Chapter 18 Entrepreneurship and Innovation

18- 2 Management 1e Management 1e Management 1e - 2 Management 1e Learning Objectives  Define the process of entrepreneurship and the role of managers as entrepreneurs  Describe the opportunities and challenges that affect the growth of new ventures  Compare and contrast different types of ventures that entrepreneurs create  Explain how managers lead a creative process with individuals and teams  Outline how entrepreneurs use innovation to grow global opportunities

18- 3 Management 1e Management 1e How Entrepreneurship Makes a Difference (p. 440)  Entrepreneur Individual that plans, organizes, and leads high- risk business opportunities with new market value Entrepreneurial skills – capacities, activities, and strengths that enable individuals to manage successfully in high-risk business environments Entrepreneurs encourage customers to accept new innovation

18- 4 Management 1e Management 1e How Entrepreneurship Makes a Difference (cont.)  Innovation (p. 440) Process that results in new market value through the creation of a product or service Innovation adoption curve – staged model that describes the evolution of an innovation’s acceptance with three types of customers  Innovators  Early adopters  Early majority (p. 442)  Late majority  Laggards

18- 5 Management 1e Management 1e How Entrepreneurship Makes a Difference (cont.)  Start-up company (p. 442) Newly formed organization with limited or no operational history  Entrepreneurship Activities associated with seeking new opportunities that generate new value, with an array of unknown forces  Business model Proposed method for creating and sustaining market value  Venture capital Funding that supports the starting and growing of high-risk business ventures

18- 6 Management 1e Management 1e How Entrepreneurship Makes a Difference (cont.)  People, processes, and the ecosystem (p. 443) Entrepreneurial ecosystem – set of stakeholders that are necessary to support the innovation and creation of new market value  Must embrace creativity  Creativity – process through which individuals and groups transform ideas into reality

18- 7 Management 1e Management 1e Opportunities and Challenges that Entrepreneurs Face (p. 444)  Growth accelerants Market opportunity/customers/competitors  Identify gap in the market  Attract diverse customers  Become a serious competitor to other businesses Human resources/people/ organizational culture  Attract and nurture the best talent Product/service/after-sales  Innovative product  Unparalleled sales and after-sales service

18- 8 Management 1e Management 1e Opportunities and Challenges that Entrepreneurs Face (cont.)  Growth accelerants (cont.) Marketing/branding (p. 445)  Should be designed before the company is launched in order to differentiate it from the competition  Feasibility – degree to which a business venture is possible, given the availability of resources and technology (p. 446) Research and development/new product development  Products designed to highest quality specifications  Important for maintaining product’s position in the market

18- 9 Management 1e Management 1e Opportunities and Challenges that Entrepreneurs Face (cont.)  Challenges to growth (p. 445) Human resources/people/organization culture  Struggle to attract and retain new talent  People must fit in to the organization culture Market opportunity/customers/competitors  Another company may identify and capture the market sooner Company financing and liquidity  Liquidity – measurement of available financial resources or the ability to convert an organization’s assets into cash  Start-ups will not survive without appropriate financing

Management 1e Management 1e Opportunities and Challenges that Entrepreneurs Face (cont.)  Challenges to growth (cont.) Operations management/systems (p. 445)  Systems and operations do not work  Quick fixes provide only short-term relief Top management/board (p. 446)  Hiring people as top-level managers without experience in start-up companies  Produces conflict between managerial team and entrepreneurial team fighting to maintain the original vision

Management 1e Management 1e Opportunities and Challenges that Entrepreneurs Face (cont.)  Opportunities and risks for new ventures (p. 447) Market size – larger markets have greater growth potential Market value creation and customer adoption  Value creation – activities and processes that increase the worth of a product or service Market value capture and business model – business model should address how much value of the market can be captured Management team/people/resources – evaluation of abilities necessary to produce success Discovery or technical ability  Scaling – degree to which a company or business model can grow, given the necessary resources

Management 1e Management 1e Opportunities and Challenges that Entrepreneurs Face (cont.)  Opportunities and risks for new ventures (cont.) Financial and liquidity (p. 448)  Initial public offering – first time a company sells its equity shares on the stock market Government/political/regulatory – effect of regulatory environment on potential for growth Execution and scaling – execute the system as soon as possible, secure clients, choose a location for the company, and get finances in order

Management 1e Managing and Leading New Ventures (p. 449)  Chosen strategy must suit business model of the new venture Aggregation venture – business strategy defined by acquiring, merging, and coordinating existing market products, services, and companies (p. 450) Discovery venture – business strategy that seeks to invent a brand-new product or service or find a new resource New-existing venture – business strategy defined by offering a new product or service to an existing category or consumers

Management 1e Managing and Leading New Ventures (cont.)  Chosen strategy must suit business model of the new venture (cont.) New-new venture – business strategy defined by offering a new category of consumers a new product or service (p. 450)  Typically distinguished by higher risk and higher returns compared to new-existing ventures System change venture – business model responding to a significant change in political environments, governmental legislation, and regulation Transplant venture – business strategy where an idea that achieves market success in one market region is transferred to other geographic markets

Management 1e Managing and Leading New Ventures (cont.)  Chosen strategy must suit business model of the new venture (cont.) Value chain venture – business model that seeks to redesign or augment an offering in an existing business or management process (p. 450)  E.g., outsourcing of information technology and research Wave venture – business model defined by a systemic change in business and market environments

Management 1e Managing the Creative Process (p. 450)  The discipline of creativity (p. 451) Creativity is a science filled with thought processes that we are all capable of when working with the right people Meta-ideas – concepts that create, nurture, and support other concepts  Sharing ideas inspires new ideas  Criticism backed up by supporting or new ideas sparks new creative processes

Management 1e Managing the Creative Process (cont.)  Flow – experience of immersion and loss of time when an individual achieves an optimum balance of challenge, interest, and achievement (p. 451) Absorption in a well-defined task enables one to ignore distractions

Management 1e Managing the Creative Process (cont.)  Flow (cont.) Eight conditions for flow in the workplace (p. 451)  Clear goals  Immediate feedback  Balance between opportunity and capacity (p. 452)  Deepened sense of concentration  Living in the present  Personal control  Altered sense of time  Loss of ego

Management 1e Managing the Creative Process (cont.)  Team creativity Q-level – measurement that determines the optimum level of group size and interaction to achieve successful creative output (p. 453)

Management 1e Management 1e Management 1e - 20 Management 1e Copyright Copyright © 2014 John Wiley & Sons, Inc. All rights reserved. Reproduction or translation of this work beyond that permitted in Section 117 of the 1976 United States Copyright Act without express permission of the copyright owner is unlawful. Request for further information should be addressed to the Permissions Department, John Wiley & Sons, Inc. The purchaser may make back-up copies for his/her own use only and not for distribution or resale. The Publisher assumes no responsibility for errors, omissions, or damages, caused by the use of these programs or from the use of the information herein.