Chapter 14 - Entrepreneurial growth. The chapter is organized around four driving forces in the growth stages: leadership, the opportunity domain, resources and capabilities, and execution. Before we get to this discussion, let’s review a key decision every entrepreneur must consider beyond startup: whether to sell, maintain, or grow the venture.
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ENTREPRENEURI AL
GROWTH
Chapt e r 14
1
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2017 ©
You’ll have multiple post-startup options
Startu
p
Sell
Maintain
Grow
Options for Venture Options for Founder
Start Another Venture
Seek Other Employment Become a Manager
Become an Entrepreneurial Leader
Take Alternate Position in the Firm Exit Day-to-Day
Management
Exit Day-to-Day Management Stay With Company
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2017 ©
Execution becomes core driving
force
Leadership
Organizational Resources and Capabilities
Opportunity
Domain
Execution
U nc ert ain ty
En vi ro nm en ta
l C on di tio ns
Sta keh
old ers
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2017 ©
Control System Components
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2017 ©
Tracking performance to
support decision-making
The Entrepreneurs Critical Information Needs???
What the Entrepreneur
needs to know about
the customer/market?
What the Entrepreneur needs to know about
the competition/industry
What the Entrepreneur needs to know about his/her own company
CRITICAL FACTS & ASSUMPTIONS ABOUT PERFORMANCE MUST BE TRACKED TO
CONFIRM/DENY THEM IN TIME
SUPPOR TS
DP
TIMELY DECISIONS
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2017 ©
Know the difference between
performance & effectiveness
• Measure of Performance:
– Are we doing things right?
• Measure of Effectiveness:
– Are we doing the right things?
• Focus on tracking effectiveness
• If effectiveness is lacking, check performance
executing
improvement
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2017 ©
The faster you convert cash, the less you’ll need
Average Inventory Collection Period
+
Cash Conversion Cycle
=
Average Receivables Processing Period
–
Average Payables Period
Inventory
Received
Payment made to Suppliers
Sal e
Payment Received from Customers
Cash Conversion Period
Days Sales Outstanding Days in Inventory
Days in Payables
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2017 ©
Consider outsourcing non-core activities
• Activities that don’t underpin your
competitive advantage might be done
better and/or for less by others.
• Focus on your critical competencies.
• Balance your need for control with your ability to control.
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2017 ©
Implement controls and remain entrepreneurial
• Minimize controls to those needed to align and coordinate your venture
• Within those controls, give employees
wide latitude to achieve objectives
• Underwrite mistakes of employees who
take rational risks
• When large enough, organize to
simultaneously:
– Execute the present (tactical)
– Refine near-future plans (operational)
– Innovate new ways to realize your vision in
the future (strategic)
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2017 ©
Expand from your competitive advantage
Distribution
• To Gift Shops
• Direct through retail, online, catalogs
• Wholesale
New Products
• New Candles
• Home Fragrance
• Gifts
Geographic Expansion
• Regional
• National
• International
Acquisition
• Gifts for fundraising market
Candles
YANKEE CANDLES’ OPPORTUNITY
DOMAIN
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2017 ©
Obtain & program resources to
develop critical capabilities
• During growth, you’ll focus on funding
• Capable and well run ventures get higher quality funding
• Use of funds must support developing your organizations’ intangible capabilities (i.e., your team)
• Forecast to align capabilities with market needs and your strategy
• Balance between developing capabilities for your customers &
finding more customers for your capabilities
• Similar to cash conversion; the capability development cycle can take time…plan ahead.
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Understand what type of leader your team needs you to be
operations
Leverages core business while exploring new opportunities
Starts a business implements the business Starts businesses within an ongoing
organization
capabilities and builds new ones to expand opportunity domain
Establishes and
implements a vision
Plans, organizes, staffs, controls
Establishes a vision and empowers others
to carry it out
Builds an organization
around the opportunity
Enhances efficiency of organization
Maintains entrepreneurial ability as organization grows; ensure culture, structure, systems are conducive to entrepreneurship; removes barriers
Leads and inspires Supervises and monitors
others
Develops and guides entrepreneurial individuals; bridges between individuals and groups with diverse expertise and orientation
Orchestrates change in
the competitive
environment
Maintains consistency and predictability
Orchestrates change in both the organizational and competitive environment
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2017 ©
Become an entrepreneurial leader
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Growth requires more managers