Entrepreneurship and Innovation

​

​

​

Prof. Ass. Dr. Lura Rexhepi Mahmutaj

July 2023

Indications of Increased Interest�in Entrepreneurship

• Books
• Amazon.com lists over 36,900 books dealing with entrepreneurship and 89,900 focused on small business.
• College Courses
• More than 5,000 entrepreneurship courses among colleges and universities across the globe.

1-2

What is Entrepreneurship? Who are the Entrepreneurs?

• Academic Definition (Stevenson & Jarillo)
• Entrepreneurship is the process by which individuals pursue opportunities without regard to resources they currently control.
• Venture Capitalist (Fred Wilson)
• Entrepreneurship is the art of turning an idea into a business.
• Entrepreneurs:
• People who take risk and put useful ideas into practice.

​

​

1-3

The difference between a Businessman and an Entrepreneur

• Businessman

​

• Entrepreneur

1-4

The difference between a Businessman and an Entrepreneur

• Businessman
• a person who starts a business on an old concept or idea.

​

2. makes his place in the market with his efforts and dedication

• Entrepreneur
• A person who brings his unique idea to run a startup company is known as an entrepreneur
• creates the market for his own business.

1-5

The difference between a Businessman and an Entrepreneur

• Businessman
• businessman is a market player.

​

​

4. A businessman is oriented towards profit.

• Entrepreneur
• Entrepreneur is a market leader because he is the first to start such a kind of enterprise.
• An entrepreneur is a people focused in essence, gives more importance to its employees, customers.

1-6

The difference between a Businessman and an Entrepreneur

• Businessman
• The risk factor is low but faces a huge competition from the rivals due to similarity of products or services.

​

​

• Entrepreneur
• Takes risks and face low competition.

1-7

Corporate Entrepreneurship

1-8

Entrepreneurial Firms

Conservative Firms

• Proactive, Initiative
• Innovative
• Risk taking

• Take a more “wait and see”

position

• Less innovative
• Risk averse

Why Become an Entrepreneur?

1-9

Why Become an Entrepreneur?

1-10

The three primary reasons that people become entrepreneurs and start their own firms

Desire to be their own boss-

VeryWendy

Financial rewards: Amazon,

Facebook, Google

Desire to pursue their

own ideas -Thumbtack

Characteristics of Successful Entrepreneurs�1 of 3

1-11

Four Primary Characteristics

Characteristics of Successful Entrepreneurs�2 of 3

• Passion for the Business
• This passion typically stems from the entrepreneur’s belief that the business will positively influence people’s lives.
• 1- Ex. John Wood, Leaving Microsoft to change the world. Room to Read educational company.

​

• Room to Read had built over 1,440 schools

and distributed over 9.4 million books

in developing parts of the world. In 2019,

they provide education for 16.8 million children

worldwide.

https://www.youtube.com/watch?v=gxUTcLRxfjM

​

​

​

1-12

Characteristics of Successful Entrepreneurs�2 of 3

• Product/Customer Focus
• An entrepreneur’s strong focus on products and customers typically come from the fact that most entrepreneurs are, at heart of people.
• “The computer is the most remarkable tool we’ve ever built . . . but the most important thing is to get them in the hands of as many people as possible.” Steve Jobs

​

​

​

​

1-13

Characteristics of Successful Entrepreneurs�3 of 3

• Tenacity Despite Failure
• Because entrepreneurs are typically trying something new, the failure rate is naturally high.
• A defining characteristic for successful entrepreneurs is their ability to continue through problems and failures.

​

• Execution Intelligence
• The ability to shape a solid business idea into a viable business is a key characteristic of successful entrepreneurs.
• “ Ideas are easy, its execution is that’s hard” Jeff Bezos Amazon founder.

​

1-14

Passion is the secret weapon of successful entrepreneurs. Learn how to identify and leverage it.�https://www.youtube.com/watch?v=_4NvC0SEU3Q

1-15

Types of Start-Up Firms

1-16

But, what is the impact of entrepreneurial firms?

