1.

Leading Breakthrough Innovations in Established Companies

Focus: How large, established firms like IBM, Apple, and Tesla can lead breakthrough
innovation despite organizational inertia.

Key Sections & Insights:

1. Understanding Breakthrough Innovation:

o Not just tech companies—traditional companies must innovate.
o True breakthroughs often disrupt business models or create new
platforms/ecosystems (e.g., Amazon’s evolution, Tesla’s roadmap).
2. Building Internal Innovation Capabilities:
o IBM and Apple as case studies. Lou Gerstner's turnaround of IBM shows the
need for internal cultural change.
o “Horizons of Growth” model (H1-H2-H3):
 H1: Mature business.
 H2: High-growth ventures.
 H3: Emerging Business Opportunities (EBOs).
3. Implementing the Horizons of Growth Model:
o Leaders must balance sustaining the core and exploring future innovations.
o IBM created a structure to fund and support EBOs without stifling them.
4. Collaborating for Innovation:
o Strategic partnerships, investments, acquisitions, and even crowd
collaborations are essential tools.
o Examples: Tesla’s open patents; Amazon’s fulfillment ecosystem.
5. Supplementary Reading:
o Example of Intuit using grassroots experimentation.

 Core Theme: How established firms can drive radical innovation.

 Key Points:

 Established firms often struggle with breakthrough innovations due to rigid structures
and cultures.
 Successful breakthrough innovation requires balancing exploration (new
markets/tech) and exploitation (existing business).
 Introduces the Three Lenses Framework:
o Strategic Lens: Is the opportunity attractive and aligned?
o Marketing Lens: Is there a real customer need?
o Execution Lens: Can the company execute it?
 Emphasizes organizational ambidexterity – creating separate units or structures for
innovation while maintaining synergy with the core.
2. Recognizing and Shaping Opportunities
Focus: How entrepreneurs recognize and shape raw ideas into actionable opportunities.

Key Sections & Insights:

1. Entrepreneurial Journeys:
o Stories of Leo Fernández (Telepizza), Robin Chase & Antje Danielson
(Zipcar), and Evan Williams (Twitter, Blogger).
o Emphasizes the iterative nature of discovering and refining ideas.
2. Recognizing Opportunities:
o Creativity is rooted in three things: expertise, motivation, and creative
thinking.
o Discovery skills: Associating, Questioning, Observing, Networking,
Experimenting (Dyer, Christensen & Gregersen framework).
3. Shaping Opportunities:
o Turning a raw idea into a business concept, then a business model.
o Components of a business model: Strategy, Capabilities, Value to
stakeholders.
4. Tools and Frameworks:
o Brief history of business models.
o How to define the market, understand customer needs, and shape offerings.
o Value propositions and cash flow forecasts are crucial for viability.
5. Supplementary Sections:
o Entrepreneurial apprenticeship.
o Business model comparison case study (SalesLogic).

 Core Theme: Opportunity recognition is a process influenced by experience,

environment, and action.
 Key Points:
o Opportunity recognition is both discovered (objective reality) and created
(subjective perception).
o Three processes:
1. Recognition: Spotting a known pattern in a new context.
2. Discovery: Actively searching for gaps or pain points.
3. Creation: Innovating entirely new demand or solutions.
o Highlights importance of user empathy, iterative validation, and lean
experimentation.
o Entrepreneurs must constantly shape opportunities by adapting to feedback
and learning.
3. Developing Business Plans and Pitching Opportunities
Focus: How to develop and communicate business plans and pitch to investors and
stakeholders.

Key Sections & Insights:

1. Developing and Using Business Plans:

o Business planning is more than just writing documents—it’s about clarifying
assumptions and building strategic alignment.
o Mini plans and pitch decks are increasingly used over lengthy documents.
2. Creating a Business Plan:
o Includes market research, business model clarity, financial projections, and
go-to-market strategy.
o Business plan = living document that evolves with feedback.
3. Pitching a Business Plan:
o Tailor your pitch for the audience (investors, partners, etc.).
o The “Why now? Why this? Why us?” model.
o Practice matters: clarity, visuals, storytelling.
4. Financial Forecasting & IP Protection:
o Learn how to present financials meaningfully even with uncertainty.
o Understand how to protect IP through patents, trademarks, and NDAs.
5. Supplementary Reading:
o 11-slide investor pitch template.
o Pitch evaluation exercises with real-world examples (AEC Systems & ZenG).

 Core Theme: Business plans are communication tools that show how an idea
becomes a viable business.
 Key Points:
o A strong business plan answers what the opportunity is, how it will be
seized, and what resources are needed.
o Focuses on:
 Market analysis and opportunity size.
 Value proposition.
 Business model and financials.
 Team strength and milestones.
o Pitching is about storytelling – use clarity, credibility, excitement, and
adaptability.
o Investor concerns: market risk, execution risk, financial risk, team risk.
4. Attracting Talent and Building Ecosystems
 Core Theme: Success of a venture depends on its people and networks.
 Key Points:
o Early-stage resources include:
 People (co-founders, employees, advisors).
 Business ecosystem (customers, suppliers, partners).
 Capital (covered in another reading).
o Emphasizes the 3Rs of co-founder dynamics: Relationships, Roles,
and Rewards.
o Discusses Living Proof and Zipcar cases to highlight founding team
evolution.
o Shows how advisory boards, open innovation, incubators,
and accelerators support growth.
o A strong ecosystem amplifies speed, credibility, and market reach.

