subject module - elective ciakl ii - class 01

EUROPEAN COURSE IN ENTREPRENEURSHIP FOR THE CREATIVE INDUSTRIES

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CIAKL Introduction


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INTRODUCTION

Building a curriculum for the entrepreneur in the arts and film Manuel José Damásio, Universidade Lusófona de Humanidades e Tecnologias and CIAKL Project leader

a) Principles of entrepreneurship education for the arts and media To start thinking of a curriculum, course development or subject molding in the realm of entrepreneurship for the arts and film we must address three specific needs:

1. The need for trainers/teachers in the domain of the arts and film to have access to deeper knowledge and skills dealing with the more business oriented aspects of entrepreneurship training and project management

2. The need for teachers and schools in this area to share and disseminate amongst broader audiences each one of their “best kept secrets” on how they nourish creativity or excel some of their trainers and trainees to become entrepreneurs, by this trying to identify the traces and good practices that indicate the foundational and conditional aspects of that outcomes

3. The need for entrepreneurship training and mindset to open itself to other disciplines either than business

Entrepreneurship is almost always situated within the domain of business and involves some type of market exchange, giving it immediate economic significance. The arts and film, on the other side, have always somehow been regarded as field untouched by economic reasoning, with a clear lack of specific entrepreneurship oriented skills being present in many of curriculums in this area. Our proposal must though focus on the opportunity seeking mindset that molds artistic training and creativity as a foundational aspect upon which entrepreneurial skills can be built on, while at the same time seeks to link entrepreneurship learning in the realms of the arts with media, not only as a training and teaching discipline, but also as a societal framework that can help in designing new entrepreneurial approaches. Entrepreneurship programs are growing at an astonishing pace. When discussing actual classes and curricula, however, entrepreneurship quickly and inexorably becomes conflated with typical business offerings. There is then a need to renovate the teaching of entrepreneurship in non-business oriented disciplines by integrating entrepreneurship within the study of art itself via a strong focus on both auxiliary case studies and use scenarios, rather than use the entrepreneurial approach merely as a means to market a good or service. This approach will not only introduce or reinforce entrepreneurship competences into teachers, students and schools where they are lacking, but also promote the bridging of the entrepreneurial nature of artistic practice with the competences needed to transform those opportunities into valuable outcomes.


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It’s is a challenge to understand how entrepreneurship can be integrated into arts courses without turning them into business courses. Moreover, though there is widespread desire among entrepreneurship aficionados to claim that entrepreneurship involves more than just business skills, to date, entrepreneurship has been somehow imprisoned within a business context largely because the subject matter has been mostly governed by the pedagogy and objectives of business schools. By claiming that entrepreneurship is a tangible, practical manifestation of a particular type of sensibility, our proposal seeks to not only encompass entrepreneurship economic ramifications in the fields of arts and media learning, but also to extend the ability of entrepreneurship teachers in these areas to engage with social discourse—to develop and express personal identity by influencing larger social contexts. Our proposal situates entrepreneurship within the academy, and tries to legitimate the practical, material dimension of the discipline to the degree that entrepreneurship shares the values of the arts: commitment to self-expression, debate, creativity, problem solving and project development, and the ongoing articulation of the mutuality of social interaction and personal identity. Following Venkataraman (1997), we define entrepreneurship broadly as the discovery, evaluation, and utilization of future goods and services. Despite this common definition, and to the detriment of discipline-based scholarship, the body of entrepreneurship research is stratified, eclectic, and divergent. The field of entrepreneurship generates many theories and frameworks and the bridging between its approaches and those of other areas are sometimes fuzzy and confusing. But, in a society searching for new ways of thinking and promoting its sustainability and growth, the entrepreneur strikes out as someone who brings about innovations, which then creates real development in the economy. But more than a definition of entrepreneurship, one of the crucial aspects of entrepreneurship training is the understanding of the forces that lead us to an entrepreneurial path. But strangely and at the same time, maybe because we are dealing with vocational non-business oriented disciplines, entrepreneurship training is lacking in most of the “creativity driven” courses and degrees in Europe, a fact that calls for a renovated approach that can bridge the gap between these two spaces of applied knowledge. The past 25 years of focus on entrepreneurship education has presented significant challenges for teachers and professors to create curricula and methods that meet or surpass student expectations. Students who enrol in entrepreneurship courses seek avenues to express latent creativity and innovativeness. If the vanguards in the beginnings of the XX century had already taken an important step towards integrating media typically not artistic, focusing on elements of everyday life - the best known case is undoubtedly the ready-mades of Marcel Duchamp, with the advent of television in the 30 ‘s and its generalization in the following decades, with the invention of video recorders in 1956 and especially with the advent of the microprocessor in the 70's, as


