Entrepreneur and Technopreneurship

• Entrepreneur
Entrepreneurs play an important role in promoting economic development. They
are key instruments of innovative change whose actions lead to the creation of
new firms or they can also transform existing firms to exploit economic and socially
beneficial opportunities. Entrepreneurs and their businesses can generate wealth
and jobs, which can enable social and regional inequality to be reduced. They
challenge the conventional and search for new solutions.

While entrepreneurial acts create new sources of competitive advantage, products

and services, firms, industries, jobs, and wealth, at the same time they also destroy
firms and jobs in now out-of-date activities. On one side, entrepreneurs are often
portrayed as heroic yet maverick individuals, single-handedly and relentlessly
pursuing opportunity and enjoying exotic lifestyles as a result. On the other hand,
when businesses close, with people losing their jobs and wicked activities being
revealed, some of the same entrepreneurs are then admonished as villains. So
entrepreneurs can be heroes and villains, sometimes both at the same time
depending on your point of view.

Entrepreneurship
Entrepreneurship is about what entrepreneurs do. ‘Entrepreneur’ is a French word,
referring to a person who is active and achieves something. At the beginning of
the 17th century, an entrepreneur in France was viewed as a person who takes risks,
but not all people who undertook risks were considered entrepreneurs. During the
18th century, a person who was contracted to perform a certain large task,
generally for the state, for a fixed price was regarded as an entrepreneur. Today,
there continues to be no agreed definition of entrepreneurs and entrepreneurship.
The Organization for Economic Co-operation and Development (OECD) adopts a
broad definition where entrepreneurship appears in

• • both some small and large firms,

• • some new firms and established family firms,
• • private firms focusing on profit,
• • social enterprises seeking to generate broader social and environmental
benefits,
• • the formal and informal economy,
• • legal and illegal activities,
• • innovative and more conventional concerns, and
• • all regions and economic sub-sectors.

• Types of Entrepreneurship
• 1. Small and Medium Enterprise (SME) Entrepreneurship

Small and medium enterprise entrepreneurship (SME) is the type of

business that is likely started by one person to serve a local market. It
is most often closely held, likely a family business, where close control
of a small business is important. These businesses generally do not
need to raise as much money, so when money is injected into these
businesses, the resultant increase in revenue and jobs created is
relatively rapid. Such enterprises can be geographically dispersed and
the jobs they create are for the most part “non-tradable” in that they
cannot be outsourced to someplace else to reduce costs. Frequently
these businesses are service businesses or retailers of other
companies’ products. The key distinguishing factor is their focus on
local markets.

2. Innovation-Driven Enterprise (IDE) Entrepreneurship

Innovation-driven enterprise (IDE) entrepreneurship is the more risky

and more ambitious. IDE entrepreneurs are aspiring to serve markets
that go well beyond the local market. They are looking to sell their
offering at a global or at least at a regional level. These entrepreneurs
usually work in teams where they build their business of some
technology, process, business model, or other innovation that will give
them a significant competitive advantage as compared to existing
companies. They are interested in creating wealth more than they are
interested in control, and they often have to sell equity in their
company to support their ambitious growth plans.

While they are often slower to start, IDE entrepreneurs tend to have
 more impressive exponential growth when they do get customer
traction. Growth is what they seek, at the risk of losing control of their
company and having multiple owners. While SME companies tend to
grow up and stay relatively small (but not always), IDE companies are
more interested in “going big or going home.” To achieve their
ambitions, they have to become big and fast-growing to serve global
markets.

A healthy economy consists of both types of entrepreneurship and

both have their strengths and weaknesses. Neither is better than the
other. But they are substantively different enough that they require
different mindsets and different sets of skills to be successful.
• The focus of this course is IDE Entrepreneurship or simply
Technopreneurship.

Factors Affecting the Entrepreneurial

Process

The entrepreneurial process includes all the functions, activities, and actions that
are part of perceiving opportunities and creating organizations to pursue them.

