Free Essay

Entrepreneurial Mindset

In: Business and Management

Submitted By JaccoVerstraten
Words 1483
Pages 6
The Entrepreneurial Mindset: Strategies for Continuously Creating Opportunity in an Age of Uncertainty
Rita Gunther McGrath and Ian C. MacMillan

Executive Summary * Successful executives will learn to master uncertainty through the skills of entrepreneurial leadership * This calls for different disciplines than in conventional management * There are five key elements: * Creating a climate supporting continuous search for opportunity * Framing * Stocking an opportunity register * Focus * Promoting adaptive execution

Entrepreneurial leadership: The most important job

Although uncertainty might cause many to freeze, it can be used to your benefit. Uncertain situations are full of new opportunities. Your task is to continuously identify high-potential business opportunities and exploit these opportunities with speed and confidence. Thus, uncertainty can become your ally, not your enemy.

Entrepreneurial leaders are distinguished from other managers by their personal practices. These fall into three categories: setting the work climate, orchestrating opportunity-seeking and moving particular ventures forward personally. * Climate setting practices create a pervasive sense of urgency for everyone to work on new business initiatives. Dedicate a disproportionate share of your own time, attention and discretionary resources to finding and supporting new business models. Gary Wendt, who drove massive growth at General Electric Financial Services, demonstrated this principle. He consistently, predictably made new business development his top priority agenda item - at every meeting and chance encounter. * Orchestrating opportunity seeking involves removing uncertainty from your people by clearly specifying what type of entrepreneurial opportunities are wanted. We call this 'ballparking.' A Swedish entrepreneur whose small company excelled at CAD/CAM technology defined an entrepreneurial playing field for his people of "50 to the power of 4." This meant he was interested in proposals that had the potential to deliver 50 million Swedish kroner ($8 million) in profits, by capturing 50% market share, with 50% margins in at least 50 countries. The logic was to seek opportunities where he solved a real problem for enough customers that he could capture the lions' share of a defensible global market without having to deal with competition from multinational firms. This gave his people scope, but also kept them focused on those opportunities where he felt that his company could build a strong position. * Specific hands-on management practices recognize that the quest for insight is the single most important source of competitive differentiation a management team can bring to an organization. For example, Robert Brown and Linda Mason, founders of Bright Horizons child care centers capitalized on an insight that allowed them to create an attractive business model in a traditionally unattractive industry. Instead of focusing on individual families' needs for child care, the couple instead redefined their customer as corporations. In 15 years, the venture grew from a concept to a thriving business with over 340 centers.

Establishing the Entrepreneurial Frame

The entrepreneurial frame defines your goals. The idea is to push you and your team to undertake those initiatives that go beyond mere incremental improvement to really make a difference. Framing has two parts: first, a definition of success, and secondly an articulation of strategic direction.

The process for establishing a frame involves working through the following questions:
1. If you were to do something in the next three to five years that you, your boss, and your company's investors would regard as a major win, what would this look like?
2. What are the minimum amount of profits you need from your new ventures (at maturity) to make a difference to your business? From your established business? What rate of growth must you sustain?
3. What is the increase in profitability you need to achieve in the next three to five years?
4. What return on investment are you seeking?

The results can be categorized thus:

| Current Performance | Desired Performance | Specification of Success | Last year's Profits | 200 | 10% improvement | 220 | Return on sales | 10% | 5% improvement | 10.5% | Revenues required to produce profits | 2,000 | 220 (above) / 10.5% (above) | 2,095 | Return on assets | 15% | 10% improvement | 16.5% | Assets required to produce profits | 1,333 | Profit goal / ROA goal | 1,333 |

Next articulate strategic direction by establishing screening criteria that are consistent with your 'ballparking' definition. Screening-out criteria are "drop dead" if a proposal has that characteristic. Screening-in criteria are "the more the merrier" (the more of these characteristics, the more attractive the opportunity). Think through the following questions:

1. What have the least desirable businesses that you have been involved with been, and what characteristics made them undesirable? What does this tell you about areas to avoid in the future?
2. What made a particular opportunity very rewarding for you? What does this tell you about areas to pursue in the future?
3. Integrate these statements into a list of (about) ten "screen out" statements and ten "screen in" statements that capture your experience. A "screen out" might be - "the opportunity would consume too much time from our key people." A "screen in" might be "this is an attractive market in which we already have a strong position". Try to make your screening statements as specific to your business as possible.

