Entrepreneurial Commercialization of Knowledge
eCourier Entrepreneurial Venture
Emergence of new knowledge resulted from a publicly financed, scientific problem solving. Eventually, the generation of this new knowledge is not primarily for application purposes or for any guided interest. However, such there are new knowledge which usually carries some commercial business potential. Evidently, national capabilities in exploiting these opportunities of new knowledge differ from each other. As explained by (1990), “these differences have been found to be a source of competitive advantages in global markets.” New production technologies and products drive the process of economic growth and allow innovation to be appropriated.
Generally, entrepreneurship requires suitable sources of knowledge. Particularly, these are sources which enable access to, and the exploitation of new knowledge. Therefore, the transfer of knowledge from academic research to commercial production and marketing activities is an essential part of the entrepreneurial activities in which organizations must considered.
However, it is also important for the organization to consider and recognize the constraints of operations in which the entrepreneurial process may be affected. Entrepreneurship always faces obstacles such as barriers to entrepreneurial entry, lack of qualified resources, and/or organizational rigidities. Depending on entrepreneurial skills, some of these can be overcome, some cannot. Difficulties like these vary with the institutional and political conditions in the different national economies. According to (2001), these difficulties can impede the entrepreneurial commercialization of new technologies just as much as they can impede any other entrepreneurial activity.
Moreover, in knowledge-based entrepreneurship there are additional obstacles which resulted from the peculiarities of scientific knowledge and its mode of transfer. According to (2003), in the attempt to overcome these obstacles, the commercialization of new technologies is been shaped.
Knowledge, as distinguish by (1967), has two types namely: the tacit or implicit and encoded or explicit knowledge. According to (1967), encoded or explicit knowledge is in the form of written information. It is accessible to commercial users as long as their training allows them to understand context and content. On the other hand, tacit or implicit knowledge is acquired by experience on the job, for example, scientific tacit knowledge is acquired by conducting scientific research (1967). This knowledge is difficult and impossible to encode and therefore has to be carried in embodied form.
In addition, technological and disciplinary fields differ with respect to what form of knowledge is relevant for commercial applications and also the actual organization of the knowledge transfer. The service of scientifically trained personnel is necessary to achieve the passing on of the information. Information transfer can cost the business venture much unless the entrepreneur itself has the knowledge of the technology and is being applied to his business. and (2002) concluded that this fact may explain why the transfer and commercial exploitation of technological knowledge indeed tends to be a matter of either small entrepreneurial start-up firms or large, incumbent firms.
New knowledge is created during a scientific research by which this knowledge can be useful in commercial production and marketing activities. Once the scientific knowledge is then created as a business opportunity, that knowledge is now needed to be pass on to create business opportunity. Transfer is usually entrepreneurial process. For example, in starting up a business that is technology oriented, the knowledge of a scientist is essential in the transfer of academic science knowledge to the commercial sphere.
Some cases of knowledge transfer are accomplished by the entrepreneur who embodies the necessary technological knowledge in person. However, in large, incumbent firm, technological expertise that is directly related to the capabilities of the organization which already exists has to selectively be acquired on the labor market. This is done through the expansion of the research and development staff which is a specialized organizational unit a firm of large scale operation ( 1993; 1997). The two contrasting forms of firm organization represent very different stages of organizational development (2001; 2000). They therefore have different strengths, face different problems, and pursue different entrepreneurial strategies in exploiting knowledge-based business opportunities.
In the case of the scientist or the engineer which has acquire the knowledge of the technology or the new knowledge and realize the commercialization value of the knowledge can exploit the knowledge they embody in order to realize innovative production processes or products. If successful, start-up firms find their niche in the markets or perhaps even a growing niche or market. Improvements and diversifications in the firm’s processes or product may sooner or later become feasible. A continued transfer of new technological knowledge would then be useful or even necessary to keep up with competitors. Thus, if run by former scientists can keep up with technological developments and in exploiting new commercial opportunities even comparatively small business ventures. This is because transfer of knowledge is easy and do not cost much for the company.
In contrary to a scientist as an entrepreneur who can exploit his own embodied knowledge and capabilities on the latest technology on processes and products, large firms have to find ways to acquire and absorb the most current technological knowledge. In addition with the nature of large firms to be differentiated, spotting technological opportunities requires considerable coordination efforts. It is essential for these firms to have coordination between the various people in charge of conceiving of new business opportunities, of deciding about them, and of actually organizing the internal resources. New technological knowledge has to be appropriate with the firm‘s specific knowledge, capabilities, and routines that have been accumulated in the past. Moreover, as a consequence, the adjustment of business conceptions is needed and has to be mastered.
How eCourier start?
eCourier is the only courier company worldwide to employ an intelligent, automated dispatch solution. eCourier was developed with the help of the leading minds and research laboratories and logistics and computing. With eCourier’s propriety technology platform, middlemen are being removed and the service limitations that the conventional operators encumber are removed.