There is almost always a triggering event that gives birth to a new organization.
Perhaps an entrepreneur has no better career prospects. Or sometimes the person
has been passed over for a promotion or even laid off or fired. For some people,
entrepreneurship is a deliberate career choice. Like most human behavior,
entrepreneurial traits are shaped by personal attributes and environment. There is
no neat set of behavioral attributes that allows us to separate entrepreneurs from
non-entrepreneurs. A person who rises to the top of any occupation, whether an
entrepreneur or an administrator, is an achiever. Granted, any would-be
entrepreneur must have a need to achieve, but so must anyone else with ambitions
to be successful.
Personal Attributes
It does appear that entrepreneurs have a higher internal locus of control than non-
entrepreneurs, which means that they have a stronger desire to be in control of
their own fate. This has been confirmed by many surveys in which entrepreneurs
said independence was a very important reason for starting their businesses. The
main reasons they gave were independence, financial success, self-realization,
recognition, innovation, and roles (to continue a family tradition, to follow the
example of an admired person, to be respected by friends). Men rated financial
success and innovation higher than women did. Interestingly, the reasons that
nascent entrepreneurs gave for starting a business were similar to the reasons
given by non-entrepreneurs for choosing jobs. The most important characteristics
of successful entrepreneurs are summarized below:

A vision of what the future could be like and the ability to

Dream
implement their dreams.
Decisiveness Ability to make decisions swiftly
Doers Implement a course of action as quickly as possible.
Implement ventures with total commitment even if confronted by
Determination
obstacles that seem insurmountable.
Dedicated to their businesses, sometimes at considerable cost to
Dedication
their relationships with friends and families.
Love what they do and the love of their product or service makes
Devotion
them so effective at selling it.
Details Always on top of the critical details.
Want to be in charge of their own destiny rather than dependent on
Destiny
an employer.
Getting rich is not the prime motivator but assume that if they are
Dollars
successful they will be rewarded.
Distribute the ownership of their businesses with key employees
Distribute
who are critical to the success of the business.
Environmental and Sociological Factors

Perhaps as important as personal attributes are the external influences on a would-

be entrepreneur. It’s no accident that some parts of the world are more
entrepreneurial than others. The most famous region of high-tech
entrepreneurship is Silicon Valley. Because everyone in Silicon Valley knows
someone who has made it big as an entrepreneur, role models abound or the so-
called ‘‘Silicon Valley fever’’ [Everett Rogers]. It seems as if everyone in the valley
catches that bug sooner or later and wants to start a business. To facilitate the
process, there are venture capitalists who understand how to select and nurture
high-tech entrepreneurs, bankers who specialize in lending to them, lawyers who
understand the importance of intellectual property and how to protect it, landlords
who are experienced in renting real estate to fledgling companies, suppliers who
are willing to sell goods on credit to companies with no credit history, and even
politicians who are supportive.

Knowing successful entrepreneurs at work or in your personal life makes becoming

one yourself seem much more achievable. Indeed, if a close relative is an
entrepreneur, you are more likely to want to become an entrepreneur yourself,
especially if that relative is your mother or father.

Another factor that determines the age at which entrepreneurs start businesses is
the trade-off between the experience that comes with age and the optimism and
energy of youth. As you grow older you gain experience, but sometimes when you
have been in an industry a long time, you know so many pitfalls that you are
pessimistic about the chance of succeeding if you decide to go out on your own.
Someone who has just enough experience to feel confident as a manager is more
likely

to feel optimistic about an entrepreneurial career. Perhaps the ideal combination

is a beginner’s mind with the experience of an industry veteran. A beginner’s mind
looks at situations from a new perspective, with a can-do spirit.
Traits of a Successful Entrepreneur
Timmons and Spinelli indicated that the successful entrepreneur needs to have
both creative aptitude and management skills. The figure below depicts the four
categories of business people on these two scales: entrepreneur, inventor,
manager/administrator, and promoter. Many graduate students with science and
engineering backgrounds may be eligible to be inventors, while graduate students
from management and administration departments may become managers or
administrators. However, note that in order to become entrepreneurs or start their
own companies, engineers should improve their management skills.

Rosabeth Kanter prescribed nine (9) Fs for entrepreneurial success

Founders Every startup company must have a first-class entrepreneur.

Focused Entrepreneurial companies specialize and focus on niche markets.
Fast Make decisions quickly and implement them swiftly.
Flexible Keep an open mind and respond to change.
Forever-
Tireless innovators.
innovating
 Entrepreneurial organizations have as few layers of management
Flat
as possible.
By keeping overhead low and productivity high, entrepreneurial
Frugal
companies keep costs down.
Entrepreneurial companies are friendly to their customers,
Friendly
suppliers, and employees.
Fun Associating with an entrepreneurial company is fun
First and foremost, the founding entrepreneur is the most important factor. Next
comes the market. This is the ‘‘era of the other,’’ in which the fastest-growing
companies in an industry will be in a segment labeled ‘‘others’’ in a market-share
pie chart. By and large, they will be newer entrepreneurial firms rather than large
firms with household names; hence, specialization is the key. A successful business
should focus on niche markets.

