INSEAD MBA Programme - May/June 2006

Course Syllabus: Venture Opportunities and Business Models

Professor Christopher Keene (Office CEA 1.58 ext 4425)

Faculty Assistant Aurélia Merle (Office # CEA 006)

Course overview

"If I were to wish for anything, I should not wish for wealth and power, but for the passionate sense of the potential." - Soren Kierkegaard, Either/Or

How do determine the potential for a new venture opportunity? How do you know if an opportunity is just okay or could be the next Google? Once you believe you have a great idea, how do you get other people excited enough about your idea to join or fund your venture?

This course will focus on the skills you need to create new venture opportunities and the confidence to present them with passion. Key topics include:

Novice entrepreneurs often become fascinated with the novelty of a new business idea, while experienced entrepreneurs focus fundamental factors likely to influence success. This class will train you to be more proficient at recognizing opportunities by learning not just to be alert to opportunities, but to search in the best places and in the best ways.

This class addresses the strategic thinking that you do before you write your 60-page business plan and prepare your 40-slide powerpoint presentation. Instead, the key deliverable for this class is the "the elevator pitch:" a 30-second description of a business idea that describes clearly and compellingly what you do, why it is different and how you will build a profitable business based on this opportunity.

Because it focuses on the initial venture idea, this course is an excellent gateway to the other entrepreneurship electives. In this class you will have the opportunity to identify an attractive venture opportunity and begin exploring it. This gives you a head start in crafting a strategy during P4 for starting a new venture (New Business Ventures) or buying an existing venture (Realizing Entrepreneurial Potential).

This course will help you assess and improve the potential of any venture, whether you want to start a company, buy into a company or create a new business inside an existing organization. It also helps you understand what professionals typically look for when sizing up a venture, giving you the skills to appraise and improve your own ideas or someone else's.

Entrepreneurs spot problems that can be solved profitably in novel ways. In particular, we will focus on three broad determinants of success:

  1. Opportunity: are you tapping a growth market with attractive customers who are willing to pay well?
  2. Unique advantage: what makes your offering in the market unique, allowing you to compete and win, even against competitors with vastly greater resources?
  3. Adaptability: how will you be able to adapt your opportunity to changing market dynamics and unforeseen challenges?

Instructional method

This is a hands-on course that will help you build skills in developing, assessing and presenting new business ideas. Class sessions will be interactive and fast-paced. You will be expected to participate actively in class - not just in presenting and defending your ideas, but also in learning when to listen and incorporate constructive feedback into your ideas. Readings

There are no required textbooks for this class. All assigned readings are available in the course packet, or online. If you have not done so already, I highly recommend that you read at least the first few chapters of "Good to Great" by Jim Collins, "The Innovator's Dilemma" by Clayton Christensen, and watch the "Seth Godin speaks at Google" video on Google video

Grading

There are three graded components of the course:

Participation

This is a class about how to analyze and present compelling business ideas, how to defend those ideas and how to listen to constructive criticism and then incorporate that criticism to improve your ideas. Outstanding students present and defend their ideas with passion, but also show the ability to listen careful and synthesize criticisms into their ideas in real time.

Venture opportunity #1 - written memo

30% of your grade will depend on a written venture idea that you prepare individually. The write-up will be in the form of a one page memorandum (or email) to a potential co-founder whose skills you need for the venture to be successful. The memorandum must outline the business idea ("elevator pitch"), your skills, the skills you need your co-founder to contribute and why this is the chance of a lifetime for your co-founder. For this exercise you can address the memo to a real or imaginary person, but be sure to use a real title and company.

Your grade for the written venture idea will be based on: 1) presenting compelling venture idea (but don't get bogged down in details - keep it simple!), 2) having a good understanding of your strengths and weaknesses and what skills you need for the venture to be successful 3) making a strong case for the co-founder to join you in the venture.

Venture opportunity #2 - presentation and written memo

40% of your grade will depend on an oral pitch (no slides or props!) that you will make on the last day of the class. The purpose of the pitch is to convince a potential customer or partner (not a VC!) to enter into a business relationship with you on a new venture opportunity. Note: this idea must be different than the written Venture opportunity #1 above.

You will prepare your pitch in teams of two, but each member of the team must participate in the presentation. Your team should present a strong "elevator pitch" and be ready to answer the following questions:

Your presentation will be graded on the strength of your venture idea and your ability to defend it in a Q&A session. Your memorandum will be graded on your ability to create a compelling reason for a customer or partner to team with you on this venture.

