Chapter 2The Entrepreneurial and

Intrapreneurial Mind

Chapter Learning Objectives

• To explain the aspects of the entrepreneurial process

• To explain the differences between the entrepreneurial and managerial domain

• To explain the organizational environment conducive to intrapreneurship

• To explain the general characteristics of an intrapreneur

• To explain the process of establishing intrapreneurship in an organization

The Entrepreneurial Process

The Entrepreneurial process has the following four steps.

1. Identification and evaluation

2. Development of the business plan

3. Determination of the required resources

4. Management of the resultant enterprise

Step 1. Identify and Evaluate the Opportunity

Some sources for new opportunities are:

• Consumers and business associates

• Members of the distribution system

• Technical people

Step 1. Identify and Evaluate the Opportunity (Contd.)

• Evaluation allows the entrepreneur to do a risk-return assessment to find out if the return is worth the risk.

• Cause of opportunity maybe:– Technological change– Market shift– Government – Competition

Step 1. Identify and Evaluate the Opportunity (Contd.)

• Market size and the length of the window-of-opportunity form the primary basis for determining risks and rewards.– Risks reflect the market, competition,

technology, and amount of capital involved.– The amount of capital forms the basis for the

return and rewards.– Follow on products become very important for

a firm expanding or diversifying

Step1. Identify and Evaluate the Opportunity (Contd.)

• Finally the opportunity must fit the personal skills and goals of the entrepreneur

• Opportunity Analysis is not a business plan, it is typically:– Shorter– Focus on the opportunity not the entire venture– Provide basis for deciding to act or not

Step1. Identify and Evaluate the Opportunity (Contd.)

• Opportunity Analysis involves answering the following questions:– What market need does it satisfy?– Your personal observations regarding the need?– What social condition underlies the market

need?– What market research data describes this need?– What patents might be available to fulfill this

need

Step 1. Identify and Evaluate the Opportunity (Contd.)

- What competition exists in the market?

- How would you describe behavior of the competition?

- What does the international market look like?

- What does the international competition look like

- Where is the money to be made in this opportunity?

Step 2. Develop the Business Plan

• Covered in greater detail in Chapter 7. Consists of the following:

Title Page

Table of Contents

Executive Summary

1.0 Description of Business

2.0 Description of Industry

Step 2. Develop the Business Plan

3.0 Marketing Plan

4.0 Financial Plan

5.0 Production Plan

6.0 Organization Plan

7.0 Operational Plan

8.0 Summary

Appendices (Exhibits)

Step 3. Determine the Resources Required

• Evaluate the available resources

• Critical resources must be distinguished from the helpful resources

• How the resources will be acquired

• Alternative suppliers along with their needs should be identified

Step 4. Manage the Enterprise

• Implement a management style.

• Determine the key variables for success.

• Control system must be identified.

Managerial Versus Entrepreneurial Decision Making

• Strategic Orientation:

– Entrepreneur makes rapid changes keeping environment in consideration.

– In larger organizations with planning systems in place this is not so easy.

Managerial Versus Entrepreneurial Decision Making (Contd.)

• Commitment to Opportunity

– Entrepreneur is pressured by the short term decision window

– Managers are not only slow in taking decisions but once decisions are made they are long term.

Managerial Versus Entrepreneurial Decision Making (Contd.)

• Commitment of Resources

– Entrepreneur commits resources on a need basis

– Managers tend to commit the full amount of resources required before start up

Managerial Versus Entrepreneurial Decision Making (Contd.)

• Control of Resources– Entrepreneur tries to use rented resources were

possible as he has difficulty in obtaining resources, he tends to have multi uses for the same resources.

– Manager tends to accumulate resources as it is a source of power for him

Managerial Versus Entrepreneurial Decision Making (Contd.)

• Management Structure

– Entrepreneur tends to have a flat organization as it allows him greater degree of control

– Managers tend to follow a formalized hierarchical structure as they know this consolidates their power

Intrapreneurship

• Entrepreneurship within an organization is called

Intrapreneurship

Corporate Versus Intrapreneurial Culture

• Corporate Culture• Favors Conservatism• Data back up• Adhere to instructions• Do not make mistakes• Do no take initiative, wait

for instructions• Stay in our own turf• Protect your backside

• Intra Culture• Develop vision• Goals and action plans• Rewarded for actions

taken• Suggest, try and

experiment• Create and develop

regardless of area• Take responsibility and

ownership

How Intrapreneurial Climate can be Developed

• Organization operates on frontiers of technology

• New ideas encouraged

• Trial and error encouraged

• Failure allowed

• No opportunity parameters

• Resources available and accessible

How Intrapreneurial Climate can be Developed (Contd.)

• Multidiscipline teamwork approach

• Long time horizon

• Volunteer Program

• Appropriate reward system

• Sponsors and champions available

• Support of top management

Intrapreneurial Leadership Characteristics

• Understands the environment

• Visionary and flexible

• Creates management options

• Encourages teamwork

• Builds a coalition of supporters

• Persists

Establishing Intrapreneurship in the Organization

1. Secure top management commitment2. Ideas and general areas that top management is

willing to support must be identified3. Company needs to use technology to make itself

more flexible4. Use groups of interested managers to train

employees.5. Organizations needs to get closer to its

customers

Establishing Intrapreneurship in the Organization (contd.)

6. Organizations needs to learn to do more with fewer resources.

7. Strong support system needs to be developed

8. Rewards must tied to performance of the team

9. Evaluation system that allows successful intrapreneurial units to expand while it allows the unsuccessful ones to close down.

END OF CHAPTER 2