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TIME Research Area | Innovation & Entrepreneurship Group (WIN)
School of Business and Economics
TIMEResearch Area | Innovation & Entrepreneurship Group (WIN)
The Entrepreneurial Mindset
Pitfalls
TIME Research Area | Innovation & Entrepreneurship Group (WIN)
THE ENTREPRENEURIAL MINDSET
PITFALLS
IDEA
APPROACH
LEAN
START-UP
TEAM
GET YOURSELF
STARTED
Watch out for critical
obstacles of new
venture
TIME Research Area | Innovation & Entrepreneurship Group (WIN)
KEEP THE “SURVIVORSHIP BIAS” IN MIND
What you see... ...and what you don't see!
“I am a successful
entrepreneur”
[1] [2]
TIME Research Area | Innovation & Entrepreneurship Group (WIN)
CONSIDER VARIETY OF MANAGEMENT FUNCTIONS
Even though complexity of a start-up can never be fully captured, "typical" pitfalls can be identified for each aspect of the entrepreneurial mindset.
BUSINESS IDEA/
BUSINESS UNIT/
COMPANY
Legal
Finance
Marketing
Production/
Logistics
Organization
Innovation
Management
Controlling
Human
Resources
TIME Research Area | Innovation & Entrepreneurship Group (WIN)
REFERENCES
[1] Huffingpost (2015). URL: http://www.huffingtonpost.jp/hikaru-adachi/full-growth-up_b_8193490.html. Access Date: 23.09.2016
[2] http://lawfirmocala.net/wp-content/uploads/2015/12/bankcruptcy.jpg Access Date: 26.09.2016
TIME Research Area | Innovation & Entrepreneurship Group (WIN)
PITFALL: ENTREPRENEURIAL OVERCONFIDENCE
While self-efficacy is vital... ...overconfidence is detrimental!
Entrepreneurial self-efficacy
High perceived feasibility
Building of
entrepreneurial
intentions
Increased
likelihood of
success
Entrepreneurial overconfidence
Over-asses their abilities
Ignore
important
information
Increased
probability of
failure
[1,2]
TIME Research Area | Innovation & Entrepreneurship Group (WIN)
PITFALL: NEED FOR EGO BOOST
WHY DO YOU WANT TO START A BUSINESS?
Show that I am
a smart person!
Do
something
great
Solve a
particular
problem
Bring new
technology
to the world
EGO GRATIFICATION [3]
TIME Research Area | Innovation & Entrepreneurship Group (WIN)
PITFALL: EXAMPLE
“There is a difference between
determination and overconfidence. […]
entrepreneurship is hard, and you will face
risks or obstacles; that you have to tackle
these one at a time and take them down; […]
entrepreneurship is about identifying those
risks and nailing them down one at a time,
creatively finding your way around obstacles,
and bringing your customer-validated product
to market. […] overconfidence […] is about
being sure you are right to the point you
don’t listen and make mistakes that kill
you. Determined entrepreneurs really listen
and then find a way to solve the challenge.”
Nathan Furr, Forbes Contributor (2012) [4]
TIME Research Area | Innovation & Entrepreneurship Group (WIN)
PITFALL: EXAMPLE
[8] [7]
Dominated corporate market
Failed anticipating that private
consumers drive smartphone
revolution
Overrun by emerge of “App Economy”
Did not realize that smartphones would
evolve as entertainment devices
Consumers preferred touchscreens
FAILURES
TIME Research Area | Innovation & Entrepreneurship Group (WIN)
HONESTY
LEARNINGS & HOW TO MITIGATE
Learn from other founders that already failed
LEARNING
ENTREPRENEURIAL
PASSION
„The fire that fuels innovation, persistence & ultimate success” [9]
About own skills & what you bring to the table
Increases commitment
Increases motivation
Persevere obstacles
[10]
TIME Research Area | Innovation & Entrepreneurship Group (WIN)
REFERENCES
[1] Salamouris, I. S. (2013). How overconfidence influences entrepreneurship. In: Journal of Innovation and Entrepreneurship.
[2] Latham, G. P., & Locke, E. A. (2006). Enhancing the benefits and overcoming the pitfalls of goal setting. In: Organizational dynamics, 35(4), 332-340.
