5 Entrepreneurs Challenging the Unknown Recognize opportunities where others see chaos or confusionAre aggressive catalysts for change within the marketplaceChallenge the unknown and continuously create the future
6 Entrepreneurship: A Mindset Entrepreneurship is more than the mere creation of business:Seeking opportunitiesTaking risks beyond securityHaving the tenacity to push an idea through to realityEntrepreneurship is an integrated concept that permeates an individual’s business in an innovative manner.6
7 The Evolution of Entrepreneurship Entrepreneur is derived from the French entreprendre, meaning “to undertake.”The entrepreneur is one who undertakes to organize, manage, and assume the risks of a business.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.
8 A Summary Description of Entrepreneurship Entrepreneurship (Robert C. Ronstadt)The dynamic process of creating incremental wealth.This wealth is created by individuals who assume major risks in terms of equity, time, and/or career commitment of providing value for a product or service.The product or service itself may or may not be new or unique but the entrepreneur must somehow infuse value by securing and allocating the necessary skills and resources.8
9 An Integrated Definition EntrepreneurshipA dynamic process of vision, change, and creation.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 marshal needed resources.The fundamental skills of building a solid business plan.The vision to recognize opportunity where others see chaos, contradiction, and confusion.9
10 An Integrative Model of Entrepreneurial Inputs and Outcomes Source: Michael H. Morris, P. Lewis, and Donald L. Sexton, “Reconceptualizing Entrepreneurship: An Input-Output Perspective,” SAM Advanced Management Journal 59, no.1 (Winter 1994): 21–31.10
11 Entrepreneurs in the United States Reasons for the exceptional entrepreneurial activity in the U.S. include:A national culture that supports risk taking and seeking opportunities.Americans’ alertness to unexploited economic opportunity and a low fear of failure.U.S. leadership in entrepreneurship education at both the undergraduate and graduate level.A high percentage of individuals with professional, technological or business degrees who are likely to become entrepreneurs.11
12 Entrepreneurial Firms’ Impact Entrepreneurial components of the U.S. Economy:Large firms have increased profitability by returning to their “core competencies through restructuring and downsizing.New entrepreneurial companies have been blossoming in new technologies and new markets.Thousands of smaller firms established by women, minorities, and immigrants have strengthened the economy.12
13 Entrepreneurial Firms’ Impact Entrepreneurial firms make two indispensable contributions to an economy:They are an integral part of the renewal process that pervades and defines market economies.They are the essential mechanism by which millions enter the economic and social mainstream of society.13
14 Aspects of Entrepreneurship Venture FinancingSocial EntrepreneurshipCorporate EntrepreneurshipTrends in Entrepreneurship ResearchEntrepreneurial CognitionGlobal Entrepreneurial MovementFamily BusinessesWomen and Minority EntrepreneursEntrepreneurial Education14
15 Common Characteristics of Entrepreneurs Commitment, determination, and perseveranceDrive to achieveOpportunity orientationInitiative and responsibilityPersistent problem solvingSeeking feedbackInternal locus of controlTolerance for ambiguityCalculated risk takingTolerance for failureHigh energy levelCreativity and InnovativenessVisionSelf-confidence and optimismIndependenceTeam building
16 Outline of the Entrepreneurial Organization ImaginationFlexibilityAcceptance of Risks816
17 Entrepreneurship Theory Entrepreneurs cause entrepreneurship.Entrepreneurship is a function of the entrepreneur:Entrepreneurship is the interaction of skills related to inner control, planning and goal setting, risk taking, innovation, reality perception, use of feedback, decision making, human relations, and independence.
