Competence-based Troubled

Somewhat like a "Charity," the Competence-based venture in trouble combines HIGH COMPETENCE with low Product Market Match, Margins , and Volume, for something with a Long-term Need , in an environment of Uncertainty and Ambiguity .

This venture is UNLIKE a Charity in that Innovation is high, as is Scarcity--with substantial control of Appropriability . Also, a Product Market Match is possible in this type of venture.

Figure 25: "B/K" Diagram

Figure 26: Target "Bulls-eye" Diagram

ADVICE:
Focus on Product Market Match using Net Buyer Benefit as leverage, until a market is identified and proven. This, then, should set the stage for higher Margins and Volume. It should also permit the incentives and the small numbers bargaining advantage necessary to decrease Appropriability, Uncertainty, and Ambiguity, and move closer to the Model Venture.

CASE STUDY EXAMPLE:

Automated Translator -- A Competence-Based Troubled Venture
Automated Translator had an ambitious vision: Automate language translation by creating translation software, and open the corners of the earth by breaking down language barriers. The undertaking began as a research project at an eastern university in the United States during the 1970s, on a $2 million donation. The development team was comprised of extremely intelligent people who were passionate about how such a translator could be a catalyst to open up communication and enhance information transfer.

In the 1980s, the team approached Matt Perrier, an experienced entrepreneur, to help obtain more funding. Matt knew that individuals would continue to need translation work periodically, and understood that global communication would always be important. Matt decided to take the project under his wing, expecting to fund the venture over the next few years as the products were developed.

$15 million was raised initially, and the business hired several employees and executives to work on the project. By the mid 1980s, the team had created several math algorithms that could reliably translate characters and words into different languages. People showed interest in the product. The time saving benefits were obvious. By having a computer perform the bulk of the translations, the document could be left for higher level edit. As the product reached the market, Automated Translator realized a significant lack of purchase orders. Their new software could not run on IBM machines, and people were unwilling to purchase special hardware for the Automated Translator. The Automated Translator team did not plan for the importance of programming in a language that could run on IBM machines. They didn't care for the IBM environment, and they found working in it 'restrictive'.

Money was running out, but Matt managed to replenish the coffers with investments from wealthy friends to keep the project going. Matt did not worry about substitute products flooding the market, because Automated Translator had a first mover advantage. 'Me too!' products would be about a dozen years behind in development, and their companies didn't have the skill composition of Automated Translator's technical team. After all, a good and accurate translator would be irreplaceable when translation was necessary. Given that line of reasoning, no steps were taken to patent the software program.

The venture was not taking off as well as had been anticipated, mainly because of the IBM compatibility oversight. The programmers were unhappy about changing over to an IBM compatible programming language, but Matt finally persuaded them after a long and difficult battle. Internally, Matt also discovered that some members of the new staff members were not working very hard or producing enough to warrant their salaries. It was costly to fire them; several had huge 'golden parachutes' written into their contracts. Matt didn't want to keep slackers on the payroll for obvious reasons. He also had to make provisions for key person insurance, as the team had neglected this important step. In the end, the unique idea to open up worldwide inter-language communications failed to attract the needed volume. The team was so passionate about the work that no contingency plans were made for the possibility that others might not hold the project in the same regard.