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  • Introduction to the

    entrepreneurial process

    Pedro Neves

  • PART I

    The entrepreneurial process

  • 3

    What is entrepreneurship?

    Entrepreneurship has been credited with the development of the assembly line, the airplane, the computer, the contact lens, and DNA fingerprinting (Baumol, 2004)

    Around the world, 9 in every 100 working age individuals are involved in entrepreneurship with approximately 300 million in the venture creation phase (Reynolds et al., 2004)

    There has been a rise in entrepreneurial activity since the 1990s

  • 4

    Entrepreneurial activity

    The entrepreneurship process and GEM (Global Entrepreneurship Monitor) operational definitions

    Nascent first 3 months of running a new business New first 3,5 years

  • Entrepreneurial perceptions, intentions and societal attitudes in 69 countries (2012)

    Entrepreneurial activity

  • Entrepreneurial perceptions, intentions and societal attitudes in 69 countries (2012)

    Entrepreneurial activity

  • Entrepreneurial activity in 69 countries (2012)

    Entrepreneurial activity

  • Entrepreneurial activity in 69 countries (2012)

    Entrepreneurial activity

  • 9

    Total Early-Stage Entrepreneurial Activity (TEA) in 69 countries

    Entrepreneurial activity

  • The entrepreneurial ecosystem (GEM)

  • An example: Cultural and social norms

    Characteristics of culture

    - National similarity;

    - Historic influence;

    - Colective creation;

    - Dinamic character;

    - Learned;

    - Shared;

    - Visible and invisible.

    Adapted from Schein (2004)

  • An example: DNA Cascais

  • Reasons for business discontinuation in 69 economies

    Entrepreneurial activity

  • 14

    It usually involves four distinct phases:

    Identification and evaluation of the opportunity

    Development of the business plan

    Determination of the required resources

    Manage the new enterprise

    The entrepreneurship process

  • 15

    Managing entrepreneurial firms is NOT the same as traditional management (Stevenson & Gunpert, 1985; Brown et al., 2001)

    The entrepreneurship process

  • 16

    Causation vs. Effectuation

    Causation vs. effectuation (Sarasvathy, 2001)

    Causation focuses on selecting the means to create a given effect (traditional process)

    Effectuation takes a set of means as given as focuses on selecting between possible effects

    Both are part of human reasoning and can occur simultaneously, overlapping and intertwining

    The entrepreneurship process

  • 17

    5 core principles of successful entrepreneurs (Read et al., 2011)

    Start with your means and take action (vs. wait for the perfect opportunity)

    Set affordable loss (vs. focus on the attractiveness of the upside)

    Leverage contingencies and embrace surprises (vs. over commitment to existing goals)

    Form partnerships with people really committed (vs. me against the world or team up with partly committed people)

    Create opportunities with what is under your control (vs. focus on predicting the future or finding the optimal opportunity)

    The entrepreneurship process

  • PART II

    Characteristics and myths

  • 19

    You control you own destiny!

    Although there is risk involved it is much more rewarding

    You get to change the world

    Nothing will use/value your talents and abilities more than

    starting your own company

    Why would you want to become an entrepreneur?

  • 20

    You have to believe in (and get others excited about it) something that does not yet exist

    You have to start somewhere: a technology, a pain, a team, a market,

    You have to ask a LOT of questions: Who is my customer? What is my value proposition? Who do I need on our team? What exactly is the product/service? Will it work? Can I scale it? How?

    Do I have a sustainable advantage? Can I avoid making mistakes that will kill

    the company before it becomes viable? What are those mistakes? What is my exit strategy?

    Do you have what it takes to become an entrepreneur?

  • 21

    Want an example???

    ENT1 - Tom First, Co-Founder, Nantucket Nectars.flv

  • Baum, J.R., & Locke, E.A. (2004). The relationship of entrepreneurial traits, skill, and motivation to subsequent venture growth. Journal of Applied Psychology, 89, 587-598.

    Passion is a key driver

  • 23

    Entrepreneurs are visionaries

    Opportunities are both found (causal) and made (effectual)

    In many cases, these are people that basically make their own opportunities using mundane means

    Entrepreneurs are risk takers

    It has to do with uncertainty (they perceive less risk AND they do not try to predict the future/environment), not necessarily risk taking (picking higher stakes)

    Some myths about entrepreneurs (Read et al., 2011)

  • 24

    Entrepreneurs are extraordinary forecasters

    They dont predict, they control (with the available tools)

    It is difficult to predict in uncertain and dynamic markets

    Prediction is very difficult, especially when its about the future. (Niels Bohr, physicist)

    Entrepreneurs are not like the rest of us

    Most of what you hear about entrepreneurship is all wrong. Its not magic; its not mysterious; and it has nothing to do with genes. Its a discipline and, like any discipline, it can be learned. (Peter Drucker)

    Some myths about entrepreneurs (Read et al., 2011)

  • 25

    Healthy fear vs. Paralyzing fear of what can go wrong (Isenberg, 2011)

    Accept that failure is a natural part of doing business (failures come early; successes take time)

    Turn failure into fodder (fail small, fast and cheaply and learn from it)

    One key element: dealing with failure

  • pneves@novasbe.pt