The Entrepreneurial Ecosystem

Evaluating its effectiveness

 Agenda

• Elements of the entrepreneurial ecosystem

• Why has the success rate been so low?
• What is needed to build a stronger system?
• A world class solution that will increase capacity to
serve the entrepreneurial community

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 Elements of the Entrepreneurial Ecosystem

• Entrepreneurs
• Education system
• Market structure
• Infrastructure
• R&D system
• Financial sector
• Corporate sector
Global Entrepreneurship Index
• Government (GEI)

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 GEI Building Blocks

Entrepreneurial Opportunity perception, start-

attitudes up skills, risk acceptance,
networking, cultural support
Entrepreneurial Opportunity start-up,
abilities technology absorption, human
capital, competition
Entrepreneurial Product innovation, process
aspirations innovation, high growth,
internationalization, risk
capital

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 Benchmarks

• Individuals who:
– Recognize valuable business opportunities
– Have the skills to exploit them
– Attach high status to entrepreneurs
– Can bear and handle start-up risks
– Know other entrepreneurs personally
– Can generate future entrepreneurial activities

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 Benchmarks

• Start-ups that:
– Are in the medium/high technology sectors
– Are initiated by educated entrepreneurs
– Offer a unique product or service
– Operate in an environment that is not overly competitive

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 Benchmarks

• Early state entrepreneurial effort to:

– Introduce new product or service
– Develop new production processes
– Penetrate foreign markets
– Substantially increase their company staff
– Finance their business with formal and/or informal venture
capital

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 Canada
Entrepreneurship Pillars Score
Attitudes Opportunity perceptions 1.00
Start-up skills 0.67
Risk acceptance 0.80
Networking 0.70
Cultural support 0.83
Abilities Opportunity start-up 0.80
Technology absorption 0.68
Human capital 0.98
Competition 0.88
Aspirations Product innovation 0.65
Process innovation 0.73
Internationalization 1.00
Risk capital 0.99
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 Global Entrepreneurship Index
Rank Country GEI
1 United States 86.2

2 Canada 79.5

3 Australia 78.0

4 Denmark 76.0

5 Sweden 75.9

6 Taiwan 69.7

7 Iceland 68.9

8 Switzerland 67.8

9 United Kingdom 67.7

10 France 66.4

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Why has the success rate been so low?

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What is needed to build a stronger system?

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 Product Development Process

1. Idea generation
2. Market research and analysis
3. Design and development
4. Testing and commercialization

The best companies develop and implement a

systematic process of new product development (NPD)
and use best practices

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 Best management practices in NPD

• Climate and culture:

– Open communication among employees across functions
or locations
– Supports entrepreneurship and innovation
– Product champions recognized and/or rewarded
– Teams recognized and/or rewarded
– No punishment for product failure
– Employees understand process (idea to launch)
– Business’s climate is not risk adverse

(Source: Cooper, Edgett, and Kleinschmidt 2004)

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 Best management practices in NPD

• Actions and programs to promote positive climate:

– New product idea submissions rewarded or recognized
– New product idea suggestion scheme in place
– Resources available for creative work
– Time off for creative work
– Unofficial projects encouraged

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 Best management practices in NPD

• Senior Management practices, roles and

commitment to NPD:
– Leave day-to-day activities/decisions to project team
– Strongly committed
– Involved in the go/no-go decisions
– Provide strong support and empowerment to team
members
– Understand process from idea to launch
– Help design and shape the process
– Measure overall results
– Metrics part of annual objectives

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 Best management practices in NPD
• Project team characteristics:
– Identifiable project team leader
– Assigned team of players
– Team together from beginning to end of project
– Leader from beginning to end of project
– Team is cross-functional and cooperative
– Information shared among members
– Team is accountable for project’s end result
– Decisions made outside the team are efficient

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 Best management practices in NPD

• NPD strategy:
– Strategic arenas defined
– Role of NPD in business goals
– Long term commitment
– Clearly defined NPD goals
– Strategic buckets of resources
– Roadmap in place

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 Best management practices in NPD

• Portfolio Management:
– Projects align with business’s strategy
– Resource breakdown reflects business’s strategy
– Rank and prioritize projects
– Good balance in number of projects and resources
– Portfolio includes high value-to-the-business projects
– Portfolio has excellent balance in types of projects
– Formal and systematic portfolio management process

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 Best management practices in NPD

• Resource availability:
– Have sufficient:
• Sales force people and time
• R&D / technical people and time
• Manufacturing / operations people and time
• Marketing people and time