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well as the marketing of personal computers in the late 70's and 80's, the art and artists begun to progressively abandon the traditional means, and started to exercise their creative activity taking as input the new technological tools. This development came to put into play the very definition of art and artistic activity, and announced the partial collapse of the institutions that were engaged in classical art, besides obviously also implying changes in the associated learning process. The Fine arts founded on the expertise of the hand and tied to the representation of reality, begun to give way to new forms of creation. With the advent of digital technologies and artistic practices resulting from technological means, art is separated from its own tradition, its traditional references of the real or of the concept, transformed. Today’s artistic practice is largely substantiated in the media, and their relevant place in today’s production deserves no questioning. New opportunities have aroused for all artistic practices to enter the field of media communication. In fact, the field of applicability of art is no longer the aesthetics or the theory of art, but media practice, that although backed by the historical forms of taste, points to new processes of referential construction that open possibilities that allow us to affirm that when teaching entrepreneurship as an activity strongly molded by the role opportunity discovery entails, the fields of art and the field of the media training point to the same context and horizons. Entrepreneurial inclinations also influence artistic, educational, or personal decisions, even when no finances are involved. It’s a type of problem solving and opportunities seeking. Entrepreneurship equals creativity—as much an attitude as it is a practice that involves business type skills. Having this in mind, our work started with the definition of the requisites for the training activities to be developed:

Business skills. What are the skills that artists and filmmakers can benefit from in their work?

Creativity. Entrepreneurship means creativity. How can we enhance that creativity typical of the arts and media conceptual process within entrepreneurial activities?

Stand out. Creative entrepreneurs have an edge on those who have simply pursued a normal path. How can we reinforce that attitude amongst art and media students?

Address job demands. Aspects of many arts jobs, even traditional ones, require entrepreneurial solutions. How can we introduce amongst our students those skills that foster employability?

Ensure a legacy. Most artists hope to make some sort of meaningful positive difference in the lives of others. Entrepreneurial actions can result in powerful legacies. How can we define that?

To develop a curriculum and syllabus in these areas implies we focus on the so called “creative industries”. The creative industries are different because consumer choice does not fit into standard consumer demand theory. Creative industries are defined in terms of a class of economic choice theory where the predominant fact is that the decisions both to produce and to consume are determined by the choice of others in a social network. This social network-based definition of the creative industries means that they are re-positioned


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from a lagging to a leading sector. Creative industries give rise to two types of values: economic and cultural. We assume creative industries originate and coordinate change in the knowledge-based economy in a way similar to how science, education, and technology impact society and we place creative industries policy at a level of equal importance. Hence, the creative industries are a kind of industrial entrepreneurship operating on the consumer side of the economy. Though, competences to be taught must follow this paradigm of the creative industries. The definition of creative industries encompasses music, film, performing arts, publishing, and art. What is produced in these industries is cultural capital which we define as the stock of cultural value embodied in an asset. Cultural values can be thought of in a functional sense as that produced by the creative industries or as the constituent set of attitudes, practices, and beliefs that are fundamental to the functioning of different organizations. Art and film students/trainers entrepreneurship oriented training should have the nature of these “industries” in mind”. There is a long tradition among academics that views the arts as a “special” industry. This can be summed up as the view that there is something about the production of everyday goods and services that the arts do not contribute to. This is what complicates the debates over arts entrepreneurship and its role in the economy. Do the arts do something more than just create jobs and material wealth and how do they contribute to society? Though what competences should teachers reinforce in their students? Arts represent a development of humanity that moves beyond the base desires to consume and produce goods and instead seeks to create something supposedly at a “higher” level. The fact that the arts are treated as “special” means there needs to be an understanding of how arts entrepreneurship is better/different in terms of economic impact than other activities and what are the specificities implied in arts entrepreneurship? Having this in mind we should also in this initial stages define the methods of training:

1. What teaching designs are appropriate for specific training and what are the methodological characteristics of robust training in this area?

2. What is an appropriate balance between the acquisition of skills on entrepreneurship by the trainees involved and the exploitation of their abilities to foster entrepreneurship amongst them?

3. How can the need for a multiplier effect be balanced with the need for training provision?

Following this we should also define what outcomes that are we looking for. The provisional list should include:

To improve knowledge about the entrepreneurial attitude Reinforcement of a positive attitude towards entrepreneurship and a concern with

knowledge relevant in this context, like expertise on IP and venture capital Ability to prepare a good business plan, a factor which is critical to the success of

entrepreneurs, as well as to increase the possibility of generating interest to investors about the materialization of the idea


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Reinforcement of a positive attitude towards the development of innovations with an economic output.