The rate of change in business gets ever faster. The advanced industrial economies
are knowledge based. Product life cycles are getting shorter. Technological
innovation progresses at a relentless pace. Government rules and regulations keep
changing. Communications and travel around the globe keep getting easier and
cheaper. And consumers are better informed about their choices. To survive, let
alone succeed, a company has to be quick and nimble. It must be fast and flexible.
It cannot allow inertia to build up. Keep your organization flat. It will facilitate quick
decisions and flexibility and will keep overhead low.

But no matter what you do, you probably won’t be able to attain much success
unless you have happy customers, happy workers, and happy suppliers. That means
you must have a friendly company. It means that everyone must be friendly,
especially anyone who deals with customers. Having fun is one of the keys to
keeping a company entrepreneurial.

Most new companies have the Nine Fs at the outset. Those that become successful
and grow pay attention to keeping them and nurturing them. The key to sustaining
success is to remain an entrepreneurial gazelle and never turn into a lumbering
elephant and finally a dinosaur, doomed to extinction.
New Product Introduction Models
There are two approaches businesses use to bring new products to market. The
NPI model is focused on the internal development and launch of a new product,
while the Customer Development model is focused on external validation of the
product with customers and market research before the product is fully developed.

1. Traditional Model
The traditional new-product introduction model outlined in Figure 1 illustrates the
process of getting a new product into the hands of waiting customers. A new
product moves from development to customer testing, and using feedback from
this initial testing, the product engineers fix technical errors until the product
launch date and first customer ship. This new-product introduction model is a
good fit for an existing company where the customers are known, the product
features can be specified upfront, the market is well-defined, and the basis of
competition is understood.

Figure 1 New Product Introduction Diagram

1.1 Concept and Seed

At the concept and seed stage, founders capture their passion and vision for the
company and turn them into a set of key ideas, which becomes the outline for the
business plan. Issues surrounding the product are defined:
•

• What is the product or service concept?

• What are the product features and benefits?
• Can it be built?
• Is further technical research needed?
• Who will the customers be, and
• Where will they be found?

The seed phase targets in convincing an investor to fund the company or the
new product.

• 1.2 Product Development

• Product development focuses on specifying and then building the product.
It typically expands into a “waterfall” or “spiral” or incremental process of
interlacing steps, all focused on minimizing development risk of a defined
feature set (Figure 1.2). This process starts with the founder’s vision, which
may be expanded into a product requirements, and expands further into
detailed engineering specifications.
Figure 1.2 The Product Development Waterfall Model

1.3 Product Testing

Product testing stage continues build the product along the classic waterfall
development model, working toward the first customer ship date. And, by beta test
time, working with a small group of outside users to test the product and ensure
that it works as specified.

1.4 Product Launch and First Customer Ship

In this stage, the product and the company are launched. The company holds
press event, and launches a series of programs to create end-user demand.
The board begins measuring the company’s performance based on sales
execution against its business plan.

This operational model no doubt sounds familiar to many: a product and

process-centric model used by countless startups to take their first products
to market.

2. Customer Development Model

In the Customer Development model, each step is represented as a circular
track with recursive arrows in order to highlight that each step is iterative.
Startups will cycle through each step of the process until they achieve “escape
velocity”—enough measurable progress in finding the business model as
defined by board and team—to propel forward to the next step. The model
assumes it will take several iterations of each of the four steps to get it right.
The figure below breaks out all the customer-related activities of an early-
stage company into four easy-to-understand steps. The first two steps of the
process outline the “search” for the business model. Steps three and four
“execute” the business model that’s been developed, tested, and proven in
steps one and two.

Note that each of the four steps has a stop sign at its exit. That’s simply
a reminder to think through whether enough has been learned to charge
ahead to the next step. It’s a place to stop and summarize all the learning and,
of course, to candidly assess whether the company has reached “escape
velocity.”

