Desktop version

Home arrow Computer Science arrow Technological Entrepreneurship: Technology-Driven vs Market-Driven Innovation


Managing Process

Managerial Dilemma

The key managerial issue facing a small technology start-up is usually that of ensuring access to resources, especially financial, as the project progresses from idea generation through to successful market launch (Chaston 2014). In large organisations, resource acquisition is a relatively unimportant matter. Instead, the primary focus is upon achieving an equitable balance between sustaining ongoing operations whilst concurrently providing adequate support for entrepreneurial activities. Sharma (1999) posited that this balancing act resulted in large firms facing the following dilemmas:

1. Managing Ideas: The number of entrepreneurial ideas is likely to be quite significant and the dilemma is the degree to which projects involving such ideas should be approved whilst avoiding an excessive diversification of resources away from ongoing operations. Senior management in most large firms tends to be risk adverse and favour a disciplined, structured, sequential linear process with regular milestone decision points to assess whether the project should be permitted

© The Author(s) 2017

I. Chaston, Technological Entrepreneurship,

DOI 10.1007/978-3-319-45850-2_8

to progress to the next stage. The drawback is this philosophy may stifle creativity but the alternative of permitting employees to engage in experimental exploration is perceived as too risky in terms of the utilisation of key resources. Risk avoidance can sometimes result in a Catch 22 situation where an idea cannot moved forward without evidence of a financial return, but a financial return can be validated only by allowing a project to progress from idea generation through to actual product development (Kantner et al. 1997).

  • 2. Management Capability: It is usually younger, less-experienced employees who have the passion and enthusiasm to generate ideas and who prefer to be involved in entrepreneurial activities rather than ongoing operations. However, these individuals usually lack the experience needed to make correct judgements on matters such as the commercial viability of a new technology or its readiness for market launch.
  • 3. Staffing. Entrepreneurial projects, especially in the early stages of development, consume funds but generate no revenue. Therefore, justifying the employment of staff on such projects can be difficult. The other question is whether to transfer staff from within the organisation or hire new people. Structured employee transfer programmes assist in increasing understanding of the organisation’s culture, strategies and operational processes. The drawback is that most employees come from existing operations and often there is resistance from their current line managers to losing key personnel (Cohen and Leveinthal 1990).
  • 4. Resources: There is a theoretical attraction in new product development (NPD) teams being given access to resources available within existing operations. Implementing this approach can be fraught with problems such as resistance within the latter groups to having to share resources and the diversion of key resources that may detrimental to revenue generation. One solution for resolving resource scarcity is to permit NPD teams to go outside the firm and form collaborative partnerships with other organisations. This approach may be blocked, however where senior management is concerned about protecting against loss of confidential information or knowledge about new technologies currently under development.

5. Launch Strategy: The final phase of actually launching a new product can be very expensive and may result in a very adverse cash flow situation. One way of managing this problem is to restrict the launch to a small proportion of the market and to use the revenue generated to over time support an ongoing market expansion. Although there is appeal in terms of the financial implications of this approach, the firm’s senior management must weigh this benefit against the risk that a competitor may copy the new product and enter areas of the market not yet served by the firm (Robinson and Stern 1997).

Found a mistake? Please highlight the word and press Shift + Enter  
< Prev   CONTENTS   Next >

Related topics