UNIT I

Entrepreneurship Process,
Entrepreneurial Roles, &
First-Generation Entrepreneurs
Prof. G. Surender Reddy
Director, EDC, SNIST

12 Signs You are Meant to be

an Entrepreneur
1. Hate the Status Quo It doesn't make sense to you that something has
been done the time-honored way with no explanation why. You are not
someone who wants to just go through the motions or sit by idly. Nor do you
like following the pack.
2. Easily Bored - You find yourself easily bored, and others start viewing you
as a problem. But nothing is wrong with you except that you are bored with
activities that aren't up to your abilities and aren't challenging. That's why you
hated most of the classes you ever attended. Think Bill Gates who dropped out
of college to become one of the richest men in the world.
3. Fired from Jobs You're too creative for your own good when it comes to
working for others, and you may have some history, as I do, of losing jobs.
Being just a cog in wheel is very difficult for you because you want to create
something others can be inspired by and contribute to.

12 Signs (Contd.)
4. Labeled a Rebel - You know that greatness resides outside the
lines of conformity and don't think that policies, laws and regulations
apply to you. You have been described as a rebel and rule breaker and
would defy gravity if you could.
5. Resist Authority - You have a lifelong record of resisting authority
from your parents, teachers and bosses. You don't go along with the
agreed upon norms of the group or community you work and live in.
6. Ready to Improve Everything - You always see how you could do
things better. In addition, you are opinionated and freely give your twocents about your better way of doing things--even when you're not
asked.

12 Signs (Contd.)
7. Bad at Making Small Talk - You have difficulty making the kind of
small talk that so many people get comfort from. This social pattern of
relationship and rapport building seems like a waste of time to you and
makes you uncomfortable.
8. Bullied in Your Youth - You may have been heavily criticized, picked
on and even bullied as a child or teenager. This has caused you to be driven to
excel and to prove to the world that you are indeed a force to be reckoned
with.
9. Obsessive - You may have been labeled obsessive/compulsive because
when you get started on something you have difficulty letting go. Don't let
anyone convince you that this is a disease or deficiency. All of the great
entrepreneurs become completely immersed in their vision. Howard Schultz
stuck with Starbucks even when his family tried to persuade him not to.

12 Signs (Contd.)
10. Scared to Go Solo - The entrepreneur in you is scared of going out on
your ownand also terrified of not doing so. This fear is so common in our
society because we've been conditioned to think that entrepreneurship is
much riskier than getting a "good job." The reality is there is instability in
both.
11. Unable to Unwind - You can't go to sleep at night because you can't
turn your thoughts off. An idea may even manifest itself in your dreams. The
next morning you find yourself still consumed with that idea, distracting you
from the job you're supposed to be doing.
12. Don't Fit the Norm - You have always been a bit uncomfortable in your
own skin. Until you get used to the idea that you are in fact different from
most people, it could prove to be a problem--or exactly the motivation you
need to acknowledge the entrepreneur screaming to get out.

ENTREPRENEURIAL PROCESS
Of course, there are many ways to organize the effort of
planning, launching and building a venture. But there are a set of
fundamentals that must be covered in any approach. We offer
the following as a way to break down the basic activities necessary.
It is useful to break the entrepreneurial process into five phases:
1. Idea generation
2. Opportunity evaluation
3. Planning
4. Company formation/launch
5. Growth

Entrepreneurial Process (Contd.)

1. Idea Generation: every new venture begins with
an idea. In our context, we take an idea to be a
description of a need or problem of some constituency
coupled with a concept of a possible solution.
2. Opportunity Evaluation: this is the step where you
ask the question of whether there is an opportunity
worth investing in. Investment is principally capital,
whether from individuals in the company or from outside
investors, and the time and energy of a set of people. But
you should also consider other assets such as intellectual
property, personal relationships, physical property, etc.

Entrepreneurial Process (Contd.)

3. Planning: Once you have decided that an opportunity, you need a
plan for how to capitalize on that opportunity. A plan begins as a fairly
simple set of ideas, and then becomes more complex as the business
takes shape. In the planning phase you will need to create two
things: strategy and operating plan.
4. Company formation/launch: Once there is a sufficiently
compelling opportunity and a plan, the entrepreneurial team will go
through the process of choosing the right form of corporate entity and
actually creating the venture as a legal entity.
5. Growth: After launch, the company works toward creating its
product or service, generating revenue and moving toward sustainable
performance. The emphasis shifts from planning to execution. At this
point, you continue to ask questions but spend more of your time
carrying out your plans.

