David and Goliath

1. David and Goliath

2. ‘We now stand on the threshold of a new age - the age of revolution. In our minds, we know the new age has already arrived: in our bellies, we’re not sure we like it. For we know it is going to be an age of upheaval, of tumult, of fortunes made and unmade at head-snapping speed. For change has changed. No longer is it additive. No longer does it move in a straight line. In the twenty first century, change is discontinuous, abrupt, seditious.’ Gary Hamel

3. Entrepreneurs • Entrepreneurs use innovation to exploit or create change and opportunity for the purpose of making profit. • They do this by shifting resources from an area of lower productivity into an area of higher productivity and greater yield, accepting a high degree of risk and uncertainty in doing so.

4. ‘We learned the importance of ignoring conventional wisdom and doing things our way....It’s fun to do things that people don’t think are possible or likely. Its also exciting to achieve the unexpected.’ • Michael Dell

5. Managers, Owner-managers &Entrepreneurs Owner-managers Managers Entrepreneurs

6. The antecedence of modern entrepreneurship Cantillon(1755) Introduced the concept of entrepreneur from ‘entreprendre’ (ability to take charge)

7. The antecedence of modern entrepreneurship Jean Baptist Say(1803, 1815) Emphasised the ability of the entrepreneur to ‘marshal’ resources in order to respond to unfulfilled opportunities

8. The antecedence of modern entrepreneurship Ely and Hess(1983) Attributed to entrepreneurs the ability to take integrated action in the enterprise as a whole, combining roles in capital, labour, enterprise and entrepreneur

9. The antecedence of modern entrepreneurship Schumpeter(1911/1934, 1928) Envisioned that entrepreneurs proactively ‘created’ opportunity using ‘innovative combinations’ which often included ‘creative destruction’ of passive or lethargic economic markets

10. The antecedence of modern entrepreneurship Knight(1921) Suggested that entrepreneurs were concerned with the ‘efficiency’ in economic factors by continually reducing waste, increasing savings and thereby creating value, implicitly understanding the opportunity-risk-reward relationship

11. The antecedence of modern entrepreneurship Hayek (1948, 1952, 1967) Continued the Austrian tradition of analytical entrepreneurs giving them capabilities of discovery and action, recognising the existence of information asymmetry which they could exploit

12. The antecedence of modern entrepreneurship Shapero(1975, 1984, 1985) Attributed a ‘judgement’ ability to entrepreneurs to identify ‘credible opportunities’ depending on two critical antecedents – perceptions of ‘desirability’ and ‘feasibility’ from both personal and social viewpoints

13. The antecedence of modern entrepreneurship Drucker(1974) Attributed to entrepreneurs a sense to ‘foresee’ market trends and make a timely response

14. The antecedence of modern entrepreneurship Kirzner(1973, 1979, 1997, 1999) Attributed to entrepreneurs a sense of ‘alertness’ to identify opportunities and exploit them accordingly

15. SME Definitions Micro Small Medium Max. employees 9 49 249 Max. turnover (euros) - 7m 40m Max. total assets (euros) - 5m 27m

16. Characteristics of Small Firms • Most are very small • Strong influence of owner-manager (+ family) • Short-term horizons • Short of cash • Raising finance a major problem • Local orientation • Little influence on market • Scope of activity limited • Over reliance on small number of customers

17. Lifestyle Firms • Provides ‘comfort level’ of activity • Provides acceptable income • Routine, tactical management

18. Growth Firms • Set up to grow • Rapid change • Risky • Strategic management

19. Characteristics of Growth Firms • Strong influence of entrepreneur (+ family) • Operates in uncertain, risky environment - Personal implications of failure important influence - Strongly intuitive, but self reliant and confident - Good at resolving conflict and ambiguity • Sees opportunities and pursues them - Uses innovation to create competitive advantage - Short-term, incremental approach to decisions - Flexible, adaptive, emergent approach to strategy • Relationship based approach to management

20. ‘I am often asked what it is to be an entrepreneur and there is no simple answer. It is clear that successful entrepreneurs are vital for a healthy, vibrant and competitive economy. • If you look around you, most of the largest companies have their foundations in one or two individuals who have the determination to turn a vision into reality.’ • Richard Branson

