Chapter 1 – The Practice of Entrepreneurship

Key Terms

Mindset - traditionally defined as the “established set of attitudes held by someone.”

Two different types of mindset:

Fixed mindset- people perceive their talents and abilities as set traits.
Growth mindset- people believe that their abilities can be developed through
dedication, effort and hard work.

Entrepreneurial action - may be understood as behavior in response to a judgmental

decision in conditions of uncertainty about possible opportunity for profit.

Entrepreneurial economics

the study of the entrepreneur and entrepreneurship within the economy. The
accumulation of factors of production per se does not explain economic development.
They are necessary factors of production, but they are not sufficient for economic growth.
One of the major threats for new and small enterprises is growing market competition.

Social entrepreneurship - offers insights that stimulate ideas to develop socially

acceptable and sustainable development goals, and also to encourage business firms in
undertaking corporate social responsibility.

Critical thinking - is the ability to apply reasoning and logic to new or unfamiliar ideas,
opinions and situations.

Open minded thinking - being open minded is a large part of critical thinking, allowing
a person to not only seek out all possible answers to a problem. It requires that a
person does not assume his or her way of approaching a situation is always best, or
even right.

Critical thinking involves the development of a range of ancillary skills such as:

1. Observation– how you see/view things, situation, experiences, happening

around you.
2. Analysis –identifying solutions/improvements/process/strategy
3. Reasoning–the way you explain the action of thinking about something in a
logical way. The way you express your thoughts/insights/knowledge about
something.
4. Judgment - ability to make considered decisions/perception/intelligence/this is
where you show your personality.
5. Decision-making – we make decisions every day. There’s an entire process
that goes in making a decision.
The Decision making process is the method of gathering information, assessing
alternatives and ultimately making a final choice. Know the advantages and
disadvantages of the outcomes. There are so many tool or guide to adopt in facing
challenging decision making. One is your SWOT analysis and many others.
6. Persuasion –making someone to believe/convince

Learning Objectives:

Introduction
 entrepreneurship has been related with launching new businesses
 today, entrepreneurship is a life skill
however, a lot of people and organizations has considered entrepreneurship as an
important life skill that is beyond just starting a venture.

 entrepreneurship is composed of collective mindsets and skillsets

Entrepreneurship Views:

Known as the Predictive Approach – is the older view where there are steps to do and
the results are usually predictable. This is the traditional entrepreneurship, identify the
goals they wanted to attain and search for available resources. They can easily and
accurately predict any changes in the business environment because they make use of
sophisticated tools to assess historical and current data. However, this approach is not
a guarantee to success as a lot of huge companies planned but still failed.

Creation Approach – the recent view identified that sees entrepreneurship as a mindset
and a method that needs practice and, used only when the future is unpredictable and
not certain. More a flexible way in making decision. In this approach entrepreneurs do
not delay the action they wanted to take despite scarcity of resources they define their
goals based from the resources available at hand.

THE START OF ENTREPRENEURSHIP IN THE PHILIPPINES

Philippines is known as a developing country and is always challenged by its high

poverty rate compared against countries in Asia. So, Entrepreneurship has become the
solution to poverty through job formation, wealth creation and social empowerment. For
now, our government sees entrepreneurship as the sole means to address the poverty
problem in our community. So, entrepreneurial ventures are really being encouraged to
solve poverty in our country.

