Description
This file related to introduction to entrepreneurship and new venture creation.
Masters in Engineering and
Management of Technology
Masters in engineering
Design
Introduction to Entrepreneurship
and New Venture Creation
Rui Baptista
Preliminaries
Introductions
Course Objectives and Content
Class Schedules and Readings
Deliverables and Student Evaluation
Student Projects
The
Entrepreneurial
Revolution
and the
Entrepreneurship
Process
Entrepreneurship in
America
Research findings by the U.S. Small
Business Administration
Small businesses represent 99
percent of all employers
Small businesses provide about 75
percent of all new net jobs
Mega-Entrepreneurs Who
Started in Their 20s
Microsoft—Bill Gates and Paul Allen
Dell Computers—Michael Dell
Apple Computers—Steve J obs
and Steve Wozniak
Federal Express—Fred Smith
Amazon—Jeff Bezos
Nike—Phil Knight
New Industries Launched
by the E-Generation
Personal computers
PC software
Biotechnology
Wireless communications/handheld devices
Healthy living products
Cellular phone services
CD-ROM
Internet publishing
Internet shopping
Virtual imaging
Innovation Since
World War II
Small entrepreneurial firms
Responsible for half of all
innovation
Credited with 95 percent of all
radical innovation
Entrepreneurship and
Economic Growth
Global Entrepreneurship Monitor 2000 Report
High level of entrepreneurial activity equals above
average economic growth
•Top three of twenty-one countries surveyed
•Brazil
•Korea
•United States
Portugal: far below world average in
entrepreneurial activity
Entrepreneurship – a way of
thinking, reasoning (Timmons)
The heart of the process is the creation and/or
recognition of opportunities
It requires the willingness to take calculated
risks
Entrepreneurship can occur, of fail to occur, in
firms that are old and new, small and large
Entrepreneurship involves continued renewal
The classic expression of entrepreneurship is
the raw start-up company
Classic Entrepreneurship:
The Startup
Startup company—an innovative idea that
develops into a high growth company
Qualities of a startup company
•Strong leadership from the main entrepreneur
•Complementary talents and outstanding
team work of team members
•Skill and ingenuity to find and control
resources
•Financial backing to pursue opportunity
The Entrepreneurial
Process
It is opportunity driven
It is driven by a lead entrepreneur
and an entrepreneurial team
It is resource parsimonious and creative
It depends on the fit and balance
among resources and needs
It is integrated and holistic
Commonly Shared Characteristics
of Successful Entrepreneurs—The
‘Behaviorist’ Approach
They seek out new opportunities, looking for the chance to profit
from change and disruption in the way business is done
They pursue opportunities with discipline and perseverance
They pursue only the very best opportunities and avoid
exhausting themselves and their organizations by chasing after
every option
They focus on execution—specifically, adaptive execution
They are able to engage the energies of everyone in the company
Entrepreneurship is neither confined to certain types of
individuals nor organizations—it is easier to find in smaller and
younger enterprises because the conditions favoring its
development are more likely to be present
Administrator/Trustee vs.
Entrepreneur/Promoter
(Stevenson&Gumpert)
Opportunity search and
recognition
Rapid commitment to pursuit
of opportunity
Structure Change:
organizational: adaptable,
co-ordinated
Market: rapid growth and
change
Acceptance of controlled
risk
Resources:
Limited control
Gradual, efficient use
Control/ownership of
maximum resources
Structure stability:
Organizational: hierarchy
Market:
maturity/concentration
Risk minimization
Opportunities: evolutionary
commitment, strategic
consensus
Disadvantages of Large
Corporations (Christensen)
Characteristics of giant corporations in the face of
radical innovation
Hierarchical in structure
Leadership as managing and administering from the top down
Rewards/incentives for “the largest” (assets, budgets, etc.)
