Chapter 1 – The EntrepreneurialChapter 1 – The Entrepreneurial Revolution Revolution

EntrepreneursEntrepreneursChallenging The UnknownChallenging The Unknown

Entrepreneurship:Entrepreneurship:A PerspectiveA Perspective

ENTREPRENEURSHIP

Entrepreneurship is being taken as a process of discovering, evaluating and exploiting opportunities in the name of an idea, spending time as well as capital on an uncertain venture.

ENTREPRENEURS

“Entrepreneurs are risk takers, willing to roll the dice with their money or reputation on the line in support of an idea. They willingly assume responsibility for the success or failure of a venture.”

“Innovation is specific instrument of entrepreneurship…the act that endows resources with the capacity to create wealth.”

(Peter Drucker – Founder of Modern Management)

Our Entrepreneurial Our Entrepreneurial EconomyEconomy

The Environment for The Environment for EntrepreneurshipEntrepreneurship

Trends in Research and EducationTrends in Research and Education

1.1. The entrepreneurial and managerial The entrepreneurial and managerial domains are not mutually exclusive but domains are not mutually exclusive but overlap to a certain extent.overlap to a certain extent.

2.2. Venture financing, including both venture Venture financing, including both venture capital and angel capital financing as well capital and angel capital financing as well as other innovative financing techniques, as other innovative financing techniques, emerged in the 1990s with unprecedented emerged in the 1990s with unprecedented strength.strength.

Trends in Research and EducationTrends in Research and Education

3.3. Intrapreneurship (that is, entrepreneurship Intrapreneurship (that is, entrepreneurship within large organizations) and the need for within large organizations) and the need for entrepreneurial cultures have gained much entrepreneurial cultures have gained much attention during the past few years.attention during the past few years.

4.4. Entrepreneurial entry strategies have been Entrepreneurial entry strategies have been identified that show some important identified that show some important common denominators, issues, and trade-common denominators, issues, and trade-offs.offs.

Trends in Research and EducationTrends in Research and Education

5.5. More research on the psychological aspects More research on the psychological aspects has emerged.has emerged.

6.6. The risks and trade-offs of an The risks and trade-offs of an entrepreneurial career have been subject of entrepreneurial career have been subject of keen research interest.keen research interest.

7.7. Women and minority entrepreneurs have Women and minority entrepreneurs have emerged in unprecedented numbers.emerged in unprecedented numbers.

8.8. The entrepreneurial spirit is universal.The entrepreneurial spirit is universal.

Trends in Research and EducationTrends in Research and Education

9.9. The economic and social contributions of The economic and social contributions of entrepreneurs have been shown to make entrepreneurs have been shown to make immensely disproportionate contributions.immensely disproportionate contributions.

10.10. Entrepreneurial education has become one Entrepreneurial education has become one of the hottest topics at U.S. business and of the hottest topics at U.S. business and engineering schools.engineering schools.

Emerging Trends: Internet and Emerging Trends: Internet and E-CommerceE-Commerce

• U.S. businesses spent 85.7 billion on building U.S. businesses spent 85.7 billion on building up their Internet capabilities in 1999.up their Internet capabilities in 1999.

• Smaller ventures use the Internet for a variety Smaller ventures use the Internet for a variety of operations, including customer-based of operations, including customer-based identification, advertising, consumer sales, identification, advertising, consumer sales, business-to-business transactions, e-mail, and business-to-business transactions, e-mail, and private internal networks for employees.private internal networks for employees.

The E-Commerce ChallengeThe E-Commerce Challenge

• Electronic commerce (e-commerce)- Electronic commerce (e-commerce)- the marketing, promoting, buying, the marketing, promoting, buying, and selling of goods and services and selling of goods and services electronically, particularly via the electronically, particularly via the Internet- is the new wave in Internet- is the new wave in transacting business.transacting business.

