Assignment

Of

Entrepreneurship and Innovation

On

“Entrepreneurial Mindset and Entrepreneurial Method”

Ace Institute of Management

December 2022

Submitted By

Mahesh Chapai
As humans specialized their abilities thousands of years ago, entrepreneurship emerged.
Opportunities for entrepreneurs increased as trade routes widened. The history of entrepreneurship
spans back thousands of years and has continually changed during that time.

The first instances of entrepreneurship involved trading items between ancient tribal communities.
More entrepreneurship was made possible by the growth of agricultural skills, and this eventually
led to the emergence of more specialized trades and jobs, such as the creation of jewelry, swords,
and farming tools. The beginning of entrepreneurship began with the exchange of these
commodities and services with others. But this arrangement required that each party have a
resource that the other party also needed, which is where the creation of money came in. The ability
to give things an objective value and trade them for that value was made possible by monetary
systems. Money first appeared as rocks, shells, or other small objects before evolving into gold or
other metals. As a means of securely storing money, banks started to appear.

As early towns and cities grew, individuals started to travel between locations to buy additional
items in addition to engaging in trade with one another. This migration was made more easier by
the use and invention of numerous forms of conveyance, from horses to ships. With this growth,
entrepreneurship flourished. Communities created markets as commercial hubs, and traders
created regular land- and sea-based trade routes to move goods between these centers.

While the transition from agricultural to industry is frequently mentioned when discussing an
industrial revolution, the term more generally refers to the development of new manufacturing
techniques as well as quick social and economic transformation. The industrial revolutions
provided more gasoline to the entrepreneurial fire if trade routes and the rise of money ignited it.

The late 18th and early 19th centuries saw the onset of the first industrial revolution. Early
machines that didn't require human work were the main innovations, which allowed for the
development of the first factories. During this time, trade was accelerated by the extraction of coal
and the development of the steam engine, which also sparked the growth of railroads globally. The
first railways, factories, and mass-produced textiles were all developed by businesspeople who
raised money to invest in them.

The utilization of new energy sources, such as electricity, gas, and oil, together with the mass
manufacturing of steel and iron, defined the second industrial revolution, which began in 1870.
Ideas could circulate swiftly thanks to developments in telecommunications, particularly the
telegraph, which also paved the way for the start of globalization. The second industrial revolution
was rendered particularly significant by the development of the automobile; in fact, some argue
that it is the most significant industrial revolution. During this time, businesspeople made
enormous amounts of money by mass-producing everything from railroad rails to Model T's.
Initiated in the late 1960s, the third industrial revolution lasted for 50 years. Computers and
electronics, the development of the internet, and the introduction of nuclear energy were the
defining features of this revolution. Entrepreneurs created digital technology during this time, and
they subsequently launched international corporations to market it to the general public. For
instance, the third industrial revolution saw the development of social media, the introduction of
cryptocurrencies, and the creation of Apple computers.

As we speak, the fourth industrial revolution is still in progress. Connected devices, digital
transformation, data analytics, artificial intelligence, and machine learning are the defining
characteristics of this revolution. As businesses explore for solutions to lower their carbon
footprint and stop global warming, renewable energy is also in the spotlight. Through their ideas,
entrepreneurs continue to shape this era. They take advantage of new technologies to automate
activities that are far more complex or to build more sustainable company models.

Entrepreneurship Verses Small Businesses

When referring to a business that is attempting to achieve specific goals with minimal resources,
the terms "small business" and "entrepreneurship" are frequently used interchangeably by people.
Even if it's accurate, this is essentially the only way they have in common. The majority of
entrepreneurial endeavors begin as small firms, but not all small businesses are entrepreneurial
initiatives.

In essence, entrepreneurship is having an idea, developing a business around it, and running that
business while simultaneously incurring risk. Typically, an entrepreneurial effort begins as a small
business and gradually expands. A tiny business, on the other hand, is one that is owned or run by
a single person or a relatively small group of people. The owner directly influences how decisions
are made. A small business has a very small workforce and a very limited market share.