Course administration

I will have office hours on the days I am teaching. If you wish to see me, please email Aurélia Merle to schedule an appointment. You can also contact me by email, christopher.keene@insead.edu.

Since this class relies so heavily on participation, your attendance at each session is important. On days where we have a case, come prepared for a vigorous discussion related to the issues described in the case.

Session outline

The online version of the session outline is always official and up to date.

Session 1 - Tue 9 May - Introduction: What will you learn from this course?

This session introduces the course, exploring by means of an exercise how each student presently thinks about analyzing venture opportunities. Readings:

Session 2 - Thu 11 May - How do professionals assess a venture's prospects?

Experienced professionals such as venture capitalists use a combination of formal analysis and intuition to assess the potential of a venture. In this session, we explore how to make sure your opportunity answers the critical questions necessary to get beyond the "gee whiz" factor and attract investors.

Readings:

Session 3 - Tue16 May - Will the venture attract and retain exceptionally good talent?

Because most opportunities change dramatically over the course of the venture, the adaptability of the team is often just as important as the idea itself. In fact, most professional investors believe that the quality of the team is the single most important factor to evaluate when assessing a venture. In this session, why adaptability is critical to the success of a venture opportunity and how to attract the right team.

Readings:

Session 4 - Thu18 May - What does the venture do differently than competitors?

Perspective is everything - in order to create an attractive business, a venture must solve a market problem in a different way that is difficult for competitors to imitate. Often, successful competition against large incumbents depends on understanding what they will not do, as opposed to what they cannot do. This session will help you analyze the strength of a venture's distinctive capabilities and enhance its ability to exploit rivals' predictable competitive blind spots.

Readings:

Visiting executive: Bob Sosna, former head of operations, CIGNA, Professor of Entrepreneurship, Golden Gate University

Session 5 - Tue 23 May - How do you identify great markets and initial customers?

Because business opportunities evolve in unforeseen ways, a fast-growing market allows more room for error. Given an attractive market, the most successful ventures win the most valuable reference customers without becoming overly dependent on a few key clients. This session will help you assess whether a venture is pursuing a promising market opportunity and how to target the initial customers.

Assignment due: tell me your two-person team for Venture opportunity #2

Readings:

Session 6 - Thu 25 May - Can the opportunity withstand changing a key assumption?

Successful ventures must overcome an inherent tension between focus and flexibility. On the one hand, with limited resources, they typically must focus on doing a narrow range of things very well. On the other hand, in order to survive, especially as the environment changes in unforeseen ways, you must be able to change your venture strategy. This session will help you assess the resilience of a venture to withstand market changes.

Readings:

Session 7 - Tue 30 May - How can a venture minimize investment and maximize cash flow?

A business is more attractive when it can generate profits with relatively little investment, and can sustainably grow revenues faster than costs, including the cost of capital. Different types of business incur costs, realize revenues, and consume capital in different ways, helping to explain why some sectors attract capital and talent more readily than others. This session will help you analyze and improve a venture's design for creating profits and cash.

Readings:

Session 8 - Thu 1 Jun - Can you pitch your venture idea?

In the final session of the course, we will pull together the tools and concepts we have learned during the term. You will be asked to make a thirty second venture pitch and answer a series of questions with an aim to attract a customers or partners to work with you on your venture; this will impact your grade significantly. Your course evaluation will take place at the end of the session.

Assignment Due: Venture opportunity #2 - presentation and written memo

Instructor Bio

Christopher Keene is a recovering entrepreneur on sabbatical from Silicon Valley. He is living in Paris and serving as an Adjunct Professor and Entrepreneur-in-residence at INSEAD. He is also the Chairman of Reportive, a reporting tools software company based in Paris.

In 1991, he founded Persistence Software, a company which invented a new approach for managing data in high transaction banking and communications systems. Persistence investors included Cisco, Intel, Reuters and Sun. In 1999, Persistence Software went public and was sold in 2004 to Progress software.

Before founding Persistence, Mr. Keene was an engagement manager with McKinsey & Company in New York and Hamburg. Before that, he worked at Ashton-Tate and Hewlett-Packard. Mr. Keene earned an MBA from the Wharton School. He holds a Bachelor's Degree with Honors in Mathematics from Stanford University.

Session Resources

Copyright 2005 Christopher Keene

A teacher is one who makes himself progressively unnecessary - Thomas Carruthers

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