That there is no blueprint for entrepreneurship in the arts and media should not be surprising. It has been said that the essence of innovation is to give the world something they did not know they were missing. There are three aspects to the question of the role of education in arts and film entrepreneurship. The first is whether individuals can be taught to be arts entrepreneurs and how much they can be taught. Second is whether those who are successful arts entrepreneurs can convey information to those who are aspiring arts entrepreneurs. Finally, are current arts entrepreneurship education programs successful in creating more arts entrepreneurs? While there is an inherent artistic creativity that cannot be taught, how to run a business can be. This is why there is potential for arts entrepreneurship education though it requires changes in the present structure of schools, teachers attitudes and students mentality, but also in the design of new training programs that cope with this challenge. Our initial objective was to addresses such challenge by assuming that entrepreneurs in the creative industries should have formal training in business. Such training should include basic business principles in the areas such as accounting and management, for example, that should be complemented reflexive and reflective learning in an informal and grounded manner, namely via project based learning. The call for intellectual entrepreneurship (IE) will create interdisciplinary connections that will generate a broader support for film and the arts in society and schools though promoting the upcoming of new projects and training programs on entrepreneurship. The defined requisites, outcomes and methods, should promote the training of entrepreneurs in the fields of arts and media that have:

1. Vision and discovery. Entrepreneurs in the arts and media reconsider and reinvent themselves as individuals in the context of their disciplines. They envision new ideas and initiatives through this process based on a broader view of the world and what matters most to them.

2. Ownership, agency, and accountability. After reconceptualising themselves, entrepreneurs recognize that jobs are not entitlements. Instead, they realize that jobs originate from personal initiative and commitments. Employment is a manifestation of one’s vision and a full consideration of what is possible.

3. Integrative thinking and action. By creating synergy, the entrepreneur

marshals the intellectual capital from disparate disciplines and utilizes numerous skill sets. This is more than an awareness of cross-disciplinary scholarship. Entrepreneurs in the arts use and maximize personal connections in these areas to bring their vision to fruition.


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4. Collaboration and teamwork. The entrepreneur views the collective creativity of large groups as a critical resource. Without collaboration, synergy and integrative thinking cannot be developed though the network goals will not be achieved.

These are the four principles that map our goals but also the curriculum we will now present.

References:

Aggestam, Maria. "Art-Entrepreneurship in the Scandinavian Music Industry." In Entrepreneurship in the Creative Industries:

An International Perspective, edited by Colette Henry, 30-53. Cheltenham: Edward Elgar Publishing, 2007.

Beckman, Gary D. "‘Adventuring’ Arts Entrepreneurship Curricula in Higher Education: An Examination of Present Efforts,

Obstacles and Best Practices." Journal of Arts Management, Law & Society 37, no. 2 (2007): 88-111.

Beckman, B. (2010), Disciplining the Arts: Teaching Entrepreneurship in Context. Massachussets: R&L Education

Henry, Colette, ed. Entrepreneurship in the Creative Industries: An International Perspective. Cheltenham: Edward Elgar,

2007.

Lindqvist, Katja. "Artist Entrepreneurs." In Art Entrepreneurship, edited by Mikael Scherdin and Ivo Zander. Cheltenham:

Edward Elgar Publishing, 2011.

Scherdin, Mikael, and Ivo Zander, . Art Entrepreneurship. Cheltenham: Edward Elgar, 2011.

Venkataraman, S. (1997). The Distinctive Domain of Entrepreneurship Research: An editor's Perspective. Advances in Entrepreneurship. J. Katz and R. Brockhaus. Greenwich, JAI Press. 3: 119-138


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ENTREPRENEURSHIPand

Entrepreneur Mind-set


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Entrepreneurship and Entrepreneur Mind‐set SOURCES:

The Economist, “The Portrait of the Artist as an Entrepreneur. Albrecht Dürer. How the greatest figure of the northern Renaissance invented a new business model.” http://www.economist.com/node/21541710

S. Venkataraman, “Entrepreneurship”, Darden Business School, University of Virginia, first published in R. F. Bruner, M. R. Eaker, R. E. Freeman, R. E. Spekman, E. O. Teisberg, and V. Venkataraman, The Portable MBA, 4th ed. (Hoboken, NJ: John Wiley and Sons, 2003).

Saras V. Sarasvathy, “What makes entrepreneurs entrepreneurial?”, University of Washington School of Business, 2001

Howard H. Stevenson and David E. Gumpert, “The Heart of Entrepreneurship”, Harvard Business Review, 1985

Gregersen, Hal, et al, “Innovator DNA”, Harvard Business Review 2010

THE ARTIST AS AN ENTREPRENEUR In July 1521, as Albrecht Dürer was packing up to return to Nuremberg from Antwerp, he received a message. Would he come at once to do a portrait of Christian II, King of Denmark, who happened to be in town? Naturally he dropped what he was doing, and went. One did not turn down kings. Dürer drew Christian’s sad‐eyed, fur‐swathed figure in a charcoal sketch that still survives, kept in the British Museum. The king then asked, would he paint him in oils? Again Dürer said yes, and did so in record time, a couple of days. When it was done, he found 30 florins pressed into his hand. Soon afterwards, he left for home. For Dürer, this was an unusual incident. Then 50, he had been for some years the most famous artist in northern Europe; but he was not in essence a court painter. He thought of such people as “parasites”, hanging round great men, waiting for a commission to fall from the lordly lips. He, by contrast, was an independent businessman. He made his money not by grovelling, but by selling copies of the woodcuts and engravings printed, since 1495, at his workshop in the centre of Nuremberg. He was not even a member of a guild, for there were no artists’ guilds in the city: he was a free individual, unaffiliated, making money and a reputation purely for himself.


