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Chapter Two
The Entrepreneurial Mind: Crafting a Personal Entrepreneurial Strategy
Results Expected
Upon completion of this chapter you will be able to:
1.Determine whether being an entrepreneur would enhance your life and feed your creative energies.
2.Discuss the critical aspects of the entrepreneurial mind—the strategies, habits, attitudes, and behaviors that work for entrepreneurs who build higher-potential ventures.
3.Describe the characteristics of various entrepreneurial groups.
4.Develop concepts for evaluating a personal entrepreneurial strategy, an apprenticeship, and be able to discuss the entrepreneur’s creed.
5.Utilize a framework for self-assessment, and develop a personal entrepreneurial strategy.
6.Initiate a self-assessment and goal-setting process that can become a lifelong habit of entrepreneurial thinking and action.
7. Assess the Lakota Hills case study.
8.Describe the entrepreneurial aspects depicted in the firm October Sky.
Teaching Pedagogies
There are four pedagogical options in the chapter to consider when conducting class sessions. The IM is organized to enable you to create the unique format and blend of teaching formats you prefer. The four pedagogies are:
1.Lecture or mini-lecture
2. Traditional case study
3.Use of exercises or role plays
4. Combination of the above.
Sample syllabi available on the McGraw Hill Higher Education Website for this textbook at: , also illustrate how instructors have blended the pedagogies.
Lecture Outline
I. Entrepreneurs Are LeadersA. The old notion of separate entrepreneurs and managers has given way to the view of an entrepreneurial leader with diverse skills and resources.
II. Three Principles for Entrepreneurial Leadership
A.Ewing Marion Kauffman founded and built Marion Labs.
1.He started his pharmaceutical company in 1950 with $5,000.
2. When the company was acquired by Merrell Dow in 1989, more than 300 people became millionaires.
3.Kauffman founded the Ewing Marion Kauffman Foundation, whose mission is:
a. To make a lasting difference in helping youths at risk.
b. To encourage leadership in all areas of American life.
B.The cornerstone of the values, philosophy, and culture of Marion Labs and now the Kauffman Foundation are:
1.Treat others as you would want to be treated.
2. Share the wealth that is created with all those who have contributed to it at all levels.
3.Give back to the community.
C. Few organizations truly and consistently practice these principles.
D.Great companies can be built upon simple but elegant principles; and all the capital, technology, and information cannot substitute for these principles. / PP2-2 “AchievingEntrepreneurial Greatness” repeats the three core principles of entrepreneurship.
III. Timeless Research
A.A single psychological model of entrepreneurship has not been supported by research.
1.However, it is accepted that eventual success of a new venture will depend on the talent and behavior of the lead entrepreneur.
2. Myths persist about entrepreneurs; one is the belief that leaders are born, not made.
3.Recent research suggests that leadership is complex, depending on the interconnections among the leader, the task, the situation, and those being led.
B.Research by David C. McClelland and John W. Atkinson.
1.Their theory of psychological motivation is a generally accepted part of entrepreneurial behavior.
2. The theory states that people are motivated by three principal needs:
a. The need for achievement is the need to excel and for measurable personal accomplishment.
b. The need for power is the need to influence others.
c. The need for affiliation is the need to attain an “affiliation goal.”
C.Other research focused on the common attitudes and behaviors of entrepreneurs.
1.A 1983 study found a relationship between attitudes and behaviors of successful entrepreneurs and various stages of company development.
2. Another study found that entrepreneurs were unique individuals.
3.Also, those who like to plan are much more likely to be in the survival group than those who do not.
D.The 1983 research by Howard H. Stevenson and Jeffry Timmons found:
1.Entrepreneurs felt they had to concentrate on certain fundamentals.
2. They had a willingness to learn about and invest in new technologies, to be adaptable, to have a professional attitude, and to have patience.
3.They also talked about the importance of “enjoying and being interested in business.”
4. Many recognized the importance of human resource management.
5.Other entrepreneurs focused on the importance of building an organization and teamwork.
6.Many believed that the ability to do strategic planning would be of growing importance.
7.Also cited was the importance of sensitivity to and respect for employees. The example of Stonyfield Farms is cited as an example of an impassioned work environment.
E. A study by McKinsey & Co. of medium-size growth companies found that the chief executive officers of winning companies had three common traits:
1.Perseverance.