18 Typology of Entrepreneurial Styles Source: Thomas Monroy and Robert Folger, “A Typology of Entrepreneurial Styles: Beyond Economic Rationality,” Journal of Private Enterprise IX(2) (1993): 71.18
19 The Dark Side of Entrepreneurship The Entrepreneur’s Confrontation with RiskFinancial risk versus profit (return) motive varies in entrepreneurs’ desire for wealth.Career risk—loss of employment securityFamily and social risk—competing commitments of work and familyPsychic risk—psychological impact of failure on the well-being of entrepreneurs
20 A Model of Entrepreneurial Motivation Source: Douglas W. Naffziger, Jeffrey S. Hornsby, and Donald F. Kuratko, “A Proposed Research Model of Entrepreneurial Motivation,” Entrepreneurship Theory and Practice (spring 1994): 33.
21 Opportunity Identification: The Search for New Ideas Opportunity identification is central to entrepreneurship and involves:The creative pursuit of ideasThe innovation processThe first step for any entrepreneur is the identification of a “good idea.”The search for good ideas is never easy.Opportunity recognition can lead to both personal and societal wealth.
22 Entrepreneurial Imagination and Creativity How entrepreneurs do what they do:Creative thinking + systematic analysis = successSeek out unique opportunities to fill needs and wantsTurn problems into opportunitiesRecognize that problems are to solutions what demand is to supply
23 The Role of Creative Thinking CreativityThe generation of ideas that result in the improved efficiency or effectiveness of a system.Two important aspects of creativity exist:ProcessThe process is goal oriented; it is designed to attain a solution to a problem.PeopleThe resources that determine the solution.
25 The Creative Climate Characteristics of a creative climate: A trustful management that does not overcontrol the personnelOpen channels of communication among all business membersConsiderable contact and communication with outsidersA large variety of personality typesA willingness to accept changeAn enjoyment in experimenting with new ideasLittle fear of negative consequences for making a mistakeThe selection and promotion of employees on the basis of meritThe use of techniques that encourage ideas, including suggestion systems and brainstormingSufficient financial, managerial, human, and time resources for accomplishing goals
27 Ease of Doing Business Rank EconomyEase of Doing Business RankSingapore1New Zealand2Hong Kong, China3United States4United Kingdom5Denmark6Ireland7Canada8Australia9Norway10Georgia11China89Bangladesh119Russian Federation120Costa Rica121Brazil129India133
28 Innovation Rankings INSEAD 2009 1. United States2. Germany3. Sweden4. United Kingdom5. Singapore6. South Korea7. Switzerland8. Denmark9. Japan10. Netherlands
30 Russia Components Legacy of innovation - 49 Culture to innovate - 46 Quality of the educational system - 41Quality of management schools – 66Intellectual property protection – 93Technological awareness - 91Firm level technology absorption - 90
31 United States Human Capacity – 1 Culture to innovate - 2 Quality of the educational system – 3Quality of management schools - 10
32 Innovation and the Entrepreneur Is the process by which entrepreneurs convert opportunities into marketable ideas.Is a combination of the vision to create a good idea and the perseverance and dedication to remain with the concept through implementation.Is a key function in the entrepreneurial process.Is the specific function of entrepreneurship.
33 The Innovation Process Types of InnovationInventionExtensionDuplicationSynthesisSources of InnovationUnexpected occurrencesIncongruitiesProcess needsIndustry and market changesDemographic changesPerceptual changesKnowledge-based concepts
34 Type Description Examples Invention Totally new product, service, or processWright brothers—airplane Thomas Edison—light bulb Alexander Graham Bell—telephoneExtensionNew use or different application of an already existing product, service, or processRay Kroc—McDonald’sMark Zuckerberg—FacebookBarry Sternlicht—Starwood Hotels & ResortsDuplicationCreative replication of an existing conceptWal-Mart—department stores Gateway—personal computers Pizza Hut—pizza parlorSynthesisCombination of existing concepts and factors into a new formulation or useFred Smith—Fed Ex Howard Schultz—Starbucks
35 Major Innovation Myths Myth 1: Innovation is planned and predictableMyth 2: Technical specifications should be thoroughly preparedMyth 3: Creativity relies on dreams and blue- sky ideasMyth 4: Big projects will develop better innovations than smaller onesMyth 5: Technology is the driving force of innovation success