Cause of downfall
Slow to change archaic strategy
Slow to change outdated culture
Slow to recognize and incorporate entrepreneurship,
entrepreneurial leadership, and entrepreneurial reasoning
Increasingly Fast Emergence
of New Technology
Time for new technologies to reach 25% of the
U.S. Population
Household electricity (1873)—46 years
Telephone (1875)—35 years
Automobile (1885)—55 years
Radio (1906)—22 years
Television (1925)—26 years
Videocassette recorder (1952)—34 years
Personal computer (1975)—15 years
Cellular phone—13 years
World Wide Web—7 years
The Timmons Model of the
Entrepreneurial Process
Communication
Opportunity
(2)
Resources
(4)
Business Plan
Fits and gaps
Ambiguity Exogenous forces
Team
(3)
Creativity Leadership
Uncertainty Capital market context
Founder (1)
Timmons Model: The Driving
Forces
Opportunity
Resources
Team
Context
Timmons Model Interpreted
The process starts with opportunity, not strategy, resources
or planning
Opportunity recognition results from creativity, which is
shared by the entrepreneur and the entrepreneurial team;
Creativity results from collision between academic learning
and real world practice
Value Creation results from integration of opportunity and
efficient use of resources
Combination of people, opportunity and resources coming
together at a particular time may determine the chance for
success
Entrepreneurial Traits
Minimize and control vs. maximize and own
Creativity—opportunity recognition and generation
Unique/not easily imitated (technological?) assets
Knowledge of the market and competition
People (entrepreneurial team) and motivation skills
Financial resources (identify needs)
Business plan
Implementation and management skills
Ability to devise a growth/exit strategy
A Descriptive Model of The
Entrepreneurial Process
Entrepreneurial Interest
Generate Business Ideas—Opportunity Identification
Opportunity Evaluation/Assessment
Develop and Refine the Concept
Determine the Resources Required
Acquire the Necessary Financing/Partners
Develop the Business Plan
Implement and Manage
Harvest the Venture—Growth/Exit Strategy
The Entrepreneurial Process I
What are my interests?
What am I passionate about?
What am I good at?
Do I want to be an entrepreneur?
Searching processes and methods
Unique assets and knowledge
Past business experience
Establish goals for the business
Preliminary resource needs
Entrepreneurial Interest
Generate Business
Ideas/Opportunity
Identification
The Entrepreneurial Process II
Changing Demographics
Size/Growth of Market; or
Emergence of New Market
New Technologies: products/processes
Regulatory Change
Social Change
Competitive advantages: potential for
value creation
Define Products/Services, Processes
Target Customers
Define Competition
New Organizational Structures/Forms
Sales or Distribution Channels
Start Developing the Business Plan
Venture Screening:
Business/Opportunity
Assessment
Develop and Refine the
Concept
The Entrepreneurial Process III
Marketing and Sales Expertise
Technical Expertise
Financing Needs
Distribution Channels
Sources of Supply
Licenses, Patents, & Legal Protection
Debt Supplier Financing
Equity J oint Ventures
Outsourcing Partnerships
Leasing Barter
Determine the Required
Resources
Acquire the Necessary
Financing/Partners
The Entrepreneurial Process IV
Detailed Concept/Opportunity
Description
Detailed Operating Plan
Detailed Marketing Plan
Detailed Financial Plan
Management Team Agreement
Implementation of Plan
Monitor Performance
Payback to Resources Providers
Reinvestment/Expansion
Achievement of Performance Goals
Licensing of Rights Sell or Merge
Go Public – IPO Shut Down
Developing the Business
Plan
Implement and Manage
Growth/Exit
Opportunity Recognition:
Innovation and New Venture
Strategies
New Products
Old Products
Tinkering at the
margins – market
niches
New geographical
markets or new
users
New product
variants, features,
services
Significant
innovation, new
product and market
Old
Markets
New
Markets
Entrepreneurship and
Innovation
Schumpeterian view: entrepreneur translates new
scientific knowledge into new products/markets
and/or processes in order to gain monopoly power
Drucker’s view: innovation is a specific function
of entrepreneurship—it is the means by which the
entrepreneur either creates new wealth-producing
resources or endows existing resources with
enhanced potential for creating wealth
Sources of Innovation/
Entrepreneurship (Drucker)
Internal:
Unexpected occurrences
Incongruities
Process needs
Industry and market changes
External:
Demographic Changes
Changes in Perception
New Knowledge
Sources of Innovation/New
Business Ideas
Existing
Products and
Geographical
Markets
Individual Creativity
and Brainstorming
Customers
and Suppliers
R&D and External
Technological Developments
Generation of
Business Opportunities
Market-Pull Innovations
(Von Hippel)
Oriented primarily towards satisfying the
needs of a specific market
Tend to occur when customers are
technologically sophisticated
Occurs more frequently with older
technologies
Are mostly incremental innovations where an
established market bases its perceptions of
opportunity on known technologies
Technology-Push Innovations
Oriented primarily towards increased technical
performance
Require that scientists and engineers have direct
experience with users in order to apply new
technology successfully
Technical information lies mostly with the
innovators, while users tend to be relatively
unsophisticated
Are often the major source of radical changes in
market and organizational structures
doc_919000003.pdf
This file related to introduction to entrepreneurship and new venture creation.
