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BM2313 ENTREPRENEURSHIP AND VALUE CREATION Entrepreneurial Traits Entrepreneurs Have an Empowering Perspective of Failure EXAMPLE: The traditional school system trains children...

BM2313 ENTREPRENEURSHIP AND VALUE CREATION Entrepreneurial Traits Entrepreneurs Have an Empowering Perspective of Failure EXAMPLE: The traditional school system trains children to close their books and not ask for help when taking exams. Assessments are usually labeled as either pass or fail. Along the way, old-fashioned teachers also train students to believe failure is bad. In reality, failure is simply feedback. Failure is the way people learn and grow. For most people, failure is not a correction but a rejection. Never take failure personally. Remember: Failure is a verb, not a noun. Failure is something a person does – it's not something s/he is. Failure is the opportunity to begin again in a new and better way. Successful entrepreneurs believe failure is inevitable and educational (Smith, 2012). Failure is feedback from the real world, and one of the first benefits a person can gain from it is the knowledge that he took action. He created a result. He made an impact on the world. Positive or negative, he made a difference through his actions and created an experience he could learn from. Entrepreneurs must seek and find the answers they need. It does no good to stay angry and blame others for a failure after it happened. Entrepreneurs must learn to detach from blame. Entrepreneurs must stay strong during life's failures (Smith, 2012). Entrepreneurs Know a Little About a Lot EXAMPLE: Smith once heard a story about a CEO meeting with an external visitor. An employee burst in during the meeting and said, "We’ve got a problem. We’ve got to handle this right now!” The CEO calmly looked at the employee and said, “Remember rule number five (5).” The employee thought for a second, smiled, relaxed, and said, “Right – rule number five (5). Thank you,” and then turned and walked out of the room. The CEO resumed his conversation, and within minutes, another employee came running in and said: “Something has just come up that requires your immediate attention.” Once again, the CEO calmly looked at the employee and said, “Remember rule number five (5).” The employee visibly relaxed and said, “Oh yeah – rule number five (5). Sorry, I forgot.” Then he smiled and walked out of the room. Rule number five (5): Don’t take yourself so seriously. The visitor is confused and surprised because he hasn’t seen anything like this before. When he asked the CEO what rule number five (5) was, the CEO smiled and said, “Rule number five (5) is “Don’t take yourself so seriously.” The visitor asked, “How many rules are there?” The CEO smiled even bigger and said, “Just one.” The story's moral is that things are rarely as serious as they may first appear. While inexperienced entrepreneurs may run around trying to put out fires, a more seasoned entrepreneur will let many fires burn themselves out. Why? Because entrepreneurs know a little about a lot, this broader, more generalized view allows them to see what’s truly important and keep things more balanced (Smith, 2012). 02 Handout 1 *Property of STI  [email protected] Page 1 of 7  BM2313 Entrepreneurs Give and Receive Praise Correction EXAMPLE: A karate teacher uses a powerful tool to get the best from his students and himself. It’s called “PCP,” which stands for Praise, Correct, and Praise. Rather than criticizing or correcting errors immediately, when the instructor spots a mistake during a student’s training, he uses the PCP strategy to get better results, first praising or complimenting the student on what he did right, then correcting the mistake, and then praising the improvement. For instance, if a child halfheartedly kicks his leg instead of kicking with force, the instructor might say, “Great, excellent, you got your leg moving in the right direction. Now let’s do it with more strength.” When the child kicks harder, the instructor gives him a high five and says, “That’s it, good job!” Praise, then correct, then praise again. A spoonful of sugar helps the medicine go down. Praise is like sugar; correction is like medicine. Adults enjoy being praised just as much as children, and praising people is a key secret to success (Smith, 2012). Entrepreneurs Fly with Eagles EXAMPLE: Ken Krogue, a writer at Forbes, had his friend, Troy Fullmer, experience a slight inconvenience during their meal together. He asked the waitress for a little change in how his meal was prepared, and the waitress responded with, “Oh, we can’t do that, I’m sorry.” Troy replied, “Can I talk to your manager?” The manager came out, and Troy immediately received the slight change he requested. It was possible. People before the process. Customers before policy. Just like