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WHAT IS ENTREPRENEURSHIP? Entrepreneurship is about creating a successful new business with resources that you already have. Successful entrepreneurs, through their imagination, energy, talent, knowledge, contacts, and activities, create new wealth in societies. They do this in two ways: by reducing or eliminating existing inefficiencies in markets and firms or by bringing new products and problem solutions to people. When people create new businesses or firms to exploit inefficiencies or create and sell new and innovative products we call them entrepreneurs and their activities entrepreneurial. Inefficiencies Inefficiencies arise when it is difficult to remove poorly used resources from where they are currently employed and reapply them in ways that are more useful and different people have different information, conjectures, or ideas about the future prospects of resources, products, customer needs and preferences, the value chains of industries, and the broad social, economic, political, and technological trends. Opportunities Opportunities to create new products arise because of limits to our current knowledge and also because we humans are creative and are constantly looking at the world around us in new ways. An example of limits to our knowledge would be the limitations in technology needed to satisfy certain known but unfulfilled market needs. Every industry faces such technological frontiers—in design, manufacturing, distribution, sales, marketing, logistics, quality, etc.—and is therefore a source of both known and sometimes unanticipated opportunities. It is from these major sources—stickiness of resources, information asymmetries, limited knowledge, and creativity—that new wealth is often created for the enterprising entrepreneur and for society. So, what makes entrepreneurs entrepreneurial? Entrepreneurs are entrepreneurial, as differentiated from managerial or strategic. Because they think effectually; they believe in a yet‐to‐be‐made future that can substantially be shaped by human action; and they realize that to the extent that this human action can control the future, they need not expend energies trying to predict it. In fact, to the extent that the future is shaped by human action, it is not much use trying to predict it ‐ it is much more useful to understand and work with the people who are engaged in the decisions and actions that bring it into existence. "Effectual" is the inverse of "causal" reasoning Causal rationality begins with a pre‐determined goal and a given set of means and seeks to identify the optimal – fastest, cheapest, most efficient, etc. ‐ alternative to achieve the given goal. Effectual reasoning, however, does not begin with a specific goal. Instead, it begins with a given set of means and allows goals to emerge contingently over time from the varied imagination and diverse aspirations of the founders and the people they interact with. Relationship between opportunity and individual needs To be an entrepreneurial opportunity, a prospect must meet two tests: it must represent a desirable future state, involving growth or at least change; and the individual must believe it is possible to reach that state. This


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relationship often identifies four groups, which we show in the graph. Entrepreneurs are not just opportunistic; they are also creative and innovative. The entrepreneur does not necessarily want to break new ground but perhaps just to remix old ideas to make a seemingly new application. Many of today’s fledgling microcomputer and software companies, for example, are merely altering existing technology slightly or repackaging it to accommodate newly perceived market segments.

WHAT IS AN ENTREPRENEURIAL OPPORTUNITY AND

WHERE DOES IT COME FROM?

Entrepreneurial Leader An entrepreneurial leader is one who “imagines” a future business possibility within a framework of macroforces and trends and acts to bring the future into existence with a sense of urgency, unconstrained by the limited set of means at his or her disposal, with commitment and flexibility during the creation process, in order to profit from the journey.

Principle 1: Entrepreneurial opportunities are rarely found; they have to be created and earned.

Major source of entrepreneurial opportunities The emergence of significant changes in social, political, demographic, and economic forces that are largely outside the control of individuals. These kinds of macroforces are exogenous changes, because they often occur outside the boundaries of the business environment and are rarely influenced by them. On the contrary, these changes have a profound impact on the business world. Of course, sometimes social and political changes are a result of business practices or cultures (such as globalization) but in most cases, individual firms can rarely influence such forces. These macroforces give rise to fundamental changes in how we live, where we live, and what we prefer, thus providing numerous opportunities for entrepreneurs to create and market new products and services. Indeed, these changes also provide opportunities to renew and reinvent existing products and services. When existing firms cannot or will not adapt to these changes, opportunities are created for entrepreneurs in new firms. Demographic changes alter the size, average age, structure, composition, employment, educational status, income, and health of the population. Second source of opportunity Occurs through inventions and discoveries that produce new knowledge. Technological developments and breakthroughs in university laboratories and other research institutions, corporate or otherwise, offer excellent prospects for commercial opportunities. The latest advancements in science, arts, crafts, and music all present conditions for fashioning entrepreneurial opportunities. These developments may occur not only in scientific labs but also in craft shops, garages, studios, and basements.


