Enso 9 Oct 2024 Entrepreneurship (PDF)

The entrepreneurial process - theory and practice Hanna von Schantz Entrepreneur and PhD ENSO 9 Oct. 2024 Today’s lecture PART 1) THEORY The entrepreneurial process Person + environment + opportunity + process = initiative Process:...

The entrepreneurial process - theory and practice Hanna von Schantz Entrepreneur and PhD ENSO 9 Oct. 2024 Today’s lecture PART 1) THEORY The entrepreneurial process Person + environment + opportunity + process = initiative Process: Linear - causation Open - effectuation ☕ PART 2) PRACTICE Two start-up cases Scheme of entrepreneurship 3 Who is an entrepreneur? Every year, around 50,000 people start businesses in Sweden Entrepreneurs don't have to be a certain way to succeed Entrepreneurs cannot look the same everywhere There are different types of entrepreneurs and different motives to becoming an entrepreneur Motivations and drivers Opportunity entrepreneurs/social entrepreneurs Lifestyle entrepreneurs Intrapreneurs Neccessity entrepreneurs Intrapreneurship@ 3M see https://www.bloomberg.com/news/articles/2006-05-09/3ms-seven-pillars-of-innovation?leadSource=uverify%20wall The person + the environment 💡 6 The environment 1. General environment Political, social, technical, ecological and legal 2. Specific environment Market, competitors, stakeholders, system of rules and taxes, traditions and established “industrial wisdom” 7 Creating novel solutions to social problems Opportunity Opportunity is central to entrepreneurship – without it, entrepreneurship does not exist 🧐 (Shepherd & Grégoire, 2012) Entrepreneurship is central to opportunity – without entrepreneurship, opportunity does not exist 🤔 (Sarasvathy, 2008) What is an opportunitiy? Opportunity = A situation with potential Entrepreneurial opportunity = A favorable moment in time to create a new or significantly improved product, service, business model, process or new practice Favorable = What one wants to do is perceived as feasible and desirable Subjective = Part of personal interpretation Timing = Window of opportunity = i.e. not a product or service or business idea, but resources and circumstances that may develop into on or more of these things Source: Seeing and Seizing Opportunities, Nils Nilsson (2021) Six sources to opportunities 1. Found through noticing things that work elsewhere 2. Traced to economic and social change and consumer trends 3. Developed from research/new technology/new knowledge 4. Based on and resolve “customer pains” 5. Created through “effectuation” – entrepreneurial method 6. Come in to existence through the “entrepreneurial gaze” Source: Seeing and Seizing Opportunities, Nils Nilsson (2021) Process… for what? Take the steps from knowing to doing The opportunity is a ”work in progress” Only 5% of business make it to their 10 year anniversary Final stage, implemented business model that works 12 A process as a stream of activities a/ A B b/ A B c/ A B Out of bounds = not desireable or feasible A d/ B Källa: Seeing and Seizing Opportunities, Nils Nilsson N O Two alternative processes The closed,linear process – ”causation” The open process – ”effectuation” The linear process Ideas and tools borrowed from management: strategic analysis, market analysis, cost/revenue analysis, budgeting, organization etc. Business plan 1. Business concept – Vision, mission, values – The offering/value proposition – Market – Customer/target groups – Resources and activities 2. Organization (persons/team, core competencies ) 3. Financials 4. External environment 5. Implementation map (go to market) 6. Risk analysis 19 Habits and behaviors of successful entrepreneurs Is there a learnable and teachable “core” to entrepreneurship? Yes!! Source: Sarasvathy 2001 Effectuation – a method Causation: linear, causal, planning, “strategic thinking”, ”known” end-result X % growth Establishment in a new market For ”imitative”/”non-innovative entrepreneurship” … In combination Situational Effectuation: open, experimental, contextual “creative thinking”, end-result unknown Causation vs. effectuation Examples  The entrepreneurial method A logic about how entrepreneurs deal with the future (uncertainty) that impacts how they make decisions in ”non-rational” way Focusing on controlling and creating the future, rather than predicting it Useful for “inventing the wheel”, bringing people on board and creating something new together One process – five principles See: Sarasvathy - effectuation vs. causation https://www.youtube.com/watch?v=hCMpd7z4AbA Start with your means 1. Who you are – your traits, tastes and abilities 2. What you know – your education, training, expertise, and experience 3. Whom you know – your social and professional networks Using these means, begin to imagine and implement possible effects that can be created with them Affordable loss principle Limit risk by spending only what you can afford to lose at each step Invest only what you can afford, not with regards to expected financial returns: ”I’m 28 years old, I have a degree and I can invest 50 000 SEK and 6 months of my time…” Skip traditional market research, instead take the product to the nearest possible potential customer before it is built Strategic partnership (crazy quilt principle) Go out and talk to people and ask if/how they can contribute Pre-commitments from key stakeholders to reduce uncertainty The ideal beginning for a successful startup is the introduction of customers into strategic partnerships Learn from others and get their resources Build partnerships rather than doing a competitive analysis Trust people Leverage contingencies (lemonade principle) ”When life gives you