[3] Kaplan, J. (2003). Five Biggest Mistakes That Entrepreneurs Make. URL: http://ecorner.stanford.edu/videos/364/Five-Biggest-Mistakes-That-Entrepreneurs-Make. Access Date: 23.09.2016
[4] Furr, N. (2012): Why Confident Entrepreneurs Fail: The Overconfidence Death Trap. URL: http://www.forbes.com/sites/nathanfurr/2012/11/13/why-confident-entrepreneurs-fail-the-overconfidence-death-trap/#785ea0ad1df2. Access Date: 23.09.2016
[5] Forbes (2013): Who wants to be a billionaire (Cover). URL: http://blogs-images.forbes.com/tomiogeron/files/2013/01/Forbes_cover012113.jpg. Access Date: 23.09.2016
[6] Forbes (2013): Retire like a Rockstar (Cover). URL: http://1hdlxe1oe0ll1eghud24le5v.wpengine.netdna-cdn.com/wp-content/uploads/2014/12/Forbes.jpg Access Date: 23.09.2016
[7] ©Mark Blinch
[8| Gustin, S. (2013): The Fatal Mistake That Doomed BlackBerry. URL: http://business.time.com/2013/09/24/the-fatal-mistake-that-doomed-blackberry/
TIME Research Area | Innovation & Entrepreneurship Group (WIN)
REFERENCES
[9] Cardon, M. S. & Glauser, M. (2011). Entrepreneurial Passion: Sources and Sustenance.
[10] Geragthy, S. (2013): The Influence of Entrepreneurial Passion on Success. URL: https://www.talkdesk.com/blog/the-influence-of-entrepreneurial-passion-on-success-2. Access Date: 23.09.2016
TIME Research Area | Innovation & Entrepreneurship Group (WIN)
CORRECT IDEA EVALUATION?
Problem? Customer? Willingness
to pay?
TIME Research Area | Innovation & Entrepreneurship Group (WIN)
PERCEPTION
PITFALL I: REAL PROBLEM?
REALITY
Try to understand the others and to see the problem out of their perspective: Is there really a problem?
YOU THE OTHERS YOU THE OTHERS
TIME Research Area | Innovation & Entrepreneurship Group (WIN)
PITFALL II: INADEQUATE CUSTOMER IDENTIFICATION
BUSINESS IDEA/
BUSINESS UNIT/
COMPANY
Similar solution,
same problem
Different solution, same problem
Perceived
competition
Actual competition
Is there really a customer for your solution? Does another solution exist already?
Considering a problem from different perspectives helps identifying customers!
TIME Research Area | Innovation & Entrepreneurship Group (WIN)
PITFALL I: EXAMPLE
“Your idea should solve a real problem.
Will your service or product solve a problem
many people are facing? That idea you had
to make a cup holder on washing machines so
that people have a place to put their drink while
doing laundry -- is that even a thing? If your
great idea is a solution for an imagined
problem, you’ve just made a huge mistake in
entrepreneurship. Because if nobody has the
problem that you have the solution for,
nobody’s going to come looking for it.”
Andre Bourque, Entrepreneur Contributor
(2016) [1]
42% of failed startups do so because there is no market need! [2]
TIME Research Area | Innovation & Entrepreneurship Group (WIN)
PITFALL I: EXAMPLE
“Nobody inherently needed a
Segway. Everyone was getting around
by foot, bicycle, motorcycle and car
just fine.”
Adam Hartung, Forbes Contributor
(2015) [5]
[4]
TIME Research Area | Innovation & Entrepreneurship Group (WIN)
PITFALL II: EXAMPLE
“It's absolutely amazing how many potential
business owners include this statement […]:
"We have no competition."
If that's what you think, you couldn't be further
from the truth. Every successful business
has competitors, both direct and indirect.”
“Confidently believe that you have no real
competitors.
Usually, no competitors means no market --
or it means you haven’t looked.”
[7]
[6]
TIME Research Area | Innovation & Entrepreneurship Group (WIN)
LEARNINGS & HOW TO MITIGATE
„REQUIREMENTS“ FOR CUSTOMER PROBLEMS
REAL FOCUSED
BIG DIFFICULT
OBVIOUS
COMPLETE
WORSENING
[8]
Be open to competition to asses your markets & customers in the right way:
Think about the problem you are trying to solve & how it is currently solved!
