Self-Understanding for Opportunity Creation

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Chapter 1: Entrepreneurship: A Global Social Movement

1.1 Explain the importance of action and practice in entrepreneurship.

1.2 List the seven lesser-known truths about entrepreneurship.

1.3 Explain the history of entrepreneurship in the US.

1.4 Compare and contrast the different forms of entrepreneurship in practice today.

1.5 Illustrate the global diversity of entrepreneurship and its impact.

1.6 Predict different ways in which this book will help you practice entrepreneurship.

Neck, Entrepreneurship. © SAGE Publications, 2018.

Learning Objectives

Notable Quote

“All human beings are entrepreneurs. When we were in the caves we were all self-employed . . . finding our food, feeding ourselves. That’s where human history began…As civilization came we suppressed it. We became labor because they stamped us, ‘You are labor.’ We forgot that we are entrepreneurs.”

Muhammad Yunus, author and social entrepreneur

Neck, Entrepreneurship. © SAGE Publications, 2018.

PBS News Hour interview transcript. Available at http://www.skaggsisland.org/sustainable/muhammadyunus.htm

1.1 Entrepreneurship Requires Action and Practice

Neck, Entrepreneurship. © SAGE Publications, 2018.

Anyone Can Be an Entrepreneur

Practice through action

Develop the right mindset

Create something new

Entrepreneurship Requires Action and Practice

i.e. a new idea, a new item or product, a new institution, a new market, a new set of possibilities.

Neck, Entrepreneurship. © SAGE Publications, 2018.

Example: Muhammad Yunus

2006 Nobel Peace Prize winner

Founded Grameen Bank

Provided short term micro-loans to impoverished in Bangladesh

Entrepreneurship Requires Action and Practice

Yunus, M., & Jolis, A. 2007. Banker to the Poor: Micro-Lending and the Battle Against World Poverty. New York: Public Affairs

1.2 Entrepreneurship May Be Different Than You Think

Neck, Entrepreneurship. © SAGE Publications, 2018.

Media Images of Entrepreneurs

Myth: the “male tech hero-genius”

Parody: a lone-wolf whose traits account for the extraordinary success

Reality: consistent practice

Entrepreneurship May Be Different Than You Think

Neck, Entrepreneurship. © SAGE Publications, 2018.

Well-Known Entrepreneurs

Bill Gates (Microsoft)

Steve Jobs (Apple)

Mark Zuckerberg (Facebook)

Elon Musk (Tesla)

Entrepreneurship May Be Different Than You Think

While the likes of Bill Gates and his peers are certainly inspirational, we would argue that few can personally identify with the stories surrounding them, and they do little to represent the reality of entrepreneurship.

Conducted customer research through Facebook

Success through dedication and sacrifice

Neck, Entrepreneurship. © SAGE Publications, 2018.

Niari Keverian, CEO of ZOOS Greek Iced Teas

Entrepreneurship in Action

Niari Keverian is the CEO of ZOOS, a Boston-based company founded in 2014 that sells Greek iced tea. Along with her business partner, ZOOS’s founder Kristina Tsipouras, Keverian is overseeing a healthy expansion of their low-sugar, low-calorie, all-natural indulgence. Within a year of launch, ZOOS tea was on the shelves in every Massachusetts outlet of the Wegmans grocery store chain (located in the Northeast and Mid-Atlantic United States) as well as more than 200 health food stores, spas, fitness studios, and boutique grocers.

In what ways do you see Niari Kevarian as being totally dedicated to the success of ZOOS? What does dedication mean for the entrepreneur?

Keverian, who describes herself as a “strong-minded personality” who “works best under pressure,” reported putting in 15-hour days (weekends too), sacrificing most of her social life in the process. Her advice for her fellow entrepreneurs: “You have to be ready to dedicate your entire life to getting that business off the ground. Always know you have the control of what your future holds. No one is going to dictate that to you; it’s in your court.”

Table 1.1: The Truths About Entrepreneurship

Neck, Entrepreneurship. © SAGE Publications, 2018.

Entrepreneurship May Be Different Than You Think

Learning Objective 1.2 List the seven lesser-known truths about entrepreneurship.

Neck, Entrepreneurship. © SAGE Publications, 2018.