21. ECONOMIC GROWTH LEVEL OF ENTREPRENEURIAL ACTIVITY Entrepreneurial Opportunity Entrepreneurial Capacity Economic Infrastructure Demography Education Culture Global Entrepreneurship Monitor

22. Economists’ perspectives on entrepreneurship Industrial economist’s perspective: Growth of SMEs is explained by attractiveness of market entry into an industry because of its profitability, growth, the barriers to entry and its concentration

23. Economists’ perspectives on entrepreneurship Labour market economist’s perspective: Analysis of the factors influencing individuals to set up an SME

24. KNOWLEDGE INNOVATION Focus of Evolutionary Theory

25. KNOWLEDGE CHANGE INNOVATION Focus of Evolutionary Theory

26. Evolutionary Theory Why entrepreneurship encourages growth: • It encourages competition by increasing the number of enterprises. • It is a mechanism for ‘knowledge spill-overs’ – transmission of knowledge from its point of origin to other individuals or organizations. • It generates diversity and variety among enterprises in any location.

27. Opportunity, innovation and entrepreneurship

28. Frequency of Innovation Increasing competitive advantage High Low High Degree of Innovation Innovation and Competitive Advantage

29. Adaptor v Innovator Innovator • Approaches task from unusual angles • Discovers problems and avenues of solutions • Questions basic assumptions related to current practices • Has little regard for means; is more interested in ends • Has little tolerance for routine work • No need for consensus; often is insensitive to others Adaptor • Employs a disciplined, precise, methodical approach • Is concerned with solving, rather than finding, problems • Attempts to refine current practises • Tends to be means orientated • Is capable of extended detail work • Is sensitive to group cohesion and cooperation

30. ENTREPRENEURIAL ENVIRONMENT INVENTION Ability to be CREATIVE Ability to spot OPPORTUNITIES INNOVATION SUCCESS Creativity, Invention, Opportunity and Entrepreneurship

31. Invention and Entrepreneurship Hi STRUGGLER INNOVATOR Creativity / Invention STAGNATOR COPIER Lo Hi Opportunity perception / Entrepreneurship

32. Schumpter’s Innovations • Introduction of a new or improved good • Introduction of a new process • Opening of a new market • Identification of a new source of supply of raw materials • Creation of new types of industrial organization

33. Drucker’s Sources of Opportunity • The unexpected • The incongruity • The inadequacy in underlying processes • The changes in industry or market structure PLUS • Demographic changes • Changes in perception, mood or meaning • New knowledge

34. Production bottlenecks Why? Deliveries unreliable Why? Transport problems Why? Inadequate rewards Lost best salesperson Why? Why? Sales are falling Why? Inadequate checking Why? Quality is suspect Why? Materials not consistent Why? Price not competitive We use ‘cost plus’ pricing Why? Why? Why? Why?

35. Heroes and Super-heroes

36. Personal characteristics and traits Culture of society Antecedent influences Situational factors Influences on Owner-managers and Entrepreneurs

37. Lifestyle firm, often trade or craft based. Will not grow Owner-manager Growth firm. Pursuit of growth & personal wealth important Entrepreneur Manages business for others. organization similar to large firm Manager Managerial Typologies Type of business Type of manager

38. Personality Characteristics: Methodological Problems • Not stableover time • Requires subjective judgements • Measures tend to ignore cultural and environmental influences • The role of education, learning, training is often overlooked • Issues such as age, sex, race, social class can be overlooked

39. Characteristics of Owner-Managers • The need for independence • The need for achievement • Internal locus of control • Measured risk takers

40. Danger Signs for Owner- Managers • Need for personal control • Unwilling or unable to delegate • Can distrust subordinates • Needs applause and recognition

41. Characteristics of Entrepreneurial Owners • Opportunistic • Innovative • Self confident (or delusional?) • Self motivated and restless • Proactive and decisive • Vision and flair (creating an image) • Willing to take even greater risks

42. ‘I have always lived my life by thriving on opportunity and adventure. Some of the best ideas come out of the blue, and you have to keep an open mind to see their virtue.’ • Richard Branson

43. Antecedent influences on Start-ups • Education • Employment and unemployment • Family • Immigration