eagles, entrepreneurs are fearless and, thus, very results-oriented. Also, they are always prepared for change. Just like what the manager had done, he put Troy’s comfort first, knowing that his concern was a form of constructive feedback rather than a harsh criticism of their management. Entrepreneurs nurture their teams. Eagles build nests and hunt for their eaglets. While eagles push their eaglets on the cliff's edge, the father eagle catches them until they start flapping their wings. The manager showed the waitress how to properly handle the situation so that the next time it happens, the waitress will know what to do. Entrepreneurs Look into The Future Few people understand the power of vision. Vision makes things happen; good health does not just happen without a vision to make it happen; financial freedom does not just happen without a vision to make it happen. Vision attracts power. It’s what attracts wisdom. Great entrepreneurs use vision to create a balanced approach to productivity. People balance their time by planning for the future and acting in the present. Most entrepreneurs spend very little time looking into the past. It does not mean hindsight is unimportant–it can be used to develop good foresight (Smith, 2012). While it is important to value hindsight, don’t let it limit your foresight. 02 Handout 1 *Property of STI  [email protected] Page 2 of 7  BM2313 Entrepreneurs that Changed the World The following are the entrepreneurs who changed the world: Tony Tan Caktiong (Jollibee) Caktiong was not intimidated when McDonald’s had its first outlet in the Philippines, mainly because the foreign fast-food chain did not know the local food culture. Filipinos have a sweet taste in food and like to smell everything they eat. Jollibee Foods Corporation (JFC) started establishing franchises outside the Philippines: Hong Kong, the Middle East, the USA, Italy, Canada, etc. These enabled millions of Filipino overseas workers to taste their homes in other countries (Jollibee Foods Corporation, 2023). Angeline Tham (Angkas Ride Sharing App) Angkas app is one of the top transportation choices for people living in cities across the Philippines and has already been downloaded more than 1.5 million times. Angkas has a 99.99-plus percent safety record, and Tham is working towards offering free training for 14 million bikers nationwide and planning to launch the country’s first motorcycle ambulance (Angkas, n.d.) Howard Schultz (Starbucks Coffee Company) Schultz first joined Starbucks Coffee Company as its Marketing Director. In 1986, he opened his coffee shop called “II Giornale.” Later, the co-founders of Starbucks decided to sell the company to Schultz. He then executed his plan to grow the company nationwide aggressively. There are now about 30,000 Starbucks locations worldwide. Howard retired from Starbucks in 2018 but rejoined the company. In 2023, he became the chairman emeritus and stepped down from the board of directors (Starbucks, 2023). Phil Knight (Nike) Knight had been a track runner at the University of Oregon, where he observed the coach fiddling with the running shoes of the runners and the immediate effect it had on their performance. (Martin, 2023) At Stanford, Knight handed in a paper detailing how he would run a company of quality running shoes in Japan because of low production costs. The enterprise was first called Blue Ribbon Sports and faced many problems, including financial disagreements with banks. Today, Nike generates nearly $45 billion or 2.5 trillion pesos in sales (Forbes, 2022). Reed Hastings (Netflix) In 1997, Reed Hastings and Marc Randolph co-founded Netflix, an online movie rental service offering customers flat rates. Around 2005, Netflix tried to make a name for itself by shipping DVDs to customers and, later, allowing customers to stream movies and television shows online. In February 2007, the company delivered its billionth DVD and began to move away from its original core business model of DVDs by introducing video on demand. Netflix grew as DVD sales fell from 2006 to 2011. Netflix ushered in the online streaming era. As of 2020. Netflix reported 169 million paid subscribers and a revenue of $20.1 billion or 1.1 trillion pesos (Hastings, 2023). Amancio Ortega (Zara) Ortega left school at 14 to sew shirts by hand for a tailor. In 1968, following his ambition and intuition, he began a company called “Confecciones Goa” that sold dressing gowns, housecoats, and lingerie that women in cooperatives had made for him (Behan, 2022) 02 Handout 1 *Property of STI  [email protected] Page 3 of 7  BM2313 In 1975, Ortega and his wife Rosalia opened their first retail store, Zara, which offered higher quality made clothes at reasonable prices. By the 80s, Zara’s were located throughout Spain. Ortega incorporated Zara into a holding company called the Inditex Group, and