, CEO of eCourier, founded the company in response to frustration with unreliable courier services while working in the shipping industry. Inspired by the lack of innovation within conventional courier operations, Allason felt that combining cutting-edge technology with a customer-oriented business philosophy would revolutionize the courier industry.
According to Allason, he started looking at the market of courier when he was still a student when he ordered a present for a friend and did not arrive that it ruined his surprise. He became furious with the shoddy service and the fact that the courier firm could not tell where his order was.
In his curiosity, he tried to work out why the couriers are so unreliable. felt there was an important gap in the market due to the lack of information between the couriers and their controllers. He and Bregman, a fellow student he met in the US, analyzed how UK courier companies worked and discovered a highly fragmented sector with obsolescent supply chains creating insuperable barriers to growth.
According to , “Traditional courier companies are based on a human sequence of telephonists, coordinators, controllers, customers and couriers. Because of high information costs, one controller can oversee a fleet of only 20 to 30 couriers meaning if the company is to grow it must operate several separate fleets.” This rules out big efficiencies and economies of scale. In fact, according to him, the greater the number of customers the less efficient the company becomes. Expansion costs much. However, eCourier has expanded from fixed-costs based which have expanded traffic with no limitations. They have concluded that, “there was not so much gap in the market as a gaping hole to be filled using the best technology.”
However, in their search for a technology, the entrepreneurs face their first problem. The technology is still not available in that time. So they have to contact logistics experts about the possibilities and cost of creating the software. There has a possibility of creating the software however it cited prices of millions and a timescale of several years.
The next step was an extensive, global search for a developer, after being told that the system could be built for more than £4million. They have identified an American academic as the person who could build their business-defining technology by the name of Dr. Cynthia Barnhard, transport guru at the Massachusetts Institute of Technology. When and identified her, they bombarded her with gift baskets while she was on holiday vacation in Hawaii until she agreed to help them. Dr. enlisted the help of two Italian universities to design and build the system which has made team to travel to Italy to sign contracts.
According to , the limitation at a conventional firm is the number of people that a booking has to pass through before reaching the courier. He explains that an operator takes the details and passes them to a controller. The controller then has to work out whom to give the delivery to and then actually give it. This all happens by radio or mobile phone which is labor-intensive and based on little accurate information. If the customer wants to know where their package is, the information has to pass down that human chain then back up again.
eCourier set out to develop technology that would connect customers with couriers directly and minimize the impact of the middle man. This technology development resulted to a unique technology platform called AIBA – Advanced Information Based Allocation System. AIBA knows where all the eCouriers are, and it knows what they are carrying, where they are heading and how fast they are moving. This information is combined with the latest traffic and weather reports. The computer also compares the journey with previous patterns, allowing it to calculate the impact of a busy streets and the weather. It then uses this information to predict a travel time for the collection and delivery and allocates each new delivery to the most appropriate courier. The whole process takes milliseconds.
The company which is based in east London has turned over £1.5million in the first full year of trading and landed big accounts. According to (2006), after two years of trials and £5million in private investment, , 25, and , 26, are confident their eCourier venture will conquer wherever it operates in the UK’s £1billion market. In their first month, September 2004, they completed 25 deliveries and charged £1000. Now, the company manages 80 couriers within London and this is growing by the week (2006).
As well as business success, eCourier is achieving widespread recognition. On the anniversary of its first year of operation the business received a raft of awards from the likes of The Chartered Institute of Logistics & Transport, the Department of Trade and Industry and the British Computer Society.
Customers and mailroom managers alike are impressed with eCourier. In the past year a host of high-profile businesses have converted to what is arguably the country’s fastest-growing courier business. ‘eCourier has certainly made a big difference to us’, comments Despatch Manager for Harrods in Knightsbridge. According to him, they book on line and a few minutes later the courier turns up. Currently the company of Reardon use eCourier throughout the day, mostly to deliver items for their customers. He also commented that booking on line is faster and more efficient, and it has definitely reduced their courier costs.’
Analysis
Porter’s Five forces
In the analysis of the courier industry, eCourier is assessed using the Porter’s five forces mode. Firstly, competition in the specific industry is weak since eCourier is first in the technology and if other would implement the same technology, they would be way up to some years behind. Threat of the new entrants is also assessed as weak since they would also be way behind the eCourier and a new enterprise would have a difficulty in establishing a parallel business as with eCourier and it would be hard to compete with an already establish and recognized eCourier.
The threat also for substitutes is assessed as also weak since substitutes for these services is not yet known. The bargaining power of the suppliers is assessed to be strong since the company is using the latest technology which technology suppliers are offering. The bargaining power of the buyers also is assessed to be strong since the customers usually have no incentive to be loyal.
