Part 2

The Opportunity

The Opportunity
Screen and choose opportunities with great care. Venture capital investors fund no more than 1 or 2 percent of the ventures they review. Good opportunities have risks and problems. The perfect deal has yet to be seen. Take steps to eliminate problems early during opportunity screening.

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Chapter 3

The Entrepreneurial Process

Entrepreneurship Defined
Entrepreneurship a way of thinking, reasoning, and acting that is opportunity obsessed, holistic in approach, and leadership balanced for the purpose of value creation and capture.
(This definition of entrepreneurship has evolved over the past three decades from research by Jeffry A. Timmons at Babson College and the Harvard Business School and has recently been enhanced by Stephen Spinelli, Jr. former Vice Provost for Entrepreneurship and Global Management at Babson College, and current President of Philadelphia University).

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Entrepreneurship Results
Value:
Creation Enhancement Realisation Renewal

For:
Owners Stakeholders All Participants
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Entrepreneurship Results
Willingness to take risks:
Personal Financial Calculated

Shift the odds of success. Balancing risks with rewards.

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Entrepreneurship is NOT just Start-Ups Only

It includes companies and organisations:
All types. At all stages.

Can occur and fail to occur:

In old and new firms. Small and large firms. Fast and slow growing firms. Private, not-for-profit and public sectors. All geographic points. All stages of a nations development.

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Classic Entrepreneurship: The Startup

Raw startup companyan innovative idea that develops into a high growth company. Qualities of a startup company:
Strong leadership from the main entrepreneur. Complementary talents and outstanding teamwork of team members. Skill and ingenuity to find and control resources. Financial backing to chase opportunity.

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Beyond Startups
Giant firms of the past (IBM, Digital Equipment Corporation, Sears, AT&T) once thought to be invincible, have been reduced in size and scope by waves of entrepreneurial ventures. Large companies face shrinking payroll while new ventures add jobs. New entrepreneurial rivals are changing the pace of business as usual.

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People Want to be Led!

People dont want to be managed. They want to be led. Ewing M. Kauffman There are managers and leaders. Very few are both. Leaders set aspirations and continually work at success. Richard Pratt, Visy

Characteristics of giant firms:

Hierarchical in structure Leadership as managing and administering from the top down Rewards for the largest (assets, budgets, etc.)

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The Fall of the Giants

Slow to change archaic strategy (average 6 years). Slow to change outdated culture (average 10 to 30 years). Slow to recognise and incorporate:
entrepreneurship entrepreneurial leadership and entrepreneurial reasoning.

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Signs of Hope for Corporations

Launching experiments and strategies to recapture the lost entrepreneurial spirit. Working to instill the culture and practices of entrepreneurial reasoning.

Applying entrepreneurial thinking to invent their futures.

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Metaphors for Entrepreneurship

Improvisational Quick Clever Creative Resourceful Inventive Complex compare to music (jazz or symphony conductor), sports (golf), chess

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Paradoxes of Entrepreneurship (1 of 3)
An opportunity with no or very low potential can be an enormously big opportunity. To make money you have to first lose money. To create and build wealth, one must relinquish wealth. To succeed, one first has to experience failure.

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Paradoxes of Entrepreneurship (2 of 3)
Entrepreneurship requires considerable thought, preparation, and planning, yet is basically an unplannable event. For creativity and innovativeness to prosper, rigor and discipline must accompany the process. Entrepreneurship requires a bias toward action and a sense of urgency, but also demands patience and perseverance.

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Paradoxes of Entrepreneurship (3 of 3)
The greater the organisation, orderliness, discipline, and control, the less you will control your ultimate destiny. Adhering to management best practice (especially staying close to the customer that created industry leaders in the 1980s), became a seed of self-destruction and loss of leadership to upstart competitors. To realise the long-term equity value, you have to forgo the temptations of short-term profitability.

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Think Big for Higher Potential Ventures

Dont think too small. Smaller often means higher failure odds. Getting the odds in your favour. Entrepreneurship should not be a job substitute. Odds for survival, growth, and a higher level of success, changes when the ventures reaches a size of 10-30 people with $2-$3 million in revenues.

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 Promise of growth:
Expansion and building of long term value. Durable cash flow streams.

Venture Capital backing:

Venture capital backing in Australia and New Zealand limited Not essential for startup, nor a guarantee of success.

Private investors:
Often harvested entrepreneurs.
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The Entrepreneurial Team

An entrepreneurial leader:
Learns and teachesfaster, better. Deals with adversity, is resilient. Exhibits integrity, dependability, honesty. Builds entrepreneurial culture and organisation.

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The Entrepreneurial Team

Quality of the Team:
Relevant experience and track record. Motivation to excel. Commitment, determination, and persistence. Tolerance of risk, ambiguity, and uncertainty. Creativity.

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The Entrepreneurial Team

Quality of the Team:
Team focus of control. Adaptability. Opportunity obsession. Leadership. Communication.

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Sustainability as a Base
Achieving economic, environmental and social goals. Without compromising the same opportunity for future generations. Driven by many factors. By understanding these factors, the entrepreneur builds a firmer base girding the venture for the long term.

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