2. A builder’s mentality.
3.A strong propensity for taking calculated risks. / PP2-3 “Leadership and Human Behavior”reviews the current research on entrepreneurship based on traits.
Text Exhibit 2.1
“Comparing Management and Leadership” summarizes the differences between leaders and managers.
Also: PP 2-4
Text Exhibit 2.2
“Characteristics of Entrepreneurs” shows the unique characteristics of entrepreneurs.
Also: PP 2-5
IV. Converging on the Entrepreneurial Mind.
A.Desirable and Acquirable Attitudes, Habits, and Behaviors.
1.Entrepreneurial success involves more than personality; it is what entrepreneurs do.
a. There are certain inborn characteristics that entrepreneurs have, but these don’t guarantee success.
b. Certain attitudes and behaviors can be acquired and refined through experience and study.
2. Entrepreneurs are able to significantly improve their odds of success by concentrating on those attitudes and behaviors that work.
3.Most successful entrepreneurs listed three attributes as the principal reasons for their success:
a. The ability to respond positively to challenges and learn from mistakes.
b. Personal initiative.
c. Great perseverance and determination.
4. The text profiles numerous members of the Academy of Distinguished Entrepreneurs.
5.There is no single set of attitudes and behaviors that every entrepreneur must have, but there are six common themes.
B.New Research.
1. The Praeger Perspectives series (2007) explores the entrepreneur from three angles
a. People
b. Processes
c. Places
2. Work by Kwiatkowski and Sharif provides insight into the entrepreneurial mindset involved in creating new intellectual property and knowledge creation ventures.
C. Seven Dominant Themes.
1.Commitment and determination are seen as more important that any other factor.
a. Frank P. Perdue, president of Perdue Farms, said, “Nothing, absolutely nothing, replaces the willingness to work.”
b. A new venture demands top priority for the entrepreneur’s time, emotions, and loyalty, and usually requires personal sacrifice.
c. Entrepreneurs are intensely competitive—they direct this energy toward the goal and their competitors, not their peers.
d. Entrepreneurs are disciplined, tenacious, and persistent in solving problems.
e. However, they are neither aimless nor foolhardy.
f. They are also realistic in recognizing what they can and cannot do.
2. Courage.
a. Not simply bravery resulting from deficient information about a given situation nor pluck anchored in feelings of invulnerability
b. Three important aspects of courage:
1. moral strength and principles.
2. being a fearless experimenter.
3. a lack of fear of failing at the experiment – and most undertakings – and a lack of fear of conflict that may arise.
3. Leadership.
a. Successful entrepreneurs are experienced, possessing:
•intimate knowledge of the technology and marketplace in which they compete.
•sound general management skills.
•a proven track record.
b. They are self-starters and have an internal locus of control.
c. They are patient leaders.
d. Dr. Alan Grant’s research found three clear areas of the entrepreneurial leadership paradigm:
•the lead entrepreneur.
•the venture team.
•the external environment influences.
e. Grant’s work is supported by a later study by Nigel Nicholson in his 1998 European Management Journal article, reporting on the personality and entrepreneurial leadership of the heads of the U.K.’s most successful independent companies.
f. Successful entrepreneurs are interpersonally supporting and nurturing—not interpersonally competitive.
g. Successful entrepreneurs are not lone wolves, and do not need to collect all the credit.
h. They have the ability to make heroes out of the people in the venture.
4.Opportunity Obsession.
a. Successful entrepreneurs are oriented to the goal of pursuing and opportunity.
b. They are intimately familiar with their industries, customers, and competition. (The industry examples of Staples and Jet Blue are given to support the opportunity obsession).
5. Tolerance of Risk, Ambiguity, and Uncertainty.
a. Successful entrepreneurs manage paradoxes and contradictions.
b. They are willing to take a risk; however they calculate the risk carefully and try to improve their odds.
c. Entrepreneurs get others to share financial and business risks with them.
d. John B. Miner proposed a concept of motivation-organizational fit, contrasting a hierarchic (managerial) role with a task (entrepreneurial) role. Roles include:
1. Individual achievement.
2. Risk avoidance.
3. Seeking results of behavior.
4. Personal innovation.
5. Planning and setting goals.
e. Entrepreneurs also tolerate ambiguity and uncertainty and are comfortable with conflict.
f. Constant changes introduce ambiguity and stress into every part of the enterprise.
