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Entrepreneurship
Boot Camp Mindset
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Do entrepreneurs think differently?
What is this outside the box all about?
Is outside the box for real?
Question for today
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Start at any of the nine dots and draw four straightlines that go through all nine dots without liftingyour pencil and no tracing over an existing line.
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Four straightwithout connecting all nine dots w\olifting your pencil,no tracing over an existing line.
You have to go outside the box twice
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ReadingWhat makes entrepreneurs entrepreneurial?
Saras Sarasvathy
We seeks to answer the question is there such a think asentrepreneurial thinking?
If there is, is it applicable only to entrepreneurs?
How is it different from the thinking process of managers?
The conclusion is Effectual vs. Causal reasoning, but can it be
learned?
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Setting the framework How Entrepreneurs ThinkCausal vs. Effectual Thinking
Causal Thinking = Managerial ThinkingChoosing best means to achieve a predetermined goal
Saras Sarasvathy, Harvard Business Review
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Managerial Thinking Causal ReasoningDistinguishing Characteristic:
Selecting between given means to achieve a pre-determined goal
GivenGoal
M1
M2
M3
M4
M5 Given Means
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Causal Thinking = Managerial Thinking
Choosing best means to achieve a predetermined goal
Strategic Thinking = Creative ThinkingGenerating new means to reach predetermined goal
Setting the framework How Entrepreneurs ThinkStrategic vs. Effectual Thinking
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Strategic Thinking Creative Causal Reasoning
Distinguishing Characteristic:Generating new means to achieve pre-determined goals
GivenGoals
M1
M2
M3
M4
M5
New meansare generated
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Causal Thinking = Managerial Thinking
Choosing best means to achieve a predetermined goal
Strategic Thinking = Creative Causal ThinkingGenerating new means to reach predetermined goal
Effectual Thinking = Entrepreneurial Thinking
Imagining possible new ends using a given set of means
Saras Sarasvathy, Harvard Business Review
Setting the framework How Entrepreneurs ThinkEffectual Thinking
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Entrepreneurial Thinking Effectual Reasoning
Distinguishing Characteristic:
Imagining possible new ends usinga given set of means
M1
M2
M3
M4 M5
E1
E2
E3
E4
E5
Given Means
Saras Sarasvathy, Harvard Business Review
ImagineNew Ends
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Market Definition Classic Causation Model from Marketing Textbooks
Process of Effectuation Used by Expert Entrepreneurs
THE CUSTOMER
Segmentation(using relevant variables such as age, income, etc.)
Targeting(based on evaluation criteria
such as expected return)
Positioning(through market
strategies)
CustomerIdentification
(through Who am I?
What do I know? Whom do I know?)Customer Definition(through strategic partnerships & selling)
Adding Segments/Strategic Partners
Definition of one of several possible markets
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Classic Causation Model from Marketing Textbooks
Customer
Preliminary Prototype $ 250M
Initial Focus Group Study $ 250MMarket Segment Study $ 100 M
Gets you to the start line
Advertising & PR $ 11MM
Gets you to the market
Sale often pull through to
get to customer
Initial cost $ 11.6MM
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Customer
Preliminary Prototype $ 250K
Initial Focus Group Study $ 250K
Market Segment Study $ 100KGets you to the start line
Advertising & PR $ 11M
Gets you to the market
Introduction of newmeans to reach goalPartnershipsNew outletsMLM ChanneleCommerce
Strategic, Creative ThinkingGenerating new means to reach customer
Initial cost $ 11.6MM + or -
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Efficacious Thinking Entrepreneurial ThinkingImagining new ends, new means
Customer
Industry KnowledgePatterns of ChangeSkill SetsSocial Networks
Phantom Sale againstdefined pain \ cure
Customer in HandInitial customer acquisition onspecial terms (early adopter,point of sale, etc.)
Initial cost $ 19.61
Pain Identification
Customer benefit need
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Pure Entrepreneurial Thinking EfficacyDistinguishing Characteristic:
Imagining possible new ends usingnew means
M1
M2
M3
M4 M5
Create New Means
Apologies to Saras Sarasvathy
Harvard Business Review
ImagineNew Ends
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Thinking like an entrepreneur
Causal Thinking
Strategic ThinkingEffectual Thinking
USC Entrepreneurial Thinking
Efficacy
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The USC thinking
Efficacy
Imagine the end,Create the means
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Types of Thinking
Ends Means
Causal (Linear) Given Given
Strategic (Creative) Given Create
some new
Effectual Create Given
new
Efficacy Imagine Create NewNew Ends Means
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Entrepreneurial Thinking
Imagine the end,
Create the means
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Tom OMaliaOrfalea Chair for Entrepreneurial [email protected]
Lloyd Greif CenterMarshall School of BusinessUniversity of Southern CaliforniaBridge Hall OneLos Angeles, CA 90089-0801