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Asking the ➻ right questions➻ UNCOVERING THE TOOLBOX & MINDSET OF A SUCCESSFUL VENTURE DEVELOPER

) C V ( BY DIMITRIS KYRKOS & JON PETUR JONSSON Powered by D.T.U.


AS K IN G THE R I G HT QUE ST IO N S Uncovering the toolbox and mindset of a successful Venture Developer


Preface !

This book is part of a master thesis project, jointly worked together by DTU master students Dimitris Kyrkos and J贸n P茅tur J贸nsson with the objective to "dissect" the mind of a successful Venture Developer (VD). The scope of the project is to identify the tool box and mindset of Henrik Albertsen. Through action research, observations, interviews, analysis and literature studies, the researchers have tried to elucidate how theories can support and explain his behaviour and map down the tools and methods he uses when selecting and developing his investments. By doing this, we hope to learn and understand what makes him successful.

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Acknowledgements !

This project has been a long and exciting learning journey, throughout which we received assistance and guidance from various friends, professors and venture capital professionals. It wouldn’t have been possible for our book to see the daylight without them. For your help we are very grateful and we would like to thank: Our supervisors and professors at the Technical University of Denmark, Søren Lybecker and Sara Grex for their support and guidance. Our designer and close friend, Johnny Konstas for putting in his artistic excellence and designing our book.

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Henrik Albertsen and his close colleague Andreas Flensborg who spent several hours from their busy schedule to answer our questions and allowed us to observe them in work.

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The team of Kenyan entrepreneurs, Brian McWachanga, Kyalo Gideon and Wahome Kevin for giving us the time to answer our question, providing us with photos which we used in this book and joining us for a dinner party at our house in Gentofte.

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Nicolaos Plakopitas from Global Finance, an independent investment firm located in Greece, for giving us the time to answer our questions and giving us valuable information regarding the venture capital business.

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CC Tang Adjunct Professor at the division of Engineering and Technology Management at the National University of Singapore, for providing us with valuable information regarding the venture capital business.

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The people behind the book

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The Authors Dimitris Kyrkos J贸n P茅tur J贸nsson

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The Designer Ioannis Konstas

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The Venture Developers Andreas Flensborg Henrik Albertsen

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The Professors Sara Grex S酶ren Lybecker

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The Kenyan Entrepreneurs Brian McWachanga Kyalo Gideon Wahome Kevin


What’s in it for you?

Tips and tricks of a former Venture Capitalist Overview of the Venture Capital business Application of analytical tools on a business case


“Due to volatility and technology development in todays surroundings, there has never been as many opportunities in the market and it has never been easier for entrepreneurs to start up businesses� -Henrik Albertsen


Who is Henrik Albertsen? !

Henrik Albertsen is a former Venture Capitalist (VC) with extensive experience in VC fund management. As a former Managing General Partner in the VC firm Nordic Venture Partners (NVP), he has signed more than 350 venture transactions and managed funds of more than 400 million dollars since 2000.

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Some of NVP’s most successful investments were CRF Health, Saxotech Octoshape, Polar Rose and Zyb. According to techcrunch.com Polar Rose was acquired by Apple in 2010 and Zyb by Vodafone in 2008.

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In March 2013, Nordic Venture Partners was fully acquired by the secondary fund manager within Verdane Capital. After successfully selling the company, Henrik had the opportunity to re-invent himself. Having acquired a lot of strategic, transactional and operational experience in high tech companies throughout the years, he teams up with Andreas Flensborg, a friend who has experience in the startup scene in Africa, and together they decide to go there and invest. Their vision is to become market leaders in 5 to 10 years.

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Henrik has a MSc in Engineering from the Technical University of Denmark and an executive MBA from the Scandinavian International Management Institute. Throughout his career, Henrik has worked in the whole value chain of IT, starting as a developer and a project manager then moving into international sales and finally in the venture business with a focus on the IT industry where he has been a board member and a chairman in many companies. After working for more than 30 years in the field of IT, Henrik has developed an excellent understanding of the industry.


“You don't decide. It’s very difficult to get a job in this field. I got into venture capital when I called the venture capital firm 2M invest and asked if I could do my master thesis for my MBA there. I had a lot of experience in sales at the time, since I had been working with many business partners. They liked me a lot and offered me a job after I graduated. Then, few years later, Danske bank started a branch for venture capital investments, I applied and got the job. I was the CEO of that branch for 3 years and then with the other general partners we decided to buy the fund. It was a management buy out and the start of Nordic Venture Partners.“ - Henrik

Why did you decide to become a VC?

“Being open minded is a very important skill, not to be limited towards how things can play out. When many successful people look at something and they say this is a good idea, it makes it even more dangerous for you to look at it. Everyone is thinking, if so many successful persons say it then it must work, and its not always the case.” - Henrik

What makes you successful?

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“To select the strategy and not to postpone decision making. In a very short time span, you must be able to source in all the potential options, be quick analysing. Another good trait is that you decide to go along and be open minded during the process. Being flexible but still progressive and moving fast towards the right direction.” - Andreas

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How are you different from other VCs?

“You need to be proud of your products, and make customers happy, that is really important. You need to look at the product and ask yourself, will this make customers happy? You need to talk to customers and understand if they are happy. I have never been a chairman of a company where I have not been a member of the product council which decides on the specific features of the product road map. Thats how important I think the product is for the company”. - Henrik

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He uses his own money, so there are no partners involved. This makes things easier, as he doesn’t have to answer to anyone. He is not planning to sell the companies he invests in. Instead of looking for exits, he is aiming at becoming a dominant player in the African market in 5 to 10 years.

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“I always thought exits were artificial. How are you supposed to know if someone will buy it in 10 years? I was focused on how I can build successful businesses instead, because if you do that, then acquiring will come automatically.” - Henrik

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He focuses on 3 companies and not more, this way he can participate more in building them up.

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“You can influence 3-4 companies, but you cannot influence 30 companies. You are only one person. You need to work persistently on each company and you can’t expect other people to do everything.” - Henrik


How does it work? !

The following figure illustrates the overall work process of a Venture Developer (VD) as it was conceived through interviews and observations with Henrik and Andreas. Each step of the process corresponds to a chapter in this book where a more detailed description is presented. It all starts with the question of

strategic positioning. The VD has to decide where to invest based on market analysis, network, intuition etc. As soon as the geographical location is chosen, the VD has to focus on this specific market; screen the different opportunities

what to invest in. While building up a company, many people need to work together and it is always a challenge deciding who to involve. and decide

The final step and perhaps the most important one, is an iteration between developing the product; designing the business model and getting feedback from customers, until the team figures out how to make this work.

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The VD process , ysis l a an s‌ ket r rce a o f m l rna e t x e

Choosing your battlefield (where?)

Betting on the right horse (what & who?) , orces f y r st indu s‌ rend t t e mark

Uncovering the secret formula (how?) Product development

Go to market

Business model design


Contents

1 2 3 4 5

Introduction to the venture business

page 1-14

Choosing your battlefield

page 15-28

Betting on the right horse

page 29-58

Uncovering the secret formula

page 59-96

Will it work?

page 97-104


1 Introduction to the venture business

) C (V

What is venture capitalism? How does it work? What is a VC looking for in a business case? What do entrepreneurs want? How can entrepreneurs and VCs work together? What are the typical conflicts?


“If there was science around it, everyone could do it, and there would be no money in it� -Henrik Albertsen


! What is venture capitalism and how does it work? !

The venture business is all about making money. In this business, people travel through countries like there are no borders. Throughout the world, venture capitalists (VCs) seek investment opportunities where they hope they can find the best deals to invest “their� money. They look for companies that can become extremely valuable, companies like Apple, Google or Microsoft.

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VCs manage capital from entities referred to as limited partners who are usually wealthy individuals, companies, institutions, pension funds, etc. For a commission fee, VCs use the capital to invest in high risk, high growth, early stage or later stage companies which they believe will grow to become successful and go public (listed on stock exchange) or acquired by another company. Due to the nature of their investments, VCs don't expect to get immediate returns but in 5-10 years.

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Apart from the capital that VCs use to help grow their investments, VCs have extensive networks that they sometimes use. These networks consist of firms, individuals, and other investee firms from VCs portfolios who might have specific knowledge about an industry, large customer base, disruptive technologies, etc. If VCs see opportunities that his investee firm and any of his partners can benefit and create value by working together, VCs will facilitate and help the two in collaboration. This it is referred to as strategic partnership.

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Setting the stage


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When it comes to investing, VCs usually invest in two different ways. The first type of investments are the so called later stage capital investments. In these types of investments VCs invest capital in companies that have already proven their operations and are in need for capital to accelerate their growth. The amount of capital VCs invest varies depending on the need of the company which is exchanged for equity. These types of investments are more common than the early stage capital investments, which are considered more risky. The later stage capital investments are considered less risky because the companies being invested in have already proven the viability of a product or service and the management team is capable of managing and running day to day activities.

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In early stage capital investments, VCs invest in young companies which are still in their early phases. These investments are usually distributed in rounds. To make an example, a VC might decided to invest 5M $ in three rounds for 20% equity of the company. 1M $ would be invested in the first round which would occur in the beginning, 2M $ would be invested in the second round one year later, and 2M $ would be invested in the third round 3 years after the initial investment. The amount of capital that VCs invest in companies can vary a lot, as well as the timing and number of rounds, but these aspects depend on VCs and the requirement of the company being invested in. The reason for the rounds of investments is to minimize the risk of VCs who can evaluate if capital from previous rounds are being used correctly and if they should continue with further investments.

