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Entrepreneurship and Young Entrepreneurs #001

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Budher Song

on 12 November 2013

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Transcript of Entrepreneurship and Young Entrepreneurs #001

What is Entrepreneurship?
The History of Entrepreneurship
The Definitions of Entrepreneurship
The Boundries of Entrepreneurship
The Facts of Entrepreneurship
"A persons who seek to generate value through creation or expansion of economic activity, by identifying and exploiting new products, processes or markets."
OECD, 2008
Who is an Entrepreneur?
Self-confident and optimistic
Able to take calculated risk
Respond positively to changes
Flexible and able to adapt
Knowledgeable of markets
Able to get along well with others
Independent minded

Entrepreneurs' Traits
Energetic and diligent
Creative, need to achieve
Dynamic Leader
Responsive to suggestions
Take initiatives
Resourceful and persevering
Perceptive with foresight

Invention - is the creation of new products, processes, and technologies not previously known to exist.
Innovation - is the transformation of creative ideas into useful applications by combining resources in new or unusual ways to provide value to society for or improved products, technology, or services.
The difference between Invention and Innovation is
"Entrepreneurship is no longer a job title. It is the state of mind of people who want to change the future."
Guy Kawasaki, Chairman of George Technology Ventures
"Entrepreneurship is a dynamic process of vision, change, and creation. Requires energy and passion towards the creation and implementation of new ideas and creative solutions."
Tim R. Holcomb, Prof. of The Florida State University
“I have not failed … I’ve just found 10,000 ways that won’t work .”
Thomas Alva Edison, American inventor, scientist, and businessman
Entrepreneurship is a nexus
of two observable phenomena.
a Dissatisfaction "One"
(the Entrepreneur or Team)
a Lucrative "Opportunity"
and a "Fear" of the dark
“Opportunity is often missed by people because it sometimes comes dressed in overalls and looks like work.”
~ Thomas Alva Edison, American inventor, scientist, and businessman
#Peter F. Drucker(1985)
-The entrepreneur always searches for change, responds to it, and exploits it as an opportunity.
-Entrepreneurship is neither a science nor an art. It is a practice.

#Joseph Schumpeter(1934)
-Entrepreneurship, as defined, essentially, consists in doing things that are not generally done
in the ordinary courses of business routine.
-It is essentially a phenomenon that comes under the wider aspect of leadership.

#Jeffry Timmons & co-authors
-The ability to create and build a vision from practically nothing.

#Karl Vesper
-The dynamic process of creating incremental wealth.

#Kirzner
-Entrepreneurship is the ‘alertness’ to new opportunities. This is what entrepreneurs are like.
-Entrepreneurship is seizing an opportunity by taking innovation actions.

#Stevenson(1985)
-The pursuit of opportunity without regard to resources currently controlled.

#Robert Nelson
-A person who is able to look at the environment,identify opportunities to improve theenvironment, marshall resources, and implementaction to maximize those opportunities.
"Entrepreneurship. It does need, however, to be systematic. It needs to be managed.
Above all, it needs to be based on purposeful innovation."
Peter F. Drucker, Great Schalar of Business Management
Who is ?
Budher Song

송 정 현 (Budher Song)
+ Entrepreneurial Management
+ Mechenical Engeneering
+ Music

