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Chapter 1
High-tech entrepreneurship
Managing innovation in a world of variety and uncertainty
Michel Bernasconi, Simon Harris, Mette Moensted
For economies to achieve growth in an increasingly technologically advanced and borderless world, the creative talents of its residents need to be marshalled into successful businesses. This has ever been so. It has been witnessed in Europe, for example, from the times of the Roman Empire, through the age of the Holy Roman Empire, when some countries and regions achieved phenomenal economic success through the entrepreneurial activities of individuals and groups who translated technological and merchant opportunity into the creation of wealth. In this book, we call this process high-tech entrepreneurship.
We are, once again, entering a period of global economic liberation, running in parallel with significant technological advance. This is, inevitably, leading to questions from policy makers with local, regional, national and supranational economic concern as to how this process can be fostered. Managers of firms, whether in their own businesses or professional managers of larger firms, ask how it may be managed. Individuals with innovative intentions ask how they may be able to achieve their dreams: the dreams upon which the future economic welfare of us all, and of future generations, will depend.
So many types of people share an interest in the subject of this book, but do so from different standpoints. Technicians with innovations in their heads and in their hearts seek to understand the process of developing ideas into businesses. Entrepreneurs look to see how they can increase the impact of their innovations, financially or in other ways. Owners and managers of established firms from the small to the very large are seeking ways that they can gain or regain the innovative and entrepreneurial dynamism that characterizes the growth business. Managers and administrators of that environment, from the managers of business incubators, to local support and advice agencies, to the managers of venture capital bodies, wish to learn how they can make a constructive difference, in part by understanding how others do so. Political interests are concerned with how government policies can improve the environment they set for the high-tech entrepreneurship process, and how the environment can impair that process. And students of management, who may be in, or may develop into, one of these roles benefit from an understanding of the processes involved. From in-house executive programmes to specialist MBA and masters programmes, for science and for business specialists, at postgraduate and at undergraduate level, the number of courses offered in the area of high-tech entrepreneurship has exploded.
One outcome of this interest has been a plethora of books that purport to show how it is done; the âhow-toâ books. Typically, these give models of the high-tech entrepreneurship process that are clear and logical and, usually, on the face of it at least, reasonably complete. They appear to give us what we want. They make it look straightforward. They present us with certainly. Follow their linear template, they suggest, and we can also do it. As we shall see, this is not a realistic proposition: high-tech entrepreneurship, like life, is more difficult than that.
A WORLD OF VARIETY AND UNCERTAINTY
First, let us define what we mean. Following Jolly and Thérm (1996), we define technology to be any original and protected combination of scientific knowledge, technical knowledge and know-how, mastered by a firm (or firms), and incorporated into a product, service, production process, information system or management method, for an economic purpose. Taking the marketing standpoint that Paul Millier presents in Chapter 12, we regard a high-tech product to be a product or service which is a breakthrough in upsetting its market to a point where the market can no longer be considered in the same way.
High-tech entrepreneurship is the creation of value from technical innovation through success in business. It is not a person, nor is it an idea; rather, it is a process. It is a process of building new companies based on technologies. It is not the only way to innovate, and is not necessary best way to innovate, but as Ludovic Dibiaggio argues in Chapter 3, it is a way that is well adapted to complex situations.
The first thing that we know â this is a research-led text â as Mette Moensted presents in Chapter 2, is that the world of and the process of high-tech entrepreneurship is highly complex. This book will attempt to embrace the complexity that we know to be involved, in two aspects. First, the contexts in which managers are âdoingâ high-tech entrepreneurship are highly diverse, and the ways in which they do it vary greatly. Second, they are also doing all this in environments of extreme uncertainty.
Variety in high-technology entrepreneurship
The context within which high-technology entrepreneurship takes place is varied. First, it is geographically varied. The relationship between high-tech firms and the national or regional context is an important theme, since we must remain aware that âit is not the same everywhereâ. Second, the institutional setting for high-tech entrepreneurship is also varied. It can involve young start-ups led by technologically advanced individuals, but it is also commonly practised by existing companies, big or small, research and development centres, universities, private inventors and government departments and agencies.
Technological innovation comes mainly from scientists and technologists, but it is not only the realization of the work and dreams of individuals. As Valérie-InÚs de La Ville shows us in Chapter 5, it is also a collective creation, and one that develops over time. The transformation of these people into entrepreneurs, the process examined by Alain Fayolle in Chapter 4, is complex to define, culturally grounded, and the result of personal trajectories. High-tech entrepreneurship requires many different skills that are not available in one person, and as Céline Druilhe and Elizabeth Garnsey show us in Chapter 10, and Michel Bernasconi shows in Chapter 11, entrepreneurial teams are, of necessity, made up of people who complement the founders. All the individuals involved are embedded in social networks, and as Michel Bernasconi and his colleagues show us in Chapter 6, these are not only essential for the success of the entrepreneurial process, but are a key element of the environment in which the firms are created. Such networks are, as Mette Moensted shows us in Chapter 16, an essential element of the innovation process to create access to diversity, but as Simon Harris cautions in Chapter 7, we cannot simply dictate our networks, since they are highly dependent on the cultural heritage.