Approach people from
different backgrounds
Early feedback from
customers
TIME Research Area | Innovation & Entrepreneurship Group (WIN)
REFERENCES
[1] Bourque, A. (2016). Does Your Business Idea Solve a Problem? Does It Fit You Personally? Ask Yourself These Questions Before Committing. URL: https://www.entrepreneur.com/article/269697. Access Date: 23.09.2016
[2] CB Insights (2014): The Top 20 Reasons Startups Fail. URL: https://www.cbinsights.com/blog/startup-failure-reasons-top. Access Date: 23.09.2016
[3] ©The Entrepreneur
[4] Heller, J. (2016). The Segway. URL: http://www.slcentral.com/agurusworld/26/page5.php. Access Date: 23.09.2016
[5] Hartung, A. (2015): The Reason Why Google Glass, Amazon Fire Phone and Segway All Failed. URL: http://www.forbes.com/sites/adamhartung/2015/02/12/the-reason-why-google-glass-amazon-firephone-and-segway-all-failed/2/#40eef1cd5a93. Access Date: 23.09.2016
[6] Zwilling, M. (2016): 10 Startup Mistakes You Can't Afford To Make Again. URL: https://www.entrepreneur.com/article/270860. Access Date: 23.09.2016
[7] Clark, A. (2016): Top 10 Business Plan Mistakes. URL: https://www.entrepreneur.com/article/81188. Access Date: 23.09.2016
[8] Startuprunner (2016). Customer Problems for Startups. URL: https://startuprunner.com/customer-problems/. Access Date: 23.09.2016
TIME Research Area | Innovation & Entrepreneurship Group (WIN)
PITFALL I: ANXIETY FOR MISTAKES
PLANNED LAUNCHED
Making mistakes allows to learn from them – a failed idea can even be useful!
[1]
Failure creates extraordinary change
Failure builds up tough skin
Failure keeps the go in check
Failure creates “aha” moments
It propels growth as an entrepreneur
!
You can try to anticipate & plan everything, but you will never know for sure until trying for real!
TIME Research Area | Innovation & Entrepreneurship Group (WIN)
PITFALL II: NO CAPTURING OF LEARNINGS
BUSINESS IDEA/
BUSINESS UNIT/
COMPANY
Legal
Finance
Marketing
Production/
Logistics
Organization
Innovation
Management
Controlling
Human
Resources
DIMENSIONS OF MISTAKES BE AWARE OF THEM!
[1]
Try to make the best out of failure and capture your learning!
Call failure something else
Use failure as stepping stone
Never fail alone
Don’t hide your failures
Redefine what you want
!
TIME Research Area | Innovation & Entrepreneurship Group (WIN)
PITFALL I & II: EXAMPLE
“Those who fail the most, learn the most.
When you fail, you learn what works and
what doesn’t.
Venture capitalists have been known to invest
in entrepreneurs that have undergone multiple
entrepreneurial failures. For some, an
entrepreneur who has never experienced
failure is untested and has not learned from
adversity.”
Chris W. Dunn, Founder & CEO of Skill
Incubator (2016) [4]
TIME Research Area | Innovation & Entrepreneurship Group (WIN)
PITFALL I & II: EXAMPLE
“Traf-O-Data was a good idea with a flawed business
model. It hadn’t occurred to us to do any market research,
and we had no idea how hard it would be to get capital
commitments from municipalities. Between 1974 and
1980, Traf-O-Data totaled net losses of $3,494. We closed
shop shortly thereafter. Since then, I have made my share
of business mistakes, but Traf-O-Data remains my favorite
mistake because it confirmed to me that every failure
contains the seeds of your next success. This was the
essential step toward a personal computer that anyone
could use, and the keystone for the creation of Microsoft.“
Paul Allen, Co-founder of Microsoft (2011) [8]
[4]
[6, 7]
TIME Research Area | Innovation & Entrepreneurship Group (WIN)
LEARNINGS & HOW TO MITIGATE
Go out as early as possible & make mistakes
Capture your learnings
Maintain positive attitude
Structure your approach but do not overplan
Failed ideas can teach you a lot
Read & listen to motivating material
TIME Research Area | Innovation & Entrepreneurship Group (WIN)
REFERENCES
[1] Cutler, Z. (2014). Failure Is the Seed of Growth and Success. URL: https://www.entrepreneur.com/article/239360. Access Date: 23.09.2016
[2] Porter, J. (2013): How Failure Made These Entrepreneurs Millions. URL: https://www.entrepreneur.com/article/227011. Access Date: 23.09.2016
[3] ©The Entrepreneur
[4] Dunn, C. W. (2016): 8 Reasons Failure Makes You a Better Entrepreneur. URL: https://www.entrepreneur.com/article/279854. Access Date: 23.09.2016
[5] Courtesy of the Living Computer Museum (2013). Microsoft founders Bill Gates and Paul Allen recreate an iconic 1981 shot of the pair posing among vintage computers. URL: http://www.forbes.com/sites/clareoconnor/2013/04/04/bill-gates-and-paul-allen-reunite-and-recreate-classic-1981-microsoft-photo/#5ba876f45ad5. Access Date: 23.09.2016
[6] Vozza, S. (2014): 5 Famous Entrepreneurs Who Learned From Their First Spectacular Failure. URL: https://www.fastcompany.com/3026253/dialed/5-famous-entrepreneurs-who-learned-from-their-first-spectacular-failures. Access Date: 23.09.2016
[7] The Entrepreneur (2016): Bill Gates. URL: https://www.entrepreneur.com/article/197526. Access Date: 23.09.2016
[8] Allen, P. (2011): My favorite Mistake. URL: http://europe.newsweek.com/my-favorite-mistake-paul-allen-66489?rm=eu. Access Date: 23.09.2016
TIME Research Area | Innovation & Entrepreneurship Group (WIN)
PITFAL I: ONLY HIRING PEOPLE YOU LIKE
[1, 2]
...might not be
the ones you need...