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Third source of opportunity May be found in the inefficiencies embedded in a society’s existing economic structure in the form of incongruities. An incongruity is a “discrepancy, a dissonance, between what is and what ought to be.” Definition of opportunity “A time, juncture, or condition of things favorable to an end or purpose, or admitting of something being done or effected” (The Oxford English Dictionary). Opportunity involves an end or purpose and things favorable to the achievement of it. Therefore, for something to be an opportunity, there must be an “original mind”. Further, in the case of an entrepreneurial opportunity, the “things favorable” consist of two categories: (1) beliefs about the future and (2) actions based on those beliefs. Thus, “before there are products and firms, there is human imagination. Inspiration The inspiration and information that allows one to endow and enrich the abstract and impersonal forces and trends with specific meaning so that the individual is able to imagine a product, a market, and the means to bring them together is partly within us and partly outside. Dispersed knowledge Austrian economist Friedrich von Hayek postulated the concept of dispersed knowledge, where no two individuals share the same knowledge or information about the environment. We can distinguish between two types of knowledge: first, the body of scientific knowledge, which is stable and can be best known by suitably chosen experts in their respective fields; second, the dispersed information of a particular time and place, whose importance only the individual possessing it can judge. This dispersion has an extremely important implication as far as entrepreneurial opportunities are concerned. Dispersed information explains how an enterprising individual and unfolding forces and trends combine to crystallize into an opportunity to create and exploit new products in existing or new markets. The key is that this information is diffused in the economy; it is not a given and not equally at everyone’s disposal. Thus, only a few people know about a particular scarcity, a new invention, or a particular resource lying fallow. This knowledge is typically idiosyncratic because it is acquired through each individual’s own circumstances, including occupation, on‐the‐job routines, social relationships, and daily life. It is this specific information, obtained in a particular information corridor that leads to someone seeing opportunities for profit‐making insight.


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“Entrepreneurship is a function of individuality: who you are, what you know, and who you know” (Saras Sarasvathy). We cannot imagine how certain firms could have come into being, aside from the particularity of certain individuals: Disney without Walt Disney, Ford without Henry Ford, General Electric without Thomas Edison, Wal‐Mart without Sam Walton. Act upon the opportunity One thing is to arrive at an entrepreneurial opportunity, but an entirely different matter to act on this opportunity and ride it through to execution and profitability. There is a fundamental uncertainty about entrepreneurial opportunities. There is no meaningful way in which to predict the future prospects of an entrepreneurial opportunity and then act on it. Distinction should be made between uncertainty (outcomes that cannot be imagined and are unknowable) and risk (both outcomes and their probabilities can be subjectively assigned). Bringing new products and markets into existence usually involves an element of downside (partly influenced by risk and partly by uncertainty). Indeed, risk and uncertainty provide the opportunity for profit in the first place. This opportunity for profit attracts many people to entrepreneurship.

Principle 2: A fear of realizing the downside of creating a new business biases one toward analysis. A bias for analysis significantly decreases the probability of business entry but increases the probability of success.

While the opportunity may be an attractive one, the urgency to act creates many loose ends and increases the number of things that can go wrong with the new venture. While a certain amount of reflection, analysis, and planning might allow the individual to improve the quality of execution, the fear of losing the upside to real or imagined competitors biases the entrepreneur toward action. Again, we have a conundrum.

Principle 3: A fear of missing the upside of a good opportunity biases one toward action. A bias for action significantly increases the probability of business entry, but often decreases the probability of success.

Entrepreneurs use what she calls the affordable loss principle. Affordable loss is the amount of personal resources that an entrepreneur feels psychologically comfortable committing to an idea, and, at the extreme, this means committing “zero” resources to market.

Principle 4: By adopting the affordable loss principle, enterprising individuals are able to resolve the tension between a bias for analysis and a bias for action.

Most of the entrepreneur’s resources have to come from other people and institutions. Thus the entrepreneur has to assemble the resources and the value‐chain infrastructure before potential profits can be realized. The process of creating products and markets implies that much of the information required by potential resource suppliers (for example, technology, price, quantity, tastes, supplier networks, distributor networks, and strategy) is not reliably available. Relevant information will become available only when the market has been successfully created.


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Principle 5: All creative endeavors involve a vicious cycle: no product implies no customers; no customers implies no revenue; no revenue implies no cash for investment; no investment implies no legitimacy or credibility; no legitimacy implies no resources; no resources implies no product.

By using their human capital (talent, education, and knowledge), intellectual capital (creativity, resourcefulness, enthusiasm, and optimism), and social capital (contacts with people and their contacts), entrepreneurs are able to leverage the necessary resources required to break out of the vicious cycle without increasing their overall exposure to loss from a failed venture. The strategy of using commonly available resources to break out of the vicious cycle is called bootstrapping.

Principle 6: Bootstrapping

Bootstrapping involves at least three components: using assets parsimoniously, leveraging social assets, and employing resourcefulness. Entrepreneurs use resources very sparingly, with sparse resources asset parsimony strategy. Asset parsimony strategy keeps the loss exposure of the entrepreneurs very low and at the same time allows one to create something with little. The basic tenet of asset parsimony strategy is to invest your imagination before you spend your money. Since entrepreneurs have limited resources to invest, they must creatively exchange the goods and services they need for noncash assets at their disposal, such as information, friendship, charm, enthusiasm, obligations, time, and imagination. The bases of these exchanges are emotions and values rather than logic and reason. In exchanges based on social relationships, entrepreneurs use their social skills and accumulated social capital to obtain the resources necessary to build on their initial ideas much more cost‐effectively than by purchasing these resources at open‐market prices.