Figure 2: Porter’s Five Forces Model
SWOT Analysis
Strengths
Ø High-Tech Courier Delivery
eCourier utilizes the latest GPS technology to revolutionize same day and overnight courier services across London and the UK.
Ø satellite based tracking system and artificial intelligence
With this technology customers can track their package second-by-second from dispatch to delivery online whether it’s a same day or overnight booking, across London or anywhere in the UK which gives customers more convenience and less cost.
Ø eCourier is faster than the competition
With the company’s fleet of motorcycles, small and large vans coupled with patented software algorithms they have the ability to match incoming jobs to the most appropriate vehicle in fleet, based on some factors which includes traffic and weather conditions, available drivers, vehicle type and others.
Ø Instant proof of delivery
As soon as our courier has delivered parcel on same day or overnight services customers receive an instant signed proof of delivery by email, SMS or fax which gives also the customers more convenience.
Ø Competitive and committed staff
The company also has its competitive and committed staff which has even used their vehicles in the first days of their operations in delivering the orders of their customers.
Ø Reliable service
Customers and mailroom managers alike are impressed with eCourier. Evidently, in the past year a host of high-profile businesses have converted to what is arguably the country’s fastest-growing courier business.
As evidence, , Despatch Manager for Harrods in Knightsbridge, commented that eCourier has certainly made a good turn out for their operations. According to him they book on line and a few minutes later the courier turns up. In addition, he said booking on line is faster and more efficient, and it has definitely reduced their courier costs.
Moreover, eCourier takes 85 per cent of bookings on line while its nearest rival takes about five per cent. According to , for clients sending them hundreds of deliveries each day, costs are cut significantly and faster and more reliable services is provided. The mailroom manager at one investment bank in particular says eCourier save him and his team three hours a day because his staff never need to phone up to check the status of a delivery.
Ø Competitive pricing
The average eCourier delivery charges from £5 to £15, so competitive pricing is added to the benefits of accuracy and efficiency (2006).
Weaknesses
Ø GPS limitation
The company has a routing system which reports the location of the available couriers and which customers can view where their orders are at. Each of the drivers of eCourier’s has its palmtop computers issued by the company with the global positioning system (GPS) in which delivery locations and delivery status is recorded every 10 seconds.
However, GPS has limitations as it is difficult to get a signal especially at London in which signals usually do not reach a good signal from seven or eight satellites.
In addition, signal is also interfered by the tall buildings of the city and the technology has its weakness on getting signal indoors and when it is undercover. This becomes a barrier in the reporting and mapping of the couriers locations.
Moreover, there is also a problem on accuracy of their system in which could even incur a delay of 5 minutes in the network.
Opportunities
Ø Expansion to Manchester and Coventry
With the rapid growth of eCourier, opportunities of expansion are viable for the company with the current position of the company in the marketplace.
Ø Enduring commercial advantages to eCourier’s operations that help explain why it has found raising investment relatively easy.
Threat
Ø Rise in oils prices
With the nature of courier industry, eCourier depends on mobility. Oil prices increase becomes a threat to them since it would incur them additional costs.
Ø Environmental legislation on gas emission on road transport
PEST Analysis
UK’s express and courier services are of a great significance in the growth and efficiency of the economy of the country. Faster and more efficient delivery services are essential for UK business especially with UK’s geographical position which is far from Europe’s continental center and with businesses dealing with international trade. Even though global economy has slowed down, the express and courier industry in UK had still maintained a steady growth rate and market turnover over the years.
In addition, since the express logistics services has been outperformed by the courier services in the growth of turnover, express and courier services demand has grown rapidly especially with the industries in services and manufacturing. Thus, the success of the courier industry is strongly affected with these industries’ economic performance. With technology advancement and the growth of e-commerce usage which is combined with the commitment of express and courier sector in information technology investment, the effects of global slowdown has not affect the industry much. This is also the industry has offered more value to their services and has retained its most valuable customers even in times of the economic slowdown. Increase in the Internet retail selling has also increase the demand of courier services with the increase demand of home deliveries. In addition, the industry has also boosted with the increase for air courier services for developing countries.
However, problems with the increased costs of air freight also arise with the increased security measures that air courier have imposed. In connection with these, express and courier sector has preferred to do on the road services than in air freight. However, there are also barriers which arise with the on the road carrier. With the government more concern on the environment, an environmental legislation has been imposed. This gives additional cost for the road based courier and express sector.
However, growth of the express and courier industry is likely to be steady with the growth of UK economy. In the continuous growth of internet shopping courier industry would most likely to be benefited since there would also be an increase in home deliveries. However, along with these opportunities are threats with the problems of government legislation and security on the UK’s road based and in the air based courier industry. In addition, the government has also have currently introduced environmental legislation for road-based couriers which would costs courier industry with additional expenses.
Credit:ivythesis.typepad.com
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