Presentation on theme: "Entrepreneurs Challenging The Unknown"— Presentation transcript:
1 Entrepreneurs Challenging The Unknown Zelimir William Todorovic Ph.D.Doermer School of Business and management StudiesIndiana University – Purdue University, Fort Wayne
2 Entrepreneur Is it all a Myth Entrepreneurship - The Introduction
3 Etrepreneurship in the Past “ If you are a small businessman, you may be as extinct as the village blacksmith”“Small business is as dead as the dodo”Entrepreneurship - The Introduction
4 Entrepreneurship Today 70% of economic activityBetween 60% and 80% of new jobsDriven by passion and purposeU.S. standard of living (4 times better than former USSR) ascribed to entrepreneurshipEntrepreneurship - The Introduction
7 The Evolution of Entrepreneurship Entrepreneur is derived from the French entreprendre, meaning “to undertake”.No single definition of entrepreneur :Small BusinessLeadership Style
8 Who Are Entrepreneurs?Entrepreneurs, driven by an intense commitment and determined perseverance, work very hard. They are optimists who see the cup as half full rather than half empty. They strive for integrity. They burn with the competitive desire to excel.
9 Common Characteristics Associated with Entrepreneurs Commitment, Determination, and PerseveranceDrive to AchieveOpportunity OrientationInitiative and ResponsibilityPersistent Problem SolvingSeeking FeedbackInternal Locus of ControlTolerance for AmbiguityCalculated Risk TakingIntegrity and ReliabilityTolerance for FailureHigh Energy LevelCreativity and InnovativenessSelf-confidence and OptimismIndependenceTeam Building
10 Defining The ConceptRecent 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.
11 Entrepreneurial Orientation AutonomyInnovativenessProactivenessCompetitive aggressivenessRisk-TakingAutonomyTwo techniques often used to promote autonomyUsing skunkworks to foster entrepreneurial thinkingDesigning organization structures that support independent actionInnovativenessTwo methods used to enhance competitive position through innovativenessFostering creativity and experimentationInvesting in new technology, R&D, and continuous improvementProactivenessTwo methods to promote acting proactivelyIntroducing new products or technological capabilities ahead of the competitionContinuously seeking out new product or service offeringsCompetitive aggressivenessTwo ways competitively aggressive firms enhance their entrepreneurial positionEntering markets with drastically lower pricesFinding successful business models and copying them.Risk takingThree types of risks faced by organizations and their executivesBusiness risk takingFinancial risk takingPersonal risk takingTwo methods to strengthen competitive position through risk takingResearching and assessing risk factors to minimize uncertaintyUsing techniques that have worked in other domains
12 Entrepreneurial Orientation Dimension DefinitionAutonomy Independent action by an individual or team aimed at bringing forth a business concept or vision and carrying it through to completion.Innovativeness A willingness to introduce novelty through experimentation and creative processes aimed at developing new products and services as well as new processes.Proactiveness A forward-looking perspective characteristic of a marketplace leader that has the foresight to seize opportunities in anticipation of future demand.Source: J. G. Covin and D. P. Sleving, “A conceptual Model of Entrepreneurship As Firm Behavior,” Entrepreneurship Theory & Practice, Fall 1991, pp. 7-25; G. T. Lumpkin and G. G. Dess, “Clarifying the Entrepreneurial Orientation Construct and Linking It to Performance,” Academy of Management Review 21, no. 1 (1996), pp ; D. Miller, “The Correlates of Entrepreneurship in Three Types of Firms,” Management Science 29 (1983), ppAdapted from Exhibit 12.3 Dimensions of Entrepreneurial Orientation
13 Entrepreneurial Orientation Dimension DefinitionCompetitive An intense effort to outperform industry rivals. It is characterized by a combative posture or an aggressive response aimed at improving position or overcoming a threat in a competitive marketplace.aggressivenessRisk taking Making decisions and taking action without certain knowledge of probable outcomes; some undertakings may also involve making substantial resource commitments in the process of venturing forward.Source: J. G. Covin and D. P. Sleving, “A conceptual Model of Entrepreneurship As Firm Behavior,” Entrepreneurship Theory & Practice, Fall 1991, pp. 7-25; G. T. Lumpkin and G. G. Dess, “Clarifying the Entrepreneurial Orientation Construct and Linking It to Performance,” Academy of Management Review 21, no. 1 (1996), pp ; D. Miller, “The Correlates of Entrepreneurship in Three Types of Firms,” Management Science 29 (1983), ppAdapted from Exhibit 12.3 Dimensions of Entrepreneurial Orientation
