How Entrepreneurs Think and Act

• John Pisapia, Professor

Florida Atlantic University

Founder, SLN

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The Mind of the Entrepreneur

The Behaviors that drive entrepreneurial actions, and

The Method that entrepreneurs use to bring ideas to fruition.

Definitions

Entrepreneur1. A person who starts a

business and is willing to risk loss in order to make money.

2. A person who takes an idea, product or service and does whatever is necessary to introduce it to the marketplace where it can produce revenue.

EntrepreneurshipEntrepreneurship is the pursuit of opportunity without regard to resources currently controlled.

(Howard Stevenson Harvard professor, 1975)

Entrepreneurship involves the nexus of three phenomena: The presence of an opportunity, and The presence of enterprising individuals Who can ‘see it’ and is capable enough to respond it to it, Irrespective of existing resources (Shane & Venkataraman, 2000, p. 218

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TO ‘SEE IT’, YOU MUST BE ABLE TO IDENTIFY

NEW MEANS-ENDS RELATIONSHIPS.

“OPPORTUNITY” implies an offering that is

novel in one or more of four ways:

1. Pioneering a truly innovative product;

2. Devising a new business model;

3. Creating a better or cheaper version of an

existing product; or

4. Targeting an existing product to new sets of

customers.

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Managerial Role Predict what will happen

next, target individuals

who can help them.

Navigate by focusing on their

identity, knowledge, and

relationships.

Pursue ideas and push through

reality to create new

opportunities.

Guiding Question What SHOULD I do? What CAN I do and SHOULD I do

it?

What CAN I do?

Outcome Share in existing market.

Outcomes are fixed.

Shares in existing markets or creating

new markets based on opportunities

that arise.

Creates new market.

Outcomes are not fixed or

limited.

Ideas on Profit/Loss Focus on defined

strategies to maximize

returns)

Focus on both maximizing returns

and affordable loss.

Focus on affordable loss. Focus

on creating more options and

opportunities in future over

returns.

Ideas on Competition Focus on analyzing

competition in red ocean.

Focus on both analyzing competition,

finding blue oceans, and creating

strategic alliances.

Focus on creating strategic

alliances and finding blue

oceans.

Ideas on Exploitation Exploit competences

(known situations and

known skills)

Balancing between exploiting both

competences and capabilities.

Exploit capabilities (unknown

situation and unknown skills)

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Effe

ctu

al R

ea

so

nin

g

Causal Reasoning

High

HighLow

S t ra te g i c T h i n k i n g

Managerial Thinking

Entrepreneurial Thinking

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Managerial Thinking

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M1

GOAL

M2

M3

M4

M5

Entrepreneurial Thinking

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O1

O2

O3

O4

O5

Making something out of Nothing by using Effectual Reasoning to Imagine numerous possibilities with the means available.

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The Genesis of Strategic Thinking

Causal ReasoningAnalytical

Critical

Linear

Strategic Reasoning

Analytical

Critical

Synthetic

Integrative

Adaptive

Creative

Innovative

Effectual ReasoningAdaptive

Creative

Innovative

To Take the Strategic Thinking Questionnaire (STQ)

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The Aim is to become more enterprising / entrepreneurial

The Behaviors that Drive Entrepreneurial Action

• Risk Taking - the willingness to take bold actions by

committing resources to new projects in the pursuit of an

opportunity even when the project has an uncertain

outcome.

• Innovativeness - the willingness to support new ideas,

novelty, creative processes, and experimentation which may

result in opportunity recognition, resource allocation, new

products, technological leadership, and services.

• Pro-activeness - the ability to anticipate future

environmental changes and demand, find and exploit

opportunities, and act upon them by launching new products,

services, and technologies ahead of competitors. 2/12/2015 Pisapia2015

The Entrepreneurial Method Sarasvathy, 2001, p.20

• Assess your means! Who are you? What do you know a lot about? Who you know.

• Be means driven rather than goal driven. What can you do with the means available?

• Invest what you can afford to lose at each step. Limit downside potential. Evaluate opportunities based on whether the downside is acceptable, rather than on the attractiveness of the predicted upside.

• Find the others and Share the Risk , secure pre-commitments, and Co-create the future.

• Embrace and leverage surprises rather than remain tethered to existing goals. Serendipity and surprise are good.

• Focus on things you control - means, processes.

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16

Be Means Driven

Assess your Means

Find Committed Partners

Embrace Serendipity

Strategic Reasoning

Risk Taking

Proactiveness

Affordable Loss

Innovativeness

Putting it all together

Focus on what you control

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Want More?jpisapia@fau.edu

• Pisapia, J. (2009). The strategic Leader: New tactics for a globalizing world. Charlotte: NC.

Information Age Publishing

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