solvay summer school 2010 - part 1: the entrepreneurial process
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Solvay European Summer School 2010
ENTREPRENEURSHIPIntroduction: The Entrepreneurial Process
Olivier WitmeurBernheim Chair of Entrepreneurship
DESIRED OUTCOMES OF AN ENTREPRENEURSHIP COURSE
• Understand why entrepreneurship matters and is relevant to most of us.• Introduce key-concepts and best practices in various entrepreneurial
settings.• Develop (your) entrepreneurial mindset … and/or take one step back
• More open questions than definitive answers!• Have fun
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DESIRED OUTCOMES OF THIS SESSION
• What is entrepreneurship• What are the key elements in entrepreneurship
– Who is an entrepreneur• From idea to success: The entrepreneurial process
AGENDA
• 09.00-09.15 Introduction• 09.15-10.30 Case discussion: ‘John Roughneen’
• 11.00-11.30 Lecture: ‘The Entrepreneur’• 11.30-12.00 Video: Rules for revolutionaries• 12.00-12.30 Lecture: ‘Defining Entrepreneurship’
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HOW MANY SQUARES DO YOU SEE ?
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SUCCESSFULL START-UP : A CHALLENGE
Companiescreated
Year 1 Year2 to 3
Year4 to 10
Stilloperate
after10 years
100%
-35%-15%
-15%35%
0
20
40
60
80
100%
US and Europe average
JOHN ROUGHNEENCASE DISCUSSION
INITIAL QUESTIONSBe ready for a 5 minutes presentation
• Group A– Do you think that John may be a good entrepreneur?– What are is strengths and weaknesses?
• Group B• What are the main issues ate this stage?• How would you address them? What should John & Glen do next?
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About (the) entrepreneur(s)
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MOTIVATIONS OF ENTREPRENEURS
• Typical answers cover:– Feeling of freedom– Ability to innovate– Personal fulfillment linked to the management of a business– Rejection of the employee status– Rejection of big institutions – Money … in case of success– Social recognition
DIFFERENT VIEWS ON THE ENTREPRENEUR
• As a revolutionaire Entrepreneurial leadership• As a manager Entrepreneurial management• As a salesman• As a team player
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THE ENTREPRENEUR AS A REVOLUTIONNARY
• Anticipate change and deal with uncertainty• Willing to take considered risk and trying to reduce it.• Start without having all resources available• Mobilize all resources available / Use of inter-personal network
– Financial commitment!• Ready to get hands dirty• Blurred frontiers between business and private life• Not afraid to be alone and to be criticized even by family and friends
‘ENTREPRENEURIAL LEADERSHIP’
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ENTREPRENEURIALLEADERSHIP
SKILLS
Visionary
Team playerMotivate
CommunicationInfluence
Firm but FairBuild Confidence& Trust
Manage change
Deal with ambiguity
Flexible but Consistent
THE ENTREPRENEUR AS A MANAGER
• Work hard– Time commitment !!!
• Specific skills gained from experience• Realism, pragmatism, flexibility• Accept failure• Share success
• General management skills:– Strategy– Sales & Marketing– Project management and planning– Time management– Finances
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THE ENTREPRENEUR AS A SALESMAN
• Sales is absolutely essential– To customers– To the first employee– To the business partners– To the financial partners
• Customer-oriented culture is a key success factor:– Start with customer’s needs
• Their needs, their vision, their situation, their constraints, their processes, their goals, …
– Match product/service and internal sales process to those needs– Create close relationship (intimacy!) with customers
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THE ENTREPRENEUR AS A TEAMPLAYER
• Complementarities and balance– The dream team = CEO + CTO + CFO
• Shared vision • Clear job distribution and collaboration processes• Performance driven, fault-tolerant• No family links
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THE DARK SIDE OF ENTREPRENEURS
– Obsession of control– Suspicion, paranoia, …– Oversized need for recognition– Not always calm especially when things go wrong– Genius or fool? They act the same!