6.Creativity, Self-Reliance, and Ability to Adapt.
a. Very rapid rates of change require fluid and highly adaptive forms of organization.
b. Successful entrepreneurs believe in themselves.
c. They believe their accomplishments lie within their own control.
d. They have the ability to see and “sweat the details” and also to conceptualize.
e. Effective entrepreneurs actively seek and take initiative.
f. They are adaptive and resilient.
g. They seek and use feedback and learn from their mistakes.
h. Successful entrepreneurs learn from failure experiences.
7.Motivation to Excel.
a. Entrepreneurs appear driven internally by a strong desire to compete and to pursue challenging goals.
b. Entrepreneurs have a low need for status and power and derive personal motivation from the challenge of creating enterprises.
c. If they are successful, ironically, power and status will result.
d. Possessing an objective way of keeping score, such as profits or stock price, is also important.
e. Successful entrepreneurs insist on the highest personal standards of integrity and reliability.
f. One study found that entrepreneurs said personal integrity was the most important factor in their long-term success.
g. The best entrepreneurs are aware of their own strengths and weaknesses.
h. Successful entrepreneurs believe in themselves.
i. Other important traits are perspective and a sense of humor. / Results Expected #2
Discuss the critical aspects of the entrepreneurial mind—the strategies, habits, attitudes, and behaviors that work for entrepreneurs who build higher-potential ventures.
PP2-6 “Converging on the Entrepreneurial Mind” profiles the six dominant themes of the entrepreneurial mind
Text Exhibit 2.3
“Seven Themes of Desirable and Acquirable Attitudes and Behaviors” summarizes key desirable attitudes based on seven themes.
Also: PP 2-7
Text Exhibit 2.4
“Core and Desirable Entrepreneurial Attributes” presents the six core desirable attributes in graphic form.
Also: PP 2-8
PP 2-9 “Three Important Aspects of Courage” highlights the construct of courage.
Text Exhibit 2.5 “Online Search for Desirable Attributes of Entrepreneurship” details the number of internet “hit” on key themes of entrepreneurship
Also: PP 2-10
Text Exhibit 2.6
“The Entrepreneurial Leadership Paradigm” summarizes the three areas of leadership developed by Dr. Alan Grant.
Also: PP 2-11
Results Expected #1
Determine whether being an entrepreneur would enhance your life and feed your creative energies.
Text Exhibit 2.7
“Opportunity Knocks-Or Does it Hide? An Examination of the Role of Opportunity Recognition in Entrepreneurship” shows the number and proportion of opportunities at various sources and types for entrepreneurs and non entrepreneurs.
Also: PP 2-12
V. Entrepreneurial Reasoning: The Entrepreneurial Mind in Action.
A.Successful entrepreneurs have useful benchmarks for gauging what to do.
1.But, there is no evidence of an ideal entrepreneurial personality.
2. However, successful entrepreneurs share common attitudes and traits.
B.Successful entrepreneurs possess not only a creative and innovative flair, but also solid management skills, business know-how, and sufficient contacts. / PP2-13 “The Entrepreneurial Mind in Action” summarizes the current thinking on personality types vs. acquired skills for entrepreneurs.
Results Expected #3
Describe the characteristics of various entrepreneurial groups.
Text Exhibit 2.8 “Who is the Entrepreneur?” presents a 2x2 matrix of the entrepreneur passed on creativity and innovation and general management skills.
Also: PP 2-14
VI. The Concept of Apprenticeship.
A.Shaping and Managing an Apprenticeship.
1.Successful entrepreneurs share a pattern of experience:
a. They have acquired 10 or more years of substantial experience and established a track record in the industry.
b. They have acquired intimate knowledge of the customer, distribution channels, and market through direct experience.
c. They made money for their employer before doing it for themselves.
2. Examples include:
a. Apple Computer founders Steve Jobs and Steve Wozniak.
b. Paul Tobin of Cellular One.
3.Successful entrepreneurs are likely to be older and to have at least 8 to 10 years of experience.
4. They have a track record impressive enough to give investors confidence.
5.They usually have nurtured relevant business contacts and networks.
6.In the first 10 or so years after leaving school it is crucial to select a career to prepare for an entrepreneurial career.
7.Having relevant experience and skills can dramatically improve the odds for success.
8.The concept of an apprentice is useful—entrepreneurs learn by doing.
B.Windows of Apprenticeship.
