Entrepreneurship0506

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Entrepreneurship0506

  1. 1. Entrepreneurship Shuman Ghosemajumder Stanford University Management Science & EngineeringEntrepreneurship Models for Indian Social Venture Projects May, 2006 Copyright © 2006, Shuman Ghosemajumder Freely distributed under a Creative Commons License 2.5
  2. 2. Agenda 1. What is entrepreneurship? 2. Building a successful venture 3. Considerations for social ventures * * grain of salt
  3. 3. What is entrepreneurship?
  4. 4. What is entrepreneurship? • Not small business management • Not just startups • Not just for-profit firms • Is the act of creating a new and innovative enterprise “The pursuit of opportunity beyond the resources you currently control” – Howard Stevenson, Harvard Business School
  5. 5. Some less than great new ventures...
  6. 6. Building a successful venture
  7. 7. The success formula Team Resources Strategy
  8. 8. Team – the right personalities Everyone should be... • A team player • A hard worker • Curious • Flexible • Good at listening
  9. 9. Team – the right skills Need to have... • Personal achievers • Salespeople • Creative people • Managers • Domain experts
  10. 10. Resources
  11. 11. Strategy Fundamental issues to address – Who is the market? What are their needs? – How does this product/service meet these needs? – What will they pay? How will they pay? – What is the timeline for each stage of the business? – What is the long term strategy? – Who is your competition? How are you better?
  12. 12. Strategy – business plans Why write a business plan? – To organize, clarify, and scrutinize your thoughts – To facilitate corporate development – To attract a talented team – To raise any money whatsoever! Your business plan is your high-level strategic plan as well as your detailed all- purpose sales pitch
  13. 13. Key success factors – checklist • Team – Personalities: what are your personality types (values, style, etc.)? – Interests: what are you interested in? – Experience: what experience do you have? • Resources – IP and goods: what does the business own? – Cash: how much cash do you have? – Network: what connections support the organization? • Strategy – Plan: what is your plan for establishing and growing the business? – Competition: how will you address the competitive challenges?
  14. 14. Success formula found in most ventures of any kind..
  15. 15. Indiana Jones and the Last Crusade - Team Leader / Manager Domain Expert / Idea Person Partnerships Investor / Director
  16. 16. Indiana Jones and the Last Crusade - Resources Equipment Intellectual Property Capital
  17. 17. Indiana Jones and the Last Crusade - StrategyJoint Venture Partners Competition R&D Exit Strategy
  18. 18. Considerationsfor social ventures
  19. 19. Three keys to a successful social enterprise* • Generate community wealth – new revenue streams – don’t compete with scarce charitable dollars • Making the commitment to compete – be organized, effective, and professional • Bearing witness – call attention to real injustice and suffering * From Bill Shore, CEO, Community Wealth Ventures
  20. 20. Keys to a successful social enterprise* Purely philanthropic Purely commercial Motives, Appeal to goodwill Mixed motives Appeal to self- Methods & interest Mission driven Mission driven & Goals market driven Market driven Social value Social & economic Economic value value Subsidised rates or Market-rate prices beneficiaries Pay nothing mix of full of payers & those who pay nothing Below-market capital, or Key stakeholders capital Donations & mix of donations & Market-rate capital grants market-rate capital Below-market wages, or Market-rate workforces Volunteers mix of volunteers and compensation fully paid staff Special discounts, or mix suppliers Make in-kind Market-rate prices of in-kind & full price donations donations * Sailendra Dev Appanah, TRN, http://www.thairuralnet.org/download/Social_entrepreneur_tools.ppt
  21. 21. Keys to a successful social enterprise Purely philanthropic Purely commercial Motives, Appeal to goodwill Mixed motives Appeal to self- Methods & interest Mission driven Mission driven & Goals Wikipedia market driven Market driven Social value Social & economic Economic value value Subsidised rates or Market-rate prices beneficiaries Pay nothing mix of full of payers & those who pay nothing Below-market capital, or Key stakeholders capital Donations & mix of donations & Market-rate capital grants market-rate capital Below-market wages, or Market-rate workforces Volunteers mix of volunteers and compensation fully paid staff Special discounts, or mix suppliers Make in-kind Market-rate prices of in-kind & full price donations donations