Principle 7: Bootstrapping is an ideal way to break the vicious cycle at start‐up

A central tenet of entrepreneurship is the refusal to accept a lack of resources as an insurmountable constraint. Indeed, many entrepreneurs claim that you are better off having sparse resources because it lowers risk, forces you to be more creative, and focuses your attention on generating revenues to build the business — the cheapest form of capital available. Having sparse resources may have its advantages, but it also presents problems.

Cash is the most important asset for any start‐up because it is the ultimate store of value that can be traded for other valuable assets. While social capital certainly helps, it is not as liquid or as tradable as cash. Further, social capital is most effective at the earliest stages of a creative process. Growth demands a more fungible asset, such as cash.

Principle 8: Cash is king/queen. Cash is most expensive when you need it most In addition to the liabilities of newness and smallness, entrepreneurial ventures face what may be called the liabilities of complexity. One need not emphasize the point that managing a


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business venture is a highly complex process. Three specific complexities need special mention. They are management of ideas, management of attention, and management of logistics. For an entrepreneur, the biggest challenge is to pursue an idea to its conclusion. Most individuals lack the capability to deal with complexity. People have short attention spans. Because of this inherent limitation of the human mind, people are most efficient at repetitive task. But new business creation is hardly repetitive. There are many details to think about and execute. Each task and each new problem looks different from the earlier ones. The entrepreneur has to take on all roles, from janitor to strategist. The essence of entrepreneurship is finding ways to buy low and sell high!

Principle 10: Every new business has three to five fundamental drivers. Find them and focus on them. The task of creation becomes easy.

FROM CONCEPTUAL TO REAL ACTION

Everyone have the capacity to generate ideas, but just few have the ability to use ideas to create something, to solve problems, to improve processes to create value that can be exchanged. Create value is not just about to earn money. Considering the consumer perception it is also a way to create benefits and good experiences. Detecting what it is that has value for the client becomes a search for competitive opportunities. The hard work is to discover a great idea and find out which idea is better than other, and how to recognize an interesting idea that can move the world. The answer is – try to move your idea into action, and many other questions will appear, many other solutions will be needed based in new ideas, based in new actions. If you can put the idea in action, if you can exceed the barriers, which means you probably are in the right path to the success. The ideas doesn’t move by themself, they need energy from people who desire to challenge for something new, instead to be just talking about ideas. An entrepreneur is a doer not a talker, even though them are dreamers, the entrepreneurs are people who can make things happen, because they have the ability to generate value which is the first rule to achieve success.

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12

Observing

Some of the most innovative entrepreneurs are “intense observers,” Gregersen says. Take for

example Scott Cook, the founder of Intuit: “When we interviewed him, we talked about how he

got the initial idea for Quicken software. He watched really carefully in terms of how his wife

was very frustrated doing their finances. Manually it was frustrating and irritating. She

purchased some software that was equally frustrating and irritating.” It was at that point that

Cook thought he might be able to develop a product that could help his wife “solve that

problem more effectively.”

After a ‘sneak preview’ of an early Apple computer, Cook got a “rich sense of what it might look

like to have a user interface and a mouse and so on, and be able to have things like checks on

the screen that looked like what they should be.” And from this observation, Gregersen says,

sprang Quicken.

Experimenting

When Jeff Bezos, the founder of internet retailer Amazon, was growing up, he used to spend

time on his grandfather's farm in the summer. When machinery broke down on the farm, his

grandfather would try to fix it himself, with some help from Jeff. They would “experiment,

trying this and that, until it would finally work again.” If the animals on the farm got sick, his

grandparents wouldn’t call the vet, but rather experiment and try to fix the problem

themselves.

“So Jeff grew up with that kind of attitude and mindset, that if I am confronted with a

challenge, I can figure out a solution,” Gregersen says. “That kind of experimentation spilled

over into Amazon.” At first, the idea had been to sell books via the internet without inventory.

“That was the initial idea. We sometimes forget that it took him seven, eight, nine years of

experimentation to build the capacity to have warehouses full of books.” As a consequence of

his experimentation, Bezos “built this business model that we now call Amazon today.”

Questioning

Questions are at the core of what we do. We can be observing the world or experimenting,

“but if I have no questions in my mind, I'm pretty unlikely to get any observations or insights or

‘ahas’ that I never saw or thought about,” Gregersen says.

“And this kind of questioning attitude and mentality is just rampant in these folks.” Some may

be better than others in observing, but when it comes to questioning, “all were powerful.”

“I'll never forget when I sat down with A.G. Lafley (the former CEO of Procter & Gamble) to talk

with him about his world of leadership. I had a series of questions related to research about

global leadership and I swear he asked me far more questions in that interview than I asked

him because he was just simply curious about what was going on in the research.”