2.1 Customer Discovery

Customer discovery translates a founder’s vision for the company into
hypotheses about each component of the business model and creates a set of
experiments to test each hypothesis. In Customer Development, the
importance of getting out of the building and into conversations with
customers is the most critical.

Customer discovery includes two outside-the-building phases.

2.1.1 Test customer perception of the problem and the customer’s need
to solve it. Is it important that the right product will drive significant numbers
of customers to buy or engage in.
 2.1.2 Show customers the product for the first time, assuring that the
product elegantly solves the problem or fills the need well enough to
persuade lots of customers to buy.

Pivots may happen in the customer discovery phase. Failure may happen and
It is a normal part of the startup process. Pivots are responses to these
mistakes and is a major change to the business model hypotheses based from
customer feedback. A pivot is not a failure.

2.2 Customer Validation

Customer validation proves that the business tested and iterated in customer
discovery has a repeatable, scalable business model that can deliver the
volume of customers required to build a profitable company. During
validation, the company tests its ability to scale against a larger number of
customers with another round of tests, that are larger in scale and more
rigorous and quantitative.

2.3 Customer Creation

Customer creation builds on the company’s initial sales success. It’s where the
company, spends large sums to scale by creating end-user demand and
driving it into the sales channel.

Customer creation varies by startup type. Some startups enter existing

markets well-defined by their competitors, others create new markets where
no product or company exists, and still others attempt hybrid by re-
segmenting an existing market as a low-cost entrant or by creating a niche.
Each market-type strategy demands different customer creation activities
and costs.

2.4 Company Building

“Graduation day” arrives when the startup finds a scalable, repeatable
business model. At this point it’s fundamentally no longer the temporary
search-oriented organization known as a startup—it’s a company! In a
sometimes-bittersweet transition out of startup mode, company-building
refocuses the team’s energy away from “search” mode and focus on
“execution”.
The customer development model is considered better than the new product
introduction model because it allows businesses to validate their product or
service with customers before investing significant resources into
development. This approach reduces the risk of launching a product that
doesn't meet the needs of the target market, and increases the chances of
creating a profitable business opportunity. The customer development model
is more focused on external validation while NPI model is more focused on
internal product development.

What is Innovation?

If there is commercialization but no invention (invention = 0), or invention

but no commercialization (commercialization = 0), then there is no
innovation.

The invention (an idea, a technology, or some sort of intellectual property) is

important, but the entrepreneur does not need to create the invention. In fact, the
inventions that lead to innovation-driven companies often come from elsewhere.
Such was the case with Steve Jobs, who identified others’ inventions (the computer
mouse created by Xerox PARC is the most famous example) and commercialized
them effectively through Apple. Likewise at Google, which has made most of its
money through AdWords, text-based, keyword-driven advertisements on their
search results pages.These examples show that the capability to commercialize an
invention is necessary for real innovation. An entrepreneur, then, serves primarily
as the commercialization agent. Innovation is not only limited to technology and
can come in many varieties including technology, process, business model,
positioning, and more.
As technology becomes more and more commoditized, more business model
innovations that leverage technology has emerged. There will still be many
opportunities for technology-driven innovation in areas like energy storage, power
electronics, wireless communications, and much more, but this is not the sole
definition of innovation.

How could students create innovation?

Students, young innovators, are a great source of innovation because they often
have a unique perspective, are not constrained by legacy thinking, and are open to
new and unconventional ideas.

They also have the latest knowledge in their field and the energy, curiosity, and
willingness to take risks to bring their ideas to life. They can also become valuable
addition to companies and startups as they bring not just new ideas but also
enthusiasm, energy, and education.

There are several ways that students can create innovation:

Problem-solving: Identify a problem or need in their community or industry

and develop a solution.

Entrepreneurship: Start a business or become involved in a startup, and work

to develop and launch new products or services.

Research: Conduct research on emerging technologies or industries, and use

that knowledge to identify new opportunities for innovation.

Collaboration: Work with other students, professors, or industry

professionals to share ideas and combine skills to generate new innovations.

Incubators and Accelerators: join a university or local startup incubator or

accelerator program, they often provide mentorship, resources, and funding
for student entrepreneurs
Innovation challenges: Participate in innovation challenges or competitions,
which can provide opportunities to work on real-world problems and connect
with industry leaders.

It's important to keep in mind that innovation takes persistence, creativity

and hard work, students should also be prepared to learn from failures and
to be flexible with their ideas.