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VCs focus on fund management, meaning that they spend a lot of their time managing and finding new investors. Then with help of business analysts, they look for deals and evaluate dozens or hundreds of companies. For the remaining time, they focus on the business execution and the exit part. In the business execution they help and give advices to the companies they invest in but due to nature of their investments they don't have the necessary resources and time to help all of them. That’s why VCs prioritise their investments. They prioritise based on how successful the companies are. The more successful, the more they are in. They want to make sure to follow up on the successful companies but not those who are less successful. They want to focus on what makes a difference. In this business there are always companies that fail and VCs don't want to spend time on those. For the exit part, VCs will make sure that the companies are successfully acquired or that IPOs go according to plan.

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Key criteria

! What is a VC looking for in a business case? !

Starting with the attractiveness of the market, VCs are looking for large, high growth international markets where the product or service needs to be scalable enough to reach overseas markets. Additionally the product or service should be disruptive and able to transform the existing market. It is very important that the management team has proven themselves to be strong. When it comes to determining the management team, VCs will look at factors such as high integrity, honesty and transparency. The team needs to be highly motivated and persistent and there needs to be strong leadership within the team. The team has to have the right skills and knowledge about their industry and have strong market orientation and business sense. The capital requirements are also a very important factor and VCs will try to avoid projects that are in need of large capital investments. VCs are looking to invest in companies which are able to gain competitive advantage, therefore the product, patents and technology play a crucial role. A high tech company, with a superior product and a patent to protect it is sure to gain competitive advantage over existing competitors and potential future competitors, which VCs will analyse very carefully. Finally VCs seek an attractive operating economy where the company is based and has its operations. This would include political stability, infrastructure, GDP, economic development, etc.

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! How does a VC evaluate a business case? !

For the management team, VCs will look into the relevant functional experience and track record. They will go to great lengths and discuss with managements subordinates, customers, peers, suppliers and team members to understand their personal characteristics, intelligence, receptivity, team spirit, energy, commitment and presence. For the attractiveness of the market, they will look at the needs of the market, the target market and the estimate market potential. They will assess possible customers, industry experts, market research consultants and the competitiveness of the product. They will benchmark the products price and the performance to competitors, assess the targeted customers, the distribution channels, the current size of the market, the projected growth and the availability of the market. For the product, patents and technology, if any, they will look at whether the product is novel and if it can be patented. They will look at whether the technology is already available. They will look at the feasibility and the development plan of the product, the milestones, cost, performance, and the proprietary. For the operating economics they will look at the competition, operations, market and capital. They will assess the overall strategy and economics, the pricing and the economics of distribution, the cost position, capacity, possibility for ramp-up and the financial performance.

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The Assessment

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Working with a VC

! What do entrepreneurs want in a joint venture? !

Before entrepreneurs start seeking capital from VCs, they should understand what they want in a joint venture. Entrepreneurs want to build sustainable and successful companies with financial support from VCs, this is the case with most entrepreneurs and the main reason why they seek VCs assistance. Entrepreneurs want to have VCs as mentors who can provide them with advices and support, this is very important because many entrepreneurs don't seem to know if VCs can provide value through advices and support. But in times of trouble, most of them realize how important they can be. And finally entrepreneurs want to have good control and management over the company and receive financial gains from work they put into the venture.

! What do VCs want in a joint venture? !

VCs want to invest in successful companies that they can make a lot of money out of. VCs don't want to invest money into companies that will give low returns. VCs want to contribute with value-adding service that management can use to build and grow the company. It is also in their interest to provide entrepreneurs with this service because they will make money only if the company is successful. VCs want to build reputation for themselves. It is very important for them to have good reputation. They are being hired as fund managers by wealthy individuals, companies or institutions so they need to have a good image. Furthermore, they need to have good reputation when it comes to dealing with entrepreneurs because VCs want to have a good image when promising early or later stage companies approach them for investment purposes. 8


! What are the typical conflicts between VCs and entrepreneurs? !

The most typical conflicts arise because of difference in opinion between VCs and entrepreneurs on how the company should be valued. Usually this conflict occurs when the company does not perform well and more money is needed or during exits when the company is acquired or taken public; When VCs want to change the management team, especially the CEO and CFO; When VCs are forced to leave the investment, they might want to take decisions which are not in the interest of the management team. This can happen due to expiration date of VCs funds; When VCs work with other companies in the same industry which are competing for the same customers; When VCs want to carry out actions against management’s will in order to maximize profits, such as supporting an acquisition of the company by another company or forcing a merger with another company from the VC portfolio; When entrepreneurs want to reduce the shares of VCs with the help of another investor.

! How should entrepreneurs work with VCs? !

First of all be honest. Entrepreneurs should always tell the VC if they are running into troubles with something, and if possible, they should tell the VC in advance any bad news they have or might have in the near future. Be fair and sincere, otherwise the entrepreneur might run the risk of getting a bad reputation which can quickly spread around in the industry. Trust the VC as a mentor, advisor or a board member. Don’t complain or regret having invited the VC to invest in the company when becoming successful. Without his support, an entrepreneur would most likely not have reached the same level of success within few years period. Use VC resources to develop the company. 9


VCs have extensive financial capabilities as well as knowledge, experience and network in the industry so don’t hesitate to use it. When other parties are invited to invest, make sure to understand their investments and motives before signing the deal, this can reduce the risk of future conflicts between all parties.

! What kind of VC is Henrik Albertsen?

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After shutting down Nordic Venture Partners, Henrik decided to change his strategy. He didnt want to continue working as a traditional VC, such as managing funds and investors. He wanted to do something different. He wanted to combine VC tactics with businesses development and create new companies who can change the world. Because of todays possibilities of making lean startups, he could start up companies mainly using his own funds. Due to the fact that he doesn't raise funds through limited partners and that he focuses on building up only few businesses using his knowledge, experience and time, Henrik is not a VC but a Venture Developer (VD). In the next chapters, we will explain how he selects and develops his investments.

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Now that the venture business has been explained the chapter concludes with an overview model.

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The model illustrates all the relevant actors involved in the venture business and the lines of communication between them. Additionally, when looking from the perspective of VCs, it explains the most important factors VCs needs to consider before interacting with any of the particular actors.

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The VC overview model


The VC overview model Limited partners Capital contribution,ROI, Expiry date, Investment industry, level of involvement and level of authority

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VCs

Geographical barriers, cultural differences, communication, negotiations, trust and cooperation

Knowledge, experience, expertise, talent, network, background and investment fit

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VC Network Skills, experience, expertise, technology, network, people, customers, capital, cooperation opportunities

Early/later stage company

Market attractiveness, management team, capital requirements, product, patents and technology


Chapter summary !

The Venture business is all about making money by investing in high growth startups. To minimize risk, VCs invest in different rounds and usually in later stage companies. VCs are fund managers. A lot of their time goes into looking for investment opportunities and they don’t have much time helping building up their investments. Therefor VCs prioritize and focus their time on the most successful companies. The key criteria VCs look for in a business case are: • attractiveness of the market • management team • capital requirements • product, patents and technology • competitors • operating economy Entrepreneurs want: • build sustainable and successful companies • VCs as mentors • control and management over their company • receive financial gains VCs want: • invest money in successful companies • contribute with value-adding service • build reputation for themselves 13

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The typical conflicts: • difference in value perception • VCs want to change the management team • VCs are forced to leave the investment • VCs work with companies in the same industry • VCs want to carry out actions against management’s will • entrepreneurs want to dilute the shares of VCs How to work with VCs? • be fair, sincere and honest • trust VCs • don’t complain or regret having invited VCs to invest after becoming successful • use VCs resources to develop the company • understand the investments and motives of all parties Henrik is not a Venture Capitalist, he is a Venture Developer. A Venture Developer is a person who focuses on few investments and spends most of his time developing businesses.

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The VC overview model is a framework which illustrates all the relevant actors in the VC business, the lines of communications and based on the perspective of VCs, it explains the most important factors VCs need to consider regarding each stakeholder.

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2 Choosing your

battlefield Where to invest and why? Which parameters are important? What are the priorities? How important is intuition?


“If the company is in a good space, a mediocre management can pull out good opportunities. It´s about betting on the right segment”

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-Henrik Albertsen


Why Kenya? Market analysis: “doing business index� / start a business / expected growth / stability / legal infrastructure / GDP Market trends: tech infrastructure / penetration of mobile phones per population / mobile broadband penetration/ entrepreneurial culture Own skills / network / language

Instinct / visionary skills

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World

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Brazil, Philippines, Singapore, East Africa, West Africa

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Brazil, East Africa, Ghana, Nigeria Kenya, Ghana, Nigeria

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Kenya

The above figure illustrates the process of choosing a geographical location for investing as it was conceived through interviews and observations with Henrik and Andreas. On the right part of the figure there are geographical locations; which are limited down step by step through a filtering process; until the focus is on one single country. The filters include market analysis, market trends, own profile and intuition.

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“It´s hard to set up something new in Denmark, there is no room for fundamental infrastructure change. Everything in Denmark has been in place for many years. While in Africa for example there are no high burn rates, salaries are not that big, more bang for the buck than you do in Denmark, where a secretary alone will eat your money pretty fast.” - Henrik

Why not Denmark? or Europe?

“There are some rational and some irrational ones. At first you look at the “doing business index” and you’ll probably see that the most attractive place is a smaller country like Ghana or Ruanda which is easier to control. And then you can have your own skepticism on how they create this data and look at what are the indicators. You should look at how long it takes to create a business, price of electricity, stability, time of getting a building permit etc. And of course the GDP and expected growth. The mentality of the people, the ease of doing business, the law etc. They use old UK law in Kenya which is good for business. We look at Kenya as an entry point into Africa.” - Andreas

Which parameters are important?