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 Best management practices in NPD

• Project team focus and dedicated resources:

– Resources allocated based on project merit
– An innovation (or NPD) team exists
– Team is focused and not doing too much other work
– Team is focused and not spread over too many projects
– Adequate resources are assigned to projects

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 Best management practices in NPD

• Performance drivers – distinguishing high performing

from low performing:
– A systematic process
– Quality of execution
– Best practices built into the NPD process
– Spending on up-front homework
– Voice-of-customer information
– Quality of market information on entering development
– Sharp, early product definition
– Competitive and product advantage

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 Popular Metrics

• Performance of program:
– % of sales revenue from new products
– % of growth in sales from new products
• Performance of product:
– Profitability
– Revenue versus forecasted revenue
– Customer satisfaction

Some important metrics are missing …

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 Guess what?

These practices have

been validated by
‘excellence models’ over
the past 20+ years

The ‘Organizational
Excellence Framework’
integrates global
excellence models and
provides implementation
guidelines for the user
 Malcolm Baldrige

• A study in the United States compared the

benefits received by award winners from 2007 to
2010 with the cost of operating the program and
reported a benefit-to-cost ratio of 820:1

(Source: Link, Scott, 2011)

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 EFQM

• A study examined award winners against

comparison companies of similar size and
industry sector over an 11 year period and found
award winners experienced higher:
– Increases in share value
– Average growth in sales
– Reduction in costs
– Increases in operating income
– Other accounting measures

(Source:Boulter, Bendell, Abas, Dahlgaard, Singhal, 2005)

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 Do You Have A Culture Committed To Excellence?
Try a quick teaser assessment on the principles:
1. Leadership involvement
2. Alignment
3. Focus on the customer
4. People involvement
5. Prevention based process management
6. Partnership development
7. Continuous improvement
8. Data based decision making
9. Societal commitment
Click on the START button at www.organizationalexcellencespecialists.ca
 Guess what?

Global research tells

us only 10% of the
working population
is familiar with
excellence models

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Guess what?

Global research
tells us that some
organizations and
countries are not
benchmarking

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Entrepreneurship Ecosystem

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 Evaluating the Entrepreneurial Ecosystem

• Examine each element with respect to inputs,

activities, outputs and outcomes
• Design a measurement system to:
– Evaluate levels and trends
– Strive for continual improvement
– Strengthen accountability
– Communicate performance to stakeholders
– Make informed decisions
– Track performance internally
– Compare performance with others
 INPUTS ACTIVITIES OUTPUTS OUTCOMES

Entrepreneurs ideas, skills, risk learning, planning, customer satisfaction, self-sufficiency,

tolerance, unique networking, focusing employee sustainability,
product, network energy on targets, OE satisfaction, product / market presence,
assessment service quality, community
improvement
financial

Educational experienced experiential learning, capable support for

Institutions instructors, student scientific research, entrepreneurs, new entrepreneurs,
enrollment industry technology positive influence
collaboration, OE and impact on
region
assessment

Small Business experienced evaluation, selection, capital raised, support for

Development advisors, funding advisory services, entrepreneurs entrepreneurs,
Centre sources, networks mentorship, OE trained, turnover, positive influence
assessment mergers & and impact on
acquisitions, region
performance
reporting

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 INPUTS ACTIVITIES OUTPUTS OUTCOMES

Professionals professionals, training, assessment, robust management productivity,

associations, advisory services, systems, balanced continual
excellence models benchmarking, OE system of improvement
assessment measurement

Government start-up programs, program evaluation, taxes, GDP, economic

grants, tax credits, OE assessment innovation resilience, spinoff
regulations, activity
legislation

Investors angels, investors, reviewing business return on corporate social

banking institutions opportunities, raising investment, return responsibility
capital, providing on equity
loans, OE assessment

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 World Class Solution
• Global perspective:
– Understand and apply best management practices found in
excellence models and engage in benchmarking
• State-of-the-art methods:
– Use leading edge technology to rapidly assess, report, and
benchmark
– Offer support that is customizable for the organization
• Results for the entrepreneurial ecosystem:
– Continuous Improvement
– Desired outputs and outcomes
– Spin-off benefits for community

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 Your Partner

• Organizational Excellence Specialists (Canada)

‒ Integrated excellence model

– Publication

– Assessment tool

– Training programs

– Consulting services

– Strategic alliances

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 Thank You !

Dawn Ringrose MBA, FCMC, COES

Principal, Organizational Excellence Specialists

[email protected]

Canada (250) 941-2064