Managing Entrepreneurially

Managing Entrepreneurially
Chapter 4 Managing Entrepreneurially

Are You An Entrepeneur?

Objective is to: Embrace entrepreneurial thinking and practices to add value in both new and existing organizations. Entrepreneurship is the process of starting new organizations, generally in response to opportunities. Learning Outcome 1

Summary and Implications
There are four organizing issues to be addressed: organizational design and structure, human resource management, how to stimulate and make changes, and the continuing importance of innovation. Learning Outcome 3

Attributes commitment and determination strong leadership skills
Entrepreneurs often share some common attributes: commitment and determination strong leadership skills an obsession with identifying opportunities tolerance for risk ambiguity, creativity, willingness to embrace building adaptable organizations a strong belief that what they do will make a difference Learning Outcome 4

Summary and Implications
Entrepreneurs must look at controlling the venture’s operations in order to survive and prosper. Control issues that entrepreneurs face include managing growth, managing downturns, and exiting the venture. Summary and Implications Learning Outcome 5

Your Objectives Embrace the capacity of entrepreneurial thinking and practices to add value in both new and existing organizations. Identify opportunities and build the business case for launching an entrepreneurial/intrapreneurial venture.

The Context of Entrepreneurship
Entrepreneurship Defined The process of starting new organizations, generally in response to opportunities. Social Enterprises/Ventures Organizations that are started in response to needs within the community. Learning Outcome 1: Embrace the capacity of entrepreneurial thinking and practices to add value in both new and existing organizations. The 10 Greatest Social Entrepreneurs of All Time

Creative Destruction The entrepreneur creates an opportunity through innovation and then takes advantage of it. Sometime in the process of transformation the way things were done before is “destroyed.” Give Some Examples Learning Outcome 1: Embrace the capacity of entrepreneurial thinking and practices to add value in both new and existing organizations. Here’s One

Entrepreneurs are able to perceive the
Entrepreneurs are able to perceive the opportunities for profits by being sensitive to signals in the marketplace. They look for imbalances in what people need and what is available (opportunities) and then take advantage of them. Learning Outcome 1: Embrace the capacity of entrepreneurial thinking and practices to add value in both new and existing organizations.

Why Is Entrepreneurship Important? Innovation Number of new start-ups Global Entrepreneurship Learning Outcome 1: Embrace the capacity of entrepreneurial thinking and practices to add value in both new and existing organizations. The entrepreneurial process introduces innovative products, processes, and organizational structures across an economy.8 Its importance in Canada can be shown in three areas: innovation, number of new start-ups, and job creation.

Number of New Start-Ups All businesses—whether they fit the definition of entrepreneurial ventures or not—were new start-ups at one point in time, the most suitable measure we have of the important role of entrepreneurship is to look at the number of new firms over a period of time. As of December 2012 there were almost 1.2 million small businesses in Canada and between 2002 and 2007 an average of 104 000 new small businesses were created annually in Canada. Learning Outcome 1: Embrace the capacity of entrepreneurial thinking and practices to add value in both new and existing organizations.

As of December 2015 In Canada
1.14 million (97.9 percent) businesses were small businesses

Global Entrepreneurship Global Entrepreneurship Monitor (GEM) - studies the impact of entrepreneurial activity on economic growth in various countries. Surveyed 197 000 adults and estimated that “nearly half the world’s entrepreneurs are between the ages of 25 and 45 Learning Outcome 1: Embrace the capacity of entrepreneurial thinking and practices to add value in both new and existing organizations.

Initially, an entrepreneur is engaged in assessing the potential for the entrepreneurial venture and then dealing with start-up issues. Then the entrepreneur: researches the venture’s feasibility proceeds to plan the venture organizing the venture launches the venture Switches into more of a managerial role Learning Outcome 1: Embrace the capacity of entrepreneurial thinking and practices to add value in both new and existing organizations. Jeffrey Timmons, a professor at Babson College in Wellesley, Massachusetts, developed a model to explain the elements needed for entrepreneurial success (see Exhibit 4-1). The Timmons model of entrepreneurship considers opportunities, teams, and resources as the three critical factors available to an entrepreneur and holds that success depends on the ability of the entrepreneur to balance these critical factors.

