Entrepreneurs versus Intrapreneurs

Entrepreneurs versus Intrapreneurs

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Description: Entrepreneurs are people that notice opportunities and take the initiative to mobilize resources to make new goods and services. Intrapreneurs also notice opportunities and take initiative to mobilize resources, however they work in large companies and contribute to the innovation of the firm. Intrapreneurship: Learning organizations encourage intrapreneurship.

Organizations want to form- Product Champions: people who take ownership of a product from concept to market, Skunkworks: a group of intrapreneurs kept separate from the rest of the organization, New Venture Division: allows a division to act as its own smaller company, Rewards for Innovation: link innovation by workers to valued rewards.

 
Author: Mark English, Mark Wetzel, Beth Knott, Dustin Branham (Senior) | Visits: 580 | Page Views: 837
Domain:  Business Category: Entrepreneurial 
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Contents:
Entrepreneurship

Mark English
Mark Wetzel
Beth Knott
Dustin Branham

Overview






What is an entrepreneur?
Characteristics of an entrepreneur
Planning to be an entrepreneur
Growth pressures, managing a family
business, and corporate
intrapreneurship

Entrepreneurs V.
Intrapreneurs






Entrepreneurs are people that notice
opportunities and take the initiative to
mobilize resources to make new goods and
services.
Intrapreneurs also notice opportunities and
take initiative to mobilize resources, however
they work in large companies and contribute
to the innovation of the firm.
Intrapreneurs often become entrepreneurs.

Intrapreneurship



Learning organizations encourage intrapreneurship.
Organizations want to form:








Product Champions: people who take ownership of a
product from concept to market.
Skunkworks: a group of intrapreneurs kept separate from
the rest of the organization.
New Venture Division: allows a division to act as its own
smaller company.
Rewards for Innovation: link innovation by workers to
valued rewards.

Small Business Owners






Small business owners are people who
own a major equity stake in a company
with fewer than 500 employees.
In 1997 there were 22.56 million small
business in the United States.
47% of people are employed by a small
business.

Employee Satisfaction






In companies with less than 50 employees,
44% were satisfied.
In companies with 50-999 employees, 31%
are satisfied.
Business with more than 1000, only 28% are
satisfied.

Employee Satisfaction
Satisfaction Percentage

Employee Satisfaction
50

44

40
31
30

28

less than
50
50-999

20
1000+

10
0
less than 50

50-999

Number of Employees

1000+

Advantages of a Small
Business






Greater Opportunity
to get rich through
stock options
Feel more important
Feel more secure
Comfort Level

Disadvantages of a Small
Business








Lower guaranteed pay
Fewer benefits
Expected to have many skills
Too much cohesion
Hard to move to a big company
Large fluctuations in income possible

Who are entrepreneurs?


Common traits









Original thinkers
Risk takers
Take responsibility
for own actions
Feel competent and
capable
Set high goals and
enjoy working
toward them



Common traits





Self employed parents
Firstborns
Between 30-50 years old
Well educated – 80%
have college degree and
1/3 have a graduate level
degree

Successful and Unsuccessful
Entrepreneurs


Successful









Creative and
Innovative
Position themselves
in shifting or new
markets
Create new products
Create new
processes
Create new delivery



Unsuccessful







Poor Managers
Low work ethic
Inefficient
Failure to plan and
prepare
Poor money
managers

Characteristics of
Entrepreneurs
Key Personal
Attributes
Strong Managerial
Competencies
Good Technical Skills

Successful
Entrepreneurs

Key Personal Attributes


Entrepreneurs are Made, Not Born!






Many of these key attributes are developed early
in life, with the family environment playing an
important role
Entrepreneurs tend to have had self employed
parents who tend to support and encourage
independence, achievement, and responsibility
Firstborns tend to have more entrepreneurial
attributes because they receive more attention,
have to forge their own way, thus creating higher
self-confidence

Key Personal Attributes (cont.)


