Ist of VI. April 29th, 2006

Transcription

1 Characteristics of Entrepreneurs TiE Institute Knowledge Series Ist of VI April 29th, 2006 Presented by; Prof. Patrick Turner, Affiliate Professor, INSEAD, Singapore

2 TiE Institute Knowledge Series 2006 Developing informed entrepreneurs through... Experience Training Interaction Exercise 6 Managing Human Resources 26 th Aug 5 Sustaining growth and Enterprise Maturity 30 th Sept Marketing and Scaling- up! 1 29 th April Walk-through the entrepreneurial lifecycle!! Concept Organisation Maturity 29 th July 4 Characteristic s of an Entrepreneur Financing your Enterprise 3 24 th June 2 27 th May Forming your enterprise

3 Warning... Entrepreneurs can lose their money... They can even lose all they have......house...car...the lot. But that s not all......in certain circumstances they can wind up in prison. Not good news......not good news at all.

4 ... Entrepreneurs can also earn a lot of money......sometimes even a fortune......they can live as they like......luxurious houses...fast cars...yachts in the Caribbean... Very nice......very, very nice.

5 The notion of risk The balance between the two extremes constitutes the RISK of the entrepreneur It is thus crucial to recognise this and to have the necessary skills to reduce the risk as far as possible

6 What is an entrepreneur? an entrepreneur is a person who sees an opportunity and assumes the risk of starting or acquiring a business to exploit it, thereby creating wealth.

7 What characterises an entrepreneur? commitment t to growth and innovation drive to create wealth risk acceptance (financial/ personal) obsessive adherence to certain values acceptance of uncertainty and ambiguity unconditional and unreserved effort ability to spot opportunities leadership/ self-starters starters unshakeable belief in their vision

8 The 3i checklist hardworking determined confident self-motivated t competitive resilient clear-thinking honest leadership ability to motivate colleagues

9 Reasons for being an entrepreneur Use my skills/ability Control over my life Build for the family Like the challenge Live where/how I like Gain respect/recognition Earn lots of money Fulfil others' expectations Best alternative available 0% 10% 20% 30% 40% 50% 60%

10 Survival rates firms surviv ving Percent Years after start-up Source: Alfred Nucci, The Demography of Business Closings, Small Business Economics, February, 1999.

11 How old do you have to be? Useful attributes Experience Network Resources Energy Not usually present at 20 yrs old Much more in evidence at 30 But, every general rule has its exceptions

12 Degrees of entrepreneurship Most Least Buccaneer Farmer Promoter Trustee

13 It s easy to start a company, but it s hard to start a business Company = people, idea, name, logo, capital, product Business = sales, sales growth, profitability growth, ROE During turbulent times, businesses last while mere companies crash

14 Entrepreneurs, ideas and opportunities

15 The basic questions What problem do you solve? Who will care? Why will they care? How many will care? How do you get to them and at what cost? How will you defend your position? How and when will you make money? Does the team have the relevant experience? How much money is needed? What do investors get out of it? What if.?

16 The basic questions What problem do you solve? Who will care? Why will they care? How many will care? How do you get to them and at what cost? How will you defend your position? How and when will you make money? Does the team have the relevant experience? How much money is needed? What do investors get out of it? What if.?

17 What is a business opportunity? a business opportunity has the qualities of being attractive, durable, and timely, and is anchored in a product or service which creates or adds value for its buyer or enduser.

18 The two key steps Identification What is the great idea? Evaluation Can it be turned into a great business?

19 Idea identification: can anybody do it? The idea of entrepreneurial alertness The entrepreneur seems to be able to sniff out ideas and spot new possibilities naturally. The systematic search technique New idea identification is induced rather than natural Food for thought: to what extent is entrepreneurial alertness a learned behaviour rather than an inborn characteristic?

20 Two sorts of idea identification Deliberate Where the decision to start a new venture precedes the idea Accidental Where the idea is the stimulus to start a new venture

21 Sources of new business ideas Prior job Hobby/interest Chance happening Someone suggested Education/courses Other 0% 10% 20% 30% 40% 50% Ideas and opportunities

22 Of 100 successful American entrepreneurs idea from prior job 7 - built on casual job 6 - own consumer want 5 - swept into dotcom revolution 4 - systematic research 4 - read about industry 2 - family member s idea 1 - thought up during honeymoon in Italy

23 What does all this teach us about the creative process? Principally that it is fundamentally rooted in experience Chance favours the prepared mind (Louis Pasteur) The harder I practise, the luckier I get (Gary Player) Genius is 1% inspiration and 99% perspiration (Thomas Edison)

24 How to generate ideas/1 The trick is to look for unfulfilled needs, even though these needs may be dormant or unexpressed. In your prior job: what were the customers (or suppliers) least happy with? what did you think could be better done, or done differently? were there any emerging g trends which looked as though they might change the landscape?

