Entrepreneurship
Q: What is the definition of entrepreneurship?
A: The pursuit of opportunity without regard for resources currently controlled.
Q: What are the two "schools of thought" for defining entrepreneurship?
A:
1. Entrepreneurship as an Economic Function: It doesn’t make sense to decide what economic functions are entrepreneurial.
2. Entrepreneurship as a Set of Traits: A single psychological profile of an entrepreneur does not exist.
Note: Both only focus on some aspects of some entrepreneurs.
Q: What kind of phenomenon is entrepreneurship?
A: Behavioral.
Q: Strategic orientation is a continuum from _ to _?
A: Promoter to Trustee.
Critical Dimensions of Business Practice (According to Stevenson)
1. Strategic Orientation: Driven by either opportunity (promoter) or resources controlled (trustee).
2. Commitment to Opportunity: Act within short timeframes and pursue opportunities quickly.
3. Commitment of Resources: Maximize value by minimizing resource usage and accepting risk.
4. Control of Resources: Leverage others’ resources rather than owning them.
5. Management Structure: Coordination of uncontrolled resources, maximizing flexibility; employees want independence.
6. Reward Philosophy: Focus on value creation and harvest, with compensation based on performance.
Two Historical Definitions of Entrepreneurship and Their Flaws
1. Economic Function School:
○ Definition: Entrepreneurship is defined by specific economic roles, like innovation or risk-taking.
○ Flaw: Limits entrepreneurship to specific activities, ignoring the broad diversity of entrepreneurial ventures.
2. Individual Traits School:
○ Definition: Entrepreneurship is defined by personal traits, such as creativity or determination.
○ Flaw: Assumes traits are innate and static, overlooking the fact that entrepreneurial skills can be learned or developed.
Business Model Generation
Q: What is the definition of a business model?
A: A business model describes the rationale of how an organization creates, delivers, and captures value.
Q: What are the two types of revenue streams in a business model?
A:
1. Transaction-Based Revenue: Earned from one-time customer payments (e.g., buying a product).
2. Recurring Revenue: Generated from ongoing payments like subscriptions.
Q: What are the two types of pricing mechanisms?
A:
1. Fixed Menu Pricing: Prices predefined based on static variables.
2. Dynamic Pricing: Prices that change based on market conditions (e.g., auctions).
Environment Map (Four Components)
1. Key Trends: Cultural, societal, and technological trends.
2. Market Forces: Customer needs, market segments, and switching costs.
3. Macroeconomic Forces: Global economic conditions like interest rates and inflation.
4. Industry Forces: Competitors, new entrants, substitutes, and complements.
Six Forces Shaping Industry Competition
1. Bargaining Power of Suppliers
2. Intensity of Rivalry Among Existing Competitors
3. Threat of New Entrants
4. Bargaining Power of Buyers
5. Threat of Substitute Products
6. Complementors
Business Model Canvas (Nine Building Blocks)
1. Customer Segments: Different groups of people or organizations an enterprise seeks to serve.
2. Value Propositions: Products/services that create value for customer segments.
3. Channels: How businesses communicate with and deliver value to their customers.
4. Customer Relationships: Types of relationships a company establishes with its customers.
5. Revenue Streams: Cash a company generates from each customer segment.
6. Key Resources: Important assets required to make the business model work.
7. Key Activities: Most important actions a company must take to operate successfully.
8. Key Partnerships: Network of suppliers and partners to help the business succeed.
9. Cost Structure: All the costs involved in operating a business.
Value Proposition Canvas (VPC)
Q: What are the two main parts of the Value Proposition Canvas?
A:
1. Customer Profile (Circle):
○ Jobs: Tasks or problems customers are trying to accomplish.
○ Pains: Challenges or risks customers face.
○ Gains: Desired outcomes or benefits customers want.
2. Value Map (Square):
○ Products & Services: Offerings the business provides.
○ Pain Relievers: How the offerings address customer pains.
○ Gain Creators: How the offerings help customers achieve their desired gains.
Q: What are the three types of customer jobs?
A:
1. Functional Jobs: Specific tasks customers aim to complete.
2. Social Jobs: How customers want to be perceived or gain social status.
3. Emotional Jobs: Feelings customers wish to experience (e.g., security, satisfaction).
Q: What is the testing process?
