Mastering

Entrepreneurship
Gillian Lacey-Solymar

Lecture 2 – Entrepreneurship and Opportunity

October 12th 2017

Agenda: This week and Next

▪ Quick recap
▪ Relationship between entrepreneurship and opportunity
▪ Look at opportunity
— What is it?
— How do we identify it?
— How do we exploit it?

Page 2
…what sort of person is an
entrepreneur and What is
entrepreneurship?

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Characteristics/traits of
entrepreneurs
(As listed in the lecture) Problem solver
Excellent communicator
Critical
Patient
Charismatic
Willing to learn Creative
Team player Catalyst
Generalist Risk taker
Independent
Driven
(intrinsically or extrinsically?)
Enthusiastic
Time manager
Resourceful
Flexible
Confident
Humble Passionate Convincing

Overly optimistic Hard working

Emotional intelligence
Prepared for delayed gratification
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Entrepreneurs are all different

“Anyone who can face up to decision making can learn to be an

entrepreneur and behave entrepreneurially…. Entrepreneurship
is a behaviour rather than a personality trait. In 30 years I
have seen people of most diverse personalities and
temperaments perform well in entrepreneurial challenges. Some
entrepreneurs are ego-centric and others are painfully correct
conformists. Some are fat and some are lean. Some
entrepreneurs are worriers and some are relaxed…some have
great charm and some have no more personality than a frozen
mackerel!”
Peter Drucker, Harvard

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Entrepreneurship?

“The art of….

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What is Entrepreneurship?

There are 3 ways of thinking of entrepreneurship:

1.Traits of entrepreneur
2.Role or function of the entrepreneur in the
economic process
3.Behaviours and/or activities of entrepreneurs

Kaufmann and Dant (1992)

Page 7
Entrepreneurship: 5 definitions
▪ “The identification and exploitation of previously unexploited opportunities” (Hit et al,
2001)
▪ “The act and process by which societies, regions, organisations or individuals
identify and pursue business opportunities to create wealth” (George and
Zahra,2002)
▪ “The discovery, evaluation and exploitation of future goods and services” (Ekhart
and Shane, 2003)
▪ “Any attempt at new business or new venture creation, such as self-employment, a
new business organization, or the expansion of an existing business, by an
individual, a team, or an established business.” GEM: Global Entrepreneurship
Monitor
▪ “Creating a new business that solves a problem” Dorf and Byers

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…and my favourite
strict definition

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…and my favourite
loose definition

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…and my favourite
loose definition Builds in
the notion
of change

Making Ideas Happen

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Why be an entrepreneur ?
Upside

▪ Create something from nothing

▪ Change the world
▪ Fame and fortune
▪ Master of your own destiny
▪ Power
▪ Leadership

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Why be an entrepreneur ?
Downside

▪ Work all the time

▪ Be stressed all the time
▪ Risk your money/house
▪ Forget your family/friends
▪ Spend a lot of time on menial stuff
▪ Be controlled by investors

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What is entrepreneurial success?

▪ Making 10x your money?

▪ Making 100x your money?
▪ Changing your industry?
▪ Changing the world?
▪ Still being in business after x years?

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Small business failure
Percentage still “alive”

Source: Scott Shane: Illusions of Entrepreneurship

NB data is from the US
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Failure rates of start-ups, USA
Research conducted May 2017

Failure rate of start ups

80%
70%
60%
50%
40%
30%
20%
10%
0%
Year Year Year Year Year Year Year Year Year Year
1 2 3 4 5 6 7 8 9 10

Sources: Statistic brain - Entrepreneur Weekly, Small

Business Development Center, Bradley Univ, University
of Tennessee Research

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Percent still operating over 4 years
by sector

Information
Transportation,…
Retail
Construction
Manufacturing
Mining
Wholesale
Services
Agriculture
Education and Health
Finance Insurance and Real…
0% 10% 20% 30% 40% 50% 60% 70%

Sources: Statistic brain - Entrepreneur Weekly, Small

Business Development Center, Bradley Univ, University
of Tennessee Research

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Businesses with highest success rate
after year 4
1 Religious Organizations

2 Apartment Building Operators

3 Vegetable Crop Productions

Offices & Clinics of Medical

4
Doctors

5 Child Day Care Services

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Success rate of Start-ups
▪ 55% of SMEs don’t survive up to 5 years
(“”Growing Pains Survey-RSA Insurance -
October 2014)
▪ Fewer than 10% go public

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How do you define “failure”?