today, Zara has locations worldwide. Ortega’s net worth is over $57.5 billion or 3.2 trillion pesos. Walt Disney (The Walt Disney Company) The commercial success of Mickey Mouse allowed Disney to create a cartoon factory with teams of animators, musicians, and artists. Disney turned that mouse into several amusement parks, feature- length animations, and a merchandising bonanza. After his death, the growth continued, making Disney and his mouse, the founders of the world's largest media company (Walt Disney Archives, 2023). Mark Zuckerberg (Meta) He is the founder, chairman, and Chief Executive Officer of Meta, which he originally founded as Facebook. He studied computer science at Harvard and then opened an office in Palo Alto, California, where he raised $12.7 million or 635 million pesos in venture capital. Since then, Zuckerberg has aggressively grown the company, which went public in 2012. He has developed a robust advertising and sales arm and rigorously built out Facebook’s capabilities and user bandwidth by enabling native video services and live streaming. Zuckerberg also spearheaded several acquisitions, including Instagram, Oculus VR, etc. (Meta, 2023) Steve Jobs (Apple) His mission was to build a personal, portable computer that everyone could use. They achieved that with their second model of the personal computer, the Apply IIc. In 1980, Apple went public with a market value of $1.2 billion or 66.7 billion pesos by the end of its first day of trading. (Editors, 2023) Elon Musk (SpaceX) Elon Musk founded the aerospace company in 2002 to " revolutionize space technology, with the ultimate goal of enabling people to live on other planets,” according to the company website. SpaceX launched its newest rocket – Falcon Heavy, the most powerful operational rocket in the world with reusable launchers – last February 6, 2018, with zero (0) failure. In addition to SpaceX, Elon Musk serves as chief executive of Tesla Motor Co., an electric car company, is chairman and co-founder of SolarCity, and is working to build a high-speed “Hyperloop” transportation system, which – in theory – could revolutionize travel by cutting commute time (Gregersen, 2023). Anne Wojcicki (23andMe) She is the co-founder and CEO of 23andMe, which sells direct-to-consumer genetic testing kits that are easy to use – it simply requires a person to mail in a saliva sample – and relatively inexpensive, at $99 or 5,000 pesos a test. The company’s genome kits, which were named “Invention of the Year” by Time magazine in 2008, test for 36 recessive disorders, including sickle cell anemia and cystic fibrosis. In 2013, the company ran into trouble when it was ordered by the Food and Drug Administration (FDA) to stop selling its kits over questions about the reliability of the results. Instead of arguing with the FDA, Wojcicki worked closely with the agency to prove the tests were accurate. Thus, in 2015, 23andMe launched an FDA-approved testing kit. 02 Handout 1 *Property of STI  [email protected] Page 4 of 7  BM2313 The company continues to innovate, recently raising $115 million or 6.4 billion pesos to develop its drug-discovery arm (23and Me Blog, 2023) Larry Page and Sergey Brin (Google/Alphabet) In 2004, Google went public. Since then, the company has diversified, rolling out products including Gmail, Google Maps, Google+, and Google Glass. The company also develops self-driving cars, robotics, life sciences, and AI products. All these projects, including Google, are part of a parent company called Alphabet. Page and Brin are co-founders of Google and have restructured the company to create Alphabet, Google's parent company (Statt, 2019). Value Creation The Entrepreneurial Value Creation Theory, from the name itself, explains how entrepreneurs create value through a venture. Organizations have nearly perfected implementing the industrial model of managing work (the effort applied toward completing a task). This model ensures that individuals know what is required from them. For organizations, it guarantees predictability and efficiency. The problem with the model is that work is becoming commoditized at an increasing rate, extending beyond manual tasks into knowledge work, as data entry, purchasing, billing, payroll, and similar responsibilities become automated. If the organization draws value from optimizing repetitive work, one may find that it will be increasingly difficult to extract value. Today's value of products and services is based on creativity (innovative ways of utilizing new materials, technologies, and processes). Value creation in the past was a function of economies of industrial scale: mass production and the high efficiency of repeatable tasks. Value creation in the future will be based on economies of creativity: mass customization and the high value of bringing a new product or service improvement to