Quiz 1 Review Foundations of Entrepreneurship February 5, 2013
Run a prison! • Timely? • Durable? • Attractive? • Grounded in a product or service that delivers value to a customer? “Attractive” is from the perspective of the entrepreneur. It means you would be willing to do this; you would enjoy this.
Pet rocks! • Timely? • Durable? • Attractive? • Grounded in a product or service that delivers value to a customer? By definition, fads are not durable
Type writer repair! • Timely? • Durable? • Attractive? • Grounded in a product or service that delivers value to a customer? Timely only if you find a narrow niche market of typewriter collectors (Tom Hanks)
“Handheld electronic device” • Timely? • Durable? • Attractive? • Grounded in a product or service that delivers value to a customer? Apple Newton Message Pad, 1993-1998 Most people weren’t ready to adapt to handwriting recognition. The opportunity was attractive to Apple because it represented an area for new growth
Entrepreneurship process Only step in entrepreneurship phases that involves action Compare to Moore’s Model:
The Tenets of the Timmons Model: 1) The Opportunity Is there a clear customer need for the proposed product or service? Is the timing right: is the team ready, is the market ready? Ideas are a dime a dozen – it’s the combination of the factors above and the execution of the business plan that makes an idea an opportunity. 2) The Lead Entrepreneur and Management Team Experience within the proposed industry can be essential to success. Investors and other backers prefer to see a track record of driving growth and profits. An ‘A’ team with a ‘B’ idea is almost always better than the opposite. 3) The Resources Resources include capital, technology, equipment, and most importantly – people. The entrepreneur’s mantra is one of Low Overhead, High Productivity, and Controlling but not Owning resources. The best entrepreneurs are incredibly creative at finding ways to get things done inexpensively and effectively. You can always find ways to do things faster, cheaper, or better!
5 principles of effectuation • Patchwork quilt: create something new with what you have on hand • Affordable loss: commit in advance to what you’re willing to lose instead of calculating expected returns • Bird-in-hand: negotiate with stakeholders to commit resources to project • Lemonade: use surprises to create benefits instead of problems • Pilot-in-the-plane: use people as prime driver of opportunity, not resources external to individual
Quiz score distribution Average: 91 Standard deviation: 7