TWO EXTREME ENTREPRENEURIAL STYLES ?
• Lifestyle entrepreneurs– Self employed– Balance lifestyle and business success– 100 % ownership minded– Do not seek growth as such
• Serial entrepreneurs– Focus on opportunity harnessing– Not control minded … prefer to use all available resources to grow as
much as possible– Start, exit & cash-in and do it again with a new project
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VIDEO
10 RULES FOR REVOLUTIONARIES(Guy Kawasaki)
1. Jump to the next curve2. Don’t worry, be crappy3. Churn, Baby, churn4. Break down barriers5. Make Evangelists, not sales6. Avoid death magnets7. Eat like a bird, poop like an elephant8. Think digital, act analog9. Don’t ask people to something that you wouldn’t10. Don’t let “bozosity” grind you down
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The Entrepreneurial Process
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DESIRED OUTCOMES OF THIS SESSION
• Challenge the logic of classical strategic thinking• Introduce the logic of ‘Effectuation’ as a way ‘entrepreneurs’ make
decision (different than traditional ‘managers’)
THE ENTREPRENEURIAL FRAMEWORK
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ENTREPRENEUR
OPPORTUNITY
RESOURCES
Conviction
Creativity
Communication
CONTEXT
Adaptation
Fits & Gaps
ENTREPRENEURSHIP AS A PROCESS
• Individual variables: skill, profile, motivations…• Group-level variables: reactions from customers, investors, potential
employees…• Societal-level variables: governmental policies, economic conditions…
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Idea /Opportunityrecognition
Decisionto proceed
Analysingthe project
Assemblingresources:team, € …
Launch
Build /Grow
Harvest/Exit
CLASSICAL LIFECYCLE
0%
25%
50%
75%
100%
1 2 3 4 5 6 7 8 9 10 11 12 13
Seed Start-up ExpansionEarly development Maturity Renewal
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EXAMPLES OF BUSINESS ISSUES EVOLUTION Seed Start-up Early growth
Team The founders. Most of the time the team is not balanced.
Sales and techniques are in place. Finance may be outsourced.
Every aspect is managed by a full time manager.
Product Prototype geared to the main market needs.
First version validated by customers.
Ready for large scale distribution.
Market research First comprehensive ongoing market research.
Good knowledge of a first market niche.
In depth knowledge of the customers and next market segments identified.
Organization Purely informal Better role definition Dedicated management team and experienced boards.
Customers relations Informal with innovators. Organized relationship with the first customers.
Sales & Marketing processes ready to manage large numbers of customers.
Financial needs PrototypingMarket researchBusiness planning
Scaling upSales & marketing
Working capitalManagement
A DEFINITION OF ENTREPRENEURSHIP
– A way of thinking and acting that is opportunity obsessed, holistic in approach & leadership balanced…
• Thinking and acting• Central role of the opportunity• Take all aspects into consideration• Need to be managed
– … for the purpose of value creation• Value = value for the stakeholders
– Founders, team, investors, customers, society, …
(J. Timmons)
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OTHER DEFINITIONS
• The entrepreneurial process involves all the function, activities and actions associated with the perceiving of opportunities and the creation of organizations to pursue them(Bygrave & Hofer)
• The pursuit of opportunity beyond the resources you currently control.(HBS working definition, Stevenson)
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DEGREE OF ENTREPRENEURSHIP ?
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Cha
nge
New to founders
High techstart-ups
FranchiseeShops
Take-overBuy Out
CorporateSpin-offs
Innovation
Lawyers,Doctors,
….
Adapted from Christian Bruyat, 1993
Value creation
DYNAMIC APPROACH OF ENTREPRENEURSHIP
OPPORTUNITY TEAM
RESOURCES
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Q&A
olivier.witmeur@ulb.ac.bewww.olivier-witmeur.net
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