Advantages and Challenges of E-Advantages and Challenges of E-Commerce for Entrepreneurial FirmsCommerce for Entrepreneurial Firms

Advantages:Advantages:• Ability of small firms to compete with other Ability of small firms to compete with other

companies both locally and nationally.companies both locally and nationally.• Convenient and easy way of doing business Convenient and easy way of doing business

transactions.transactions.Challenges:Challenges:• Avoiding being a victim of fraudulent Avoiding being a victim of fraudulent

activities online.activities online.• Handling the costs required to maintain Handling the costs required to maintain

the site.the site.

Developing a Web SiteDeveloping a Web Site• Attractive and UsefulAttractive and Useful

• Marketing the WebsiteMarketing the Website

• ““Stickiness”Stickiness”

Use of Internet SitesUse of Internet Sites

• Company InformationCompany Information

• Corporate image buildingCorporate image building

• Product informationProduct information

• AdvertisingAdvertising

• MarketingMarketing

• Customer communicationsCustomer communications

93%93%

89%89%

80%80%

78%78%

77%77%

76%76%

Most Important Factors for Most Important Factors for Customers to do Business OnlineCustomers to do Business OnlineUser-friendly and easy to navigateUser-friendly and easy to navigate

Good previous experiencesGood previous experiences

Fast response timeFast response time

Relevant and updated contentRelevant and updated content

Bargain pricesBargain prices

54%54%

36%36%

36%36%

27%27%

15%15%

Emerging E-Commerce StrategiesEmerging E-Commerce Strategies

• 3-P Growth Model3-P Growth Model1.1. PresencePresence

2.2. PenetrationPenetration

3.3. ProfitabilityProfitability

Emerging E-Commerce StrategiesEmerging E-Commerce Strategies

• Another StrategyAnother Strategy– ReachReach

– RichnessRichness

– AffiliationAffiliation

Chapter 2 – Entrepreneurship:Chapter 2 – Entrepreneurship: An Evolving Concept An Evolving Concept

The Evolution of EntrepreneurshipThe Evolution of Entrepreneurship

• Entrepreneur is derived from the French Entrepreneur is derived from the French entreprendre, meaning “to undertake”.entreprendre, meaning “to undertake”.

• Although no single definition of Although no single definition of entrepreneur exists and no one profile entrepreneur exists and no one profile can represent today’s entrepreneur, can represent today’s entrepreneur, research is providing an increasingly research is providing an increasingly sharper focus on the subject.sharper focus on the subject.

Robert C. Ronstadt put together a Robert C. Ronstadt put together a summary description:summary description:

• Entrepreneurship is the dynamic process of Entrepreneurship is the dynamic process of creating incremental wealth. This wealth is creating incremental wealth. This wealth is created by individuals who assume the major created by individuals who assume the major risks in terms of equity, time, and/or career risks in terms of equity, time, and/or career commitment of providing value for some commitment of providing value for some product or service. The product or service product or service. The product or service itself may or may not be new or unique but itself may or may not be new or unique but value must somehow be infused by the value must somehow be infused by the entrepreneur by securing and allocating the entrepreneur by securing and allocating the necessary skills and resources.necessary skills and resources.

An Integrated DefinitionAn Integrated Definition• Entrepreneurship is a dynamic process of vision, Entrepreneurship is a dynamic process of vision,

change, and creation. It requires an application of change, and creation. It requires an application of energy and passion towards the creation and energy and passion towards the creation and implementation of new ideas and creative solutions. implementation of new ideas and creative solutions. Essential ingredients include the willingness to take Essential ingredients include the willingness to take calculated risks- in terms of time, equity, or career; calculated risks- in terms of time, equity, or career; the ability to formulate an effective venture team; the ability to formulate an effective venture team; the creative skill to marshall needed resources; the the creative skill to marshall needed resources; the fundamental skills of building a solid business plan; fundamental skills of building a solid business plan; and, finally, the vision to recognize opportunity and, finally, the vision to recognize opportunity where others see chaos, contradiction, and where others see chaos, contradiction, and confusion.confusion.

