eoincostello

Archive for December, 2012|Monthly archive page

What I learnt from CIT’s entrepreneur in residence Kieran Moynihan

In Third Party Slide-decks on December 28, 2012 at 9:03 pm

In April I attended a HETAC supported conference “Leaders’ Perspectives on Enterprise and Entrepreneurial Education” 

I heard a great talk by Cork Institute of Technology’s entrepreneur in residence Kieran Moynihan. I had a good chat with Kieran at the lunch break and found that we had many similar views.

Kieran outlined in his talk how Ireland’s recovery requires a new wave of entrepreneurship through:

– Increasing number of investment-grade start-ups.
– Increased ability to scale companies – it is a real challenge, see http://screencast.com/t/5Rh0KRPxP

He feels that Ireland’s 3rd level innovation eco-system has a key role to play in terms of Spin-outs, Spin-ins, IP licensing, R&D support. To see Kieran’s full slide deck click below ( with permission)

Entrepreneur-in-residence Overview Kieran Moynihan CIT Apr 2012

My work as SME Innovation Advocate for the national Info2Innovate Seminar Series

In Slidedecks from Conferences I have spoken at on December 28, 2012 at 8:53 pm

Info2Innovation National Series of Seminars

I had the pleasure of working with Enterprise Europe Network during 2011/2012 as the SME Innovation Advocate speaker (please see one of my presentations here – http://prezi.com/_ygbvqtt1_l_/towards-a-new-understanding-of-innovation/ ).

At the Sligo leg of the seminar series with Minister Perry

Project objectives
The European Innovation Scoreboard 2008, in its comparative analysis of innovation performance ranks Ireland in the group of innovation followers. It is noted that, within this group of countries, Ireland is a growth leader. However, amongst the relative weaknesses, linkages and entrepreneurship were identified with a particular decrease in non-R&D innovation expenditures and inter-firm collaboration. The report recommended that innovative SMEs must become fully aware of the innovation supports available to them and that they should be encouraged to “engage with these supports and with other companies to enhance the efficiency and effectiveness of their development.” This was the starting point for the Info2Innovate directory and national series of seminars.

Feedback received on my talk

Hi Eoin, Great to meet you earlier today at the EEN event. Your presentation on innovation was the highlight of the event for me. Would love to progress our discussion on innovation with you soon. Regards, Hilary

Hi Eoin, I attended the Cork Info2Innovate Seminar and I found your presentation “Towards a new understanding of Innovation” very interesting. One of items that struck a chord with me was the fact that product innovation actually has the lowest return versus financials, process/service and delivery innovation. I would very much like to get this across to management here to inform and help direct our innovation strategy. It was good to meet and I would again like to congratulate you on your presentation. Regards Stuart.

Other Speakers

There were some other great speakers on the seminar series and they shared their slidedecks with the public , here are some of the best:

Keith Finglas info2innovate

James Cunningham SME Innovation UCG perspective

Chris Dunne Daysha

Institutes of Technology need to be the keystones of Ireland’s national innovation ecosystem

In My views on December 28, 2012 at 8:31 pm

The Keystone question

The following post is based on research I carried out for my recent dissertation  ( http://www.eoincostello.ie/msc_ulster.html ). My post looks at a model I developed for an Irish national innovation ecosystem which I believe may provide the best long term benefit to the Irish public purse.

Early models of innovation ecosystems quoted in Irish policy documents place government policy-makers at the centre as the keystone of the innovation ecosystem. However, while policy makers are an essential component of any innovation ecosystem, often their role is facilitative, and to a degree reactive, in nature. When one looks at biological ecosystems at the heart is typically the keystone species (i.e. the species that has a disproportionately large impact on its environment relative to its footprint) which is a key driver of ecosystem activity. Studies have found similar keystone firms (look at Apple for example) in business ecosystems.

More recent innovation ecosystem models featured in Irish government policy documents place the entrepreneurial firm in the keystone position of the ecosystem. Forfas (Review of supports for exploitation of Intellectual Property from Higher Education Research 2010) uses an ecosystem formulation that features multiple constituents. Venture Capitalists and Entrepreneurs are placed in the keystone role while the Higher Education sector is placed in a facilitating role. This innovation ecosystem is described as a ”web of highly iterative processes involving multiple actors in an innovation network or ecosystem.” .

forfas formulation

Forfas formulation of the innovation ecosystem

The innovation ecosystem envisaged by the Innovation Taskforce (2010) places entrepreneurs and enterprise in the keystone position within the ecosystem again with Higher Education Institutions (HEIs) placed in a facilitating role. Similarly IntertradeIreland state that within the ecosystem the intention is that the central component, the firm, “will improve its innovation performance through the promotion of higher and more efficient levels of knowledge flow/sharing in an open system of innovation”.

innov task

Main elements of the Innovation Taskforce National Innovation System

HEIs are attributed key roles in the formulations discussed above but not the keystone role.

