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Summary Entrepreneurship
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Summary of Entrepreneurship for MA2 Business Engineering at the VUB.
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EntrepreneurshipChapter 1 & 2:
Content:
• Challenge of growth
• Positive Obsession
• Case – Soudal
• Trends
Challenge of growth:
Gazelle types of business:
What do these companies have in common?
• Google - 1998 (Brin, Page), Sales ca. 136 bln USD, market cap. 852 bln USD
• Facebook - 2004 (Zuckerberg), Sales ca. 55,8 bln USD, market cap. 506 bln USD
• Zalando - 2008 (Robert Gentz, David Schneider), Sales ca. 5,4 bln EUR
vs.
• Bulgaria GDP ca. 56 bln USD
A gazelle company is a young fast-growing enterprise with base revenues of at least $100,000
and four years of sustained revenue growth. Gazelle companies are often found in
the technology industry, but also in retail, apparel, or food and beverage.
A gazelle company or simply gazelle is a young, very fast-growing company. This type of
company maintains consistent and rapid expansion of both employment and turnover (sales).
Additionally, the company maintains a high rate of expansion for at least four consecutive
years. Although 20% growth annually is the common definition, there is no single definition
for a gazelle company’s growth rate.
McGrath (2012):
• 5 y sustainable growth:
o 15 % companies realize 5 % growth in turnover
o 7 % companies realize 5 % growth in net income
• 10 y sustainable growth:
o ... less than 1 % growth!
• We want and need growth:
o Cf. “double digit” ambitions
o Government budgets
o Employment
o Innovative products and social progress
1
,It isn’t the usual suspects that explain sustainable growth:
ð Industry, Size, Company age, Ownership, Geographic location
Sustainable growth is explained with:
• Companies are agile: “enter new markets before competitors do; they’re good at
experimentation; they hold everyone accountable for new ideas; they can move on a
dime”
• Companies are extremely stable: “chief executives have come up through the
company; strategy and organizational structure stay consistent for long stretches;
client retention is unusually high; corporate culture is strong and unchanging”
Difficulty to grow (Parts et al. 2012):
• Barriers to grow:
o Fear to fail or make mistakes
o Old mental models, routines and cognitive limitations
o Disappearing or saturated markets
o Lack of credibility toward strategic partners
• Barriers to sustain growth:
o Small problems accumulate and disrupt growth
o Complacency, over-confidence, resistance to change
o Decreasing customer satisfaction
o Strategic partners cannot grow together
o Aggressive competition (i.e., low margins to beat competition: not a good idea!)
Positive Obsession:
Obsession:
“Obsessions are upsetting thoughts, images, or urges that intrude, unbidden, into person’s
stream of consciousness. Examples include unwanted thoughts of harming loved ones;
persistent, unwarranted doubts that one has properly locked the front door; or intrusive taught
of being contaminated.” (Taylor, 2005, p. 129)
Positive Obsession: Curiosity, persistence, determination, devotion, passion, dedication,
customer/sector knowledge
ð Steve Jobs on passion: “Your work is going to fill a large part of your life, and the only
way to be truly satisfied is to do what you believe is a great work. The only way to do a
great work is to love what you do.”
2
,Generic impacts of passion on the entrepreneurial process:
Other Positive Obsession Impacts:
• Dedication:
o Time absorption
o Builds up excellence
o Quid of work-life balance?
o Uncertainty of success
• Sector and customer knowledge:
o Warren Buffet: “... know what you do understand and don’t understand. ... The
important thing is not how big the circle of competence is, the important thing
is to stay in the circle of competence.”
o Avoid “customers do not understand” attitude
Negative Obsessions:
• Obsessed with growth in its own right
• Obsessed with writing your business plan
• Obsessed with your own idea
ð Harmonious vs. obsessive passion:
o Obsessive passion refers to a controlled internalization of an activity that
creates an internal pressure to engage in the activity that the person likes.
Harmonious passion refers to an autonomous internalization that leads
individuals to choose to engage in the activity that they like.
o Harmonious passion supports a healthy relationship, while obsessive passion
can destroy it.
3
, "Above all, you want to create something you are proud of. That's always been my philosophy
of business. I can honestly say that I have never gone into any business purely to make money.
If that is the sole motive, then I believe you are better off doing nothing.”
- Richard Branson (founder of a long string of "Virgin" companies, from Virgin Records to
Virgin Atlantic Airways to Virgin Mobile)
Model of entrepreneurial motivation and the entrepreneurship process (Shane, Loke, &
Collins, 2003, HRMR, p.274):
Some key concepts:
Resources Uncertainty
- Experimentation - Pressure
- Opportunities - Risk
- Knowledge / skills - Change
- Team - Collaboration
Develop contact points (networking) to be able to support your way to the realization of your
business:
4
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