# Creator, Soul of Entrepreneurial Culture Center
# Organizer of World Entrepreneurship Travel

# Founder of btools company
Social
Coporate
Individual
Innovation is the specific instrument of entrepreneurship. It is the act that endows resources with new capacity to create wealth. Innovate, indeed, creates a resource. As changing the value and satisfaction obtained from resources by consumer.
Peter F. Drucker,1985
Entrepreneurship
Innovation
Pro-Activeness
Risk Management
Challenge
Opportunity
Value Creation
Networking
Resource Transform
Innovator
Dreamer
Sustainer
Challenger
Challenge
Creativity
low
high
high
Innovation Matrix
Manager
planner
strategist
organizer
staffer
motivator
budgeter
evaluator
coordnator
supervisor
Entrepreneur
visionary
opportunity-seeker
creator
innovator
calulated risk-taker
resource leverager
change agent
active and adaptive
concept implementer
Comparing Key Roles of
Managers and Entrepreneurs
Resource : Corporate Entrepreneurship & Innovation, 2008
Myths of Entrepreneur
1. Entrepreneurs are born, not made
2. Entrepreneurs must be inventors
3. There is a standard profile or prototype of the entrepreneur
4. All you need is luck to be an entrepreneur
5. Entrepreneurs are extreme risk takers(gamblers)
6. Entrepreneurial people are academic and social misfit
7. All Entrepreneurs need is money
8. Ignorance is bliss for Entrepreneurs
9. Most Entrepreneurial initiatives fail
10. Entrepreneurship is unstrucktured an chaotic
Resource : Corporate Entrepreneurship & Innovation, 2008
Innovativeness
low
high
high
Risk
Relating innovation to risk
Little to No innovative activity
Home Run
Strategy
Lots of trials and experiments/Balanced portfolio of projects
•Less than half of new ventures survive 3 years
•For every 100 new ventures, 63% fail within 4 years,
12% are ‘living’ commercial failures, and 25% “succeed.”
•Among those that succeed, fewer than 20% generate
high rates of growth and superior economic returns.
Success is a low probability event
"Entrepreneurship is a way of thinking, reasoning, and acting that is opportunity obsessed, holistic in approach, and leadership balanced."
Jongtae Bae, Interpreting and Promoting Entrepreneurship, 2009
The Entrepreneurial Process
Entrepreneurship is neither a science nor an art.
It is a practice.
Resource : Timmons & Spinelli, 2009
Entrepreneurial
Team
Opportunity
Resources
變態
Metamorphosis is best of best innovation.
Metamorphosis is a biological process by which an animal physically develops after birth or hatching, involving a conspicuous and relatively abrupt change in the animal's body structure through cell growth and differentiation.

Some insects, amphibians, molluscs, crustaceans, Cnidarians, echinoderms and tunicates undergo metamorphosis, which is usually accompanied by a change of habitat or behavior.
Resource : Wikipedia, 2012
Understanding entrepreneurship is not easy, though the basic definition of an entrepreneur is pretty simple.
There are many variants, but they all boil down to pretty much the same ingredients.

Peter F. Drucker
Fits and Gap
[Timmons Model]
of
Business Plan
Ambiguity
Exogenous Forces
Communications
Leadership
Creativity
The Entrepreneurial Intentionality
Opportunity
Realization
Opportunity
Realization
Marketing
Financing
Routines
R&D
Organizing
Resources Combined
Organizational Area
HR Network
User
Installed Base
Channel
Market Area
Financial Area
Technological Area
Relations Connected
Open Source
University Spill Over
R&D Institutes
Collaborators
VCs
Angels
Banks
The word entrepreneur is derived from the French word ‘entre prendre’ it means “to undertake” and literally translated means “between-taker” or “go-between”.
Schumpeter has firmly expressed his opinion
that the function of entrepreneurship is innovation.

