The New Entrepreneurial Imperative. E “Wealth in the new regime flows directly from innovation,...
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Chapter 1 The New Entrepreneurial Imperative
The New Entrepreneurial Imperative. E “Wealth in the new regime flows directly from innovation, not optimization; that is, wealth is not gained by perfecting
E Wealth in the new regime flows directly from innovation, not
optimization; that is, wealth is not gained by perfecting the
known, but by imperfectly seizing the unknown. ~Kevin Kelly, New
Rules for the New Economy, Wired
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E The changing domain of the external environment
TechnologicalTechnological EconomicEconomic CompetitiveCompetitive
LaborLabor ResourceResource CustomerCustomer LegalLegal
RegulatoryRegulatory GlobalGlobal CustomerCustomer SocialSocial
SupplierSupplier Managers face shortened decision windows and
diminishing opportunity streams, meaning they must act quickly or
find themselves missing out on opportunities
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E Customers Fragmented markets and rapidly rising customer
expectations are forcing firms to customize their products,
cultivate longer-term customer relationships and learn new skills
in serving global markets Technology Firms have to change the ways
they operate internally and how they compete externally based on:
-New information management technologies -New production and
service delivery technologies -New customer management technologies
Competitors Lead customers to entirely new market spaces Quickly
mimic which makes it harder to differentiate Attack firms most
profitable areas of business by specializing in narrow, profitable
niches Legal, Regulatory and Ethical Standards Firms are
increasingly accountable to multiple forcing management to make
difficult choices and deliver results while behaving responsibly
Increasingly litigious environment Increasing regulatory
restrictions The Embattled Corporation
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E Achieving a sustainable competitive advantage derives from
five key company capabilities Adaptability Adaptability Flexibility
Flexibility Speed Speed Aggressiveness Aggressiveness
Innovativeness Innovativeness Entrepreneurship is the core source
of sustainable competitive advantage
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E Seven perspectives on the nature of entrepreneurship Creation
of wealth Creation of wealth Creation of enterprise Creation of
enterprise Creation of innovation Creation of innovation Creation
of change Creation of change Creation of employment Creation of
employment Creation of value Creation of value Creation of growth
Creation of growth
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E An encompassing definition of entrepreneurship:
Entrepreneurship is the process of creating value by bringing
together a unique combination of resources to exploit an
opportunity.
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E Entrepreneurship involves a process Entrepreneurs create
value where there was none before Entrepreneurs put resources
together in a unique way Entrepreneurship is opportunity-driven
behavior
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E Corporate entrepreneurship is a term used to describe
entrepreneurial behavior inside established mid-sized and large
organizations. Other popular related terms Organizational
entrepreneurship Intrapreneurship Corporate venturing
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E Management is the process of setting objectives and
coordinating resources, including people, in order to attain
them.
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E Managers focus more on the current situation and how to
improve efficiency and effectiveness Entrepreneurs focus less on
the current situation and more on what can be
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E The Manager Planner Strategist Organizer Staffer Motivator
Budgeter Evaluator Coordinator Supervisor The Entrepreneur
Visionary Opportunity-seeker Creator Innovator Calculated
Risk-taker Resource Leverager Change Agent Active and Adaptive
Concept Implementer The Entrepreneurial Manager
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E Greiners 5 stages of a companys evolution Creativity
Creativity Direction Direction Delegation Delegation Coordination
Coordination Collaboration Collaboration
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E The evolutionary process of companies: Companies enter a
particular growth stage and prosper until reaching a crisis point
Crisis Point Next Stage Failure Begin Decline Acquisition
Candidate
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E Start up and early growth Growth through direction Growth
through delegation Growth through coordination Growth through
collaboration
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E Stage 1 Creativity Stage 2 Direction Stage 3 Autonomy Stage 4
Coordination Stage 5 Collaboration Management FocusMake
&SellEfficiency of operation s Expansion of market
Consolidation of organizatio n Problem solving & innovation
Organization Structure InformalCentralized & Functiona l
Decentralized & geographic al Line-staff & product groups
Matrix of teams Top Management Style Individualistic &
entrepreneuri al DirectiveDelegativeWatchdogParticipative Control
SystemMarket resultsStandards & cost centers Reports &
profit centers Plans & investment centers Mutual goal setting
Management Reward System OwnershipSalary & merit increases
Individual bonusProfit sharing & stock options Team bonus
(Source: Adapted from Larry E. Greiner, Evolution and Revolution as
Organizations Grow Harvard Business Review, July-August, 1972 p.
45)
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E Managers within an organization tend to become reactive by
responding to the changes brought about by the external environment
but let entrepreneurial fires within the company dwindle and
diminish
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E How much more cost savings can the company wring out of its
current business? Are managers within the firm working harder and
harder for smaller and small efficiency gains? How much more
revenue growth can the company squeeze out of its current business?
Is the company paying more and more for customer acquisition and
market share gains? Managers must ask themselves the following
questions to avoid inevitable diminishing returns and refocus on
new directives and entrepreneurial avenues:
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E How much longer can the company keep propping up its share
price through share buybacks, spin-offs, and other forms of
financial engineering? Is top management reaching the limits of its
ability to push up the share price without actually creating new
wealth?How much longer can the company keep propping up its share
price through share buybacks, spin-offs, and other forms of
financial engineering? Is top management reaching the limits of its
ability to push up the share price without actually creating new
wealth? How many more scale economies can the company gain from
mergers and acquisitions? Are the costs of integration beginning to
overwhelm the savings obtained from slashing shared overhead
costs?How many more scale economies can the company gain from
mergers and acquisitions? Are the costs of integration beginning to
overwhelm the savings obtained from slashing shared overhead costs?
How different are the strategies of the four or five largest
competitors in the industry from the companys strategy? Is it
getting harder and harder to differentiate the company from its
competitors?How different are the strategies of the four or five
largest competitors in the industry from the companys strategy? Is
it getting harder and harder to differentiate the company from its
competitors?