Heterogeneous
Complementary skills
No problem with conflicts
New perspective
The people you like...
Irrelevant skill set
Similar perspective
Avoid conflict
...and lead to
problems! No innovative ideas
Less learning
Perform worse on
complex tasks
Less processing
Lack of diversification
TIME Research Area | Innovation & Entrepreneurship Group (WIN)
PITFALL II: NO ACTIVE MANAGING OF CONFLICTS
No decision is reached and problem still
exists
Divert energy away from more value-
adding activities
Destroy morale of the team members
Polarize or divide team
BAD CONFLICTS
People change and grow personally
with each conflict
Result in a solution
Increase involvement of everyone
affected by the conflict
Create cohesiveness among the
members of the team
GOOD CONFLICTS
[3, 4, 5]
TIME Research Area | Innovation & Entrepreneurship Group (WIN)
PITFALL I: EXAMPLE
“It may sound great to do business with your
friends, but remember, in the business world,
it's always business first and friendships
second. Also remember, most times when the
business ends, so does the friendship.”
Founder of Action COACH (2003) [5]
TIME Research Area | Innovation & Entrepreneurship Group (WIN)
PITFALL II: EXAMPLE
“Feeling that he needed an experienced operating and
marketing partner, the then 29-year-old Jobs lured Sculley
to Apple with the now legendary pitch: ’Do you want to sell
sugared water for the rest of your life? Or do you want to
come with me and change the world?’ Sculley took the bait
and within two years, Sculley had organized a board
campaign to fire Jobs. Jobs himself would surely
consider hiring Sculley as a great mistake.”
Peter Sims (2013) [8]
[7]
TIME Research Area | Innovation & Entrepreneurship Group (WIN)
LEARNINGS & HOW TO MITIGATE
[5]
Know what everyone brings to the table
Determine skills that are required to make your company successful
Develop a culture that promotes your company's values & vision
Disregard personal feelings or former collaboration when making a hiring decision
TIME Research Area | Innovation & Entrepreneurship Group (WIN)
REFERENCES
[1] Kaplan, J. (2003): Five Biggest Mistakes That Entrepreneurs Make. URL: http://ecorner.stanford.edu/videos/364/Five-Biggest-Mistakes-That-Entrepreneurs-Make. Access Date: 23.09.2016
[2] Jones, L. (2016): Homogeneous Vs. Heterogeneous Teams. URL: http://www.ehow.com/info_8357494_homogeneous-vs-heterogeneous-teams.html. Access Date: 23.09.2016
[3] Philpps, C. (2016): Managing Team Conflict. URL: http://www.chumans.com/human-systems-resources/managing-team-conflict.html. Access Date: 23.09.2016
[4] Gentry, J. (2015): How to Avoid Startups' Biggest HR Pitfalls. URL: https://www.entrepreneur.com/article/245708. Access Date: 23.09.2016
[5] Sugars, B. (2008): Avoid These 7 Partnership Killers. URL: https://www.entrepreneur.com/article/196912. Access Date: 23.09.2016
[6] © The Entrepreneur
[7] Yohe, M. (2010): Steve Jobs. URL: http://www.namespedia.com/image/Jobbs_8.jpg. Access Date: 17.08.2016
[8] Sims, P. (2013): Five of Steve Jobs’s Biggest Mistakes. URL https://hbr.org/2013/01/five-of-steve-jobss-biggest-mi. Access Date: 23.09.2016
TIME Research Area | Innovation & Entrepreneurship Group (WIN)
PITFALL I: FAILING TO BRING MVP TO MARKET
LAUNCH PREPARATION
Waiting to launch until a product is perfect...
