the entrepreneurial mindset - edge.edx.org · be identified for each aspect of the entrepreneurial...

TIME Research Area | Innovation & Entrepreneurship Group (WIN)

School of Business and Economics

TIMEResearch Area | Innovation & Entrepreneurship Group (WIN)

The Entrepreneurial Mindset

Pitfalls


THE ENTREPRENEURIAL MINDSET

PITFALLS

IDEA

APPROACH

LEAN

START-UP

TEAM

GET YOURSELF

STARTED

Watch out for critical

obstacles of new

venture


KEEP THE “SURVIVORSHIP BIAS” IN MIND

What you see... ...and what you don't see!

“I am a successful

entrepreneur”

[1] [2]


CONSIDER VARIETY OF MANAGEMENT FUNCTIONS

Even though complexity of a start-up can never be fully captured, "typical" pitfalls can be identified for each aspect of the entrepreneurial mindset.

BUSINESS IDEA/

BUSINESS UNIT/

COMPANY

Legal

Finance

Marketing

Production/

Logistics

Organization

Innovation

Management

Controlling

Human

Resources


REFERENCES

[1] Huffingpost (2015). URL: http://www.huffingtonpost.jp/hikaru-adachi/full-growth-up_b_8193490.html. Access Date: 23.09.2016

[2] http://lawfirmocala.net/wp-content/uploads/2015/12/bankcruptcy.jpg Access Date: 26.09.2016

http://lawfirmocala.net/wp-content/uploads/2015/12/bankcruptcy.jpg





APPROACH


PITFALL: ENTREPRENEURIAL OVERCONFIDENCE

While self-efficacy is vital... ...overconfidence is detrimental!

Entrepreneurial self-efficacy

High perceived feasibility

Building of

entrepreneurial

intentions

Increased

likelihood of

success

Entrepreneurial overconfidence

Over-asses their abilities

Ignore

important

information

Increased

probability of

failure

[1,2]


PITFALL: NEED FOR EGO BOOST

WHY DO YOU WANT TO START A BUSINESS?

Show that I am

a smart person!

Do

something

great

Solve a

particular

problem

Bring new

technology

to the world

EGO GRATIFICATION [3]


PITFALL: EXAMPLE

“There is a difference between

determination and overconfidence. […]

entrepreneurship is hard, and you will face

risks or obstacles; that you have to tackle

these one at a time and take them down; […]

entrepreneurship is about identifying those

risks and nailing them down one at a time,

creatively finding your way around obstacles,

and bringing your customer-validated product

to market. […] overconfidence […] is about

being sure you are right to the point you

don’t listen and make mistakes that kill

you. Determined entrepreneurs really listen

and then find a way to solve the challenge.”

Nathan Furr, Forbes Contributor (2012) [4]


PITFALL: EXAMPLE

[8] [7]

Dominated corporate market

Failed anticipating that private

consumers drive smartphone

revolution

Overrun by emerge of “App Economy”

Did not realize that smartphones would

evolve as entertainment devices

Consumers preferred touchscreens

FAILURES


HONESTY

LEARNINGS & HOW TO MITIGATE

Learn from other founders that already failed

LEARNING

ENTREPRENEURIAL

PASSION

„The fire that fuels innovation, persistence & ultimate success” [9]

About own skills & what you bring to the table

Increases commitment

Increases motivation

Persevere obstacles

[10]


REFERENCES

[1] Salamouris, I. S. (2013). How overconfidence influences entrepreneurship. In: Journal of Innovation and Entrepreneurship.

[2] Latham, G. P., & Locke, E. A. (2006). Enhancing the benefits and overcoming the pitfalls of goal setting. In: Organizational dynamics, 35(4), 332-340.

