Entrepreneurship Development v8

Entrepreneurship Development

Prof. Vedavyas M G

About the Course• This is a core course

• Four hours per week

• Methodology will include presentations, discussions, case studies and exercises

• Evaluation will include internal assessment and final written examination

• Following books will be used extensively• Entrepreneurship – Robert Hisrich and Others• Entrepreneurship Development – Small Business Enterprises –

Poornima Charantimath

2Entrepreneurship Development

Coverage

Entrepreneur and Entrepreneurship

Creativity, Innovation and the Entrepreneur

The Business Planning Process

Institutional Environment for Entrepreneurs

Family Businesses as Enterprises

International Entrepreneurship

Informal Risk Capital and Venture Capital

Managing Growth


Entrepreneur and Entrepreneurship

• Who is an Entrepreneur?• Entrepreneur vs. Manager• What is Entrepreneurship?• Functions of an Entrepreneur• Competencies of an Entrepreneur• Motivation• Decision process for becoming an Entrepreneur• Types of Entrepreneurs• Stages in Entrepreneurial process• Intrapreneur


Name some Entrepreneurs


Who is an Entrepreneur?


Who is an Entrepreneur?

• Entrepreneur – Individual who takes risk and starts something new

• Other definitions –– Literally – in French enterprendre means – go-

between or undertake

• One who relentlessly pursues opportunities, beyond the resources currently controlled


Some more definitions of an Entrepreneur

• One who exhibits behavior including (a) initiative taking (b) organizing and reorganizing social and economic mechanism to turn resources and situations to practical account and (c) acceptance of risk or failure

• One who brings resources, labour, material and other assets into combinations that make their combined value greater than before

• An individual who bears the risk of operating a business in the face of uncertainty about future conditions

• One who innovates and introduces something new in the economy• One who searches for change, responds to it and exploits opportunities• A person who is able to look at the environment, identify opportunities to improve

it, marshal resources and implement action to maximize those opportunities• Entrepreneurs assemble resources including innovations, finance and business

acumen in an effort to transform innovations into economic goods


Entrepreneurship

• Relentless pursuit of opportunities beyond the resources currently controlled

• Entrepreneurship is the process of creating something new with value by devoting the necessary time and effort, assuming the accompanying financial, psychological, and social risks; and receiving the resulting rewards of money, personal satisfaction and independence


Entrepreneur/Entrepreneurship

• Entrepreneurship is the process of • creating something new with value • by devoting the necessary time and effort• assuming the accompanying financial,

psychological, and social risks• receiving the resulting rewards of independence,

personal satisfaction and money


Entrepreneur as innovator

• The function of an entrepreneur is to reform the pattern of production by exploiting an invention or an untried technological method of producing a new commodity or producing an old one in a new way, opening a new source of supply of materials or a new outlet for products, by organizing a new industry


What are the differences between a Entrepreneur and a Manager?


Entrepreneur vs. Manager

Entrepreneur• Involved with the start-up

process• Assumes financial,

psychological and material risks

• Driven by passion and opportunity

• Initiates change• His own boss• Can fail or get a huge reward• Creates Wealth• Employer – creates jobs

Manager• Involved in running a

continuing business• No such risks

• Driven by resources and laid down processes

• Follows rules and procedures• Is a hired employee• Gets fixed rewards and salary• Manages Wealth• Employee – works for wages


Characteristics

• Passion, Belief and Fun– Passion that goes beyond financial rewards; the

sense of satisfaction in achieving something new– Treating the entrepreneurship as life itself –

beyond a career – living and breathing the enterprise

– Belief that the enterprise will create something of value to people and society – that it will make people’s lives better


• Initiative taking or ownership and execution intelligence– Sense of ownership – taking responsibility and

finding solutions for every problem without losing focus of the goal

– Execution determines success or failure of enterprise

– Ability to start and sustain by building the right structure, ecosystem, business model etc.