A tabular comparison of entrepreneurship and small business is given below:

Entrepreneurship Small Business

Entrepreneurship is about recognizing and Small Business is a business that is owned
exploiting a new business opportunity in the and controlled by an individual or a few
market individuals
It's main objective is creating and developing a
It's main objective is making profits
new and innovative product or service
Entrepreneurship could experience rapid
Small Business doesn't experience growth
growth and development
 The owners are satisfied with their situation
The owners have an energetic attitude and are
and do not wish to change or experience
always looking to change and develop
growth
Small Bsiness owner arenot innovative;
Entrepreneurship exhibit high degree of
carry out a business that has already been
innovation
establish by an entrepreneur
Entrepreneurships have a high share in the
Small Businesses have a low market share
market

Entrepreneurial Mindset and its characteristics

A collection of abilities known as an entrepreneurial mindset enables people to recognize
opportunities, seize them, learn from setbacks, and flourish in a range of contexts. According to
research, having an entrepreneurial mindset is important for starting new firms, is highly regarded
by employers, and improves success in school. In addition, it's crucial to have the capacity to "think
outside the box," or in original and unusual ways, in order to get over many of the barriers to
entrepreneurship success. An entrepreneurial attitude, which is frequently an uncommon fusion of
technical know-how, creative problem-solving, personal qualities, and business acumen, is what
enables many successful enterprises. Here are seven traits that successful entrepreneurs frequently
have in common.

• Curiosity: Successful entrepreneurs frequently have an intense sense of curiosity. Keep your
brain engaged. Find out how things fit together and how the world functions. This will improve
your capacity for new perspective-taking. Study the successful. Look at their backgrounds and
achievements. Observe what made them outstanding. What did they do that you could do
better? Think about what you would change if you were in their shoes. Ask questions, research
the opposition, and seek out novel approaches. Consider your surroundings as a source of value
creation inspiration.

• Commitment: While your enthusiasm may inspire you to launch your own business, your
commitment will enable you to endure despite any obstacles. An vital quality of an
entrepreneur is the capacity to endure persistent rejection and failure. Entrepreneurs that are
successful learn from rejection and avoid having it lower their self-esteem. Keep the criticism
off of yourself and use it as motivation to improve your business concepts. Focus on making
comparisons between yesterday and now with a "see how far I've come" mentality. When you
are motivated, you can see your accomplishments. You are motivated to keep going forward
by it. continues to yield fruit. enables you to persist.
• Optimism: Entrepreneurs who succeed persevere in the face of obstacles. Being upbeat about
a circumstance entail approaching it as a potential that should be investigated. An entrepreneur
views a difficulty as a chance to learn. Boost your self-assurance. To build and polish your
ideas, use the lessons you've learned from each experience. Be positive. Recognize that every
problem has a solution.

• Flexibility: Entrepreneurship is a difficult field, as we all know. New requirements and issues
keep cropping up. It helps to be adaptable in your thinking so you can take blows, solve issues
swiftly, and bounce back from failures. Develop a methodical, critical approach to issue
solving to become more agile. Record your thoughts in a journal that you keep. Make a list of
the difficulties you encounter, including any roadblocks or apparent restrictions that keep you
from moving. Write down all your knowledge for each of these, one at a time. What do you
need to know, ask yourself. Create a timeline to get beyond this obstacle, then make a list of
all your ideas and put them into action.

• Ownership: High internal locus of control is a trait of successful entrepreneurs; they have faith
in their capacity to influence their own success. An almost neurotic drive to be in control of
one's own destiny plagues entrepreneurs. Regardless of what life throws at them, they realize
that their own actions, choices, and reactions will either make or break them. This entails
accepting responsibility for carrying out the necessary tasks. Develop the awareness that you
have complete power over how you react to the situation life hands you. Develop the belief
that you can achieve your goals.

• Leadership: You must lead and inspire your team, give them responsibility, and depend on
them for support if you want to be a good entrepreneur. It is essential to convey your concept
in an inspiring way. The key to effective communication is clarity. Entrepreneurs have a better
chance of achieving their goals by increasing the team's focus and engagement. Create your
own engaging call to action and constantly mimic it.

• Connection: You'll always fail if you behave or think like an island. Entrepreneurs must
escape the bubble that they frequently unintentionally create. Make a tribe or a network. Select
those who will facilitate the collaborative ties necessary for the expansion of your project.
Create emotional ties that inspire work more than any monetary reward could. Develop close
relationships with your family, friends, and coworkers. Spend some time on the connections
that are important to you. then strengthen your willingness and capability to ask for help when
you need it.

• Self-respect: Take as much care of your health and mind as you do of your business. Make
taking care of yourself a priority in your everyday routine. Exercise: walk, run, go to the gym,
do whatever you enjoy; Rest — get enough sleep and time to recharge; and Diet — fuel your
 body with healthy options and a few pleasures. Pleasure is crucial as well. To succeed in life,
take care of your body and spirit.