25 How to generate ideas/2 The trick is to look for unfulfilled needs, even though these needs may be dormant or unexpressed. In your prior job: could you see any possibilities for offering something new to customers in a related industry? could you see any niche possibilities? could you see areas in which h your own employer had needs?

26 How to generate ideas/3 The trick is to look for unfulfilled needs, even though these needs may be dormant or unexpressed. In your hobbies or spare time interests: can you see an unexploited way of applying new technology? have you ever felt the lack of a product or service? how could life be made easier for people with similar interests? what is the most frustrating aspect of your hobby or interest?

27 How to generate ideas/4 One technique is to create a bitch list. I bitch when.. I can t send SMS messages to France there s no beer in the fridge at 11 o clock at night I can t find my size shoes The software on my Pocket PC does not give me what I want

28 How to generate ideas/5 Building on your own bitch list, get used to the idea that whenever anybody expresses dissatisfaction with the way something works or how something is done, that signals a potential need to be filled.

29 How to generate ideas/6 Another technique is to brainstorm. 1. Define your purpose 2. Choose participants 3. Choose a facilitator 4. Brainstorm spontaneously and copiously 5. No criticism, no negatives 6. Record ideas in full view 7. Invent to the void 8. Resist becoming committed to one idea 9. Identify the most promising ideas 10. Refine and prioritise

30 How to generate ideas/7 Yet another technique is quite simply to ask around family, friends, neighbours if you are interested in a particular industry, talk to people involved in it, and keep an eye on trade magazines there are various magazines for would-be entrepreneurs, all giving ideas for new businesses there is even a free monthly new ideas service - i and a crazy ideas site be alert

31 The thing from outer space Please imagine a creature living on another planet somewhere far from our solar system. What kind of being might live on such a planet? Please draw your creature. Source: Exercises for Stimulating Out-of-the Box Thinking, Sheila Campbell

32 Crazy ideas/1

33 Crazy ideas/2

34 Crazy ideas/3

35 Crazy ideas/4

36 The three components of creativity it Expertise Creative thinking skills Creativity Motivation Source: Teresa M. Amabile, How to Kill Creativity, Harvard Business Review, Sep-Oct 1998

37 Creative thinking skills probably better to talk about the degree of flexibility and imagination a person brings to bear when approaching a problem. over the last few years this idea has been expressed by the phrase thinking out of the box however training courses have existed since the 1950s to improve this skill (Creative Problem Solving, Synectics etc)

38 Ask yourself : what are the parameters? In the following line of letters, cross out six letters so that the remaining letters without altering their sequence, spell a familiar word. B S A I N X L E A T N T E A R S Source: von Oech, Roger. (1983). A Whack on the Side of the Head: How to Unlock our Mind for Innovation. New York: Warner Books. & (1986) A Kick in the Seat of the Pants: Using your Explorer, Artist, Judge, & Warrior to be more Creative. New York: Harper & Row, Publishers, Inc.

39 Ask yourself: why are things the way they are? Q W E R T Y U I O P

40 Make new rules (ie, don t assume you know them) Add one more line to make six IX Source: Basadur, M. (1995) The Power of Innovation: How to Make Innovation a Way of Life and Put Creative Solutions to Work. London: Pitman Publishing:

41 Ask yourself : y what is the real problem?

42 Lateral thinking concept invented by Edward de Bono in 1967 the basic idea is that we usually think in learned patterns, and therefore our thinking follows known paths. in order to innovate, we ought to think outside these known paths and try to see things from new angles. the point is that the solutions to many problems require a new perspective.

43 Examples a man goes into a bar and asks the barman for a glass of water. The barman picks up a pistol from under the bar and threatens the man with it. The man then thanks the barman and leaves. What happened? a deaf and dumb person goes into a stationery shop. In order to get across to the shopkeeper the message that he needs a pencil sharpener, he puts a finger into his left ear and moves his other hand in circles around his right ear. The next customer is blind. What does he do to ask for a pair of scissors?

44 Another exercise A cowboy rode into a town on Friday. He stayed for three nights and then left on Friday. How come? His horse was called Friday.

45 Entrepreneurs, ideas and opportunities

46 Is your idea an opportunity? does your idea solve a consumer want or need? are there enough people who will buy your product to support a business? how much competition is there for that demand? can this idea be turned into a profitable business? do you have the skills needed? does the idea provide scope for attaining your own personal objectives?

