Introduction to the entrepreneurial process academy...3 What is entrepreneurship?...
Transcript of Introduction to the entrepreneurial process academy...3 What is entrepreneurship?...
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
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)
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
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?
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 don’t predict, they control (with the available tools)
• It is difficult to predict in uncertain and dynamic markets
• “Prediction is very difficult, especially when it’s about the future.” (Niels Bohr, physicist)
• Entrepreneurs are not like the rest of us
• “Most of what you hear about entrepreneurship is all wrong. It’s not magic; it’s not mysterious; and it has nothing to do with genes. It’s 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