ENTREPRENUERSHIP

ENTREPRENUERSHIP

An unemployed man goes to apply for a job with Microsoft as a janitor. The manager there arranges for him to take an aptitude test (Section: Floors, sweeping and cleaning). After the test, the manager says, "You will be employed at minimum wage, $5.15 an hour. Let me have your e-mail address, so that I can send you a form to complete and tell you where to report for work on your first

day. Taken aback, the man protests that he has neither a computer nor an e-mail address. To this the MS manager replies, "Well, then, that means that you virtually don't exist and can therefore hardly expect to be employed. Stunned, the man leaves. Not knowing where to turn and having only $10 in his wallet, he decides to buy a 25-LB flat of tomatoes at the supermarket. Within less than 2 hours,

ENTREPRENUERSHIP

he sells all the tomatoes individually at 100% profit. Repeating the process several times more that day, he ends up with almost $100 before going to sleep that night. And thus it dawns on him that he could quite easily make a living selling tomatoes. Getting up early every day and going to bed late, he multiplies his profits quickly. After a short time he acquires a

ENTREPRENUERSHIP

cart to transport several dozen boxes of tomatoes, only to have to trade it in again so that he can buy a pick-up truck to support his expanding business. By the end of the second year, he is the owner of a fleet of pick-up trucks and manages a staff of a hundred former unemployed people, all selling tomatoes. Planning for the future of his wife and children, he

ENTREPRENUERSHIP

decides to buy some life insurance. Consulting with an insurance adviser, he picks an insurance plan to fit his new circumstances. At the end of the telephone conversation, the adviser asks him for his e-mail address in order to send the final documents electronically. When the man replies that he has no e-mail, the adviser is stunned, "What, you

ENTREPRENUERSHIP

don't have e-mail? How on earth have you managed to amass such wealth without the Internet, e-mail and e-commerce? Just imagine where you would be now, if you had been connected to the Internet from the very start!" After a moment of thought, the tomato millionaire replied, "Why, of course! I would be a floor cleaner at Microsoft!"

ENTREPRENUERSHIP

Who is a Entrepreneur?What is Entrepreneurship?What’s the importanceRole in any Economy???

THE NATURE AND IMPORTANCE OF ENTREPRENEURS

Historical Background Growing income inequalities, Regional

disparities, Urban & Rural imbalance and Huge backlog of unemployment makes the policy makers to concentrate on Entrepreneurship as a critical input in the process of devt.

ENTREPRENEURSHIP

What is Entrepreneurship? It is the process of mind to take calculated risk

with confidence to achieve pre-determined objectives.

Conventional view Entrepreneurs are born and it is hereditary Entrepreneurship is a monopoly of some communities and restricted to certain regions.

Modern view It does not belong to any particular

region, community, education, sex, age etc.,

Definition J. S. Mill & Marshall define ‘Profit’ as a

compensation payable to the entrepreneur for his risk bearing function.

Prof. Knight defines ‘Profit’ as a reward for the uncertainty bearing capacity of entrepreneur

Working Definition

An entrepreneur is a person who combines various factors of production, processes raw material, converts the raw material into a finished product and creates utility and sells the produce in the market to earn profit.

Salient Features

Entrepreneurship is need-based functionProduction is not for self –consumptionProfit orientedEntrepreneur posses distinct qualities

like risk bearing, goal setting, information seeking, time planning , maintaining good interpersonal relations, innovator and team builder

Continue….He posses the different D’s for success.

ie., Desire, Discipline, Determination, Dedication, Devotion, Dignity.

He is a creator of wealth

He takes decision about What to produce --- Product selection How to produce --- Technology Where to produce --- Location When to produce --- Time

planning/Duration For whom to produce --- Target

consumers/ Market

Misconceptions about Entrepreneurs

Entrepreneurs are born They are profit-hungry They are dishonest They are favored by luck. Only rich people can become

entrepreneurs It is a monopoly of certain

communities

Most of what you hear about entrepreneurship, says America’s leading management thinker, is all wrong. It’s not magic; it’s not mysterious; and it has nothing to do with genes. It’s a discipline and, like any discipline, it can be learned.