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“Then you consider your network and skills. For example Brazil is very interesting at the moment, but if you don’t speak the language and if you don’t know anyone there, then its not really a good place for you. Then you have your instinct, visionary skills, ability to see if there is something interesting to the medium or long perspective as well as what's trending at the moment. Kenya and East Africa are trending at the moment. And if one can assume that tech can be a facilitator or driver for general well-being or wealth creation, which is the case in our part of the world, then Africa is attractive. If we rule out North Africa and South Africa you have the middle area (sub-saharan Africa). If you look at the macro economic data right now Nigeria is attractive and Ghana and East Africa. East African community was created in 2010. There is a big tech drive at the moment. Tech infrastructure is evolving very rapidly, penetration of mobile phones, mobile broadband. This cannot be compared with other places in Africa.” - Andreas

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“Legislation that actually works and entrepreneurial culture are the two fundamental ingredients. Then, governmental structure; infrastructure, growth and education are also important. Growth rate is up to 15% per year in certain areas in Nairobi. Ikea is opening up their first store in Africa; Walmart is coming in; Google is relocating their African headquarters from South Africa to Nairobi. The deployment of mobile network in the last ten years, started from very little penetration to the point where ¾ of the country actually own mobile devices. The rollout of high-speed internet connections has completely transformed the business environment through online transactions.” - Henrik

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A quick look at Kenya

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According to the most recent economic update on Kenya from the World Bank, the national economy presents favorable macroeconomic conditions, while the projections suggest stable and steady growth for the upcoming years. Despite a few recommendations for further improvement, the World Bank states that overall the Kenyan government has maintained fiscal discipline, while the inflation remains low, the fiscal deficit manageable and the exchange rate stable. Considering that these favorable economic conditions have been recorded in 2013 that was an election year for Kenya, it is safe to assume that Kenya has entered 2014, a non-election year, from a strong economic position. After all, it should not pass unnoticed that in only 50 years of independence the GDP per capita has undergone an eightfold increase. However, having a favorable economic image in general terms is not enough for an investment to work. The environment finally chosen by a VD should also successfully undergo the remaining filtering process. Applying the market analysis filter to Kenya, we first notice the high ranking that the country received upon the introduction of the “doing business index” by the World Bank. Kenya was ranked 71st out of the 189 ranked countries in the “Doing Business 2006 Report”. This ranking indicates that Kenya is an investment option worthy of further examination. Most recent and detailed indicators show that Kenya ranks high in dealing with construction permits, protecting investors and getting credit. Especially regarding credit, it has been noticed that Kenyan banks are the most prompt to lend to small and mediumsized enterprises than the other banks in Sub-Saharan Africa.

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Trading across borders also presents a much promising progressive course that is maintained throughout the past few years. Many initiatives have been taken by the national authorities to circumvent the obstacles to the regional trade, such as the inauguration of the “Huduma� centers that work as a onestop-shop for the delivery of trade services to businesses. Finally, another observation provides us with an interesting input. Research has shown that approximately two-thirds of each year’s reforms on making it easier to start and operate a business are found in low- and lower-middle-income economies. Therefore, the classification of Kenya as a low income economy is actually an advantage to its future performance. Again it is noted that the right conclusion depends on the appropriate point of view. Moving on to the next package of filters, an overview of the market trends of Kenya is essential. Firstly, we notice that the largest share of GDP is the service sector and not agriculture. More precisely the ICT market in Kenya appears so promising that one might speak of a telecommunications revolution. The mobile miracle in Kenya is twofold. It consists not only of an unprecedented uptake and usage of mobile services, with a penetration rate of 60 subscriptions per 100 people, but also of innovative services, such as mobile money. Though Kenya was a slow starter at first, the 22 million subscribers by 2010 are telling a whole different story that presents potentials and also leaves room for progress, thus for profit. In addition, the broadband market comes to further distinguish Kenya as the best investment option.

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The landing of three undersea fibre optic cables provides a much favorable infrastructure that adds an extra element to the not so uncommon mobile success story of most developing countries. Although the first two filters could be matched by a number of candidates, it now becomes hard to imagine a country that would fulfill this set of criteria better than Kenya.

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Thirdly, an important input in our filtering process is the matching of our own set of skills with the candidate countries that have made it so far in the filtering process. Andreas’s previous work experience in Kenya is of extreme relevance here. Knowing your terrain of action is a crucial element to any successful VD. A network of connections is already in place making its enhancement more affordable, both in time and money. Additionally, Henrik’s background in high tech ventures fits the market trends of the country. Moreover, the inheritance from the colonial times of English as one of the official languages largely facilitates the investment. Finally, the true art of an entrepreneur is his instinct. All checklists in the world would not be enough without the necessary visionary skills. In a scenario where more than one countries fulfill all the requirements set by the VD, which is highly possible, it is his own instinct that will allow him to single out the winning place. Henrik and Andreas bet on Kenya and so far they have been proven right.

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Why healthcare IT?

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After deciding where to invest, the challenge is to choose the right industry within this country. Henrik and Andreas examined the external environment in order to decide where to position themselves within this market. They decided to go there on a field trip in order to get some first hand information. They called entrepreneurs, bankers, lawyers, incubators, many different people and designed a trip down there that gave them the necessary appetite to carry on. They went there to validate their assumptions and meet the various actors involved in building companies: the Kenyan investment authority; the Danish embassy; startups; incubators; investment funds; tech bloggers; etc. The analysis they conducted corresponds to the four key external forces, introduced in the “business model generation� book.

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In order to create better and more competitive business models, it is important to have a good understanding of the environment that an organisation operates in. This is especially important in today’s high pace environment where a business model that works well today might be outdated and obsolete tomorrow. Understanding and being aware of the environmental changes is therefore a vital part in making better decisions when designing business models.

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Key external forces

Key

Tech infrastructure

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trends

Market

Industry forces

forces

Macro economic forces

lack of a patientmanagement system


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With the Key external forces framework, these environmental forces are categorised as 4 different types of forces. The first force is the market force which refers to the attractiveness and the dynamics of a market. It includes market issues, market segments, needs, demands, switching costs and the revenue attractiveness. The second force is the industry force which affects the competitiveness of an organisation. The factors that make up the industry force are addressed in the Porters Five Forces framework on page 38. The third force is the key trends which affects the plans of an organization since it needs to understand the current and future direction of the environment. It includes technology, societal, cultural, regulation, and socioeconomic factors. The fourth force is the macro-economic force which affects the economy where an organisation operates. It includes global market conditions, capital markets, commodities, other resources and economic infrastructure.

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Applying the model on Kenya, one of the key market trends they saw was that tech infrastructure is evolving very rapidly, together with penetration of mobile phones and mobile broadband. Then one of the needs they identified in the market was the lack of a patient management system. Patient profiles are kept in hard copies and the system in general is chaotic. As a consequence, a patient management system in Kenya became an interesting opportunity.

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Chapter summary !

The first step in the Venture Development process is to choose the geographical location and the industry segment for your investment.

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Henrik and Andreas decide to invest in Kenya, more specifically in the healthcare IT sector.

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The process they follow to reach this decision comprises of two steps, the strategic positioning model and the four key external forces.

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First, they decide to focus on Kenya after comparing different options using a specific set of parameters which include market analysis; industry forces; own profile; and visionary skills.

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Then, they go to Kenya to map down the market and the different industry segments and as a consequence they see a potential in the healthcare IT sector.

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3 Betting on the right

horse

How to spot talents? How to distinguish between good and great startups? How to evaluate the business model? How to evaluate the people?

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“You can always always change a business model or a product, but the people behind it remain the same�

-Henrik Albertsen


Choosing the right startup When looking for investment opportunities, investors have to choose among many different types of startups. But how do they choose the right one?

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After deciding that Kenya would be interesting for business, Henrik and Andreas decided to go there and validate their assumption that Kenya had the “entrepreneurial gene� they were looking for. During this trip, Henrik was exposed to more than 100 interesting startups ranging from high-tech businesses to entrepreneurs selling local jewelries, cosmetics etc. But before meeting with these entrepreneurs, he already had some ideas in mind which he thought would be interesting for doing business in Kenya. However, his focus was not on how good are the companies he was screening, but rather on how good are the people. From his experience, most early stage companies end up with a completely different product or service from what they started out with, but the people behind the idea stay the same. Therefore he wanted to find the right people that could help him in executing any of the business ideas he had in mind. It’s like having two bags, in one bag you have some ideas and in the other bag you have the teams. What you do is try to match the teams in one bag with the business idea in the other.

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Through years of experience Henrik has built up an ability to understand what is a good business, what works and when he is being faced with an extraordinary business opportunity. In the following chapter, by focusing on one of his investments as a case study, we intend to uncover and reveal the components that make up a good business and how to evaluate them. This we do by using contemporary management theories and organizational and business frameworks and apply them on iDaktari, one of the Kenyan companies he decided to invest in.

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! Introduction to the business tools and organisational theories !

In this section, a list of selected business tools and organisational theories are addressed and described. Theses theories and tools contain critical questions and perspectives which give an insight into how well a company is positioned when looking at the people, innovation, strategy and business model of a company. After introducing these tools and theories, we will explain how Henrik uses them in the screening process.

!

The Belbin model explains that people have different characteristics when working in groups and that these set of characteristics, depending on their presence or absence, can affect group effectiveness. The model explains that there are 9 different roles group members can have. These roles are; coordinator, plant, implementer, monitor evaluator, shaper, team worker, resource investigator, completer and a specialist. The model argues that a team needs as many of these 9 different characteristics in order to be effective. If the group is lacking these characteristics or if team members have many of the same characteristics, it can lead to low effectiveness.

33

Belbin’s Team Roles


The Business Model Canvas

!

Key

Customer

Activities

Relationships Segments

Propositions

Partners

! ! !

Customer

Value

Key

Key Resources

Cost Structure

Channels

Revenue Streams

!

The business model canvas is a visual framework used to illustrate the business model of a company. The canvas consists of 9 different building blocks which determine how a company intends to make money. The building blocks are; Customer segments which explains what customers to serve. Value proposition which explains what product or service should be offered. Channels which explains how to reach customers. Customer relationships which explains how to orchestrate customers relationships. Revenue streams which explains how to charge for products or services. Key resources which explains the most important resources. Key activities which explains the most important activities. Key partnerships which explains the key partners and finally the Cost structure which explains the most important cost factors. 34


!

