Entrepreneurship and Entrepreneurs

1. Entrepreneurship and Entrepreneurs Minder Chen, Ph.D. Professor of Management Information Systems Martin V. Smith School of Business and Economics California State University Channel Islands Camarillo, CA 93012 Minder.chen@csuci.edu minderchen@gmail.com

2. Outline • Introduction • Entrepreneurship • Entrepreneurs • Timmons Model of Entrepreneurship • Effectuation: Entrepreneurial Expertise

3. The Startup Owner’s Manual A startup is a temporary organization designed to search for a repeatable and scalable business model (under extreme uncertainty). - Steve Blank, The Startup Owner’s Manual Alexander Osterwalder Steve Blank video at http://www.youtube.com/watch?v=6t0t-CXPpyM How to Build a Startup (Steve Blank, Udacity)

4. Creativity, Innovation, and Entrepreneurship • Sources of Creativity 創意的泉源 • Methods of Innovation 創新的方法 • Spirit of Entrepreneurs 創業的精神 創業 Entrepreneurship 創意 Creativity 創新 Innovation

5. 三創 ICE：Innovation, Creativity, and Entrepreneurship • Sources of Creativity 創意的泉源 • Methods of Innovation 創新的方法 • Spirit of Entrepreneurs 創業的精神 三創方法學 ICE Methodology 創業 Entrepreneurship Team Execution Prototyping Minimum Viable Product Growth Hacking 創意 Creativity 創新 Innovation Product Idea Customer Development & Lean Startup Business Model Canvas • Product/service/process • Business model • Social Innovation • IT-enabled • Individual • Group • Organization Creative Problem Solving Design Thinking

6. Not Seeing the Opportunities of New Things • Don’t see: Cannot see at its nascent stage • Don’t care: Don’t take it seriously once seen • Don’t understand: Don’t understand when it has become successful • Don’t move fast enough: Wait until it is too late 1.第一 2.第二 3.第三 4.第四 看不見看不起 看不懂 來不及 馬雲：很多人一生輸就輸在對新生事物[的看法和反應]上 (link) 先見之明人棄我取摸透產業先人一著 Explore ignored market Understand the Industry’s value chain First mover Foresights Source: Jack Ma, CEO of Alibaba Group

7. No China Beer, No China, No Data The reaction of Jack Ma’s first encounter with the internet. Official Documentary about Jack Ma 马云《Dream Maker》 Alibaba Group “追梦者阿里巴巴” https://www.youtube.com/watch?v=bU5ze-EwFg8  Min 4 What will be your reaction and action if you saw the Web in 1995? • 1994-1998 China Pages • 1999 Alibaba.com  Alibaba Group https://en.wikipedia.org/wiki/Jack_Ma

8. Creativity: Creative Problem Solving Creativity is a process of becoming sensitive to problems, deficiencies, gaps in knowledge, missing elements, disharmonies, and so on; identifying the difficulty; searching for solutions, making guesses, or formulating hypotheses about the deficiencies: testing and retesting these hypotheses and possibly modifying and retesting them; and finally communicating the results.“ -- Dr. E. Paul Torrance https://en.wikipedia.org/wiki/Creativity https://cucumber.io/blog/2014/10/21/the-two-modes-of-thought-you-need-for-bdd

9. Definition of Innovation An innovation is the creation and application of a new or significantly improved technology, product/service, process, or business model that is accepted by markets and society. -- Adapted from OECD 2005 and Wikipedia. (link) http://www.youtube.com/watch?v=2NK0WR2GtFs&feature=watch-vrec http://www.designcouncil.org.uk/Documents/Documents/OurWork/Insight/DesignForInnovation/DesignForInnovation_Dec2011.pdf

10. GEM Definition of Entrepreneurship "Any attempt at new business or new venture creation, such as self-employment, a new business organization, or the expansion of an existing business, by an individual, a team of individuals, or an established business."  http://www.gemconsortium.org/wiki/1149

11. What is Entrepreneurship? • Entrepreneurship • Defines the process by which individuals pursue opportunities without regard to the resources they currently control with the ultimate goal of creating new “value” • Identifies opportunities, putting useful ideas into practice • Requires creativity, drive, and a willingness to take risks

12. Inventor ≠ Entrepreneur • An inventor creates something new while entrepreneurs put the resources together to commercialize inventions • Entrepreneurs assemble resources (e.g., money, people, strategy, and risk bearing ability) to transform inventions into viable businesses • Entrepreneurship requires a different set of skills that can be learned and honed.