[3] Kaplan, J. (2003). Five Biggest Mistakes That Entrepreneurs Make. URL: http://ecorner.stanford.edu/videos/364/Five-Biggest-Mistakes-That-Entrepreneurs-Make. Access Date: 23.09.2016

[4] Furr, N. (2012): Why Confident Entrepreneurs Fail: The Overconfidence Death Trap. URL: http://www.forbes.com/sites/nathanfurr/2012/11/13/why-confident-entrepreneurs-fail-the-overconfidence-death-trap/#785ea0ad1df2. Access Date: 23.09.2016

[5] Forbes (2013): Who wants to be a billionaire (Cover). URL: http://blogs-images.forbes.com/tomiogeron/files/2013/01/Forbes_cover012113.jpg. Access Date: 23.09.2016

[6] Forbes (2013): Retire like a Rockstar (Cover). URL: http://1hdlxe1oe0ll1eghud24le5v.wpengine.netdna-cdn.com/wp-content/uploads/2014/12/Forbes.jpg Access Date: 23.09.2016

[7] ©Mark Blinch

[8| Gustin, S. (2013): The Fatal Mistake That Doomed BlackBerry. URL: http://business.time.com/2013/09/24/the-fatal-mistake-that-doomed-blackberry/

http://ecorner.stanford.edu/videos/364/Five-Biggest-Mistakes-That-Entrepreneurs-Make













REFERENCES

[9] Cardon, M. S. & Glauser, M. (2011). Entrepreneurial Passion: Sources and Sustenance.

[10] Geragthy, S. (2013): The Influence of Entrepreneurial Passion on Success. URL: https://www.talkdesk.com/blog/the-influence-of-entrepreneurial-passion-on-success-2. Access Date: 23.09.2016


IDEA


CORRECT IDEA EVALUATION?

Problem? Customer? Willingness

to pay?


PERCEPTION

PITFALL I: REAL PROBLEM?

REALITY

Try to understand the others and to see the problem out of their perspective: Is there really a problem?

YOU THE OTHERS YOU THE OTHERS


PITFALL II: INADEQUATE CUSTOMER IDENTIFICATION

BUSINESS IDEA/

BUSINESS UNIT/

COMPANY

Similar solution,

same problem

Different solution, same problem

Perceived

competition

Actual competition

Is there really a customer for your solution? Does another solution exist already?

Considering a problem from different perspectives helps identifying customers!


PITFALL I: EXAMPLE

“Your idea should solve a real problem.

Will your service or product solve a problem

many people are facing? That idea you had

to make a cup holder on washing machines so

that people have a place to put their drink while

doing laundry -- is that even a thing? If your

great idea is a solution for an imagined

problem, you’ve just made a huge mistake in

entrepreneurship. Because if nobody has the

problem that you have the solution for,

nobody’s going to come looking for it.”

Andre Bourque, Entrepreneur Contributor

(2016) [1]

42% of failed startups do so because there is no market need! [2]


PITFALL I: EXAMPLE

“Nobody inherently needed a

Segway. Everyone was getting around

by foot, bicycle, motorcycle and car

just fine.”

Adam Hartung, Forbes Contributor

(2015) [5]

[4]


PITFALL II: EXAMPLE

“It's absolutely amazing how many potential

business owners include this statement […]:

"We have no competition."

If that's what you think, you couldn't be further

from the truth. Every successful business

has competitors, both direct and indirect.”

“Confidently believe that you have no real

competitors.

Usually, no competitors means no market --

or it means you haven’t looked.”

[7]

[6]



„REQUIREMENTS“ FOR CUSTOMER PROBLEMS

REAL FOCUSED

BIG DIFFICULT

OBVIOUS

COMPLETE

WORSENING

[8]

Be open to competition to asses your markets & customers in the right way:

Think about the problem you are trying to solve & how it is currently solved!