1-17

Impact of Entrepreneurial Firms

• Innovation

​

• Job Creation

​

• Impact on Society

​

• Impact on Larger Firms

​

1-18

Case Study analysis

Prim: How a Lack of Passion and Resolve Can Kill a Business

• Prim’s idea was to disrupt the laundry industry. A growing number of people in the United States are usinglaundry services to wash and fold their clothes.
• The problem with these services is that they are a hassle. In most instances, customers have to bag their laundry, drop the bag or bags off at the laundry service, and then pick them up later. Many services have lines at the busiest times of the day, which result in drivers having to wait to drop off or pick up their laundry.
• Prim launched in mid-2013, after passing through the prestigious Y Combinator business accelerator program earlier that year. Here’s how Prim’s laundry service worked. A customer bagged her/his laundry, and then went online to choose a pickup and delivery time. The price was $25 for the first bag and $15 for each additional bag. The bags would be picked up by a driver recruited by a third-party delivery service. (Rickshaw was the name of the delivery service in the city where Prim started.) Everything would be back, washed and folded, later that day or early the next day. No cash changed hands between the customer and the pickup or delivery drivers. Everything was paid for through Prim’s website. Prim gained favorable press and early momentum. When it closed, it was handling 1,000 pounds of laundry a day from 40 clients and was growing. What went wrong?
• Two things went wrong with Prim. First, once Prim got your clothes, it went from an innovative disruptor to an old-school company. It would take your clothes to a laundry service and utilize its wash and fold services. Prim negotiated volume discounts with several laundry services; but, the discounts were verbal, not written. What Prim didn’t count on was the partnerships going sour. While the laundry services were initially receptive to work- ing with Prim, they had their own delivery services and eventually saw Prim as siphoning off their customers and revenue. During its short history, Prim churned through three different laundry services.
• The second thing that went wrong with Prim was a lack of passion and resolve on the part of its founders. Faced with the reality that working with local laundry services was a fragile business model, Prim’s founders, Yin Yin Wu and Xuwen Cao, had a decision to make. Should they build or lease their own laundry service? This was a daunting prospect, given the hundreds of thousands of dollars necessary to build and staff a high-volume laundry wash and fold facility. Even more daunting was the prospect that this step would need to be repeated in each new market Prim entered. After two months of deliberation, Wu and Cao pulled the plug. While they estimated that by constructing their own laundry service they could build a profitable business in 5 to 10 years, with revenues of $10 million to $15 million, it was a direction they simply did not want to pursue. Both were computer science students in college and had no direct experience in the laundry business. In an article published by CNNMoney, Garry Tan, a partner with Y Combinator, reflecting on why Wu and Cao closed Prim, said, “They didn’t want to actually have to wash the laundry—they wanted to be the connector.”

Questions for Critical Thinking

• Why is passion such a critical part of entrepreneurial success? Prim’s founders were apparently passionate about building a company but not passionate about the laundry business specifically. In what ways is this combination problematic?
• How could Prim’s cofounders have better anticipated that laundry services would eventually see Prim as siphoning off their own business and be reluctant to work with them?
• Rather than employ its own drivers to pick up and deliver laundry for its customers, Prim relied on the use of third-party delivery services. In what ways do you think this approach could have limited Prim’s growth in other markets?

Sources: J. P. Mangalindan, “Prim: Anatomy of a Folded Startup,” CNNMoney, available at https://tech.fortune.com/2014/01/22-prim- anatomy-of-a-folded-startup

1-19

Recognizing Opportunities and Generating Ideas

What is an Opportunity?

2-21

Opportunity Defined

An opportunity is a favorable

set of circumstances that

creates a need for a new

product, service, or business.

What is an Opportunity?

2-22

Four Essential Qualities of an Opportunity

What is window of opportunity?

2-23

Window of Opportunity

• For an entrepreneur to capitalize on an opportunity, its window of opportunity must be open. Once the market for a new product is established, its window of opportunity opens. As the market grows, firms enter and try to establish a profitable position. At some point, the market matures, and the window of opportunity closes.