Masters in Engineering and
Management of Technology
Masters in engineering
Design
Introduction to Entrepreneurship
and New Venture Creation
Rui Baptista
Preliminaries
Introductions
Course Objectives and Content
Class Schedules and Readings
Deliverables and Student Evaluation
Student Projects
The
Entrepreneurial
Revolution
and the
Entrepreneurship
Process
Entrepreneurship in
America
Research findings by the U.S. Small
Business Administration
Small businesses represent 99
percent of all employers
Small businesses provide about 75
percent of all new net jobs
Mega-Entrepreneurs Who
Started in Their 20s
Microsoft—Bill Gates and Paul Allen
Dell Computers—Michael Dell
Apple Computers—Steve J obs
and Steve Wozniak
Federal Express—Fred Smith
Amazon—Jeff Bezos
Nike—Phil Knight
New Industries Launched
by the E-Generation
Personal computers
PC software
Biotechnology
Wireless communications/handheld devices
Healthy living products
Cellular phone services
CD-ROM
Internet publishing
Internet shopping
Virtual imaging
Innovation Since
World War II
Small entrepreneurial firms
Responsible for half of all
innovation
Credited with 95 percent of all
radical innovation
Entrepreneurship and
Economic Growth
Global Entrepreneurship Monitor 2000 Report
High level of entrepreneurial activity equals above
average economic growth
•Top three of twenty-one countries surveyed
•Brazil
•Korea
•United States
Portugal: far below world average in
entrepreneurial activity
Entrepreneurship – a way of
thinking, reasoning (Timmons)
The heart of the process is the creation and/or
recognition of opportunities
It requires the willingness to take calculated
risks
Entrepreneurship can occur, of fail to occur, in
firms that are old and new, small and large
Entrepreneurship involves continued renewal
The classic expression of entrepreneurship is
the raw start-up company
Classic Entrepreneurship:
The Startup
Startup company—an innovative idea that
develops into a high growth company
Qualities of a startup company
•Strong leadership from the main entrepreneur
•Complementary talents and outstanding
team work of team members
•Skill and ingenuity to find and control
resources
•Financial backing to pursue opportunity
The Entrepreneurial
Process
It is opportunity driven
It is driven by a lead entrepreneur
and an entrepreneurial team
It is resource parsimonious and creative
It depends on the fit and balance
among resources and needs
It is integrated and holistic
Commonly Shared Characteristics
of Successful Entrepreneurs—The
‘Behaviorist’ Approach
They seek out new opportunities, looking for the chance to profit
from change and disruption in the way business is done
They pursue opportunities with discipline and perseverance
They pursue only the very best opportunities and avoid
exhausting themselves and their organizations by chasing after
every option
They focus on execution—specifically, adaptive execution
They are able to engage the energies of everyone in the company
Entrepreneurship is neither confined to certain types of
individuals nor organizations—it is easier to find in smaller and
younger enterprises because the conditions favoring its
development are more likely to be present
Administrator/Trustee vs.
Entrepreneur/Promoter
(Stevenson&Gumpert)
Opportunity search and
recognition
Rapid commitment to pursuit
of opportunity
Structure Change:
organizational: adaptable,
co-ordinated
Market: rapid growth and
change
Acceptance of controlled
risk
Resources:
Limited control
Gradual, efficient use
Control/ownership of
maximum resources
Structure stability:
Organizational: hierarchy
Market:
maturity/concentration
Risk minimization
Opportunities: evolutionary
commitment, strategic
consensus
Disadvantages of Large
Corporations (Christensen)
Characteristics of giant corporations in the face of
radical innovation
Hierarchical in structure
Leadership as managing and administering from the top down
Rewards/incentives for “the largest” (assets, budgets, etc.)
