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The Entrepreneurial Manager
JADE Spring Conference
Olivier Witmeur
March 7th, 2014
Desired Outcomes of the Workshop
• Who is the entrepreneur?
• What are the differences between entrepreneur and manager?
• Does it matter?
1. Why entrepreneurshipmatters
2. About entrepreneurs
3. Introduction to effectuation
4. Case study: Wafles and Dinges
5. Introduction to intrapreneurship
6. Conclusion
• What makes entrepreneurs entrepreneurial (Sarasvathy)
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Olivier Witmeur (Belgian, 46)
• A real passion for entrepreneurship education and entrepreneurs.
• Student entrepreneurs: 2x
• Full time entrepreneur: once, in a team of 5
• Coach: 500+ projects over the last 20 years
• (Advisory) Board member in multiple new ventures
• Policy making: 2x
• PhD in entrepreneurship in 2008
• … never as an investor
• My wife (as Colombo), no kids, one dog (Vicky).
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WHY ENTREPRENEURSHIP MATTERS
Did you know one of the largest and most profitable businesses during the late 1800s and early 1900s was ice harvesting?
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Jump to the next curve.
Temps
Rule #1The dominant players on curve #1 are
not likely to jump to the curve #2…
1
2
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Again!
Today’s businesses, especially the large ones, simply will not survive in this period of rapid change and innovation unless they acquire entrepreneurial competences.
Peter Drucker
1985 (!) 2005
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Strategy Entrepreneurial Orientation
“An entrepreneurial firm is one that engages in product-market innovation, undertakes somewhat risky ventures, and is first to come up with ‘proactive’ innovations, beating competitors to the punch.A non-entrepreneurial firm is one that innovates very little, is highly risk averse, and imitates the moves of competitors instead of leading the way.”
• Entrepreneurial Orientation (EO) =
– Risk Taking
– Proactiveness
– Innovativeness
• EO Performance
(The relation is stronger in turbulent environments)
Danny MILLER (Canada)
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Towards ‘Entrepreneurism’
• Y= f ( L, C ) … Capitalism and Socialism
• Y = f ( L, C, K ) … The Knowledge Economy
• Y = f ( L, C, K, E ) ... The Entrepreneurial Society?
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Global Entrepreneurship MonitorTotal Entrepreneurial Activity Level
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How To Navigate In Turbulent Times?
VOLATILITYNature, dynamics and speed of change.
UNCERTAINTYLack of predictability and prospects for surprises.
V
U
COMPLEXITYMultiplex of forces, confounding of issues and causes-and-effects confusion.
C
AMBIGUITYHaziness of reality, potential for misreads, and the mixed meanings of conditions.
A
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ABOUT ENTREPRENEURS
Different views on the entrepreneur
1. As a revolutionary ‘Entrepreneurial leadership’
2. As a manager ‘Entrepreneurial management’
3. As a salesman
4. As a team player Entrepreneurial team
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Traits approach: Classical variables
Need for achievement (N-Ach) refers to an individual's desire for significant accomplishment, mastering of skills, control, or high standards.
Locus of control refers to how much individuals believe they can control events that affect them.
Need for achievement
Locus of control
Ambiguity tolerance is the ability to perceive ambiguity in information and behavior in a neutral and open way
Tolerance for ambiguity
Self-efficacy is the extent or strength of one's belief in one's own ability to complete tasks and reach goals
Self efficacy
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About Entrepreneurs (a personal view)
Network & Social Capital
Knowledge &Expertise
Tolerance for Ambiguity
Commitment& Courage
Passion & Values
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ELEMENTS OF ENTREPRENEURIAL LOGIC:INTRODUCTION TO EFFECTUATION
Managerial Approach based on optimizationSelecting between given means to achieve a predefined goal
How to optimizethe use of the
resources?
Given Goal
Resource 1
Resource 2
Resource 3
Resource 4
Resource 5
Typical tools & techniques: project management, leadership, controlling, quantitative methods…
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A more creative approach based on planningGenerating new means to achieve pre-determined goals
How to write a ‘case’ or a plan to ask for
more resources.