Truth #1: Entrepreneurship is not reserved for startups

Creating a business based on research

A successful business can:

develop into an organization in its own right

be merged with or acquired by another organization

Entrepreneurship May Be Different Than You Think

The term startup came into vogue during the 1990s dot-com bubble when a plethora of web-based companies were born. While the term has various meanings, we subscribe to Steve Blank’s definition of startup: a temporary organization in search of a scalable business model. Blank, S., and Dorf, B. 2012. The Startup Owner’s Manual: The Step-by-Step Guide for Building a Great Company. K&S Ranch.

Neck, Entrepreneurship. © SAGE Publications, 2018.

Truth #2: Entrepreneurs do not have a special set of personality traits

Traits include but are not limited to:

Desire for achievement

Ability to influence events

Tendency to take risks

Tolerance for uncertainty

Patterns exist in entrepreneurial thinking.

Entrepreneurship May Be Different Than You Think

Researchers have moved away from the traits perspective in favor of how entrepreneurs think and act, and have discovered that there are patterns in how entrepreneurs think. This means that all of us have the ability to act and think entrepreneurially with practice.

Neck, Entrepreneurship. © SAGE Publications, 2018.

Truth #3: Entrepreneurship can be taught

It is a method that requires practice, not a process.

“Process” implies a known outcome, but entrepreneurship is unpredictable.

Entrepreneurship May Be Different Than You Think

Entrepreneurship is not predictable and, therefore, cannot adequately be taught as a process. Instead, a method or practice approach represents a body of skills or practices that together constitute a toolkit for entrepreneurial action. The entrepreneurial method requires consistent practice so that knowledge and expertise can be continuously developed and applied to future endeavors. Neck, H.M., and Greene, P.G. 2011. Entrepreneurship education: Known worlds and new frontiers. Journal of Small Business Management, 49(1), 55–70.

Neck, Entrepreneurship. © SAGE Publications, 2018.

Truth #4: Entrepreneurs are not extreme risk-takers

Calculated risk takers

Assess what they are willing to lose

Practice the cycle of act–learn–build

Entrepreneurship May Be Different Than You Think

Figure 1.1: Act – Learn – Build

Neck, Entrepreneurship. © SAGE Publications, 2018.

Entrepreneurship May Be Different Than You Think

Neck, Entrepreneurship. © SAGE Publications, 2018.

Truth #5: Entrepreneurs collaborate more than they compete

Community plays an important role

Draw on shared experience

Test new ideas with target customers

Entrepreneurship May Be Different Than You Think

Neck, Entrepreneurship. © SAGE Publications, 2018.

Truth #6: Entrepreneurs act more than they plan

Connect with investors and potential customers

Generate buzz around the product/service

Build a strong network

Entrepreneurship May Be Different Than You Think

Neck, Entrepreneurship. © SAGE Publications, 2018.

Truth #7: Entrepreneurship is a life skill.

Think

Act

Identify opportunities

Entrepreneurship May Be Different Than You Think

Approach problems in a specific way

Adapt to new conditions

Take control of personal goals

1.3 A Brief History of the Evolution of Entrepreneurship in the United States

Neck, Entrepreneurship. © SAGE Publications, 2018.

Emergence of the Self-Made Man (Colonial America before 1776)

Immigration into the “land of opportunity”

Freedom for reinvention

Example: Benjamin Franklin

A Brief History of the Evolution of Entrepreneurship in the United States

Entrepreneurial ambition has always been deeply rooted in American history. Touted as the “land of opportunity,” the newly discovered continent attracted immigrants, primarily from the British Isles and other northern European nations, as settlements and colonies were set up. Exulting in the freedom of reinventing themselves without the burden of class or other forms of persecution, these colonists started new ventures, created new markets, and exploited opportunities in exploration, agriculture, trade and other mercantile activities.

Neck, Entrepreneurship. © SAGE Publications, 2018.

An Entrepreneurial Nation (1st Industrial Revolution 1776–1865)

Constitutional protections for property

New patent laws

Major increase in innovation

Explosive economic growth

A Brief History of the Evolution of Entrepreneurship in the United States

Neck, Entrepreneurship. © SAGE Publications, 2018.

The Pinnacle of Entrepreneurship (2nd Industrial Revolution 1865–1920)

Life-changing innovation, e.g.

