Entrepreneurship for FT13© Henley Business School 2008 NERC Doctoral Training Workshop...

Entrepreneurship for FT13 © Henley Business School 2008www.henley.reading.ac.uk

NERC Doctoral Training WorkshopEntrepreneurship OverviewKeith Heron

Entrepreneurship – NERC Doctoral Training Workshop

Being Entrepreneurial• I am joining our team of professional business

coaches to:

• support your imagination and thinking

• with the aim of helping YOU to develop…

• GREAT IDEAS• …That can be turned into

• GREAT BUSINESS VENTURES

• By you and your team - being entrepreneurs!

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Entrepreneurship – NERC Doctoral Training Workshop

Hutchison Whampoa is controlled by Asia's richest man Li Ka-shing

Business Entrepreneurs

3http://www.bbc.co.uk/news/world-asia-

25939930

Entrepreneurship – NERC Doctoral Training Workshop

Political Entrepreneurs

Entrepreneurship – NERC Doctoral Training Workshop

Creative Entrepreneurs

Jaakko Iisalo

http://www.entrepreneur.com/article/233465 Rovio Entertainment

https://www.angrybirds.com/

Entrepreneurship – NERC Doctoral Training Workshop

Social Entrepreneurs

Entrepreneurship – NERC Doctoral Training Workshop

Common factor• They have all created something new…

• Which has been in response to something they have seen in the …

• World around them…

• Which has agitated them into taking action…

• Which has created value for ‘consumers’

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Entrepreneurship – NERC Doctoral Training Workshop

What is being entrepreneurial?

• Schumpeter suggested that an entrepreneur was someone who:

• Noticed significant events;

• Brought into existence ‘innovative combinations’,

• Delivered an impact of ‘creative destruction’ on passive or inefficient existing markets.

• An entrepreneur is a person

• “who breaks away from the path of routine”

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Entrepreneurship for FT13 © Henley Business School 2008www.henley.reading.ac.uk

A definition of Business Entrepreneurship

Entrepreneurship – NERC Doctoral Training Workshop

What is Entrepreneurship?

• entrepreneurship is defined as the

• Discovery

• Evaluation

• Exploitation

• of future goods and services

• (Shane & Venkataraman, 2000)

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Entrepreneurship – NERC Doctoral Training Workshop

The source of future business

• An Opportunity is:• Information or a situation that has come

into effect, outside the control or influence of an entrepreneur….that the entrepreneur thinks (perceives) is the source for a new business venture

• The immediate response to this ‘catalyst’ is an IDEA…which then needs to be elaborated

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Entrepreneurship – NERC Doctoral Training Workshop

Evaluation of the Opportunity

Evaluation has 2 components

•Evaluation of the customer and the customer need

•Evaluation of the innovation/value proposition that needs to be created to match to the specific customer need- TOMORROW

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Entrepreneurship – NERC Doctoral Training Workshop

Exploitation - Adoption (by consumers)

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http://en.wikipedia.org/wiki/File:DiffusionOfInnovation.pngoriginally published in 1957 by Joe M. Bohlen, George M. Beal and Everett M. Rogers

Entrepreneurship – NERC Doctoral Training Workshop

Risk-taking is a pre-requisite

• Cantillon (1755) sees the entrepreneur as;

• a risk taker who

• buys at a CERTAIN price

• but sells [in the future] at an UNCERTAIN price

• The entrepreneur specialises in bearing uncertainty in the course of taking action

• (Johnson, 2007:21)

• Cantillon, Essai sur la Nature du Commerce en Général (Essay on the Nature of Trade in General).

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Entrepreneurship for FT13 © Henley Business School 2008www.henley.reading.ac.uk

Today:Spotting Opportunities for your Ideas

Entrepreneurship – NERC Doctoral Training Workshop

Your Objective• In this business simulation your objective is to

• Spot something from the world around you which…

• Agitates you into taking action…

• To create an innovation for a perceived market need…

• That can be tested beyond this workshop

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Entrepreneurship – NERC Doctoral Training Workshop

Your perception: What do you see?

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Entrepreneurship – NERC Doctoral Training Workshop 18

We are all UNIQUE

“No Two Persons Read the Same

Book”Edmund Wilson

Inscription in Victoria State Library- Australia

Two Girls Reading (1934). Pablo Picasso (Spain, 1881-1975). Oil on canvas. University of Michigan

Museum of Art

Entrepreneurship – NERC Doctoral Training Workshop

Discovery of Opportunities…aah-haa!

