Exam number three Flashcards
entrepreneurship
creating new value by an existing organization or new venture
-involves assumption of risks
what contexts can new value be created in
- Start ups
- companies of any age
- private or public equity
- non profits
entrepreneurial opportunities require
opportunity recognition
two phases of opportunity recognition
discovery
evaluation
discovery phase
becoming aware of a new business concept
evaluation phase
analyzing the opportunity to determine whether it is viable or feasible to develop further
qualities of viable opportunities
attractive
achievable
durable
value-adding
Resources essential to entrepreneurial success
financial resources
human capital
social capital
government resources
entrepreneurial financial resources
- initial start up financing
- early stage financing (angel investors)
- later stage financing (venture capitalists)
entrepreneurial human capital resources
-strong skilled management needed
entrepreneurial social capital
-extensive social contacts and strategic alliances
federal state and local government resources
- government contracting
- loan guarantee programs
- training, counseling, and support services
entrepreneurial leadership
tenants
- vision
- drive and dedication
- commitment to excellence
vision
being able to see the future and communicate/inspire that vision to others
entrepreneurial leadership insights
- social networks provide good background information
- but nothing replaces strong personal relationships with suppliers and partners
lessons from young entrepreneur
- engage audience w/ presentation
- solve a problem that really exists
- have integrity
- have a solid vision
entrepreneurial strategies
- entry strategies
- generic strategies
- combination strategies
entry strategies
- pioneering
- imitative
- adaptive
pioneering new entry strategy
-creating new ways to solve old problems
initiative new entry strategy
- introducing the same basic product or service as a competitor
- can we do it better than existing competitor
- can someone imitate us?
adaptive new entry
- offers a produce or service that is somewhat new and sufficiently different
- does a superior job at meeting customer needs
generic strategies for new ventures
overall cost leadership
differentiation
focus
overall cost leadership advantages
- simpler structure/smaller size
- quicker decision making
differentiation strategy an compete by
- unique value through innovation and superior tech
- deploying resources in radical new way
focus strategy gives ability to
-use niche strategies that fit the small business model
combination strategies for new ventures
combine the best of different generic strategies
examples of combination strategies
- holding down expenses with a simple structure
- creating high value products by being flexible and innovative
- offering specialized products or superior customer service to niche market
typical pattern of growth for corporations
simple > functional > divisional > matrix
simple structure
-owner/manager makes most of the decisions
functional structure
- grouped by major functions of the firm
- (ie marketing, finance, operations)
divisional structure
grouped by products, projects, or markets
-each division typically has it’s own functional structure
matrix structure
functional departments are combined with product groups on a project basis
-x axis is function and y axis is project and they intersect
strategic business unit (SBU) structure
grouped by similar products or markets into units to achieve synergy
holding company structure
business in a corporations portfolio are result of unrelated diversification
what considerations to firms with international operations need to consider when choosing a structure
- type of strategy that drives their foreign operations
- degree of product diversity
- extent to which firm is dependent on foreign sales
firms with global strategies should use those structures
-worldwide functional structure
worldwide divisional structure
-worldwide company holding structure
firms with multi-domestic strategies should use
- international division structure
- geographic area division structure
- worldwide matrix structure
global startup
- used inputs from around the world
- sells products/services around the world
- has coordination challenges
what structure do global startups frequently choose
boundaryless organizational design
boundaryless organizational design definition
- boundaries are more permeable than in traditional designs
- both within company structure and with external partners
different types of boundaryless designs
- barrier free
- modular
- virtual organizations
barrier free
has permeable internal and external boundaries
barrier free requirements
- higher level of trust
- philosophy of organization development
- greater use of teams
- open communication flows with external
modular organization
- outsources non-core activities to outsiders,
- activates knowledge of suppliers but retains strategic control
- focus scarce resources on key areas
virtual organization
- forming alliance with multiple organizational partners
- may not be permeant
- needs a lot of cooperative efforts
- McGraw Hill example
ambidextrous organizations key design attribute
- aligned and efficient while they pursue incremental innovations
- are flexible enough to adapt to changes in the external environment and create dramatic breakthrough innovations
why is ambidextrous design more effective structure
it addresses the contradictory challenges of being adaptive while also achieving alignment
innovation allows for
- transformation of organizational processes
- creation of new and commercially viable products and services
innovation requires knowledge from
- latest technology
- the result of experiments
