Rapid Enterprise Development

To be able to complete the Innovation Chain, it is not enough to just develop a new product, it must be manufactured, marketed and distributed. If the cost for product development is high, first time entrepreneurs will find that launching the product to market costs 10 times or even more. But the good news is, the profit exponentially rises, too.

Just as the Rapid Product Development Methodology seems to be the most viable option for a small entrepreneur with minimal capital, the Rapid Enterprise Development Methodology is also his most viable option to complete the Innovation Chain. But to be able to implement it, we must first understand the strengths and weaknesses of the Manufacturing Facility-based Economic Model, the Internet-based Economic Model and the merger of the two concepts in the Knowledge-based, Networked Company Model.

Manufacturing Economic Model

A simplified manufacturing model is shown below:


The process starts with the acquisition of raw materials. It then goes through a manufacturing process the produce a certain goods or product. Next comes the distribution system that distribute the product to retail outlets barangay-wide, city-wide or country-wide. Next is the Sales and Marketing and the After Sales Support. Each one of these steps is important if we want so sell goods to customers and if we want the customer to keep on buying our product.

The problem with this model is that it takes too much resources in terms of financing, time and human capital. It takes at least a year to setup a manufacturing facility, months just to develop a city-wide distribution system, millions of pesos in advertising cost to introduce the product to market and highly trained engineers and technicians to establish a credible after sales support. It is also very demanding to the entrepreneur because he has to be able to have a mastery of each aspect of the operation if he is to guide the growth of his company.

Internet-based Company Economic Model

A dot-com" company's business model relied on harnessing network effects. Whereas the manufacturing model develops products first then finds customers later, the Internet model accumulates customers first sometimes even without a tangible product or service. In this model, the economic value of the company is measured in terms of the number of visitors to their site per day. For example, if a website like Yahoo! has 5 million visitors per day, it translates to 5 million potential customer. In the future, when they do offer services or products in their website, it will be seen by 5 million potential customers per day. That is a lot. Thus, the high perceived value of Internet based companies. But the perceived value is not realistic causing the 'dot-com- bubble crash. It wiped out $5 Trillion in market value of technology companies from March 2000 to October 2002.

The problem with this model is that it is Knowledge-based but it doesn't produce a tangible product, thus the term 'bubble'. For our Rapid Enterprise Development Model, we will harness to power of Networking and Information and Communication Technology in order to rapidly develop a company and launch a product line.

The Networked Company

The untapped potential mentioned in this blog such as the Filipino Scientists and Engineering, Large Natural Resources, etc are not really unnoticed. The problem is that the existing economic models are inadequate for local companies to realize their potential. We present a new business model that could rapidly start an enterprise that completes the value chain yet minimize the needed capitalization. We call it the 'Networked Company' concept.

A start-up company doesn't have lots of capital, both financially and in terms of manpower. It is impossible for them to cover the whole product chain on their own. However, they should have at least one strength in the chain and they should be so good at it that it gives their company an 'unfair' sustainable advantage [ see write-up on redefinition of technopreneurship ]. They should concentrate on this strength. With advances in information, communication and transportation technologies, it is now possible to delegate the other business components to firms who specializes on them. Our business diagram then becomes:


With this setup, not only is the capital requirement and the setup time minimized, but the proper choice of partner companies could also serve to strengthen the company. For examples, instead of an under-equipped, under-staffed distribution department that takes several months or even years to setup, they could choose to partner with an established courier like UPS for next day parcel delivery anywhere in the world. Of course, costing will also play a part but with this setup, the Company can choose the most appropriate delivery service base on cost and quality of service instead of being trapped by what their limited finances can afford.

This model breaks away from the concept of the company as an office or as an infrastructure. Instead of hiring people, investing in equipments and spending on operations, business processes are now out-sourced. This is not really a new model. Many companies in the US are already practicing this concept: manufacturing in China, technical support in the Philippines, software development in India, etc. We should practice it, too.


Implementing the Catch-Up Strategy


The idea behind the Catch-Up Strategy is for various stakeholders in enterprise development to take an alternative path in order to build a culture of innovation that is better than the rest of the world. If we are to progress from a position of economic backwardness towards a technologically bright future, we should not just innovate, we should be able to innovate faster and better. The two methodologies: Rapid Product Development Methodology and the Rapid Enterprise Development Methodology are the key for implementing the Catch-up Strategy. The first one taps the scientific and engineer potential of Filipinos in order to develop a new product at the shortest time possible at the least possible cost. The second concept suggest a way to bring that product to market using a 'network' of partner companies. With two methodologies, Filipino entrepreneurs will be able to complete the Innovation Chain. They might find them difficult to implement at first but they will be surprise to find out that it becomes easier as they develop more products and the build more companies.


The next portion of this blog are ideas for sustaining the revolution.

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