The Myths of EntrepreneurshipThe Myths of Entrepreneurship

• Myth 1: Entrepreneurs Are Doers, NotMyth 1: Entrepreneurs Are Doers, Not Thinkers Thinkers

• Myth 2: Entrepreneurs Are Born, Not MadeMyth 2: Entrepreneurs Are Born, Not Made

• Myth 3: Entrepreneurs Are Always InventorsMyth 3: Entrepreneurs Are Always Inventors

• Myth 4: Entrepreneurs Are Academic andMyth 4: Entrepreneurs Are Academic and Social Misfits Social Misfits

• Myth 5: Entrepreneurs Must Fit the “Profile”Myth 5: Entrepreneurs Must Fit the “Profile”

• Myth 6: All Entrepreneurs Need Is MoneyMyth 6: All Entrepreneurs Need Is Money

The Myths of EntrepreneurshipThe Myths of Entrepreneurship

• Myth 7: All Entrepreneurs Need Is LuckMyth 7: All Entrepreneurs Need Is Luck

• Myth 8: Ignorance Is Bliss For EntrepreneursMyth 8: Ignorance Is Bliss For Entrepreneurs

• Myth 9: Entrepreneurs Seek Success ButMyth 9: Entrepreneurs Seek Success But Experience High Failure Rates Experience High Failure Rates

• Myth 10: Entrepreneurs Are Extreme RiskMyth 10: Entrepreneurs Are Extreme Risk Takers (Gamblers) Takers (Gamblers)

The Corridor PrincipleThe Corridor Principle

States that with every venture States that with every venture launched, new and unintended launched, new and unintended

opportunities often arise.opportunities often arise.

Approaches to Approaches to EntrepreneurshipEntrepreneurship

• Schools of Thought ApproachSchools of Thought Approach

• Process ApproachesProcess Approaches

Entrepreneurial Schools-of-Thought ApproachEntrepreneurial Schools-of-Thought Approach

Environmental School of ThoughtEnvironmental School of ThoughtFinancial School of ThoughtFinancial School of ThoughtDisplacement School of ThoughtDisplacement School of Thought{{Macro ViewMacro View

{{Micro ViewMicro View

Entrepreneurial Trait School Entrepreneurial Trait School of Thought (People School) of Thought (People School)Venture Opportunity School Venture Opportunity School of Thought of ThoughtStrategic Formulation School Strategic Formulation School of Thought of Thought

Macro ViewMacro View(External locus of control)(External locus of control)

The Environmental School of ThoughtThe Environmental School of Thought

• The Financial/Capital School of ThoughtThe Financial/Capital School of Thought

• The Displacement School of ThoughtThe Displacement School of Thought1. Political Displacement1. Political Displacement

2. Cultural Displacement2. Cultural Displacement

3. Economic Displacement3. Economic Displacement

The Micro ViewThe Micro View(internal locus of control)(internal locus of control)

• The Entrepreneurial Trait School of ThoughtThe Entrepreneurial Trait School of Thought

• The Venture Opportunity School of ThoughtThe Venture Opportunity School of Thought

• The Strategic Formulation School of ThoughtThe Strategic Formulation School of Thought

Ronstadt Views Strategic Formulation Ronstadt Views Strategic Formulation as a Leveraging of Unique Elementsas a Leveraging of Unique Elements

• Unique Markets: mountain gap strategiesUnique Markets: mountain gap strategies

• Unique People: great chef strategiesUnique People: great chef strategies

• Unique Products: better widget strategiesUnique Products: better widget strategies

• Unique Resources: water well strategiesUnique Resources: water well strategies

Process ApproachesProcess Approaches• Integrative ApproachIntegrative Approach

• Entrepreneurial Assessment Entrepreneurial Assessment ApproachApproach

• Multidimensional ApproachMultidimensional Approach

An Integrative Model of An Integrative Model of Entrepreneurial Inputs and OutcomesEntrepreneurial Inputs and Outcomes

