was a local phe-
nomenon—companies started small and grew slowly.
But today, a company may be global from the start: it
might launch in Massachusetts; source technology or
procurement services in India; outsource manufacturing
in China; and seek customers worldwide with the help
of the Internet.
Another key factor is the regulatory environment, which
has created a greater need for ?nancial transparency and
for professionalism in governance and accounting. These
were once primarily the concerns of public companies,
but now even small companies are coming under scrutiny.
Q: How has the funding environment changed in recent
years?
When starting new ventures or taking a small business to
the next level, entrepreneurs and business owners must
consider multiple ?nancing options, from self-funding to
strategic investors to venture capital and other forms of
private equity. They must choose a mix that best suits a
speci?c venture at a certain point in its evolution, always
keeping in mind whether they intend to keep their new
business independent or to sell it at a later date.
I have seen two major changes begin to in?uence how
entrepreneurs and business owners think about the
?nancing realm. The ?rst change is the recent increase
in money slated for private equity expansion—especially
later-stage ?nancing for small established ?rms. To
create new value, savvy ?nancial investors and large
established players are buying niche players in frag-
mented industries. This consolidation play is becoming
increasingly popular. An investor might take several
smaller niche businesses and put them together with an
infusion of capital to create a new entity with expanded
potential. In one recent class, I asked 165 business
owners whether a strategic investor or a private equity
investor had ever offered to buy their company as part
of an expansion deal. The majority raised their hands—
this is dramatically different from just ?ve years ago.
www. exed. hbs. edu
“The pace of innovation, a signi?cantly more complex business environment,
and globalization have raised the bar for entrepreneurs and business owners.”
Launchi ng New Vent ur es: J ump- St ar t i ng I nnovat i on f or Ent r epr eneur s and Busi ness Owner s
LNV 2 of 4
The second major change in how new ventures and small
businesses are ?nanced is that angel investing has become
more institutionalized. In the United States last year, the
amount of angel capital for funding new businesses was
greater than the funding from venture capital (VC).
Angel investors are active investors. In fact, they typically
are experienced entrepreneurs and business owners who
have built successful businesses in the past. As a result,
they can contribute their experience to the business. In
addition, most angel investors are investing their own
money. Therefore, they have more ?exibility than the
typical VC investor in the amount of money they invest
and in the type of exit strategy they expect.
Q: In light of these changes, how should entrepreneurs
and business owners approach their ?nancing strategies?
I always advise entrepreneurs and business owners to
consider the type of business they wish to build before
they make decisions regarding ?nancing. Do they plan to
build a high-growth ?rm or a lifestyle business? The size
of the overall opportunity, and how easy or dif?cult it will
be to build the business, in?uences the amount and type
of ?nancing you need.
These factors also in?uence the risk you face and how it
is managed. Will the new business serve as a disruptor to
established players in the industry or to the customers they
serve? Disruptive innovations often require more capital
and take more time to build and implement. Risk levels
are often high and may include technical, market, resource,
and implementation risk, which must be managed closely.
As such, ?nancial investors can syndicate and minimize
the risk of disruptive innovations to any one party.
Q: What are some of the key skills needed by entrepre-
neurs today?
At the highest level, entrepreneurs must know how to
assess opportunities critically and dispassionately. Once
a good opportunity has been identi?ed, entrepreneurs
must be able to develop effective plans for building the
“go-to-market” product or service, putting the right organi-
zation and partnerships in place, acquiring the necessary
funding, and engaging market adoption.
Over the past several years, the qualities of a successful
entrepreneur have de?nitely changed. In the past, entre-
preneurs had the luxury of taking their time in developing
the skills required to build a sustainable business. Now,
however, they often are required to evolve their strategy
and build organizational capabilities much more quickly.
This requires that their personal leadership capabilities and
the governance model of the business keep pace. Smart
entrepreneurs realize this and ensure that they have the
necessary mentors and development opportunities well
before they are put to the test.
www. exed. hbs. edu
“Personal leadership is important,
but teams build companies.”
A NEW LANDSCAPE
FOR ENTREPRENEURS
RISK PROFILE OF INNOVATIONS BY TYPE
Launchi ng New Vent ur es: J ump- St ar t i ng I nnovat i on f or Ent r epr eneur s and Busi ness Owner s
Key Risk Key Risk
Key Risk Key Risk
LNV 3 of 4
www. exed. hbs. edu
Q: What leadership capabilities do ?rms need to build?
