The Entrepreneurial Mind BSCS301A-2Y1T PDF

THE ENTREPRENEURIAL MIND BSCS301A-2Y1T PRELIMINARY Triple Bottom Line (TBL) 03 ENTREPRENEURIAL THINKING 01 ENTREPRENEURSHIP IN PERSPECTIVE This phrase coined in 1994 by...

THE ENTREPRENEURIAL MIND BSCS301A-2Y1T PRELIMINARY Triple Bottom Line (TBL) 03 ENTREPRENEURIAL THINKING 01 ENTREPRENEURSHIP IN PERSPECTIVE This phrase coined in 1994 by John Elkington, the Entrepreneurial Curiosity Entrepreneurship in the Modern World founder of a British Consultancy called Sustainability.  Curiosity - is the impulse to seek out new ideas and  Entrepreneurs - seek opportunities, take risks TBL Consists of (3) Ps: experiences; is the spark of creativity and innovation beyond security, and have the drive to push an idea  Profit - refers to the real economic value 4 DIMENSIONS OF BUSINESS RESEARCH: to reality. created by business and enjoyed by the host  Curiosity - a thirst for new experiences and knowledge  Entrepreneurial Mindset - generates creative society.  Insight - the ability to gather and synthesize information ideas inside or outside business or non-business  People - refers to a business’s impact on  Engagement - the ability to connect with others; activities. employees and people outside the business. communicate a vision  Enterprise - identifying, developing, and bringing a  Planet - environmental stewardship  Determination - the persistence to overcome obstacles and vision to life; an innovative idea of doing something. achieve challenging goals  Enterprising - “marked by imagination, initiative, 02 ENTREPRENEURSHIP AND VALUE Enhancing Entrepreneurial Curiosity and readiness to undertake new projects” CREATION  Ask the right questions - differentiate an excellent question  Entrepreneurial - “willing to take risks to create Entrepreneurial Traits from a bad question value”  Entrepreneurs Have an Empowering  Innovation time - Schmidt (Google) credited with Entrepreneurial Economy Perspective of Failure pioneering a 70/20/10 management model; 70% core Entrepreneurs make (3) indispensable contributions  Entrepreneurs Know a Little About a Lot business tasks, 20% related projects, 10% unrelated to the economy:  Entrepreneurs Give and Receive Praise projects  Entrepreneurs create new businesses Correction  Always listen without judgement - curious people have no  Entrepreneurs contribute greatly to national  Entrepreneurs Fly with Eagles hidden agenda; they seek to understand others development  Entrepreneurs Look into The Future  Entrepreneurs create social change Entrepreneurs that Changed the World 04 DISRUPTIVE THINKING AND INNOVATION Entrepreneurship Spectrum Tony Tan Caktiong (Jollibee) Types of Innovation  Entrepreneurs on starting a business from Angeline Tham (Angkas Ride Sharing App)  Process Innovation - a change in how a product or service scratch - enables the entrepreneur to be productive; Howard Schultz (Starbucks) is manufactured; to achieve greater efficiency sole proprietor Phil Knight (Nike)  Product/Service Innovation - creating new ideas that do  Entrepreneurs on starting a family business - Reed Hastings (Netflix) not alter established business models long-term orientation; maximize the well-being of Amancio Ortega (Zara)  Disruptive Innovation - introduces a new value proposition current and future generations Walt Disney (The Walt Disney Company) Kinds of Disruptive Innovation:  Entrepreneurs on entering a partnership - Mark Zuckerberg (Meta)  Low-end disruptive innovations - can occur when multiple sources of cash flow Steve Jobs (Apple) existing products/services are “too good”  Entrepreneurs on buying an existing business - Elon Musk (SpaceX)  New-market disruptive innovations - can occur less risky than starting from scratch Anne Wojcicki (23andMe) when existing product characteristics limit the number Entrepreneurship and Sustainable Development Larry Page and Sergey Brin (Google/Alphabet) of potential customers Value Creation Disruptive Innovation Theory Industrial Age System vs. Modern Age System Entrepreneurial Value Creation Theory Disruptive Innovation - describes inventions that make - explains how entrepreneurs create value through a products and services more accessible, affordable, and venture available to larger population  The Rationale for a Sustainable World 4 POINTS TO IDENTIFY DISRUPTIVE INNOVATION  Creating Beyond Reactive Problem-Solving  Disruption is a process  Creating - draws energy from dreams and  Disrupters often build business models that are very different visions; truly want to see exist from those of incumbents  Reactive Problem-Solving - draws energy  Some disruptive innovations succeed; some don’t from crises; usually driven by fear  The mantra “disrupt or be disrupted” can misguide people  THE ENTREPRENEURIAL MIND BSCS301A-2Y1T MIDTERM Circle of Influence and Circle of Concern  Think win-win - agreements/solutions mutually beneficial and 05 DEVELOPING THE ENTREPRENEURIAL MIND satisfying; cooperative not competitive Entrepreneurial Habits  Curious being - make it a habit to be open and curious about everything; generate ideas for their next moves  Turn obstacles into assets - believe and act as if everything is a gift; good way of looking at the challenges  Having a high tolerance of ambiguity - makes more likely to take risks; makes less likely to get  As people look at matters within their circle of anxious when faced with uncertainty concern, it becomes apparent that there are  Using fears and anxieties as fuel - Research by some things that they cannot control (Covey, Dr. Alison Wood Brooks; trying to calm down during 1989) an anxiety attack can only worsen performance, PRINCIPLES OF CIRCLE OF CONCERN anxiety must be reframed as excitement  Begin with the end of mind - envisioning the  Focus on the causes, not effects, of confidence future; mental (1st) creation and a physical (2nd) and success - when people succeed, they tend to creation (Covey, n.d.) focus on the causes of success  Put things first - (2) factors define an activity:  Be proactive - more than merely taking the initiative; urgent and important; people are responsible for their lives urgent - requires immediate attention; usually visible The effects of being proactive important - has to do with results; contributes to a mission, value, and high-priority goals “Time Management Matrix”  Seek first to understand, then to be understood - either speaking or preparing to speak, filter everything into other people’s lives Emphatic listening - getting inside another person’s frame of reference; understand how they feel; not sympathy Sympathy - form of agreement or judgement  Highly proactive people recognize that responsibility “Process of emphatic listening” means the ability to choose a response; they do not blame circumstances for their behavior; value-based choice  “No one can make you feel inferior without your consent” - Eleanor Roosevelt  THE ENTREPRENEURIAL MIND BSCS301A-2Y1T  Parikh’s Model - Indira Parikh, president of Business Models the Foundation for Liberal and Management Embedded in a firm’s business plan, income statement, and cash  Synergize - means that the relationship within an Education (FLAME), argues that the ancient flow projections; conceptual, rather than a financial, framework; organization is catalytic, empowering, unifying, and wisdom of Hindu scriptures can be appropriated describes how a company creates and captures value exciting (Covey, 1989) to business practices. It outlines the business logic required to earn a profit (if one is “Concept of Synergy”  Bhagavad Gita - asserts people should available to be earned) and, once adopted, defines the way the focus on their thoughts/actions rather than enterprise “goes to market” (Teece, 2010). the outcome of their actions The Six (6) Primary Considerations in Developing a Business Karma Capitalism - ancient text describes the Model: concepts of emotional intelligence and servant 1. A more personalized product or service. Offer products/services leadership; foundation for a new technology tailored to customers’ individual and immediate needs; leverage 1. Greed is bad. Entrepreneurs should never technology to achieve at competitive prices engage for the desire of rewards 2. A closed-loop process. Linear consumption process (products are  Sharpen the saw - having a balanced program that 2. Be fair. Enlightened leaders are made, used, and disposed of) with a closed loop; products are allows individuals to become more productive, compassionate and selfless; “They treat recycled. Instead of disposing after consumption, they are efficient, and effective in (4) areas of life: physical, everyone as equals” returned for reuse or recycling (e.g. bottled beverages) social/emotional, mental, and spiritual. 