Approach people from

different backgrounds

Early feedback from

customers


REFERENCES

[1] Bourque, A. (2016). Does Your Business Idea Solve a Problem? Does It Fit You Personally? Ask Yourself These Questions Before Committing. URL: https://www.entrepreneur.com/article/269697. Access Date: 23.09.2016

[2] CB Insights (2014): The Top 20 Reasons Startups Fail. URL: https://www.cbinsights.com/blog/startup-failure-reasons-top. Access Date: 23.09.2016

[3] ©The Entrepreneur

[4] Heller, J. (2016). The Segway. URL: http://www.slcentral.com/agurusworld/26/page5.php. Access Date: 23.09.2016

[5] Hartung, A. (2015): The Reason Why Google Glass, Amazon Fire Phone and Segway All Failed. URL: http://www.forbes.com/sites/adamhartung/2015/02/12/the-reason-why-google-glass-amazon-firephone-and-segway-all-failed/2/#40eef1cd5a93. Access Date: 23.09.2016

[6] Zwilling, M. (2016): 10 Startup Mistakes You Can't Afford To Make Again. URL: https://www.entrepreneur.com/article/270860. Access Date: 23.09.2016

[7] Clark, A. (2016): Top 10 Business Plan Mistakes. URL: https://www.entrepreneur.com/article/81188. Access Date: 23.09.2016

[8] Startuprunner (2016). Customer Problems for Startups. URL: https://startuprunner.com/customer-problems/. Access Date: 23.09.2016


GET YOURSELF STARTED


PITFALL I: ANXIETY FOR MISTAKES

PLANNED LAUNCHED

Making mistakes allows to learn from them – a failed idea can even be useful!

[1]

Failure creates extraordinary change

Failure builds up tough skin

Failure keeps the go in check

Failure creates “aha” moments

It propels growth as an entrepreneur

!

You can try to anticipate & plan everything, but you will never know for sure until trying for real!


PITFALL II: NO CAPTURING OF LEARNINGS

BUSINESS IDEA/

BUSINESS UNIT/

COMPANY

Legal

Finance

Marketing

Production/

Logistics

Organization

Innovation

Management

Controlling

Human

Resources

DIMENSIONS OF MISTAKES BE AWARE OF THEM!

[1]

Try to make the best out of failure and capture your learning!

Call failure something else

Use failure as stepping stone

Never fail alone

Don’t hide your failures

Redefine what you want

!


PITFALL I & II: EXAMPLE

“Those who fail the most, learn the most.

When you fail, you learn what works and

what doesn’t.

Venture capitalists have been known to invest

in entrepreneurs that have undergone multiple

entrepreneurial failures. For some, an

entrepreneur who has never experienced

failure is untested and has not learned from

adversity.”

Chris W. Dunn, Founder & CEO of Skill

Incubator (2016) [4]


PITFALL I & II: EXAMPLE

“Traf-O-Data was a good idea with a flawed business

model. It hadn’t occurred to us to do any market research,

and we had no idea how hard it would be to get capital

commitments from municipalities. Between 1974 and

1980, Traf-O-Data totaled net losses of $3,494. We closed

shop shortly thereafter. Since then, I have made my share

of business mistakes, but Traf-O-Data remains my favorite

mistake because it confirmed to me that every failure

contains the seeds of your next success. This was the

essential step toward a personal computer that anyone

could use, and the keystone for the creation of Microsoft.“

Paul Allen, Co-founder of Microsoft (2011) [8]

[4]

[6, 7]



Go out as early as possible & make mistakes

Capture your learnings

Maintain positive attitude

Structure your approach but do not overplan

Failed ideas can teach you a lot

Read & listen to motivating material


REFERENCES

[1] Cutler, Z. (2014). Failure Is the Seed of Growth and Success. URL: https://www.entrepreneur.com/article/239360. Access Date: 23.09.2016

[2] Porter, J. (2013): How Failure Made These Entrepreneurs Millions. URL: https://www.entrepreneur.com/article/227011. Access Date: 23.09.2016


[4] Dunn, C. W. (2016): 8 Reasons Failure Makes You a Better Entrepreneur. URL: https://www.entrepreneur.com/article/279854. Access Date: 23.09.2016

[5] Courtesy of the Living Computer Museum (2013). Microsoft founders Bill Gates and Paul Allen recreate an iconic 1981 shot of the pair posing among vintage computers. URL: http://www.forbes.com/sites/clareoconnor/2013/04/04/bill-gates-and-paul-allen-reunite-and-recreate-classic-1981-microsoft-photo/#5ba876f45ad5. Access Date: 23.09.2016

