The Entrepreneurial Mindset in Individuals Sessions/Session Notes-1/1.2... · •Entrepreneurial...
Transcript of The Entrepreneurial Mindset in Individuals Sessions/Session Notes-1/1.2... · •Entrepreneurial...
The Entrepreneurial Mindset
in Individuals
Prof. Sudipto Bhattacharya
The Evolution of Entrepreneurship
• Entrepreneur is derived from the French
entreprendre, meaning ―to undertake.‖
– The entrepreneur is one who undertakes to organize,
manage, and assume the risks of a business.
• Although no single definition of entrepreneur exists
and no one profile can represent today’s
entrepreneur, research is providing an increasingly
sharper focus on the subject.
A Summary Description
of Entrepreneurship
• Entrepreneurship (Robert C. Ronstadt)
– The dynamic process of creating incremental wealth.
– This wealth is created by individuals who assume major
risks in terms of equity, time, and/or career commitment
of providing value for a product or service.
– The product or service itself may or may not be new or
unique but the entrepreneur must somehow infuse value
by securing and allocating the necessary skills and
resources.
An Integrated Definition
• Entrepreneurship – A dynamic process of vision, change, and creation.
• Requires an application of energy and passion towards the creation and implementation of new ideas and creative solutions or developing unique features in existing solutions.
– Essential ingredients include:
• The willingness to take calculated risks—in terms of time, equity, and/or career.
• The ability to formulate an effective venture team; the creative skill to marshal needed resources.
• The fundamental skills of building a solid business plan.
• The vision to recognize opportunity where others see chaos, contradiction, and confusion.
The Myths of Entrepreneurship
• Myth 1: Entrepreneurs Are Doers, Not Thinkers
• Myth 2: Entrepreneurs Are Born, Not Made
• Myth 3: Entrepreneurs Are Always Inventors
• Myth 4: Entrepreneurs Are Academic and Social Misfits
• Myth 5: Entrepreneurs Must Fit the ―Profile‖
• Myth 6: All Entrepreneurs Need Is Money
• Myth 7: All Entrepreneurs Need Is Luck
• Myth 8: Ignorance Is Bliss For Entrepreneurs
• Myth 9: Entrepreneurs Seek Success But Experience High Failure Rates
• Myth 10: Entrepreneurs Are Extreme Risk Takers (Gamblers)
Entrepreneurial Schools-of-Thought
Macro View: External Locus of Control
• The Environmental School of Thought
– Considers the external factors that affect a potential entrepreneur’s lifestyle.
• The Financial/Capital School of Thought
– Based on the capital-seeking process—the search for seed and growth capital.
• The Displacement School of Thought
– Alienation drives entrepreneurial pursuits • Political displacement (laws, policies, and regulations)
• Cultural displacement (preclusion of social groups)
• Economic displacement (economic variations)
Financial Analysis Emphasis
Micro View: Internal Locus of Control
• The Entrepreneurial Trait School of Thought – Focuses on identifying traits common to successful
entrepreneurs. • Achievement, creativity, determination, and technical knowledge
• The Venture Opportunity School of Thought – Focuses on the opportunity aspect of venture
development—the search for idea sources, the development of concepts, and the implementation of venture opportunities. • Corridor principle: New pathways or opportunities will arise that
lead entrepreneurs in different directions.
Definitions and Criteria of One Approach
to the Micro View
Source: Adapted from J. Barton Cunningham and Joe Lischeron, ―Defining Entrepreneurship,‖ Journal of Small Business Management
(January 1991): 56.59(1) (winter 1994): 21-31.
Definitions and Criteria of One Approach to the
Micro View (cont’d)
Source: Adapted from J. Barton Cunningham and Joe Lischeron, ―Defining Entrepreneurship,‖ Journal of Small Business Management
(January 1991): 56.59(1) (winter 1994): 21-31.
Definitions and Criteria of One Approach to the
Micro View (cont’d)
Source: Adapted from J. Barton Cunningham and Joe Lischeron, ―Defining Entrepreneurship,‖ Journal of Small Business Management
(January 1991): 56.59(1) (winter 1994): 21-31.
Micro View… (cont’d)
• The Strategic Formulation School of Thought
– Emphasizes the planning process in successful venture
development.
• Ronstadt’s View
– Strategic formulation is a leveraging of unique elements:
• Unique Markets: mountain gap strategies
• Unique People: great chef strategies
• Unique Products: better widget strategies
• Unique Resources: water well strategies
Process Approaches to Entrepreneurship
• Integrative Approach
– Built around the concepts of input to the entrepreneurial
process and outcomes from the entrepreneurial process.
