Part TwoThe OpportunityCopyright 2012 The McGraw-Hill Companies, Inc., All Rights Reserved.McGraw-Hill/Irwin

The OpportunityScreen and Choose opportunities with great careVenture capital investors fund no more than 1 or 2 percent of the ventures they reviewGood opportunities have risks and problemsThe perfect deal has yet to be seenTake steps to eliminate problems early during opportunity screening3-*

Chapter3The Entrepreneurial Process3-*

Entrepreneurship DefinedEntrepreneurshipa way of thinking, reasoning, and acting that is opportunity obsessed, holistic in approach, and leadership balanced for the purpose of value creation and capture.

(This definition of entrepreneurship has evolved over the past three decades from research by Jeffry A. Timmons, Babson College and the Harvard Business School and has recently been enhanced by Stephen Spinelli, Jr. former Vice Provost for Entrepreneurship and Global Management at Babson College, and current President of Philadelphia University).3-*

Entrepreneurship ResultsValue:CreationEnhancementRealizationRenewalFor:OwnersStakeholdersAll Participants3-*

Entrepreneurial RequirementsWillingness to take risksPersonal FinancialCalculatedShift the odds of successBalancing risks with rewards 3-*

Entrepreneurship is NOT just Start-Ups OnlyIt includes companies and organizationsAll typesAt all stagesCan occur and fail to occurIn old and new firmsSmall and large firmsFast and slow growing firmsPrivate, not-for-profit, and public sectorsAll geographic pointsAll stages of a nations development3-*

Classic Entrepreneurship: The StartupRaw startup companyan innovative idea that develops into a high growth companyQualities of a startup companyStrong leadership from the main entrepreneurComplementary talents and outstanding teamwork of team membersSkill and ingenuity to find and control resourcesFinancial backing to chase opportunity

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Beyond StartupsGiant firms of the past (IBM, Digital Equipment Corporation, Sears, AT&T) once thought to be invincible, have been reduced in size and scope by waves of entrepreneurial ventures.Large companies face shrinking payroll while new ventures add jobs.New entrepreneurial rivals are changing the pace of business as usual.3-*

People Want to be Led!People dont want to be managed. They want to be led.Ewing M. Kauffman

Characteristics of giant firmsHierarchical in structureLeadership as managing and administering from the top downRewards for the largest (assets, budgets, etc.)3-*

The Fall of the GiantsSlow to change archaic strategy (average 6 years)Slow to change outdated culture (average 10 to 30 years)Slow to recognize and incorporate: entrepreneurship, entrepreneurial leadership, and entrepreneurial reasoning3-*

Signs of Hope for CorporationsLaunching experiments and strategies to recapture the lost entrepreneurial spiritWorking to instill the culture and practices of entrepreneurial reasoningApplying entrepreneurial thinking to invent their futures3-*

Metaphors for EntrepreneurshipImprovisationalQuickCleverResourcefulInventiveComplex compare to music (jazz or symphony conductor), sports (golf), chess3-*

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Paradoxes of Entrepreneurship (1 of 3)An opportunity with no or very low potential can be an enormously big opportunity.To make money you have to first lose money.To create and build wealth, one must relinquish wealth.To succeed, one first has to experience failure.3-*

Paradoxes of Entrepreneurship (2 of 3)Entrepreneurship requires considerable thought, preparation, and planning, yet is basically an unplannable event.For creativity and innovativeness to prosper, rigor and discipline must accompany the process.Entrepreneurship requires a bias toward action and a sense of urgency, but also demands patience and perseverance.3-*

Paradoxes of Entrepreneurship (3 of 3)The greater the organization, orderliness, discipline, and control, the less you will control your ultimate destiny.Adhering to management best practice (especially staying close to the customer that created industry leaders in the 1980s), became a seed of self-destruction and loss of leadership to upstart competitors.To realize the long-term equity value, you have to forgo the temptations of short-term profitability. 3-*

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Think Big for Higher Potential VenturesDont think too smallSmaller often means higher failure oddsGetting the odds in your favor Entrepreneurship should not be a job substituteOdds for survival, growth, and a higher level of success, changes when the ventures reaches a size of 10-30 people with $2-$3 million in revenues3-*

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The Entrepreneurial TeamAn entrepreneurial leaderLearns and teachesfaster, betterDeals with adversity, is resilientExhibits integrity, dependability, honestyBuilds entrepreneurial culture and organization3-*

The Entrepreneurial TeamQuality of the TeamRelevant experience and track recordMotivation to excelCommitment, determination, and persistenceTolerance of risk, ambiguity, and uncertaintyCreativity3-*

The Entrepreneurial TeamQuality of the TeamTeam focus of controlAdaptabilityOpportunity obsessionLeadershipCommunication3-*

Sustainability as a BaseAchieving economic, environmental and social goalsWithout compromising the same opportunity for future generationsDriven by many factorsBy understanding these factors, the entrepreneur builds a firmer base girding the venture for the long term3-*

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