Eventually, your goal is to have about 10 screening in and 10 screening out statements that the organization can agree accurately reflect the types of businesses that are desired and not desired.

Creating a well-stocked opportunity register

An opportunity register is an inventory of potentially attractive new business opportunities. The idea is that at any point in time, you'll have a rich set of potential opportunities to choose from, rather than having only the choice of those that managed to survive a corporate winnowing process.

Two techniques are useful here. The first is called consumption chain analysis. The consumption chain is used to map the customers' entire set of experiences with your product or service offering. It begins with the trigger event or circumstance that leads the customer to be aware of a need, and continues through all the steps involved in their being a customer of yours. Any link in the chain has differentiation potential - which you can uncover by probing into the customers' experiences at each link.

The second technique is attribute mapping. This captures how well your offering is appealing to customers' needs at the moment. Start simply, by identifying an offering and an important customer segment. Then analyze to see where you could enhance positive attributes and eliminate negative ones, as in the chart below.

By using these two techniques, you will typically discover more good ideas than you can execute with the resources you have. The challenge is to now winnow them down to the very best, while realizing that you don't want to over-emphasize either existing businesses or new ones.

Creating Focus using real options reasoning

Like investing in a financial option, real options reasoning involves making small investments that give you the right to make a decision later. The idea is to limit your downside exposure until the upside potential of the opportunity is demonstrated. In conjunction with limiting risk, an options approach allows you to create focus and strategic alignment across your portfolio of initiatives. The portfolio addresses whether the market is certain or not, and whether the technological environment is certain or not, as in the chart.

Map the initiatives that your firm is pursuing on the chart. The mapping should reflect your strategy. If your strategy is to grow the existing business you will want more emphasis on the lower left hand section. If your strategy is exploration, you'll want more options. Firms usually learn from this exercise that they are taking on too many projects and that the projects that are in the pipeline are not consistent with their strategies. One way to fix this is to allocate resources to different sections of the map before projects are approved, then make them compete with similar projects for resources.

Promoting adaptive execution by discovery-driven planning

Discovery driven planning is a plan to learn, not to show that you had all the answers when you wrote the plan. The technique requires the interaction of five processes, working together. These processes are: 1) determining the frame (objectives) at the level of a project; 2) establishing competitive and market benchmarks; 3) defining operating specifications; 4) documenting assumptions; and 5) establishing key milestones. In uncertain environments, conventional planning makes no sense. Instead, plan with discipline to the next major milestone, then pause and re-plan as new information becomes available.

In all these techniques, the emphasis is on the twin activities of pursuing opportunity while remaining focused.

For Further Reading

McGrath, R. G. and MacMillan, I. C. 1995. 'Discovery Driven Planning' Harvard Business Review. July-August, 1995. This article outlines the technique in more depth.

McGrath, R. G. and MacMillan, I. C. 2000. Assessing technology projects using Real Options Reasoning. Research-Technology Management 43(4) pp. 35-49. This article offers an evaluative methodology for uncertain technologies.

Similar Documents

Premium Essay

Creativity in Business

...Garine Benian Wednesday/ 3:00 10-29-14 Creativity in Business Case Study 1 (pg.35): 1. Prior to starting the EET, what types of things did Michael and Sheena do to help themselves build entrepreneurial knowledge/skills? * Michael and Sheena attended New York University, majoring in management and marketing and communication studies respectively. Prior to this Michael started their own web development company with a partner while he was still in high school. He honed his skills on increased his knowledge of starting and running a small business in the process. Sheena displayed a desire to be independent by establishing her own financial independence at the age of 17. She also funded her own college education, showing a strong work ethic and desire to succeed. While attending college she worked at a venture capital company thus giving her the opportunity to learn entrepreneurial skills. Sheena also taught at a non-profit organization that further increased her educational skills. 2. What motivated Michael and Sheena to start the EET? * They wanted to help college students realize their dreams through entrepreneurship. Michael and Sheena needed to find a way to increase sales and profitability in order to sustain this venture as a viable business. To do this he saw an opportunity in public speaking while promoting his manifesto and formed the EET. 3. How did Michael and Sheena determine that the EET was a sound idea? Did they use a feasibility......