A:
Testing Process: 1. Extract hypotheses 2. Prioritize hypotheses 3. Design tests 4. Prioritize tests 5. Run tests 6. Capture learnings 7. Make progress
Q: What is a call to action?
A: A prompt encouraging customers to perform a specific action, used in experiments to test hypotheses (e.g., signing up for a newsletter).
Four Types of Customer Gains
1. Required Gains: Essential outcomes or benefits that must exist for a solution to be considered functional (e.g., basic product functionality).
2. Expected Gains: Benefits customers expect in addition to the basic functionality (e.g., user-friendly interfaces).
3. Desired Gains: Features that customers would love to have but do not expect (e.g., aesthetic appeal).
4. Unexpected Gains: Surprising benefits that exceed customer expectations (e.g., innovative features).
Testing Process: Why is Step #4 (Prioritize Tests) Necessary?
Step #4 ensures efficient resource allocation by identifying which tests should be run first based on complexity, cost, and potential impact. While Step #2 prioritizes hypotheses,
Step #4 focuses on executing tests in an optimal sequence.
Types of Experiments
1. Ad Tracking: Measures the effectiveness of online ads by tracking clicks, conversions, or other engagement metrics.
2. Landing Page Test: Tests customer interest by observing interactions with a simple web page.
3. Prototype Testing: Collects feedback on a basic version of the product.
4. Innovation Games: Uses gamified activities to involve customers in prioritizing features or providing insights.
Customer Insights
Q: What are the six techniques for gaining customer insights?
A:
1. The Data Detective: Uses existing reports and data.
2. The Journalist: Interviews customers to understand their experiences.
3. The Anthropologist: Observes customers in their natural environment.
4. The Scientist: Uses experiments to validate hypotheses.
5. The Impersonator: Experiences the product as a customer would.
6. The Co-Creator: Collaborates with customers to design solutions.
Q: What are five data traps to avoid?
A:
1. False Positives: Misinterpreting data as confirming a hypothesis when it doesn’t.
2. False Negatives: Overlooking data that confirms a hypothesis.
3. Local Maximum Trap: Focusing on small, incremental improvements.
4. Exhausted Maximum Trap: Believing no further gains are possible when they are.
5. Wrong Data: Using irrelevant or incorrect data for decision-making.
Types of Fit
Q: What is the definition of entrepreneurship?
A: The pursuit of opportunity without regard for resources currently controlled.
Q: What are the two "schools of thought" for defining entrepreneurship?
A:
1. Entrepreneurship as an Economic Function: It doesn’t make sense to decide what economic functions are entrepreneurial.
2. Entrepreneurship as a Set of Traits: A single psychological profile of an entrepreneur does not exist.
Note: Both only focus on some aspects of some entrepreneurs.
Q: What kind of phenomenon is entrepreneurship?
A: Behavioral.
Q: Strategic orientation is a continuum from _ to _?
A: Promoter to Trustee.
Critical Dimensions of Business Practice (According to Stevenson)
1. Strategic Orientation: Driven by either opportunity (promoter) or resources controlled (trustee).
2. Commitment to Opportunity: Act within short timeframes and pursue opportunities quickly.
3. Commitment of Resources: Maximize value by minimizing resource usage and accepting risk.
4. Control of Resources: Leverage others’ resources rather than owning them.
5. Management Structure: Coordination of uncontrolled resources, maximizing flexibility; employees want independence.
6. Reward Philosophy: Focus on value creation and harvest, with compensation based on performance.
Two Historical Definitions of Entrepreneurship and Their Flaws
1. Economic Function School:
○ Definition: Entrepreneurship is defined by specific economic roles, like innovation or risk-taking.
○ Flaw: Limits entrepreneurship to specific activities, ignoring the broad diversity of entrepreneurial ventures.
2. Individual Traits School:
○ Definition: Entrepreneurship is defined by personal traits, such as creativity or determination.
○ Flaw: Assumes traits are innate and static, overlooking the fact that entrepreneurial skills can be learned or developed.
Business Model Generation
Q: What is the definition of a business model?
A: A business model describes the rationale of how an organization creates, delivers, and captures value.
Q: What are the two types of revenue streams in a business model?
A:
1. Transaction-Based Revenue: Earned from one-time customer payments (e.g., buying a product).
2. Recurring Revenue: Generated from ongoing payments like subscriptions.
Q: What are the two types of pricing mechanisms?