the market; the ability to find a solution to a vexing customer problem, or the way a new product or service is sold and delivered. Becoming “more innovative” has become a mantra of management gurus, but it is clear that this advice is not enough. The challenge is not just creating value from innovation but also capturing that value. EXAMPLE: Kenneth Frazier, chairman and CEO of Merck & Co. (an American multinational pharmaceutical company), believes businesses exist to deliver value to society. Since becoming CEO in 2011, he has earned praise for stabilizing Merck. He has restored the importance of the company's research and development (R&D)nd overseen promising new launches, such as the cancer drug Keytruda (Merck, 2022). The vision of Merck & Co. To make a difference in the lives of people globally through our innovative medicines, vaccines, and animal health products. We are committed to being the premier, research-intensive biopharmaceutical company dedicated to providing leading innovations and solutions for today and the future. He believes that while a fundamental responsibility of business leaders is to create value for shareholders, the business also exists to deliver value to society. Merck has existed for 126 years; its shareholders have turned over countless times. But their salient purpose worldwide is to deliver important vaccines and medicines that make a huge difference to humanity. The revenue and shareholder value they create is an imperfect proxy for the value they create for patients and society. 02 Handout 1 *Property of STI  [email protected] Page 5 of 7  BM2313 The Rationale for a Sustainable World How did we get to the point where we are running out of the resources (such as oil) that support our way of life and others (such as clean air and fresh drinking water) that support life itself? And how did entire industries, such as fishing and agriculture, find themselves in trouble, as chronic overfishing and the drive for ever-higher crop yields led to widespread depletion of fish stocks and a historic loss of topsoil? The short answer is: We are running out of resources due to our numerous technological successes. In the first stage of the Industrial Revolution (1750-1820), large-scale manufacturing caused labor productivity in England to rise a hundredfold. But the revolution did not simply change the way we worked; it transformed the way we lived, the way we thought about ourselves, and the way we viewed the world. Nothing like it had ever occurred before. It did not take long for innovations such as the assembly line to spread to other countries in northern Europe and to the hinterlands of the United States, whose exploding population and vast store of natural resources enabled the former colony to become the next industrial power. The industry was booming, and so, too, were the material living standards. The country's industrial production grew thirty-fold as the United States population increased from about 10 million to 63 million between 1820 and 1890. The resulting fivefold growth in output per person was even greater than the productivity gains on the other side of the Atlantic. The impacts the Industrial Revolution had on the quality of life were undeniable. As industrial expansion continued into the twentieth century, life expectancy in the industrial world roughly doubled, and literacy jumped from 20 percent to over 90 percent. Benefits sprang up in products (from private cars to iPods), services (from air travel to eBay), and astounding advances in medicine, communication, education, and entertainment. With this kind of success, it is little wonder that the side effects of the Industrial Age success story were largely ignored. But the downsides of great prosperity were steadily accumulating from the very beginning. In the 1800s, England’s level of fossil fuel combustion grew dramatically, and so did water and air pollution levels. In the late 1800s, London’s infamous “fog,” particulate emissions from burning coal, caused a virtual epidemic of respiratory diseases once confined to coal-mining communities. By 1952, air quality in London was so bad that the “great smog” (four days of toxic air trapped over the city) killed more than 4,000 people and galvanized the government to create air pollution regulations. Although the problems of the Industrial Age have been evident for decades, it urged people to wake up and start operating differently due to global climate change (Senge, Smith, Kruschwitz, Laur, & Schley, 2010). Creating Beyond Reactive Problem-Solving Problem-solving involves making undesirable matters go away. Creating consists of bringing something into reality. It reflects a subtle yet profound distinction that will make all the difference in the future. Creating draws energy from dreams or visions of what people truly want to see exist (in concert