NLDIMSR
Entrepreneurship Management
Prof. Anand Dhutraj
Module 1 – Overview of Entrepreneurship Management
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Agenda
• Concept of Entrepreneur
• Entrepreneurship Advantages
• Types of Entrepreneurs
• Qualities and Characteristics of Entrepreneurs
• Innovation and creativity
Title / Author: Entrepreneurship Management/Anand
Dhutraj
NLDIMSR
What is Entrepreneurship?
• Academic Definition (Stevenson and Jarillo)
• Entrepreneurship is the process by which individuals pursue opportunities without
regard to resources they currently control.
• Alternative View
• Entrepreneurship is the art of turning an idea into a business.
• Explanation of What Entrepreneurs Do
• Entrepreneurs assemble and then integrate all the resources needed – the money,
the people, the business model, the strategy – to transform an invention or an idea
into a viable business.
Title / Author: Entrepreneurship Management/Anand
Dhutraj
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Corporate Entrepreneurship
Corporate Entrepreneurship
‒Is the conceptualization of entrepreneurship at the firm level.
‒All firms fall along a conceptual continuum that ranges from highly
conservative to highly entrepreneurial.
‒The position of a firm on this continuum is referred to as its entrepreneurial
intensity.
Title / Author: Entrepreneurship Management/Anand
Dhutraj
NLDIMSR
What is Entrepreneurship?
• Academic Definition (Stevenson and Jarillo)
• Entrepreneurship is the process by which individuals pursue opportunities without
regard to resources they currently control.
• Alternative View
• Entrepreneurship is the art of turning an idea into a business.
• Explanation of What Entrepreneurs Do
• Entrepreneurs assemble and then integrate all the resources needed – the money,
the people, the business model, the strategy – to transform an invention or an idea
into a viable business.
Title / Author: Entrepreneurship Management/Anand Dhutraj
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Corporate Entrepreneurship (2 of 2)
Entrepreneurial Firms Conservative Firms
•Proactive •Take a more “wait and see” posture
•Innovative •Less innovative
•Risk taking •Risk averse
Title / Author: Entrepreneurship Management/Anand Dhutraj
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Why Become an Entrepreneur?
• The three primary reasons that people become entrepreneurs
and start their own firms.
• Desire to be their own boss
• Desire to pursue their own ideas
• Financial rewards
Title / Author: Entrepreneurship Management/Anand Dhutraj
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Characteristics of Successful Entrepreneurs
Figure 1.1 Four Primary
Characteristics of Successful
Entrepreneurs
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Characteristics of Successful Entrepreneurs
• Passion for the Business
• The number one characteristic shared by successful entrepreneurs is a
passion for the business.
• This passion typically stems from the entrepreneur’s belief that the business
will positively influence people’s lives.
• Product/Customer Focus
• A second defining characteristic of successful entrepreneurs is a
product/customer focus.
• An entrepreneur’s keen focus on products and customers typically stems
from the fact that most entrepreneurs are, at heart, craftspeople.
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Characteristics of Successful Entrepreneurs
• Tenacity Despite Failure
• Because entrepreneurs are typically trying something new, the failure
rate is naturally high.
• A defining characteristic for successful entrepreneurs is their ability to
persevere through setbacks and failures.
• Execution Intelligence
• The ability to fashion a solid business idea into a viable business is a key
characteristic of successful entrepreneurs.
Title / Author: Entrepreneurship Management/Anand Dhutraj
Common Myths About Entrepreneurs (1 of 7)
Myth 1: Entrepreneurs Are Born, Not Made
• This myth is based on the mistaken belief that some people are genetically
predisposed to be entrepreneurs.
• The consensus of many studies is that no one is “born” to be an
entrepreneur; everyone has the potential to become one.
• Whether someone does or doesn’t become an entrepreneur is a function of
their environment, life experiences, and personal choices.
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Common Myths About Entrepreneurs (2 of 7)
Although no one is “born” to be an entrepreneur, there are common traits and
characteristics of successful entrepreneurs
•A moderate risk taker •Optimistic disposition
•Persuasive •A networker
•Promoter •Achievement motivated
•Resource assembler/leverager •Alert to opportunities
•Creative •Self-confident
•Self-starter •Decisive
•Tenacious •Energetic
•Tolerant of ambiguity •A strong work ethic
•Visionary •Lengthy attention span
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Common Myths About Entrepreneurs (3 of 7)
Myth 2: Entrepreneurs Are Gamblers
• Most entrepreneurs are moderate risk takers.