I believe that there are a number of arguments as to why placing the business enterprise in the keystone role (while acknowledging that defacto this is typically the case on the ground) is not ideal from a national interest point of view. State resources (in the form of subsidies, grants and other state enterprise policy instruments) are in short supply and need to be allocated in a manner which maximises the long term benefit to our state and its citizens.

The disadvantage to Ireland’s ”public good” of such a enterprise keystone formulation of the innovation ecosystem model include in my opinion:

  • Company ecosystems develop around the objectives of the keystone firm. In Ireland a large proportion of  keystone firms are foreign multinationals. If the  national conditions no longer suit the operations of the keystone firm it will exit the ecosystem in which it was keystone (for example Dell moving assembly to Poland).
  • Diversity is a key feature of a healthy innovation ecosystem. Company ecosystems develop to serve the technology and other needs in a very specific usage in a particular industry. Therefore company keystone driven ecosystems reduce diversity and reduces robustness in the event of a systemic shock (for example the downfall of the integrated Nokia/Symbian ecosystem).
  • Knowledge spillovers are key to the benefits of an efficiently operating innovation ecosystem. However  in commercial ecosystems the control of knowledge (through non-disclosure agreements and contracts) is a key feature and is commonly used to control the behaviour of ecosystem constituents.  Contrast this with the fact that a key role of HEIs is to disperse knowledge as widely as possible.
  • The role of intermediaries in an innovation ecosystem: Intermediaries play a key role in facilitating networks and brokering collaborative relationships thereby contributing to stability and diversity in the ecosystem. A HEI is in a better situation to play the intermediary role given its non-aligned nature. 
  • Public policy cannot induce enterprise to behave in any desired way apart from that which ultimately serves the profit motive and internal objectives. While HEIs are autonomous bodies the majority of their funding comes from public sources and, as such, gives them an agenda to address what is identified as desirable by relevant public policy.

An alternative formulation of a national innovation ecosystem that places the Institute of Technology at the keystone is outlined in the image below. The constituents in this model are those identified in my winning entry in the Festival of Innovative Practice at University of Ulster’s Centre for Higher Education Practice.

This model contains many of the constituents identified in the Hunt Report’s (the National Strategy for Higher Education to 2030) model for our institutes of higher education. In recognition of the key role played by entrepreneurship and SME start-ups in innovation, the Incubation Centre constituent is added to this model. Most HEI campuses in Ireland now have an incubation centre embedded within their campus. Also the Alumni constituent is added in this formulation due to their connection to the keystone HEI and potential to be active participants in the inward and outward flows of knowledge, staff, students and ideas.

ecosystem 

 

 Components of a National Innovation Ecosystem for Ireland

My 10 golden rules for start-ups

In Advice for Start-ups on December 28, 2012 at 7:41 pm

1. Be careful what you sign and check for the notice terms and length of the agreement.

2. If it’s not in writing it never happened.

3. Equity is blood, preserve it for as long as possible before giving any of it away.

4. Don’t rush into gold plating the first version – Fail early, fail cheap.

5. Cart before the horse – do the feasibility research (including asking customers how much they would pay you for it) before writing any specifications documents. When talking to your customers think about the parallel between a sales pitch and telling your child a bed time story, when you start telling them a fairy tale the first question they ask is “Who am I in your story”? They want the story to be about them, not you or some third party.

6. Don’t re-invent the wheel, outsource anything you can and check http://portal.enterprise-europe-network.ec.europa.eu/  for any possible duplication of what you intend working on. I asked one of my mentees to bear this in mind, but like all of us,  the best lessons are learnt the hard way. He called me recently saying “You know the way you were always saying “Can it be done easier”, well now after 9 months I’ve figured out that I can poll the data I need without wasting time coding the software myself!”.

7. Make sure you keep 50% of your resources for marketing/sales etc – Secrets of Software Success ( http://www.amazon.com/Secrets-Software-Success-Management-Insights/dp/1578511054 ) finds that the most successful software companies are those that spend a high % on marketing.