Entrepreneurial Method/ Process

• Business planning
As a tool for business planning, business plans are typically built around a number of internal
organizational functions as well as a few external variables that affect how any endeavor is
run. Business plans are created with the assumption that they will ultimately provide solutions
to "a set of dependent and independent functional challenges." The six basic steps of the
business planning process are frequently mentioned. Following are the steps: 1) establish the
company's mission and goals; 2) establish goals and objectives; 3) construct a plan to achieve
the goals; 4) determine the resources needed and create a plan for their acquisition and
allocation; 5) put the plan into action; and, 6) Review the situation, assess the findings, and
make any necessary corrections. Focus groups, SWOT analysis, financial forecasting, and
nominal rating are some of the strategies used to help entrepreneurs.

• Effectuation
Effectuation is proposed as a collection of heuristics employed by seasoned businesspeople in
the creation of new companies. A (partially) manufactured environment, endogenous goal
formation, and a logic of control are all issues that Effectuation purports to address.
Entrepreneurs begin by picturing the kinds of potential entrepreneurial activity they could
partake in given the intrinsic means. The role of the entrepreneur extends beyond simply
assuming that certain opportunities already exist and are just waiting to be discovered. It also
requires helping to create such opportunities as part of a societal process. Stakeholder
commitment is necessary for effectuation. Goals are shaped, resources are combined and
reconfigured, and artifacts are produced by constant engagement with them. Goals are
gradually constrained as the network of stakeholders grows, fostering convergence around a
particular item.

• Entrepreneurial bricolage
The entrepreneurial bricolage is made up of three components: Making do implies a "bias
towards action and active engagement," "combination of resources for new purposes" suggests
repurposing resources for uses that were not initially anticipated, and "the resources at hand"
emphasizes the physical or intellectual resources that are already in the hands of the
entrepreneur rather than newly acquired resources. By utilizing available resources in ways
that were not originally intended, bricolage, as the creation of an action-oriented or hands-on
approach, mitigates the constraints of the resource environment and thereby lowers resource
uncertainty. When resources are scarce, the bricolage technique aids business owners in putting
 its five tenets into practice: physical input, labor input, skill input, customers-market, and
institutional-regulatory environment.

• Discovery-Driven Planning
Discovery-driven planning, which has its roots in real option theory, is a method for making
implicit assumptions apparent and testing them through a series of experiments before
allocating resources. The core tenet of discovery driven planning is that traditional planning
techniques may not only be useless in circumstances of great uncertainty, but also result in
terrible outcomes. Using the five principles of 1) framing the desired business, 2)
benchmarking the factors that guarantee a successful project, 3) strategic translation of
operations by specification of organizational deliverables, 4) documenting, testing and
revisiting assumptions, and 5) managing key milestones, to learn and plan the next milestones,
discovery-driven planning offers an alternative approach to planning. Targeted experiments
and the reverse income statement are two helpful tools for advancing the process while
adhering to discovery-driven planning. For planning that is driven by discovery, business
assumptions must be specific and verifiable. As a result, this approach requires a reverse
income statement that details the maximum amount of money that could be lost without the
business going out of business. Critical presumptions are uncovered, essential operational
actions are specified, and market participants are benchmarked. These presumptions are put to
the test at predetermined checkpoints, and based on the outcomes of each milestone, the
decision is taken as to whether to stop, iterate, or modify the process' direction.

• Disciplined entrepreneurship
Entrepreneurs should manage uncertainty by adopting a disciplined strategy rather than
ignoring, evading, or being impacted by it while trying to resist it. Finding strategies for
managing the inherent unpredictability of producing something fresh is the crucial task in
entrepreneurship. Guidelines for decreasing the uncertainty of the venture creation process are
provided by disciplined entrepreneurship. The following are the three fundamental rules for
disciplined entrepreneurship: Create a working hypothesis and be prepared to alter it, collect
the necessary funding and resources for performing experiments, and then plan and conduct
experiments to try to uncover any unanswered questions regarding the concept A working
hypothesis is a set of presumptions about many elements of a business, such as technology,
client expectations, and resource availability. The phrase "subject to change" emphasizes the
provisional character of these assumptions. When managing a new business is viewed as
conducting experiments, it opens up a new, methodical approach of considering the amount of
capital that should be raised—which should be neither too much nor too little because too much
of either will disrupt the process. This suggests delaying key hires until a stable company model
is established. Finally, entrepreneurs base the design and execution of their experiments on
available resources and the working assumption. There are two types of experiments: holistic
and partial (to address different sources of uncertainty) (to gain information about multiple
 variables). Holistic experiments are good for disclosing the unknown unknowns, while partial
experiments are ideal for learning more about the known unknowns (what one knows one does
not know) (what one does not knows one does not know).

