Strategic Entrepreneurship Growth:

Contents
Designing the business model:..............................................................................................................2
Balancing the focus: effectuation (entrepreneurial) vs causal (managerial)..........................................3
Application to the Ansoff Product-Market Matrix:............................................................................3
Venture development stages:...............................................................................................................4
Stage 1: New venture development:.................................................................................................4
Stage 2: Start-up activities:................................................................................................................4
Stage 3: Growth Stage:......................................................................................................................4
Stage 4: Business Stabilisation:..........................................................................................................5
Stage 5: Innovation or decline...........................................................................................................5
Key management issues encountered during the growth stage:.......................................................5
Confronting the growth wall:................................................................................................................5
Strategic sustainable development.......................................................................................................5
Strategic backcasting.............................................................................................................................5
Designing the business model:
Entrepreneurial businesses must be able to evolve and transform to match the pace
of change.
The business must be able to build and maintain two sets of capabilities:
1. Dynamic capabilities – concerned with strategic development of the business
to innovate and differentiate from competitors and adapt to changing
competitive landscapes.
2. Operational capabilities – These attend to management of routine operations.
An entrepreneur must design the business model that provides the blueprint for the
acquisition and growth of capabilities to deliver a clear value proposition to the
market at a cost and revenue equation that ensures the company’s survival and
ongoing stakeholder support.
Business model is the design of organisational structures to enact a business
opportunity. Needs to consider:
1. Economic perspective: concerned with logic of profit from producing/delivering
the good.
2. Operational perspective: Considers value creating architecture – set of
sequences, processes and activities that the business does.
3. Strategic positioning: views company’s market positioning interactions.
At the heart of a good business model is the value proposition – centerpiece of
designing business growth strategies.

Alex Osterwalder’s business model canvas:

Balancing the focus: effectuation (entrepreneurial) vs causal
(managerial)
Three different types of logic and reasoning:
1. Effectual (entrepreneur) – imagines the ends then arranges the means to
achieve those ends.
2. Causal Reasoning (manager) – Uses existing means to achieve existing
ends.
3. Creative causal reasoning (Strategist) – Shapes give means and creates new
means to meet given ends.
Application to the Ansoff Product-Market Matrix:

- Effectual logic has its place in the diversification quadrant –in this area there
are no known products or known markets. (Imagination, vision, confidence
etc. is necessary)
- This is where entrepreneurs can imagine new possibilities (ends) and arrange
resources (means) to achieve these ends.
- In the Product Development and Market Extension areas, constraints exist –
the focus shifts to choosing among existing product and market options (Or
choosing and crafting different means).
- The objective end is fixed to either move more of the known product into an
unknown market or create new products to increase revenues from the
existing market.
- In market penetration quadrant both the products and markets are known.
- The objective is to maximise sales within the combination of fixed means
(product and market) and achieve a known end (higher revenues, sales and
profits).
 - These two types of reasoning need to be balanced for the business to
succeed.

Venture development stages:

Managing entrepreneurial may be the most critical challenge for future success of
the business enterprises.
- Understand the management transition.
- Important – firm needs to maintain certain entrepreneurship characteristics to
encourage innovation and creativity.
- Translate this spirit of creativity and innovation to their personnel – while
personally making a transition towards a more managerial style.

Stage 1: New venture development:

Activities associated with the initial formulation of the venture.
- Requires creativity, assessment and networking for initial strategy formulation.
- Determine general philosophy, scope and mission.
Stage 2: Start-up activities:
- Foundation work that contributes to creating a formal business plan, includes
searching for capital, carrying out marketing activities, developing effective
entrepreneurial team.
- Perform strategic and operational steps to identify firm’s competitive
advantage uncover funding sources.
Stage 3: Growth Stage:
- This stage requires major changes in entrepreneurial strategy.
- Competition calls for reformulation of strategy.
- This stage is a transition from informal entrepreneurial “one-person”
leadership to managerial formalized and team-oriented leadership.
Stage 4: Business Stabilisation:
- Some developments occur: increased competition, consumer indifference to
entrepreneur’s goods and services, and saturation of the market with “look-a-
likes”.
- Sales begin to stabilize – future direction becomes important.
- Swing stage: either the firm swings into higher profitability or down to decline
and failure.
Stage 5: Innovation or decline
- Companies that fail to innovate will die.
- Financially successful firms will try to acquire other innovative businesses.
Key management issues encountered during the growth stage:
Growth is usually a change from a personal venture to a group-structured operation.
- New -venture managers experiencing growth still need to adopt flexible,
organic structures.
- Rigid structures are best suited for mature, stabilized companies.
- Therefore, culture needs to be flexible, autonomous and risk-taking.

Confronting the growth wall:

- Many entrepreneurs struggle to develop the managerial ability to deal with
venture growth – thus they encounter a growth wall.
- They are unable to handle the challenges that growth brings.
- Some of these challenges include: instant size increases, a sense of
infallibility, internal turmoil and extraordinary resource needs.

Successful growth oriented firms exhibit some consistent themes:

- The team needed for tomorrow is hired and developed today.
- Hierarchy is minimised.
- Employees hold a financial stake in the company.
- The original core vision of the company is constantly and zealously reinforced.

Strategic sustainable development

- Entrepreneurial strategy is the art of managing assets one does not own.
- Put a strategy in place that grows the company and protects natural
resources.
- Growing emphasis on entrepreneurs as change agents in in addressing
environmental and social issues.
- The value proposition is not merely an economic and business case but also
reflects social and natural environment value (Link with economics – positive
and negative externalities).
- Sustainability wealth generation – contributing a holistic net benefit to the
economy, community and natural environment.

Strategic backcasting
- Looking back from the future.
- Approaches challenges from the opposite direction.
- The future desired conditions are envisioned then steps are defined to attain
those conditions.
- Examine several future scenarios.
- If we want to arrive at scenario A, what trends would need to change to get
there?