The effectiveness of groups depends on their dynamics, this is a critical factor in the four stages of group development theory. Group performance depends on its stage of development. According to the theory, groups pass through four stages in the development process, each stage having different characteristics. The first stage is the forming stage where group members get to know each other and set objectives for the group. The second stage is the storming stage where group members start to experience conflicts and disagreements because of roles, responsibilities etc. The third stage is the norming stage where group members start to feel at ease with each other. Members start to bond and roles and responsibilities become clear. The fourth stage is the performing stage when the group starts to perform effectively. At this point group members know and trust each other and they know what to expect from other team members.

Four stages of group development

!

m for per m nor m stor

m for 35

ing

ing

ing

ing


Four Building Blocks of Competitive Advantage

Competitive Advantage Speed, flexibility & innovation

Efficiency

Competitive Advantage

Quality Responsiveness to customers

This framework explains the four important building blocks that together determine the competitive advantage of a company. Competitive advantage is the ability of a company to outperform competitors and deliver products or services more efficiently and effectively. The four building blocks are; Efficiency, which is the ability of a company to utilize their resources in the best possible way. Quality, which is the ability of a company to deliver a product or service that customers desire and value highly. Innovation, which is the ability of a company to deliver products and services that customers considered new, exciting and different. And finally the responsiveness to customers, which is the ability of a company to respond quickly to customer needs and demands.

36


The Effectiveness and Efficiency model is used to measure organisational performance. The model explains how effectively a company reaches its goals and how efficiently they use their resources to do so. For illustration purposes a n d d e p e n d i n g o n t h e o rg a n i s a t i o n a l performance, the company is placed in any of the four quadrants.

Efficiency High

Effectivene

! Effectiveness and Efficiency model !

Effectiveness and

Low

Low

Efficiency

High

If placed in low effectiveness, low efficiency quadrant, management is setting the wrong organisational goals and uses resources poorly to achieve them. The result is a low quality product or service that customers do not want.

!

If placed in the low effectiveness, high efficiency quadrant, management is setting wrong organisational goals but uses resources well to achieve them. The result is a high quality product or service that customers do not want.

!

If placed in the high effectiveness, low efficiency quadrant, management is setting the right organisational goals but uses resources poorly to achieve them. The result is a product or service which is too expensive.

!

If placed in the high effectiveness, high efficiency quadrant, management is setting the right organisational goals and uses resources well to achieve them. The result is a high quality product that customers can afford.

37


Porter’s Five Forces 1) Rivalry 2) Potential to enter in the industry 3) Power of suppliers 4) Power of customers 5) Threat of substitute products

! Porter’s Five Forces !

The Porter’s Five Forces model is an analysing tool that helps to investigate the five most important external factors or potential threats that can affect the competitive advantage and expected profits of a company. The models seeks answers to the following questions:

!

What is the power of large suppliers? If there are only few large suppliers that can provide the necessary input for operation, the higher price can be expected for that input. High prices for important inputs will lead to higher costs and lower profits. What is the power of large customers? If there are only few large customers, they can bargain more for prices. Higher bargaining power leads to lower profits. What is the threat of substitute products? If customers can easily substitute products or services with other products or services, the prices need to be set low in order not to be substituted. Lower prices mean less profits.

!

What is the potential for entry into an industry? The easier it is for a company to enter a market, for example if quality and brand-loyalty in the industry is lacking, the more profits a company can expect to make.

38


!

The SWOT Analysis is an analytical framework that is used to analyse the internal strengths (S) and weaknesses (W) of an organisation and the external opportunities (O) and threats (T) in the environment. The results are used to set the correct goals and strategy for the corporate, business, and functional levels in order to harness the strengths, eliminate the weaknesses, seize the opportunities and minimize the threats.

SWOT ANALYSIS INTERNAL ANALYSIS

STRENGTHS

WEAKNESSES

39

EXTERNAL ANALYSIS

OPPORTUNITIES

THREATS

SWOT Analysis


! VRISA

The VRISA model is an analytical tool used to look into how a particular resource can affect the profitability of a company by analysing the value, rareness, imitability, substitutability and appropriability of a particular resource. The model seeks to answer the following questions; Does the particular resource add value? Is the particular resource rare? Is the resource difficult to imitate? Is the recourse difficult to substitute? Is the resource appropriate?

VRISA Value

+/-

Rareness

+/-

Imitability

+/-

Substitutability

+/-

Appropriability

+/-

40


!

When Henrik evaluates entrepreneurs and their businesses, he doesn’t follow a specific procedure, only his intuition which he has developed through years of experience. We have tried to “translate” this otherwise abstract process into step by step actions, using several business tools and organisational theories. The screening process, introduced on the next spread, illustrates our interpretation of how Henrik screens his investment opportunities and how he comes down to an investment decision. We believe that this framework can be valuable to investors when they are faced with an investment opportunity and to entrepreneurs that need to constantly evaluate their team and business model.

!

Even though the process is illustrated in a certain row of procedures, using several business tools and people theories in different steps, Henrik doesn’t follow this procedure or uses these tool or theories consciously. Through many years of working with hundreds of early and later stage companies and screening thousands of entrepreneurs, Henrik has acquired tacit knowledge regarding how to understand what works in business. He is able to use theories and tools unconsciously and in most cases it takes him less than a minute to evaluate whether or not to invest. He observes how the team expresses themselves and how they present their idea. Then he asks very direct fundamental questions regarding the business. Questions that put pressure on the entrepreneurs to think quickly and give honest answers. Then he uses his intuition and gut feeling to evaluate them. The screening process is our interpretation of his behaviour and consists of the following three steps:

41

Screening Process


Step 1

Step 2

Step 3

!

The first step is to apply the following organisational theories in order to evaluate the team: Four Stages of Group Development; and Belbin’s Team Roles. Together with the team, the business idea has to be examined as well. This is achieved by applying the following business tools: The Business Model Canvas; Effectiveness and Efficiency; Porter’s Five Forces; Four Building Blocks of Competitive Advantages.

!

Then the SWOT Analysis is used to get a clear overview of the strengths, weaknesses, opportunities and threats which have been identified in step 1. The SWOT model is used to understand what weaknesses you would need to eliminate, what strengths you would need to harness, what opportunities you could seize and what threats you would need to minimize.

!

Then the VRISA model is used to evaluate how this specific business model and/or the team behind it match any of your investment ideas and whether it can add value to them. You have to ask yourself the following questions: will this team and their business add value to any of my business ideas? Is this team and their business rare in any way? Is it possible in some way to imitate the team or their business? Is the team and their business difficult to substitute? Is the team and their business appropriate and will it make money?

42


Screening process Uncovering the toolbox of a VD.

f

s

Apply management and Belbin’s organizational Team Roles tools to evaluate the business model and the management team

1

p

n

Customer Relationships

Key Activities

!!!

Customer Segments

Value Propositions

Key Partners Key Resources

Cost Structure

Channels

Revenue Streams

Speed, flexibility & innovation

Efficiency

Porter’s Effectiveness and Efficiency

Five Force

Competitive Advantage Quality Responsiveness to customers


SWOT ANALYSIS INTERNAL

EXTERNAL

STRENGTHS

OPPORTUNITIES

WEAKNESSES

2

THREATS

Use the SWOT model to get a clear overview of the analysis

3

Use the VRISA model to see if the team adds value to any of the business ideas VRISA Value

+/-

Rareness

+/-

Imitability

+/-

Substitutability

+/-

Appropriability

+/-


!

The patient management system in Kenya is outdated. In most clinics (health clinics, dental clinics etc.), patient information is kept on hard copies. A problem has become evident with this procedure since documents are being piled up and it is becoming increasingly difficult to keep track and edit patient’s information. Additional problems are long and unorganised waiting queues, poor financial management over the clinic resources, frequent insurance frauds and low patient turn-ups. iDaktari has developed a system that will solve many of the problems patients and GPs are facing.

The business case

The team consisted of Gideon, which was the coordinator; Kevin, which was the software developer and Brian, which was the designer. They had proven to be hard working and autonomous. They were highly ambitious and willing to put in a lot of working hours to achieve positive results for the company. The team had been working very hard to grow their company. They went to many startup competitions, doctors, and clinics to promote and sell their product. They had many sleepless nights when they spent more than 40 working hours in a row to meet a customer request while still being full-time students pursuing their undergraduate degree in computer science.

The team

! !

!

45


46


iDaktari’s Business Model

outdated technology

low efficiency, one-to-one meetings with GPs

good management team

Key Partners

! ! !

General Practitioners

Key Activities

product development, installation, maintenance, sales Key Resources

people, software development skills, knowledge, network, sales skills, technology

Cost Structure

fixed costs : facilities, software, transportation.

Value

Microsoft based, desktop, patient management system


Propositions

Customer

Customer

Relationship

Segments

customer segment too narrow

personal relationship

Channels

General Practitioners

one-to-one meetings with GPs

Revenue Streams

one-time sales

low efficiency, too many meetings

low revenues, not scalable,


!

Investors are looking for teams who have passed the first 3 stages of group development and are in the most effective stage, the performing stage. By asking very direct fundamental questions and observing their reaction and behavior, they are able to understand which teams are in the performing stage. For example if they notice that group members are contradicting each other; that roles and responsibilities are unclear; or that team members are arguing with each other, it is a clear indicator that the group is not in the performing stage.

!

The team was able to show very clear evidence of being in the performing stage. They were able to handle the pressure of Henrik’s questions very well. They were clear, smart, consistent and confident in Q&As as well as in presenting. It was very natural for the team to interact with each other, roles and responsibilities were clear, they were able to shift the dialogue between group members very easily and all group members demonstrated intelligence and understanding when discussing business . From these observations Henrik could safely assume that the team would be able to perform.