13. Conceptual Framework: The Global Entrepreneurship Monitor TEA: Total Early-stage Entrepreneurial Activity SEA: Social Entrepreneurial Activity EEA: Employee Entrepreneurial Activity *http://www.gemconsortium.org/wiki/1148 http://gemconsortium.org/report retrieved 2016 report

14. Model of Business Phases and Entrepreneurship Characteristics http://gemconsortium.org/report retrieved 2016 report

15. An Entrepreneur An entrepreneur is a person who is willing and able to convert a new idea or invention into successful innovation, simultaneously creating new products and business models largely responsible for the dynamism of industries and long-run economic growth. --- Joseph A. Shumpeter (1942) (link)

16. Employment Size of Firms in US US has about 26M firms Only 6.69 M has one or more employers More than 50% of all jobs are in small business. 65% of new jobs are in small business. http://www2.census.gov/programs-surveys/susb/tables/2013/us_state_totals_emplchange_2012-2013.xlsx

17. Statistics of Small Businesses • US owns ¼ of global wealth • US population 324 M https://www.census.gov/popclock/ http://www.deptofnumbers.com/employment/us/ CES survey (also know as the establishment or payroll survey), counts the number of employees on employer payrolls. The CPS employment number comes from a survey of households for employed individuals (thus its alternative name — the household survey). The CPS is also where the unemployment rate data comes from.

18. https://www.sba.gov/sites/default/files/FAQ_Sept_2012.pdf

19. Small Business Size < 500~1500 The Office of Advocacy defines a small business as an independent business having fewer than 500 employees. The United States, the Small Business Administration sets small business criteria based on industry, ownership structure, revenue and number of employees (which in some circumstances may be as high as 1500, although the cap is typically 500).http://www.sba.gov/content/ small-business-size-standards Both the US and the EU generally use the same threshold of fewer than 10 employees for small offices (SOHO - Small office home office). https://www.sba.gov/contracting/getting-started-contractor/make-sure-you-meet-sba-size-standards/table-small-business-size-standards

20. Two Types of Entrepreneurship http://www.slideshare.net/billaulet/what-is-disciplined-entrepreneurship/

21. Source: http://impact.sosense.org/de/blog/das-finanzierungsparadoxon-f%C3%BCr-sozialunternehmen

22. Entrepreneur • A person who engages in entrepreneurship. • Insane perseverancein the face of total rejection. • Entrepreneurs tend to be vision-driven and good at perceiving new business opportunities and they often exhibit positive biases in their perception (i.e., a bias towards finding new possibilities and seeing unmet market needs) and a pro-risk-taking attitude that makes them more likely to exploit the opportunity by starting or expanding a business. Adapted from: https://en.wikipedia.org/wiki/Entrepreneurship

23. Entrepreneurs • Entrepreneurs get customers • Entrepreneurs create jobs • Entrepreneurs grow the economy Inventors   Entrepreneurs Thinkers   Doers Carts   Horses (growth engine) The central belief that innovation is the key to economic growth is dead wrong — it is entrepreneurship that is the key to growth. …innovation is the “cart,” entrepreneurship is the “horse” that creates the customers and value from any invention and innovation that occurs. Entrepreneurial StrengthsFinder by Jim Clifton (CEO of Gullop) and Sangeeta Bharadwaj Badal; see also http://www.sbnonline.com/article/116152/

24. Young Entrepreneurs • Interest among young people in entrepreneurial careers is growing. • According to a Gallop study, 7 out of 10 high school students want to start their own business. • Over 2,000 two-year and four-year colleges and universities offer entrepreneurship courses. How About You?

25. Successful Entrepreneurs • Passion for the business • Product/customer focus • Execution intelligence • Tenacity despite failure Source: Entrepreneurship: Successfully Launching New Ventures

26. Who is an Entrepreneur? Flexibility Ability Experience Age Distribution for Starting Company 20 25 30 35 40 45 Age • Situational more than personality

27. Types of Entrepreneurs • Survival Entrepreneur • Social Entrepreneur • Serial Entrepreneur • Lifestyle Entrepreneur: Business of up to 5-25 employees with founders wanting to control their destiny, often a family one. • High Growth Venture Entrepreneur : Typically characterized by a founder with a bold vision, highly skilled technical ability, willing to take a big risk and willing to bring on partners (include investors, strong cofounders) to make their mission a reality. Should they succeed they generate high returns for their investors and generate 1,000s of jobs. Paul Graham’s **Startup=Growth Essay is an extreme take on this type of entrepreneur and what they should focus on at all costs. Professor Isenberg from Harvard, hits the nail on the head as well with realizing that there is a danger of focusing too much on startup creation vs focusing on their growth. http://savannah.vc/2012/12/01/what-we-do-and-dont-fund-investment-thesis-part-1/ https://thestartupgarage.com/types-entrepreneurs/