▪ If failure is liquidating all assets, with investors

losing most or all the money they put into the
company => failure rate of 30 - 40 percent
▪ If failure is defined as declaring a projection
and then falling short of meeting it, => failure
rate is 90 - 95 percent
Source: Harvard Business School Working Knowledge

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Fortune 500:1955 vs 2016

▪ June 2014 Fortune magazine

looked back at the Fortune 500 in
1955 vs then 2014
▪ 61 companies on 1955 list were
still there
▪ 60 companies on 1955 list were
still there in 2016
▪ 88% had gone

Source: Fortune Magazine, Mark J Perry, AEI Ideas

Page 22
The reasonable man adapts
himself to the world; the
unreasonable one persists
in trying to adapt the
world to himself.
Therefore all progress
depends on the
unreasonable man.

George Bernard Shaw,

Man and Superman (1903)
"Maxims for Revolutionists"

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 Entrepreneurs
change the world…

Presentation Title Page 24

 …But they need opportunities

Presentation Title Page 25

What is a
business opportunity?

▪ 3 key questions:

▪ What is a business opportunity?

▪ How do we find a business opportunity?

▪ How do we tell if it’s any good ie what

constitutes a real opportunity?

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Two tasks right now

▪ What is the relationship between opportunity and

entrepreneurship?

▪ Define opportunity

Presentation Title Page 27

 “Much literature looks at the overlap between
entrepreneurship and opportunity”

Kaufmann and Dant (1992)

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Entrepreneurship versus
Opportunity: what is the
relationship?

Entrepreneurship Opportunity

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Entrepreneurship versus
Opportunity

Entrepreneurship Opportunity

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Entrepreneurship versus
opportunity?

Entrepreneurship

Opportunity

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Entrepreneurship versus
opportunity?

Opportunity

Entrepreneurship

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Entrepreneurship versus
opportunity?
1.

Entrepreneurship Opportunity

3.
2.

Entrepreneurship
Opportunity

Opportunity Entrepreneurship

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 ENTREPRENEURSHIP

PROBLEM AND/OR CHANGE OPPORTUNITY

Presentation Title Page 34

What is a Business Opportunity

▪ A business opportunity is a packaged business

investment that allows the buyer to begin a business
investment. Entrepreneur.com
▪ Ongoing opportunity to generate income as an
independent representative of a network marketing
company. Business Dictionary.com
▪ A business opportunity involves sale or lease of any
product, service, equipment etc that will enable a
purchasor to begina business.Wikipedia

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Pinning down opportunity

▪ “Conceptually, scholars have debated exactly what

constitutes an entrepreneurial opportunity and in
doing so, they have generated a wide variety of
definitions, sometimes ambiguous, sometimes
contradictory, resulting in a considerable amount
of variance in perspectives (McMullen, et al,
2007).”

Presentation Title Page 36

What is an opportunity?

▪ An idea?
▪ An unexploited project?
▪ Is it objective?
▪ Is it subjective?

Presentation Title Page 37

Pinning down opportunity
▪ Hansen et al tried to categorise definitions of opportunity, both
conceptual (“what is it?”) and process related (“how do you identify
it?”).
▪ They examined 19 years worth of literature
▪ They identified:
— 25 conceptual and 24 operation definitions of opportunity
— 48 definitional elements and 39 operational elements of
process related definitions of opportunity
▪ They created:
— 6 composite definitions of opportunity
— 8 composite definitions of opportunity related processes

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Definitions of opportunity.

An opportunity is...
1. An opportunity is the
possibility of introducing a
new product to the market at a
profit
Authors (Year)
Alsos, & Kaikkonen (2004); Companys & McMullen (2007);
DeTienne &
Chander (2003); Dutta & Crossan (2005); Eckhardt & Ciuchta
(2006); Eisenhauer (1996);
Gaglio (2004); Ko & Butler (2003); Lee & Venkataraman
(2006); Plummer, Haynie &
Godesiabois (2007); Smith, Matthews & Schenkel (2009)

Source: Hansen et al.: ENTREPRENEURIAL OPPORTUNITY AND THEIR OPERATIONALIZATIONS

Frontiers of Entrepreneurship Research 2009
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An opportunity is...

2. An opportunity is a situation
in which entrepreneurs
envision or create new means
ends frameworks
Authors (Year)
Companys & McMullen (2007); Koen & Kleinschmidt (2005);
Sarason,
Dean & Dillard (2006)

Source: Hansen et al.: ENTREPRENEURIAL OPPORTUNITY AND THEIR OPERATIONALIZATIONS

Frontiers of Entrepreneurship Research 2009
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An opportunity is...

