MODULE1: TECHNOLOGY BASED ENTREPRENEURSHIP
• OBJECTIVES • LECTURES NOTES • • • • Introduction An Entrepreneurial Perspective. Defining Entrepreneurship. Traits versus Characteristics. as a prerequisite to
• Creative Innovation. •
Innovation and Entrepreneurship. ways for new
• Significant enterprise. • TRANSPARENCIES
and the barriers to innovation in the organizations. the critical innovation roles. and advantages and disadvantages associated with alternative planned change strategies.
. Compare and contrast power bases. managerial behaviors. Compare and contrast the attitudes and behavior of entrepreneurial manager and the trustee with respect to creativity and innovation. Discus the importance of creativity and innovation to Entrepreneurship.MODULE1: TECHNOLOGY BASED ENTREPRENEURSHIP
Objectives Define Entrepreneurship and discus the characteristics of Entrepreneurs. Explain the innovation process. the characteristics of innovative organizations.
merchants. and entrepreneurs will thrust us into the twenty-first century with a thunderous roar. • Early reference to the entrepreneur in the 14th century spoke about tax contractors individuals who paid a foxed sum of money to a government for the license to collect taxes in their region. the risk takers.. as if we had stumbled onto a new direction for American enterprise. but its resurgent popularity implies a ”sudden discovery”. funeral directors. because the American system of free enterprise has always engendered the spirit of entrepreneurship. ENTREPRENEURSHIP
ENTRE. • In the 19th century. often adventurers. and. refers to individuals who were “undertakers”.
An Entrepreneurial Perspective
• Entrepreneurship is one of the four mainstream economic factors: land. capital. the decision makers. • The word itself. incidentally. the individuals who aspired to wealth and who gathered and managed resources to create new enterprises. More important. as we shall see. This is a myth. They were “contractors” who bore the risks of profit or loss.PPT Holt. labor. derived from 17th-century French entreprendre. entrepreneurs were the “captains of industry”. adventurers. They are risk takers who seize opportunities to harness and use resources in unusual ways. Entrepreneurship: New Venture Creation. meaning those who “undertook” the risk of new enterprise.DOC
. They are inspired people. David H. and the United States became a world economic power through entrepreneurial activity. America was discovered by entrepreneurs. and many early entrepreneurs were soldiers of fortune. Prentice Hall: 1992. and entrepreneurship. our future rests squarely on entrepreneurial ventures founded by creative individuals. builders. who can at once disrupt a society and instigate progress.
USE TRANSPARENCIES SLIDES ENTRE1.MODULE1: TECHNOLOGY BASED ENTREPRENEURSHIP
The concept of entrepreneurship has been around for a very long time.
and Austrian economists wrote enthusiastically about entrepreneurs as the “change agents” of progressive economies. In his Essaisur la nature du commerce en général. At the other extreme. The entrepreneur becomes. Cantillon described an entrepreneur as a person who pays a certain price for a product to resell it at an uncertain price. Thereby making decisions about obtaining and using resources while consequently assuming the risk of enterprise. a French economist.. was credited with giving the concept of entrepreneurship a central role in economics. However.
Adam Smith spoke of the “enterpriser” in his 1776 Wealth of Nations as an individual who undertook the formation of an organization for commercial purposes. Menger saw the entrepreneur as an astute individual who could envision this transformation and create the means to implement it.DOC
. entrepreneurs reacted to economic change. 8). thereby becoming the economic agents who transformed demand into supply.b.
Economics and Entrepreneurship
Richard Cantillon. Menger assigned priority numbers to different events in this chain so that a high-priority event would have a low number (e. A critical point in Cantillon’s argument was that entrepreneurs consciously make decisions about resources allocations..MODULE1: TECHNOLOGY BASED ENTREPRENEURSHIP
• Notable early French. British economist John Stuart Mill elaborated on the necessity of entrepreneurship in private enterprise. British. and the “fourth factor” of endeavor was entrenched in economic literature as encompassing the ultimate ownership of a commercial enterprise.
In 1848. and this might represent raw material needed to create the number 1 event.
Carl Menger (1840-1921) established the “subjectivist perspective of economics” in his 1871 Principles of Economics. in his 1803 Traité d’ éeconomie politique. often creating the circumstances that lead to industrial growth. therefore. the change agent who transforms resources into useful goods and services.g.
Entrepreneurship as a Process
Joseph Schumpeter. yet a person who had exceptional insight into society’s needs and was able to fulfill them. The term entrepreneur subsequently became common as a description of business founders. described an entrepreneur as one who possessed certain arts and skills of creating new economic enterprises. Schumpeter described
ENTRE. 1) and would be an ultimate “end use” to satisfy a human need. In Smith’s view. fields of unharvested wheat would have a low priority.