49

Group development


Belbin's Team Roles

!

According to Henrik you need three different roles in an IT company: a business developer; a very intelligent software developer; and an artist.

!

It was clear that Gideon was the coordinator and team worker of the group. He was the one who was coordinating the team, setting goals and deadlines for projects, distributing work and making sure they were working on the right things and that they were on time for meetings. He made sure that team members were satisfied, were able to work without any problems and then he took care of business related activities such as business development, sales, finance, etc Brian was the artist of the team, he was the specialist in front-end design. He was in charge of the front-end development, the visual format of iDaktari’s desktop software. Making sure that the interface looked professional and easy to use. Additionally to being a specialist, he was also a plant. He was able to come up with creative solutions and ideas.

!

It was clear that Kevin was a specialist and a monitor evaluator, he had the knowledge and expertise in coding and creating the software solutions or the back-end development. He was the software developer of the team. He seemed highly skilled, self motivated and loved to spend most hours of the day coding and creating software solutions. He was also very critical regarding ideas that the team came up with, explaining what works and what doesn't.

50


! Level of rivalry: medium, some competitors but more expensive ! Potential of new entry: high, not so complicated product and low brand loyalty !

Porter’s Five Forces

Power of suppliers: low, only software and hardware needed which is easily available

! Power of customers: high, they can easily switch to other systems !

Threat of substitute products: medium, hard copies are still in use by many GPs and they can go for similar systems of competitors or use their own in house system

!

Quality: Medium\low - Using outdated technologies Efficiency: Low efficiency - They do not optimally utilize their resources. They are pursuing one-to-one selling strategy to GPs who pay low money. Additionally they have to go on site to sell and install their system. Speed, innovation and flexibility: Medium - The product is not very innovative however it is decent when comparing it to the Kenyan standard. They are fast and flexible since they consist of a small team and it is quite easy to make adjustment to the software. Responsiveness to customers: Low/medium - They have responded to a need in the society and they have few customers who are content. But there are still many customers who are not convinced enough to buy their product.

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Competitive advantage


Competitive advantage

Efficiency

Innovation

not so innovative product, although it is an improvement to hard copies

catering one-to-one to GPs, on-site installation

Competitive Advantage

Quality

outdated technology

Responsiveness to customers

few satisfied customers but many not convinced

52


Effectiveness and Efficiency Effectiveness: Medium effectiveness - Their product is somewhat good, it does add value to customers although it can be improved. Their strategy and business model are wrong because they cannot really scale. Efficiency: Low efficiency - They do not optimally utilize their resources. They are pursuing one-to-one selling strategy to GPs who pay low money. Additionally they have to go on site to sell and install their system.

Effectiveness

High

Low Low

53

Efficiency

High


SWOT Analysis

EXTERNAL ANALYSIS

INTERNAL ANALYSIS

STRENGTHS

Good management team, business sense, hard working, dedicated, intelligent, digital patient management system (somehow valuable product although it can be better)

WEAKNESSES

Not scalable, weak channels (one to one selling strategy), desktop system (outdated technology)

OPPORTUNITIES

Expansion to new customer segments (hospitals, patients, neighbour countries), product improvements, scalability

THREATS

Competition, new technology (disruptive)

54


VRISA Value + It adds value: local representation, experienced team in this industry segment, existing customer base, relevant network, technical knowledge, proven managerial skills. Rareness + It is rare: one of the few early stage startups in this industry segment with the right skills, experience and willing to cooperate Imitability + It is not easy to imitate: because the team has acquired specific experience and tacit knowledge by working with a patient management system in this industry. It would be very hard to find another team with the same background, energy, enthusiasm and commitment Substitutability + It is not easy to substitute: Henrik could substitute the team by establishing a company by himself and then hire the right people with the right skills. But that would be very resource demanding, difficult and risky. Appropriability + It is appropriate: Henrik can make money out of this investment. It fits one of the ideas he had in mind for a patient management system. By redesigning their business model and strategy to fit this particular ideas, they could be successful.

55


Chapter summary !

Before choosing among entrepreneurs Henrik already had some business ideas in mind. It’s like having two different bags. In one bag you have the different business ideas and in the other you have the entrepreneurs. The trick is to find the best match. Companies change but people usually stay the same. Henrik was looking for the right people rather than the right company. From many years of experience Henrik has acquired tacit knowledge about what works in business. He makes his choices based on intuition and gut feeling. The screening process is a framework which was created to interpret Henrik’s behaviour when choosing among entrepreneurs. It explains in three steps how to evaluate entrepreneurs and make an investment decision. By applying the screening process to our case study, it was evident that the Kenyan team Henrik chose to work with was good but their business model was not.

!

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The team working


The team having fun!


4 Uncovering the secret formula ! How to design the right business model? How to develop the right product? How to design the right strategy? Which tools to use? Which organisational design to apply?


* “The only way to win is to learn faster than everyone else” - Eric Ries


!

Henrik could see that the Kenyan entrepreneurs behind iDaktari could add value to a specific business idea he had in mind. He liked the team, their energy, backgrounds, skills, determination, intelligence, business understanding and the space that they were working in. However, he felt that their approach to pursue competitive advantage and outperform competitors would not be successful. He didn't like that their product was built using outdated technologies, their one-on-one selling strategy which was targeting a narrow customer segment nor their business model which wasn't scalable enough to make good profits. Instead of investing in the company, Henrik proposed to the team to create a new company. The new company would not be very different in nature but they would create a new, updated patient management system. The new patient management system would be built using the latest technology and with the new system they would reinvent the whole business model and offer a product that would lead to strong positioning in the market.

!

For this reason, a workshop was organised in his offices in Copenhagen in the beginning of November 2013. The Kenyan entrepreneurs were invited to join for an intensive one week workshop to redefine the product around the patient and design the business model and the strategy of the new company. It was given the name Unumed

! ! 61

Unumed


!

In the workshop two teams were formed which became the two different functional departments of the company. The first team was the business development team, it consisted of Andreas and Gideon who worked on redesigning the business model. The second team was the product development team, it consisted of Henrik, Brian and Kevin who worked on redefining the product. During this week, the two teams worked in parallel in separate rooms and at the end of each day the two teams were gathered in a briefing session where they discussed and gave feedback on each other's progress, issues and ideas.

!

At the end of the week, the two teams had come up with many good ideas for various functions for the new patient management system as well as many good ideas for the new business model. However, there were still many uncertainties, therefore many assumptions had to be made and then verified in the following weeks. A brief description of the product is presented in this section. Furthermore, the business model of Unumed is introduced using the Business Model Canvas and the SWOT Analysis is used to illustrate how the new business model is harnessing the strengths, eliminating the weaknesses, seizing the opportunities and minimizing the threats of the old iDaktari business model.

!

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!

The system includes an inpatient management module with minimum technical requirements where the history of the patient is recorded, such as the patient journey, diagnoses, prescriptions, treatments and etc. The system will have full communication support and offer surveillance and telemedicine as well as automatic reporting to authorities. Furthermore, doctors can choose which features they want to use.

! !

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Product description


How it works

!

!

Patients enter a clinic. The patients are registered or/and authenticated through photo ID and sent to a normal or priority queue to wait for service. Children are accompanied by their parents and authentication is made through their parents. Doctors have tablets where they can see patients waiting in queues, which they can prioritise as they like. Then doctors can assign patients to other queues or check them out. If patients have to undertake examinations in other clinics, doctors can get access to specific information.

!

Management can have a visual overview of all queues and can follow the workflow (who is taking a break, how many patients are treated by doctors, how many nurses are available etc.).

!

Treatment plans are presented to patients as tasks and are monitored by doctors (active – inactive – in which steps are patients), the system offers notifications/reminders options through sms or emails.

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Unumed’s Business Model

cutting edge technology

no installation needed, less meetings with GPs

more experienced team & more capital

Key Partners

! ! !

Mission hospitals

!

NGOs

Key Activities

product development, maintenance, sales & marketing Key Resources

people, capital, software development skills, knowledge, network, sales skills, technology

Cost Structure

fixed costs : facilities, software, maintainance, travel expenses 65

Value

online web application, patient management system


Propositions

Customer

Customer

Relationship

Segments

co-creation with some big clients / online subscription

Channels

conferences, exhibitions, online channels

Mission Hospitals, private & public Hospitals, General Practitioners

extended customer segment

more efficient channels

Increased revenues, scalable

Revenue Streams

subscription fees, freemium model

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SWOT Analysis stronger team (experience, knowledge & business sense)

INTERNAL ANALYSIS

!

stronger product & business model.

!

more resources (money & network)

STRENGTHS

Good management team, business sense, hard working, dedicated, intelligent, digital patient management system (somehow valuable product although it can be better)

WEAKNESSES

Not scalable, one to one sales strategy

! latest technology

! scalable business model. ! wide customer segment 67

desktop system (outdated technology)


EXTERNAL ANALYSIS

stronger product (latest technology)

!

improved channels and revenue streams (scalable business model)

!

OPPORTUNITIES

wide customer segment Expansion to new customer segments (hospitals, patients, neighbour countries),

!

product improvements, scalability

THREATS

Competition, new technology (disruptive)

!

more competitive product (stronger, updated & cheaper)

!

technology is now a strength

68


!

When looking at the business model of Unumed, we can see that many changes have been made from the previous business model of iDaktari. If we look at the SWOT Analysis we conducted in the previous chapter on IDaktari, where we identified the strengths and the weaknesses in the internal environment and the opportunities and the threats in the external environment and compare it with a SWOT Analysis of the business model of Unumed we can see that all of the strengths from the previous analysis are being harnessed and more strengths have been added; the weaknesses we pointed out have been eliminated; the opportunities that we found have been seized; and the threats have been minimized.