Cause of downfall
Slow to change archaic strategy
Slow to change outdated culture
Slow to recognize and incorporate entrepreneurship,
entrepreneurial leadership, and entrepreneurial reasoning
Increasingly Fast Emergence
of New Technology
Time for new technologies to reach 25% of the
U.S. Population
Household electricity (1873)—46 years
Telephone (1875)—35 years
Automobile (1885)—55 years
Radio (1906)—22 years
Television (1925)—26 years
Videocassette recorder (1952)—34 years
Personal computer (1975)—15 years
Cellular phone—13 years
World Wide Web—7 years
The Timmons Model of the
Entrepreneurial Process
Communication
Opportunity
(2)
Resources
(4)
Business Plan
Fits and gaps
Ambiguity Exogenous forces
Team
(3)
Creativity Leadership
Uncertainty Capital market context
Founder (1)
Timmons Model: The Driving
Forces
Opportunity
Resources
Team
Context
Timmons Model Interpreted
The process starts with opportunity, not strategy, resources
or planning
Opportunity recognition results from creativity, which is
shared by the entrepreneur and the entrepreneurial team;
Creativity results from collision between academic learning
and real world practice
Value Creation results from integration of opportunity and
efficient use of resources
Combination of people, opportunity and resources coming
together at a particular time may determine the chance for
success
Entrepreneurial Traits
Minimize and control vs. maximize and own
Creativity—opportunity recognition and generation
Unique/not easily imitated (technological?) assets
Knowledge of the market and competition
People (entrepreneurial team) and motivation skills
Financial resources (identify needs)
Business plan
Implementation and management skills
Ability to devise a growth/exit strategy
A Descriptive Model of The
Entrepreneurial Process
Entrepreneurial Interest
Generate Business Ideas—Opportunity Identification
Opportunity Evaluation/Assessment
Develop and Refine the Concept
Determine the Resources Required
Acquire the Necessary Financing/Partners
Develop the Business Plan
Implement and Manage
Harvest the Venture—Growth/Exit Strategy
The Entrepreneurial Process I
What are my interests?
What am I passionate about?
What am I good at?
Do I want to be an entrepreneur?
Searching processes and methods
Unique assets and knowledge
Past business experience
Establish goals for the business
Preliminary resource needs
Entrepreneurial Interest
Generate Business
Ideas/Opportunity
Identification
The Entrepreneurial Process II
Changing Demographics
Size/Growth of Market; or
Emergence of New Market
New Technologies: products/processes
Regulatory Change
Social Change
Competitive advantages: potential for
value creation
Define Products/Services, Processes
Target Customers
Define Competition
New Organizational Structures/Forms
Sales or Distribution Channels
Start Developing the Business Plan
Venture Screening:
Business/Opportunity
Assessment
Develop and Refine the
Concept
The Entrepreneurial Process III
Marketing and Sales Expertise
Technical Expertise
Financing Needs
Distribution Channels
Sources of Supply
Licenses, Patents, & Legal Protection
Debt Supplier Financing
Equity J oint Ventures
Outsourcing Partnerships
Leasing Barter
Determine the Required
Resources
Acquire the Necessary
Financing/Partners
The Entrepreneurial Process IV
Detailed Concept/Opportunity
Description
Detailed Operating Plan
Detailed Marketing Plan
Detailed Financial Plan
Management Team Agreement
Implementation of Plan
Monitor Performance
Payback to Resources Providers
Reinvestment/Expansion
Achievement of Performance Goals
Licensing of Rights Sell or Merge
Go Public – IPO Shut Down
Developing the Business
Plan
Implement and Manage
Growth/Exit
Opportunity Recognition:
Innovation and New Venture
Strategies
New Products
Old Products
Tinkering at the
margins – market
niches
New geographical
markets or new
users
New product
variants, features,
services
Significant
innovation, new
product and market
Old
Markets
New
Markets
Entrepreneurship and
Innovation
Schumpeterian view: entrepreneur translates new
scientific knowledge into new products/markets
and/or processes in order to gain monopoly power
Drucker’s view: innovation is a specific function
of entrepreneurship—it is the means by which the
entrepreneur either creates new wealth-producing
resources or endows existing resources with
enhanced potential for creating wealth
Sources of Innovation/
Entrepreneurship (Drucker)
Internal:
Unexpected occurrences
Incongruities
Process needs
Industry and market changes
External:
Demographic Changes
Changes in Perception
New Knowledge
Sources of Innovation/New
Business Ideas
Existing
Products and
Geographical
Markets
Individual Creativity
and Brainstorming
Customers
and Suppliers
R&D and External
Technological Developments
Generation of
Business Opportunities
Market-Pull Innovations
(Von Hippel)
Oriented primarily towards satisfying the
needs of a specific market
Tend to occur when customers are
technologically sophisticated
Occurs more frequently with older
technologies
Are mostly incremental innovations where an
established market bases its perceptions of
opportunity on known technologies
Technology-Push Innovations
Oriented primarily towards increased technical
performance
Require that scientists and engineers have direct
experience with users in order to apply new
technology successfully
Technical information lies mostly with the
innovators, while users tend to be relatively
unsophisticated
Are often the major source of radical changes in
market and organizational structures
doc_919000003.pdf