Words: 606 - Pages: 3

Premium Essay

Pillary

...Three Pillars Essay Shacola Columbus Grand Canyon University: UNV 504 Innovation and Entrepreneurship December 24, 2014 The college of business has three very distinctive pillars that help the college of business move a positive direction. The three pillars are servant leadership, entrepreneurial spirit, and innovation these are pillars that the college base there learning on. While looking at all three pillars you can see how they all play a role with each other. The first pillar were actually go in depth into is servant leader. Servant leader is finding out what the people needs and putting them first. Servant leaders help others and also meet their environment need that’s located around them. A servant led environment wants individuals to include their ideas and how they feel. In the article Leadership Excellence by Barrett, Colleen explains how to treat people and shows the power of a servant led organization. Colleen looks at the most important priorities in customer service, is to follow the golden rule. She encourages people to follow the golden rule treat people like they would want to be treated, and then everything else will fall into place. Having a positive and motivating environment will rub off to the customers and something positive will arise from it (Barrett, 2011). The next pillar that comes along with servant leader is innovation. Innovation comes from a servant leaders environment; in this type of environment its helps the......

Words: 815 - Pages: 4

Premium Essay

Aston Case Study

...Internal Version for BBS Use Only Aggi Nauval Hutama Karya Aspal Beton: Entrepreneur Mindset The entrepreneur process includes all the functions, activities and actions that are the part of perceiving opportunities and creating organizations to pursue them (William Bygrave & Andrew Zacharakis,”Entrepreneurship” 2010) Opening Paragraph Budi Prasetyo, CEO of HK Aston, is preparing big agenda that afternoon. He is busy coordinating big projects of his new office HK Aston. As a subsidiary company of Hutama Karya a State Own Enterprises in construction business, HK Aston have specific mission to be a focus company in managing Asphalt and Steel business. One of the big projects on the pipeline is Tanjung Benoa Toll Road in Bali. First of all HK Aston is a newly startup company set up in 2009 with mission to differentiate services and bring more value to the industry towards better services as a group of businesses. Main purpose setting up subsidiary company with core business of specific services is to gain focus in asphalt services which value added perceive values. HK Aston business operation is still active during the process of spin off from division under Operation Directorate to become full fledge company. Even though setting up a good foundation of strong business need more than just a legal documentation and given business, moreover they must have a strong entrepreneurial spirits towards vision of the new company. In this case Budi will have to manage the three basic......

Words: 4146 - Pages: 17

Premium Essay

Strategic Entrepreneurship

...Strategic Entrepreneurship Introduction: In this article, the main topic that is covered relates to precisely how strategic and entrepreneurial management are both combined and unified as a single management function. That is, Strategic Entrepreneurship which is a term vaguely coined by many describes the constant need of mangers focusing on objectives such as finding new business opportunities and taking advantage of creating short-term competition. An expectation of meeting such objectives creates a problem that is caused by having a select few elements of strategic management and entrepreneurship that overlap each other. Due to the general obscure understanding of how both strategic management and entrepreneurship are related, many studies have been conducted in order to better define Strategic Entrepreneurship. The article notes that in recent time, only one study goes to show a conceptual model of SE (Ireland 2003), but lacking in formulating a feedback loop between strategic management and entrepreneurship. Even though SE can be defined as simultaneous pursuit of opportunities and strategic advantages, the model presented by most early studies failed to pinpoint the correlation between the two. Due to the fact that SE is a new field of study, the article reviews all information on entrepreneurship, strategic management, and strategic information in order to determine the origin of SE, find the locus of integration, highlight the common components or elements, and...