! !

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SWOT Analysis


Organisational design

!

Now that we have explored the business aspect for both Unumed and iDaktari, we will shift our focus to the organisational part. In this section, we start by introducing selected theories and frameworks which we believe can give a good insight and understanding on Henrik’s organisational design choices. Establishing a strong organisational structure is the heart and backbone of developing and implementing a successful business model.

Star model

!

! !

The Star Model is an extensive framework for organisational design which can be used to turn a business model into a sustainable organisation. It maps out five important aspects which are critical in supporting the execution of a business model. Furthermore, in order to execute the business model successfully, it is very important that all these five aspects are aligned harmoniously with each other.

!

70


Star model Strategy

People

Rewards

Structure

Processes

The first aspect is strategy which determines the goals, vision and mission of an organisation and how it plans to achieve them. The second is structure which determines the hierarchy and location of people and their decision-making power. The third is processes which determine how the flow of information between people is orchestrated. The fourth is reward system which determines how to motivate and reward employees to achieve goals. The fifth is people practices which determine policies regarding skills and mindset of the people within the company.

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Organisational control and change

!

Need to improve operations

Need to respond to new events

balance

One dilemma that managers face when designing control processes is to find the right balance between activities that pursue effectiveness and activities that pursue efficiency. Efficiency requires predictable operational routines that encourage automated decision making, while effectiveness requires a more flexible organisational structure that encourages employees to take contemplated decisions and realise when they need to depart from operational routines in order to respond to unpredictable changes in the environment.

The model indicates that in order to achieve both effectiveness and efficiency, managers must find the correct balance between the need of improving operations and responding to new unpredictable events.

72


Four Functions of Management

!

The four essential tasks a manager needs to master in order to optimally utilize company resources and achieve strategic goals are planning, organising, leading and controlling. These tasks are introduced in the Four Functions of Management framework and should be performed in the same sequence as they are presented. Planning is the task of choosing the right goals for the organisation and the appropriate set of actions to achieve them. Organising is the task of delegating power, roles and responsibilities to organisational members in order to work together towards strategic goals. Leading is the art of motivating, coordinating and inspiring organisational members to work together towards strategic goals. Controlling is the task of establishing measuring and monitoring systems which evaluate organisational performance in achieving strategic goals.

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planning

organising

controlling

leading


!

Performance: reciprocal & pooled

One type of work processes that managers create is the “reciprocal performance”. This means that the work performed by each member of the group is dependent on the work of the other group members. With this type of work processes, it is very important that information sharing and interaction is intensive within the team and that coordination of activities and efforts is established in order to meet goals and objectives

! Reciprocal

Another type of work processes is the “pooled performance”. In this case group members give their own independent input to group performance. Each member’s contribution adds up to the overall group performance.

Pooled

74


Expectancy theory

!

Motivation of employees is high when they believe that high level of efforts can lead to high performance and that high performance can lead to realisation of desired outcomes.

Effort

Performance

Furthermore, employee’s motivation is dependant on three different concepts. These concepts are expectancy, instrumentality and valence. The first concept, expectancy, is the employees perception on how her level of effort will lead to different level of performance. The expectancy is high when employees feel that they will be able to perform at a high level if they put in a lot of effort. The second concept, instrumentality, is the employee’s perception on how her level of performance will lead to attainment of outcomes such as interesting job assignments, bonuses, pay, feeling of accomplishment or job security. The instrumentality is high when employees feel that high performance will lead to attainment of desired outcomes. The third concept, valence, is the employee’s perception on how the obtained outcomes are desirable for them. The valence is high when employees believe that the obtained outcome is satisfying.

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Outcomes


Equity theory

!

The Equity Theory addresses the issue of balancing work outcome over work input. To determine fairness, an employee would compare her outcome/input ratio to the one of colleagues or people in the same industry. According to this theory, if person x has the same ratio as her referent person y, person x is motivated to continue contributing the same level of input in order to receive the same level of outcome. Furthermore, if person x wants to receive higher level of outcome, person x would be motivated to increase the level of input.

!

In cases of inequity, when the output/input ratio is not the same as the one of a referent, pressure or tension will be created to restore equity and get the two ratios balanced. There are two types of inequity, underpayment and overpayment. In the case of underpayment, one reaction in order to restore equity would be lowering the inputs. This could be manifested in the form of putting in less hours of work, less effort or being absent from work. Another reaction would be increasing the outcomes, by asking for an increase in salary. In the case of overpayment, in order to restore equity, one option might be to change oneself’s perception of output/input ratio or the referent’s output/ input ratio. The employee might consider her contribution more important than initially thought or the one of the referent less important than initially thought.

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Goal setting theory

!

Managers can influence employee’s behaviour through goal setting. In order to stimulate a high level of motivation and performance, goals need to be specific and challenging. Goals which are easy to achieve or nonspecific, will not lead to high levels of motivation and performance. Some managers believe that involving organisational members in the actual goal setting as well as giving feedback on how they are doing will make employees more acceptant and determined to achieve goals. Furthermore, managers often create action plans which include the strategy of the company as well as a list of milestones which are essential to obtaining goals.

77


Star model Strategy

People

Rewards

Structure

Processes

Now that all theories and frameworks have been introduced, we will apply them on the case of Unumed in order to understand Henrik’s organisational design choices. We will go sequentially through each of the five aspects of the Star Model and structure our analysis around them. Since the effectiveness of the organisation depends on how well the five organisational design policies are aligned with each other, we will look into how this alignment is established.

78


!

With the vision of becoming market leaders in healthcare IT in Kenya by 2024, the strategy of Unumed is to develop an innovative, high tech, high quality patient management system which will be used by General Practitioners and hospitals in Kenya, and in neighbouring countries. Furthermore, Unumed aims at becoming the biggest source of aggregated biometric data in Kenya. They plan to achieve these goals by working closely with partners and customers in the healthcare industry in order to identify underlying problems and challenges the industry is facing and provide robust IT solutions.

!

In collaboration with his team, Henrik has set three different types of goals for the company. Firstly they created a long term goal where they seek market dominance in 10 years. Secondly they created a medium range goal where they seek to sell the system to thirty hospitals by the end of the year and finally they create short term goals which aim at finding solutions to the different tasks they are working on each time.

!

In order to achieve these goals, Henrik has set up a team of highly skilled individuals, capable of performing the activities needed and together they created an action plan which states explicitly all the activities essential to achieve the goals.

!

strategy

79

planning


organising

leading

controlling

In the workshop conducted in Copenhagen, the forming of the two functional departments was established. Henrik gave clear roles and responsibilities to everyone in the team. Andreas and Gideon will take care of business development and Kevin, Brian and Henrik will take care of product development. Henrik will be the director and all major decisions will be taken by him. Henrik uses different motivational factors to engage his employees. He sets specific and challenging tasks which stimulate the team to perform. He involves team members in goal setting and action planning which boosts acceptance and determination. He creates incentives for the team to perform by giving them equity stake in the company. Furthermore, he creates a good working atmosphere and boosts self-confidence of team members by working closely with everyone in the team, giving them constant feedback and encouraging the team to work hard towards the organisational goals, which will lead to success and large financial rewards.

!

In order to measure and monitor the progress of the team, Henrik has set up different lines of communication and weekly status meetings. Team members communicate with each other on a daily basis through communication tools such as WhatsApp and Skype were they discuss daily activates, progress, issues, questions, etc. Furthermore the team has weekly status meetings where they discuss progress and obstacles they face in reaching the short term organisational goals. strategy

80


Mind the balance

!

The team is pursuing this strategy favouring flexibility and responding to new events (pursuing effectiveness) over operational routines and the need to improve operations (pursuing efficiency). To start with, the team doesn't follow programmed decision making but rather contemplated decision making, where team members independently need to make important decisions regarding implementation and execution.

!

Need to improve operations

Need to respond to new events

balance

Additionally, in many occasions team members need to depart from roles and operational routines in order to help out with other projects or something unexpected that needs immediate attention. This type of focus seems to support the strategy and is relevant for working towards the strategic direction of the company.

strategy

81


Director

!

Henrik

Business Development

Product Development

Andreas & Gideon

Brian & Kevin

Since Unumed is a young startup with only five employees, the structure follows a simple and flexible balanced matrix structure. Henrik is the director and he takes all the major decisions of the company. There is a business development department which Gideon and Andreas are responsible for and a product development department which Kevin and Brian are responsible for. Henrik is also available to assist both departments but he mainly focuses on helping Kevin and Brian in the product development activities. Although roles and responsibilities have been assigned, a balanced matrix structure allows the organisational members to step out of their current roles and assist in other projects if needed. This is possible because of the small size of the organisation, the close proximity, and the team’s knowledge and understanding of activities conducted in both departments.

structure 82


The work processes of the team follows the reciprocal performance. This is because the work of each of the team members is very dependent on the rest of the group. In order for Brian to design the interface of the system, he needs to coordinate closely with Kevin who is doing the back end development. Furthermore, Gideon would not be able to demonstrate and sell the product to prospective clients if Kevin and Brian don't deliver their work or explain clearly to Gideon how the system works. Intensive information sharing is encouraged between team members since the Kenyan entrepreneurs live and work in the same house and they report almost on a daily bases to Henrik and Andreas. When it comes to goal setting, the team follows a pooled performance. Team members independently and individually contribute their ideas to discussions and the i n d i v i d u a l c o n t r i b u t i o n s a re t h e n u s e d t o s e t organisational goals as well as the action plan on how to reach them.

83

process

Reciprocal

Pooled


!

Communication channels

!

! Status meetings !

!