Resource 1
Resource 2
Resource 3
(needed)
(needed)
Typical tools & techniques: strategic and financial planning
Given Goals
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Entrepreneurial ThinkingImagining possible new ends using a given set of means
How to exploit one opportunity inside the
opportunity space?
Resource 1
Resource 2
Resource 3
Resource 4
Resource 5
Possible goal 1
Possible goal 2
Possible goal 3
…
…
Opportunity Space
Typical tools & techniques: co-creation, creativity, enrolment, lean entrepreneurship, bootstrapping….
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Introducing Effectuation: The logic of expert entrepreneurs.
The word effectual (entrepreneurial approach) is the inverse of causal (managerial approach).
In general, in MBA programs across the world, students are taught causal or predictive reasoning in every functional area of business.
Saras SarasvathyIndia
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Causation vs. Effectuation
Causation Effectuation (Cre-Action)
• Planned approach
• Top-Down
• Managerial logic
• Prediction based: To the extent we can predict the future, we can control it.
For predictable situations
• Emergent approach
• Bottom-up
• Entrepreneurial logic
• Control based: To the extent we can control the future, we don’t need to predict it.
For uncertain situations
Effects are predicted
Need to manage
the causes
Causes are given
Need to manage
the effects
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Principle #1: Bird in Hand
Start with who you are, what you know and whom you know… Not with pre-set/given goals (based on prediction)
• Typical entrepreneurial resources:
– Expertize, skills…
– Social capital
– Psychological capital: hope, optimism, self efficacy and resilience
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Principle #2: Affordable loss
Invest what you can afford to lose (extreme case = 0€)
… Not expected (risk adjusted) return
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Principle #3: Crazy Quilt
Build a network of self-selected stakeholders
… Not competitive analysis and transactional relationships with first-best partners.
Co-CreationCustomersSuppliersChannels
Financial partnersEmployeesSponsors
…
Committed stakeholders
network
Crazy quilt, not puzzle.
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Principle #4: Lemonade principle
Embrace and leverage surprises (they can present new opportunities)
…Not avoid them
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Nils Bergvist
Question:
• What would you do?
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About Nils
• Swedish
• Environmental engineer
• Worked 8 years in the mining industry in Kiruna (in Northern Sweden)
• Passion for wildlife and sports
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Ice Hotel
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Principle #5: Pilot-in-the-plane
The future comes from what people do
… No inevitable trends
Control vs Plan
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The Dynamics of the Entrepreneurial Network
Who I am? What I can do? Whom I know?
My affordable loss?
Who may be involved?
Additionalresources
Iterative opportunityco-construction
New GoalsThe venture grows
step by step.
Dead end
My Goals?
Multiple techniques help to deal with these cycles: Design Thinking, Lean Startup, Business Model Generation, Staged Financing…
To be continued.
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Managerial vs. Entrepreneurial Thinking (stylized facts)
Effectual
CausalLow
Low High
High ExpertEntrepreneurs
ExperiencedVCs
Angels
CorporateManagers
NoviceVCs
Bankers
Noviceentrepreneurs
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From Causation to Effectuation…and vice-versa
TIME AND EXPERIENCE
LOGIC
Causal
Effectual
Novice entrepreneur
Expert entrepreneur
Start-upfirm
Largefirm
Shift in logic necessitated byfirm growth
Entrepreneurs do not alwaysmanage to bridge this gap
Moderatingeffect of
resources
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Wafels & Dinges
Questions:
• What would you do next?
• What is your logic?
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Don’t wait/look for the perfect opportunity.
Just start!