• Evidence-based management for entrepreneurial environments

Evidence-based management, which has its roots in evidence-based medicine, promotes the
use of the best available evidence to guide and enhance the quality of choices. This stems from
a mentality that values devotion to the facts over relying on received wisdom and half-truths
for making judgments. Building prototypes to systematically gather data on client reactions to
trials and prototypes is encouraged by evidence-based management, which also promotes using
the results as useful inputs for future ventures and experiments. It also introduces "embedded
design in learning from real scenarios," which suggests that this approach is built with learning
through experimentation in real situations in mind. Generally, four principles of evidence-
based management are proposed: 1) treat the organization as an unfinished prototype; 2) rely
on facts rather than gut instincts; 3) as outsiders, make more objective assessments than
insiders; 4) apply these principles to all areas of the business, not just executive decision
making.

• The Lean Startup Methodology

The lean startup methodology was introduced as a strategy for starting new businesses,
drawing on the concepts of lean manufacturing (avoiding waste and maximizing resource use).
By imitating the scientific approach while validating key venture assumptions, the lean startup
methodology provides an alternative to traditional planning. The process is based on frequent,
intimate communication with actual customers and the gathering of feedback. Entrepreneurs
translate their business concepts into verifiable model assumptions in the first step. Then, these
presumptions will be tested using a tool known as minimal viable products (MVPs). An MVP
is a product version with the smallest possible feature set that is created to offer pertinent data
to support or refute assumptions. The assumptions are either affirmed or refuted by the
objective examination of the tests that have been accomplished. By gathering fine-grained and
comprehensive data regarding the sources of uncertainty, this technique aims to reduce the
high uncertainty in venture creation processes.

Entrepreneurial Logics/Principles
Entrepreneurs make judgments and take actions all the time. What makes them do that? Dr.
Saras Sarasvathy studied 27 seasoned business owners who founded organizations with
valuations ranging from $200 million to $6.5 billion to find the answers to these questions. She
gave them a 17-page problem set with decisions typical of a company and repeatedly encouraged
them to think aloud. She was able to learn not just what they chose, but also how they came to
that decision. She utilized this to create the lauded "Effectuation" framework, which she defined
as "the logic of thought employed by professional entrepreneurs to form successful enterprises."
A process idea called effectuation explains how entrepreneurs launch new businesses.
Entrepreneurs might choose between causal (or predictive) thinking and effective thinking when
considering how to add value to a firm (or effectuation). Both strategies are appropriate since
they address different issues.
• Setting a goal and then acquiring the resources required to attain it is what causal thinking
entails. Causal thinkers hold the view that they can influence the future if they can forecast it.
• Effectuation provides a different way of thinking and challenges conventional corporate
planning. This idea states that future predictions are impossible. Effective thinkers hold the
viewpoint that "I don't need to foretell the future if I can influence it."

The majority of us place a lot of value on making predictions because we believe that the more
we can forecast about the future, the more we can influence it. Expert entrepreneurs flip this idea
around: they've discovered the hard way that the most exciting companies are established in
fields where the future is not only unknowable, but also unknowable. Those entrepreneurs would
rather create the future than anticipate it. How? According to the study, they apply the following
five principles:

1. Bird in Hand Principle: Start by using what you already have. Who are you, what can
you do, who do you know, and what other tools and resources do you currently have
available to you?
2. Lemonade Principle: There will be unpleasant surprises because the level of uncertainty
is higher. Accept the unexpected and utilize it as an opportunity to rethink your existing
ideas rather than trying to predict all possible alternative outcomes.
3. Crazy Quilt Principle: Instead than picking individuals yourself, form alliances with
those who choose your idea. You boost your chances of success if the people you team
up with share your passion for the concept.
4. Pilot-in-the-plane Principle: Concentrate on tasks that you can manage since they have
a higher likelihood of producing the intended effects. The idea that the future is
predetermined is the foundation of an effective worldview.
5. Affordable Loss Principle: By being aware of the potential losses at each step, you may
reduce your risk. Money, reputation, or any other resource could be used. Make sure you
can afford the loss if a future activity puts one of your resources at danger.