In order to keep everyone up to date on daily activities, as well as sharing important information or address questions to team members, the team uses communication tools such as WhatsApp, Skype and regular emails. WhatsApp is particularly used since its simple, fast and user friendly. Through WhatsApp it's also very easy to create different groups which are used for different topics. This has proven to be an effective and efficient way of organising information and communicating with each other. In order for everyone to be updated, weekly status meetings are scheduled. In these meetings the team members discuss about the progress in business and product development. Any issues, delays or important information are brought up and discussed and the team works together on solving the different issues. These meetings are usually virtual, as part of the team is in the offices in Kenya, while Henrik is usually in Copenhagen. Both offices are equipped with big screens, cameras and speakers with the latest virtual conference software.

process

84


!

By creating a set of motivational factors, Henrik is able to align the goals of his team with the goals of the organisation and motivate them to work hard on the strategic direction of the company.

!

According to the equity theory, team members compare their outcome/input (o/i) ratio with the o/i ratio of other team members. The team finds that their level of outcome in relation with their input is fair. This can be noted since each member of the team believes that they are putting in the same amount of input which comes in the form working hours, while they are receiving the same amount of outcome, which comes in the form of salary and shares of the company. Under this condition of equity, the team is motivated to continue contributing their current level of input to receive their current level of outcome. Furthermore, if the team wishes to increase their future level of outcome, they will be motivated to do so by increasing their current level of input. Additionally, he encourages high expectancy. He has made it obvious to the rest of the team that it is only through high level of effort and dedication that they will be able to succeed. Therefore they are motivated to put in a lot of effort and they expect that this effort will lead to high performance. Additionally, by giving the team a stake in the company, Henrik has created a strong incentive for them to work hard. It is also evident that he encourages instrumentality by creating a clear link between performing on a high level and receiving desired outcomes.

!

85

rewards


Effort

Performance

Outcomes

! !

Finally he makes sure that there is valance for outcomes. This he does by providing outcomes which come in the form of a salary, interesting job assignments, traveling, feeling of accomplishment. Those outcomes are appreciated by everyone in the group. The second set of factors that Henrik uses to motivate his team is through goal setting, team involvement and feedback. Henrik is able to motivate his team by setting specific goals which are difficult to obtain. By doing so, he is able to stimulate high motivation and performance. Additionally, to encourage more determination and acceptance towards reaching the goals, he involves the team in the goal setting process. Furthermore, in order to keep track on progress and motivate the team to work hard towards the strategic goals, he gives constant feedback on their work.

rewards

86


!

As we have already discussed in the previous chapter, Henrik was looking for a good team, a team with the correct attributes to create a product and execute the business model. He has identified that in the IT sector, three important roles are required in order to succeed. First of all a very skilled software developer is necessary. Then you need an artist, someone with taste and passion for designing who would be able to create an innovative, user friendly interface. And finally you need someone with a business sense, someone who can sell the product, develop the business and execute the business model.

!

In Unumed these roles are fulfilled. Kevin is the skilled software developer, Brian is the artist and Gideon is more business oriented. Henrik assists with the business development and execution, but he mainly focuses on programming and product development as well as being the leader for product strategy. Finally Andreas works with Gideon in the business part, developing and executing the business model.

!

Furthermore, Henrik needs self-motivated, creative free-thinkers who can work in autonomous teams. Additionally, he is looking for people who share his enthusiasm, people with high expectations who like to challenge themselves and are willing to risk in order to succeed. The Kenyan team had already proven they have the “entrepreneurial gene� and that they are able to perform autonomously and creatively.

!

people

87


!

Design policy alignment

!

!

One implication of the Star Model and an essential factor for organisational effectiveness is the alignment of the five design policies. This alignment is fundamental in order for the different aspects of the organisation to interact harmoniously with each other. After going through the five different aspects of the Star Model we will look into how the different organisational design policies are aligned and how they are able to support each other.

!

As we have pointed out before, it is part of Unumed’s strategy to favour innovation and flexibility over efficiency. This choice of strategy is reflected on the other areas of the star model. In the same spirit Unumed follows a simple and flexible matrix structure, allowing team members to take initiative and step out of their organisational routines when necessary. The processes and communication channels encourage participation of all team members and collective decision making, forming an agile and friendly atmosphere which enables creative thinking and innovation. Additionally, the reward system is based on equity and expectancy. By feeling equal, team members are more likely to work in a reciprocal performance as a team, sharing ideas and knowledge. This leads us to the more important part of the organisational design, the people. Unumed’s flexible structure and cross functional processes would not work without the right people. A flexible structure calls for flexible people; a strategy favouring creativity and innovation calls for creative, free-thinkers who can work in teams; and a reward system based on expectancy requires self-motivated people who like to challenge themselves and are willing to risk.

88


The Lean approach

!

In order to understand how the team develops, implements and adjusts the business model, we will introduce the “Lean startup” methodology. It has been more than 10 years since the lean concept was introduce by Steve Blank in his book, The Four Steps to the Epiphany and since then it has made a big impact on the startup scene. Many companies have begun to grasp it and it is now being taught in more than 25 universities around the world. As Steve Blank puts it, “they’re turning the conventional wisdom about entrepreneurship on its head”

!

1. Instead of spending a lot of time on planning and research, entrepreneurs

accept that the ideas that they have are only hypothesis or at best good guesses. They create a business model around these ideas where they use the business model canvas to sketch out their hypothesis.

!

2. The entrepreneurs apply the customer development approach, by meeting

with prospective customers, users and partners in order to test and get feedback on their business model hypothesis and assumptions. If validated, Minimum Viable Products (MVPs) are made which are used for testing and getting immediate feedback from users and customers. Based on this feedback, if needed, assumptions are changed and products are adjusted or substantially changed. Then the cycle starts again where a redesigned MVP is rolled out for testing.

!

89

The three key principles


!

3. The entrepreneurs apply the agile development approach which goes hand

in hand with the customer development approach. This term is taken from the software industry and its purpose is to minimize the use of time and resources. The agile development approach is about creating products iteratively and incrementally while seeking customer and user feedback. From each iteration a MVP is created which is used for testing and getting feedback.

!

Based on these principles, the founders of Lean startups don’t start by executing a business plan but instead they start by looking for a business model that works. Through constant feedback, entrepreneurs are able to design the right business model and only then they focus on execution.

!

Our research indicates that Henrik is applying a similar iterative approach in the case of Unumed. The iterative process we have identified through interviews and observations is illustrated in the figure below. In this section, we will go through one iteration in order to see this method in action.

!

Product development

Go to market

Business model design

90


Go to market

!

As we saw earlier, in the workshop through idea generation and brainstorming, the team created a business model hypothesis which they sketched on a business model canvas. To verify the hypothesis and its assumptions, they applied the customer development approach. In the end of January 2014, the team was able to set up meetings with two mission hospitals. They met with the management of the hospitals and gave them a presentation explaining the functions and capabilities of their system. Based on the feedback they received during the meetings, it was clear they had been wrong in some of their assumptions. 1. They thought that the strongest feature of their product was the patient journal management system, however it turned out that the management of the hospital was more interested in an enterprise resource planning (ERP) system. 2. They assumed that hospitals would be willing to share patient information, however the management of the hospitals was very sceptical regarding this issue and they were willing to share only data that was necessary for treatment. 3. They thought that it wouldn’t be a problem if the internet connection was down for some hours, as the system would synchronise as soon as the connection would be restored. According to management this wouldn’t work. There are more than four hundred patients visiting the hospital every day and the system would need to be up and running all the time. As we can see on the next page, customer feedback can be illustrated using the four key external forces, introduced in chapter 2.

! 91

Changed assumptions


!

too many patients, system needs to be running 24/7

Key trends

needs & demands:

Market

Industry forces

forces

!

ERP system controlled data sharing

Macro economic forces

92


Product development & business model design

!

Based on these newly changed assumptions, the team had to adjust their business model and product accordingly. The product would still have the patient management features as before but they would also incorporate the new ERP feature into the system and the offline function. However the online function requires hardware and this changes the business model considerably as is illustrated on the next page. Before this assumption was questioned, their product didn’t involve any physical parts, everything could be purchased online. By including hardware in the package, several building blocks are affected.

!

They are currently in the phase of developing their first MVP which they will use to test and get feedback from customers. Then based on the feedback they expect to get, they plan to adjust and iterate until they find a business model and a product that works. By following this procedure, they build the product iteratively and incrementally.

!

93


K.A. V.P.

Server installation & maintenance

ERP module

!

Offline function K.R. Hardware

C.S.

R.S.

Hardware related costs

Hardware will increase the price

94


Chapter summary

!

A workshop was conducted in Copenhagen in order to redesign the product, business model and strategy of the new company. The company was given the name Unumed. The new business model of Unumed, compared to the previous business model of iDaktari, had been improved. They were now offering a product using the latest technologies with no installation required. The new team had now more experience, knowledge and resources. They had extended their customer segment. The channels had been made more efficient and the business model was now scalable

!

An organization was created to effectively develop and implement the new business model of Unumed. Several organizational frameworks were used to analyse Henrik’s organizational design choices. It was demonstrated that the five aspects of the organization are aligned and are able to interact harmoniously with each other.

!

Strategy • Focus on responding to new events rather than improving operations • Through planning, organizing, leading and controlling, Henrik encourages and stimulates his team to work towards strategic goals

!

Structure The structure follows a flexible and a simple balanced matrix structure. There are two functional departments, product- and business development.

95

! Star model ! !


!

Processes • The work process follows a reciprocal performance. The work of each team member is heavily dependent on the work of others. Goal setting and action planning, follows a pooled performance. Team member contribute through discussions and goals and action plans are made collectively based on individual contribution • The most used communication tools are WhatsApp and Skype • The team has weekly status meetings to follow up on progress

!

Reward system • Equity - Team members are equally treated • Ownership – Team members are motivated to work hard for their own company to succeed • Expectancy - The team expects that effort will lead to high performance and high performance will result in desired outcomes • Goal setting – Collectively, the team sets specific and challenging goals and they receive constant feedback regarding the progress

!

