Entrepreneurs Challenging The Unknown

1. EntrepreneursChallenging The Unknown Zelimir William Todorovic Ph.D. Doermer School of Business and management Studies Indiana 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 activity • Between 60% and 80% of new jobs • Driven by passion and purpose • U.S. standard of living (4 times better than former USSR) ascribed to entrepreneurship Entrepreneurship - The Introduction

5. Entrepreneurship - The Introduction

6. Entrepreneurship - The Introduction

7. The Evolution of Entrepreneurship • Entrepreneur is derived from the French entreprendre, meaning “to undertake”. • No single definition of entrepreneur : • Small Business • Leadership 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. Commitment, Determination, and Perseverance Drive to Achieve Opportunity Orientation Initiative and Responsibility Persistent Problem Solving Seeking Feedback Internal Locus of Control Tolerance for Ambiguity Calculated Risk Taking Integrity and Reliability Tolerance for Failure High Energy Level Creativity and Innovativeness Self-confidence and Optimism Independence Team Building Common Characteristics Associated with Entrepreneurs

10. 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.

11. Entrepreneurial Orientation Autonomy Innovativeness Proactiveness Competitive aggressiveness Risk-Taking

12. Entrepreneurial Orientation Dimension Definition Autonomy 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. 135-72; D. Miller, “The Correlates of Entrepreneurship in Three Types of Firms,” Management Science 29 (1983), pp. 770-91. Adapted from Exhibit 12.3 Dimensions of Entrepreneurial Orientation

13. Competitive 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. aggressiveness Entrepreneurial Orientation Dimension Definition Risk 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. 135-72; D. Miller, “The Correlates of Entrepreneurship in Three Types of Firms,” Management Science 29 (1983), pp. 770-91. Adapted from Exhibit 12.3 Dimensions of Entrepreneurial Orientation

14. Entrepreneurial Orientation Risk Taking Innovation Pro-activeness

15. Continuum of Radical and Incremental Innovations Exhibit 12.1 Continuum of Radical and Incremental Innovations

16. Innovation Challenges • Seeds versus Weeds • Experience versus initiative • Internal versus external staffing • Building capabilities versus collaborating • Incremental versus preemptive launch

17. 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 skills • Innovation requires the knowledge of the market

18. Market Knowledge needed for Innovation • Consumers • Competitors

19. Market Knowledge needed for Innovation • Consumers • Decide on your target consumers • Understand your target consumers • Common mistakes: • Knowing the size of the market does not mean you know your target consumers • Selecting 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.

20. Competitors • The size of industry • The number of competitors/substitutes • The competitive advantage for each competitors • What is your niche market?

21. The Age of Gazelles • A “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.

22. Gazelles - Innovation • Gazelles are leaders in innovation. • Gazelles produce twice as many product innovations per employee as do larger firms.

23. Entrepreneurial Assessment Approach TypeofVenture Qualitative,Quantitative,Strategic, andEthicalASSESSMENTS TypeofEntrepreneur TypeofEnvironment Do the Results of the Assessments Make Sense Given: Stage of Entrepreneurial Career Prior Experienceand Education EarlyCareer MidCareer LateCareer

24. 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

25. “Corporate Entrepreneurship Assessment Instrument(measured key entrepreneurial climate factors) • Management Support • Autonomy/Work Discretion • Rewards/Reinforcement • Time Availability • Organizational Boundary

26. The Entrepreneurial Perspective Although certainly not an exact science, this perspective provides an interesting look at the entrepreneurial potential within every individual.

27. Figure 2 Interrelationship of Entrepreneurs and Managers - Modified Approximate Entrepreneur’s capability Approximate AGT need ENTREPRENEUR MANAGER A Managerial Skills Required Entrepreneurial Skills Required C B Entrepreneurial and Managerial Skills Required D Open Systems Model Rational Goal Model Internal Process Model Human Relations Model

28. Business Incubators • Business incubators are designed to “hatch” new businesses • Incubators provide some a number of resources to a new venture

29. Growth Business Networking Coaching/ Business Support E M P H A S I S Time (Months) Infrastructure Fortifying Cost Minimization

30. Incubator as a Growth Tool Growth Dominant Progression Coaching/Business Support Time (Months) Incubator as a Subsidy Tool Cost Minimization Infrastructure Fortifying