15 Managing InnovationInnovation: using new knowledge to transform organizational processes or create commercially viable products and servicesSome Companies, such as Apple, are always innovating popular products, while others are constantly struggling for their one great idea.Innovation: using new knowledge to transform organizational processes or create commercially viable products and servicesLatest technologyResults of experimentsCreative insightsCompetitive informationThere are “five disciplines” for creating what customers wantIdentify important customer needsCreate solutions that fill those needsBuild innovation teamsEmpower "innovation champions" who keep the effort on trackAlign the entire enterprise around creating value for customers
16 Continuum of Radical and Incremental Innovations Exhibit 12.1 Continuum of Radical and Incremental Innovations
17 Innovation Challenges Seeds versus WeedsExperience versus initiativeInternal versus external staffingBuilding capabilities versus collaboratingIncremental versus preemptive launchInternal versus external staffingInnovation projects need competent staffs to succeedPeople drawn from inside the firmMay have greater social capitalKnow the organization’s culture and routinesMay not be able to think outside the boxPeople drawn from outside the firmAre costly to recruit, hire, trainMay have difficulty building relationshipsBuilding capabilities versus collaboratingInnovation projects often require building new sets of skillsFirms can seek helpOther departmentsPartner with other companies that bring resources and experiencePartnershipsCreate dependencies and inhibit internal skills developmentSharing benefits of innovation may create conflictIncremental versus preemptive launchCompanies must manage the timing and scale of new innovation projectsIncremental launchLess riskyRequires few resourcesServes as a market testCan undermine the project’s credibility if too tentativeLarge-scale launchRequires more resourcesCan effectively preempt a competitive response
18 Managing Innovation Firms need to regulate the pace of innovation Incremental innovation (six months to two years)Radical innovation (Typically 10 years or more)Innovation often requires collaborating with others who possess complementary knowledge and skillsInnovation requires the knowledge of the marketFirms need to regulate the pace of innovationIncremental innovationMay be six months to two yearsMay use a milestone approach driven by goals and deadlinesRadical innovationTypically long term – 10 years or moreOften involves open-ended experimentation and time-consuming mistakesStrict timelines unrealisticInnovation often requires collaborating with others who possess complementary knowledge and skillsPartners can come from several sourcesOther personnel within the departmentPersonnel within the firm but from another departmentPartners outside the firmNon-business sources, including research universities and the federal government
19 Market Knowledge needed for Innovation ConsumersCompetitors
20 Market Knowledge needed for Innovation ConsumersDecide on your target consumersUnderstand your target consumersCommon mistakes:Knowing the size of the market does not mean you know your target consumersSelecting a specific target segment does not mean you are going to reject consumers from other segments. On the other hand, providing services and products to consumers from different segments does not mean you are targeting on everybody.
21 Competitors The size of industry The number of competitors/substitutes The competitive advantage for each competitorsWhat is your niche market?
22 The Age of GazellesA “gazelle” is a business establishment with at least 20% sales growth every year (for five years), starting with a base of at least $100,000.
23 Gazelles - InnovationGazelles are leaders in innovation.Gazelles produce twice as many product innovations per employee as do larger firms.
24 Entrepreneurial Assessment Approach Type of VentureQualitative, Quantitative, Strategic, and Ethical ASSESSMENTSType of EntrepreneurType of EnvironmentDo the Results of the Assessments Make Sense Given:Stage of Entrepreneurial CareerPrior Experience and EducationEarly CareerMid CareerLate Career
25 3M’s Innovation Rules Don’t kill a project Tolerate failure Keep divisions smallMotivate the championsStay close to the customerShare the wealth
27 The Entrepreneurial Perspective Although certainly not an exact science, this perspective provides an interesting look at the entrepreneurial potential within every individual.
28 ENTREPRENEUR MANAGER Figure 2 Interrelationship of Entrepreneurs and Managers - ModifiedENTREPRENEURMANAGEREntrepreneurial Skills RequiredManagerial Skills RequiredEntrepreneurial and Managerial Skills RequiredOpen Systems ModelRational Goal ModelInternal Process ModelHuman Relations ModelApproximateAGT needEntrepreneur’s capabilityABCD
29 Business IncubatorsBusiness incubators are designed to “hatch” new businessesIncubators provide some a number of resources to a new ventureBusiness incubators are designed to “hatch” new businessesIncubators provide some or all of the following functionsFundingPhysical spaceBusiness servicesMonitoringNetworking
30 Business Networking Coaching/ Business Support Infrastructure Time (Months)EMPHASIGrowthCost MinimizationInfrastructureFortifyingCoaching/ Business Support
31 DominantProgressionTime (Months)GrowthCost MinimizationInfrastructureFortifyingCoaching/Business SupportIncubator as a Growth ToolIncubator as a Subsidy Tool