[6] Vozza, S. (2014): 5 Famous Entrepreneurs Who Learned From Their First Spectacular Failure. URL: https://www.fastcompany.com/3026253/dialed/5-famous-entrepreneurs-who-learned-from-their-first-spectacular-failures. Access Date: 23.09.2016

[7] The Entrepreneur (2016): Bill Gates. URL: https://www.entrepreneur.com/article/197526. Access Date: 23.09.2016

[8] Allen, P. (2011): My favorite Mistake. URL: http://europe.newsweek.com/my-favorite-mistake-paul-allen-66489?rm=eu. Access Date: 23.09.2016


TEAM


PITFAL I: ONLY HIRING PEOPLE YOU LIKE

[1, 2]

...might not be

the ones you need...

Heterogeneous

Complementary skills

No problem with conflicts

New perspective

The people you like...

Irrelevant skill set

Similar perspective

Avoid conflict

...and lead to

problems! No innovative ideas

Less learning

Perform worse on

complex tasks

Less processing

Lack of diversification


PITFALL II: NO ACTIVE MANAGING OF CONFLICTS

No decision is reached and problem still

exists

Divert energy away from more value-

adding activities

Destroy morale of the team members

Polarize or divide team

BAD CONFLICTS

People change and grow personally

with each conflict

Result in a solution

Increase involvement of everyone

affected by the conflict

Create cohesiveness among the

members of the team

GOOD CONFLICTS

[3, 4, 5]


PITFALL I: EXAMPLE

“It may sound great to do business with your

friends, but remember, in the business world,

it's always business first and friendships

second. Also remember, most times when the

business ends, so does the friendship.”

Founder of Action COACH (2003) [5]


PITFALL II: EXAMPLE

“Feeling that he needed an experienced operating and

marketing partner, the then 29-year-old Jobs lured Sculley

to Apple with the now legendary pitch: ’Do you want to sell

sugared water for the rest of your life? Or do you want to

come with me and change the world?’ Sculley took the bait

and within two years, Sculley had organized a board

campaign to fire Jobs. Jobs himself would surely

consider hiring Sculley as a great mistake.”

Peter Sims (2013) [8]

[7]



[5]

Know what everyone brings to the table

Determine skills that are required to make your company successful

Develop a culture that promotes your company's values & vision

Disregard personal feelings or former collaboration when making a hiring decision


REFERENCES

[1] Kaplan, J. (2003): Five Biggest Mistakes That Entrepreneurs Make. URL: http://ecorner.stanford.edu/videos/364/Five-Biggest-Mistakes-That-Entrepreneurs-Make. Access Date: 23.09.2016

[2] Jones, L. (2016): Homogeneous Vs. Heterogeneous Teams. URL: http://www.ehow.com/info_8357494_homogeneous-vs-heterogeneous-teams.html. Access Date: 23.09.2016

[3] Philpps, C. (2016): Managing Team Conflict. URL: http://www.chumans.com/human-systems-resources/managing-team-conflict.html. Access Date: 23.09.2016

[4] Gentry, J. (2015): How to Avoid Startups' Biggest HR Pitfalls. URL: https://www.entrepreneur.com/article/245708. Access Date: 23.09.2016

[5] Sugars, B. (2008): Avoid These 7 Partnership Killers. URL: https://www.entrepreneur.com/article/196912. Access Date: 23.09.2016

[6] © The Entrepreneur

[7] Yohe, M. (2010): Steve Jobs. URL: http://www.namespedia.com/image/Jobbs_8.jpg. Access Date: 17.08.2016

[8] Sims, P. (2013): Five of Steve Jobs’s Biggest Mistakes. URL https://hbr.org/2013/01/five-of-steve-jobss-biggest-mi. Access Date: 23.09.2016

http://www.namespedia.com/image/Jobbs_8.jpg


LEAN START-UP


PITFALL I: FAILING TO BRING MVP TO MARKET

LAUNCH PREPARATION

Waiting to launch until a product is perfect...