3. Act rather than react. Leaders accomplish 3. Asset sharing. Sharing costly assets; unlock value for both sides “excellence by taking action”; influences (e.g. Uber shares assets with car owners, landowner who gets their status tomorrow money from renting a spare room) 06 DEVELOPING BUSINESS ACUMEN 4. Seek higher consciousness. Leaders should 4. Usage-based pricing. Charge customers when they use the The Purpose of Business view problems within larger contexts; show product or service rather than requiring them to buy something  Naert’s Model - Philippe Naert, dean of the sensitivity outright (e.g. customers billed for credit cards at the end of the Antwerp Management School in Belgium, proposes  Dharma - Dr. Athreya, a renowned month only if they use the service) that economic and societal values can be pursued management guru, has highlighted some 5. A more collaborative ecosystem. Improving the relationship with simultaneously (Erisman & Gautschi, 2015) of the core concepts of Dharma (natural supply chain partners for a new technology; helps allocate  Modern companies create economic and law) as enshrined in the Indian Shastras business risks more appropriately; crowdsource new ideas societal values while establishing a win-win (timeless principles); can be understood as (Smith, 2015) relationship between business and society a righteous duty/path to uphold the family 6. An agile and adaptive organization. Use technology to move  A healthier workforce leads to lower and the organizational and social fabric. away from traditional hierarchical decision-making models; absenteeism at work Main Principles of Dharma (applied in better reflect market needs and allow real-time adaptation (e.g.  Van Duzer’s Model - Jeff Van Duzer, dean of the business) Amazon changes business conditions/customer requirements) School of Business and Economics at Seattle 1. Loka Sangraha (Public Good) - welfare of Pacific University, proposes the purpose of business others (2)-fold: 2. Kaulasam (Efficacy) - concern for ecology;  To serve customers by providing goods and sensible use of resources for future services that promote human flourishing generations  To serve employees by providing opportunities 3. Vividhta (Innovation) - beyond survival, for meaningful and creative work constantly seeking for more effective - Duzer suggests that profit should be best viewed solutions to meet its economic and social as a means to serve customers and employees. expectations “The purpose of a business, in other words, is not to 4. Jigyasa (Learning) - change and continuity make a profit, full stop. It is to make a profit so that coexist; keep learning from the feedback business can do something more or better.” - Duzer loop of society  THE ENTREPRENEURIAL MIND BSCS301A-2Y1T 07 THE LANGUAGE OF BUSINESS INCOME STATEMENT Financial Ratios Understanding Financial Statements - shows the revenues earned and expenses incurred RETURN OF INVESTMENTS (ROI) STATEMENT OF FINANCIAL POSITION by a business over an accounting period “profit-and- (BALANCE SHEET) loss statement (P&L)” - financial position of a business on a certain date (end of the month or year) - return on the owner’s equity “return on equity (ROE)” - relates income or profit after income tax to the total stockholder’s equity - average stockholders equity: beginning balance + ending balance / 2 PROFIT MARGIN/RETURN ON SALES (ROS) “Revenue -Total Expenses = Net Income” - low profit margin → unsecure company profit; experiences decline in PRIMARY FUNCTIONS OF THE INCOME sales STATEMENT: - declined profit margin → negative profit margin; has lower sales than  Wealth Generation - assess how much wealth other companies has been created; reveals the firm’s profit for a - high expenditures (low profit margin) → too much inventory, too many given period employees, inappropriate operating spaces (e.g. large office requiring higher  Profit Derivative - provides information needed rent pay) - higher profit margin → more profitable company; better control over its “Total Assets = Total of Liabilities and Owner’s Equity” to gauge business performance; reveals the costs than its competitors PRIMARY FUNCTIONS OF A BALANCE SHEET: level of sales revenue and amount of expenses RETURN ON ASSETS (ROA)  Business Funds - shows the capital contribution of CASH FLOW STATEMENT owners, acquired assets of the business and - focuses on liquidity (balancing the cash outside lenders inflows/outflows) to enable firms to operate and pay  Business Value - provides a starting point; lists all their bills when they are due assets and business claims - shows how effectively the company has utilized its assets  Business Assets and Claims - can be helpful to - ROA: operating income / average total assets look at relationships between various statements of average total assets - used to better gauge asset utilization financial position items; current assets and how CURRENT RATIO much owed in current liabilities  Business Performance - relationship between profit earned and the value of net