Unit 1: Entrepreneur and Entrepreneurship

Definitions & Concepts

A good entrepreneur is one who is capable of inspiring confidence in people, has the capability to motivate them to work with him/her in fulfilling the economic goals set by him/her Entrepreneur is a French word, is derived from the word Entreprendre It means to undertake the person who undertakes the risk of new enterprise Richard Cantilon has coined the word a person who buys factory services at certain prices with a view of selling its products at uncertain prices ==> Bearer of risk

 The rate of growth in an economy depends to a great extent on the activities of entrepreneurs Joseph A. Schumpeter defines the entrepreneur in an advanced economy is
an individual who introduces something new in the economy. His function is to reform/ revolutionize the pattern of production by exploiting an invention or an untried technological possibility for producing a new commodity

The process of development is a deliberate and continuous phenomenon which is actively promoted by a change agent who provides economic leadership

 Adam Smith, Father of Economics

Did not use the word, Entrepreneur Instead used employer, merchant, undertaker, master

F.H. Knight:
Wrote an article Risk, Uncertainty, and Profit Entrepreneur are a specialized group of people who bears risk and deal with uncertainty

 Four Key elements of an Entrepreneur:

Innovation Risk taking Vision Organizing Skill

Traits and Characteristics

Imagination/Vision Old problems, new ways of thinking Always questioning Strong positive attitude Willingness to try new things--and fail great decision maker
the Q-CAT System:
Q = Quick. C = Committed A = Analytical T = Thoughtful.

Traits and Characteristics

Entrepreneurs need a keen eye to understand economic, social, and scientific realities and the capacity to understand evolutionary processes in the future. They need to understand how institutions work, and individuals react in order to introduce activities and products that serve peoples need and that are sustainable economically and politically. Entrepreneurs also need dedication and commitments and the capacity to overcome failure.

Entrepreneur Scan
Knowledge
Knowledge and Experience

Wanting
Motivation

Capabilities

Characteristics

Capable of

Being

 Knowledge
Market Environment People Production Finances

 Motivation Internally driven autonomy achievement power --Externally driven Unemployment Gap in the market Interest in subject Certainty of clients

 Capabilities (depends upon Company life cycle)

Early phase Market orientation Creativity Flexibility

Mature phase Manage Motivate Organize plan Financial and administration

 Characteristics
Achievement Autonomy Power Affiliation Effectiveness Endurance Taking risks

Thinking Styles
Pioneer Salesperson Manager Expert

Innovation
Build a better mousetrap, and the world will beat a path to your door --- Ralph Waldo Emerson

Innovation
An innovation starts as a concept that is refined and developed before application. Innovations may be inspired by reality. The innovation process, which leads to useful technology, requires: Research Development (up-scaling, testing) Production Marketing Use Experience with a product results in feedback and leads to improved innovations.

Innovation
Innovations respond to need and economic conditions. Inventors, investors, and researchers put effort into solving burning problems, and that leads to innovations. Labor shortages led to mechanized equipment. Drought conditions led to improved irrigation. Energy crises led to higher efficiency cars. Farmers cooperatives were established during periods of excessive low farm prices. Environmental regulations trigger cleaner technologies. A tax on carbon will lead to improved stoves and power plants, and hopefully better cars!!

Invention vs. Innovation

Invention is the creation of new products or processes through the development of new knowledge or from new combinations of existing knowledge Innovation is the initial commercialization of invention by producing and selling a new product, service, or process Product innovation Service innovation Process innovation

Incremental Innovation
Incremental innovation refers to simple changes or adjustments in existing products, services, or processes

Continuous improvement, what in Japanese is called kaizen, is the process of relentlessly trying to find ways to improve and enhance a companys products and processes from design through assembly, sales, and service

 Six Sigma is a rigorous and analytical approach to quality and continuous improvement with an objective to improve profits through defect reduction, yield improvement, improved consumer satisfaction, and best-in-class performance

10 Essential Elements that Lead to Incremental Innovation

1. 2. 3. 4. 5. 6. 7. 8. 9. 10. Define quality and customer value Develop a customer orientation Focus on the companys business processes Develop customer and supplier partnerships Take a preventive approach Adopt an error-free attitude Get the facts first Encourage every manager and employee to participate Create an atmosphere of total involvement Strive for continuous improvement

Breakthrough Innovation
A breakthrough innovation is an innovation in a product, process, technology, or the cost associated with it that represents a quantum leap forward in one or more of those ways Breakthrough approaches to innovation are inherently more risky than incremental innovation approaches

Innovation and Entrepreneurship

Innovations are new ways to achieve tasks. Types of innovations include: Mechanicaltractors, cars. Chemicalpesticides. Biologicalseed varieties. Managerial extra pay for work, overtime. Institutionalwater users association, patents, banks, stock market.

Fostering Innovative Entrepreneurship

Three Approaches: Internal Corporate Venturing Cooperating to Produce Innovation Acquiring innovative Capability

Internal Corporate Venturing

Corporate Entrepreneurship can occur as either a bottom-up process or as a top-down process Autonomous strategic behavior is a bottom-up process through which Product Champions pursue new product ideas to commercialization Product Champions are individuals who have an entrepreneurial vision for a new product and seek support for its commercialization

Internal Corporate Venturing

Induced strategic behavior is a top-down process in which the current strategy and structure foster product innovations that are closely associated with the current strategy Requires a decision on which corporate resources to deploy for new technology development and which innovative ideas to bring to market

Cooperating to Produce Innovation

Strategic alliances can help to foster innovation by combining the knowledge and resources of two or more partners Firms must focus on building knowledge, identifying core competencies and developing strong human resources to manage these projects Firms can also give away their core competencies by outsourcing to alliance partners rather than developing their own capabilities over time

Acquiring Innovative Capability

Many firms now use acquisitions of other firms as a substitute for developing innovations internally This can reduce risk and lower costly R&D investments The drawback is that firms can eventually lose their ability to generate innovations internally

Importance of Entrepreneurship
Providing leadership for the industrial development Introducing innovative changes Increasing productivity Providing employment improving std of living Promoting regional and national growth Promotes import/export (trade)

 helps develop community leaders creates better ties between communities and broader business world by promoting
wealth generation job creation community building for existing inner-city small businesses and organizations interested in growth.

to facilitate access to new markets, capital, and knowledge

In short, entrepreneurs are engines of job creation because they are committed to growing as fast as the marketplace allows!

Intrapreneurship
Intrapreneurship is the use of entrepreneurial techniques within an corporation or organization which allow employees to become Intrapreneurs (or corporate entrepreneurs) within the firm. The employee/intrapreneur can use their creativity and innovative ideas to create for their employer new products, services or new entire divisions for the firm with the full backing of the firms resources.

 Exploit Your Companys Competitive Advantages Enlist Key Supporters at the Top Recruit Allies in Other Departments Look Beyond Quantifiable Metrics