What makes entrepreneurs

entrepreneurial?
 Our Team

Aman Ghimire Indu Yadav

Prasuna Dahal Sahana Shrestha

Agenda 01
Sahana Shrestha
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Sahana Shrestha
 Entrepreneurs

Are the persons who have already started or is in the process of starting an
enterprise
6

Entrepreneurial

Attitudes

Skills

Behaviors
Entrepreneur à Individual Entrepreneurship à Process

Entrepreneurial à Attitudes, skills, and behavior

 Two types of Entrepreneurial
Thinking

• Causal Thinking
Causal thinking starts with a predetermined goal and a set of means
and resources to reach that goal in the fastest, cheapest and most
efficient way possible.
Using a metaphor, causal thinking is like a chef who decides what they
want to cook, finds a recipe to use and then goes shopping for the
ingredients so they can follow the recipe.
 Effectual Thinking
Effectual thinking, in contrast, sees entrepreneurs start new
ventures by beginning with their means: who I am, what I
know, and whom I know.
• Effectual thinking is like a chef who starts with the
ingredients they have and knowledge of cooking and
begins to create based on his inputs, realizing that he can
mix it up and diverge from the recipe, potentially creating
something amazing and new.
• Entrepreneurs are entrepreneurial Entrepreneurial process
because they think effectually
Idea Generation

Do entrepreneurs think effectually?

Market Research
And in her research, she
overwhelmingly found that most of the
highly successful and creative Business Plan

entrepreneurs practice effectual

thinking more than causal. Raise Money

Make it Happen

Make it Happen
 Effectual Reasoning:
THE PROCESS
Effectuation theory is often considered a process theory
because it explains the process that entrepreneurs use to
create new ventures. Effectuation theory stems from the way
that expert entrepreneurs think about problems and how
they go about solving them.

All entrepreneurs begins with three categories of means:

1. Who they are - their traits, tastes and abilities
2. What they know-their education, training, expertise and
experience
3. Whom they know-their social and professional networks
 Process Elements
• Expert entrepreneurs begin with who they are, what they know, and
whom they know, and immediately start taking action and interacting
with other people.
• They focus on what they can do and do it, without worrying much
about what they ought to do.
• Some of the people they interact with self-select into the process by
making commitments to the venture
• Each commitment results in a new means and new goals for the
venture
• As resources accumulate in the growing network, constraints begin to
accrete. The constraints reduce possible changes in future goals and
restrict who may or may not be admitted into the stakeholder
network
• Assuming, the stakeholder accumulation process does not prematurely
abort, goals and networks concurrently converge into a new market
and a new firm
• Let us consider how two processes operate in
the simple case of building a restaurant
• In the causal process,
• One would start with some market research
into the restaurant industry in city of her choice,
• Select a location very carefully based upon the
market research
• Segment the market in a meaningful way
• Select target segments based on estimates of
potential return
• Design a restaurant to appeal the target
segments
• Raise the required funding
• Bring the team together
• Finally, implement specific market strategies and
manage daily operations to make restaurant a
success
In the effectual process,
• It would all depend on:
üwho our entrepreneur is, what one knows,
and whom one knows
• One is a good Indian chef who is considering
starting an independent business
• Assuming one has very little money, what are
some of the ways one can bring the ideas to
market
• Then, one actually pursue is to persuade
friends who work downtown to allow to bring
lunch for their office colleagues to sample
• Further, some customers then sign up for lunch
service and begins preparing food at home
and deliver lunches personally
• Eventually, one could save up enough money
to rent a location and start a restaurant.
 The 5 Principles of Effectuation

The crazy quilt Principle 1

principle
The affordable
Principle 2
loss principle
The bird-in-
Principle 3
hand principle
The lemonade
Principle 4
principle
The pilot-in-the-
Principle 5
plane principle
 The crazy quilt principle

Partners, partners,
partners……
 The affordable loss principle

Is the loss affordable??

Prasuna Dahal
 The bird-in-hand principle

ØWho they are?

ØWhat do they know?
ØWho do they know?

Create a solution with the resources you have!!

 The lemonade principle

Leverage surprises
The pilot-in-the-plane principle

Control vs Predict
 Effectual Logic

STRENGTHS WEAKNESS

OPPORTUNITIES THREATS
Indu Yadav
Aman Ghimire
Entrepreneurial method example - star bucks

• How Schultz built Starbucks into Nationally Known Brand Name ?

Recognized

• 1st, Baby boomers were rejecting processed and prepackaged foods.

• 2nd, American's were becoming more interested in a higher level of
service.
Utilized the
understanding
of the changing
demand side

• Tandem with a range of operating policies – to develop premium

coffee products and appealing retail environment.
 The original Starbucks was founded in 1971 by Gordon
Bowker, Jerry Baldwin, and Zev Siegl.

Some The founders were not studying the market trends.

They were filling a need-their own need-for quality
Historical coffee.“

Facts The Dutch coffee connoisseur had been at it since

1966

Schultz had grown up thinking of coffee as commodity

purchased along the inner aisles of supermarkets.
 Timeline

• The large • Americans • Declining from a

especially • Schultz built his
roasters post war peak
teenagers, who first coffee bar,
continued to of 3.1 cups per
had drunk I1 Giornale,
spend on day in 1963 to
coffee, which was later
Advertising less than 2 cups
increasingly merged with the
Budgets. in the mid 1980s.
consumed other original
• About half the Starbucks in
• Per capita beverages, US population
especially soft 1987.
coffee over the age of
consumption drinks such as 10 did not
began to fall coke and Pepsi. consume coffee.
.

1960s 1970s 1980s 1990s

 Issues and Solutions
Issues Solutions
1. Consumer they discovered, didn’t like non stop 1. Schultz considered each of the issues, he
opera music. wanted to please consumers.
2. Demand for Flavored coffee. 2. Do it in a way that was consistent with the
offerings and distinct identity that he was trying
to create.

3. A menu printed primarily in Italian was not
accessible to many people.
4. The Baristas’ bow ties were uncomfortable to
wear and difficult to keep looking neat after
hours in front of the espresso machine.
3. Adjusted many operating policies in response to
customer and employee feedback
4. I1 Giornale began providing chairs and
planning more varied music.

5. The Baristas stopped wearing ties.

Schultz believed the practice would compromise his organization’s commitment to selling an
authentic, high-quality product and thus its brand’s developing image.
Dynamic model of effectual logic
 Means driven ( rather than
goal oriented ).

Dynamic
model’s Affordable loss ( rather than
expected return ) as an
three key investment criterion.

principles
Leveraging ( rather than
avoiding ) contingencies.
 In 1945, newly married, and with barely
$5,000, Leonard Shoen set out on his effectual
journey that led to the creation of U-Haul.

Using effectual means, plunged into action,

creating the market as he grew the business.
The Creation
of U-Haul National gas station chains to utilize their
unused space for parking and to manage
the paperwork.

Advertising was entirely limited to Yellow

Pages.
 As differentiated from
managerial or strategic,
because they think
effectually.
Conclusion :
What makes They believe in a yet-to-be-
entrepreneurs made future that can
substantially be shaped by
human action.
entrepreneuri
al ??
It is much more useful to
understand and work with the
people who are engaged in
the decisions and actions that
bring it into existence.