French economist Jean Baptiste Say. Menger assigned a low-priority event with a high number (e. Austrian economist revived the concept of entrepreneurship when he joined Harvard University and his work was published in the United States in 1934.
in Schumpeter’s word. an untried technological possibility for producing a new commodity or producing an old one in a new way. . as defined.
Characteristic of Successful Entrepreneurs Self-confident and optimistic Able to take calculated risk Respond positively to challenges Flexible and able to adapt Knowledgeable of markets Able to get along well with others Independent minded Energic and diligent Creative. more generally. John Hornaday of Babson College was among the first to use surveys and intense interviews to develop a composite list of entrepreneurial traits.
Traits versus Characteristics
In an effort to understand entrepreneurs better. need to achieve Dynamic leader Responsive to suggestions Take initiatives Resourceful and persevering Perceptive with foresight
ENTRE. Entrepreneurship. The product or service itself may or may not be new or unique but value must somehow be infused by the entrepreneur by securing and allocating the necessary skills and resources. researchers have sought to define traits common to a majority of individuals who start and operate new ventures.
The entrepreneur seeks.
The evolution of the concept has generated many definitions. time. we shall use Ronstad’s definition of entrepreneurship: Entrepreneurship is the dynamic process of creating incremental wealth. This wealth created by individuals who assume the major risks in terms of equity. . essentially consists in doing things that are not generally done in the ordinary course of business routine.MODULE1: TECHNOLOGY BASED ENTREPRENEURSHIP
entrepreneurship as a force of “creative destruction” whereby established ways of doing things ate destroyed by the creation of new and better ways to get things done.DOC
. to reform or revolutionized the pattern of production by exploiting an invention or. . by opening up anew source of supply of materials or a new outlet for products . and/or career commitment of providing value for some product or service. but perhaps a recent one by writer Robert Ronstand captures its essence.
1.is “the ability to bring something new into existence.
2. is the transformation of creative ideas into useful applications. germinate ideas. nuture them.
• Innovation. therefore. of bringing something new into existence. but each has a unique connotation. but most social scientist agree on five stages that we label as: • • • • • A model of the creative process: Idea Germination Preparation Incubation Illumination Verification
Idea Germination: The seeding stage of a new idea Recognition
Preparation: Conscious search for knowledge Rationalization
Incubation: Subconscious assimilation of information Fantasizing
ENTRE. Ideas usually evolve through a creative process whereby imaginative people.
The Creative Process
• Entrepreneurs need ideas to pursue. Innovation . and ideas seldom materialize accidentally. and develop them successfully. but creativity is a prerequisite to innovation. • Various labels have been applied to stages in the creative process. This definition emphasizes the “ability”.DOC
. not the “activity”.is the process of doing new thing.MODULE1: TECHNOLOGY BASED ENTREPRENEURSHIP
Responsive to criticism
Entrepreneurship and Innovation
Creative as a prerequisite to innovation
• The terms creativity and innovation are often used to mean the thing.
technology.to manufacturing. satisfaction for founders
Your own new enterprise serves your interest in significant ways:
2.MODULE1: TECHNOLOGY BASED ENTREPRENEURSHIP
Illumination: Recognition of ideas as being feasible Realization
Verification: Application or test to prove ideas has value Validation
Innovation and Entrepreneurship
• It is important to recognize that innovation implies action. revenues for investors.
3. they may have become inventors. • The difference between invention and innovation is: Invention . reward of employees. market strategy.
Analytical Planning . capital Implementation .to provide: value to customers.
Commercial Application . When people have passed through the illumination and verification stages of creativity. human resources.
Elements in the Innovation Process
1. or services. processes.
1. services accomplish: organization. technology.is the creation of new products.to obtain: materials.DOC
. 2. but they are not yet innovators. not just conceiving new ideas. product design. Innovation . and technologies not previously known to exist.is the transformation of creative ideas into useful applications by combining resources in new or unusual ways to provide value to society for or improved products. financial need Organizing Resources .to identify: product design.
"Entrepreneurial" is often associated with venturesome or creative. who started his computer company in his college dorm room or Lillian Vernon. As your company grows and become more profitable. Be creative in acquiring the resources you need to build and grow your
ENTRE. Fulfillment. a retirement program. They ended rich and successful. it takes on value.MODULE1: TECHNOLOGY BASED ENTREPRENEURSHIP
Salary. Assets builder. in time. the more profitable it becomes . A company allows you the use of an automobile for business purposes. You should. Perks. is studying the historical definition of "entrepreneur" just an academic exercise? Let's look at how some small business experts define the word "entrepreneur": Bob Reiss. One of those resources is capital. you can take long step toward security. If you can consistently earn a big salary for many years running. You derive a deep. it will make you a short-term loan or pay for your home security system. I've known many people who say they'd love to start a business. The excitement and challenge of your own enterprise makes life immensely stimulating. It removes the necessity to beholden to an employer. with confidence that you can succeed. It becomes a separate unit which can be sold for a sum money. Beyond that lies a company profit-sharing plan. Your own business can set you free from financial worries. Independence.DOC
Entrepreneur: What's In a Definition?