...prevents you from gaining valuable insights!
LAUNCH Preparation
MVP Version 1
Preparation
final MVP
Peparation
MVP Version 2
Evaluation/
Testing
Evaluation/
Testing
TIME Research Area | Innovation & Entrepreneurship Group (WIN)
PITFAL II: UNWILLINGNESS TO ADAPT ORIGINAL IDEA
0
50
100
150
200
250
2009 2010 2011 2012 2013 2014 2015
Blackberry
Apple Iphone
Mill
ion P
hones
sold
per
Year
BLACKBERRY
2009 2015
[1] [2]
[5,6]
APPLE IPHONE
2009 2015
[3] [4]
TIME Research Area | Innovation & Entrepreneurship Group (WIN)
PITFALL I: EXAMPLE
“A minimum viable product is the least
amount of product or service you can bring
to market […]. Good judgment only comes
from experience, and experience typically
comes from bad judgment. The toughest
lessons to learn are usually the most costly in
terms of resources and capital.”
Jeff Boss, Entrepreneur Contributor (2014)
[7]
TIME Research Area | Innovation & Entrepreneurship Group (WIN)
PITFALL II: EXAMPLE
“We spent $200M and we have not proven
out our business model. We spent $200M
and we have not proven that we know
precisely what our customers want to buy.
We are the most heavily funded startup in
NYC in our life cycle and we have spent 2/3
of the cash ... Holy shit this is a big deal.”
Jason Goldberg, Founder & CEO of
e-commerce sites Fab & Hem (2015) [10] [9]
TIME Research Area | Innovation & Entrepreneurship Group (WIN)
LEARNINGS & HOW TO MITIGATE
Do not try getting everything right the first time
Bring your MVP to market early on
Test new features without considering sunk costs
Be willing to adapt your original idea
Determine why customers value your product & service
TIME Research Area | Innovation & Entrepreneurship Group (WIN)
THE ENTREPRENEURIAL MINDSET
PITFALLS
IDEA
APPROACH
LEAN
START-UP
TEAM
GET YOURSELF
STARTED
Unfold your
entrepreneurial
personality
Create your business
idea and evaluate its
potential
Apply the process of
successful
entrepreneurs
Build your own team
and establish relevant
partnerships
Get your company
started in the best
possible way
Watch out for critical
obstacles of new
venture
TIME Research Area | Innovation & Entrepreneurship Group (WIN)
REFERENCES
[1] BlackBerry (2009). URL: http://www.smartphonefanatics.com/uploaded_images/blackberry_tour_front-793159.jpg. Access Date: 24.09.2016
[2] BlackBerry (2015). URL: http://techgeek.com.au/wp-content/uploads/2014/12/blackberryclassic-640x360.png. Access Date: 24.09.2016
[3] Iphone 3G (2009). URL: http://www.patentlyapple.com/.a/6a0120a5580826970c0120a63717b6970c-pi. Access Date: 24.09.2016
[4] Iphone 6 (2015). URL: http://fastgeekz.com/wp-content/uploads/2015/10/iphone-6.png. Access Date: 24.09.2016
[5] Statista (2016): Absatz von BlackBerry-Smartphones weltweit vom 1. Quartal 2007 bis zum 2. Quartal 2016 (in Millionen Stück). URL: https://de.statista.com/statistik/daten/studie/12739/umfrage/weltweit-verkaufte-rim-smartphones-seit-dem-1-quartal-2007/. Access Date: 24.09.2016
[6| Statista (2016): Absatz von Apple iPhones weltweit in den Geschäftsjahren 2007 bis 2015 (in Millionen Stück). URL: https://de.statista.com/statistik/daten/studie/203584/umfrage/absatz-von-apple-iphones-seit-dem-geschaeftsjahr-2007/. Access Date: 24.09.2016
[7] Boss, J. (2014); 4 Best Practices to Avoid Startup Failure, URL: https://www.entrepreneur.com/article/239348. Access Date: 23.09.2016
TIME Research Area | Innovation & Entrepreneurship Group (WIN)
REFERENCES
[8] ©The Entrepreneur
[9] ©Megan Dickey/Business Inside
[10] Shontell, A. (2015): THE TECH 'TITANIC': How red-hot startup Fab raised $330 million and then went bust. URL: http://www.businessinsider.com/how-billion-dollar-startup-fab-died-2015-2?IR=T. Access Date: 23.09.2016