​

• This is the case with Internet search engines. Yahoo, the first search engine, appeared in 1995, and the market grew quickly, with the addition of Lycos, Excite, and several others. Google entered the market in 1998, sporting advanced search technology. Since then, the search engine market has matured, and the window of opportunity is less prominent. Today, it would be very difficult for a new start-up search engine firm to be successful unless it offered compelling advantages over already established competitors. Bing, Microsoft’s search engine, is gaining ground with approximately 20.9 percent market share (compared to 63.9 percent for Google), but only after Microsoft has exerted an enormous amount of effort in head-to-head competition with Google.

2-24

Three Ways to Identify an Opportunity

2-25

First Approach: Observing Trends

• Observing Trends
• Trends create opportunities for entrepreneurs to pursue.
• The most important trends are:
• Economic forces
• Social forces
• Technological advances
• Political and regulatory change
• It’s important to be aware of changes in these areas.

​

​

2-26

First Approach: Observing Trends

2-27

Environmental Trends Suggesting Business or Product Opportunity Gaps

Trend 1: Economic Forces

2-28

Economic trends help determine areas that are suitable for new start-ups and areas that start-ups should avoid.

Example of Economic Trend Creating a Favorable Opportunity

• For example, an increase in the number of women in workforce and their incomes. This is an opportunity for businesses that sell online (saving time) and clothing stores.

Trend 2: Social Forces

2-29

Social trends alter how people and businesses behave and set their priorities.

Examples of Social Trends

• Aging of the population.
• The increasing diversity of

the workplace.

• Increased participation in

social networks.

• Growth in the uses of mobile

devices.

• An increasing focus on health

and wellness.

Trend 3: Technological Advances

2-30

Advances in technology frequently create business opportunities.

Once a technology is created, products often emerge to advance it.

Example: H20Audio

An example is H20Audio, a company started by four former San Diego State University students, that makes waterproof and earbuds for the Apple iPhone.

​

For example, the Valedo Back Therapy is a device that uses sensors to detect the nature of a user's back pain. Based on the data the sensors collect, the device suggests exercises the user can perform to relieve pain.

Trend 4: Political Action and Regulatory Changes

2-31

Political action and regulatory changes also provide the basis for opportunities.

Example

Laws to protect the environment have created opportunities for entrepreneurs to start firms that help other firms comply with environmental laws and regulations.

Second Approach: Solving a Problem�1 of 2

• Solving a Problem
• Sometimes identifying opportunities simply involves noticing a problem and finding a way to solve it.

​

• Many companies have been started by people who have experienced a problem in their own lives, and then realized that the solution to the problem represented a business opportunity.

​

​

2-32

Second Approach: Solving a Problem�2 of 2

2-33

• For example, in 1991, while leaving a local coffee drive-thru as he was taking his daughter to school, Jay Sorensen dropped a cup of coffee in his lap because the paper cup was too hot. This experience led Sorensen to invent an insulating cup sleeve and to start a company to sell it. Since launching his venture, the company, Java Jacket, has sold over four billion cup sleeves.

Third Approach: Finding Gaps in the Marketplace�1 of 2

• Gaps in the Marketplace
• A gap in the marketplace is often created when a product or service is needed by a specific group of people but doesn’t represent a large enough market to be of interest to mainstream retailers or manufacturers.

2-34

Third Approach: Finding Gaps in the Marketplace�2 of 2

2-35

Product gaps in the marketplace represent potentially viable business opportunities.

Specific Example

Tish Cirovolv realized there were no guitars on the market made specifically for females. To fill this gap, she started Daisy Rock Guitars, a company that makes guitars just for women and girls.

Case Study 2 Careem: Mobilizing a Solution to a Problem�

Careem, the Middle East’s first and leading taxi- booking app-based service, was created as a result of two entrepreneurs’ attempts to a solve a region wide problem. Mudassir Sheikha, a 39-year-old Stanford- educated Pakistani, and his Swedish colleague Magnus Olsson travelled extensively in their capacity as consul- tants for McKinsey & Company. During their travels to the Middle East and North Africa (MENA) region, they struggled to find an easy, quick, efficient, and reliable means of transportation. It also quickly became apparent that although Uber had provided a great solution to com- muters’ needs in many markets around the world, it had not yet entered the MENA region, and this presented an attractive opportunity. Inspired by the global transforma- tion of taxi-booking services and recognizing an under- served market, the two tech-savvy consultants launched Careem in the city of Dubai, the United Arab Emirates, in 2012. Although Careem was initially launched for business customers, the company soon found that its users were booking rides for personal use, like airport trips, schools drops, and pick-ups.

