Entrepreneurship A strategic viewpoint

Omer ShahzadMB-12-08

What is Entrepreneurial Strategy?

The Entrepreneurial mystery Before answering to the question , “Can entrepreneurship be taught?”

Entrepreneurship is not a magic, it’s not a mystery and it has nothing to do with the genes.

It’s a discipline and like any discipline, it can be learned and improved upon.

What is Entrepreneurship?Entrepreneurship refers to a certain kind of activity.

The heart of that activity is innovation: the effort to create purposeful, focused change in an enterprise’s economic or social potential.

What is Entrepreneurial Strategy?Entrepreneurial Strategy is both deliberate and emergent.

Strategy is defined as the patterns of decisions that shape the venture internal resource configuration and deployment and guide alignment with environment.

It’s a plan of action for accomplishing goals.

The Entrepreneurial Strategies Just as entrepreneurship requires entrepreneurial management, so it requires practices and policies outside, in the marketplace. It requires entrepreneurial strategies.

These strategies are clear and there are specifically four entrepreneurial strategies:Being first with the mostHitting them where they ain’tOccupying a specialized nicheChanging the economic characteristics of a product, market or industry

Applying the StrategiesThe four entrepreneurial strategies are not mutually exclusive.

Each fits certain kinds of innovation and does not fit others.

Each requires specific behaviors on the part of entrepreneur.

Finally each has its own limitations and carries its own risks.

Being First With The Most• For this entrepreneurial strategy the entrepreneur aims at leadership.

• Being first with the most does not necessarily aims at creating a big business right away, though often this is indeed the aim.

• But it aims from the start at a permanent leadership position.

Case: The Mayo Clinic• Not every “Being First With The Most” strategy needs to aim at creating a big business, though it must always aim at creating a business that dominates its market.

• Two brother surgeons decided to establish a medical center based on totally new concepts of medical practice and especially on building teams in which outstanding specialists would work together under a coordinating team leader. They were the Mayo Brothers.

• They aimed from the beginning at the dominance of the field, at attracting the outstanding practitioners in every branch of medicine and at attracting patients.

Being First With The Most• Being first with the most requires an ambitious aim; otherwise it is bound to fail. It always aims at creating a new market or a new industry.

• In the case of Mayo Clinic, Being First With The Most aims at creating a quite different and highly unconventional process.

Being First With The Most• As because Being First With The Most aims at creating something truly new and truly different.

• The implementation of this strategy requires thoughtful and careful analysis. This strategy needs to hit right on target or it misses altogether.

• And once launched, the Being First With The Most strategy is difficult to adjust or to correct.

Hitting Them Where They Ain’t• This entrepreneurial strategy is composed of 2 different kinds of activitiesCreative Imitation—What the entrepreneur does is something somebody has done already but it is creative because the entrepreneur applying the strategy of creative imitation understands what the innovation represents better than the people who made it

Entrepreneurial Judo—This strategy aims at obtaining a leadership position and eventually dominance. But it does not do so by competing with the leaders– or at lest not where the leaders are aware of competitive challenge or worried about it.

Case: IBM v/s Apple• IBM practiced creative imitation with the personal computer, the idea was though of apples.

• Everybody at IBM knew that a free-standing computer was uneconomical and expensive.

• IBM immediately went to work to design a machine that would become the standard in the computer field and dominate or at least lead the entire field.

• The result was the PC. And within 2 years it had taken over the Apple leadership in computer world, becoming the fastest selling brand.

Anjum FayazMB-12-07

Occupying a Specialized Niche• The entrepreneurial strategies discussed so far, being first with the most, hitting them where they ain’t, all aim at market or industry leadership. The niche strategy aims at control.

• The strategies discussed earlier aim at positioning an enterprise in a large market or a major industry. The entrepreneurial strategy aims at obtaining a practical monopoly in a small area.