28. Job, Career, and Calling “Money will always be easier to measure, which is why it takes a little extra effort to value the heart.” $$ http://www.brigittelinford.com/forward-fitness/2016/9/6/are-you-living-in-your-job-career-or-calling http://faculty.som.yale.edu/amywrzesniewski/documents/Jobscareersandcallings.pdf

29. Discussion Questions • Entrepreneurs: Born or Made? • What are the personality traits of entrepreneurs? • Who are your role model as entrepreneurs? Why? • What are the motivating factors to become an entrepreneur? Money? • Do you want to be an entrepreneur? Yes/No? Why? • What types of businesses you want to start? Take a Entrepreneurial Personality Profile test here: http://psychologytoday.tests.psychtests.com/take_test.php?idRegTest=3204

30. Entrepreneurial Profile10:Pathways from Talent to Business Success Entrepreneurial Profile 10tm Methodology Report, p. 3 https://www.gallupstrengthscenter.com/EP10/en-US/GetFile?fileName=EP10%2FEP10_TalentDefinitions.pdf&language=en-US

31. 10 Talents of Successful Entrepreneurs • Business Focus • Confidence • Creative Thinker • Delegator  • Determination • Independent • Knowledge-Seeker  • Promoter • Relationship-Builder • Risk-Taker  • ENTREPRENEURIAL PROFILE 10TM METHODOLOGY REPORT, https://www.gallupstrengthscenter.com/EP10/en-US/GetFile?fileName=EP10%2FEP10_TalentDefinitions.pdf&language=en-US Nature trumps nurture?? 5 in 1000 has an aptitude for starting and growing a business. ENTREPRENEURIAL PROFILE 10TM METHODOLOGY REPORT, p. 6 https://www.gallupstrengthscenter.com/EP10/en-US/GetFile?fileName=EP10%2FEP10_TalentDefinitions.pdf&language=en-US

32. Business Focus • Are profit-oriented • Establish clear goals and objectively measure their progress toward the goal • Judge the value of an opportunity, a relationship or a decision by its effect on business • Invest time in planning growth strategies • Align employee responsibilities with company goals Jim Clifton and Sangeeta B. Badal, Entrepreneurial StregthsFinder 2.0

33. Confidence • Know themselves and present themselves effectively and with confidence — even in the face of rejection • Clearly understand others • Build trust and invest in people • Able to articulate the competitive advantage of their firm in the marketplace • Align employee activities with their individual strengths, leading to business growth Jim Clifton and Sangeeta B. Badal, Entrepreneurial StregthsFinder 2.0 ENTREPRENEURIAL PROFILE 10TM METHODOLOGY REPORT, https://www.gallupstrengthscenter.com/EP10/en-US/GetFile?fileName=EP10%2FEP10_TalentDefinitions.pdf&language=en-US

34. **Creative Thinker • Imagine beyond the boundaries of what exists now • Explore options and can think their way through problems • Are constantly thinking of creating new products and/or services for their customers • Have minds that are typically firing with many different ideas  Lack of Focus? • Are curious and quick learners Jim Clifton and Sangeeta B. Badal, Entrepreneurial StregthsFinder 2.0

35. Delegator • Understand that they cannot do everything themselves if the business is going to expand • Can readily delegate authority and responsibility • Can proactively collaborate with others • Recognize and draw on people’s special abilities • Help ensure that team members become effective contributors to the company Jim Clifton and Sangeeta B. Badal, Entrepreneurial StregthsFinder 2.0

36. Determination • Push to achieve more and have a tremendous work ethic • Instigate the action to get something started • Are eager to make decisions and quick to act • Confront obstacles directly and overcome them • Are persistent and undeterred by failure and/or roadblocks Jim Clifton and Sangeeta B. Badal, Entrepreneurial StregthsFinder 2.0

37. Independent • Depend on themselves to get the job done • Have a strong sense of responsibility • Can handle multiple tasks successfully • Are resolute, with a high level of competence in every aspect of managing a business Jim Clifton and Sangeeta B. Badal, Entrepreneurial StregthsFinder 2.0