The government’s objectives of economic development and job formation has been
placed in the supervision of the Philippine Development Plan (PDP) which strengthens
the thrust on entrepreneurship by way of trade and investment. Strengthening
competition and contribute job opportunities.
THE SKILLS IMPORTANT IN ENTREPRENEURSHIP– In creation approach,
entrepreneurs are able to learn through action and manage uncertainty by developing
these five important skills. These skills could only work for those who are eager to take
action. In order to develop these skills, an entrepreneur needs to learn by doing. Putting
idea into action is the most important thing to live a more entrepreneurial and
influencing life. These skills are:

1. The Skill of Play – allows his imagination to explore, expose his mind to a
treasure opportunities and potentials and is very innovative.
2. The Skill of Experimentation – acting to learn means attempting to do something,
learning from such attempts and structuring said learning when the next thing
similar to happen. (trial and error)
3. The Skill of Empathy – Empathy is putting one’s shoes in the shoe of others.
Simply, it is relating to the feelings of others when placed in a similar
circumstances.
4. The Skill of Creativity- creativity is not just to discover or search for opportunities
but to form them/or apply them/to put into practice.
5. Skill of Reflection – taking time to reflect is most important skill of all skills. The
discomfort handled, the feelings felt and the knowledge possessed gives new
perspectives and allow for more assessment of the results and forming of
conclusion, which can be done through reflection.

Ways To Do Reflection

Rationalizing about skills –is performed, constructing a seemingly good or logical

reason.

1. Analytical– it is rationalizing about skills and understanding obtained from an

experience and relating what has been learned to anything heard about
before.
2. Evaluative – this concerns on what went well as well, as what went bad or
whether the experience was useful or not.
3. Critical – this is considering the role played in a situation, the approach
applied, what could still might be done, the lessons from the experience,
queries in mind and the anticipation of the possible result.
4. Narrative – it is describing what happened in terms of what took place, what
was said and the people involved.
5. Emotional – This centers on the feelings and the management of these
feelings during a certain situation. How you response to a certain situation.
6. Perceptive – It focuses on ones insights and feedbacks as well as the others
in addition to how various views, needs or inclinations affected the
experience.

When reflecting, an entrepreneur considers an experience that has

transpired/happened and attempts to understand or explain it. This often
leads to insight and deep learning or ideas to examine and new experiences.
THE TRUTHS ABOUT ENTREPRENEURSHIP

There are really no shortcuts when it comes to entrepreneurship. Entrepreneurs must

understand that is a hard commitment and there is no quick formula for success. Here
are some truths about entrepreneurship:

1. Entrepreneurship is not solely for startups

2. Entrepreneurs do not have exceptional personality qualities (remarkable,
outstanding, extraordinary)
3. Entrepreneurs can be taught yet entail practice – requires a person to possess a set
of skills that should be improved continuously through practice to be used not just for
today but also for the future.
4. Entrepreneurs are not so much risk-takers by nature they normally would make
assessment, judgement, and forecast first, prior to taking the next step.
5. Entrepreneurs work in partnership more than they complete – builds personal
relationships, learn their lessons from the shared experiences others has faced. The
community is a vital partner of most entrepreneurs working together with target
consumers, with prospective investors and with family and friends brings more
efficiency, additional fresh ideas and produce creativity and innovation.
6. Entrepreneurs are more on doing than planning – decisive and action-oriented must
think and make decisions quickly. They disciplined themselves to take action and to
carry out the decisions, they have made.
7. Entrepreneurship is truly a life skill – life skill is not only for entrepreneurs but also for
other professions. Some of these life skills are :

 Resilience – refocus after failure.

 Agility –ability to adopt quickly and easily adjust to dynamic changing
environment and situations, grab new opportunities and be competitive.
 Negotiating – setting boundaries ensuring good relationship and understanding.
 Problem solving – creating solutions
 Relationship building – means getting along with people
 Mindfulness

TYPES OF ENTREPRENEURSHIP

• Intrapreneurship - Intrapreneurship refers to encouraging people to discover

high-risk, high-reward concepts with the support of a big corporate organization.

Example: Google supports its employees to provide the 20% of their time for
innovative projects

• Entrepreneurs Inside - entrepreneurs function inside any type of organizations

such as government agencies, non-profit organizations, religious entities, self-
employed and even cooperatives, whether they are big or small.
 • Buying a franchise - franchise is a type of license bought by an entrepreneur as
the franchisee from an existing branded Business (franchisor) to do business
under the name of said brand. The license serves as the right to open the
business using the brand’s proven business model and system, its proven
pricing, products and promotional tactics. Much is the popularity of franchising
these days because it is already a ready business.

