Entrepreneurship

 

Entrepreneurship Shuman Ghosemajumder  Stanford University Management Science & Engineering Entrepreneurship Models for Indian Social Venture Projects May, 2006

Copyright © 2006, Shuman Ghosemajumder  Freely distributed under a Creative Commons License 2.5

 

 A  Ag g en end da

1. Wha Whatt is entr entrepr eprene eneurs urship hip? ? 2. Bui Buildi lding ng a succes successful sful vent venture ure 3. Con Consid sidera eration tions s for social social ventures ventures * * grain grain of o f salt

 

What is entrepreneurship?

 

Wha hatt is entr ntre eprene preneurs urship hip? ?

Nott sm smal alll bus busin ines ess s man manag agem emen entt • No • Not just startups • Not ju jus st fo for-p -pro rofi fitt fir firm ms • Is th the e act act of cr crea eati ting ng a new new an and d innovative enterprise “ The pursuit of opportuni op portunity ty beyond beyond the resourc re source es you curre c urrently ntly control c ontrol””  – Ho How w ar ard d St Stev even ens s o n , Harv Har v ar ard d B u s i n es ess s Sc Sch hool

 

Some less than great new ventures...

 

Building a successful venture

 

The success success form formula ula

Team

 Resources

Strategy

 

Team – the righ rightt personalitie pe rsonalities person rsona aliti litie es

Every veryon one e sh shou oull d be b e...

• A tea team m pla playe yer  r  • A har hard d wor worke ker  r  • Cu Curi rio ous • Fl Flex exib iblle • Goo Good d at at list listeni ening ng

 

Team –– the right skills

Need t o h av e...

• Pe Perso rsonal nal achi achieve evers rs • Sa Sale lesp speo eopl ple e • Cre Creati ative ve peo people ple • Ma Mana nage gers rs • Do Doma main in expe expert rts s

 

Resources

 

Strategy

Fundamental issues to address  – Who is the market? market? What are their needs? needs?  – How does this product/service product/service meet these needs?  – What will they pay? How will they pay? pay?  – What is the timeline for each each stage of the business? business?  – What is the long term strategy?  – Who is your competition? competition? How are you better? better?

 

Stra trate tegy gy – busine business ss plans plans

Why write a business plan?  – To organize, clarify, clarify, and scrutinize your your thoughts  – To facilitate corporate development development  – To attract a talented talented team  – To raise any money whatsoever!

Your bus business iness plan plan is your y our hig highh-le leve vell strate st rategi gic c plan p lan as as we w ell as your yo ur deta detail ile ed all all-purpos pur pose e sa sale les s pitc pi tch h

 

Key success Key success factors factors – che checklist cklist • Team  – Personalities: what are your personality types types (values, style, etc.)?  – Interests: what are you interested interested in?  – Experience: what experience do you have? have?

• Resources  – IP and goods: what does the business business own?  – Cash: how much cash do you have? have?  – Network: what connections support support the organization?

• Strategy  – Plan: what is your plan for establishing and growing the business?  – Competition: how will you address the competitive competitive challenges?

 

Success formula found in most ventures of any kind .. ..

 

Indi ndia ana Jones and and the Last Last Crus rusa ade - Team

Leader / Manager  Domain Expert / Idea Person Partnerships

Investor / Director 

 

Indi ndia ana Jon Jone es and Last Crus rusa ade - Resou sources rces Jone Jones and the t he Last sourc rce es

Equipment

Intellectual Property

Capital

 

Indi ndia ana Jones Jone s and th e La Last st Crus rusa ade - Str tra ategy Jones a and nd the

Joint Venture Partners

R&D

Competition

Exit Strategy

 

Considerations for social ventures

 

Three ke keys ys to successfu cessful ssoc ocia al enterpr enterprise* ise* keys t o a suc succe cess ssful full soci socia ial

• Ge Gene nera rate te comm commun unit ity y wealth wealth  – new revenue streams streams  – don’t compete with scarce scarce charitable dollars

• Mak Making the comm commitm itment entand to comp cprofessional ompete etenal  – being organized, effec effective, tive, professio • Be Bear arin ing g wi witn tnes ess s

 – call attention to real injustice and and suffering

* From Bill Shore, CEO, Community Wealth Ventures

 

Ke Keys ys to tto o a suc succe cess ssful ful soc socia iall ent e nte erpr rprise* ise* Keys enterpri nterprise* se*

Purely philanthropic

Motives, Methods & Goals

  s   r   e    d    l   o    h   e    k   a    t   s   y   e    K

 Appeal to goodwill Mission driven Social value

Purely commercial Mixed motives Mission driven & market driven

 Appeal to selfinterest Market driven

Social & economic value

Economic value

Market-rate prices

beneficiaries

Pay nothing

Subsidised rates or mix of full of payers & those who pay nothing

capital

Donations & grants

Below-market capital, or mix of donations & market-rate capital

Market-rate capital

Below-market wages, or mix of volunteers and fully paid staff 

Market-rate compensation

workforces

suppliers

 Volunteers

Make in-kind donations

Special discounts, or mix of in-kind & full price donations

Market-rate prices

* Sailendra Dev Appanah, TRN, http://www.thairuralnet.org/download/Social_entrepreneur_tools.ppt

 

Keys to a succ Keys succe essf ssful ul soci socia al enterpri enterprise se

Purely philanthropic

Motives, Methods & Goals

  s   r   e    d    l   o    h   e    k   a    t   s   y   e    K

 Appeal to goodwill Mission driven

Wikipedia Social value

Purely commercial Mixed motives Mission driven & market driven

 Appeal to selfinterest Market driven

Social & economic value

Economic value

Market-rate prices

beneficiaries

Pay nothing

Subsidised rates or mix of full of payers & those who pay nothing

capital

Donations & grants

Below-market capital, or mix of donations & market-rate capital

Market-rate capital

Below-market wages, or mix of volunteers and fully paid staff 

Market-rate compensation

workforces

suppliers

 Volunteers

Make in-kind donations

Special discounts, or mix of in-kind & full price donations

Market-rate prices

 