How do we define "entrepreneur"? Is there anything to be learned about entrepreneurship and building a business by studying the definition? Or. Security." A key factor in Reiss's definition is that entrepreneurs undertake opportunities regardless of the resources the entrepreneur currently controls. Naturally. Entrepreneurs find ways to acquire the resources they need to achieve their goals. High-Reward: Starting and Growing Your Small Business With Minimal Risk. It allows you independence and freedom from bosses and supervisors. started at the moment that you company enter black. along with a host of other small advantages. that will pile up a splendid asset for your later years. psychological satisfaction from “doing business”. Nothing can spin out money like a profitable company. but they just don't have the money to get started. with the flexibility to change course as necessary. and with the will to rebound from setbacks. says: "Entrepreneurship is the recognition and pursuit of opportunity without regard to the resources you currently control. Neither did many of history's greatest entrepreneurs like Michael Dell. who started her mail-order business when she was a housewife looking for extra income. and you banish boredom and restlessness from your life. successful entrepreneur and author of Low-Risk. the more it is worth. These successful entrepreneurs didn't start rich and successful. be able to make a far higher salary that you could ever earn working for someone else.
leader of San Joaquin Delta College Small Business Development Center.. the better your chance of succeeding in business.g. how many people are really doing exactly what they want to be doing? Entrepreneurs are usually doing what they want. Entrepreneurs like to be in control of their future. Linda Pinson. an entrepreneur's continued paycheck isn't dependent upon a single employer whose faulty business decisions could lead to being laid off. or... Gillian Murphy. e. Become an educated risk taker..." Today. I think it is now recognized that the "educated risk taker" will win the race.. While studies have shown that people derive tremendous satisfaction from their work. The view. Pinson's second point is the growing awareness of "professional entrepreneurship. "Oh. while some people see starting a business as more risky than conventional employment. associates. I think is rapidly changing because a large percentage of American entrepreneurs have not been successful. They are starting one business followed by another and often another. to make money. When I think of someone with 'an entrepreneurial spirit.MODULE1: TECHNOLOGY BASED ENTREPRENEURSHIP
business. First. Their industry knowledge and skills have been everything we could hope for. and to be the master of his/her own soul (both financially and spiritually). and associates. If he makes it. we say. many entrepreneurs want to be masters of their own fate and they can't find this outside of entrepreneurship.' I think of a person who will do whatever it takes to be successful in business." Pinson makes two key points.but their business skills have been sorely lacking.continues to seek opportunities and/or different methods of operation. Think outside the box and you'll improve your chances of acquiring what you need to succeed. he is our shining example of who we want to be. Pinson reminds us that entrepreneurs have a certain responsibility not only to themselves but also to their customers. other people see it as less risky. They like to set their own course. Inherent in the venture is the risk of what the future may bring. So.. well" and pay no heed to the plight of his venders. author of much of the SBA's material about writing a business plan and creator of business plan software (business-plan. though. The more you understand about business and entrepreneurship. says: "An entrepreneur is not static but fluid. Such entrepreneurs are sometimes called "serial entrepreneurs. they are doing something which they feel gives them control over their future. I believe that an essential key to success is that the entrepreneur also be an "educated" risk taker.. more people aren't just starting one business. Therefore. If he does not." Sometimes these people become angel investors who invest their own money into start-up companies... Many entrepreneurs feel that running a business offers far more security than being an employee.com) says: "I have always thought of an entrepreneur as a person who starts a business to follow a vision. at least. and customers who have been burned in the process. " Pinson continues: "I think that there is a general admiration for the entrepreneur who has a skill and bravely jumps into the middle of the fire hoping not to get burned.DOC
. Further. suppliers.
ENTRE.. Entrepreneurs often argue that you can acquire wealth much faster if you own a business and you can build a buffer of personal financial security.
MODULE1: TECHNOLOGY BASED ENTREPRENEURSHIP
A former client wanted to open a business in a specific strip mall. leaving her with reduced rent. my client "found" a location where he could operate his business!" Murphy again shows the value of creativity in acquiring the necessary business resources. and general operations. entrepreneurs are willing to propose unique ideas to potential partners or to negotiate unconventional deals to get what they want. He sought out a business that didn't appear to be very healthy. In turn. there were no vacancies.DOC
. inventory needs.
ENTRE. The business owner agreed to my client's suggestion of dividing her premises. Further. Thinking outside the box or taking creative approaches can often gain access to resources that appear unavailable to less entrepreneurial-minded people. However.