38. Knowledge-Seeker • Seek knowledge that is relevant to growing their business • Push themselves to acquire in-depth information about every aspect of their business • Have a preoccupation with their business that borders on obsession • Anticipate knowledge needs and use knowledge well Jim Clifton and Sangeeta B. Badal, Entrepreneurial StregthsFinder 2.0

39. Promoter • Have a clear, strong voice and speak boldly on behalf of their company • Have the ability to make their case effectively and have others follow their decisions • Communicate their vision of their company to employees and customers [and investors] • Have a clear growth strategy Jim Clifton and Sangeeta B. Badal, Entrepreneurial StregthsFinder 2.0

40. Relationship-Builder • Have high social awareness • Can attract and maintain a constituency • Build mutually beneficial relationships • Use their relationship talents to access internal and external resources • Forge relationships with employees and customers that go beyond work or products or services • Have an open demeanor, positive attitude and personal integrity that helps build trust Jim Clifton and Sangeeta B. Badal, Entrepreneurial StregthsFinder 2.0

41. Risk-Taker • Show a strong personality and are charismatic and confident • Show enthusiasm and emotion in taking on challenges • Have highly optimistic perception of risk • Can easily make decisions in complex situations • Can easily establish emotional connections with customers, are more likely to understand what customers need, share new ideas with customers and are more likely to exceed customer expectations Jim Clifton and Sangeeta B. Badal, Entrepreneurial StregthsFinder 2.0

42. Core Elements of a Startup Three core elements of each startup -- team, product, and market. • The caliber of a startup team can be defined as the suitability of the CEO, senior staff, engineers, and other key staff relative to the opportunity in front of them. • The quality of a startup's product can be defined as how impressive the product is to one customer or user who actually uses it: How easy is the product to use? How feature rich is it? How fast is it? How extensible is it? How polished is it? How many (or rather, how few) bugs does it have? • The size of a startup's market is the number, and growth rate, of those customers or users for that product. http://pmarchive.com/guide_to_startups_part4.html

43. Timmons Model of Entrepreneurship • The Timmons Model of Entrepreneurship considers opportunities, teams, and resourcesas the three critical factors available to an entrepreneur and holds that success depends on the ability of the entrepreneur to balance these critical factors. • Opportunity evaluation • Resource marshaling • Entrepreneurial team formation •  The entrepreneur searches for an opportunity, and on finding it, shapes the opportunity into a high-potential venture by drawing up a team and gathering the required resources to start a business that capitalizes on the opportunity. the entrepreneur risks his or her career, personal cash flow and net worth. ** http://www.lem.ep.usp.br/0300021/NewVentureCreationChapter3.pdf https://kimberlymoises.wordpress.com/2012/08/28/timmons-model-of-the-entrepreneurial-process/ http://faculty.babson.edu/academic/eship/mappingtheterritory_babson/babson_entreprenuership.pdf

44. The Timmons Model of Entrepreneurship Business Plan/Model (Discipline) (Risk) Money follows high-potential opportunities conceived of & led by a strong management team. https://kimberlymoises.wordpress.com/2012/08/28/timmons-model-of-the-entrepreneurial-process/ http://www.slideshare.net/akashpai/the-timmons-model-of-the-entrepreneurial-process (slides)

45. Timmons Model • Start with opportunities • No money, strategy, networks, team or business plan • Shape, size and depth of opportunity establishes required shape, size and depth of resources and team • Founder (entrepreneur) takes charge • Attract key players to the team • Manage and redefine the risk-reward equation Dr. Jeffrey Timmons believed that the entrepreneurial process was not just about creating new companies, capital, and jobs, but also about fostering "an ingenious human spirit and improving humankind“. -- The Entrepreneurial Mind

46. Including Human Resource (Team) Creative, Innovative, Resourceful Source: Jeffrey Stamp

47. Importance of Fit and Balance The entrepreneurial leader (founder) of the venture, standing on a large ball, balancing the triangle over her head symbolizing the constant balancing act over opportunity, team, and resources. (Link)

48. Ideas versus Opportunities:Search for Sea Changes Moore’s Law, Metcalfe’s Law (Network Effect) & Disruptive technologies Where are opportunities born? Be a Trend-spotter or Trend-setter Demographic shifts Brontosaurus factor Big companies get slow, lazy, stop innovating. Source: New Venture Creation, 9th Edition

49. Market demand • Market structure and size • Margin analysis Source: New Venture Creation, 9th Edition

50. one of the worst things that can happen to an entrepreneur is to have too much money too early. Networking Partnering Creative use and integration of internal and external resources Manage your cash flow carefully  Last Man Standing! Source: New Venture Creation, 9th Edition