- creative insights
- competitive information
types of innovation
product innovation process innovation radical innovation incremental innovation sustaining innovation disruptive innovation
product innovation
- applies technology go develop new product designs
- common during early stages of industry life cycle
process innovation
improves efficiency of organizations processes
-common during later stages of industry life cycle
radical innovation
major departure from existing practices usually from technological change
-can transform whole industry
incremental innovation
-make small improvements in products or processes to enhance existing products
sustaining innovation
- extends sales in existing market
- enables new products to be sold at a higher margin
disruptive innovation
- overturn markets with a new approach to meeting customer needs
- technologically simpler and less sophisticated
innovation spectrum
Radical (most) to incremental (least)
innovation challenges/dilemas
- seeds versus weeds
- experience versus initiative
- internal versus external staffing
- building capabilities versus collaborating
- incremental versus preemptive launch
seeds versus weeds
what projects should we pursue
-seeds bear fruit while weds don’t and should be cast aside
experience versus initiative
should an experienced upper manager lead a project or should a mid level manager with more enthusiasm and fresh ideas do it
internal versus external staffing
-do we get good staff from insiders with social capital or from external people who are betting at thinking outside the box
building capabilities versus collaborating
-do we find the skills that we need from internal departments or external collaborations with other companies
incremental versus preemptive launch
do we do a less risky incremental launch that gives competitors time to catch up or do we do a big preemptive launch to stay ahead of them even though it’s more risky
cultivating innovation skills
- discovery skills
- creative intelligence
discovery skills
allows leaders to see potential in innovations
creative intelligence
allows individuals to develop more creative higher potential innovations
defining scope of organization
- defining strategic envelope
- evaluating result
strategic envelope
- focus on common technology?
- focus on market theme?
evaluating results (defining scope)
- how much will the innovation cost?
- how likely is it to be commercially viable
- how much value will it add if it works
- can we learn something even if it fails
managing pace of innovation
- incremental innovations
- radical innovations
- time pacing allows for control of the innovation process
incremental innovations
- may take 6-12 months
- may use a milestone approach with goals and deadlines
radical innovations
- make take 10 years or more
- may involve open ended experimentation and time consuming mistakes
staffing to capture value from innovation
- use experienced people from diverse backgrounds
- require employees to serve in the new venture as part of career development
- once people have new venture experience transfer them to revitalize core business
- separate individual perforce from innovation to avoid failure stigma
value of unsuccessful innovation
- experience and learning gained through failure
- don’t over commit or despair, pivot quickly and transfer knowledge
corporate entrepreneurship
- pursuit of new venture opportunities
- strategic renewal via intrapreneuring
corporate entrepreneurship categories
focused approaches
dispersed approaches
measuring success
focused approaches
new venture groups
business incubators
new venture groups
semi autonomous units with informal structure used to innovate and coordinate with other divisions
business incubator
hatch new businesses by providing funding, physical space, services, monitoring, networking
dispersed approaches to corporate entrepreneurship
- spread throughout form
- ability to change is core capability
- stakeholder can bring new ideas or venture opportunities to anyone in the organization
dispersed approaches to corporate entrepreneurship aspects
- entrepreneurial culture
- resource allotment to support activities
- product champions to promote from start to finish
measuring success of corporate entrepreneurship
- exit champions
- real options analysis
exit champions
avoid costly defeats by questioning viability of new project, gathering hard evidence, risking loss of status while opposing popular projects, saving corporations finances and reputation
real options analysis
investment tool that helps manage uncertainty associated with launching new ventures
real options analysis limitations
agency theory
managerial conceit
escalation of commitment
agency theory
managers have incentive to propose projects that might be successful so they game the system by back solving any formula
managerial conceit
overconfidence and the illusion of control (hubris)
escalation of commitment
keep investing and double down in a decision even though it seems likely to fill
entrepreneurial orientation definition
involves strategy making pratices used to identify new ventures, a unique frame of mind, and a perspective toward entrepreneurship
different entrepreneurial orientations
autonomy innovativeness proactiveness competitive aggressiveness risk taking
autonomy
independent action aimed at bringing fourth a new vision or opportunity
innovativeness
willingness to find new innovations through experimentation and creative processes
proactiveness
forward thinking perspective characteristics that allow the seizure of opportunities
competitive aggressiveness
intense effort to outperform industry rivals
-too much is bad and can damage reputation
risk taking
willingness to act boldly without knowing consequences