Innovation of new product.
Innovation of new technology.
Innovation of new process of production methods.
Exploration of new markets.
Searching for the new sources and supply.
Innovation of industrial reconstruction method.
Resource : Jongtae Bae, 2009
Innovation and Entrepreneurship
"Entrepreneurship is the process of creating something new of value by devoting (giving) the necessary time and effort. By accepting and acknowledging the necessary financial, psychological, and social risks, and Finally receiving the resulting rewards be it monetary and personal satisfaction and freedom to do what you want."
Robert D. Hisrich, M. Peters & D. A Shepherd
"Entrepreneurship is create new way of life for reach to the dream or goals"
Budher Song, Organizer of W.E.T.
"He or she is an individual who actively form or lead their own business and nurture them for growth and prosperity."
UiTM Entrepreneurship Study Group
"A person who creates and manages change by the recognition of opportunities (needs, wants, opportunities, problems, and challenges) and develops people and manages resources to take advantage of the resources to take the opportunity and creates a venture (profitable business)."
Eston Kimani, Prof. of MIT
Knight "Entrepreneur is the economic functioning who undertakes such responsibility of uncertainty which by its very nature cannot be insured nor capitalised nor salaried too."
Jean-Baptiste Say "An entrepreneur who combines the land of one, labor of another and capital of yet another and produces a product. By selling the product in the market, he pays interest on capital, rent on land, and wages to labor. What remains is his profit. He has to surmount obstacles, suppress anxieties, repair misfortunes and device expedients."
Joseph A. Schumpeter "an entrepreneur is a person who is willing and able to convert a new idea or invention into a successful innovation."
Karl Vesper "Entrepreneurs are achievement oriented individuals driven to seek challenges and new accomplishments."
"One who undertakes an enterprise, especially contractor –acting as intermediary between capital and labor."
Jean-Baptiste Say, French Economist
Uncertainity Bearing
Decision Making
Entrepreneurship does not have to be high risk.
The Definitions of Entrepreneur
ⓒCopyright by Budher Song 2012. All Rights Reserved.
"Entrepreneur are people who the ability to see and evaluate business opportunity; to gather necessary resources, to take advantage of them and to initiate appropriate action to ensure success,"
International Labour Organization(I.L.O.), 1982
Hirsch, Peter and Shepherd revealed that first entrepreneur definition took Marco Polo as an example of an upcoming entrepreneur who made the greatest attempt of establishing the trade routes. The strategy he followed was that he made a contract with a good and dependable venture capitalist on a 25% - 75% basis to get his ventures financed.
Who is.. the first entrepreneur?
Resource : Margaret Miller 2008
"Vision, integrity, passion, innovation, creativity, consistency, organization, courage, self-motivation, flexibility, inspiration are some of the chief personality traits of a budding entrepreneur. He must work on the following points and should polish himself to adapt to this new competitive era. Commitment towards work, patience and a passionate attitude acts as a catalyst in their growth and development."
Margaret Miller, GoArticle.com 2008



‡
‡
actor (war like action) and person in charge of large-scale production projects

person bearing risks of profit (loss) in a fixed price contract with the government

person bearing risks is different from one supplying capital

person being risks, planning, supervising, organizing andowning

separated profits of entrepreneur from profits of capital

distinguished between those who supplied funds andreceived interest and those who received profit from managerial capabilities

entrepreneur is an innovator and develops untried technology

entrepreneur is an energetic, moderate risk taker

entrepreneur maximizes opportunities

entrepreneur takes initiatives, organizes some social-economic mechanisms and accept risk of failure

entrepreneur seen differently by economics, psychologists, business persons and politicians

intrapreneur is an entrepreneur within an already establsihed organization

entrepreneurship is the process of creating somethingdifferent with value by devoting the necessary time and effort, assuming theaccompanying financial, psychological, and social risks, and receiving theresulting rewards of monetary and personal satisfaction
Middle Ages

