1. Chapter 18 Entrepreneurship and Innovation

2. 18- 2 Management 1e 18- 2 Management 1e 18- 2 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

3. 18- 3 Management 1e 18- 3 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

4. 18- 4 Management 1e 18- 4 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

5. 18- 5 Management 1e 18- 5 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

6. 18- 6 Management 1e 18- 6 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

7. 18- 7 Management 1e 18- 7 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

8. 18- 8 Management 1e 18- 8 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

9. 18- 9 Management 1e 18- 9 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

10. 18- 10 Management 1e 18- 10 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

11. 18- 11 Management 1e 18- 11 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

12. 18- 12 Management 1e 18- 12 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

13. 18- 13 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

14. 18- 14 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

15. 18- 15 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

16. 18- 16 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

17. 18- 17 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

18. 18- 18 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

19. 18- 19 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)

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