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What is the “Entrepreneurial         Mindset”?     Entrepreneurship and Small Business Management                 Christop...
Theories of Entrepreneurship Personality/Trait Theory  “Crystal Ball” or Lone Visionary Opportunity Recognition  Right...
Facts About Entrepreneurs  65% did not start businesses as children     or students, and did not have parents who     wer...
Facts About Entrepreneurs  65% developed their idea by talking to or     working with customers or partners  70% did not...
Case Study: Bill Gates              The Myth Bill Gates was a visionary who saw the future that all PCs  would run Window...
Case Study: Bill Gates               The Facts  Bill’s family was very wealthy, and Bill went to a gifted high    school ...
Case Study: Mark Zuckerberg               The Myth Mark was a visionary who saw online social networks as  the future of ...
Case Study: Mark Zuckerberg                  The Facts    Learned how to write computer programs since he was 10      yea...
What about Google???
Case Study: Japan – SONY Co-founded by Ibuka First innovation (electric rice  cooker) failed Stayed in business by  rep...
Case Study: Japan - SONY Bell Labs developed  transitors, but didn’t think  they could be used in a  pocket radio Ibuka ...
Class Discussion:           Vietnam – FPTWho started FPT? How? Why?What was FPT’s original business? Were they succes...
What is the Entrepreneurial         Mindset?      Entrepreneurial vs Managerial           Effectual vs Causal
Learning ObjectivesHow do entrepreneurs think when starting a new business?How is this different from how Managers think...
The Entrepreneurial Mindset:      Cause vs Effect
Causal - If we can accurately predict the    future, then we can control it. Predictive: Start with Goals Analysis Befor...
Effectual - If we can control the future, we          don’t need to predict it.  Non-predictive: Start with Means  Actio...
So which method is     better?
Who moved my cheese?
Elements of the Effectual        EntrepreneurProcessPrinciplesLogic
Effectual ProcessBegin with who you are, what you know, and  whom you knowTake action and interact with other peopleFoc...
Effectual Process              Expanding Cycle of Resources                     New Means               Possible Goals    ...
Effectual Principles Means-driven (as opposed to goal-driven) action Affordable loss, stakeholders only invest what they...
Effectual LogicSee the world as open, still in the makingVery rarely see opportunities as given or  outside of their con...
Class Activity and Discussion Read “Venturing” Case Excise Problem 1 Based on your new knowledge of Effectuation,  work ...
Venturing Problem 11. Who could be your potential customers for this   product?2. Who could be your potential competitors ...
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The Entrepreneurial Mindset (Part I)

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A brief introduction to the Entrepreneurial Mindset and how it is different from the traditional mindset taught to students of traditional business or management programs. I deliver regular courses based on these concepts, and regularly help aspiring and experienced entrepreneurs to put these principles to use in the process of creating new ventures.

Published in: Business

The Entrepreneurial Mindset (Part I)