5. Becoming an Entrepreneurial Leader

 Core Theme: Entrepreneurship is a leadership style, not just a job description.
 Key Points:
o Introduces Innovation Life Cycle:
 Explore → Experiment → Launch → Scale.
o Describes 4 types of entrepreneurial opportunities:

1. Low-growth businesses.
2. High-growth businesses.
3. Breakthrough innovations.
4. Dumb ideas/mandatory projects.

o Leadership traits vary across stages – from visionary and risk-taker to

execution-focused and team builder.
o Jeff Bezos and Amazon are highlighted as a case study in entrepreneurial
leadership and long-term thinking.

6. Coordination, Sensemaking, and Idea Work in Team

Formation
 Core Theme: How team dynamics influence a startup’s ability to pivot or persevere.
 Key Points:
o Based on a study of 7 founding teams.
 o Teams with overlapping responsibilities and unstructured
communication engaged in holistic sensemaking, enabling pivots.
o Teams with clear role separations engaged in fragmented sensemaking,
leading to idea perseverance.
o Introduces concepts:
 Holistic Idea Work: Combining diverse perspectives to innovate.
 Complementary Idea Work: Refining individual aspects without
major shifts.
o Provides a framework connecting team coordination → sensemaking →
pivot/perseverance outcomes.

7. “How to Design a Winning Business Model”

Core Ideas:

 A business model is a system of choices and consequences that define how a

company creates and captures value.
 Unlike strategy or tactics, a business model focuses on how the business operates at a
fundamental level.

Key Concepts:

1. Definition of a Business Model:

 It is not just a plan; it includes:

o Policy choices (e.g., compensation, pricing)
o Asset choices (e.g., tech or facility investment)
o Governance choices (e.g., control and decision-making structure)
 Each choice leads to consequences, which can be flexible (quickly changeable)
or rigid (long-lasting and hard to replicate).

2. Virtuous Cycles:

 Good business models generate feedback loops that reinforce a competitive

advantage (e.g., Ryanair’s low fare → high volume → more bargaining power).
 These cycles mimic network effects and are intentional outcomes of design.

3. Criteria for a Good Business Model:

 Alignment with company goals.

 Self-reinforcing (choices support each other).
 Robustness (can withstand imitation, market change, customer/supplier pressure).

4. Business Model vs. Strategy vs. Tactics:

 Aspect Focus
Business Model The logic of value creation and capture
Strategy Choice of which business model to use in different conditions
Tactics Day-to-day moves within a chosen business model

Real-World Examples:

 Ryanair: Changed choices (low-cost, no-frills) → rigid consequences (reputation,

low cost) → sustained model.
 Irizar: Empowered employees through shared ownership and no-hierarchy structure
→ high motivation → quality and profitability.

8. “The Entrepreneur’s Business Model: Toward a Unified

Perspective”
Core Ideas:

 Entrepreneurs often fail not because of the idea or resources, but due to poor business
models.
 Proposes a 6-component model assessed across three levels: foundation, proprietary,
and rules.

Six Core Components:

Component Key Question

1. Value Proposition How do we create value?
2. Market Segment Who do we create value for?
3. Internal Capability What is our source of competence?
4. Competitive Strategy How do we position ourselves competitively?
5. Economic Model How do we make money?
6. Growth/Exit Intentions What are our time/scope/size ambitions?

Three-Level Framework:

1. Foundation Level:

 Defines basic decisions about each component.

 Offers universal comparability across ventures.

2. Proprietary Level:
  Focuses on uniqueness—how an entrepreneur creatively configures components for
competitive advantage.

3. Rules Level:

 Establishes execution guidelines to maintain consistency and enforce the model (e.g.,
max fare rules at Southwest Airlines).

Application Example – Southwest Airlines:

 Foundation: Standardized low-cost offering, national reach.

 Proprietary: Unique employee culture, only Boeing 737s, no-frills.
 Rules: Max flight time, no food, fast turnaround.

Evolution and Fit:

 Business models evolve from basic (foundation) to sophisticated (proprietary +

rules).
 Fit is crucial:
o Internal fit: Between model components.
o External fit: With changing environment.
 Entrepreneurs often start with incomplete models that evolve through trial, learning,
and strategic adaptation.

Theoretical Underpinnings:

 Based on value chain theory, RBV (resource-based view), transaction cost

economics, and Schumpeterian innovation.
 Emphasizes complementarity, system thinking, and entrepreneurial intent in
model design.

9. Conjoint Analysis: Summary

Definition

Conjoint analysis is a research technique used to measure how people value different
features (attributes) of a product or service. Respondents are shown multiple concepts
(combinations of features) and are asked to choose or rank them. The analysis then scores
each feature, helping businesses make informed decisions.

Why It’s Important

 Goes beyond simple ratings by forcing trade-offs.

 Reveals what customers truly value.
 Helps identify optimal product features, price points, and market positioning.

Example (Ice Cream Launch)

Attributes: Flavor, Size, Price

Levels under Flavor: Chocolate, Vanilla, Mango, etc.
→ Customers evaluate combinations like “Mango, 1 scoop, ₹50” vs “Vanilla, 2 scoops,
₹80”.

Key Terms

Term Meaning
Attribute High-level feature (e.g., Color, Price, Size)
Level Options within an attribute (e.g., Red, Blue, Black for Color)
Concept A full product profile made by combining one level from each attribute
Set (Task) A group of concepts shown together for evaluation
Part-Worths / Numerical value showing the preference for each level; reflects how much
Utilities influence that feature has on the final choice

Initial Survey (First Step)

 Used to collect baseline data.

 Helps filter out irrelevant features or price ranges.
 Reduces cognitive load and survey fatigue during the actual conjoint study.

Analysis Method

 Logistic Regression is used (as attributes are categorical).

 Regression calculates utilities (coefficients) which indicate how much each feature
level influences choice.

SUMMARIES