13

Another was Michael Dell. “I had the naivete to ask Michael if he had any favourite questions

he likes to ask when he wanders around the world. And he instantly responded with a quizzical

look, like ‘That's a dumb question.’ Then he said: “Hal if I had some favourite questions,

everybody would know the answers. Instead, when I'm wandering the world, I try to construct

a question for every conversation that might generate information that I never had before’. And

for most of these innovative entrepreneurs, that's just how they think."

Networking

Typically, when we think of networking, we think of this in terms of jobs, a career or maybe

social life. But when it comes to creativity, it takes on a different meaning. “Innovators are

intentional about finding diverse people who are just the opposites of who they are, that they

talk to, to get ideas that seriously challenge their own,” Gregersen says. Creative and innovative

entrepreneurs look for people who are “completely different in terms of perspective” and

regularly discuss ideas and options with them “to get divergent viewpoints.” There could be

differences in gender, industry, age, country of origin, or even politics. “If I'm on the right,

they're on the left, that kind of notion. And those sorts of diverse inputs in terms of

conversations enabled them to get new ideas,” he says.

“Now it doesn't come instantly. Sometimes the conversations provide their own insights.”

David Neeleman, founder of JetBlue Airways and now CEO of Azul Airlines in Brazil, got the

idea for paperless ticketing or e‐ticketing, Gregersen says, by talking to one of his employees

about the frustration of having to carry around paper tickets in order to give them to

passengers flying on their planes. “So that conversation then led to a new idea and a way of

doing things differently.”

Disruptive innovation

Another of the co‐authors of the study, Clayton Christensen, is an expert in disruptive

innovation and this led Gregersen to wonder what the origin was of “those disruptive

organisations that changed whole industries.” They then drew up a list of the world’s most

innovative companies based in part on BusinessWeek’s ”Most Innovative Company” ranking

and began interviewing the CEOs or founders.

They got access to the likes of Dell, asking him and others: "Tell us about what was going on

when you got the initial idea that led to this innovative business called Dell computer (or

Amazon in the case of Bezos)." They then realised, when looking at the responses to this

question, that innovative entrepreneurs are “doing a lot of the same things ‐‐ there’s a little bit

of variation but a lot of the same things.”

At that stage, they developed a self‐assessment and 360 degree survey based on the concepts

of experimenting and so on, and assessed ‘thousands of executives and entrepreneurs.’ “And

what we discovered was that those engaging in these behaviours and this thinking pattern,

were actually the ones who delivered breakthrough processes, new products and services, new

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14

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15

“Innovation is a habit,” Gregersen says. “And for these innovative entrepreneurs it's a way of life. It's the fabric of who they are. And for others who aren't that way, they could be: if they choose to act different to think different.”

Hal Gregersen is an affiliate professor of leadership at INSEAD. The co‐authors of the study are Jeffrey Dyer, a strategy professor at Brigham Young University, and Clayton Christensen, a professor of business administration at Harvard.

First published: December 21, 2009

Last updated: January 14, 2010

Source: http://knowledge.insead.edu/innovation‐innovators‐dna‐091221.cfm#


16

HOW DO EXPERT ENTREPRENEURS THINK AND ACT

David McClelland, psychology teacher at Harvard University, identified 3 types of motivational

needs that frame the entrepreneurial attitude: Need for Realization, Need for Power and

Authority, Need for Affiliation.

Need for Realization

The individual is motivated by achievement and seeks to achieve this accomplishment.

Tends to be realistic, with challenging goals and try to promoting their work.

Have a great need of feedback for its realization and progression as well as a need to

feel accomplished.

Need for Power and Authority

The individual is motivated by power and authority.

Have need to be influential, effective and have an impact in the community.

Have need to lead and make their ideas prevail.

Have great motivation to increase their personal status and prestige.

Need for Affiliation

The individual needs to create friendly relationships and is motivated by the interaction

with other people.

Membership produces motivation and need to be popular within their group.


17

SUCCESSFUL ENTREPRENEURS ‐ HOW TO DISTINGUISH? The successful entrepreneurs have many characteristics, but the following are considerate as

the most relevant to achieve success:

Initiative

Persistence

Self‐confidence

Communication skills

Understanding the opportunities

Effective guidance Concern about the quality of work

Concern about the quality of work

Systematic planning

Monitoring the activities

Commitment to planning

Recognition the importance of networking in business

Relationship capability

Exercise: SELF ‐ ANALYSIS

Trace your entrepreneur profile with the ENTREPRENEUR LEVEL ANALYSIS MATRIX and find

which premise you need to improve to become a great entrepreneur.

Name: __________________________________________________

Date: _____/_____/__________

InitiativePersistenceand persuasion

Monitoringactivitites Self-confidence

Communicationskills

Understanding the opportunities

Effective guidance

Concern aboutthe quality of work

Commitmentwith the plan

Networking

Relationshipcapability

Systematicplanning

5

5

10

10

5

5

10

10

5

5

10

10

5

5

10

10

5

5

10

10

5

5

10

10

55

1010 55

1010

5

5

1010

105

5

10

10

ENTREPRENEUR LEVEL RADARSELF - ANALYSISTrace your profile joining the points,and find which premise you need to improve

to become a great entrepreneur.

