Table Of ContentMANAGEMENT OF TECHNOLOGY SERIES 18
DESIGNING
BUSINESSES
How to develop and lead
a high technology company
George Young
The Institution of Electrical Engineers
IEE MANAGEMENT OF TECHNOLOGY SERIES 18
Series Editors: G. A. Montgomerie
B. C. Twiss
DESIGNING
BUSINESSES
How to develop and lead
a high technology company
Other volumes in this series:
Volume 1 Technologies and markets J. J. Verschuur
Volume 2 The business of electronic product development F. Monds
Volume 3 The marketing of technology C. G. Ryan
Volume 4 Marketing for engineers J. S. Bayliss
Volume 5 Microcomputers and marketing decisions L. A. Williams
Volume 6 Management for engineers D. L. Johnston
Volume 7 Perspectives on project management R. N. G. Burbridge
Volume 8 Business for engineers B. Twiss
Volume 9 Exploitable UK research for manufacturing industry G. Bryan
(Editor)
Volume 10 Design and wealth creation K. K. Schwarz
Volume 11 Integration and management of technology for manufacturing
E. H. Robson, H. M. Ryan and D. Wilcock (Editors)
Volume 12 Winning through retreat E. W. S. Ashton
Volume 13 Interconnected manufacturing systems H. Nicholson
Volume 14 Software engineering for technical managers R. J. Mitchell
(Editor)
Volume 15 Forecasting for technologists and engineers B. C. Twiss
Volume 16 Intellectual property for engineers V. Irish
Volume 17 How to communicate in business D. J. Silk
DESIGNING
BUSINESSES
How to develop and lead
a high technology company
George Young
The Institution of Electrical Engineers
Published by: The Institution of Electrical Engineers, London,
United Kingdom
• 1997: The Institution of Electrical Engineers
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British Library Cataloguing in Publication Data
A CIP catalogue record for this book
is available from the British Library
ISBN 0 85296 891 4
Printed in England by Short Run Press Ltd., Exeter
To Elizabeth
Contents
Preface x
Section I: INTRODUCTION
1 Engineers and business 3
Why engineers are suited to founding and running businesses.
The techniques to be added to the engineer's skill set. Looking
at design of a business as an extension of product design.
Objectives of the book.
2 Objectives of the entrepreneur or management team 7
The type of business to be designed and built. Businesses with
contained objectives. Businesses that aim for higher goals. The
issue of risk and sharing of ownership. The issue of personal
commitment. Looking to exit strategies at the beginning.
Section II: BUSINESS STRATEGY
3 Strategic business design 13
Top-down techniques. The bottom up approach. Integrating
the top down and bottom up approaches.
4 Internal business design issues 45
Technology policy, quality issues, information systems,
designing the organisation structure, recruitment and
building the team.
viii Designing businesses
Section III: FINANCE
5 Financial concepts for the technical professional 83
Financial statements. Profit and loss statements, cash flow
statements and balance sheets; the relevance of such
statements to business design. Accounting policies. Using
statements for business design. Illustrative financial
statements. The software consultancy. The distribution
business. The finance needs of a business. The natural growth
rate of a business. Strategies to minimise the finance needs of
a business. Debt funding. When debt funding is appropriate.
Types of debt funding.
6 Building the equity base of the business 109
The soft start-up. Opportunities for bootstrapping the
business, i.e. avoiding reliance on external funding sources.
The business plan. Objectives of the business plan. Structure of
the business plan. Introduction. The market to be addressed,
discussion of competitors and basic strategies to gain a
position in the market and maintain competitive advantage.
Description of products and manufacturing processes.
Financial projections. Summary resumes for key promoters.
How to raise venture capital, and the issues involved. The stock
market. Public stock markets and the issues involved in
running a public company.
Section IV: DEVELOPING THE BUSINESS
7 Alliances 145
The need for alliances. Examples such as Microsoft/IBM.
Distribution and licence arrangements. Types of alliances.
8 Acquisitions 159
Why do acquisitions? Types of acquisitions. Relevance to the
technical entrepreneur.
Section V: MANAGEMENT BUY-INS AND BUYOUTS
9 Management buy-ins and buyouts 177
The opportunity associated with buy-ins and buyouts. The
challenges associated with such operations. Financial and
operating issues involved. Timescales.
Contents ix
Section VI: CONCLUSIONS
10 Commercial judgment, leadership and other people matters 193
11 In review 201
Bibliography 203
Index 207