Many of these stores and restaurants. example are7-11, Ace Hardware, Pizza
Hut, Jollibee, McDonalds and a lot more.

• Buying a small business - the entrepreneur buys out the existing owner and
takes the management and operations of the small business,new owner is able
to take over an operation that has already making cash flow and profits. The
advantages of the new owner is able to take over an operation that has already
established customer base, reputation and employees who are familiar with all
aspects of the business.

• Social Entrepreneurship - means pursuing innovative applications that have the

likelihood of solving community-based problemspossible to solve social problems
at the same time make profit.

• Family Business - family business is owned and managed by members of the

family that is usually handed down from generation to generation to be innovative
in their own way. Most family businesses stuck to their traditional (old) ways and
are unwilling to embrace changes.

• Serial Entrepreneurs - is an entrepreneur who constantly crops up with fresh

ideas and starts new businesses.

ENTREPRENEURSHIP AS A METHOD

Method is a systematic way of doing a task, while a process is a sequence of steps to

take to attain something.

- entrepreneurship is nonlinear, unpredictable, unstructured and complex

-business environment of entrepreneurs is really dynamic, uncertain and ambiguous

- the view of entrepreneurship has been shifted as a method to manage the confusion,
although this does not guarantee success.

- entrepreneurial method describes a logic of thinking that is usually used by some most
successful entrepreneurs to form their ventures. The entrepreneurial method mainly
consists of five effectual principles. Based on the works of Sarasvathy, today, much is
said about the effectuation theory.
Effectuation

Effectuation is the idea in entrepreneurship that the future is unpredictable

yet controllable. Sarasvathy believes that the focus of effectual entrepreneurs
is to create a future instead of predicting it.

Five principles behind effectuation:

1. Bird in Hand-creating solutions using the resources available at the

disposal of entrepreneurs
2. Affordable Loss-only investing much that an entrepreneur is willingand
can afford to lose
3. Crazy Quilt-business shall become successful through cooperation with
other people and companies
4. Lemonade-unexpected turns are not always negative, entrepreneurs see
them as new opportunities
5. Pilot in The Plane-the future is really something that needs to be
controlled and not try to predict

Components Of The Entrepreneurship Method

Entrepreneurship Method – is a different way to interpret and understand

entrepreneurial failure and success.

1. Identify Desired Impact

2. Begins with Means at Hand
3. Describe the Idea Today
4. Estimate Affordable Loss
5. Reflect and BeHonest
6. Take SmallAction
7. Network and Enjoin Others in the Journey
8. Build and Learn from What Has Been Learned

Managerial and Entrepreneurial Thinking

Managerial Thinking – is usually best to apply during times of certainty.

managerial thinking uses information and data as basis for decision-making.

Entrepreneurial thinking – refer to the ability to identify opportunities in the

marketplace and discover the most fitting ways and time to take advantage of
them. It is more like a mindset that opens ones eyes to fresh learning
opportunities and helps entrepreneurs grow in their roles.

ENTREPRENEURSHIP REQUIRES DELIBERATE PRACTICE

Entrepreneurship method is both a mindset and a practice.

- Practice is usually linked with repetition and experience.
- Performance cannot be improved by plainly having experience nor
success could be attributed to genes. Practice or spending lots of time
repeating the same action will end up to be expert on said act.
(experience is the best teacher, through experience we learn and grow)
- Entrepreneurship commands hard work, together with unique
opportunities
- Deliberate practice becomes a discipline, because it has been mastered.
Once a basic competence is achieved after progressing from constant
practice, a person becomes expert of a particular field of endeavor.

References: Textbook: Entrepreneurial Mindset by: Prof. Angelita Ong

Camilar-Serrano,Ph.D-BM, MBA, CMC