Identify Identify OpportunityOpportunity

Assess and Assess and acquireacquirenecessary necessary resourcesresources

ImplementationImplementation

EnvironmentalEnvironmentalopportunitiesopportunities

EntrepreneurialEntrepreneurialindividualsindividuals

An An organizational organizational contextcontext

Unique Unique business business conceptsconcepts

ResourcesResources

InputsInputs

The The Entrepreneurial Entrepreneurial

ProcessProcess

Number of eventsNumber of events(and)(and)

degree ofdegree ofentrepreneurshipentrepreneurship

•A going ventureA going venture

•Value creationValue creation

•New products,New products, services services

•ProcessesProcesses

•TechnologiesTechnologies

•Profits and/orProfits and/or personal personal benefits benefits

•Employment,Employment, asset, and asset, and revenue revenue growth growth

OutcomesOutcomes

EntrepreneurialEntrepreneurialIntensityIntensity

InnovationInnovation Proactive-Proactive-nessness

Risk takingRisk taking

Entrepreneurial Assessment ApproachEntrepreneurial Assessment Approach

TypeTypeofof

VentureVenture

TypeTypeofof

EntrepreneurEntrepreneur

TypeTypeofof

EnvironmentEnvironment

Qualitative,Qualitative,Quantitative,Quantitative,Strategic, andStrategic, and

EthicalEthical

ASSESSMENTSASSESSMENTS

Do the Results of the Assessments Make Sense Given:Do the Results of the Assessments Make Sense Given:

Prior ExperiencePrior Experienceand Educationand Education

EarlyEarlyCareerCareer

MidMidCareerCareer

LateLateCareerCareer

Stage of Entrepreneurial CareerStage of Entrepreneurial Career

Multidimensional ApproachMultidimensional Approach

Individual(s)Individual(s)

OrganizationOrganizationEnvironmentEnvironment

ProcessProcess

Entrepreneurial ManagementEntrepreneurial Management• The underlying theme of this book is the discipline The underlying theme of this book is the discipline

of entrepreneurial management:of entrepreneurial management:– Entrepreneurship is based upon the same principles, Entrepreneurship is based upon the same principles,

whether the entrepreneur is an existing large institution or whether the entrepreneur is an existing large institution or an individual starting his or her new venture single-an individual starting his or her new venture single-handed. It makes little or no difference whether the handed. It makes little or no difference whether the entrepreneur is a business or a nonbusiness public-service entrepreneur is a business or a nonbusiness public-service organization, nor even whether the entrepreneur is a organization, nor even whether the entrepreneur is a governmental or nongovernmental institution. The rules governmental or nongovernmental institution. The rules are pretty much the same, the things that work and those are pretty much the same, the things that work and those that don’t are pretty much the same, and so are the kinds that don’t are pretty much the same, and so are the kinds of innovations and where to look for them. In every case of innovations and where to look for them. In every case there is a discipline we might call Entrepreneurial there is a discipline we might call Entrepreneurial Management.Management.

Chapter 3 – Intrapreneurship:Chapter 3 – Intrapreneurship: Developing Developing Corporate Corporate Entrepreneurship Entrepreneurship

The Nature of The Nature of IntrapreneurshipIntrapreneurship

Defining The ConceptDefining The Concept

Recent research has defined corporate Recent research has defined corporate entrepreneurship as a process whereby entrepreneurship as a process whereby an individual or a group of individuals, an individual or a group of individuals,

in association with an existing in association with an existing organization, creates a new organization organization, creates a new organization

or instigates renewal or innovation or instigates renewal or innovation within the organization.within the organization.

The Need for Corporate The Need for Corporate EntrepreneurshipEntrepreneurship

1.1. Rapid Growth in the number of new and Rapid Growth in the number of new and sophisticated competitorssophisticated competitors

2.2. Sense of distrust in the traditional methods of Sense of distrust in the traditional methods of corporate managementcorporate management

3.3. An exodus of some of the best and brightest An exodus of some of the best and brightest people from corporations to become small people from corporations to become small business entrepreneursbusiness entrepreneurs

4.4. International competitionInternational competition5.5. Downsizing of major corporationsDownsizing of major corporations6.6. An overall desire to improve efficiency and An overall desire to improve efficiency and

productivityproductivity

Obstacles in Corporate VenturingObstacles in Corporate Venturing

• Enforce Standard Enforce Standard procedures to avoid procedures to avoid mistakesmistakes

