Starting Up Characteristics Lifecycle Emerging vs. Established Companies “Let yourself be silently drawn by the strange pull of what you really love.” ~ Rumi Salman Azhar & Friends in 2018

Salman Azhar & Friends in 2018 What is Entrepreneurship? Are these entrepreneurial ventures or not? Enzos, Taco Bell Plug and Play, Y-combinator Duke Manor (apts.), Airbnb Apple, Google Lyft, Uber, Uber Driver? Accenture, AzharConsulting https://www.flickr.com/photos/gtmcknight/198311028 Salman Azhar & Friends in 2018

Salman Azhar & Friends in 2018 Entrepreneurial Ventures Most entrepreneurial ventures start as a small business All small business are not entrepreneurial ventures Characteristics of entrepreneurial ventures? Innovative Product, process, or service Scale up Pivot to adapt to changes Capture a new market Often financed (VCs/angels) By Presidência do México - Flickr, CC BY 2.0, https://commons.wikimedia.org/w/index.php?curid=47141188 Salman Azhar & Friends in 2018

Entrepreneurial Organizations: Start The organization is centered around the founder(s) What happens with a startup, is that an original network builds with the entrepreneur(s) at the center. As problems boil up, subnetworks then get created within the network as needed. As the company gets bigger, these informal networks will continue to grow, solving problems as they come up. Organizations grow organically as it evolves The structure is unknown at the start Salman Azhar & Friends in 2018

Entrepreneurial Organizations: Growth The company gets so big that these networks have to be propagated throughout the organization to get any kind of alignment. What ultimately ends up happening is that the company gets so big that these networks & solutions must be propagated throughout the organization to get any kind of alignment. Without someone else can come in with a deliberate, aligned strategy and beat them… Vulnerability? Become vulnerable to internal and external challenges Salman Azhar & Friends in 2018

Entrepreneurial Organizations: Mature What ultimately ends up happening is that the company learns what works in the market, but so do other people. At this point, they have to switch to a deliberate strategy to make sure all these people are aligned. The network doesn’t work anymore. What will end up happening is the processes that are aligned with the strategy will become more important than the people. Think Management Consulting firms, where the consultants are essentially replaceable because of the methodologies. Deliberate strategy Processes aligned with the strategy & organization Align Learn the market Structured organization Processes become more important than the people Salman Azhar & Friends in 2018

Entrepreneurial Organizations: Evolution That means that as a company evolves, it’ll need to go from entrepreneur to network to hierarchy, where the value of the organization moves from its people to its processes. These are two completely different stages and they require completely different skills. Note how many firms fail when they try to move from startup to large organization. It’s just two completely different skill sets Unfortunately, what that means is that when agility is needed, a large organization doesn’t have it. Value moves from people to processes Logarithmic Time Scale Salman Azhar & Friends in 2018

Salman Azhar & Friends in 2018 Entrepreneurial Organizations: Evolution Risky transition Manage transition Different skillsets In reality, most of the “time” of a business is in the deliberate strategy phase. However, note you can’t get there without getting through this phase, which is where our entire focus will be. That means that as a company evolves, it’ll need to go from entrepreneur to network to hierarchy, where the value of the organization moves from its people to its processes. These are two completely different stages and they require completely different skills. Note how many firms fail when they try to move from startup to large organization. It’s just two completely different skill sets Linear Time Scale Salman Azhar & Friends in 2018

Skillsets for Different Phases Key: Alignment, Deliberation UNDERSTAND the existing market Structure your organization Create/execute strategy Aligned way (ops/strategy) What skills are necessary during emergence? What skills are necessary for scale? Key: Learning, Agility, Innovation, Small-scale leadership LEARN the market CREATE new markets (innovation) Get the right people Create those linkages between the people on your team Emergent: Ability to LEARN the market Ability to create new markets (innovation) Ability to create those linkages between the people on your team Ability to get the right people Learning/Agility/Innovation/Small-scale leadership is key Deliberate: Ability to UNDERSTAND the existing market (marketing) Ability to order your organization in a structured, aligned way (ops/strategy) Ability to create/execute strategy Alignment is key Salman Azhar & Friends in 2018

Salman Azhar & Friends in 2018 Emergent vs Deliberate Strategy Emergent Strategy An unintended strategy Emerges from a series of unintended actions not Unintended order created throughout an organization Deliberate Strategy A fully intentional strategy Based on conscious and analytical decision-making An intentional order created via a top-down approach With a large business with a KNOWN customer and a known value proposition, etc. this is what you push on. Salman Azhar & Friends in 2018

Salman Azhar & Friends in 2018 Processes & Organization: Evolution Emerging Create new markets Few talented people Agile & dynamic coordination Established Dominate the market Robust processes Structured organization Numerous people Varying skillset Agile but not scalable Scalable but not agile Unfortunately, what that means is that when agility is needed, a large organization doesn’t have it. Salman Azhar & Friends in 2018

Innovation in Established Organization How do established organization innovate? Acquire a startup (YouTube) Simulate a startup (Waymo) Personal Examples FleetAdvisor (MicroFlex  Eaton) ClaimsFlo Passport (ClaimsFlo  ADP) What could go wrong? Challenging in transforming culture Acquisition doesn’t adapt to established culture Spinoff doesn’t adapt to agile culture Beat Google Video Spinning off smaller divisions Salman Azhar & Friends in 2018

Salman Azhar & Friends in 2018 Entrepreneurial Organizations: Evolution This course Idea Validation Pivoting Managing Risks That means that as a company evolves, it’ll need to go from entrepreneur to network to hierarchy, where the value of the organization moves from its people to its processes. These are two completely different stages and they require completely different skills. Note how many firms fail when they try to move from startup to large organization. It’s just two completely different skill sets Unfortunately, what that means is that when agility is needed, a large organization doesn’t have it. Other I&E Courses Salman Azhar & Friends in 2018

Salman Azhar & Friends in 2018 Entrepreneurial Ventures: Recap Characteristics of entrepreneurial ventures Innovative product, process, or service Scale up the company Pivot to adapt to changes Capture a new market Often financed by VCs/angels Lifecycle of entrepreneurial ventures Start Growth Mature Evolution Salman Azhar & Friends in 2018

Salman Azhar & Friends in 2018 Emerging Companies: Recap Emerging companies Create new markets Few talented people Agile & dynamic coordination Key: Learning, Agility, Innovation, Small-scale leadership LEARN the market CREATE new markets (innovation) Get the right people Create those linkages between the people on your team Salman Azhar & Friends in 2018

Salman Azhar & Friends in 2018 Established Companies: Recap Established Dominate the market Robust processes Structured organization Numerous people Varying skillset Key: Alignment, Deliberation UNDERSTAND the existing market Structure your organization Create/execute strategy Aligned way (ops/strategy) Salman Azhar & Friends in 2018