Keys to a succ Keys succe essf ssful ul soci socia al enterpri enterprise se

Purely philanthropic

Motives, Methods & Goals

  s   r   e    d    l   o    h   e    k   a    t   s   y   e    K

 Appeal to goodwill Mission driven

Wikipedia Social value

Purely commercial Mixed motives Mission driven &  A  Arr av avi ind market driven

 Appeal to selfinterest Market driven

Social & economic value

Economic value

Market-rate prices

beneficiaries

Pay nothing

Subsidised rates or mix of full of payers & those who pay nothing

capital

Donations & grants

Below-market capital, or mix of donations & market-rate capital

Market-rate capital

Below-market wages, or mix of volunteers and fully paid staff 

Market-rate compensation

workforces

suppliers

 Volunteers

Make in-kind donations

Special discounts, or mix of in-kind & full price donations

Market-rate prices

 

Keys to a succ Keys succe essf ssful ul soci socia al enterpri enterprise se

Purely philanthropic

Motives, Methods & Goals

  s   r   e    d    l   o    h   e    k   a    t   s   y   e    K

 Appeal to goodwill Mission driven

Wikipedia Social value

Purely commercial Mixed motives Mission driven &  Arr av  A avi ind market driven

 Appeal to selfinterest

Hybrid Cars

Market driven

Social & economic value

Economic value

Market-rate prices

beneficiaries

Pay nothing

Subsidised rates or mix of full of payers & those who pay nothing

capital

Donations & grants

Below-market capital, or mix of donations & market-rate capital

Market-rate capital

Below-market wages, or mix of volunteers and fully paid staff 

Market-rate compensation

workforces

suppliers

 Volunteers

Make in-kind donations

Special discounts, or mix of in-kind & full price donations

Market-rate prices

 

Other cons ideratio tions ns th the er considera co consi nside dera rati ons • Un Unde ders rsta tand ndin ing g cu cultu lture re  – Entrepreneurship more challenging in some societies than others

• Under Understand standing ing gover governmen nments ts and and educati educational onal instit institution utions s  – Some governments and institutions more supportive supportive than others

• Inc Incorp orpora oratio tion n as a 501(c) 501(c)(3) (3) orga organiz nizati ation on

 – Exclusively for religious, charitable, scientific, scientific, testing for public safety, literary, educational, or amateur sports fostering organizations, or organizations for the prevention of cruelty to children or animals  – Exempt from federal income tax  – Donations are tax deductible

 

Ent ntreprene repreneur ursh ship ip in 2006 is di diff ffe erent

Technology matters • ICT means means more more oppor opportuni tunitie ties, s, differe different nt dynamics • informa information-b tion-based ased marketp marketplaces laces provid provide e many or most parts of the value chain with zero marginal distribution cost

 

Where to begin

 

Whe here re to begin – the tra traditi ditiona onall mode mod el model

Identify Identify Opportunity Opportunity

• general market research • market segmentation • segment research

Develop Develop Plan Plan

• pricing mo models • competitive research • financial mo models • business pl plan

 A  As emb bbllee  As  Assssem em emb Team Team

• attr attra act an and d re reta tain in the best talent • complementary skills and personalities

Funding Funding & S & Suppor Support Suppor upporttt

• term sheets • make sure you have more than enough resources to pursue your vision!

 

 A  Arr av avii n d Mo Mod d el el** • India’s India’s Aravind Aravind Eye Eye Hospital Hospital is is the larges largestt provider provider of eye eye surgery surgery in in the world, performing 180,000 cataract operations a year, 70% percent of them for free. • It costs costs the the hospital hospital about about $10 $10 to perform perform a catar cataract act operati operation on which which would cost about $1650 in the United States. Target Market

Service Concept

Non-paying Patients

High-quality Low-cost Surgery

Paying Patients

High-quality Surgery &Better  Amenities

Operating Strategy

Standardised  Assembly Line of model cataract surgery

Service Delivery System

Separate units to treat both groups of patients, but adjacent to allow doctors to move to both units

Investors

Gates Foundation

Paying Patients

* Sailendra Dev Appanah, TRN

 

 A d d i t i o n al ad  Ad adv vice ramewor works ks are onl only y che ch eckl cklist ists s Frame

• MECE list of cons considera iderations tions for making making a strat strategic egic decisi decision on • a framework framework is not a formula; formula; utilizin utilizing g it does does not not provide provide answers Leadersh Lea dership ip = th the e art and sc science ience of mana manageme gement nt

• be fact-ba fact-based sed and analyt analytical ical and make make smart deci decisions sions • also use your intuit intuition ion and and creativ creativity, ity, and and take take risks! risks!

 

Resources Entrepreneurship Entrepreneursh ip @ Stanford •

BASES (http://bases.stanford.edu http://bases.stanford.edu))

•

Stan St anfo ford rd En Entr trep epre rene neur urs shi hip p Net etw wor ork k (http://sen.stanford.edu http://sen.stanford.edu))

•

Stan St anfo ford rd Te Tech chn nol olog ogy y Ven Ventu ture res s Pro Progr gram am (http://stvp.stanford.edu http://stvp.stanford.edu))

External Resources •

Ashoka (http://www.ashoka.org http://www.ashoka.org))

•

MIT OpenCourseWare (http://ocw.mit.edu http://ocw.mit.edu))

 

Questions? Shuman Ghosemajumder