with an accurate and insightful understanding of what is). Reactive problem-solving draws energy from crises, usually driven by fear (fear of the consequences if we fail to solve the problems). A sustainable future will involve a new energy system, new types of buildings and transport, and new ways to dramatically reduce waste and toxicity – based on new products, processes, business models, and methods of managing and leading. It will require passion and patience, people working together toward 02 Handout 1 *Property of STI  [email protected] Page 6 of 7  BM2313 aims with genuine meaning and opening themselves to ideas that may seem foreign and even threatening. And it will require the courage to act without all the answers, moving beyond the comfortable approach of “figuring out the answer and then implementing it.” The creative process is inescapably a learning process, which means venturing into complex and uncharted territory with openness and humility and continually discovering shortfalls. Tapping and developing the potential of people and organizations to create the future rather than react to the present rests on two (2) foundations that have always been at the core of organizational learning: visions for the future and an understanding of the present reality. The power of genuine vision is understood in cultures worldwide. But just as important is the ability to see the current state of things as objectively as possible. It is often misunderstood by people who appreciate the importance of vision. Still, they would rather not look at difficult or painful aspects of the current situation, as well as those who prefer to look only at the bad and not recognize what is positive about their current situation that they can build on (Senge, Smith, Kruschwitz, Laur, & Schley, 2010). In particular, seeing the present systematically is crucial to creating the future. People get so drawn into fragmented views of the “problem” that they often resort to superficial quick fixes. EXAMPLE: People everywhere today are reacting to different facets of the sustainability crisis, but many of the efforts represent reactions to what are seen as separate and distinct threats – climate change, high oil prices, growing waste and toxicity, unhealthy food, water shortages, social and political stability – as opposed to a deep reflection on the interconnections between these different issues (Senge, Smith, Kruschwitz, Laur, & Schley, 2010). References: 23and Me Blog. (2023, October 16). Retrieved from Anne Wojcicki: https://blog.23andme.com/tag/anne-wojcicki Angkas. (n.d.). Angkas. Retrieved from About: Our Story, Journey, and Advocacy: https://www.angkas.com/about- us#:~:text=The%20Birth%20of%20Angkas,the%20country's%20congested%20urban%20areas. Behan, A. (2022, April 15). Investopedia. Retrieved from Business Leaders: https://www.investopedia.com/terms/a/amancio- ortega.asp Editors, B. (2023, May 23). Biography. Retrieved from Entrepreneurs: https://www.biography.com/business-leaders/steve-jobs Gregersen, E. (2023, October 12). Britannica. Retrieved from History & Society: Elon Musk: https://www.britannica.com/biography/Elon-Musk Hastings, R. (2023, January 20). Neflix. Retrieved from Neflix News: https://about.netflix.com/en/news/ted-sarandos-greg- peters-co-ceos-netflix Jollibee Foods Corporation. (2023, October 16). Jollibee Foods Corporation. Retrieved from History and Milestones: https://jollibeegroup.com/history-milestones/ Martin, R. (2023, September 26). Britannica. Retrieved from History & Society: Phil Knight: https://www.britannica.com/biography/Phil-Knight Merck. (2022, October 26). Merck. Retrieved from News Release: Robert M. Davis to Succeed Kenneth C. Frazier as Chairman of Merck: https://www.merck.com/news/robert-m-davis-to-succeed-kenneth-c-frazier-as-chairman-of-merck/ Meta. (2023, October 16). Meta. Retrieved from Media Gallery: Mark Zuckerberg: https://about.meta.com/media- gallery/executives/mark-zuckerberg/ Senge, P., Smith, B., Kruschwitz, N., Laur, J., & Schley, S. (2010). The Necessary Revolution: How Indidviduals and Organizations Are Working Together to create a Sustainable World. Nicholas Brealey Publishing. Smith, K. C. (2012). The Top 10 Distinctions Between Entrepreneurs and Employees. Ballantine Books. Starbucks. (2023, October 16). Starbucks. Retrieved from Starbucks Stories & News: Executive Team: https://stories.starbucks.com/leadership/howard-schultz/ Statt, N. (2019, December 5). The Verge. Retrieved from The rise, disappearance, and retirement of Google co-founders Larry Page and Sergey Brin: https://www.theverge.com/2019/12/4/20994361/google-alphabet-larry-page-sergey-brin- sundar-pichai-co-founders-ceo-timeline Walt Disney Archives. (2023, October 16). Retrieved from Disney Hstory: https://d23.com/disney-history/ 02 Handout 1 *Property of STI  [email protected] Page 7 of 7