– Focuses on the entrepreneurial process itself and
identifies five key elements that contribute to the process.
– Provides a comprehensive picture regarding the nature of
entrepreneurship that can be applied at different levels.
An Integrative Model of Entrepreneurial Inputs and
Outcomes
Source: Michael H. Morris, P. Lewis, and Donald L. Sexton, ―Reconceptualizing Entrepreneurship: An Input-Output Perspective,‖ SAM
Advanced Management Journal 59(1) (winter 1994): 21–31.
Process Approaches… (cont’d)
• Entrepreneurial Assessment Approach
– Stresses making assessments qualitatively,
quantitatively, strategically, and ethically in regard to the
entrepreneur, the venture, and the environment
• Multidimensional Approach
– Views entrepreneurship as a complex, multidimensional
framework that emphasizes the individual, the
environment, the organization, and the venture process.
Entrepreneurial Assessment Approach
Source: Robert C. Ronstadt, Entrepreneurship (Dover, MA: Lord Publishing Co., 1984), 39.
The Entrepreneurial Mindset
• Entrepreneurial Mindset
– Describes the most common characteristics associated
with successful entrepreneurs as well as the elements
associated with the ―dark side‖ of entrepreneurship.
• Who Are Entrepreneurs?
– Independent individuals, intensely committed and
determined to persevere, who work very hard.
– They are confident optimists who strive for integrity.
– They burn with the competitive desire to excel and use
failure as a learning tool.
Common Characteristics of Entrepreneurs
Commitment, determination,
and perseverance
Drive to achieve
Opportunity orientation
Initiative and responsibility
Persistent problem solving
Seeking feedback
Internal locus of control
Tolerance for ambiguity
Calculated risk taking
Tolerance for failure
High energy level
Creativity and Innovativeness
Vision
Self-confidence and optimism
Independence
Team building
Characteristics Often Attributed to Entrepreneurs
Source: John A. Hornaday, ―Research about Living
Entrepreneurs,‖ in Encyclopedia of Entrepreneurship, ed.
Calvin Kent, Donald Sexton, and Karl Vesper, © 1982, 26–27.
21st. Century Characteristics of Entrepreneurs
Source: Soo Ji Min, ―Made Not Born,‖ Entrepreneur of the Year Magazine (fall 1999): 80.
The Dark Side of Entrepreneurship
• The Entrepreneur’s Confrontation with Risk
– Financial risk versus profit (return) motive varies in
entrepreneurs’ desire for wealth.
– Career risk—loss of employment security
– Family and social risk—competing commitments of work
and family
– Psychic risk—psychological impact of failure on the well-
being of entrepreneurs
Typology of Entrepreneurial Styles
Source: Thomas Monroy and Robert Folger, ―A Typology of Entrepreneurial Styles: Beyond Economic Rationality,‖
Journal of Private Enterprise IX(2) (1993): 71.
Entrepreneurs: Type A Personalities
• Chronic and severe sense of time urgency.
• Constant involvement in multiple projects subject to deadlines.
• Neglect of all aspects of life except work.
• A tendency to take on excessive responsibility, combined with the feeling that ―Only I am capable of taking care of this matter.‖
• Explosiveness of speech and a tendency to speak faster than most people.
Stress and the Entrepreneur
• Entrepreneurial Stress
– The extent to which entrepreneurs’ work demands and
expectations exceed their abilities to perform as venture
initiators, they are likely to experience stress.
• Sources of Stress
– Loneliness
– Immersion in business
– People problems
– Need to achieve
Dealing with Stress
• Networking
• Getting away from it all
• Communicating with employees
• Finding satisfaction outside the company
• Delegating
• Exercising Rigorously
The Entrepreneurial Ego
• Self-destructive Characteristics
– An overbearing need for control
– Sense of distrust
– Overriding desire for success
– Unrealistic optimism
• Entrepreneurial Motivation
– The quest for new-venture creation as well as the willingness to sustain that venture. • Personal characteristics, personal environment, business
environment, personal goal set (expectations), and the existence of a viable business idea.
A Model of Entrepreneurial Motivation
Source: Douglas W. Naffziger, Jeffrey S. Hornsby, and Donald F. Kuratko, ―A Proposed Research Model of
Entrepreneurial Motivation,‖ Entrepreneurship Theory and Practice (spring 1994): 33.