John Kotter, leadership guru and Konosuke Matsushita
Professor of Leadership, Emeritus at Harvard Business
School, calls on executives to ensure that their ?rms
focus on both leadership and management. Leadership
activities are all about transforming—innovating the
strategy of a ?rm or developing new capabilities required
to take a company to the next level. Management activi-
ties, on the other hand, ensure that the company can
execute today’s strategy—setting challenging goals and
delivering results. As such, these leadership and man-
agement capabilities may be focused on stakeholders
and processes inside or outside the ?rm.
A NEW LANDSCAPE
FOR ENTREPRENEURS
A team approach to creating successful new ventures
True innovators are focused on the long-term improvements that they can make to the
company and in the industry at large. By establishing a strong team spanning all four
quadrants, entrepreneurs can create a foundation for success as the company evolves.
WHAT % OF TIME DO YOU SPEND DOING THE FOLLOWING LEADERSHIP ACTIVITIES?
Leading
“Transforming”
External
“Strategy”
Internal
“Organization”
Managing
“Executing and Delivering Results”
Building New
Capabilities
Mentoring &
Motivating
Innovating
New Business
Development
Monitoring & Control
Managing Resources
Measuring
Performance
Selling To Customers
Managing
Customer/Partner
Relationships
At various points in the company’s development, the
emphasis on leadership and management, as well as
the focus on external or internal stakeholders, may differ.
The savvy entrepreneur and business owner, however,
knows how to assemble a team with complementary
outlooks and skills so that all of these areas receive
the right amount of attention today—and for the long
term. Personal leadership is important, but teams build
companies.
Launchi ng New Vent ur es: J ump- St ar t i ng I nnovat i on f or Ent r epr eneur s and Busi ness Owner s
LNV 4 of 4
In accordance with Harvard University policy, Harvard Business School does not discriminate against any person on the basis of race, color, sex or sexual orientation, gender identity, religion, age,
national or ethnic origin, political beliefs, veteran status, or disability in admission to, access to, treatment in, or employment in its programs and activities. The following person has been
designated to handle inquiries regarding the nondiscrimination policies: Ms. Nancy DellaRocco, Harvard Business School, Soldiers Field, Boston, MA 02163-9986 U.S.
©2007 President and Fellows of Harvard College
www. exed. hbs. edu
LYNDA M. APPLEGATE is the Henry R. Byers Professor
of Business Administration at Harvard Business School,
where she teaches courses in entrepreneurial man-
agement and in technology and innovation. An active
international consultant, Applegate has served on the
boards of directors and advisory boards of public and
privately held companies, and as a policy adviser to the
World Bank, the NASDAQ Stock Exchange, and govern-
ments around the world. She currently chairs the HBS
Executive Education Owner/President Management
(OPM) Program and a new program, Launching New
Ventures: Jump-Starting Innovation for Entrepreneurs
and Business Owners.
A NEW LANDSCAPE
FOR ENTREPRENEURS
Q: How do entrepreneurs and business owners acquire
the necessary skills and insights to help their companies
succeed?
While it is true that some people have more of an en-
trepreneurial spirit, the truth is that the ability to launch
and build a successful new company in this fast-paced
and complex world also requires a disciplined, strategic
outlook.
That is why HBS Executive Education recently created
a program to meet the speci?c needs of entrepreneurs
and business owners of small and midsize companies.
Launching New Ventures: Jump-Starting Innovation for
Entrepreneurs and Business Owners helps you to under-
stand how to evolve strategy—as well as the capabilities
required to execute that strategy—in order to deliver
superior business value in a rapidly changing world. This
new program is an outgrowth of a previous HBS Alumni
program entitled, The Entrepreneur’s Toolkit, which was
sponsored by Ed Hajim (HBS MBA ’64), serial entrepre-
neur and current chairman and CEO of MLH Capital.
Over the past decade, we have seen a number of busi-
ness “disruptors”—such as the Internet, new business
models, and globalization—which create not only great
opportunities, but also unique challenges. Launching
New Ventures will provide the practical insights, skills,
and tools that you need to leverage disruptive opportuni-
ties and address new challenges.
Launchi ng New Vent ur es: J ump- St ar t i ng I nnovat i on f or Ent r epr eneur s and Busi ness Owner s
doc_202785490.pdf