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Entrepreneurship – NERC Doctoral Training Workshop

The PESTEL Cloud

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P E S T E L

Entrepreneurs Consumers

Trying to understand the information in the PESTEL Cloud

Political

EconomicSocietal

Technological Environment- natural

Legal

Entrepreneurship – NERC Doctoral Training Workshop

The PESTEL Cloud

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P E S T E L

Trusted Intermediaries- Goldman Sachs, Trade Bodies, Analysts, UKTI, Experts e.g., NERC Speakers

Entrepreneurs Consumers

Political

EconomicSocietal

Technological Environment- natural

Legal

Trying to understand the information in the PESTEL Cloud

Entrepreneurship – NERC Doctoral Training Workshop

Information Asymmetry Opportunities

• Kirzner (1973)

• Entrepreneurs have…“the ability to notice …opportunities that have hitherto been overlooked”

• They are driven by entrepreneurial alertness

• This is a distinctive set of perceptual and cognitive processing skills that direct the opportunity identification process

• Kirzner, I., 1973, Competition and Entrepreneurship, Chicago: University of Chicago Press.

• Kirzner, I., 1979, Perception, Opportunity, and Profit, Chicago: University of Chicago Press.

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Entrepreneurship – NERC Doctoral Training Workshop

Existing Firms:The Vision- opportunities in all directions

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Market DevelopmentEnter New Markets

- with Existing Products

DiversificationNew Products

and New Markets

Product DevelopmentDevelop New Products- for Existing Markets

Market Penetration Increase ExistingProduct-Market

Strategy

Markets

Products

Existing

Existing

New

New

Entrepreneurship – NERC Doctoral Training Workshop

Existing Firms: Marketing Myopia

• Levitt, T, 1960, Marketing Myopia, Harvard Business Review.

• ‘Short-sighted managements fail to recognise there is no such thing as a growth industry’

• Growth stops NOT because a market is saturated but because of the failure of management

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Entrepreneurship – NERC Doctoral Training Workshop

Existing Firms:The Reality- 1-2% allocated to new ventures

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Market DevelopmentDiversification

Product Development

Market Penetration (98-99% allocation) Increase ExistingProduct-Market

Strategy

Markets

Products

Existing

Existing

New

New

Entrepreneurship – NERC Doctoral Training Workshop

Be Alert• When you listen to and observe the following

presentations from ‘Trusted Intermediaries’ of the PESTEL cloud…

• Your brain will be stimulated by certain things

• Create a mind map of the OBSERVATIONS

• That have captured your attention…

• This is the start of your IDEATION

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Entrepreneurship for FT13 © Henley Business School 2008www.henley.reading.ac.uk

Tomorrow:Evaluating the Opportunity:Building your Innovation Propositions

Entrepreneurship – NERC Doctoral Training Workshop

Beyond your first idea• If your idea was so easy to generate…

• We need to go beyond the first idea to

• ‘innovate the idea’

• Which is done through a series of

• Experiments or tests

• Karl Popper would call it ‘Conjecture testing’

• Eric Ries calls it ‘Lean Start-Up’

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Entrepreneurship – NERC Doctoral Training Workshop

• In order to ‘spot’ an opportunity an entrepreneur will already have a pre-informed idea of the solution to the problem

• However, other entrepreneurs may have had similar ideas for the same problem

• The key is to devise an INNOVATIVE solution

• This requires IMAGINATION and CREATIVITY

• This requires understanding our capabilities

• The Future is Risky

Creating the Future- Innovating

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Entrepreneurship – NERC Doctoral Training Workshop

Lean Start-Up process• See Eric Ries• Model for starting up by • Aiming to understand your ‘identified’ customer

archetype• Building ‘something’ to have a conversation with this

customer• Measuring ‘reaction’• Reflecting and then adapting or changing• It is intended to avoid the entrepreneur fixating on

their preferred ‘design’ before really finding out what their customer actually needs

• See the book of readings provided pre workshop

Entrepreneurship – NERC Doctoral Training Workshophttp://businessmodelgeneration.com/canvas/bmc?

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Business Model Canvas by Strategyzer

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Entrepreneurship – NERC Doctoral Training Workshophttp://businessmodelgeneration.com/canvas/bmc?

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Business Model Canvas by Strategyzer

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Entrepreneurship – NERC Doctoral Training Workshophttp://businessmodelgeneration.com/canvas/bmc?

_ga=1.145618737.421850295.1415101893

Business Model Canvas by Strategyzer

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Entrepreneurship – NERC Doctoral Training Workshophttp://businessmodelgeneration.com/canvas/bmc?

_ga=1.145618737.421850295.1415101893

Business Model Canvas by Strategyzer

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Entrepreneurship – NERC Doctoral Training Workshophttp://businessmodelgeneration.com/canvas/bmc?

_ga=1.145618737.421850295.1415101893

Business Model Canvas by Strategyzer

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Entrepreneurship – NERC Doctoral Training Workshophttp://businessmodelgeneration.com/canvas/bmc?

_ga=1.145618737.421850295.1415101893

Business Model Canvas by Strategyzer

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Entrepreneurship – NERC Doctoral Training Workshophttp://businessmodelgeneration.com/canvas/bmc?