Words: 1898 - Pages: 8

Premium Essay

Title

...JOHN SMITH 1 Global Place, Box XXXX, Glendale, AZ, 85306; 555.333.8666; student@global.thunderbird.edu October 12, 2010 Toyota Motor Sales USA 19001 S Western Ave Torrance, CA 90501 Dear Hiring Manager: “Betsy.” This is the name my mom has given her 2010 Toyota Prius. She loves this car as do I because I get to drive my mom around in it when I visit her. The time spent together has generated memories that I will always carry with me. And, that’s why I want to work for Toyota. It’s a brand that brings people together with products that deliver lasting customer satisfaction. I am a MBA candidate at Thunderbird School of Global Management and I am interested in Toyota’s Strategic Resources Track internship that’s offered this summer. Toyota is defining the category and I want to bring my education and ten years of advertising experience to expand Toyota’s leadership position. I offer Toyota a passion for growing brands. In my advertising career I directed the success of regional and global brands and learned how to translate market data into strategies that delivered results. Additional skills relevant to this internship are listed below. Strategic Analysis I directed a team that positioned the fourth largest credit union in the U.S., BECU, as a financial leader in a highly competitive marketplace. Through analyzing our target audience and the financial category I identified insights that built a differentiated strategy. The advertising campaign that subsequently......

Words: 2428 - Pages: 10

Premium Essay

External/Internal Factors Paper

...External/Internal Factors Paper Diversity is one of the most important things at The Home Depot. It is the catalyst for innovative thinking, entrepreneurial spirit and new ways of building our communities. To this end The Home Depot uses creativity, fresh thinking, and the experiences of people from different cultures and beliefs. The Home Depot believes that talent comes in many different forms and they celebrate each and every talent, because every talent is cultivated and is considered to be the foundation of our culture in America. At The Home Depot, the executive management team is responsible for diversity and creates a culture that welcomes every associate. The company encourages people from diverse backgrounds in all levels of management, and managers are accountable for attracting diverse candidates. The Home Depot realizes that as they continue to grow locally and globally, they will increasingly need for their associates to continue contributing to their efforts. The Home Depot values diversity because it offers a competitive advantage, makes the company a better place to work; and they can understand better their diverse customers’ needs in this way. The Home Depot gives customers better service and deliver. At The Home Depot, Managers are committed to creating a diverse work environment and in these circumstances all employees are included, respected, supported and encouraged associates to do the best work. The Home Depot recognizes with pride the......

Words: 443 - Pages: 2

Premium Essay

Entrepreneurship Leadership in the 21st Century

...The past thirty years have witnessed the most powerful emergence of entrepreneurial activity in the world. Entrepreneurs are now described as aggressive catalysts for change in the world of business; individuals who recognize opportunities where others see chaos, contradiction, or confusion. They have been compared to Olympic athletes challenging themselves to break new barriers, to longdistance runners dealing with the agony of the miles, to symphony orchestra conductors who balance the different skills and sounds into a cohesive whole, or to top-gun pilots who continually push the envelope of speed and daring. The U.S. economy has been revitalized because of the efforts of entrepreneurs, and the world has turned now to free enterprise as a model for economic development. The passion and drive of entrepreneurs move the world of business forward as they challenge the unknown and continuously create the future (Kuratko, 2002). Several methods have been used to measure the impact of entrepreneurial ventures on the economy—for example, efforts to start a firm (which may not be successful), incorporation of a firm (which may never go into business), changes in net tax returns filed (reflecting new filings minus filings no longer received), and a substantial amount of full-time and part-time self-employment. According to the Small Business Administration, 672,000 new businesses were created in 2005; the largest in US history (even 12% higher than......

Words: 6402 - Pages: 26

Premium Essay

Supervisor in Us

...Course description and outline The Ice House Entrepreneurship Program is a unique and powerful online learning program designed to inspire and engage participants in the fundamental concepts of an entrepreneurial mindset and the unlimited opportunities it can provide. The overall objective is to empower learners through entrepreneurial thinking and immerse them in entrepreneurial experiences that will enable them to develop entrepreneurial skills. Inspire, Inform and Involve This highly interactive program enables participants to learn from the first-hand experience of successful real-world entrepreneurs. Drawing on the eight life-lessons described in the book, the program combines narrated chalkboard presentations with video interviews and case studies featuring modern-day examples of those who, like Clifton’s Uncle Cleve, have triumphed over hardship and adversity by embracing an entrepreneurial mindset. In addition to the narrated chalkboard presentations, each lesson includes individual learning assessments, discussion topics and assignments that are designed to maximize comprehension and assimilation while encouraging real-world application of the core concepts. The course also includes access to a vibrant online entrepreneurial learning community, a virtual campus that enables participants and facilitators to share their knowledge and experience with other entrepreneurs and educators within their own communities as well as others across the country......