8. Look to automate/streamline standard processes from the word go. Many companies fail to scale as the early entrepreneur gets bogged down in admin stuff.

9. If you can build your business from cashflow without equity investment do so until you need to scale. Clean shareholding registries are a big benefit.

10. Start with the end in mind – have a clear plan of why you are doing it and what you want to get out of it – write it down too.

Opportunity recognition – my rule of thumb for new start-up ‘opportunities’

In Advice for Start-ups on December 28, 2012 at 6:12 pm

How do you accesses whether your ‘opportunity’ has the potential to be a commercial venture or is it just a good ‘idea’

When I worked on the London Stock Exchange a key part of my role as fund manager was to rapidly assess whether a proposed business venture/diversification stacked up. My rule of thumb for my initial scan was based on a funnel similar to that used in Innovation processes, with a number of gates the opportunity must get through.

 

Also want to make sure it is a sector that has long term demand rather than a facilitating technology that has a finite life.

In terms of those start-ups that saw themselves as tackling a sector that they felt was ripe for dis-intermediation my heuristics for this were clear answers to the following questions:

1. The vendor, rather than the customer, is in control of the interaction due to knowledge asymmetry.
2. There is a cost layer of inefficiency and waste which keeps the cost base high and results in higher end prices.
3. There are variable outcomes for customers resulting in poor customer experiences.
4. Related technical innovations are taking place that traditional players are structurally slow to respond to.

A lot of my thinking on this is influenced by one of my favourite books – http://www.amazon.com/Innovators-Dilemma-Revolutionary-Change-Business/dp/0062060244

Some thoughts on early stage equity splits

In Advice for Start-ups on December 28, 2012 at 6:03 pm

Business is a random walk and the only way to win is to prepare for multiple scenarios at an early stage. At the start-up stage enthusiasm is high and the pressure is on to “get things done”. Sorting out the share capital amongst the founding team may feel like a low priority but it is a high cause for the failure of teams in the first 3 years.

Seed capital refund is based on the percentage of the business you have so it’s important to avoid early dilution.

Sit down with the potential team/shareholders at the start up stage and do up a 3 year plan that deals with the questions as to:

1. Who is driving it.

2. Who makes the ultimate decisions.

3. Who controls the bank account

4. Who does what, itemise the roles and individual responsibilities.

Titles matter, the controlling shareholder on many occasions be the CEO.

Many people commencing a start-up bring the same set of rules to the start ups as they do to their personal, romantic and work relationships however business is different. Integrity is important however trust sometimes only goes as far as what is written on the agreement (which is why it is important to have one).

The worst scenario is 50/50 split between the founding partners, as I found in my experience this can lead to futile competition leading to status quo and lack of leadership. Even if you agree 1/3 each split one person needs to be driving the business.

My advice is to always sit down at a very early stage (before the company is registered at the CRO) and write down your vision for the next 3 years under the headings –

  • Individual Roles and Responsibilities
  • Cash prepared to invest and leave in the business for 3 years
  • Desired  personal outcomes
  • Personal goals (what you want out of the business in terms of salary, hiring authority etc).

Then swop your replies and compare notes – then scan them so that you have a permanent record 🙂

 

The next big frontier – Online Realty

In Web 3.0 on December 28, 2012 at 5:53 pm

The next big frontier – Second Life shows the way

I believe that the evolution of Second Life is an early illustration of how over the coming decades the structural engineering and QS disciplines will give way to the online creation and engineering of virtual offices, virtual production lines, virtual shops. Salesforce model of observing user behaviour to inform structure, Dell model of integrating back end operations with front end web display will permeate our online realities gradually replacing the physical realty market.

Small businesses lack awareness of support services available to them

In Supports for SMEs on December 28, 2012 at 5:48 pm

A recent EU report, ‘Support Services for Micro, Small and Sole Proprietor Businesses in Europe’ (supportservices-studyresults_4128) produced the following main findings around support services:

  • ƒ participation rates in support services by small businesses are quite low;
  • ƒ women, highly educated and growth-oriented entrepreneurs make the most use of support services;
  • ƒ an external identification of the needs of small businesses is required;
  • ƒ small businesses lack awareness of support services;
  • ƒ small businesses prefer direct contact with support service providers;
  • ƒ small enterprises prefer locally available services;
  • ƒ more tailor-made and more targeted services are needed;
  • ƒ there is a lack of satisfaction with the services provided.