_ga=1.145618737.421850295.1415101893

Business Model Canvas by Strategyzer

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Entrepreneurship – NERC Doctoral Training Workshop

http://businessmodelgeneration.com/canvas/vpc?_ga=1.181927842.421850295.1415101893

Capturing the FIT- the Value Proposition Canvas

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Entrepreneurship – NERC Doctoral Training Workshop

Creating a customer persona

• How does this customer…

• THINK

• SEE

• FEEL

• DO• What do they like? What influences them? What catches their attention?

• What are their values? What are their emotions?

• When you observe them, or imaging them, what are they doing?

• How can we tell?

• Get OUT of the Office and look!

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Entrepreneurship – NERC Doctoral Training Workshop

Activity: A process for recording your thoughts about customers

• customers

Why did these customers attract your attention?

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Entrepreneurship – NERC Doctoral Training Workshop

Activity: What did your creativity suggest?

• Customer personae For each customer

personaeWhat is the specific customer need that you have identified?

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Entrepreneurship – NERC Doctoral Training Workshop

Activity: Enhance your ‘preferred’ proposition

• Diverge to generate MORE detailed needs

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Entrepreneurship – NERC Doctoral Training Workshop

Activity: Converge to your Best Solution

• Look for the best elements…

• Combine and Converge to THE SINGLE main need

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Entrepreneurship – NERC Doctoral Training Workshop

Activity: Repeat the process to

devise the VP for that need

• Look for the best elements…

• Combine and Converge to THE SINGLE main VP

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Entrepreneurship – NERC Doctoral Training Workshop

Question

Which Number is Least like the Others?

1. Thirty-One

2. Thirteen

3. One-Third

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Entrepreneurship – NERC Doctoral Training Workshop

Answer:

1. Thirty-One

2. Thirteen

3. One-Third

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Entrepreneurship – NERC Doctoral Training Workshop

Mind Openers- In Groups•You are a taxi driver.

•Your cab is yellow and black and has been in use for 5 years.

•One of the outside mirrors is broken, and the engine needs a tune-up.

•The gas tank holds 23 gallons, but is only 2/3 full.

•An air freshener hangs from the rear-view mirror.

•How old is the driver?

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Entrepreneurship – NERC Doctoral Training Workshop

Critical Evaluation Method

• Popper proposed the ‘critical method’ of trial and error.

• “Bold hypotheses should be proposed and then exposed to the severest of criticism in order to detect where there is error.”

• The solution, initially ‘tentative’ is a theory which is critically tested and discussed

• The results (which will change over time) are what he termed the ‘science of the day’ (p.97)

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Popper, K. 1992. ‘Unended Quest: An Intellectual Autobiography’, Routledge, London.

Entrepreneurship – NERC Doctoral Training Workshop

From Opportunity to Market Ready

Schaper, M and Volery, T, 2004. Entrepreneurship and Small Business

time

Shane, S. 2003. A General Theory of Entrepreneurship: The Individual-Opportunity Nexus. Elgar, Cheltenham, UK

The world of...Environment

PoliticsSociety

EconomicsTechnology

Legal

Things that occur- some are ‘spotted’

WHY?PersonalityEducation

ExperiencesConnections

Ideas for innovations

Market Exploitation

Evaluate the Innovation Idea

Modify or reject it Use it

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Entrepreneurship – NERC Doctoral Training Workshop

Creativity and its relevance

• At its heart, creativity is simply the production of novel, appropriate ideas in any realm of human activity, from science, to the arts, to education, to business, to everyday life.

• The ideas must be novel—different from what's been done before—but they can't be simply bizarre; they must be appropriate to the problem or opportunity presented.

• Creativity is the first step in innovation, which is the successful implementation of those novel, appropriate ideas.

• Amabile, T.M., 1997, Motivating Creativity in Organizations: On doing what you love and loving what you do, California Management Review, Vol 40, No, 1, Fall.

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Entrepreneurship – NERC Doctoral Training Workshop

Thinking tools• Business Environment Timeline Mapping

• Customer Persona

• Value Proposition Canvas

• Lean Start-Up

• Business Model Canvas

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Entrepreneurship – NERC Doctoral Training Workshop

Henley Centre for Entrepreneurship

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Mr Keith Heron

Keith combines his experience of business (Kimberly-Clark) and business start-up (commercial interiors from 1990-2002), with his MBA thinking to bridge the gap between academic thinking and practical application.

He has designed and delivered theory-based, practical entrepreneurship programmes for different audiences from:Small businesses for Queensland Government:16-19 yr group at the inaugural National Enterprise Academy for Peter Jones:University programmes in Queensland and at Reading (Henley Business School).

Keith continually develops and tests his thinking through his own consultancies, and his supervision of MSc Entrepreneurship students consulting to business start-ups in Reading and London, and is developing an online resource for early stage business owners: EU Trademark- YourManagementMatters®