What is common among these?

JoMei Chang, Vitria Technology

Dan Lauer, Haystack Toys
Gino Tsai, JD Corp.
David G. Neeleman, JetBlue Airways
Sunil B. Mittal, Bharti Telecom
Gururaj Desphande and Daniel E. Smith,
Sycamore Networks
 Inventing and reinventing organizations
• Entrepreneurship: is the ability to take the factors of
production – land, labour, capital and use them to produce
new goods or services.
• The entrepreneur perceives opportunities that other
business executives do not see or do not care about
• Entrepreneurship versus Management
• Entrepreneurship involves initiating changes in production,
whereas management involves the ongoing coordination of
the production process.
• Entrepreneurship is a discontinuous phenomenon,
appearing to initiate changes in the production process …
and disappearing until it reappears to initiate another
change.
• Entrepreneur see change as the norm and as healthy
• Entrepreneurs always searches for change, respond to it
and exploit it as an opportunity.
 Benefits of Entrepreneurship
Economic growth:
Small new firms provide more new jobs in the economy
But only firms which grow rapidly provide jobs
Jobs are created in the service sector more than manufacturing sector

Productivity:
Less productivity is the most fundamental problems of almost all the economies
Productivity increases by improving the production techniques.
Two keys to higher productivity:
Research and development
Investment in new plant and machinery
New technologies, products and services:
Most of the small inventors are those who worked with the companies that refused to
accept innovations
Sometimes one entrepreneurial innovation gives rise to many others – invention in
one field may be used in others

Marketplace change:
Entrepreneurs stir up competition
Nirma
3M
 Characteristics of an Entrepreneur
• Psychological factors
• Entrepreneurs are complex and no one theory can explain all of
their behaviour
• First theory: McClelland’s need hierarchy theory
• He found that certain societies tended to produce a larger
percentage of people with high need achievement
• Five factors that distinguished entrepreneurs and people who
manage existing small firms:
– Need achievement
– Local of control
– Tolerance for risk
– Tolerance for ambiguity
– Type A behaviour
Difference between entrepreneurs and managers

Entrepreneurs value self-respect, freedom, a

sense of accomplishment and exciting life
style
Managers tend to value true friendship,
wisdom, salvation and pleasure.

Entrepreneurs need:
Self confidence, drive, optimism and courage to launch and
operate a business, without the safety of a steady paycheck

SOCIOLOGICAL FACTORS
Many socially neglected classes have turned to entrepreneurs
They are finding their own ways to doing things
Eg: African Americans
Women
 Barriers to Entrepreneurship
• Lack of viable concept
• Lack of market knowledge
• Hard to attract people with enough information (they are
complacent to change the current jobs)
• Lack of initial capital
• Lack of general business know how
• Social stigma
• Time pressures, distractions
• Legal constraints, regulation, red tapism
• Protectionism, monopoly
• Patent inhibitions
 Reinventing organizations
• Much of research is being done about what happens once the
organizations are settled and the processes are set
• Organizations tend to become complacent and do not remain creative
• Single and double loop learning
• Intrapreneurship
• In todays fast paced economy many organizations have grown larger
and lost their ability to be innovative and flexible
• Intrapreneurship is the practice of beginning and developing new
business ventures within the structure of an existing organizations
• Eg. Merck, 3M, Johnson & Johnson, General Electric