  1. 1. What is the “Entrepreneurial Mindset”? Entrepreneurship and Small Business Management Christopher Zobrist, MBA Adapted from “The Entrepreneurial Method” by S.D. Sarasvathy, 2006
  2. 2. Theories of Entrepreneurship Personality/Trait Theory “Crystal Ball” or Lone Visionary Opportunity Recognition Right Place, RIght Time Entrepreneurial Thought Process Managerial vs Entrepreneurial
  3. 3. Facts About Entrepreneurs 65% did not start businesses as children or students, and did not have parents who were entrepreneurs 75% learned skills they used in starting their business after age 21Source: Inc 500 Founders’ Survey (1996)
  4. 4. Facts About Entrepreneurs 65% developed their idea by talking to or working with customers or partners 70% did not have a vision for a “venture- scale” business, they just wanted to start somethingSource: Inc 500 Founders’ Survey (1996)
  5. 5. Case Study: Bill Gates The Myth Bill Gates was a visionary who saw the future that all PCs would run Windows Built Microsoft into the bigest software company in the world by himself because of his vision and talent
  6. 6. Case Study: Bill Gates The Facts  Bill’s family was very wealthy, and Bill went to a gifted high school for children of rich families  Bill learned how to program a computer in high school (in the late 1960s, computers were very rare)  Bill did not “drop out” of Harvard, but rather took a “leave of absence” and could come back at any time  Bill’s mother introduced Bill’s new company, Micro-Soft, to the CEO of IBM  A few weeks after the introduction, IBM signed a deal with Bill for MS-DOS, allowing Bill to retain the IPSource: Leap, by Rick Smith
  7. 7. Case Study: Mark Zuckerberg The Myth Mark was a visionary who saw online social networks as the future of online media Mark built Facebook by himself from the beginning based on his vision and talent Through his strong vision and character, was able to raise millions of dollars easily for Facebook
  8. 8. Case Study: Mark Zuckerberg The Facts  Learned how to write computer programs since he was 10 years old  Worked on many “projects” including Facemash and The Facebook, many of which failed early, but he learned from them  Started The Facebook with just $2000  Had a strong core team who helped him grow Facebook before getting external funding  Met Sean Parker who helped him raise money to grow the businessSource: The Facebook Effect, by David Kirkpatrick
  9. 9. What about Google???
  10. 10. Case Study: Japan – SONY Co-founded by Ibuka First innovation (electric rice cooker) failed Stayed in business by repairing short-wave radios Ibuka envisioned a pocket radio, but was initially denied the license by the Japanese government
  11. 11. Case Study: Japan - SONY Bell Labs developed transitors, but didn’t think they could be used in a pocket radio Ibuka licensed the technology and pushed his engineers for 3 years to develop the first transitor radio Sold 1.5 million units, and Sony became a technology leader
  12. 12. Class Discussion: Vietnam – FPTWho started FPT? How? Why?What was FPT’s original business? Were they successful in this business?How did FPT’s business evolve over time? Are they successful? Why or why not?
  13. 13. What is the Entrepreneurial Mindset? Entrepreneurial vs Managerial Effectual vs Causal
  14. 14. Learning ObjectivesHow do entrepreneurs think when starting a new business?How is this different from how Managers think when managing an established business?
  15. 15. The Entrepreneurial Mindset: Cause vs Effect
  16. 16. Causal - If we can accurately predict the future, then we can control it. Predictive: Start with Goals Analysis Before Action Goals drive stakeholder and resource acquisition Control is achieved by being one step ahead of the competition Avoid failure at all costs
  17. 17. Effectual - If we can control the future, we don’t need to predict it.  Non-predictive: Start with Means  Actions and interactions with stakeholders drive the process  Goals are set by stakeholders who invest only what they are willing to lose  Control is achieved by action; transforming current reality into new and unforeseen possibilities  Fail small and early and LEARN from it
  18. 18. So which method is better?
  19. 19. Who moved my cheese?
  20. 20. Elements of the Effectual EntrepreneurProcessPrinciplesLogic
  21. 21. Effectual ProcessBegin with who you are, what you know, and whom you knowTake action and interact with other peopleFocus on what you can do and do itPeople you interact with self- select into the process by making commitments to the ventureEach commitment results in new means and new goals for the venture
  22. 22. Effectual Process Expanding Cycle of Resources New Means Possible Goals and Actions Who I am Obtain Interact withWhat I know What I can do Stakeholder other peopleWhom I know Committment Means Available Converging Cycle of Interests New Goals New Markets New Opportunities New Ventures
  23. 23. Effectual Principles Means-driven (as opposed to goal-driven) action Affordable loss, stakeholders only invest what they are willing to lose Negotiate with any and all stakeholders who are willing to make actual commitments to the project Be flexible by leveraging surprises rather than trying to avoid them Work with potential customers as the prime driver of opportunity
  24. 24. Effectual LogicSee the world as open, still in the makingVery rarely see opportunities as given or outside of their controlHave an instrumental view of firms and marketsDo not seek to avoid failure because it is part of the learning process
  25. 25. Class Activity and Discussion Read “Venturing” Case Excise Problem 1 Based on your new knowledge of Effectuation, work in teams to provide answers to the questions in Problem 1 After you have finished answering the questions, choose a partner and compare your answers. Be prepared to discuss your answers with the class.
  26. 26. Venturing Problem 11. Who could be your potential customers for this product?2. Who could be your potential competitors for this product?3. What information would you seek about potential customers and competitors—list questions you would want answered.4. How will you find out this information—what kind of market research would you do?5. What do you think are the growth possibilities for this company?

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