Social Responsibility Facing Entrepreneurs There are some entrepreneurs who take their social responsibilities seriously. Entrepreneurs have pursued opportunities with products and services that protect the global environment. Learning Outcome 1: Embrace the capacity of entrepreneurial thinking and practices to add value in both new and existing organizations.

Ethical Issues Facing Entrepreneurs Entrepreneurs need to be aware of the ethical consequences of what they do. In a survey of employees from different sizes of businesses who were asked whether they thought their organization was highly ethical, 20 percent of employees disagreed. Learning Outcome 1: Embrace the capacity of entrepreneurial thinking and practices to add value in both new and existing organizations. WHY?

Entrepreneurs must address 4 key steps as they start and manage their entrepreneurial ventures: exploring the entrepreneurial context identifying opportunities and possible competitive advantages starting the venture managing the venture Learning Outcome 1: Embrace the capacity of entrepreneurial thinking and practices to add value in both new and existing organizations.

Start-Up and Planning Issues for an Entrepreneurial Venture
– Where do ideas come from? Working in the industry personal interests or hobbies familiar and unfamiliar products and services opportunities in external environmental sectors Learning Outcome 2: : Identify opportunities and build the business case for launching an entrepreneurial/intrapreneurial venture. Copyright © 2016 Pearson Canada Inc.

Evaluating Ideas Will it Work Feasibility Study: An analysis of the various aspects of a proposed venture to determine the feasibility of the venture. Learning Outcome 2: : Identify opportunities and build the business case for launching an entrepreneurial/intrapreneurial venture.

Exhibit 4-4 Evaluating Potential Ideas
Learning Outcome 2: Identify opportunities and build the business case for launching an entrepreneurial/intrapreneurial venture. Evaluating entrepreneurial ideas involves personal and marketplace considerations. Each of these assessments will provide an entrepreneur with key information about the idea’s potential. Exhibit 4-2 describes some questions that entrepreneurs might ask as they evaluate potential ideas. Copyright © 2016 Pearson Canada Inc.

Exhibit 4-5 Evaluating Potential Competitors
Learning Outcome 2: Identify opportunities and build the business case for launching an entrepreneurial/intrapreneurial venture. Part of researching a venture’s feasibility is looking at the competitors. What would entrepreneurs like to know about their potential competitors? Exhibit 4-3 lists some possible questions to ask when evaluating potential competitors. Copyright © 2016 Pearson Canada Inc.

Planning a Venture: Developing a Business Plan Business Plan: Written document that summarizes a business opportunity and defines and articulates how the identified opportunity is to be seized and exploited. Learning Outcome 2: Identify opportunities and build the business case for launching an entrepreneurial/intrapreneurial venture.

Issues in Organizing an Entrepreneurial Venture
There are four organizing issues an entrepreneur must address: Organizational design and structure Human resource management How to stimulate and make changes The continuing importance of innovation Learning Outcome 3: Choose appropriate organizational structures to support an entrepreneurial culture. Once the start-up and planning issues for an entrepreneurial venture have been addressed, the entrepreneur is ready to begin organizing the entrepreneurial venture. There are four organizing issues an entrepreneur must address: organizational design and structure, human resource management, how to stimulate and make changes, and the continuing importance of innovation

Organizational Design and Structure Organizational structure tends to evolve with intentional planning by the entrepreneur. The structure may be very simple—one person does whatever is needed. As the entrepreneurial venture grows, new functional areas need people. Learning Outcome 3: Choose appropriate organizational structures to support an entrepreneurial culture. The choice of an appropriate organizational structure is an important decision when organizing an entrepreneurial venture. At some point, successful entrepreneurs find that they can’t do everything alone. More people are needed. The entrepreneur must then decide on the most appropriate structural arrangement for effectively and efficiently carrying out the organization’s activities. Without some suitable type of organizational structure, the entrepreneurial venture may soon find itself in a chaotic situation. Copyright © 2016 Pearson Canada Inc.

Organizational Design and Structure Entrepreneur must share decision making and operating responsibilities. Learning Outcome 3: Choose appropriate organizational structures to support an entrepreneurial culture. Copyright © 2016 Pearson Canada Inc.