Authors (Year)
3. An opportunity is an idea Anderson (2000); Ardichvili, Cardozo & Ray (2003);
that has developed into a Davidsson, Hunter &
business form Klofsten (2004); Dimov (2007)

Source: Hansen et al.: ENTREPRENEURIAL OPPORTUNITY AND THEIR OPERATIONALIZATIONS

Frontiers of Entrepreneurship Research 2009
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An opportunity is...

4. An opportunity is an entrepreneur's
perception of a feasible means to
obtain/achieve
benefits
Authors (Year):
Brunetto & Farr-Wharton (2007); Casson & Wadeson
(2007); Dimov
(2003); Gnyawali & Fogel (1994); Krueger (2000)

Source: Hansen et al.: ENTREPRENEURIAL OPPORTUNITY AND THEIR OPERATIONALIZATIONS

Frontiers of Entrepreneurship Research 2009
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An opportunity is...

Authors (Year):
5. An opportunity is an entrepreneur’s Chandler, DeTienne & Lyon (2003)
ability to create a solution to a problem

Source: Hansen et al.: ENTREPRENEURIAL OPPORTUNITY AND THEIR OPERATIONALIZATIONS

Frontiers of Entrepreneurship Research 2009
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An opportunity is...

Authors (Year):
6. An opportunity is the possibility to Alsos, & Kaikkonen (2004)
serve customers differently and better

Source: Hansen et al.: ENTREPRENEURIAL OPPORTUNITY AND THEIR OPERATIONALIZATIONS

Frontiers of Entrepreneurship Research 2009
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Summary: Conceptual
definitions of opportunity

1. An opportunity is the possibility of 4. An opportunity is an entrepreneur's

introducing a new product to the market at a perception of a feasible means to
profit obtain/achieve benefits

2. An opportunity is a situation in which 5. An opportunity is an entrepreneur’s ability to

entrepreneurs envision or create new create a solution to a problem
means ends frameworks
3. An opportunity is an idea that has 6. An opportunity is the possibility to serve
developed into a business form customers differently and better

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Composite definitions and
labels of opportunity-
related processes
1. A cognitive process of recognizing an idea 5. A creative process of generating new
and transforming it into a business concept alternatives ("Opportunity creating")
("Opportunity development")
2. A process of scanning or being alert 6. A special case of problem solving
("Opportunity scanning/Alertness") ("Problem solving")

3. A cognitive process of matching supply and 7. Perceiving a possibility to profitably create

demand ("Opportunity matching") a new business or improve an existing one
(“Business possibilities)

4. Perception of a felt need ("Need 8. A process of social construction within a

perception") window of time ("Social construction")

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COMMENTS ON Opportunity?
▪ “Every problem is an opportunity” Vinod Khosla –co founder Sun
Microsystems
▪ “Innovation is the specific tool of entrepreneurs, the means by which they
exploit change as an opportunity for a different business or a different
service”
Peter Drucker
▪ “Entrepreneurship can be described as the creative act of the discovery,
evaluation and resource allocation of an opportunity. Entrepreneurship is
the nexus of individuals and opportunity”
Dorf and Byers

▪ A business concept that, if turned into a tangible product or service

offered by a business enterprise, will result in a financial profit”
Daniel Myska

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AN OPPORTUNITY IS NOT THE
SAME FOR EVERYONE

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Opportunity Cost

The cost of the next best

opportunity foregone

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3 ways of identifying an
Opportunity

Solve a problem

Exploit a change

Conduct structured analyses

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3 ways of identifying an
Opportunity

Exploit a change

Solve a problem

Conduct structured analyses

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Plus one more way…

Exploit a change

Solve a problem
LUCK!
Conduct structured analyses

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LET’S DISAGREGATE

HOW DO YOU
SOLVE A
PROBLEM?

Solve a problem

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Solving a problem-example

1981 Peter Norton deleted a

computer file by mistake
so

1982 He founded Peter Norton computing

and wrote a programme to recover the data

1988 - Peter Norton was named

Entrepreneur of the Year

1990- sold to Symantec (known for Norton

anti-virus software) for $70m

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Solving a problem-example

Presentation Title Page 55

Solving a problem-example

Presentation Title Page 56

And/or

Exploit a change

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Exploiting change

▪ https://www.youtube.com/watch?v=u06BXgWbGvA

Presentation Title Page 58

External changes

The pace of change is accelerating –

good or bad?

2028
http://www.youtube.com/watch?v=cL9Wu2kWwSY
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Pinyin: WEI JI
PINYIN: ZHUAN JI

转机
TURNING A CRISIS INTO AN OPPORTUNITY
It helps to…

Conduct structured analyses

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P E STEEPLED
S T L E D E