5

5

10

10

5

5

10

10

5

5

10

10

5

5

10

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5

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1010 55

1010

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Sam

ple

From Ideas to Business - GOLDEN 11 -

QUESTIONS TO MATURE IDEAS

We can create many ideas every day, but just a few of them can emerge as a sustainable idea to create a new project or business. This problematic is part of a natural mature process that can convert ideas in interesting ideas that can be developed to be part of a business plan.

The questions on this guide reflect the investors structure of thinking and the major issues that arise when they are analyzing projects to verify how mature the ideas are.

Answer the following questions in a pragmatic and objective way.

1. PRODUCT / SERVICE

WHAT ARE THE PRODUCTS OR SERVICES OF THIS PROJECT?

1.1. Brief description of project

1.2. Brief description of my product and / or service.

1.3. It is a single product or service?

1.4. Briefly describe how the product or service works, or how is the "mechanics" of the project.

Depending on the state of maturity of your idea, there may be questions which cannot be answer at this time. It's part of the process. In time you will find the answers.

Try to find the information for the answers through a process of investigation and observation of the functioning of markets where you want to develop your business as well as conducting a benchmarking process.

2. CLIENT

Client, consumer, user, purchaser or prescriber are the same "person"?

2.1. Do you have more than one type of client (example: toys for kids – The users are the children, but whose pays are the fathers.)

2.2. Please identify:

2.2.1. Client (who pays)

2.2.2. Consumer / User (who consumes / uses)

2.2.3. Purchaser (who buys) 2.2.4. Prescriber (who prescribes)

2.2.5. There is another type of client? 2.2.6. Where the "client" can purchase the product or service? 2.2.7. How and where the "client" uses the product or service? 2.2.8. How does the "customer" gets help to use your product or service?

3. WHAT PROBLEM IS BEING SOLVED?

3.1. What is the need of my client / user?

3.2. What kind of experience is provided to my client / user?

3.3. How do you resolve the need or how do you provide the experience?

3.4. Who is the target or targets?

4. KEY ACTIVITIES AND DEPENDENCE OF THIRD PARTIES 4.1. Identify the key activities for the realization of this project.

4.2. Identify and evaluate your current knowledge and technical resources.

4.3. Do you depend of third parties to implement your idea? Who are they?

4.4. Who are the possible "providers" for activities that you cannot perform?

4.5. What resources do you need to “activate” the providers?

5. WHAT IS THE COMPETITIVE ADVANTAGE OF THE PRODUCT? 5.1. Who are the competitors and who is the biggest one?

5.2. What are the main strengths and weaknesses of my

competitors?

5.3. Is there any competitive advantage in your product to be a winner?

5.4. Identify the competitive advantage. (2 sentences maximum)

6. THE BARRIERS TO SUCCESS. 6.1. Perform a PESTEL analysis and identify the barriers and opportunities

(PESTAL analysis – Political, Economic, Social, Technological, Environment and Legal – macro factors)

BARRIERS OPPORTUNITIES Political

Identify political factors that may be a

barrier or an opportunity

Economic Identify economic

factors that may be a barrier or an opportunity

Social Identify social factors that may be a barrier

or an opportunity

Technological Identify technological factors that may be a


Environment Identify environment factors that may be a


Legal Identify legal factors that may be a barrier

or an opportunity

6.2. Can you identify any kind of other barriers or opportunities that become some other macro factors?

6.3. How can you exceed the barriers?

BARRIERS SOLUTIONS

Political

Economic

Social

Technological

Environment

Legal

others

7. SWOT Analysis Identify the opportunities and threats in the market, and the strengths and weaknesses of the project / business.

Strengths Weaknesses

INTERNAL analysis

Opportunities Threats

EXTERNAL analysis

8. DOES YOUR PRODUCT “WORK” THE SAME WAY PEOPLE

“OPERATE” TODAY?

8.1. Do the clients need to learn how your product works?

8.2. How and where can they learn?

9. WHICH ARE THE INTERNAL AND EXTERNAL RESOURCES NEEDED?

INTERNAL RESOURCES EXTERNAL RESOURCES

9.1. Do you need Partners? Identify the key partners of your business

(NOTE: Partner is different from supplier. Partners share the risk as well as the project success)

Key Partners

10. STARTER CRITICAL TEAM 10.1. How many people does the business need to start?

10.2. Which are the key competencies? (jobs description)

10.3. Which are the needed key talents?

11. HOW IS THIS PROJECT SELF-SUSTAINABLE?

Identify income flows

11.1. When does the client pay?

11.2. How does he pay?

11.3. Where does he pay?

11.4. Which are the available modalities of payments to the client (ex. ATM, check, paypal)?

Issuance of invoice / receipt

11.5. How is the invoice issued?

11.6. Where is the invoice issued?

11.7. How does the "client" receive the invoice?