Chapter 1 – The Entrepreneurial
Revolution
Entrepreneurs
Challenging The Unknown
Entrepreneurship:
A Perspective
ENTREPRENEURSHIP
Entrepreneurship is being taken as a process of
discovering, evaluating and exploiting
opportunities in the name of an idea, spending
time as well as capital on an uncertain venture.
ENTREPRENEURS
“Entrepreneurs are risk takers, willing to roll the dice
with their money or reputation on the line in support of
an idea. They willingly assume responsibility for the
success or failure of a venture.”
“Innovation is specific instrument of entrepreneurship…
the act that endows resources with the capacity to
create wealth.”
(Peter Drucker – Founder of Modern Management)
Our Entrepreneurial
Economy
The Environment for
Entrepreneurship
Trends in Research and Education
1. The entrepreneurial and managerial
domains are not mutually exclusive but
overlap to a certain extent.
2. Venture financing, including both venture
capital and angel capital financing as well
as other innovative financing techniques,
emerged in the 1990s with unprecedented
strength.
Trends in Research and Education
3. Intrapreneurship (that is, entrepreneurship
within large organizations) and the need for
entrepreneurial cultures have gained much
attention during the past few years.
4. Entrepreneurial entry strategies have been
identified that show some important
common denominators, issues, and trade-
offs.
Trends in Research and Education
5. More research on the psychological aspects
has emerged.
6. The risks and trade-offs of an
entrepreneurial career have been subject of
keen research interest.
7. Women and minority entrepreneurs have
emerged in unprecedented numbers.
8. The entrepreneurial spirit is universal.
Trends in Research and Education
9. The economic and social contributions of
entrepreneurs have been shown to make
immensely disproportionate contributions.
10. Entrepreneurial education has become one
of the hottest topics at U.S. business and
engineering schools.
Emerging Trends: Internet and
E-Commerce
• U.S. businesses spent 85.7 billion on building
up their Internet capabilities in 1999.
• Smaller ventures use the Internet for a variety
of operations, including customer-based
identification, advertising, consumer sales,
business-to-business transactions, e-mail, and
private internal networks for employees.
The E-Commerce Challenge
• Electronic commerce (e-commerce)-
the marketing, promoting, buying,
and selling of goods and services
electronically, particularly via the
Internet- is the new wave in
transacting business.
Advantages and Challenges of E-
Commerce for Entrepreneurial Firms
Advantages:
• Ability of small firms to compete with other
companies both locally and nationally.
• Convenient and easy way of doing business
transactions.
Challenges:
• Avoiding being a victim of fraudulent
activities online.
• Handling the costs required to maintain
the site.
Developing a Web Site
• Attractive and Useful
• Marketing the Website
• “Stickiness”
Use of Internet Sites
• Company Information 93%
• Corporate image building 89%
• Product information 80%
• Advertising 78%
• Marketing 77%
• Customer communications 76%
Most Important Factors for
Customers to do Business Online
User-friendly and easy to navigate
54%
Good previous experiences
36%
Fast response time
36%
Relevant and updated content
27%
Bargain prices
15%
Emerging E-Commerce Strategies
• 3-P Growth Model
1. Presence
2. Penetration
3. Profitability
Emerging E-Commerce Strategies
• Another Strategy
– Reach
– Richness
– Affiliation
Chapter 2 – Entrepreneurship:
An Evolving Concept
The Evolution of Entrepreneurship
• Entrepreneur is derived from the French
entreprendre, meaning “to undertake”.
• 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.
Robert C. Ronstadt put together a
summary description:
• Entrepreneurship is the dynamic process of
creating incremental wealth. This wealth is
created by individuals who assume the major
risks in terms of equity, time, and/or career
commitment of providing value for some
product or service. The product or service
itself may or may not be new or unique but
value must somehow be infused by the
entrepreneur by securing and allocating the
necessary skills and resources.