Entrepreneurship Development 15

Characteristics …..continued

• Tenacity despite obstacles– Entrepreneurship involves experimentation and

therefore, some failures– Tenacity and focus despite failures– Perseverance of goals with course correction and

open mind– Video – Career learning from failures



• Customer focus– Understanding and exploiting how your

product/service is creating value for customers– Deep knowledge/expertise in product/service– Thorough understanding of customer’s unfulfilled

needs



What are the functions of an Entrepreneur?


Functions of an Entrepreneur

• Turning ideas into action• Identify an opportunity / Innovation• Feasibility study• Resourcing – People, Finance, Material etc.• Setting up of the enterprise• Managing the enterprise• Growth and Development• Managing Risk


In order to execute the functions, what competencies are required?


Competencies

• Initiative – Acting out of choice, being pro-active in taking the lead

• Identifying Opportunities – Mindset for seeing opportunities and pursuing them to the end

• Persistence – Never say die• Knowing – People, subject, Market, Open mind• Quality – Attention to detail, being the best• Commitment – Keeping your promises• Efficiency – Optimizing, cut waste• Systematic planning – Work breakdown, dependency


Competencies ……. continued

• Problem solving – Solution mindset• Self confidence – Can Do attitude• Assertiveness – Communicating idea, emphasis• Persuasion – Ability to convince, share the vision• Leadership – Ability to make others believe in

your dream• Monitoring – Ensuring progress, course

correction• Employee Welfare – Making them feel the

ownership


Types of Start-ups

• Salary-substitute firms– Income substitutes salary– Small; proven business model; not particularly

innovative– Addresses existing market segments – generally

also ran firms– Vast majority of firms fall into this category –

convenience stores, accounting firms, small clinics


Types of Start-ups .....continued

• Lifestyle firms– Provides owners a particular lifestyle while

earning a living– Based on hobby or pastime – golf instructor, tour

guide– Employ only the owner or a handful of people– Serves existing markets; hardly innovative– High dependence on one person’s expertise;

limited growth



• Foundation firms– Business idea based on R&D - innovative– Slow growth– Employs handful of people– Does not plan to grow large and go public –

privately held– Contract research, patented technology



• Entrepreneurial firms– Create value to society– Innovative; bring new products, services, business

models– Potential to grow large, global


Why become an Entrepreneur?

• Be your own boss - independence• Pursue your own ideas• Realize financial rewards• Create wealth for society by creating jobs


Myths

What are the common myths about Entrepreneurs?


Common Myths about Entrepreneurs

• Entrepreneurs are born, not made• Entrepreneurs are gamblers• Entrepreneurs are motivated primarily by

money• Entrepreneurs must be young and energetic• Entrepreneurs love to be in the spotlight


Importance – Economic Impact

• Directly correlated to economic growth – GDP• Creates jobs, wealth• Creative destruction – stimulates economic

activity• Improves productivity• Agents of change, innovation• Globalization


Importance – Impact on Society

• Makes life easier, enhances productivity • Increases health, wealth and prosperity• Creates moral and ethical issues– Privacy invasion?– Gene manipulation?– Ecology/Pollution?– Imbalance in society?


Importance – Impact on Larger Firms

• Smaller firms act as suppliers to larger firms improving cost optimization

• Outsourced research and development• Help in localization – Eg., Language

translators, accounting packages, insurance brokerage – partnering for success

• Healthy competition


Entrepreneurial Process

What are the steps in entrepreneurial process?