This all leads us to see each high-tech entrepreneurial context to be at least highly varied, and often infinitely varied. All these factors do not only create complexity, but complexity that itself differs from manager to manager and from management situation to management situation.
Uncertainty in high-technology entrepreneurship
Management in high-technology entrepreneurial contexts has, however, one other dominant trait: uncertainty. This includes risk, differences between contexts, and evaluation of the unknowable. Uncertainty and complexity, innovation and advanced technology is what makes it difficult to use the usual linear business economic models and planning, and makes it necessary to reflect on how to cope with management under these entrepreneurial conditions.
Our analysis of uncertainty in high-tech entrepreneurship, however, is made difficult by there having been so many efforts to define the concept of uncertainty, some including various related concepts, such as opportunity, risk, ignorance, bias or ambiguity, and some discriminating it from these concepts. We are helped by Van de Ven and Grazman's definitions of uncertainty and ambiguity, which by seeing innovation more as a journey than as a well planned and scheduled programmed process, matches our âprocessâ vision of high-tech entrepreneurship:
Much of an innovation journey involves an adaptive learning process to deal with conditions of ambiguity (i.e. where it is not clear what specific preferences or objectives should be pursued to reach a vague super ordinate goal) and uncertainty (i.e. where it is not clear what means of actions will achieve desired outcome goals)
(Van de Ven and Grazman 1997: 279)
Julien and Marchesnay (1996) identify uncertainty as a condition for entre-preneurship: an uncertain context is open for new interpretations and for new actions, creating opportunities through innovation. Innovation and entrepreneurship are based on creating new ideas and new knowledge. But a number of aspects of high-tech contexts make the issue of uncertainty even greater than in other entrepreneurial environments.
First, we are faced with intrinsic characteristics of the context. Technologies, especially in early phases, are not yet proven, and the ability of the technology to deliver its promise, and the time this will take, is also uncertain. New markets, especially in radical innovation areas, tend to be novel as well, and do not just fit into an existing market. The time scales for these future developments of technology and markets are unknowable.
Second, lack of control is an important dimension of the uncertainty involved. In high-tech environments there is a greater dependence on skills and other resources which are outside the control of the managers themselves. This creates great demands on communication and learning on the part of those in control of those other resources. In high-tech environments, this is a difficulty. Much of this communication may well be with culturally different people. Some of the lack of communication between high-tech entrepreneurs and financial investors, for example, may be associated with them knowing too little about each other, which is exacerbated by the intrinsic uncertainty of the projects noted before. Others in the support system can see aspects like the uncertainties embedded in an innovation, the opportunities involved and the risks in very different ways.
Third, in high-tech entrepreneurship, stories do not repeat themselves, and even if analysis of earlier experience is important for some creation of meaning, it does not predict the future. This challenges the conceptualizations and strategic models that are typically based on projection of patterns observed earlier and elsewhere. When exploring new ideas, and when developing ideas into innovations, our perspectives on what we know, and our understanding of the models of stable development need to change as well.
So in high-tech entrepreneurship, it is the norm rather than the exception for factors to be unpredictable, and is it the norm rather than the exception for most important factors also to be outside managerial control. Nevertheless, important decisions have to be made, but as we must now recognize, this will be without the possibility of straightforward and clear analysis based on established models of development. That is what we mean by uncertainty.
VARIETY AND COMPLEXITY IN THIS BOOK
We can now begin to see why it is necessary for us to disappoint those who might have wanted us to present a simple, new and all-encompassing âmodelâ of high-tech entrepreneurship. Whenever faced with contexts of uncertainty and complexity, we can expect calls for solutions, strategies or âsaviour-recipesâ (Stacey 1996), as managers in a human way seek meaning and linear causality. The purpose of these is to create âa sense of certaintyâ, but one that we would now recognize to be an illusion. Such an exercise, therefore, would be both foolish and dangerous.
First, the implicit decision-making structures do not address environments that are either different from those implicit structures, or which are intrinsically diverse. The models which implicitly assume the structure of a Silicon Valley startup may be irrelevant for a German university spin-out, or for a Swedish government department, even though all may be doing high-tech entrepreneurship.
Second, these business models are embedded with implicit certainties. The simple models, simply, will not do. For example, models based on earlier experience with sectors can overlook new opportunities, and only allow understanding of âme-tooâ technologies, not real innovations.
Third, these simplistic models do not show the interacting and organizing conditions of the high-tech entrepreneurial firms. The organization of resources to combine skills for developing technology and markets, which requires communication and negotiation to persuade other firms and agents, is critical. The environmental conditions allow entrepreneurs to recruit supporters such as partners, subcontractors, customers, and investors. Those based on personal traits, for example, overlook the interactive setting, and negotiated influence to form an innovativ...