An Integrated Definition
• Entrepreneurship is a dynamic process of vision,
change, and creation. It requires an application of
energy and passion towards the creation and
implementation of new ideas and creative solutions.
Essential ingredients include the willingness to take
calculated risks- in terms of time, equity, or career;
the ability to formulate an effective venture team;
the creative skill to marshall needed resources; the
fundamental skills of building a solid business plan;
and, finally, 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
The Myths of Entrepreneurship
• 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)
The Corridor Principle
States that with every venture
launched, new and unintended
opportunities often arise.
Approaches to
Entrepreneurship
• Schools of Thought Approach
• Process Approaches
Entrepreneurial Schools-of-Thought Approach
Macro View
{ Environmental School of Thought
Financial School of Thought
Displacement School of Thought
{
Entrepreneurial Trait School
of Thought (People School)
Venture Opportunity School
Micro View of Thought
Strategic Formulation School
of Thought
Macro View
(External locus of control)
The Environmental School of Thought
• The Financial/Capital School of Thought
• The Displacement School of Thought
1. Political Displacement
2. Cultural Displacement
3. Economic Displacement
The Micro View
(internal locus of control)
• The Entrepreneurial Trait School of Thought
• The Venture Opportunity School of Thought
• The Strategic Formulation School of Thought
Ronstadt Views Strategic Formulation
as 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
• Integrative Approach
• Entrepreneurial Assessment
Approach
• Multidimensional Approach
An Integrative Model of
Entrepreneurial Inputs and Outcomes
Inputs Outcomes
The •A going venture
Environmental Entrepreneurial Entrepreneurial •Value creation
opportunities Process Intensity
•New products,
Identify Number of events
Entrepreneurial services
Opportunity (and)
individuals degree of •Processes
An Assess and entrepreneurship •Technologies
organizational acquire •Profits and/or
context necessary personal
Innovation Proactive- benefits
resources ness
Unique •Employment,
business Implementation Risk taking asset, and
concepts revenue
Resources growth
Entrepreneurial Assessment Approach
Type
of
Venture
Qualitative,
Quantitative,
Type Strategic, and Type
of Ethical of
Entrepreneur Environment
ASSESSMENTS
Do the Results of the Assessments Make Sense Given:
Stage of Entrepreneurial Career
Prior Experience Early Mid Late
and Education Career Career Career
Multidimensional Approach
Individual(s)
Environment Organization
Process
Entrepreneurial Management
• The underlying theme of this book is the discipline
of entrepreneurial management:
– Entrepreneurship is based upon the same principles,
whether the entrepreneur is an existing large institution or
an individual starting his or her new venture single-
handed. It makes little or no difference whether the
entrepreneur is a business or a nonbusiness public-service
organization, nor even whether the entrepreneur is a
governmental or nongovernmental institution. The rules
are pretty much the same, the things that work and those
that don’t are pretty much the same, and so are the kinds
of innovations and where to look for them. In every case
there is a discipline we might call Entrepreneurial
Management.
Chapter 3 – Intrapreneurship:
Developing
Corporate
Entrepreneurship
The Nature of
Intrapreneurship
Defining The Concept
Recent research has defined corporate
entrepreneurship as a process whereby
an individual or a group of individuals,
in association with an existing
organization, creates a new organization
or instigates renewal or innovation
within the organization.
The Need for Corporate
Entrepreneurship
1. Rapid Growth in the number of new and
sophisticated competitors
2. Sense of distrust in the traditional methods of
corporate management
3. An exodus of some of the best and brightest
people from corporations to become small
business entrepreneurs
4. International competition
5. Downsizing of major corporations
6. An overall desire to improve efficiency and
productivity
Obstacles in Corporate Venturing
Traditional Mgt Practices Adverse Effects
• Enforce Standard • Innovative solutions
procedures to avoid blocked, funds misspent
mistakes
• Manage resources for • Competitive lead lost, low
efficiency and ROI market penetration
• Control against plan • Facts ignored that should
replace assumptions
• Plan for the long term • Nonviable goals locked in,
high failure costs
• Manage functionally • Entrepreneur failure and/or
venture failure
• Avoid moves that risk the • Missed opportunities
base business
Obstacles in Corporate Venturing, cont.