• The idea that entrepreneurs are gamblers originates from two sources:
• Entrepreneurs typically have jobs that are less structured, and so they
face a more uncertain set of possibilities than people in traditional jobs.
• Many entrepreneurs have a strong need to achieve and set challenging
goals, a behavior that is often equated with risk taking.
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Common Myths About Entrepreneurs (4 of 7)
Myth 3: Entrepreneurs Are Motivated Primarily by Money
• While it is naïve to think that entrepreneurs don’t seek financial
rewards, money is rarely the reason entrepreneurs start new firms.
• In fact, some entrepreneurs warn that the pursuit of money can be
distracting.
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Common Myths About Entrepreneurs (5 of 7)
Myth 4: Entrepreneurs Should Be Young and Energetic
• Entrepreneurial activity is fairly evenly spread out over age ranges.
• While it is important to be energetic, investors often cite the strength of the
entrepreneur as their most important criterion in making investment
decisions.
• What makes an entrepreneur “strong” in the eyes of an investor is
experience, maturity, a solid reputation, and a track record of success.
• These criteria favor older rather than younger entrepreneurs.
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Common Myths About Entrepreneurs (6 of 7)
Table 1.4 Age Distribution of Business Owners
Age Percentage of Business Owners
20-34 24.7
35-44 22.9
45-54 26.6
55-64 25.8
Source: R. W. Fairlie, A. Morelix, E.J. Reedy, and J. Russell, 2015 The
Kauffman Index of Startup Activity: National Trends.
Title / Author: Entrepreneurship Management/Anand Dhutraj
Common Myths About Entrepreneurs (7 of 7)
Myth 5: Entrepreneurs Love the Spotlight
• While some entrepreneurs are flamboyant, the vast majority of them do not
attract public attention.
• As evidence of this, consider the following question: “How many entrepreneurs
could you name?”
• Most of us could come up with Jeff Bezos of [Link], Mark Zuckerberg
of Facebook, Larry Page and Sergey Brin of Google or maybe Elon Musk of
Tesla and SpaceX.
• But few could name the founders of Netflix, YouTube, or DIRECTV, even
though we frequently use those firms’ services.
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Figure 1.2 Types of Start-Up Firms
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Economic Impact of Entrepreneurial Firms
• Innovation
• Is the process of creating something new, which is central to the entrepreneurial
process.
• Small innovative firms are 16 times more productive than larger innovative firms in
terms of patents per employee.
• Job Creation
• Small businesses create a substantial number of net new jobs in the United States.
• Firms with 500 or fewer employees created two million of the roughly three million
private sector jobs in 2014.
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Entrepreneurial Firms’ Impact on Society and
Larger Firms
• Impact on Society
• The innovations of entrepreneurial firms have a dramatic impact on society.
• Think of all the new products and services that make our lives easier,
enhance our productivity at work, improve our health, and entertain us.
• Impact on Larger Firms
• Many entrepreneurial firms have built their entire business models around
producing products and services that help larger firms become more efficient
and effective.
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The Entrepreneurial Process
The Entrepreneurial Process Consists of Four Steps
Step 1: Deciding to become an entrepreneur.
Step 2: Developing successful business ideas.
Step 3: Moving from an idea to an entrepreneurial firm.
Step 4: Managing and growing the entrepreneurial firm.
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Steps in the Entrepreneurial Process (1 of 2)
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Steps in the Entrepreneurial Process (2 of 2)
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What is an Opportunity? (1 of 2)
Opportunity Defined
An opportunity is a favorable set of circumstances that creates a need for a new
product, service, or business.
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What is an Opportunity? (2 of 2)
Figure 2.1 Four Essential Qualities of an Opportunity
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Figure 2.2 Three Ways to Identify
an Opportunity
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First Approach: Observing Trends (1 of 2)
• Observing Trends
• Trends create opportunities for entrepreneurs to pursue.
• The most important trends are:
• Economic forces
• Social forces
• Technological advances
• Political and regulatory changes
• It’s important to be aware of changes in these areas.
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First Approach: Observing Trends (2 of 2)
Figure 2.3 Environmental Trends Suggesting Business, Product, or Service Opportunity Gaps
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Trend 1: Economic Forces
• Economic trends help determine areas that are ripe for new start-ups and
areas that start-ups should avoid.