Entrepreneurial Careers






The idea that entrepreneurial success leads to
more entrepreneurial activity may explain why
many entrepreneurs start multiple companies over
the course of their career
Corridor Principle- Using one business to start or
acquire others and then repeating the process
Serial Entrepreneurs- A person who founds and
operates multiple companies during one career

Key Personal Attributes (cont.)


Need for Achievement








A person’s desire either for excellence or to
succeed in competitive situations
High achievers take responsibility for attaining
their goals, set moderately difficult goals, and
want immediate feedback on their performance
Success is measured in terms of what those
efforts have accomplished
McClelland’s research

Key Personal Attributes (cont.)


Desire for Independence






Entrepreneurs often seek independence from
others
As a result, they generally aren’t motivated to
perform well in large, bureaucratic organizations
Entrepreneurs have internal drive, are confident in
their own abilities, and possess a great deal of
self-respect

Key Personal Attributes (cont.)


Self-Confidence






Because of the high risks involved in running an
entrepreneurial organization, having an “upbeat”
and self-confident attitude is essential
A successful track record leads to improved selfconfidence and self-esteem
Self-confidence enables that person to be
optimistic in representing the firm to employees
and customers alike

Key Personal Attributes (cont.)


Self-Sacrifice




Essential
Nothing worth having is free
Success has a high price, and entrepreneurs have
to be willing to sacrifice certain things

Technical Proficiency







Many entrepreneurs demonstrate strong technical
skills, typically bringing some related experience to
their business ventures
For example, successful car dealers usually have lots
of technical knowledge about selling and servicing
automobiles before opening their dealerships
Especially important in the computer industry
NOT ALWAYS NECESSARY

Planning


Business Plan – A step-by-step outline
of how an entrepreneur or the owner of
an enterprise expects to turn ideas into
reality.

Questions To Keep In Mind


What are my motivations for owning a business?



Should I start or buy a business?



What and where is the market for what I want to
sell?



How much will all this cost me?



Should my company be domestic or global?

Motivations



1.
2.
3.

Deciding what your motivations are
will direct you toward what type of
business fits you best.
Types:
Lifestyle Venture
Smaller Profit Venture
High Growth Venture

1. Lifestyle Venture







Small company that provides its owner
independence, autonomy, and control.
Is often run out of household
Provides flexibility (hours, meeting
places, attire)
Aligns your personal interests and
hobbies with your desire to make a
profit.

2. Smaller Profit Venture






Small company not concentrated on
pushing the envelope and growing
inordinately large.
Making millions of dollars not important.
Content with making a decent living.
Ex. Mom and Pop Stores

3. High Growth Ventures





Goal is maximum profit and growth.
Concentrated on pushing envelope and
growing as large as possible.
Focus on innovation

Start or Buy?






Start – cheapest, but very difficult
-requires most planning/research
Buy – expensive – may be out or reach
-requires less planning and research
Franchise (middle ground) – a business
run by an individual (the franchisee) to
whom a franchiser grants the right to
market a certain good or service.

The Market???





Planning & Research essential
Extensive market surveys (family,
friends, neighbors…)
Magazines and Polls offer some
information on the market
-Businessweek, Harris Poll

What about the cost?


Plan realistically, not optimistically





Don’t overestimate your profits
Don’t underestimate your costs

Sources of Funds





Banks
Venture Capitalists – filthy rich, high risk investors
looking for a many-times-over yield
Angels – seem to have altruistic motives and less
stringent demands than venture capitalists

Domestic or Global?




Drawbacks to Global – more research
and less accessible connections in
startup phase, more travel time
required, more considerations.
Advantages to Global – more human
resources, more demand, more
financing, easier to start global than go
from domestic to global.

Entrepreneurship: Growth Pressures
Entrepreneurs often find that as their business grows, they feel
more pressure to use formal methods to lead their
organizations.
Although this formalization process may compromise some
entrepreneurs spirit, it often leads to more focus,
organization, and greater financial returns.
Basically, it’s a movement from a “seat-of-the-pants” operation
to a more structured, legitimate and recognizable business.