People • Team of five people with background in software, design and business • Self motivated, free thinkers, creative, entrepreneurs The team follows the Lean startup approach and it was demonstrated by applying the 3 key principles to the case. 1. They created a business model hypothesis 2. They went to market to test in with potential customer to get feedback 3. They used the feedback to adjust the business model and start developing a MVP 96


5

Will it


work?


!

Throughout this case study, the researchers had the opportunity to follow the development of a startup company from the very beginning. By working with the former Venture Capitalist Henrik Albertsen and his colleague Andreas Flensborg on one of their investments in Kenya, we had the chance to witness the process from its first steps. Equipped with organisational and business tools and theories we were able to observe Henrik’s actions, map them down and translate them into useful frameworks. These frameworks, which represent the results of our master thesis have been introduced throughout the different chapters of this book. In this section we would like to go through them again and see in which context and under which conditions they can be applied.

!

The first framework was developed in the early stages of our research, in an attempt to understand the venture business and the dynamics between the different actors involved. The “Venture Capital (VC) overview model” (see chapter one) can be useful to entrepreneurs who want to understand the business in order to work with a VC, as it gives a quick visual overview over this complex industry.

The VC overview model

The other three frameworks were developed later in the course of our research. They are the result of a long process of analysing the data gathered through interviews and observations. The “Venture Development (VD) process” (see introduction) is a three-step representation of the whole process as far as we were able to witness it. We believe it can be useful to investors, entrepreneurs and Venture Developers. It’s a holistic framework which can be supported by different tools and theories according to the business case.

The VD process

!

99


!

The next two frameworks, the “strategic positioning model” and the “screening process” correspond to the first two steps of the VD process respectively. We did not develop a framework for the last step of the VD process as we feel that it can be described through the Lean startup methodology.

!

The “strategic positioning model” (see chapter 2) corresponds to the first step in the VD process. It is a very useful tool to structure a market analysis when comparing many options. The filters on the left side of the model can be adjusted and prioritised according to the objectives of the analysis.

!

Finally, the “screening process” corresponds to the second step in the VD process. It is a selection of different organisational and business tools and theories which are structured in three sequential steps. It can be used both by entrepreneurs and investors in order to evaluate a business model and the team behind it and make an investment decision. Again, the selection of tools and theories can be altered and adjusted to the business case.

! !

100


What about risk?

!

One interesting observation that came out of our research is that all aspects of the venture industry are somehow related to risk. There are four ways of responding to risk: avoid, transfer, mitigate and accept. These responses are prioritized in this order, meaning that only if it is not possible to avoid, transfer or mitigate risk, you accept it. Although a complete risk analysis falls outside the scope of this thesis, it is interesting to look into some examples of risk responses in our case study. Henrik had no previous experience doing business in Africa. He had no market insights nor network in the area. These factors added a lot of risk in his investment. In order to avoid the risk of uncertainty he hired Andreas who has a lot of experience in this area and a wide network.

!

Another important aspect is the financial risk exposure and Henrik uses both transfer and mitigation response assessment. By giving shares of the company both to the Kenyan entrepreneurs and to Andreas, he is able to reduce their salaries and transfer part of the financial exposure to them. It is worth noting that this response works as a motivation factor too, since the success of the company is directly related to the benefits.

!

101


!

As we addressed in the previous chapter, one aspect of the lean methodology is to minimize the use of resources. By applying a lean approach, Henrik is able to reduce the financial related risks. Another aspect of the lean approach is to develop and adjust the business model iteratively and incrementally based on customer feedback. This method reduces the probability of failing and thus the associated risk.

!

Finally, for the risks that cannot be avoided, transferred or mitigated, the only option is acceptance. This is achieved by establishing a risk-aware culture so all team members can realize the severity of the risks they bare.

! ! !

102


So, will it work?

!

Although things look promising at the moment, we can only speculate as it is impossible to predict the future. Based on the analysis we conducted so far one thing is certain, as the organization will start to grow, more people will be needed and things will become more complex.

!

As the company is in its early stage development, developing the product and the business model, it is important to focus on flexibility instead of stability. At this point, the most important thing is to find and develop the most effective and desirable solutions for their customers and a business model that works. By having a flexible organization it is easier for the company to respond. As soon as the team finds the right product and business model the company will begin to grow and they will need to start focusing more on operational routines and efficiency. This will affect the organisational design as they will need to establish predictable organizational routines and encourage programmed decision making.

! !

103


“The best way to predict your future is to create it” -Peter F. Drucker


Literature

!

The Wall Street Journal (Dec 26 2012): Selling Abroad from the Get-Go by Scott Denne Fortune (Aug 11 2003): Churning Things Up by Andy Grove Harvard Business Review (1987): Strategy vs. Tactics from a Venture Capitalist by Arthur Rock Yahoo/e27 (Dec 31 2012): Ascenz monitors ships’ fuel consumption gets S$589K funding from Red Dot Ventures by J. Angelo Racoma Bloomberg Businessweek (Aug 9 2012): Startups’ New Creed: Patent First, Prototype Later by Ashlee Vance Bloomberg Businessweek (Jul 19 2012): Patent Deals Give Investment Banks a Boost by Serena Saitto The Wall Street Journal (Jul 30 2012): Samsung Case is a Proxy for Google by Jessica E. Vascellaro Investing in Venture Capital and Buyouts (Edited by Summer Levine), Chapter 2: Analysis of Venture Capital Deals by David S. Lobel

! !

Introduction & Chapter 1


Chapter 2

!

Kenya economic update, Reinvigorating Growth with a Dynamic Banking Sector, World Bank December 2013, 9th edition. Broadband in Kenya, ICT Market Snapshot, accessed online on the 25/4/2014 at http://broadbandtoolkit.org/Case/ke/5 Peter Lange, July 2013, Kenya - Telecoms, Mobile, Broadband and Fo r e c a s t s , 1 2 t h E d i t i o n . A v a i l a b l e o n l i n e a t h tt p : / / w w w. b u d d e . c o m . a u / Re s e a rc h / Ke n y a -Te l e c o m s - M o b i l e Broadband-and-Forecasts.html Sub-Saharan Africa Mobile Observatory 2012, GSMA, Deloitte, available online at http://www.gsma.com/publicpolicy/wpcontent/ uploads/2013/01/gsma_ssamo_full_web_11_12-1.pdf Mark Page, Partner, Dr. Maria Molina, Gordon Jones, Danil Makarov, The mobile economy 2013, ATKearney, GSMA, available online at http://www.atkearney.com/documents/10192/760890/ The_Mobile_Economy_2013.pdf

!


!

Alexander Osterwalder, Yves Pigneur (USA, 2010) Business model generation. Published by John Wiley & Sons Inc. Robin Finchman, Peter Rhodes (New York, 2005) Principles of organizational behavior. Fourth edition, Oxford University press. Jones, George (New York, 2013) Essentials of contemporary management. Fifth edition, McGraw-Hill Irwin. Duncan Kitchin (Great Britain, 2010) An introduction to organizational behaviour for managers and engineers, a group and multicultural approach. First edition, Elsevier. Hans Eibe Sorensen (United Kingdom, 2010) Business development, a market-oriented perspective. Published by John Wiley & Sons Inc. Rudiger Dornbusch, Stanley Fischer, Richard Startz (Singapore, 2011) Macroeconomics. Eleventh edition, McGraw-Hill Irwin. Steve Blank (Harvard Business Review, May 2013 Why the lean startup changes everything. Steve Blank (USA, 2003) The four steps to the epiphany. Third edition, lulu.com.

Chapters 3,4 & 5


!

Tim Brown, Barry Katz (2009) Change by design. Harper Collins ebooks Hagel Joh, Singer, Marc (March – April 1999) Unbundling the corporation. Harvard business review Treacy, Michael, Wiersema, Fred (1995) The discipline of market leaders: choose your customers, narrow your focus, dominate your market. Dr. David Hillson, Developing Effective Risk Responses, Proceedings of the 30th Annual Project Management Institute 1999 Seminars & Symposium Philadelphia, Pennsylvania, USA: Papers Presented October 10 to 16, 1999

*

for an extended list of references,

please contact the authors.


So… HENRIK ALBERTSEN IS A FORMER VENTURE CAPITALIST. AFTER SUCCESSFULLY SELLING HIS COMPANY, THE NORDIC VENTURE PARTNERS, HE HAS THE OPPORTUNITY TO REINVENT HIMSELF. HE TEAMS UP WITH A BUSINESS DEVELOPER, ANDREAS, AND THREE KENYAN ENTREPRENEURS AND TOGETHER THEY SET UP A COMPANY IN NAIROBI.

!

TWO MASTER STUDENTS FROM THE TECHNICAL UNIVERSITY OF DENMARK

FOLLOW THE

DEVELOPMENT OF THIS COMPANY AS A CASE STUDY FOR THEIR MASTER THESIS. THEIR OBJECTIVE IS TO UNCOVER HENRIK’S TOOLBOX AND MINDSET WHEN NURSING AND MANAGING HIS INVESTMENT. THROUGH INTERVIEWS AND OBSERVATIONS THEY TRY TO ELUCIDATE HOW THEORIES CAN SUPPORT AND EXPLAIN HIS BEHAVIOUR.

!

WITH

GUIDANCE

FROM THEIR

PROFESSORS AND TOGETHER WITH A

DESIGNER, THEY

“TRANSLATE” THEIR FINDINGS INTO USEFUL FRAMEWORKS, WHICH ARE PRESENTED IN A VISUAL FORMAT THROUGHOUT THIS BOOK. THESE FINDINGS CAN BE USEFUL TO INVESTORS AND ENTREPRENEURS ACROSS THE WORLD.

Asking the right questions BY DIMITRIS KYRKOS & JON PETUR JONSSON

Book chapters with colors!  

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