assets - relates current assets to current liabilities to show a firm’s immediate solvency and liquidity solvency - ability of a firm to meet long-term obligations liquidity - enterprise’s ability to pay short-term bills and debts current ratio - how much current assets are available to meet the current liabilities Ex. If the current ratio is 2:1, the company has 2php worth of current assets to meet every 1php of current liability higher current ratio → more solvent/liquid  THE ENTREPRENEURIAL MIND BSCS301A-2Y1T QUICK RATIO (ACID-TEST RATIO) INTEREST COVERAGE RATIO 3. Focus on the same buyer group, be it the purchaser, the user, or an influencer 4. Define the scope of the products and services offered by the industry - indicates a company’s short-term liquidity and measures its - indicates a company’s ability to meet its interest payment 5. Accept the industry’s functional or emotional orientation ability to meet its short-term obligations with its most liquid obligations; shows how many times the company earns its 6. Focus on competitive threats and formulate strategy assets annual interest expense Strategy Canvas quick ratio lower than 1 → does not mean into bankruptcy; lower percentage/ratio → risky - graphically depicts a company and its competitor’s value could heavily rely on inventory/other assets to pay its higher percentage/ratio → better proposition, suggests opportunities to escape/eliminate competition short-term liabilities Ex. Interest coverage ratio of 4:1 or more is desirable - rating scale graph of 1 to 5 higher quick ratio → better liquidity position a drop in ratio → drops the credit rating of the 2 PURPOSES OF STRATEGY CANVAS: too high quick ratio → too much cash reserved; high company  To capture the current state of a market space; see the accounts receivable 08 BLUE OCEAN STRATEGY factors the industry competes on and where the DEBT RATIO Red Ocean vs. Blue Ocean competition currently invests (Kim & Mauborgne, 2022)  To propel users to refocus from competitors to alternatives  Blue Ocean Strategy - creates new market space & stimulates new - general idea of the amount of leverage a company uses demand lower percentage/ratio → less leverage higher percentage/ratio → more risk - builds brands; can create brand equity that lasts for 30% below → healthy decades (e.g. IBM’s 360 series “the first family of 30 - 60% → moderate computers”) 60% and above → risky - never use the competition as a benchmark STOCKHOLDER’S RATIO  Red Ocean Strategy - competing in an existing market space to capture demand (e.g. MoveIT vs. Angkas vs. Joyride) - indicates the financial stability in the long run; how much of the company’s assets are funded by issuing rather than borrowing lower percentage/ratio → risky higher percentage/ratio → stronger equity 30% below → risky 30 - 60% → moderate 60% and above → healthy Occupying an Uncontested Market Space DEBT-EQUITY RATIO One Principle of the Blue Ocean strategy is to reconstruct market boundaries to break from competition SIX (6) STEPS/PATHS FRAMEWORK TO - measures the percentage of the company’s balance sheet RESHAPING MARKET BOUNDARIES: lower percentage/ratio → less leverage/stronger equity 1. Define industry requirements and focus on being higher percentage/ratio → more risk the best within them 2. Look at the industries through the lens of generally accepted strategic groups and strive to stand out  THE ENTREPRENEURIAL MIND BSCS301A-2Y1T ERRC (Eliminate, Reduce, Raise, Create) unconsciously make in competing within the - a helping tool in crafting a future strategy canvas “Four market (4) Actions Framework”; facilitates identifying the value “ERRC GRID” elements to be created, increased, decreased, or eliminated - a simple matrix-like tool that drives companies to focus simultaneously and creating/unlocking a new “Blue Ocean”; developed by W. Chan Kim and Renee Mauborgne “Four (4) Actions Framework” The ERRC Grid Tool for creating new Blue Ocean pushes companies to act on the questions posed in the Four (4) Actions Framework to create a new value curve/strategic profile. 4 IMMEDIATE BENEFITS OF ERRC GRID:  It pushes them to simultaneously pursue differentation and low cost to break the value- cost tradeoff  It immediately flags companies focused only on raising and, creating, solving problems related to cost structure and over-engineering products and services  Managers easily understand it at any level, creating a high degree of engagement in its application  It drives companies to thoroughly scrutinize every factor in the industry, helping them discover the implicit assumptions they