17th Century

1725 Richard Cantillon

1797 Beaudeau

1803 Jean Baptiste Say

1876 Francis Walker

1934 Joseph Schumpeter

1961 David Mc Clelland

1964 Peter F. Drucker

1975 Albert Shapero

1980 Karl Vesper

1983 Gifford Pinchot

1985 Robert Hisrich
Entrepreneur, who make flows of value.
Budher Song, Entrepreneur
The Theory of 5 Needs Hierarchy of Abraham H. Maslow
Physiological Comfort, Biological and Physiological Needs
Security, Safety Needs
Social Acceptance, Belongingness and Love needs
Persomal Esteem, Esteem Needs
Self Realization, Self Actualization Needs
Physiological Comfort, Biological and Physiological Needs
Security, Safety Needs
Social Acceptance, Belongingness and Love needs
Persomal Esteem, Esteem Needs
Cognitive Needs
Aesthetic Needs
Transcendence
The Theory of 8 Needs Hierarchy
The Theory of Need Hierarchy
The bird struggles out of the egg. The egg is the world. Whoever wants to be born, must destroy a world. The bird flies to God. That God's name is Abraxas.
in Demian(1919)
Hermann Hesse
Founder
Locus of control is a theory in personality psychology referring to the extent to which individuals believe that they can control events that affect them. Understanding of the concept was developed by Julian B. Rotter in 1954, and has since become an important aspect of personality studies.

Individuals with a high internal locus of control believe that events result primarily from their own behavior and actions. For example, if a person with internal loci of control does not perform as well as they wanted to on a test, they would blame it on lack of preparedness on their part. Or if they performed well on a test, then they would think that it was because they studied enough. Those with a high external locus of control believe that powerful others, fate, or chance primarily determine events. Using the test performance example again, if a person with external loci of control does poorly on a test, they would blame the test questions being too difficult. Whereas if they performed well on a test, they would think the teacher was being lenient, or that they were lucky.

Those with a high internal locus of control have better control of their behavior, tend to be more politically involved, and are more likely to attempt to influence other people than those with a high external (or low internal respectively) locus of controlThey also assign greater likelihood to their efforts being successful and more actively seek information concerning their situation.

One's "locus" (Latin for "place" or "location") can either be internal (meaning the person believes that they control their life) or external (meaning they believe that their environment, some higher power, or other people control their decisions and their life).

(Resource : Carlson, N.R., et al. (2007). Psychology: The Science of Behaviour - 4th Canadian ed.. Toronto, ON: Pearson Education Canada.)
Locus of Control
Innovativeness
low
high
high
Risk
Home Run
Strategy
Window of Opportunity
Entrepreneur
Manager /
Administrator
Promoter
Inventor
Creativity
&
Innovation
General Management skills,
Business know-how, Networks
low
high
high
(Resource : Jeff Timmons, New Venture Creation)
Degree of Entrepreneurship
low
high
high
Frequency of
Entrepreneurship

Dynamic
Periodic /
Incremental

Periodic /
Discontinuous

Continuous /
Incremental

Revolutionary
Richard Branson
(Virgin)

Rich DeVos
(Amway)

Ray Kroc
(McDonald's)

Herb Kellener
(Southwest Airways)

Ted Turner
(CNN)

Akio Morito

(Sony)

Bill Gates
(Microsoft)

Sachiro Honda
(Honda Motors)

Howard Head
(Head Skies)

Steve Jobs
(Apple)

(Innovativeness, Risk Taking, Proactiveness)
(Number of Events)
Entrepreneurial Grid to Individual Managers
Window of Opportunity
Resource : Corporate Entrepreneurship & Innovation, 2008
#J.B. Say(1816)
-The agent who unites all means of production and who finds in the value of the products.. the reestablishment of the entire capital he employs, and the value of the wages, the interest and the rent which he pays, as well as the profits belonging to himself.

#Cole, A. H.(1959)
-The purposeful activity(including an integrated sequence od decision) of an individuals, undertaken to initiate.
-Maintain or aggrandize a profit-oriented business unit for the production or distribution of economic goods and services.
(Resources : The Entrepreneurial Journey, Tomas J. O'Malia, Bradywine publishing company 2000)
Uncertainty
Capital Market Context
Throughout the theoretical history of entrepreneurship, scholars from multiple disciplines in the social sciences have grappled with a diverse set of interpretations and definitions to conceptualize this abstract idea.
"some writers have identified entrepreneurship with the function of uncertainty-bearing, others with the coordination of productive resources, others with the introduction of innovation, and still others with the provision of capital" (Hoselitz, 1952)