• There are 3 niche strategies: The toll-gate strategy The specialty skill strategy The specialty market strategy

The Toll-Gate Strategy• The toll gate position is the most desirable position a Company can occupy. But it has stringent requirements:The product has to be essential to a processThe risk must be greater than the cost of the product

Market must be limited that whoever occupies it, first pre-empts it

Case: Alcon Company• Alcon Company is the best example of the Toll-Gate Strategy.

• Alcon Company developed an enzyme to eliminate the one feature of the standard surgical operation for senile cataracts.

• Once this enzyme has developed and patented, it had a toll-gate position.

• Thus it became essential for the process and fulfills the requirements of the strategy.

The Specialty Skill Strategy• The Specialty Skill Strategy is a highly–focused niche strategy where unique and highly specialized skills are necessary.

• Specialized skills can put the companies ahead in their field and nobody has the worth to challenge them. They become the standard.

The Specialty Market Strategy• The Specialty Market Strategy is a niche strategy where unique and highly specialized knowledge of a market is necessary.

• Specialty market can be found by looking at a new development and determining the resources that would give a unique niche.

Case: Automated Baking Ovens• In England and Denmark there are 2 major companies who produce and supply the automated baking ovens for cookies and crackers.

• There are a dozen of other companies producing the same and there is nothing technical about that.

• But these two companies know the market, they know every single major baker in the market and every single major baler knows them.

Waqas JavaidMB-12-05

Changing The Economic Characteristics• In the previously mentioned strategies, the aim of entrepreneur was innovation but here the strategy itself is the innovation.

• The product or a service it carries may be old and have been around for a long time but this strategy converts this old and existing product or service into something new.

• It changes its utility, its value, its economic characteristics and sometimes even it s physical shape and value.

Purpose Behind The Strategy• All the strategies mentioned have one thing in common– they create a customer. And that is the ultimate purpose of a business.

• This is done by the four different ways:By creating utilityBy pricingBy adapting to the customers social and economic reality

By delivering value to the customers

Strategy is not Law• Many of the entrepreneurs place their strategies on a pedestal. Once they have the plan on the paper, they try not to stray from it.

• They have a belief that sticking to their plans will send a positive gesture to the customers, investors and employees and changing the plan would undermine their credibility.

• Even sometimes it seems like entrepreneurs are more interested in pursuing their original strategy that keeps the business afloat.

Strategy is not Law• The harder it has been for a Company to work out its strategy, the more trouble it has abandoned.

• An entrepreneur must be smart enough to recognize when they have to change the course and they shouldn't hesitate to do so.

• This doesn’t means that a good strategy is unimportant, fact is that in the course of day-to-day business, you don’t have the luxury of standing pat . Sometimes you have to shift from one strategy to another.

Strategies Benefits• Formulating a strategy helps the firm to develop assets such as know-how and reputations that require repetition and constancy of effort.

• A strategy defines the boundary condition or envelope within which new initiative are more likely to result in synergies than of they were randomly selected.

Case: Wal-Mart• Sam Walton was an avid innovator who started the long departmental chain of Wal-Mart.

• Today’s Wal-Mart is the result of many years of continuous change and innovative ideas.

• But all his experiments fit a long term strategy of low cost, mass market, discount distribution, and thus provided with significant competitive advantages.

Implementation of Strategies• The quality of implementation matters at least as much as, and sometimes more than, the formulation of rules and policies.

• A typical strategy resembles a map of directions. These directions are of value while the execution is routine.

• It also requires exceptional determination, technique, endurance and the ability to make judgments under difficult conditions.

Building aResponsive & Growing Organization

Appropriate Resource Allocation

Developing Policiesto facilitate implementation

Introduction of Best Practices

Systems and ProceduresRewards

Linked to Performance

StrategicLeadership

Building CorporateCulture to Fit Strategy

Effective

Strategy

Implement-

action

Effective Implementation of Strategies

Concluding Up• The goal of practicing and implanting the strategies and building an enduring company derives from what Joseph Schumpeter described as:The dream and will to found a private kingdomThe will to conquer, to succeed for the sake not of the fruits of success but of success itself

The joy of certain, of getting things done

Thank You for being such a patient listener and listening us for so long