Traditional Mgt Practices Adverse Effects
• Protect the base business at • Venturing dumped when
all costs base business is threatened
• Judge new steps from prior • Wrong decisions about
experience competition and markets
• Compensate uniformly • Low motivation and
inefficient operations
• Promote compatible • Loss of innovators
individuals
Reengineering Corporate Thinking
• Set explicit goals
• Create a system of feedback and positive
reinforcement
• Emphasize individual responsibility
• Give rewards based on results
Innovative Philosophy
1. Encourage action
2. Use informal meetings whenever possible
3. Tolerate failure and use it as a learning experience
4. Persist in getting an idea to market
5. Reward innovation for innovation’s sake
6. Plan the physical layout of the enterprise to encourage
informal communication
7. Expect clever bootlegging of ideas – secretly working on
new ideas on company time as well as personal time
8. Put people on small teams for future-oriented projects
9. Encourage personnel to circumvent rigid procedures and
bureaucratic red tape
10. Reward and promote innovative personnel
Specific Elements of a Corporate
Intrapreneurial Strategy
• Developing the Vision
Shared Vision
Belonging Relationships
Having a purpose Mutual trust and a
Beyond the daily supportive basic attitude
work prevail
Mission
and
Vision
Commitment
Structure
Active, committed
Local initiative and
participation of
central synthesis
employees
Specific Elements of a Corporate
Intrapreneurial Strategy
• Developing the Vision
• Encouraging the Innovation
– Radical innovation is the launching of inaugural
breakthroughs
– Incremental innovation refers to the systematic
evolution of a product or service
• Structuring for an Intrapreneurial Climate
• Developing Venture Teams
3M’s Innovation Rules
• Don’t kill a project
• Tolerate failure
• Keep divisions small
• Motivate the champions
• Stay close to the customer
• Share the wealth
“Corporate Entrepreneurship
Assessment Instrument
(measured key entrepreneurial climate factors)
• Management Support
• Autonomy/Work Discretion
• Rewards/Reinforcement
• Time Availability
• Organizational Boundary
Developing Venture Teams
• A venture team is composed of two or more
people who formally create and share the
ownership of a new organization.
• The leader is called a “product champion” or
an “intrapreneur”.
The Interactive Process of
Intrapreneurship
Who Are Entrepreneurs?
• Intrapreneurs are sometimes captured by the
description as “a dreamer who does.” They
tend to be action oriented. They can move
quickly to get things done. They are goal
oriented, willing to do whatever it takes to
achieve their objectives. They are also a
combination of thinker, doer, planner, and
worker. They combine vision and action.
The Ten Commandments of an
Intrapreneur
1. Come to work each day willing to be fired
2. Circumvent any orders aimed at stopping your dream
3. Do any job needed to make your project work, regardless of
your job description
4. Network with good people to assist you
5. Build a spirited team: choose and work only with the best
6. Work underground as long as you can – publicity triggers
the corporate immune mechanism
7. Be loyal and truthful to your sponsors
8. Remember that it is easier to as for forgiveness than for
permission
9. Be true to your goals, but be realistic about the ways to
achieve them
10. Keep the vision strong
The Interactive Process of
Individual and Organizational
Characteristics
An Interactive Model of Corporate
Entrepreneuring
Organizational
Characteristics Resource
•Management Support Availability
•Work Discretion
•Rewards/Reinforcement
•Time Availibity
•Organizational
Boundaries
Decision Idea
Business/
to Act Implemen-
Precipitating Event Feasibility
Intrapre- tation
Planning
neurially
Individual
Characteristics
•Risk-taking Propensity
•Desire for Autonomy
•Need for Achievement Ability to
•Goal Orientation Overcome
•Internal Locus of Control Barriers