...prevents you from gaining valuable insights!

LAUNCH Preparation

MVP Version 1

Preparation

final MVP

Peparation

MVP Version 2

Evaluation/

Testing

Evaluation/

Testing


PITFAL II: UNWILLINGNESS TO ADAPT ORIGINAL IDEA

0

50

100

150

200

250

2009 2010 2011 2012 2013 2014 2015

Blackberry

Apple Iphone

Mill

ion P

hones

sold

per

Year

BLACKBERRY

2009 2015

[1] [2]

[5,6]

APPLE IPHONE

2009 2015

[3] [4]


PITFALL I: EXAMPLE

“A minimum viable product is the least

amount of product or service you can bring

to market […]. Good judgment only comes

from experience, and experience typically

comes from bad judgment. The toughest

lessons to learn are usually the most costly in

terms of resources and capital.”

Jeff Boss, Entrepreneur Contributor (2014)

[7]


PITFALL II: EXAMPLE

“We spent $200M and we have not proven

out our business model. We spent $200M

and we have not proven that we know

precisely what our customers want to buy.

We are the most heavily funded startup in

NYC in our life cycle and we have spent 2/3

of the cash ... Holy shit this is a big deal.”

Jason Goldberg, Founder & CEO of

e-commerce sites Fab & Hem (2015) [10] [9]



Do not try getting everything right the first time

Bring your MVP to market early on

Test new features without considering sunk costs

Be willing to adapt your original idea

Determine why customers value your product & service


THE ENTREPRENEURIAL MINDSET

PITFALLS

IDEA

APPROACH

LEAN

START-UP

TEAM

GET YOURSELF

STARTED

Unfold your

entrepreneurial

personality

Create your business

idea and evaluate its

potential

Apply the process of

successful

entrepreneurs

Build your own team

and establish relevant

partnerships

Get your company

started in the best

possible way

Watch out for critical

obstacles of new

venture


REFERENCES

[1] BlackBerry (2009). URL: http://www.smartphonefanatics.com/uploaded_images/blackberry_tour_front-793159.jpg. Access Date: 24.09.2016

[2] BlackBerry (2015). URL: http://techgeek.com.au/wp-content/uploads/2014/12/blackberryclassic-640x360.png. Access Date: 24.09.2016

[3] Iphone 3G (2009). URL: http://www.patentlyapple.com/.a/6a0120a5580826970c0120a63717b6970c-pi. Access Date: 24.09.2016

[4] Iphone 6 (2015). URL: http://fastgeekz.com/wp-content/uploads/2015/10/iphone-6.png. Access Date: 24.09.2016

[5] Statista (2016): Absatz von BlackBerry-Smartphones weltweit vom 1. Quartal 2007 bis zum 2. Quartal 2016 (in Millionen Stück). URL: https://de.statista.com/statistik/daten/studie/12739/umfrage/weltweit-verkaufte-rim-smartphones-seit-dem-1-quartal-2007/. Access Date: 24.09.2016

[6| Statista (2016): Absatz von Apple iPhones weltweit in den Geschäftsjahren 2007 bis 2015 (in Millionen Stück). URL: https://de.statista.com/statistik/daten/studie/203584/umfrage/absatz-von-apple-iphones-seit-dem-geschaeftsjahr-2007/. Access Date: 24.09.2016

[7] Boss, J. (2014); 4 Best Practices to Avoid Startup Failure, URL: https://www.entrepreneur.com/article/239348. Access Date: 23.09.2016


REFERENCES


[9] ©Megan Dickey/Business Inside

[10] Shontell, A. (2015): THE TECH 'TITANIC': How red-hot startup Fab raised $330 million and then went bust. URL: http://www.businessinsider.com/how-billion-dollar-startup-fab-died-2015-2?IR=T. Access Date: 23.09.2016

the entrepreneurial mindset - edge.edx.org · be identified for each aspect of the entrepreneurial...

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