A:
1. Fixed Menu Pricing: Prices predefined based on static variables.
2. Dynamic Pricing: Prices that change based on market conditions (e.g., auctions).
Environment Map (Four Components)
1. Key Trends: Cultural, societal, and technological trends.
2. Market Forces: Customer needs, market segments, and switching costs.
3. Macroeconomic Forces: Global economic conditions like interest rates and inflation.
4. Industry Forces: Competitors, new entrants, substitutes, and complements.
Six Forces Shaping Industry Competition
1. Bargaining Power of Suppliers
2. Intensity of Rivalry Among Existing Competitors
3. Threat of New Entrants
4. Bargaining Power of Buyers
5. Threat of Substitute Products
6. Complementors
Business Model Canvas (Nine Building Blocks)
1. Customer Segments: Different groups of people or organizations an enterprise seeks to serve.
2. Value Propositions: Products/services that create value for customer segments.
3. Channels: How businesses communicate with and deliver value to their customers.
4. Customer Relationships: Types of relationships a company establishes with its customers.
5. Revenue Streams: Cash a company generates from each customer segment.
6. Key Resources: Important assets required to make the business model work.
7. Key Activities: Most important actions a company must take to operate successfully.
8. Key Partnerships: Network of suppliers and partners to help the business succeed.
9. Cost Structure: All the costs involved in operating a business.
Value Proposition Canvas (VPC)
Q: What are the two main parts of the Value Proposition Canvas?
A:
1. Customer Profile (Circle):
○ Jobs: Tasks or problems customers are trying to accomplish.
○ Pains: Challenges or risks customers face.
○ Gains: Desired outcomes or benefits customers want.
2. Value Map (Square):
○ Products & Services: Offerings the business provides.
○ Pain Relievers: How the offerings address customer pains.
○ Gain Creators: How the offerings help customers achieve their desired gains.
Q: What are the three types of customer jobs?
A:
1. Functional Jobs: Specific tasks customers aim to complete.
2. Social Jobs: How customers want to be perceived or gain social status.
3. Emotional Jobs: Feelings customers wish to experience (e.g., security, satisfaction).
Q: What is the testing process?
A:
Testing Process: 1. Extract hypotheses 2. Prioritize hypotheses 3. Design tests 4. Prioritize tests 5. Run tests 6. Capture learnings 7. Make progress
Q: What is a call to action?
A: A prompt encouraging customers to perform a specific action, used in experiments to test hypotheses (e.g., signing up for a newsletter).
Four Types of Customer Gains
1. Required Gains: Essential outcomes or benefits that must exist for a solution to be considered functional (e.g., basic product functionality).
2. Expected Gains: Benefits customers expect in addition to the basic functionality (e.g., user-friendly interfaces).
3. Desired Gains: Features that customers would love to have but do not expect (e.g., aesthetic appeal).
4. Unexpected Gains: Surprising benefits that exceed customer expectations (e.g., innovative features).
Testing Process: Why is Step #4 (Prioritize Tests) Necessary?
Step #4 ensures efficient resource allocation by identifying which tests should be run first based on complexity, cost, and potential impact. While Step #2 prioritizes hypotheses,
Step #4 focuses on executing tests in an optimal sequence.
Types of Experiments
1. Ad Tracking: Measures the effectiveness of online ads by tracking clicks, conversions, or other engagement metrics.
2. Landing Page Test: Tests customer interest by observing interactions with a simple web page.
3. Prototype Testing: Collects feedback on a basic version of the product.
4. Innovation Games: Uses gamified activities to involve customers in prioritizing features or providing insights.
Customer Insights
Q: What are the six techniques for gaining customer insights?
A:
1. The Data Detective: Uses existing reports and data.
2. The Journalist: Interviews customers to understand their experiences.
3. The Anthropologist: Observes customers in their natural environment.
4. The Scientist: Uses experiments to validate hypotheses.
5. The Impersonator: Experiences the product as a customer would.
6. The Co-Creator: Collaborates with customers to design solutions.
Q: What are five data traps to avoid?
A:
1. False Positives: Misinterpreting data as confirming a hypothesis when it doesn’t.
2. False Negatives: Overlooking data that confirms a hypothesis.
3. Local Maximum Trap: Focusing on small, incremental improvements.
4. Exhausted Maximum Trap: Believing no further gains are possible when they are.
5. Wrong Data: Using irrelevant or incorrect data for decision-making.
Types of Fit