ENTREPRENEURIAL ROLES
Intrapreneur
"Intrapreneurship refers to employee initiatives in organizations to undertake
something new, without being asked to do so. Hence, the intrapreneur focuses
on innovation and creativity, and transforms an idea into a profitable venture,
while operating within the organizational environment. Thus, intrapreneurs are
Inside entrepreneurs who follow the goal of the organization.
Intrapreneurship is an example of motivation through job design, either
formally or informally. Employees, such as marketing executives or perhaps
those engaged in a special project within a larger firm, are encouraged to behave
as entrepreneurs, even though they have the resources, capabilities and security
of the larger firm to draw upon. Capturing a little of the dynamic nature of
entrepreneurial management (trying things until successful, learning from
failures, attempting to conserve resources, etc.) adds to the potential of an
otherwise static organization, without exposing those employees to the risks or
accountability normally associated with entrepreneurial failure.

Entrepreneurial Roles (Contd.)

Inventor/Innovator
Joseph Schumpeter (1883-1950), Austrian-born professor, is
famous for focusing on the entrepreneur as the central figure in
advancing the wealth of nations and creating dynamic
disequilibrium in the global economy. In the process of creative
destruction (of the market system), entrepreneurs plays a central
role by constantly assimilating knowledge not yet in current use
and setting up new production forms and functions to produce and
market new products. He pointed out that knowledge underlying
the innovation need not be newly discovered and may be existing
knowledge that has never been utilized in production. Therefore,
the entrepreneur need not be an inventor and vice versa. He is the
one who turns an invention into commercial exploitation.

Entrepreneurial Roles (Contd.)

Risk-Taker
Richard Cantillon (1680-1734) suggested that an entrepreneur is someone
who has the foresight and willingness to assume risk and take the requisite
action to make a profit (or loss). Cantillons entrepreneur is forward-looking,
risk-taking, alert though need not be innovative in the strict sense.
Two different kinds of risk were distinguished by Frank Knight (1885-1972):
one is capable of being measured (i.e., objective probability that an event will
happen) and shifted from the entrepreneur to another party by insurance;
the other is un-measurable (i.e., no objective measure of probability of gain
or loss), e.g., the inability to predict consumer demand. According to Knight,
the entrepreneur takes the latter risk: true uncertainty found in situations,
which do not repeat themselves with sufficient conformity to make possible a
computation of probability (what we nowadays term as "unknown and
unknowable").

Entrepreneurial Roles (Contd.)

Organizer/Coordinator
Jean-Bapiste Say ,the French political
Economist, said that entrepreneur is one who
combines the land of one, the labor of another
and the capital of yet another, and thus,
produces a product. Thus, Say has made a clear
distinction between the role of the capitalist or
capital provider as a financier and the
entrepreneur as an organizer.

Entrepreneurial Roles (Contd.)

Manager
Managers and entrepreneurs both play an important
role in the business community. Many of them share
some of the same characteristics, but some differences
exist when it comes to the basic traits of each.
Managers play an entirely different role than an
entrepreneur -- unless, of course, an entrepreneur is
managing his own business. In that case, the
entrepreneur takes on some of the traits of a manager
out of necessity, such as being a coordinator and
controller.

FIRST-GENERATION ENTREPRENEURS
According to a study by Maryann Fraboni and
Robert Saltstone, published in Journal of Social
Behavior and Personality, first-generation
entrepreneurs are more suspicious, assertive,
imaginative, controlled, and reserved than
second-generation entrepreneurs. Secondgeneration entrepreneurs were more
trusting, humble, practical, undisciplined, and
outgoing than first-generation entrepreneurs.
(Contd.)

First-Generation (Contd.)
1st generation entrepreneurs are typically more risk-taking and less brand-aware,
they put a lot of trust on their gut, hence they have a higher chance to succeed or fail
equally. The 2nd generation entrepreneurs on the contrary, can be highly risk averse
in comparison to their peers and might go more by research and processes, relying
less on their gut, as they can be more brand-conscious and can even fear failure. The
1st generation entrepreneurs are definitely bolder, as basically they have nothing to
lose! 2nd generation entrepreneurs can be bold too, but there are limits, as in they
would not like put their entire past success on the line for one deal.
On a funny note, 1st generation guys can start off in a garage or a small office; on
the contrary, if the business comes to the 2nd generation guys, of course they will at
least have a decent size office.
However, the biggest plus for a 2nd generation entrepreneur, where he or she scores
handsomely over the 1st generation one is the intangible exposure and experience
they can get while growing up seeing the 1st generation of entrepreneurs grow,
work, toil and maybe even scale. This hands-on experience can go miles for the 2nd
generation when they are at the helm of affairs.

Riddle for the Day

What word becomes shorter when you add two
letters to it?

Answer to the Riddle

Short

A Brain Teaser for You

Which eight-letter word still remains a word
after removing each letter from it?

Answer to the Brain Teaser

Starting-Staring-String-Sting-Sing-Sin-In-I

Thought for the Day

The true entrepreneur is a doer, not a dreamer.
- Nolan Bushnell

Assignment #2
Will you make a good entrepreneur? If so, why?
If not, why not?