Words: 1454 - Pages: 6

Premium Essay

Leadership

...Three Pillars Essay Grand Canyon University: UNV 504 Innovation and Entrepreneurship June 10, 2014 Three Pillars Essay In his video Ken Blanchard, discusses the three pillars of business; servant leadership, innovation and entrepreneurial spirit (Blanchard, 2011). Servant leadership is not being a servant to those that you work with, it is offering direction and vision with stated goals. It sets a platform for all employees to know where the company is headed, while focusing energy on the set goal. It requires that both management and employees live according to the vision with customers being the primary focus. Servant leadership if done correctly draws out the innovation in employees. It asks people to bring their ideas to work and put on their thinking caps to move towards better practices, efficient processes and more satisfied customers. It allows for the entrepreneurial spirit in employees to be developed. Employees not only become a part of the process for development and innovation, but partners in the business. They have a personal stake in the company which can build long term loyal employees working to sustain and grow for the customer, themselves and the business. Although servant leadership focuses on others and needs of the whole in most cases there could be some shortcomings to servant leadership. According to Lynch and Friedman servant leaders might easily focus more on the needs of the followers than the needs of the organization as a whole or......

Words: 1141 - Pages: 5

Premium Essay

Entrepreunship

...I vividly remember the moment I feel in love with the idea of being an entrepreneur. It was shortly after moving to Silicon Valley, while watching Mark Zuckerberg and Jim Breyer on the Harvard to Facebook lecture by Stanford Technology Venture Program's Entrepreneurial Thought Leader Seminars. During that podcast, I realized that with an idea and the right vision anything is possible. It is this conviction to take a risk to follow your dreams that is at the core of entrepreneurship. Merriam-Webster Dictionary defines entrepreneurship as "the of organization, management, and assumption the risks of a business or enterprise." Yet, this definition makes entrepreneurship seem like a set of actions instead of a mindset. In my opinion, entrepreneurship is not a prescribed set of actions. Following the beaten path does not make one entrepreneurial. Actually, it is the disregard of what is conventional that gives a person an innovative edge. From an etymological point-of-view, the word entrepreneur is based on the Sanskrit word "Antha Prerna," which in translation means "self-motivated." Self-motivation is the hallmark of an entrepreneur. Self-motivation is the x-factor, separating those who have the entrepreneurial mindset from others who are trapped in the conventional way of thinking. Self-motivation is not an ability, but a desire to reach for something greater. Something much larger than oneself. The late Steve Jobs captures this with his famous comment toward an employee:......

Words: 516 - Pages: 3

Premium Essay

Entrepreneurial Mindset

...The Entrepreneurial Mindset 7 years=900K in residual income per month I. Habits—Everybody has them. The question is; Are they helping me or are they hurting me? A. You must replace good habits with great habits. Bad habits must be replaced with good ones. II. Income—Average income in the United States is $33,000 per year. Maryland has the highest average income in the United States with $35,000 per year. 85% of Americans are living paycheck to paycheck. And have little to no savings at the age of 65 yrs. Old. 95% of the United States is in the $33,000 per year mark 3X this gap is the is the next step at the $100,000 per year mark. Only 4% of the United states makes $100,000 per year or more. Less than 1% of the United States makes $500,000 per year or more. Do you have what it takes to be in that 1% range? Don’t take advice from people that are in the $33,000 per year mark. They have never made $100,000 so why the fuck would you listen to them on how to be successful. III. Choices A. How do we choose to spend our money? a. It doesn’t matter how much money you are making. It is how you use the money that you make. ie. Someone can be making $35,000 per year and they are able to put aside $5,000 per year towards their savings. Then someone can be making $100,000 per year and they spend every penny they earn. “Learn to invest your money and not spend it.” Barry Dillah Stop spending money and start investing money If the money...