47 Points to keep in mind a technological breakthrough on its own does not constitute t an opportunity the landscape is constantly changing, thus opening the way for ideas that were not feasible yesterday an opportunity may simply involve taking something that is successful in one part of the world and introducing it in another KISS

48 The basic questions What problem do you solve? Who will care? Why will they care? How many will care? How do you get to them and at what cost? How will you defend your position? How and when will you make money? Does the team have the relevant experience? How much money is needed? What do investors get out of it? What if.?

49 Careful with assumptions It is a basic rule with new venture plans that you should never make any unsubstantiated assumptions ASS-U-ME

50 Assumptions are inevitable By definition, new ventures involve the unknown and the uncertain, and are undertaken with a high ratio of assumption to knowledge. Because assumptions about the unknown frequently turn out to be wrong, new ventures inevitably experience deviations from their original plan. The management of assumptions is, therefore, critically important in a new venture.

51 Some dangerous assumptions Customers will buy because our product/service is good and technically superior Customers will run no risk in switching to us from their current suppliers The product/service will sell itself We can develop the product on time and on budget We will have no trouble attracting the right staff We can protect our product from competition

52 Assumptions need to be managed Make a checklist of all assumptions, explicit and implicit Make a plan to test those assumptions A useful technique is to name one member of the team keeper of the assumptions

53 Distinguish between assumptions Primary assumptions assumptions that have a crucial impact on the venture, capable of determining success or failure (eg, customer acceptance rate) Secondary assumptions Non-life-threatening assumptions (eg, GDP growth rate, interest rates etc)

54 The potentially killer assumptions Anything concerned with customer acceptance of your new product/service

55 Understand the key questions What are the key questions that need to be answered? Who has the answers? What questions need to be answered first?

56 Questions to ask regarding your market and industry (1) Is my market clearly identifiable? How big is it? How am I going to reach it? How fast is it growing? Can it be segmented? What types of people buy this product/service? What makes my offering unique? What is the pricing structure of the market? What factors are most important to buyers? What is required to succeed in this market? What is the competition?

57 Questions to ask regarding your market and industry (2) Can the market support another player? What strategies/tactics does the competition use? Who are the most successful competitors and why? What are the current trends in the market? Is the market seasonal? Is the market subject to regulations/restrictions? Is there customer loyalty in the market? To what extent is the market sensitive to economic fluctuations? What are the key success factors?

58 Sources of information Customers Competitors Suppliers Trade associations/trade shows Business publications Chambers of Commerce Government statistics Business schools/universities Vocational training centres Internet Observation

59 The two sorts of data Primary data Information you collect yourself to analyse a specific situation ti Secondary data Information collected by people other than yourself Information collected by people other than yourself for purposes other than the current project

60 Primary data Subjective cannot be statistically analysed, eg, focus group Measurable statistically analysable, eg, survey

61 Focus groups A focus group is a small, targetted group discussion with an overall agenda, but without a rigid questionnaire. It is largely unstructured so that spontaneous thoughts and ideas can surface Participants are usually rewarded, sometimes financially, sometimes with some token of thanks.

62 Guidelines for focus groups Make sure the group is representative of the population segment that interests you Have a strong moderator to guide proceedings Encourage the group to be open and honest Make sure all members of the group participate Avoid stating your own opinions or leading participants Use visual aids to help discussion Wit Write down opinions i on flip chart Get a separate person to take notes (groups are often recorded or even videoed) One focus group is not enough

63 Surveys Require meticulous planning and a well thought-out sequence of questions Three types Personal interview (90% response rate) Phone interview (60% response rate) Mail questionnaire (4% response rate?)

64 Questionnaires Must be understandable (remember Murphy s law again) Must be as short as possible, consistent with the research needs Be direct in the questions Questions must be easily answerable Avoid offending anyone Be honest about the purpose of the questionnaire Always pre-test your questionnaire Think about a web based questionnaire (eg

65 Time investment Focus groups up to 90 minutes Personal interviews minutes Phone interviews up to 20 minutes Mail surveys the longer the questionnaire, the less likely it is that it will be completed Careful: avoid the temptation to cram more into a questionnaire by using small fonts

66 The confidentiality issue This has been grossly exaggerated by the dotcom phenomenon (obsession with first mover status) Companies habitually research the potential market for new products/services You cannot verify the acceptability of your new idea unless you ask potential customers what they think of it

67 Q&A

68 THANK YOU!