• Example of Economic Trend Creating a Favorable Opportunity
•A weak economy favors start-ups that help consumers save money.
•An example is [Link], a company started to help consumers
save money on gas.
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Trend 2: Social Forces
Social trends alter how people and businesses behave and set their priorities. These
trends provide opportunities for new businesses to accommodate the changes.
Examples of Social Trends
•Aging of the population.
•The increasing diversity of the population.
•Millennials entering the workforce.
•Growth in the use of mobile devices.
•An increasing focus on health and wellness.
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Trend 3: Technological Advances (1 of 2)
Advances in technology frequently create business opportunities.
Examples of Entire Industries that Have Been Created as the Result of
Technological Advances
• Computer industry
• Internet
• Biotechnology
• Digital photography
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Trend 3: Technological Advances (2 of 2)
Once a technology is created, products often emerge to advance it.
Example: Rokit Boost
• An example is Rokit Boost, a high-end mobile accessories company that makes
smartphone cases, headphones, portable USB device chargers, and Bluetooth
speakers. Rokit Boost wouldn’t exist if it weren’t for the advent of the
smartphone.
Title / Author: Entrepreneurship Management/Anand Dhutraj
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Trend 4: Political Action and Regulatory
Changes (1 of 2)
Political and regulatory changes also provide the basis for opportunities.
General Example
• This happened with the passage of the Affordable Care Act in 2010. The
provisions of the act yielded opportunities for entrepreneurs to launch
electronic records start-ups, apps to help patients monitor their medication, and
similar companies.
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Trend 4: Political Action and Regulatory
Changes (2 of 2)
Political change also engenders new business and product opportunities.
For example, global political instability and the threat of terrorism have
resulted in many firms becoming more security-conscious.
Specific Example
• Evolv Technology is a start-up that has assembled a multidisciplinary
team of experts to identify, invent, and apply new technologies to meet
current terrorism-related threats.
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Second Approach: Solving a Problem (1 of 2)
Solving a Problem
• Sometimes identifying opportunities simply involves noticing a problem and
finding a way to solve it.
• These problems can be pinpointed through observing trends and through
more simple means, such as intuition, serendipity, or chance.
• Many companies have been started by people who have experienced a
problem in their own lives, and then realized that the solution to the problem
represented a business opportunity.
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Second Approach: Solving a Problem (2 of 2)
Specific Example
Sometimes people aren’t able to access energy to recharge their smartphones for
a period of time. A number of companies have solved this problem in innovative
ways. An example is the $70 Eton BoostTurbin 2000, which is a device that weighs
less than four ounces. It combines a battery with a hand crank that provides
enough power to fully charge a typical smartphone.
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Third Approach: Finding Gaps in the
Marketplace (1 of 2)
• Gaps in the Marketplace
• A third approach to identifying opportunities is to find a gap in the
marketplace.
• A gap in the marketplace is often created when a product or service is
needed by a specific group of people but doesn’t represent a large enough
market to be of interest to mainstream retailers or manufacturers.
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Third Approach: Finding Gaps in the
Marketplace (2 of 2)
Product gaps in the marketplace represent potentially viable business
opportunities.
Specific Example
Tish Cirovolo realized there were no guitars on the market made specifically
for females. To fill this gap, she started Daisy Rock Guitars, a company that
makes guitars just for women and girls. Daisy Rock guitars are stylish, come
in feminine colors, and incorporate design features that accommodate a
woman’s smaller hand and build.
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Personal Characteristics of the Entrepreneur
Characteristics that tend to make some people better at recognizing opportunities
than others
• Prior Industry Experience
• Cognitive Factors
• Social Networks
• Creativity
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Prior Industry Experience (1 of 2)
Prior Industry Experience
• Studies have shown that prior experience in an industry helps an
entrepreneur recognize business opportunities.
• By working in an industry, an individual may spot a market niche
that is underserved.
• It is also possible that by working in an industry, an individual
builds a network of social contacts who provide insights that
lead to recognizing new opportunities.
Title / Author: Entrepreneurship Management/Anand Dhutraj
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Prior Industry Experience (2 of 2)
Prior Industry Experience
• It is also important to note that anecdotal evidence suggests that people outside
an industry can sometimes enter it with a new set of eyes, and as a result
innovate in ways that people with prior experience might find difficult.
• For example, Elon Musk, the founder of Tesla, had no prior experience in the
auto industry.