Words: 3034 - Pages: 13

Premium Essay

Entrepreneurial Spirit

...The three pillars of GCUs College of Business are Entrepreneurial Spirit, Innovation and Servant Leadership. These are three key characteristics that are critical in building a strong foundation for students to succeed in their professional growth and in business. This paper reviews each of these pillars and how they apply personally to my work environment and career development. Entrepreneurial Spirit The entrepreneurial spirit is composed of multiple characteristics including but not limited to passion, vision, creativity, autonomy, and risk-taking. Possessing an entrepreneurial spirit is an important quality not just for individual success but for that of a business as well. For a business to maintain growth and sustainability it must maintain core competencies and have an entrepreneurial value system that it sticks to (Chaifetz, 2010). Chaifetz (2010), discusses how his company encourages the entrepreneurial spirit amongst his employees to be innovative and challenges them to think of new ideas. As his company has grown it has not fallen subject to common problems such as inflexibility, bureaucracy, and standardization that are often seen when companies expand. In fact, the approach is taken to provide employees with the tools and resources necessary to implement innovative ideas and tailor services for their customers. Not only does this method add to the entrepreneurial culture in the company it also lends to enhanced customer service directly impacting its success. I...

Words: 950 - Pages: 4

Premium Essay

Me Mover

...ultimately should provide room for many different students, their production and diverse products. Vision DISPLAY wants to develop KEA students' entrepreneurial mindset and design skills and thereby giving all students who want to become entrepreneurs a better opportunity for making their dream come true.Through working with a realistic case, KEA also want their students to expand their understanding of the world and to gain experience of working communities. Values Entrepreneurship Fellowship Social Responsibility Voluntariness/Citizenship Sustainability Handmade Quality Goals DISPLAY’s goal is to help as many students as possible, not only by selling their designs but helping them finding a job or start their own company. Other means of communication To be up to date on what is on display in DISPLAY, you can follow them on Facebook and Instagram,visit the shop on Saxogade in Vesterbro or check KEAs media or the flyers. Communication plan Purpose, objective, goal DISPLAY’s purpose is to promote the works of KEA’s students. They not only encourage people to buy these student’s work, but also hiring them. But they help students’ entrepreneurship as well, while giving everybody the same opportunity. They offer experience for students and also to expand their mindset. The website will be made to help...

Words: 588 - Pages: 3

Premium Essay

Stages of Organizational Growth

...Discuss which of the first four (4) stages of organizational growth presents the greatest single challenge and why. The first four stages characterize the period from inception of a new venture to the attainment of organizational maturity. This period includes the development of an entrepreneurship through the stage when the firm becomes a professionally managed firm. Stage III professionalization would the greatest single challenge because an organization must never lose its entrepreneurial mind set or spirit, but it must begin to develop the infrastructure and professional management systems required to facilitate its future growth. This a delicate balancing act. If an entrepreneurship is carried to an extreme in large companies, it can result in chaos, and chaos ultimately leads to organizational difficulties and even bankruptcy. (Flamholtz & Randle, 2007) The entrepreneurial personality can be a barrier to success at Stage III. Making the transition from an entrepreneurship to professional management involves more than just the development of operational and management systems. It requires a profound mind-set change on the part of people, especially the founders—the entrepreneurs. This transition may be a difficult task for entrepreneurs because they may fear of becoming “bureaucratic” and then confuse bureaucracy with systems. Some of this is deeply rooted in their personalities; they do want to be controlled by anyone or anything—not plans, not role......

Words: 304 - Pages: 2

Premium Essay

Business Environment

...Smart Union is a Chinese toymaker located in Dongguan province. It was founded by Tony Wu and was emblematic of the rise of the manufacturing power of China. “Its orders, factories and employees steadily increased in number, and a web of suppliers grew up around it.” Mr. Wu had experience in the toy industry before founding Smart Union, and used his knowledge and entrepreneurial skills and established his own mainland factory in 1997. Within ten years, with clients such as Mattel and Disney, the firm was able to go public on the Hong Kong Stock Exchange and raise HK$53 million (US$7m). The firm had all of the factors of production going its way: land in mainland China; a large population of cheap labor; plenty of capital and the entrepreneurial ability of Mr. Wu. As all of these things started to go well for the firm, problems arose. “China began to overheat in 2007.” Attendant with the rise in profits, across all of China, the cost of labor started to increase. As there were more competitors vying to supply the same goods to Smart Union’s customers, the prices of their raw materials along with the rest of the production costs for its toys (namely electricity and oil). Further, most of Smart Unions goods were sold to American firms and thus paid for in American dollars. As the yuan appreciated in value, the firm’s profits were squeezed. Also, customers were taking advantage of the increase in suppliers of toys and made “tougher bargains with......

Words: 778 - Pages: 4