Entrepreneurship Readings Summary

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Remove structural obstacles to reduce the objective risks of a failed venture

- Punishing bankruptcy as a crime

- Don’t make it hard to fire people, it’s better to protect laid-off workers

Turn failure into fodder

Entrepreneurs are not reckless gamblers. Inexpensive failures don’t make headlines. Support the training of entrepreneurs in risk-mitigation strategies and skills.

Reading 5: Building Resilience

Douglas and Walter: the former recovers from a failure, the latter falls into hopelessness. Walter becomes listless. He goes from sadness to depression.

Optimism is the key

Dogs and rats accept pain when they have experienced it, they learn helplessness.

Human beings react to extreme adversity in a normal distribution.

On one end: people fall apart into depression and stay in it.

In the middle: first react with depression and anxiety, then they come back how they were before the trauma. RESILIENCE

On the other end: better they were before the trauma. “That which does not kill us makes us stronger”

Reading 6: Meeting the Challenge of Corporate Entrepreneurship

Because of maturing technologies and aging product portfolios, companies must create, develop and sustain new businesses.

New businesses present three challenges:

- Lack of data about market and finance

- Innovation required: maverick spirit. Microsoft’s wariness of open-source software. “There is only a fine line between entrepreneurship and insubordination”

- Poor fit between new businesses and old systems. Executives match the skills of mature businesses, not the entrepreneurial skills.

When you develop a new business, you need to use trial-and-error strategy. In highly ambiguous environments, there are many possible strategic directions and evolutionary paths. Different from uncertain environments.

Learning comes from experimentation and interaction with a small number of customers. You need to test with prototypes (should be detailed enough) and to understand if the technology, the product is adapted to the market’s needs.

Example: Procter & Gamble’s CEO. Quitting focus group, go to customers’ houses!

Trial-and-error approach: failing fast to learn quickly in a reasonable timeframe (30 days). It’s better to identify a failure early, rather than burning 90% of your initial capital.

Lean start-up and bootstrapping are complementary: the maximization of existing resources first. The entrepreneur plans his business according to his resources.

Being lean: being efficient with resources. BUILD-MEASURE-LEARN. Customers contact. Iteration. Minimum viable product = minimum prototype → ZAPPOS.

Bootstrap: customer funding

Two different flawed approaches:

- New ventures in isolated divisions. But impossible to integrate later because of power struggles.

- Charge all managers with nurturing innovative ideas

Example: IBM’s EBO management system

In the 90s, the CEO of IBM didn’t understand why his teams keep missing the emergence of new industries. He created a distinct Emerging Business Opportunity (EBO) management system associated with a pool of funds. A mix of evolving and successful businesses, a mix of entrepreneurship and disciplined management, short and long term thinking and established and new processes.

Once the business has clear leadership and strategy → IBM’s business groups, better in regard to operational issues.

- Balancing elements from your old and old businesses

- You just kept iterating, iterating and iterating

- Meetings: refining business plan not focus on financial performance

Summary of the Courses

- Henry Ford: “consumers will like what I tell them to like”. Standardization. E.g. APPLE

- “If I asked the public what they wanted, they would have asked for a faster horse” Henry FORD

- Johnson & Johnson CEO: “Failure is our most important product”

- Starbucks: “The idea behind customer service here is to make it one that isn't just good, we want to make it Great. If people have a BAD experience, they'll tell 7 people. If they have an average experience they'll tell no one. If they have a GREAT experience, they'll tell 2-3. Making it a great experience though, isn't just about service. If they have a problem (bad drink, cracked lid, etc.), we want to do everything to make it right, then and there."

4 new business models that are here to stay:

- Mass Production VS Just In Time Delivery

- Standardization VS Customisation

- Shopping VS Browsing; E-commerce/Brick and mortar

- In-house VS Outsourcing. The latter largely won.

Introduction

Different kinds of entrepreneur:

- Founder

- Intrapreneur

- Franchisee

Gazelle: high-potential venture

Entrepreneurship: “the process by which individuals purse opportunities without regard to resources they currently control”

People are aware of the new need after they experience it

Product life cycle increasingly becomes shorter

Radical innovation comes