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Entrepreneurial Decision Making and the Effect on Business Models (Storytelling Document)


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This is "The Sory of BEN belonging to the paper with the same name."

In this paper we review the results of an empirical research of a number of organisations. The research shows a difference in the evaluation of a business model of an organization by the entrepreneur and by the researchers. It shows, based on an extensive list of questions, the decision to be taken on strategic level differs by entrepreneurs compared with the decision to be taken by researchers based on the same set of questions. The paper goes into the field of entrepreneurs and the factors why they drive their own business like they do and how they gather data and process this data to prepare for a decision on strategic level. The paper describes how cognitive possibilities of the entrepreneur, biases and heuristics, experience and type of personality influence the decision making process. Finally future implications are mentioned as how to influence the process of decision making at strategic level by entrepreneurs in order to be able to have a more objective decision process based on facts rather than on gut feeling.

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Entrepreneurial Decision Making and the Effect on Business Models (Storytelling Document)

  1. 1. 1
  2. 2. 3
  3. 3. Merchandiser in tablets 5
  4. 4. One day he was confronted with the economic crisis in Europe Revenue was going down However BEN is not the guy to give up And came up with a few good ideas 7
  5. 5. His tablets went up in price and 9
  6. 6. Looking back at his actions and the results BEN still is not satisfied and got real hesitations concerning his strategy. BEN asked himself the following questions: Is this the proper way to go about? What would customers say concerning this higher price? What would employees say concerning cost savings (i.e. smaller lease car) Are there any other possibilities to find that will lead to a better strategy and what could they be? BEN called his old university and had a discussion with Clemens and Marijn. BEN got supported by a group of students that looked at his Business Model. 11
  7. 7. With the help of a large set of questions this evaluation was completed. Based on the facts from the research the students had performed the questions were answered and graphically displayed. Very happy BEN looked at the evaluation. Now he could see where the real issues are. Channels, Cost structure and Rebenue streams. BEN was so interested that he also completed the same questionnaire. With the help of Avans these two evaluations were compared with each other. The comparision scared BEN shitless. He couldn’t believe his eyes!!! 13
  8. 8. A total difference in strategy. BEN on cost and price, students on customer relationship and segmentation. How come? Students based on research And BEN? Well he just answered the questionnaire! So what is happening? How do entrepreneurs decide? We first will take a look inside the entrepreneurs brain. 15
  9. 9. Envy: Every entreprneur aspires to reach the same level of succes as Richard Branson. Down Jonesing: Look for their next manouvre without exacltly knowing how it all works. They just want it like a twelve year wants Grand Theft Auto. Grindstone lobes: All thoughts are always about work. 16
  10. 10. BEN discovers a lot of opportunities. For all of these opportunities BEN discoveres in the data he has to take a decision to follow thru. Some opportunities can lead to success and some will fail. 18
  11. 11. However each time BEN is confronted with a challenge: the proces of decision making remains a complex process. 20
  12. 12. BEN makes use of cognitive mechanisms to evaluate and interpret his data. He sees more opportunities in making business than non entrepreneurs. BEN sees the risk involved, however he doesn’t see the risk as high as others would see them. However BEN can fall into the ‘cognitive illusion trap’ which means that BEN doesn’t see the reality not anlymore because of information overload, responsibility, committment, emotions or a high degree of uncertainty. 22
  13. 13. Another issue in the decision making process of BEN are his biases. BEN doesn’t always make use of rational processes based on facts to decide. He has a set of subjective opinions that he has built during his time of entrepreneurship. That means that these opinions again and again lead to the same interpretation because BEN doesn’t allow himselve to objectively looking at the facts. BEN also has a set of rules he uses in situations where he has to make decisions. 24
  14. 14. BEN’s experience in entreprenership, his biases and heuristics prevent uereka moments that BEN used to have after a good night of sleep. Thats the moment the brain was able to mull over the issue and after waking up the rational mind takes over based on experience. 26
  15. 15. Well to be honest. Theoretically speaking this is the conceptual model of BEN. We have seen him struggle with his enterprise, took some decisions that apperently doesn’t seem to be the best strategy for his company. BEN has seen that in the decision making process a lot of aspects play a role. However BEN has still some questions that are unanswered. YET! So what questions does BEN have? 28
  16. 16. BEN is driven by the process of creation, never stop thinking about the business, his devotion to the business, taking risks and receiving a reward at the end. BENs decisions are influenced by his cognitive possibilities, biases, heuristics, experience and personality. Where does this lead to? The empirical research of the companies together with the desk research led to some insight in the decision making process of BEN. However it doesn’t give an answer on the former mentioned questions. Therefore a subsequent study is already started at Avans and therefore Avans is looking for participants . Future implications Empirisch model Wat is de hoofdvraag Uit de theorie Praktijk meten Doen we zo Intersubjectiviteit, elke onderzoeker komt met dezelfde resultaten binnen de toegepaste methode. 30
  17. 17. Conducting this subsequent research with the support of entrepreneurs would be very helpful in answering the three mentioned questions. It is my honour to invite participants and that I am very happy that I am allowed to do this research. Thank you for your attention. 31
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