Entrepreneurial Process

• Step 1: Identify and Evaluate the opportunity• Step 2: Develop Business Plan• Step 3: Determine the Resources required• Step 4: Manage and Grow the Enterprise


Step 1: Identify and Evaluate the opportunity

• Opportunity assessment• Creation and length of the opportunity• Real and perceived value of opportunity• Risk and returns of opportunity• Opportunity versus personal skills and goals• Competitive environment


Step 2: Develop Business Plan

• Title Page; Table of contents• Executive Summary• Major sections

– Description of business– Description of industry– Technology plan– Marketing plan– Financial plan– Production plan– Operational plan– Summary

• Appendixes


Step 3: Determine the Resources required

• Determine resources needed• Determine existing resources• Identify resource gaps and available suppliers• Develop access to needed resources• Determine structure• Identify and recruit people


Step 4: Manage and Grow the Enterprise

• Develop right management style• Understand key variables for success• Identify problems and potential problems• Implement control systems• Develop and implement growth strategy


Intrapreneurship• What is intrapreneurship?• Causes for interest in intrapreneurship• Corporate versus intrapreneurial culture• Climate for intrapreneurship• Intrapreneurship leadership characteristics• Establishing intrapreneurship


What is intrapreneurship?• Entrepreneurship within an existing business structure• Large enterprise constraints

– Bureucratic structure– Emphasis on short term profits– Inability to go beyond policy– Performance measures

• Helps overcome the constraints of a large organization towards entrepreneurship

• Attempt to create same spirit, culture, challenges, rewards• Uses the skills, resources and financial strengths of the

existing organization to quicken entrepreneurship


Causes for interest in intrapreneurship

• Organizations do not want to lose creative people – independence, individual expression, responsibility, freedom

• Organizations are threatened and face with stiff competition from small creative entrepreneurship firms

• Helps in the next phase of growth and diversification• Market share vs. Margin• Key elements

– New business venturing or Corporate venturing– Innovativeness– Self renewal– Proactiveness


Corporate vs. Intrapreneurial culture

• Traditional Corporate culture– Environment for conservative decision making– Span of control, budget controlled are signs of status– Data collection for justifying decisions– ‘who can I blame for this disaster?’ culture– Sign offs and approvals – hierarchy, delay and lack of

ownership– Performance measures towards short term goals – not

creativity or risk taking


Corporate vs. Intrapreneurial culture

• Intrapreneurial culture– Vision based, aggressive and forward looking– Expertise and trust are important– Hunch, belief and passion as important as data– ‘I made a mistake – I will learn’ culture– Flat organisation structure– Responsibility with freedom and independence– Realising the dream is the reward – do what it takes, not

rule based


Climate for Intrapreneurship

• Top management support, sponsors and champion support• Seeing intrapreneurs as future revenue generators and not

expenses• Encouraging new ideas, allowing honest mistakes• Trial and error encouraged• Making needed resources available• Multidisciplinary teamwork approach• Long time horizon• Volunteer program• Risk/reward system


Intrapreneurial Leadership Characteristics

• Understands the environment• Is visionary and flexible• Creates management options• Encourages teamwork• Encourages open discussion• Builds a coalition of supporters• Persists


Establishing Intrapreneurship in the Orgn.

• Top management commitment• Identify the right opportunities relevant to organization• Create flexible organizational structures – use technology• Have a committed team of intrapreneurs• Learn to be more productive with fewer resources• Establish a strong support structure – monitor progress,

course correction, customer feedback etc.• Establish appropriate performance measures



Traditional Managers

Entrepreneurs Intrapreneurs

Primary motives Promotion and corporate rewards

Independence, pursuit of idea

Independence and advancement

Time orientation Short term – targets, quotas

Survival and 5 to 10 year growth

Medium term

Activity Delegates and supervises

Direct involvement Direct involvement with less risk

Risk Careful Risk taker Moderate risk taker

Status Concerned about status symbols

Not concerned about status symbols

Not concerned about status symbols

Failure Avoids mistakes Deals with mistakes and failure

Hides risky projects

Decisions Agrees with top Follows dream with decisions

Gets others to agree to achieve

Serves Others Self and customers Self, customers and sponsors

Relationship with others

Hierarchy based Transaction and deal making

Transaction without hierarchy

Entrepreneurship Development v8

Documents

Transcript of Entrepreneurship Development v8