INTRODUCTION TO INTRAPRENEURSHIP
Entrepreneurs and Intrapreneurs
Owner-Manager
in Small Firms
Managers
in Large Firms
Entrepreneurs
Lifestyle
Entrepreneurs
Intrapreneurs
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Entrepreneurs vs Intrapreneurs
ENTREPRENEUR INTRAPRENEUR
Ownership Yes No (employee)
Decision power Unlimited as long as shareholders agree
Hierarchy
Incentive Overall Limited: Bonus, SOP…
Risk Large, i.e. may include personal assets
Job reputation
Strategic Freedom Full To be aligned with the corporate agenda
Type of activity Ex-nihilo creation Strat with existing organizational support
Sponsors Stakeholders Corporate Management
• Adapted from Basso, 2004
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Corporate Entrepreneurship Challenges
• Entrepreneurial culture / values
• Recruit, Develop & Retain entrepreneurial people
• Leadership skills
• Pace of change is accelerating Need to renew
• Core vs non-core activities
• Breakthrough innovation
• Develop an organization that is entrepreneurship friendly
CULTURE
STRATEGY(Vision)
ORGANIZATION(Tactics)
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Entrepreneurial Values and Behaviours
• Adapted from Burns, 2008
Change is normal
‘Can do’
Trials & Errors
Opportunistic
‘Work is Fun’ Celebrate Success
CreatityInnovation
Self confidence
Network and Sharing
Learn frommistakes
Optimism
Long term impacts
AchievementMulti-
disciplinarityTeam
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Organizational framework for Internal Venturing
Strategic Importance
Very important Uncertain Not important
Operational relatedness
Unrelated Special BU Special BU Spin-off
Partly related New department New department Contracting
Strongly related Direct Integration New department Contracting
Adapted from Burns, 2008
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CONCLUSION
Traditional vs Entrepreneurial Management (Adapted from H. Stevenson)
ENTREPRENEURIAL TRADITIONAL
Strategic Orientation
Driven by perception of opportunity
Driven by resources currently controlled
Commitment to opportunity
Revolutionary with shortduration
Evolutionary of long duration
Commitment of resources
Multistaged with minimal exposure at each stage
Single-staged with complete commitment upon decision
Control of resources
Episodic use of rent of required resources
Ownership or employment of required resources
Management structure
Flat with multiple informal networks
Formalized hierarchy
Reward philosophy Value-drivenPerformance-basedTeam-oriented
Security-drivenResource-basedPromotion-oriented
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Entrepreneurship and ManagementEN
TREP
REN
EUR
SHIP M
AN
AG
EMEN
T
Initialdiscovery
Opportunityrefinement
Marketmaking
Resourceacquisition
(New) co-ordination of
(new) resources
Co-ordinationof old
resources/on-going activityDiscovery process
Exploitation process
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The test of a first-rate intelligence is the ability to hold two opposed ideas in the
mind at the same time, and still retain the ability to function.
F. Scott Fitzgerald
Entrepreneur vs. Manager is the wrong question.
Act like Lionel Messi; ie be good at everything and know what tool/logic to
use at the right time
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It doesn’t matter whether you are a lion or a gazelle.When the sun comes up, you better start running.
Thomas L. Friedman in “The World Is Flat”
Every morning in Africa, a gazelle wakes up.
It knows it must run faster than the fastest lion or it will be killed.
Every morning a lion wakes up.It knows it must run faster than the
slowest gazelle or it will starve to death.
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Never Stop Wondering and Asking
T. +32.2.650.41.60 – M. +32.475.68.62.50 if important and urgent
For visitors: 48 avenue F. Roosevelt (Janson Building) – Room J1-117, 1050 Brussels
Postal address: 50 avenue F. Roosevelt – CP 141, 1050 Brussels, Belgium
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BACK UP
WHAT IS ENTREPRENEURSHIP?
Definition 1: The HBS working definition
The pursuit of opportunity beyond the resources you currently control.
H. StevensonUSA
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Definition 2: The classical academic definition
We define the field of entrepreneurship as the scholarly examination of how, by whom and with what effects opportunities to create future goods and services are discovered, evaluatedand exploited.
Academy of Management Review, 2000, vol. 25, n°1, 217-226
S. Shane S. Venkataraman
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Definition 3: Degree of entrepreneurship?
New to founders
FranchiseeShops
Take-overBuy Out
CorporateSpin-offs
Innovation
Lawyers,Doctors,
….
Ch
ange
New to market
High tech& Social start-ups
Ch. Bruyat A. Fayolle
Adapted from C. Bruyat (1993) & A. Fayolle
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Definition 4: A classical definition
A way of thinking and acting that is opportunity obsessed,
holistic in approach & leadership balanced
for the purpose of value creation
J. TimmonsUSA
Thinking and acting = There is a “method”
Central role of the opportunity
(but found or made?)
Take all aspects into consideration
Need to be managed There are best practices
Value for the stakeholders, i.e. founders, team, investors,
customers, society…
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