Expanding Regionally

Careem is touted as one of the UAE’s most successful start- ups, with growth of 30 percent month on month. Within five years of its launch, it has expanded to 60 cities across 11 countries, claims over 10 million registered users, and has over 250,000 contract drivers. Careem has ambitious plans to become leading transporter of people and things in the Middle East. With car ownerships as low as 2 to 5 percent in some countries and a large population of 700 million people in the region, there is a potential of between 150 million and 200 million trips a day—a huge opportunity for Careem.

Taking the Home Advantage

As a homegrown player, Careem has unmatched insight into the region’s consumers, topography, infrastructure, neighborhoods, roads, and local commuting needs, allowing it to quickly act on the opportunity to develop better maps than and have a competitive advantage over Uber. Many cities and their neighborhoods in the region were inadequately covered by Google Maps and Nokia Maps, so Careem sent its own team to build a location database. The brand name, which means “generous” in Arabic, also worked very well with the local consumers.

Playing the Local Favorite

Close familiarity with the cultural and traditional values helped Careem to serve the regional markets well. In Saudi Arabia, where women were banned from driving until October 2017, Careem had a massive female follow- ing, making up nearly 80 percent of its customers. It even introduced a pre-booking facility for women so they could conveniently plan their trips. In Dubai, Careem launched its Ameera services, a ladies-only ride with a woman chauffer. In September 2016, in Saudia Arabia, Careem offered a farms, where they are sac- rificed and then brought home. Careem offered to provide this service: its drivers got the animal, sacrificed it for the customers, and brought it to customers’ homes accord- ing to the tradition. In situations where customers wanted the live animal to be transported to their homes, Careem arranged for pick-up vehicles for that too.

Dealing with the Rivalry

Uber entered the Middle East market in 2013 as a global brand with international appeal, changing the competitive dynamics in a growing market that presented an attractive opportunity. Both Uber and Careem adopted competitive strategies to capitalize on that opportunity. Careem already had a strong hold on the market due to its first-mover’s advantage and local orientation. Due its global dominance, Uber was able to a raise $15 billion in venture capital compared to $425 million that Careem had raised. Faced with a changing competitive scenario and an aggressive opponent, Careem focused on providing more localized solutions to the region, including better maps, pre-booking services, dedicated call centers, and a varied fleet. Careem claims that other services operate only as a limo service, but it offers a different ride experience for everyone. For example, in Dubai, Careem offered different types of rides: Economy, Business, Careem Kids, MAX, First Class, and Ameera. While Uber seeks global dominance, Careem is concentrating on being a leading regional player with a strong focus on local needs and wants.

Questions for Critical Thinking

1. Identify the market gaps that Shiekha and Olson filled by launching Careem in the Middle East. What role did their personal commuting experience in the region play in identify the opportunity?
2. Comment on how being a local player helped Careem to cater to the needs of users in the region. What factors have contributed to its regional popularity?
3. As the taxi-booking segment matures in the Middle East, how relevant will factors like innovativeness and first-mover’s advantage be to sustainability and continued success?
4. Considering the strong competition from global leader Uber, do you think Careem will be able to maintain its hold in the region?

Sources: Frank Kane, “Gentlemen, Start Your Engines: It’s Uber vs Careem,” The National, November 24, 2015, available at https://www. thenational.ae/business/gentlemen-start-your-engines-it-s-uber- vs-careem-1.13430

​

2-36

Personal Characteristics of the Entrepreneur

2-37

Characteristics that tend to make some people better at recognizing opportunities than others

Prior Experience

Cognitive Factors

Social Networks

Creativity

Full View of the Opportunity Recognition Process

2-38

Depicts the connection between an awareness of emerging trends and the personal characteristics of the entrepreneur

See Problems As Opportunities | Mona Patel | TEDxNewBedford

https://www.youtube.com/watch?v=FzAyOddR5u4

2-39

References

Bruce R. Barringer & R. Duane Ireland

​