• Manage resources for Manage resources for efficiency and ROIefficiency and ROI

• Control against planControl against plan

• Plan for the long termPlan for the long term

• Manage functionallyManage functionally

• Avoid moves that risk the Avoid moves that risk the base businessbase business

• Innovative solutions Innovative solutions blocked, funds misspentblocked, funds misspent

• Competitive lead lost, low Competitive lead lost, low market penetrationmarket penetration

• Facts ignored that should Facts ignored that should replace assumptionsreplace assumptions

• Nonviable goals locked in, Nonviable goals locked in, high failure costshigh failure costs

• Entrepreneur failure and/or Entrepreneur failure and/or venture failureventure failure

• Missed opportunitiesMissed opportunities

Adverse EffectsAdverse EffectsTraditional Mgt PracticesTraditional Mgt Practices

Obstacles in Corporate Venturing, cont.Obstacles in Corporate Venturing, cont.

• Protect the base business at Protect the base business at all costsall costs

• Judge new steps from prior Judge new steps from prior experienceexperience

• Compensate uniformlyCompensate uniformly

• Promote compatible Promote compatible individualsindividuals

• Venturing dumped when Venturing dumped when base business is threatenedbase business is threatened

• Wrong decisions about Wrong decisions about competition and marketscompetition and markets

• Low motivation and Low motivation and inefficient operationsinefficient operations

• Loss of innovatorsLoss of innovators

Adverse EffectsAdverse EffectsTraditional Mgt PracticesTraditional Mgt Practices

Reengineering Corporate ThinkingReengineering Corporate Thinking

• Set Set explicitexplicit goals goals

• Create a system of Create a system of feedbackfeedback and and positivepositive reinforcementreinforcement

• Emphasize Emphasize individual responsibilityindividual responsibility

• Give Give rewardsrewards based on results based on results

Innovative PhilosophyInnovative Philosophy1.1. Encourage actionEncourage action2.2. Use informal meetings whenever possibleUse informal meetings whenever possible3.3. Tolerate failure and use it as a learning experienceTolerate failure and use it as a learning experience4.4. Persist in getting an idea to marketPersist in getting an idea to market5.5. Reward innovation for innovation’s sakeReward innovation for innovation’s sake6.6. Plan the physical layout of the enterprise to encourage Plan the physical layout of the enterprise to encourage

informal communicationinformal communication7.7. Expect clever bootlegging of ideas – secretly working on Expect clever bootlegging of ideas – secretly working on

new ideas on company time as well as personal timenew ideas on company time as well as personal time8.8. Put people on small teams for future-oriented projectsPut people on small teams for future-oriented projects9.9. Encourage personnel to circumvent rigid procedures and Encourage personnel to circumvent rigid procedures and

bureaucratic red tapebureaucratic red tape10.10. Reward and promote innovative personnelReward and promote innovative personnel

Specific Elements of a Corporate Specific Elements of a Corporate Intrapreneurial StrategyIntrapreneurial Strategy

• Developing the VisionDeveloping the Vision

Shared VisionShared Vision

BelongingBelongingHaving a purposeHaving a purposeBeyond the dailyBeyond the daily

workwork

RelationshipsRelationshipsMutual trust and aMutual trust and a

supportive basic attitudesupportive basic attitudeprevailprevail

CommitmentCommitmentActive, committedActive, committed

participation ofparticipation ofemployeesemployees

StructureStructureLocal initiative andLocal initiative andcentral synthesiscentral synthesis

MissionMissionandand

VisionVision

Specific Elements of a Corporate Specific Elements of a Corporate Intrapreneurial StrategyIntrapreneurial Strategy

• Developing the VisionDeveloping the Vision

• Encouraging the InnovationEncouraging the Innovation– Radical innovation is the launching of inaugural Radical innovation is the launching of inaugural

breakthroughsbreakthroughs– Incremental innovation refers to the systematic Incremental innovation refers to the systematic

evolution of a product or serviceevolution of a product or service

• Structuring for an Intrapreneurial ClimateStructuring for an Intrapreneurial Climate

