Entrepreneurship Intrapreneurship

1. Entrepreneurship & Intrapreneurship Learning objectives: Recap from last week Concept of entrepreneurship The entrepreneurial process The individual entrepreneur How entrepreneurs think – their mindset Characteristics of entrepreneurs Heidi Roizen case study The concept of ‘intrapreneurship’ Aspects of an entrepreneurial corp. culture How it can be developed Ziba Designs video

2. Entrepreneurship Risk taking Innovation – creating/introducing something new or unique Being proactive – taking initiative Organizing and reorg. social/econ mechanisms to turn resources to practical use Rewards are: Independence Personal satisfaction Money

3. The Entrepreneurial process Opportunity – identify & evaluate Founder - team Resources – determine needs Develop Business Plan – exploit opportunity Manage the enterprise

4. Which of these individuals are entrepreneurs? A woman who enjoys making appetizers for her parties, and who is praised by friends who say how delicious they are, starts a company to make and sell them A scientist involved in top-secret research makes breakthrough discoveries that would advance the frontiers of his field; but he has no interest in identifying the practical uses of his findings. After being “downsized” from his job, a man comes up with the idea of processing old automotive parts and creating borders for flower gardens. A retired army officer develops the idea of purchasing old amphibious vehicles from the government and using them to start a company that offers tours of wilderness areas. A young computer scientist develops new software that is far better than anything now on the market: she seeks capital to start a company to develop and sell this product.

5. How Entrepreneurs Think Entrepreneurs in particular situations may think differently when faced with a different task or decision environment. Given the nature of their decision-making environment, entrepreneurs need to sometimes: Effectuate Be cognitively adaptable Learn from failure

6. Causation and Effectuation According to Sarasvathy (Darden), entrepreneurs tend to use an effectuation process more often than a causal process Causal Process (as embodied in Kotler’s Marketing Management) Starts with a desired outcome. Focuses on the means to generate that outcome. Effectuation Process Starts with what one has (who they are, what they know, and whom they know). Selects among possible outcomes.

7. The Causation Process (1 of 2) Given a product or a service, Kotler suggests a procedure for bringing the product/service to market: Analyze long-run opportunities in the market. Research and select target markets. Identify segmentation variables and segment the market. Develop profiles of resulting segments. Evaluate the attractiveness of each segment. Select the target segment(s). Identify possible positioning concepts for each target segment.

8. The Causation Process (2 of 2) Select, develop, and communicate the chosen positioning concept. Design marketing strategies. Plan marketing programs. Organize, implement, and control marketing effort. This process is called the STP (segmentation, targeting, and positioning) process.

9. Principles of Effectuation (1of 2) Implications of effectuation for the entrepreneur are explained in terms of five basic principles: Patchwork quilt means-driven action, creation of something new with existing means (vs. discovering new ways to achieve given goals) Affordable loss committing in advance to what one is willing to lose (vs. investing in calculations about expected returns to project) Bird-in-hand negotiating with any/all stakeholders willing to make actual commitments to the project; determines goals of the enterprise Lemonade leverage surprises for benefits rather than try to avoid them, overcome them, or adapt to them Pilot-in-the-Plane rely on & work with people as the prime driver of opportunity and not limit entrepreneurial efforts to exploiting factors external to the individual

10. Principles of Effectuation (2 of 2) Entrepreneurial Mind-Set Involves the ability to rapidly sense, act, and mobilize, even under uncertain conditions.

11. Entrepreneurial vs. Managerial decision making Action orientation Willingness to shift strategy Resource commitment periodic, multistage vs. upfront Resource use vs. ownership Org. structure flat, informal vs. hierarchical, defined

12. Entrepreneurial characteristics According to Kuemmerle (2002): Are you comfortable stretching the rules? prepared to make powerful enemies? patient to start small? willing to shift strategy? a closer?

13. Entrepreneurial Characteristics Locus Of Control Needs Independence Achievement Risk Taking

14. Childhood/Family Education Personal Values Age Work History

15. Motivation/Support Systems Pull vs. push Role Models Support Networks Moral Professional

16. Heidi Roizen case study What entrepreneurial characteristics does Heidi display? What opportunity should she pursue and why? What can we learn from her about crafting an entrepreneurial career?

17. What is Intrapreneurship Corporate Entrepreneurship Entrepreneurial thinking, entrepreneurial practices and innovation in large firms New venture creation within large firms Transformation of existing organizations through strategic renewal or structural change Intrapreneurs Employees in large firms who can turn ideas into reality Goal-oriented Action-oriented

18. Why is intrapreneurship important? Rapidly changing markets New, sophisticated competitors Shortened product life Rapidly changing technology Higher employee satisfaction ? retention Building a competitive edge

19. Traditional vs. Entrep. Corp. culture Follow instructions given Do not make mistakes Do not fail Do not take initiative Stay within your turf and protect your backside Develop the vision Goals, and action plans Be rewarded for actions taken Suggest, try, and experiment Create and develop Take responsibility and ownership

20. Ways to establish a climate for intrepreneurship Operate organization on the frontiers of technology Encourage new ideas Allocate time for innovation Tolerate experimentation that fails Reward/Incentivize desired actions Continual communication amongst team members Top management support

21. Intrapreneurial leader Understands the environment Visionary and flexible Encourages team work Open discussion Builds a coalition of supporters Persists

22. Ziba Designs

23. Leadership’s effect on intrapreneurial thinking Corporations that create an intrapreneurial strategy often find that: The ethos of the original enterprise changes dramatically Traditions set aside in favor of new processes Some people unaccustomed to new environment will dislike it and leave Others will find it motivating and thrive in it Leaders must recognize the 4 steps of intrap. strategy Developing the vision Encouraging innovation Structuring for an intrapreneurial climate Developing venture teams