Human Resource Management Employee Recruitment - entrepreneurs seek high potential people who can perform multiple roles. Employee Retention - An entrepreneur wants to keep the people he or she has hired and trained. Learning Outcome 3: Choose appropriate organizational structures to support an entrepreneurial culture. an entrepreneurial venture grows, additional employees will need to be hired to perform the increased workload. As employees are brought on board, an entrepreneur faces certain human resource management (HRM) issues. Two HRM issues of particular importance to entrepreneurs are employee recruitment and employee retention. Copyright © 2016 Pearson Canada Inc.

How to Stimulate and Make Changes Entrepreneurs face dynamic change: Entrepreneurs need to be alert to problems and opportunities that may create the need for change. In fact, of the many hats an entrepreneur wears, that of change agent may be one of the most important. Learning Outcome 3: Choose appropriate organizational structures to support an entrepreneurial culture. In today’s dynamically chaotic world of global competition, organizations must continually innovate new products and services if they want to compete successfully. Innovation is a key characteristic of entrepreneurial ventures and, in fact, is what makes an entrepreneurial venture “entrepreneurial.” Copyright © 2016 Pearson Canada Inc.

The Continuing Importance of Innovation Curiosity-Driven Research: Research directed toward acquiring new knowledge rather than toward some more practical objective (also referred to as basic research). Learning Outcome 3: Choose appropriate organizational structures to support an entrepreneurial culture. In today’s dynamically chaotic world of global competition, organizations must continually innovate new products and services if they want to compete successfully. Innovation is a key characteristic of entrepreneurial ventures and, in fact, is what makes an entrepreneurial venture “entrepreneurial.” Copyright © 2016 Pearson Canada Inc.

The Continuing Importance of Innovation Applied Research Research that accesses, rather than generates, new knowledge and applies it to a practical or commercial purpose. Research and Development (R&D) Investigative activities that an organization conducts to lead to discoveries that will help develop new products or procedures. Learning Outcome 3: Choose appropriate organizational structures to support an entrepreneurial culture. Copyright © 2016 Pearson Canada Inc.

Issues in Leading an Entrepreneurial Venture
The Entrepreneur as Leader Drawing the best out of other individuals, even given the unpredictability of the situation. The driving force through the early stages of the entrepreneurial venture is often the visionary leadership of the entrepreneur Learning Outcome 4: Make appropriate choices in leading an entrepreneurial venture. Leading is an important function of entrepreneurs. As an entrepreneurial venture grows and people are brought on board, an entrepreneur takes on a new role—that of a leader. In this role, the entrepreneur has certain leadership responsibilities in leading the venture Copyright © 2016 Pearson Canada Inc.

Issues in Controlling an Entrepreneurial Venture
Managing Growth The best growth strategy is a well-planned one. Grow strategy should be part of a venture’s overall business goals and plan. Rapid growth without planning can be disastrous. The key challenges for an entrepreneur in organizing for growth include finding capital, finding people, and strengthening the organizational culture. Learning Outcome 5: Deploy appropriate control structures to respond to the unique challenges faced by entrepreneurial ventures Growth is what distinguishes an entrepreneurial venture. Entrepreneurial ventures pursue growth.46 Growing slowly can be successful, but so can rapid growth. Growing successfully doesn’t occur randomly or by luck. Successfully pursuing growth typically requires an entrepreneur to manage all the challenges associated with growing Copyright © 2016 Pearson Canada Inc.

Issues in Controlling an Entrepreneurial Venture
Managing Downturns It’s important to have an up-to-date contingency plan, or Plan B, for dealing with a worst-case situation or crisis. An entrepreneur wants to be prepared before an emergency hits. Learning Outcome 5: : Deploy appropriate control structures to respond to the unique challenges faced by entrepreneurial ventures. Although an entrepreneur hopes to never have to deal with organizational downturns, declines, or crises, there may come a time when he or she must do just that. After all, nobody likes to think about things going badly or taking a turn for the worse. But that’s exactly what the entrepreneur should do—think about it before it happens by designing the control system to signal this to management early in the game Copyright © 2016 Pearson Canada Inc.

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