Difficulties and challenges of entrepreneurship in Nepal

One of the emerging trends among Nepalese young is entrepreneurship. Many of Nepal's most
well-known firms today were founded by enthusiastic, dynamic youths. The biggest development
now occurring worldwide is in the field of entrepreneurship. Nepal is ranked 110th out of 190
countries in the most recent World Bank rating for business ease. Among Nepal's advantages for
fostering entrepreneurship are its plenty of resources, favorable environment, sizeable young
population, and legal support.
There are several challenges that come in the journey of being an entrepreneur or developing a
startup in Nepal. Some of them are listed below.

• Finance
For a variety of reasons, it can be challenging for entrepreneurs in Nepal to get access to
financing through venture capitalists, accelerator programs, or bank loans. In Nepal, banks
were frequently observed favoring a certain industry or market. They just care about the
industry they wish to concentrate on, such as agriculture, tourism, etc., and aren't really
interested in fresh concepts. In an accelerator program, access to venture capitalists' funds
must pass through several stages, which the entrepreneurs may weigh against the
opportunity cost of not applying for these programs in order to receive funding. A small
amount of capital is required to start prototyping, but a larger source of capital is required
to grow the business. Startups have the most trouble during scaling phase. Also, Nepal's
ecosystem lacks true venture capitalists who could supply the necessary risk capital and
assume the associated risk on behalf of the companies for a minimal fee.

• Human Capital
Another factor that has been found to influence new enterprises in Nepal is human capital.
Due to the volatility associated with start-ups, the competent individuals needed for their
businesses preferred applying to the existing corporations rather than start-ups. Human
resources would frequently embark into salary negotiations with employees, sometimes
even going above and beyond what an established company would be willing to pay. A
heterogeneous unit with varied expertise must be formed in order to create a high-quality
team so that each member can fill the other's knowledge gaps. The reason why most
startups fail is that their homogeneous teams frequently consist of close friends with
comparable skill sets. The majority of employees come for the salary rather than to learn
about business, which forces them to bargain frequently.

• Culture
Since culture has an impact on how entrepreneurship is viewed in every nation, it is
frequently mentioned as a barrier for entrepreneurs. Family is a key component of culture,
and most Nepalese families preferred that their members pursue traditional employment
over entrepreneurial endeavors. When compared to people who maintain a serious or more
traditional employment, entrepreneurs are frequently referred to as casual workers. The
absence of financial and inspirational support from family and friends in Nepal had a big
influence and made it difficult for start-ups to grow.

• Support System
 Services including telecommunications, power, transportation, the internet, networking,
mentorship, expert services, and accelerators make up the support system. Scaling a firm
would be simpler if it had a network of the proper suppliers, investors, and important
partners. In Nepal there is a mentoring mismatch since there aren't enough good mentors
and the advice, they give is hard to put into practice. Because of incubators, there is now a
tendency for people to follow investors rather than using their own initiative. Support
systems are found in direct relation to the years of operation or employment experiences.
Companies that had been in business for at least three years had learning cycles during
which they acquired knowledge for themselves. On the other side, prior employment or
other experiences also provided advantages like network surplus, which might build a
company's support network.

• Marketing
Most Nepali entrepreneurs have goods to sell but are unsure of the value they are providing.
According to others, this issue is brought on by entrepreneurs' alleged lack of actual
marketing skills. Instead of speaking in terms that are focused on the needs of the audience,
entrepreneurs tend to use more technical language while marketing their products. In order
to improve marketing, the team should include at least one marketing professional. A top-
notch network of marketing experts or hiring outside marketing agents could further
enhance this.

• Policy
Government regulations are necessary to advance the company, yet some regulations may
unintentionally impede the growth of a corporation. The government hasn't been able to
get rid of the intermediary in government agencies, and there isn't a single, well-defined
registration process, so entrepreneurs may run into problems. By forcing people, especially
in the case of airport cargo, to go through them, these intermediaries encourage corruption.
Since there is no payment gateway like PayPal in Nepal, it is more challenging for
businesses to export goods than to import them.

• Processes
A startup may find the technicalities of renewal, registration, or even Value Added Tax
(VAT) entry to be challenging or intimidating. The range of talents possessed by
employees in the organization and the experience of the founders were shown to be directly
correlated with processes. An advantage for the business in terms of its capacity to
accelerate and adapt swiftly would be a start-up made up of a diverse group with various
abilities, such as marketing and accounting. Similar to this, experienced entrepreneurs were
thought to be better at management or operations. This would enable them to manage the
numerous necessary business operations more easily than inexperienced business owners.
Before deciding to join the venture, an entrepreneur must have work experience, have
 experience in the majority of the field, have learned a little bit about everything, or at the
very least have a network to whom they can refer when new issues arise.

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