Entrepreneurship: Growth Pressures
Entrepreneurial and Formal Organizations differ in
six business dimensions:







Strategic orientation
Commitment to opportunity
Commitment to resources
Control of resources
Management structure
Compensation policy

Entrepreneurship: Growth Pressures
Business
Dimension

Entrepreneurial
Organization

Formal
Organization

Strategic orientation

Seeks opportunity

Controls resources

Commitment to
opportunity

Revolutionary
Short duration

Evolutionary
Long duration

Commitment to
resources

Lack of stable needs and Systematic planning
resource bases
systems

(capital, people, and
equipment)

Control of resources

Lack of commitment to
permanent ventures

Power, status, financial
rewards for maintaining
status quo

Management Structure

Flat
Many informal networks

Clearly defined authority
and responsibility

Compensation policy

Unlimited; based on
Short-term driven;
team’s accomplishments limited by investors

Entrepreneurship: Growth Pressures

Going Global….
From domestic to worldwide expansion, globalization can be
extremely rewarding for entrepreneurs.
THINK: Money and Business Exposure
However, it is a huge undertaking. Adapting your business to
operate in the global market can lead to a decrease in
ownership, and a forced focus on raising money to keep your
business alive.
THINK: Selling out, Private to Public (Initial Public Offering,
IPO)

Entrepreneurship: Managing a Family Business




Over 50% of the U.S. Gross Domestic Product (GDP) is
generated from family business.
12% of CEOs on the Inc. 500 list describe their company as a
family business.

So, why not dream up a plan and
go into business with your family or
friends?

Entrepreneurship: Managing a Family Business
Two reasons not to go into business with your family or
friends.…

Families fight
Friends fight.
Often, it involves money. So a business environment could
potentially breed arguments, disagreements, and feuds.
Fighting can occur during early developmental stages when
hours are long and pay is low. Or, after success has been
achieved.

Entrepreneurship: Managing a Family Business
Six steps to help lead you to a successful Family Business:







Clear job responsibilities
Clear hiring criteria
Clear plan for management transition
Agreement on whether and when to sell business
Commitment to resolving conflicts quickly
Outside advisors are used to mediate conflicts.
Clarity is key…. but NO GUARANTEE.

Entrepreneurship: Managing a Family Business
Operational vs. Survival Issues….
Operational = Decisions about the economics of the business
and how to balance that with rational and family obligation
criteria.
THINK: Day-to-day grind.
Survival = Develop out of a lack of attention on the operational
issues within the business.
THINK: Festering problems; ultimately compromise livelihood.

Entrepreneurship: Managing a Family Business
FAMILY FEUD:

Severed
relationships

Divorce

Poor business
performance

Low morale,
motivation

Entrepreneurship: Corporate INTRA-preneurs
Intrapreneur = someone in an existing organization who
turns new ideas into profitable realities.

Not every employee has the ability to become a successful
intrapreneur. It takes well-developed strategic action,
teamwork and communication abilities.

Entrepreneurship: Corporate INTRA-preneurs
Organizations that redirect themselves through innovation have
the following characteristics:








Commitment from senior management
Flexible organization design
Autonomy of the venture team
Competent/Talented people with entrepreneurial
attitudes
Incentives and rewards for risk taking
Appropriately designed control system

Entrepreneurship: Corporate INTRA-preneurs
In order to for this type of forward thinking to reap long-term
benefits, top management must allow it to flourish in the dayto-day operations of the business….

This is known as “skunkworks”
Skunkworks = Islands of intrapreneurial activity within an
organization.
REMEMBER: On the island, formal rules and policies of the
organization often DO NOT apply.

One More Time






What is an entrepreneur?
Characteristics of an entrepreneur
Planning to be an entrepreneur
Growth pressures, managing a family
business, and corporate
intrapreneurship