- Peter F. Drucker

Distinction between Entrepreneurs and Managers

Entrerpreneur :1. Entrepreneurial function is organising

production2. Decision making & calculated risk bearing 3. Has all round responsibility4. Public relation skills & team building5. High level of achievement and motivation6. Innovative, creative, imaginative soul7. Challenges established values and

attitudes

Continue….

Managers :1. Managers are employees (specific role)2. Limited scope for innovation &

creativity3. Managerial jobs are transferable4. Managers do not bear risk5. Managers Need team building &

leadership role6. Managers need knowledge, insight and

expertise

BENEFITS OF ENTREPRENEURSHIP

   Provides a vehicle for using your gifts and talents to help others

Promotes independence and the opportunity to make your own business decisions

Provides flexibility in that you are able to set your own pace and schedule 

  Provides an opportunity to achieve financial independence

   Provides self-fulfillment   Improves economic and financial literacy   Increases self-esteem and respect Economic DevelopmentEmployment OpportunitiesRegional BalancesRural DevelopmentImprovement in Financial System of country

 

Pros and Cons of

Entrepreneurship

PROS:• Excitement: Due to its high capacity for risk, there is a lot of adventure.• Rules and regulations: Work in a current job is difficult to do because of all the "red tape" and consistent administration approval needed.• Originality: Some people feel that they can offer a new service/product that no one else has offered before.• Competition: Employees feel they can offer their current company's product/service at a lesser expense to the public.• Independence: Some people wish to be their own boss and make all the important decisions him/herself.• Salary potential: Generally, people want to be paid for the amount of work they do in full; they do not want to be "short-changed.".

• Flexibility: Entrepreneurs can schedule their work hours to spend quality time with family or any other reason.

• Rational salary: They are not being paid what they're worth and would rather work on their own and earn the money they should be earning for their efforts.

• Freedom: Entrepreneurs can work whenever they want, wherever they want, and however they want

CONS

• Salary: Starting your own business means that you must be willing to give up the security of a regular paycheck.• Benefits: There will undoubtedly be fewer benefits, especially when considering that your business will be just starting off.• Work schedule: The work schedule of an entrepreneur is never predictable; an emergency can come up in a matter of a second and late hours will have to be put in.

• Administration: All the decisions of the business must be made on your own; there is no one ranked higher than you on the chain of command in YOUR business.\• Incompetent staff: Often times, you will find yourself working with an employee who "doesn't know the ropes" as well as you do due to lack of experience.• Procedures: Many times during your entrepreneurial life, you will find that many policies do not make sense, nor will they ever make sense.

Inside the Entrepreneurial Mind: From Ideas to Reality

Creativity, Innovation, and Entrepreneurship

Creativity is the ability to develop new ideas an to discover new ways of looking at problems and opportunities.

Innovation is the ability to apply creative solutions to problems and opportunities to enhance or to enrich people’s lives. (Creative destruction)

In a nutshell, creativity is thinking new things, innovation is doing new things.

Creativity – A Necessity For Survival

A paradigm is a preconceived idea of what the world is, what it should be like, and how it should operate.

Paradigms act as logjams to creativity since they are immovable blocks to creative thinking.

Creative ThinkingThe right brain is creative and intuitive – lateral thinking

The left brain is logical and rational – vertical thinking

Those who use their right brain are more likely to be different and challenge traditional mindsets (paradigms), which leads to innovation (also known as “creative destruction”)

Basically…• Right brain = Intuitive• Innovation = Creative destruction• Innovators = Being different

Barriers to CreativitySearching for the one “right” answer

Most educational systems teach that there is one “right” answer to a problem. This is a boon to creativity since it acts as a block to brainstorming.

Focusing on “being logical”Being logical is valuable when evaluating ideas and implementing them, however, focusing too much effort on being logical in the early imaginative phases discourages the use of intuition.

Blindly following the rulesOften times, creativity depends on our ability to break existing rules so we can find new ways of doing things.

Constantly being practicalSuspending practicality for a while frees the mind to consider creative solutions that, otherwise, might never arise.