Although there is only limited consensus about the defining characteristics of entrepreneurship, the concept is almost as old as the formal discipline of economics itself. The term "entrepreneur" was first introduced by the early 18th century French economist Richard Cantillon. In his writings, he formally defines the entrepreneur as the "agent who buys means of production at certain prices in order to combine them" into a new product (Schumpeter, 1951). Shortly thereafter, the French economist J.B. Say added to Cantillon's definition by including the idea that entrepreneurs had to be leaders. Say claims that an entrepreneur is one who brings other people together in order to build a single productive organism (Schumpeter, 1951).
Even though certain themes continually resurface throughout the history of entrepreneurship theory, presently there is no single definition of entrepreneurship that is accepted by all economists or that is applicable in every economy.

Over the next century, British economists such as Adam Smith, David Ricardo, and John Stuart Mill briefly touched on the concept of entrepreneurship, though they referred to it under the broad English term of "business management." Whereas the writings of Smith and Ricardo suggest that they likely undervalued the importance of entrepreneurship, Mill goes out of his way to stress the significance of entrepreneurship for economic growth. There is no good English equivalent word to encompass the specific meaning of the French term entrepreneur (Schumpeter, 1951).

The necessity of entrepreneurship for production was first formally recognized by Alfred Marshall in 1890. In his famous treatise Principles of Economics, Marshall asserts that there are four factors of production: land, labor, capital, and organization. Organization is the coordinating factor, which brings the other factors together, and Marshall believed that entrepreneurship is the driving element behind organization.

Since the time of Marshall, the concept of entrepreneurship has continued to undergo theoretical evolution. For example, whereas Marshall believed entrepreneurship was simply the driving force behind organization, many economists today, but certainly not all, believe that entrepreneurship is by itself the fourth factor of production that coordinates the other three (Arnold, 1996). Unfortunately, although many economists agree that entrepreneurship is necessary for economic growth, they continue to debate over the actual role that entrepreneurs play in generating economic growth.
One of the first entrepreneurs was Marco Polo. He had ideas of trading with Asia in the 13th century and was sure of how he could get there and the materials he could trade. His expeditions were financed by venture capitalists in Venice with an assurance that he would share his profits with them. These loose associations continued to flourish in Europe and other parts of the world where people with money were willing to back ideas and new schemes when they were convinced that there was some pecuniary advantage in the end.
The Entrepreneurial Process
Resource : Timmons & Spinelli, 2009
Entrepreneurial
Team
Opportunity
Resources
Fits and Gap
[Timmons Model]
of
Business Plan
Ambiguity
Exogenous Forces
Communications
Leadership
Creativity
Founder
Uncertainty
Capital Market Context
The Entrepreneurial Process
Resource : Timmons & Spinelli, 2009
Entrepreneurial
Team
Resources
Fits and Gap
[Timmons Model]
of
Business Plan
Ambiguity
Exogenous Forces
Communications
Founder
Uncertainty
Capital Market Context
The Entrepreneurial Process
Resource : Timmons & Spinelli, 2009
Entrepreneurial
Team
Opportunity
Resources
Fits and Gap
[Timmons Model]
of
Business Plan
Ambiguity
Exogenous Forces
Communications
Founder
Uncertainty
Capital Market Context
The Entrepreneurial Process
Resource : Timmons & Spinelli, 2009
Entrepreneurial
Team
Opportunity
Resources
Fits and Gap
[Timmons Model]
of
Business Plan
Ambiguity
Exogenous Forces
Communications
Founder
Uncertainty
Capital Market Context
Very large,
growing,
undefined
Very limited
Innumerable :
money,
management
Leadership
Creativity
Opportunity
Larger,
growing faster
Money to
launch
Resources and team
Catching up
At Venture Capital Funding, toward New Balance
At Start-up, a Huge Imbalance
Even bigger,
faster growing
Competitors
Great balance sheet
Great free cash flow
Can play with
the best
How large and profitable
can we become?
Leadership
Creativity
At IPO, a New Balance
Leadership
Creativity
Full transcript