1.Age windows are especially important because it takes time to create and build a successful activity.
2. Seven years is a realistic time frame to expect to grow a higher potential firm.
3.There are several implications:
a. Time is precious.
b. By age 50, there will have been time for starting, at most, three successful new ventures.
c. The first venture may be a failure.
d. This leaves time to grow only one or two ventures.
4. A paradox: energy and drive peak early, while wisdom and judgment peak late.
5.Flexibility to shift among business opportunities is also required.
C. The Concept of Apprenticeship: Acquiring the 50,000 Chunks
1.Studies about entrepreneurs have confirmed what practitioners have known all along: that some attitudes, behaviors, and know-how can be acquired and that some of these attributes are more desirable than others. It is also clear that apprenticeship is a vital aspect of entrepreneurial education.
2. Successful entrepreneurs follow a pattern of apprenticeship, where they prepare for becoming entrepreneurs by gaining the relevant business experiences from parents who are self-employed or through job experiences.
D. Role Models
1.Numerous studies show a strong connection between the presence of role models and the emergence of entrepreneurs. / Results Expected #4
Develop concepts for evaluating a personal entrepreneurial strategy, an apprenticeship, and be able to discuss the entrepreneur’s creed.
PP2-15 “The Concept of Apprenticeship” outlines key points in this section.
Text Exhibit 2.9
“Windows of Entrepreneurial Apprenticeship” summarizes the key elements of an apprenticeship and experience curve.
Also: PP 2-16
- Myths and Realities
B. Studies indicate 90 percent or more of founders start their companies in the same marketplace, technology or industry they have worked in.
C. It has been found that entrepreneurs work both more and less than their counterparts in large organizations, that they have high degrees of satisfaction with their jobs, and that they are healthier. / Text Exhibit 2.10
“Myths and Realities About Entrepreneurs” reviews 17 popular myths often attributed to entrepreneurs along with the reality to refute these erroneous myths.
Also: PP 2-17; 2-18; and 2-19
- What Can Be Learned?
1. This book will help you move the odds of success in your favor.
2.It will focus your attention on developing answers for the most important questions about entrepreneurship.
- A Word of Caution: What SATs, IQ Tests, GMATs, and Others Don’t Measure
B. Intelligence is a very valuable and important asset for entrepreneurs, but alone is woefully inadequate. / PP2-20 “A Word of Caution” reviews the entrepreneurial skills needed beyond the test scores.
X. A Personal Strategy.
A.An apprenticeship can be an integral part of shaping an entrepreneurial career.
B. Through this, an entrepreneur can shape a strategy and action plan.
C.Most entrepreneurs report higher personal satisfaction with their lives than their managerial counterparts.
D. Satisfaction from independence is a source of great satisfaction.
E.Successful entrepreneurs enjoy higher incomes and a higher net worth than career managers. / PP2-21 “Exercises” summarizes the two end of chapter exercises
Exhibit2-22 “Crafting a Personal EntrepreneurialStrategy”
Text Exhibit 2.11
“Peeling the Onion” explores areas known and not known to investors and stakeholders and the entrepreneur and the team
Also: PP 2-23
Text Exhibit 2.12 “Fit of the Entrepreneur and the Venture Opportunity” is a 2x2 matrix examining the attractiveness of the opportunity compared to the entrepreneur’s requisite skills
Also: PP 2-24
XI. Entrepreneur’s Creed.
A.Entrepreneurs believe that they are responsible for success.
B.Most entrepreneurs believe mental attitudes and philosophies are more important than specific skills.
C. These attitudes are gathered in the “entrepreneur’s creed.” / Results Expected #5
Utilize a framework for self-assessment, and develop a personal entrepreneurial strategy.
Results Expected #6
Initiate a self-assessment and goal-setting process that can become a lifelong habit of entrepreneurial thinking and action.
XII. Chapter Summary.
XIII. Study Questions.
XIV. Internet Sources for Chapter 2.
XV. Mind Stretchers.
XVI. Exercises
A.Crafting a Personal Entrepreneurial Strategy.
B.Personal Entrepreneurial Strategy. / PP2-25 to 2-35“Personal Entrepreneurial Strategy” summarizes the process of Crafting the personal entrepreneurial strategy and review reasons for planning, self-assessment, constructive feedback, and effective goal setting.
XVII. Case: Lakota Hills / Learning Objective #7: Assess the Lakota Hills case study.
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