• Debbie Fields, the founder of Mrs. Fields Cookies, had no prior experience in
the food industry.
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Cognitive Factors
Cognitive Factors
• Studies have shown that opportunity recognition may be an innate skill or
cognitive process.
• Some people believe that entrepreneurs have a “sixth sense” that allows
them to see opportunities that others miss.
• This “sixth sense” is called entrepreneurial alertness, which is formally
defined as the ability to notice things without engaging in deliberate search.
Title / Author: Entrepreneurship Management/Anand Dhutraj
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Social Networks (1 of 3)
• Social Networks
• The extent and depth of an individual’s social network affects opportunity
recognition.
• People who build a substantial network of social and professional contacts will be
exposed to more opportunities and ideas than people with sparse networks.
• Research results suggest that between 40% and 50% of people who start a
business got their idea via a social contact.
• Strong-Tie Vs. Weak-Tie Relationships
• All of us have relationships with other people that are called “ties.” (See next
slide.)
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Social Networks (2 of 3)
• Nature of Strong-Tie Vs. Weak-Tie Relationships
• Strong-tie relationships are characterized by frequent interaction and form
between coworkers, friends, and spouses.
• Weak-tie relationships are characterized by infrequent interaction and
form between casual acquaintances.
• Result
• It is more likely that an entrepreneur will get new business ideas through
weak-tie rather than strong-tie relationships. (See next slide.)
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Social Networks (3 of 3)
Why weak-tie relationships lead to more new business ideas than
strong-tie relationships
Strong-Tie Relationships Weak-Tie Relationships
These relationships, which These relationships, which form
typically form between like- between casual acquaintances,
minded individuals, tend to are not as apt to be between like-
reinforce insights and ideas that minded individuals, so one person
people already have. may say something to another
that sparks a completely new
idea.
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Creativity (1 of 2)
• Creativity
• Creativity is the process of generating a novel or useful idea.
• Opportunity recognition may be, at least in part, a creative
process.
• For an individual, the creative process can be broken down into
five stages, as shown on the next slide.
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Creativity (2 of 2)
Figure 2.4 Five Steps to Generating Creative Ideas
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Full View of the Opportunity Recognition
Process
Depicts the connection between an awareness of emerging trends and the personal
characteristics of the entrepreneur
Figure 2.5 The Opportunity Recognition Process
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Techniques for Generating Ideas
• Brainstorming
• Focus Groups
• Library and Internet Research
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Brainstorming
• Brainstorming
• Is the process of generating several ideas about a specific topic.
• A brainstorming “session” typically involves a group of people, and
should be targeted to a specific topic.
Rules for a brainstorming session:
• No criticism.
• Freewheeling is encouraged.
• The session should move quickly.
• Leap-frogging is encouraged.
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Focus Groups
• Focus Group
• Focus groups involve a group of people who are familiar with a
topic, are brought together to respond to questions, and who
are able to shed light on an issue through the give-and-take
nature of group discussions.
• They work best as a follow-up to brainstorming, when the
general idea for a business has been formulated but further
refinement of the idea is needed.
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Library and Internet Research (1 of 3)
• Library Research
• Libraries are an often underutilized source of information for
generating new business ideas.
• The best approach is to talk to a reference librarian, who can point
out useful resources, such as industry-specific magazines, trade
journals, and industry reports.
• Simply browsing through several issues of a trade journal or an
industry report on a topic can spark new ideas.
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Library and Internet Research (2 of 3)
Large public and university libraries typically have access to search engines and
industry reports that would cost thousands of dollars to access on your own.
Examples of Useful Search Engines and Industry Reports
•BizMiner
•ProQuest
•IBISWorld
•Mintel
•LexisNexis Academic
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Library and Internet Research (3 of 3)
• Internet Research
• If you are starting from scratch, simply typing “new business ideas”
into a search engine will produce links to newspaper and magazine
articles about the “hottest” and “latest” new business ideas.
• If you have a specific topic in mind, setting up Google mail alerts will
provide you with links to a constant stream of newspaper articles,
blog posts, and news releases about the topic.
• Targeted searches are also useful.
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Other Techniques
• Customer Advisory Boards
• Some companies set up customer advisory boards that meet regularly to
discuss needs, wants, and problems that may lead to new ideas.
• Day-In-The-Life Research
• A type of anthropological research, where the employees of a company
spend a day with a customer.
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Thank you!
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