• Developing Venture TeamsDeveloping Venture Teams

3M’s Innovation Rules3M’s Innovation Rules

• Don’t kill a projectDon’t kill a project

• Tolerate failureTolerate failure

• Keep divisions smallKeep divisions small

• Motivate the championsMotivate the champions

• Stay close to the customerStay close to the customer

• Share the wealthShare the wealth

““Corporate Entrepreneurship Corporate Entrepreneurship Assessment InstrumentAssessment Instrument(measured key entrepreneurial climate factors)(measured key entrepreneurial climate factors)

• Management SupportManagement Support

• Autonomy/Work DiscretionAutonomy/Work Discretion

• Rewards/ReinforcementRewards/Reinforcement

• Time AvailabilityTime Availability

• Organizational BoundaryOrganizational Boundary

Developing Venture TeamsDeveloping Venture Teams

• A venture team is composed of two or more A venture team is composed of two or more people who formally create and share the people who formally create and share the ownership of a new organization.ownership of a new organization.

• The leader is called a “product champion” or The leader is called a “product champion” or an “intrapreneur”.an “intrapreneur”.

The Interactive Process of The Interactive Process of IntrapreneurshipIntrapreneurshipWho Are Entrepreneurs?Who Are Entrepreneurs?

• Intrapreneurs are sometimes captured by the Intrapreneurs are sometimes captured by the description as “a dreamer who does.” They description as “a dreamer who does.” They tend to be action oriented. They can move tend to be action oriented. They can move quickly to get things done. They are goal quickly to get things done. They are goal oriented, willing to do whatever it takes to oriented, willing to do whatever it takes to achieve their objectives. They are also a achieve their objectives. They are also a combination of thinker, doer, planner, and combination of thinker, doer, planner, and worker. They combine vision and action.worker. They combine vision and action.

The Ten Commandments of an The Ten Commandments of an IntrapreneurIntrapreneur

1.1. Come to work each day willing to be firedCome to work each day willing to be fired2.2. Circumvent any orders aimed at stopping your dreamCircumvent any orders aimed at stopping your dream3.3. Do any job needed to make your project work, regardless of Do any job needed to make your project work, regardless of

your job descriptionyour job description4.4. Network with good people to assist youNetwork with good people to assist you5.5. Build a spirited team: choose and work only with the bestBuild a spirited team: choose and work only with the best6.6. Work underground as long as you can – publicity triggers Work underground as long as you can – publicity triggers

the corporate immune mechanismthe corporate immune mechanism7.7. Be loyal and truthful to your sponsorsBe loyal and truthful to your sponsors8.8. Remember that it is easier to as for forgiveness than for Remember that it is easier to as for forgiveness than for

permissionpermission9.9. Be true to your goals, but be realistic about the ways to Be true to your goals, but be realistic about the ways to

achieve themachieve them10.10. Keep the vision strongKeep the vision strong

The Interactive Process of The Interactive Process of Individual and Organizational Individual and Organizational

CharacteristicsCharacteristics

An Interactive Model of Corporate An Interactive Model of Corporate EntrepreneuringEntrepreneuring

OrganizationalOrganizationalCharacteristicsCharacteristics

•Management SupportManagement Support•Work DiscretionWork Discretion•Rewards/ReinforcementRewards/Reinforcement•Time AvailibityTime Availibity•OrganizationalOrganizational Boundaries Boundaries

Precipitating EventPrecipitating Event

IndividualIndividualCharacteristicsCharacteristics

•Risk-taking PropensityRisk-taking Propensity•Desire for AutonomyDesire for Autonomy•Need for AchievementNeed for Achievement•Goal OrientationGoal Orientation•Internal Locus of ControlInternal Locus of Control

DecisionDecisionto Actto Act

Intrapre-Intrapre-neuriallyneurially

Business/Business/FeasibilityFeasibilityPlanningPlanning

IdeaIdeaImplemen-Implemen-

tationtation

ResourceResourceAvailabilityAvailability

Ability toAbility toOvercomeOvercomeBarriersBarriers