Barriers to Creativity (cont…)

Viewing play as frivolousPlay gives us the opportunity to reinvent reality and to reformulate established ways of doing things.

Becoming overly specializedDefining a problem as one area of specialty limits the ability to see how it might be related to other issues.

Avoiding ambiguityAmbiguity encourages us to “think something different.” Ambiguous situations force us to stretch our minds beyond their normal boundaries and to consider creative options we might otherwise ignore.

Barriers to Creativity (cont…)

Fearing looking foolishCreative thinking is no place for conformity. New ideas are rarely born in a conforming environment. People tend toward conformity to avoid looking foolish.

Fearing mistakes and failureTrying something new often leads to failure, however, failure should not be seen as an end; but rather as pit stops toward success.

Believing that “I’m not creative”One who believes they are not creative will likely behave in the same way, thus making the belief a reality. Everyone has the potential to be creative, however, one must tap into that potential first.

How to Enhance CreativityExpecting creativity

One of the best ways to communicate the expectation of creativity is to give employees permission to be creative.

Expecting and tolerating failureCreative ideas will produce failures as well as successes. Creativity requires taking chances, and managers must remove employees’ fear of failure.

Encouraging curiosityConstantly asking “what if…” questions and taking a “maybe we could…” attitude allows one to break out of the assumptions that limit creativity.

Viewing problems as challengesEvery problem offers the opportunity for innovation. Dumping one’s problems on employees’ desks to be “fixed” does nothing to develop creativity within employees.

How to Enhance Creativity (cont…)Providing creativity training

“What separates the average person form Edison, Picasso, or even Shakespeare isn’t creative capacity – it’s the ability to tap that capacity by encouraging creative impulses and then acting upon them.” Training can help everyone learn to tap their creative capacity.

Providing supportOne must give employees the tools and resources they need to be creative. One of the most valuable resources is time.

Rewarding creativityMonetary rewards, praise, recognition, and celebration can be powerful incentives.

Modeling creative behaviorEntrepreneurs who set examples of creative behavior, taking chances, and challenging the status quo will soon find their employees doing the same.

1. Preparation:: Prepare the mind for creative thinking (formal education, work

experience, etc)2. Investigation

:: Develop a solid understanding of the problem or decision3. Transformation

:: View the similarities and differences in the information collected

4. Incubation:: Give the subconscious time to reflect on the information

(daydream, relax, etc)5. Illumination

:: The creation of an innovative idea – the “Eureka factor” stage6. Verification

:: Validate the idea is accurate and useful (conduct experiments, prototypes, etc)

7. Implementation:: Transform the idea into reality

The Creative Process (cont…)

Convergent thinking is the ability to see the similarities and connections among various data and events.

Divergent thinking is the ability to see differences among various data and events.

Techniques for Improving the Creative Process

Brainstorming is a process in which a small group of people interact with very little structure with the goal of producing a large quantity of novel and imaginative ideas.

Mind-mapping is a graphical technique that encourages thinking on both sides of the brain, visually displays the various relationships among ideas, and improves the ability to view a problem from many sides. This is often referred to as “flip-flopping.”

Protecting Your Ideas

A patent is a grant from the federal government’s Patent and Trademark Office (PTO) to the inventor of a product giving them the exclusive right to make, use, or sell their invention in this country for 20 years.

Approximately 98% of all inventors rely on patent experts to steer them through the convoluted process. Legal fees for filing a patent range from $3,000 to $10,000 depending on the product’s complexity.

The average cost of a patent infringement lawsuit is about $600,000 if the case goes to trial. About half of the parties settle before going to trial. Of the trials, more than 60% of those holding patents win.

Protecting Your Ideas (cont…)

A trademark is any distinctive word, phrase, symbol, design, name, logo, slogan, or trade dress that a company uses to identify the origin of a product or to distinguish it from other goods on the market.

Today, 1.5 million trademarks are registered in the United States, and 900,000 of them are in use.

A copyright is an exclusive right that protects the creators of original works of authorship such as literary, dramatic, musical, and artistic works.

