Entrepreneurship

Boot Camp Mindset

Question for today

Do entrepreneurs think differently? What is this outside the box all about? Is outside the box for real?

Start at any of the nine dots and draw four straight lines that go through all nine dots without lifting your pencil and no tracing over an existing line.

Four straight without connecting all nine dots w\o lifting your pencil, no tracing over an existing line.

You have to go outside the box twice

Reading What makes entrepreneurs entrepreneurial? Saras Sarasvathy

We seeks to answer the question is there such a think as entrepreneurial thinking? If there is, is it applicable only to entrepreneurs? How is it different from the thinking process of managers? The conclusion is Effectual vs. Causal reasoning, but can it be learned?

How Entrepreneurs Think Causal vs. Effectual Thinking

Setting the framework

Causal Thinking = Managerial Thinking

Choosing best means to achieve a predetermined goal

Saras Sarasvathy, Harvard Business Review

Distinguishing Characteristic:
M1
M2

Managerial Thinking Causal Reasoning

Selecting between given means to achieve a pre-determined goal

M3 M4

Given Goal

M5

Given Means

How Entrepreneurs Think Strategic vs. Effectual Thinking

Setting the framework

Causal Thinking = Managerial Thinking

Choosing best means to achieve a predetermined goal

Strategic Thinking = Creative Thinking

Generating new means to reach predetermined goal

Strategic Thinking Creative Causal Reasoning

Distinguishing Characteristic:
Generating new means to achieve pre-determined goals
M1
M2 Given Goals

M3 M4 New means are generated

M5

How Entrepreneurs Think Effectual Thinking

Setting the framework

Causal Thinking = Managerial Thinking

Choosing best means to achieve a predetermined goal

Strategic Thinking = Creative Causal Thinking

Generating new means to reach predetermined goal

Effectual Thinking = Entrepreneurial Thinking

Imagining possible new ends using a given set of means
Saras Sarasvathy, Harvard Business Review

Entrepreneurial Thinking Effectual Reasoning

Distinguishing Characteristic:
Imagining possible new ends using a given set of means

M1 M2 M3 M4 M5

E1 E2 E3 E4 E5

Imagine New Ends

Given Means
Saras Sarasvathy, Harvard Business Review

Market Definition Classic Causation Model from Marketing Textbooks

(using relevant variables such as age, income, etc.)

Segmentation Targeting

(based on evaluation criteria

such as expected return) (through market strategies)

Positioning

THE CUSTOMER Customer Identification

(through Who am I? What do I know? Whom do I know?)

(through strategic partnerships & selling)

Customer Definition

Adding Segments/Strategic Partners Definition of one of several possible markets

Process of Effectuation Used by Expert Entrepreneurs

Classic Causation Model from Marketing Textbooks

Preliminary Prototype Initial Focus Group Study Market Segment Study $ 250M $ 250M $ 100 M

Gets you to the start line Advertising & PR $ 11MM

Customer

Gets you to the market Sale often pull through to get to customer

Initial cost $ 11.6MM

Strategic, Creative Thinking Generating new means to reach customer

Preliminary Prototype Initial Focus Group Study Market Segment Study $ 250K $ 250K $ 100K

Gets you to the start line

Advertising & PR $ 11M

Gets you to the market

Customer

Introduction of new means to reach goal

Partnerships New outlets MLM Channel eCommerce

Initial cost $ 11.6MM + or -

Efficacious Thinking Entrepreneurial Thinking Imagining new ends, new means Industry Knowledge Patterns of Change Skill Sets Social Networks

Pain Identification
Phantom Sale against defined pain \ cure

Customer

Customer benefit need

Customer in Hand Initial customer acquisition on special terms (early adopter, point of sale, etc.)

Initial cost $ 19.61

Pure Entrepreneurial Thinking Efficacy

Distinguishing Characteristic:
Imagining possible new ends using new means

M1 M2 M3 M4 M5

Imagine New Ends

Create New Means

Apologies to Saras Sarasvathy Harvard Business Review

Thinking like an entrepreneur Causal Thinking Strategic Thinking

Effectual Thinking
USC Entrepreneurial Thinking Efficacy

The USC thinking

Efficacy
Imagine the end, Create the means

Types of Thinking
Ends Means

Causal (Linear)

Given

Given

Strategic (Creative) Effectual

Given Create new

Create some new Given

Efficacy

Imagine New Ends

Create New Means

Entrepreneurial Thinking Imagine the end, Create the means

Tom OMalia Orfalea Chair for Entrepreneurial Studies 213.821.0917 tom.omalia@marshall.usc.edu

Lloyd Greif Center Marshall School of Business University of Southern California Bridge Hall One Los Angeles, CA 90089-0801