Ore into steel

Telephones

Lightbulbs

A Brief History of the Evolution of Entrepreneurship in the United States

Neck, Entrepreneurship. © SAGE Publications, 2018.

Rise of Institutional America (Interwar & Post-war America 1920–1975)

Small companies merged with large corporations

The Great Depression

Economic growth following the Second World War

A Brief History of the Evolution of Entrepreneurship in the United States

Neck, Entrepreneurship. © SAGE Publications, 2018.

Confined Re-Emergence (Knowledge Economy 1.0, 1975–Present)

The rise of information technology

Changes in patent law

Service- and knowledge-based economy

A Brief History of the Evolution of Entrepreneurship in the United States

Figure 1.2: Millennials—A Highly Educated and Entrepreneurial Generation

Neck, Entrepreneurship. © SAGE Publications, 2018.

A Brief History of the Evolution of Entrepreneurship in the United States

Figure 1.2: Millennials—A Highly Educated and Entrepreneurial Generation

Neck, Entrepreneurship. © SAGE Publications, 2018.

A Brief History of the Evolution of Entrepreneurship in the United States

1.4 Types of Entrepreneurship

Neck, Entrepreneurship. © SAGE Publications, 2018.

Corporate Entrepreneurship

Creating new products or ventures within an existing large organization

Carried out by employees

Created to enhance the organization

Types of Entrepreneurship

Neck, Entrepreneurship. © SAGE Publications, 2018.

Entrepreneurs Inside

Formed in various organization types

Carried out by employees

Create something of value

Types of Entrepreneurship

Neck, Entrepreneurship. © SAGE Publications, 2018.

Buying a Franchise

Turnkey operation

Outsider gains access to the market

Types of Entrepreneurship

Neck, Entrepreneurship. © SAGE Publications, 2018.

Buying a Small Business

Entrepreneur purchases existing business

Takes over operations

Less risky than starting from scratch

Types of Entrepreneurship

Chris Cranston is the owner of FlowDog, a canine aquatic and rehabilitation center outside of Boston. In 2009 she bought the business, which was called Aquadog at the time, from the previous owner. Cranston changed the name but subsumed a loyal customer base, pool equipment, location, some employees, and a favorable lease. In Cranston’s words, “Starting from a blank slate was too overwhelming for me. I needed something that I could build upon. That I could handle!” And handle she has. FlowDog grew almost 200% in the first six years since it was purchased in 2009. Interview with Chris Cranston, FlowDog.

Neck, Entrepreneurship. © SAGE Publications, 2018.

Social Entrepreneurship

For-profit or non-profit

Solving a social problem

Receiving grants to produce products

“Buy one, Give one” programs

Types of Entrepreneurship

Table 1.2: Pros and Cons of Owning a Franchise

Source: Based on material in Libava, J. (2015, February 16). The pros and cons of owning a franchise. Entrepreneur. Retrieved from https://www.entrepreneur.com/article/242848 Originally appeared at http://www.thefranchiseking.com/franchise-owner- ship-pros-cons

Neck, Entrepreneurship. © SAGE Publications, 2018.

Types of Entrepreneurship

Neck, Entrepreneurship. © SAGE Publications, 2018.

Family Enterprising

Family members own and manage

Each generation can make changes

Sometimes difficult to work with family members (blurred lines)

Resistant to changes

Types of Entrepreneurship

Figure 1.3: Percentage of Family-Owned Businesses

Neck, Entrepreneurship. © SAGE Publications, 2018.

Types of Entrepreneurship

Neck, Entrepreneurship. © SAGE Publications, 2018.

Serial Entrepreneurs

Entrepreneur start several businesses simultaneously or in quick succession

Always new ideas

Seeks greater opportunities

Types of Entrepreneurship

1.5 The World is Participating in Entrepreneurship

Neck, Entrepreneurship. © SAGE Publications, 2018.

Entrepreneurs’ Global Impact

Driving positive change

Maintaining long-term peace

Creating jobs

Redefining the world we live in

The World is Participating in Entrepreneurship

Entrepreneurship as a Social Movement

Small-scale ideas can transform into global change

Example: Unreasonable at Sea

Uniting entrepreneurs to solve formidable challenges

Traveling, listening and learning

The World is Participating in Entrepreneurship

Global Entrepreneurship

Global Entrepreneurship Monitor (GEM)

400 million entrepreneurs worldwide

Potential and nascent entrepreneurs

New and established business owners

Necessity-based and opportunity-based

The World is Participating in Entrepreneurship

Figure 1.4: Global Entrepreneurship Monitor Measuring Entrepreneurial Activity

Source: http://www.gemconsortium.org/

The World is Participating in Entrepreneurship

Table 1.3: Entrepreneurial Activities by Geographic Region 2015

See more on pages 26-27.