lemons, make lemonade” Turn the unexpected into new opportunities Surprises and disappointments are the norm Not all surprises are bad Surprises can be used as inputs into the new venture creation process Pilot in the plane principle Control the controllable! Focus on activities within your control The future is created by you and your partners - cocreation Being flexible gives more control in an uncertain environment than sticking to a pre-defined plan Case: Freitag https://www.youtube.com/watch?v=PDrrQN0aOEA “Everyone has a plan un0l they get punched in the mouth” Part 2: Two start-up cases The initiative - an app PickyEating – the company PickyEating founded in 2017 Three co-founders Operating in the field of food-tech – digitalization of food and food information Launched the app PickyEating in 2018 Part of SU Innovation’s incubator Financed by bank loan (Almi) The persons 🔎 💡 🛠 Hanna von Schantz, CEO Sofia Skantze, co-founder Mikael Naeslund, co-founder entrepreneur app development entrepreneur 💵 start-up and roll-out digital marketing start-up and exit e-commerce customer experience app development entreprenurial finance management consultant system architect PhD MBA MSc Other competences: Nutritionist, data analytics, front-end development, UX, design/brand The opportunity 2024-10-09 Execu@ve MBA –Strategisk HR-ledning 35 The opportunity Environment More than 4 Million Swedes are ”picky eaters” - 20% of Swedes state that they are sensitive/intolerant to a specific food - Every third person actively follows a diet - Voluntary dietary choices are increasing for lifestyle, ethical, environmental and health reasons - Product traceability is becoming a common requirement among consumers - Every 4th person wants to reduce meat eating, the search for alternative protein sources has begun - Individual dietary preferences have a major impact on relatives PickyEating 2.0 Dietary profiles: Nutri&on ✔ Low.. ✔ reduced.. ✔ Free from.. ✔ Source of.. Health ✔ Probio&cs ✔ Func&onal food Personalized content: Diets Recipes ✔ Vegan Discount vouchers ✔ Vegetarian (lacto) Inspiration ✔ Vegetarian (ovo) Campaigns Climate Social network features ✔ Traceability ✔ Co2 Ingredients/e-numbers ✔ Palmoil ✔ E 951  Proof of concept… among end- users Proofing the PickyEating concept: - 13 profiles - 7 000 users - Regular usage (scanning) - Gluten, milk most used profiles - Frequent customer interaction around developments Business model development – defining value ByBarb – the initiative ByBarb makes it easy and fun to improve hair wellbeing and looks by offering a “hair care capsule wardrobe” with a few essential high-performance tools and accessories that are made to last, both in terms of design and quality. Our products are for those who want to take their hair game to the next level and desire a touch of luxury in their beauty routine. ByBarb – the company Launched in January 2020 Two co-founders - Sara & Hanna Operating in beauty retail – hair care (tools/accessories) B2B and D2C sales Self-financed/bootstrapping The opportunity “Gap in the market” Trendy and fashionable products, increase in both supply and demand No “proper” hair accessory brands No “mid-price”/premium brands No niched brands within the industry First business idea "One-stop-shop for hair accessories, catering for all styles, trends and hair"  Pivoting Slimmed down the assortment Got “clear” on our brand values Focused on wholesales (B2B) Listened to and developed for our core customers REPEAT Rewriting our story, get clear(er) on our brand values Focus groups – concept development Focusing on D2C International outlook Proof of concept 3 M SEK in sales 2023 Classic retail business model 1. B2B - Large e-tailers e.g. Douglas.de , Åhléns, Lyko, Boozt,, Apotea, Apoteket 2. D2C – www.bybarb.se 3. White-label Solid margins Positive market trends - hair care is growing Good press/media coverage + influencer traction Defining value VALUE TRIGGERS OBSTACLES/UNCERTAINTIES - Superior quality - D2C or B2B? - Elegant/timeless design - Volume - Price level - Price - Knowledge and expertise - Competition - Brand - Cash-flow - Sustainability – does the customer really care? - Inflation and consumption slow-down - E-commerce branding/marketing is expensive  The ByBarb journey 2024/2025: Focus on B2B. Physical retailers 2021: Concept development Logistics Re-exploring D2C partner Pivot to B2B 2020: 2020: Focus on D2C (e- Launch of D2C commerce) www.bybarb.se 2019: Registration of legal Aug 2019: entity - AB Formex fair First ”customers” Two start-ups – two slightly different methods PickyEating: Effectual logic Doing something new – creating a new market No clear business model - Solving a problem, not really knowing what the end-product will be - No benchmarks, no customers, lots of talk but no action among established companies/stakeholders… ByBarb: Predictive (causual) logics Doing something better – launching in an existing market Taken-for-granted business model - Classic management tools: SWOT, competitive analysis, benchmarks - Defining our USPs and building brand - Competing over exiting market shares and shelf spaces  Conclusions/recommendations What type of opportunity do you have? Dare to test - you don’t know beforehand if your initial idea is good or bad Be clear on the problem you are solving (who is your customer?) Be patient and prepare for change of plans Keep cool - the entrepreneurial process is not linear Who will pay? - define value for your users/customers Nail the business model ASAP - customers, revenues, margins, profits Mixed team = strong team - different skills/personalities Questions?! 📩 [email protected] @bybarb_hair