A copyright lasts for the life of the creator plus 50 years after their death.

A copyright lasts 75 to 100 years if the holder is a business.

Experts estimate that the U.S. software industry looses $15 billion each year to pirates who illegally copy programs.

Out-of-Box, In-the-Box, New-Box, Other-Box, No-Box Thinking

Robert Alan Black, Ph.D. believes that there are more thinking systems than simply out-of-box and in-the-box thinking. In fact, he marks that simply jumping out of a box or tearing down the box can eliminate ideas and solutions that can come from staying in-the-box. These new thinking systems are:

• New-BoxNew-Box thinking is a controlled form of out-of-the-box thinking. Vertical thinking is comparable to digging the same hole deeper to find the treasure. Horizontal or lateral thinking can be comparable to digging new holes in many locations (new boxes).

• Other-BoxOther-Box involves leaving yours and entering someone else’s once again with the “What’s good about it?” philosophy. For example, sending people to work in other departments to learn what the “grass on the other side” is like.

• No-BoxNo-Box might mean complete open thinking with no limits or virtual/transparent-box thinking. This thinking challenges the greatest majority of people since tremendously potential risks are involved. Anything can go wrong at any time.

Discussion Questions

2. How are creativity, innovation, and entrepreneurship related?Creativity is thinking new things, innovation is doing new things. Successful

entrepreneurs have the ability to both come up with new ideas and are able to then find ways to make them work to solve a problem or fulfill a need.

4. One entrepreneur claims, “Creativity unrelated to a business plan has no value.” What does he mean? Do you agree?

This statement essentially means that an idea is essentially useless unless it is acted on and made into a reality and marketed. I definitely agree with this statement since the philosophy of an entrepreneur is “ready, aim, fire…,” not “ready, aim, aim, aim….”

6. Can creativity be taught or is it an inherent trait? Explain.Creativity is a trait that everyone has. Therefore, everyone has the

potential to be creative. Creativity cannot be necessarily taught, instead, one can be taught how to tap into their creative potential.

Discussion Questions (cont…)

8. Briefly outline the 10 “mental locks” that can limit individual creativity. Give an example of a situation in which you subjected yourself to one of these mental locks.

1. Searching for the one “right” answer :: When taking tests for school, we were usually brought to believe there is only one right answer.

2. Focusing on “being logical” :: At times I have rejected ideas because I thought of them as being “illogical.”

3. Blindly following the rules :: At a young age, we all are taught not to “color outside of the lines.”

4. Constantly being practical :: Impractical ideas are often shot down by the logical side.

5. Viewing play as frivolous :: Often times people view games as being counter-productive.

6. Becoming overly specialized :: “Tunnel vision” can often times limit the ability to think of ideas from another point of view.

7. Avoiding ambiguity :: It is often hard to consider at least two different, often contradictory notions at the same time.

8. Fearing looking foolish :: Often times refrain from expressing ideas to avoid criticism.

9. Fearing mistakes and failure :: Nobody wants to make mistakes or fail, therefore often times people are apprehensive about taking risks that may result in failure.

10. Believing that “I’m not creative” :: Often times people think that creativity is a trait inherited by certain individuals. The truth is that everyone has creative potential, but just needs to learn how to tap into that potential.

Discussion Questions (cont…)

10. Explain the steps of the creative process. What can an entrepreneur do to enhance each step?1. Preparation :: Prepare the mind

• Adopt the attitude of a lifelong student• Read more• Discuss ideas with others

2. Investigation :: Investigate the problem or decision• Study information related to the field that the idea is in

3. Transformation :: Observe similarities and differences in the information collected• Evaluate the parts of the situation several times• Rearrange the elements of the situation

4. Incubation :: Give the subconscious time to reflect on the information collected• Walk away from the situation• Take the time to daydream• Relax

5. Illumination :: “Eureka factor” moment• This moment will come randomly, just be ready to act on it when it comes

6. Verification :: Validate that the idea is accurate and useful• Conduct experiments• Run simulations and tests• Build prototypes

7. Implementation :: Make the idea become a reality• Take your product to the stage, don’t get caught up in the planning stage