The World is Participating in Entrepreneurship

Table 1.4: Male and Female Early-Stage Entrepreneurial Activity by Geographic Regions, 2013

Credit: Global Entrepreneurship Monitor 2015 Special Report: Women’s Entrepreneurship Report by D.Kelley et. A., p. 17, Table 3. Downloaded from http://www.gemconsortium.org/report/49281

The World is Participating in Entrepreneurship

What Makes a Country Entrepreneurial?

Financial resources

Support from government

Entrepreneurship education

Research and Development (R&D) transfer

The World is Participating in Entrepreneurship

What Makes a Country Entrepreneurial?

Commercial and legal infrastructure

Entry regulation

Physical infrastructure

Cultural and social norms

The World is Participating in Entrepreneurship

With India’s middle class predicted to grow eightfold in the coming two decades, foreign businesses are racing to invest in the country. However, the chairman of Tata Group in India, Ratan Tata, warned investors of India’s robust climate of corruption. Tata stated, “If you choose not to participate in [corruption], you leave behind a fair amount of business.” Questionable ethical practices in India have been described as ranging from the “mundane to the spectacular.”

6,793 companies

Studied female executives and company performance

Companies with female entrepreneurs performed equal to or better than male-only companies.

The 2014 Diana Project

RESEARCH AT WORK

The 2014 Diana Project involved looking at 6,793 companies, seeing how many had women on the executive team, and then analyzing those companies to find out how many businesses had received venture capital between 2011 and 2013 compared with male-only teams. Compared to 1999, they found that the figure of businesses with women receiving venture capital investments has tripled—from 5% to 15%—which shows marked progress. They also found that teams involving women entrepreneurs tended to perform as well or better than male-only companies.

What do you see as the value of studying women’s involvement in entrepreneurship?

Even though venture capital investment has tripled for women over the past 15 years, there is still a long way to go. What do you see as the primary obstacles for women in entrepreneurship?

If you were designing a study of some other underrepresented group in entrepreneurship, how would you go about it? What would you need to know to formulate your research questions?

Figure 1.5: The Entrepreneurship Ecosystem

Credit: Global Entrepreneurship Monitor 2015-2016 Report by D.Kelley, S.Singer and M.Herrington, p. 30, Figure 20. Downloaded from http://www.gemconsortium.org

The World is Participating in Entrepreneurship

1.6 How This Book Will Help You Practice Entrepreneurship

Beliefs

Entrepreneurship can be learned.

Everyone who practices can do it.

Entrepreneurship is a method.

A continuous cycle of acting, learning, building, and acting more.

Everyone can create an impact.

How This Book Will Help You Practice Entrepreneurship

Features

Entrepreneurship in Action

Mindshift

You Be the Entrepreneur

Entrepreneurship Meets Ethics

Research at Work

Case Study

How This Book Will Help You Practice Entrepreneurship

Tell Me Your Story

MINDSHIFT: Tell Me Your Story

What beliefs and expectations do you have about entrepreneurs’ stories? To what extent do you think they conform to media images of entrepreneurs? In what ways might you expect them to be different? Here is an activity to help you examine your beliefs and expectations.

Find and introduce yourself to an entrepreneur—any type of entrepreneur is fine. Ask for 20 minutes of his or her time, and simply start with the opening question: Tell me the story of how you became an entrepreneur.

As the story unfolds, you may want to ask the questions on the next slide.

MINDSHIFT: Tell Me Your Story

What worried you the most as you started the venture?

What excited you most about starting the venture?

What resources did you use to start? Where did they come from?

What moments do you remember most?

Who helped you most along the way?

How do you describe yourself to others?

What advice do you have for me as a student of entrepreneurship?

In what ways did your chosen entrepreneur confirm your beliefs and expectations? In what ways did the story motivate you (or not)? What did you learn that was most unexpected?

MINDSHIFT: CRITICAL THINKING