  22. 22. Keys to a successful social enterprise Purely philanthropic Purely commercial Motives, Appeal to goodwill Mixed motives Appeal to self- Methods & interest Mission driven Mission driven & Goals Wikipedia Aravind market driven Market driven Social value Social & economic Economic value value Subsidised rates or Market-rate prices beneficiaries Pay nothing mix of full of payers & those who pay nothing Below-market capital, or Key stakeholders capital Donations & mix of donations & Market-rate capital grants market-rate capital Below-market wages, or Market-rate workforces Volunteers mix of volunteers and compensation fully paid staff Special discounts, or mix suppliers Make in-kind Market-rate prices of in-kind & full price donations donations
  23. 23. Keys to a successful social enterprise Purely philanthropic Purely commercial Motives, Appeal to goodwill Mixed motives Appeal to self- Methods & interest Mission driven Mission driven & Hybrid Goals Wikipedia Aravind market driven Market driven Social value Cars Social & economic Economic value value Subsidised rates or Market-rate prices beneficiaries Pay nothing mix of full of payers & those who pay nothing Below-market capital, or Key stakeholders capital Donations & mix of donations & Market-rate capital grants market-rate capital Below-market wages, or Market-rate workforces Volunteers mix of volunteers and compensation fully paid staff Special discounts, or mix suppliers Make in-kind Market-rate prices of in-kind & full price donations donations
  24. 24. Other considerations • Understanding culture – Entrepreneurship more challenging in some societies than others • Understanding governments and educational institutions – Some governments and institutions more supportive than others • Incorporation as a 501(c)(3) organization – Exclusively for religious, charitable, scientific, testing for public safety, literary, educational, or amateur sports fostering organizations, or organizations for the prevention of cruelty to children or animals – Exempt from federal income tax – Donations are tax deductible
  25. 25. Entrepreneurship in 2006 is different Technology matters • ICT means more opportunities, different dynamics • information-based marketplaces provide many or most parts of the value chain with zero marginal distribution cost
  26. 26. Where to begin
  27. 27. Where to begin – the traditional model Identify Identify Develop Develop Assemble Assemble Funding Funding Opportunity Opportunity Plan Plan Team Team & Support & Support • general market • pricing models • attract and retain • term sheets research the best talent • competitive • make sure you • market research • complementary have more than segmentation skills and enough resources • financial models personalities to pursue your • segment • business plan vision! research
  28. 28. Aravind Model* • India’s Aravind Eye Hospital is the largest provider of eye surgery in the world, performing 180,000 cataract operations a year, 70% percent of them for free. • It costs the hospital about $10 to perform a cataract operation which would cost about $1650 in the United States. Target Market Service Concept Operating Strategy Service Delivery System Investors High-quality Separate Non-paying Low-cost Gates units to treat Patients Surgery Standardised Foundation both groups Assembly of patients, Line model but adjacent High-quality of to allow Paying Surgery cataract doctors to Patients &Better surgery Paying move Amenities Patients to both units * Sailendra Dev Appanah, TRN
  29. 29. Additional advice Frameworks are only checklists • MECE list of considerations for making a strategic decision • a framework is not a formula; utilizing it does not provide answers Leadership = the art and science of management • be fact-based and analytical and make smart decisions • also use your intuition and creativity, and take risks!
  30. 30. Resources Entrepreneurship @ Stanford • BASES (http://bases.stanford.edu) • Stanford Entrepreneurship Network (http://sen.stanford.edu) • Stanford Technology Ventures Program (http://stvp.stanford.edu) External Resources • Ashoka (http://www.ashoka.org) • MIT OpenCourseWare (http://ocw.mit.edu)
  31. 31. Questions?Shuman Ghosemajumder

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