Learning ObjectivesLearning Objectives

- Causal and Effectuation

- Crafting Strategy

- Entrepreneurship and Strategy

- Entrepreneurial Creativity

- Assignments & Case Studies

Entrepreneurship and Strategy Entrepreneurship and Strategy Causal and EffectuationCausal and Effectuation Evaluation of StrategyEvaluation of Strategy Crafting strategyCrafting strategy Leading CreativelyLeading Creatively

Effectuation represents a paradigmatic shift in the way that we understand entrepreneurship. Effectuation represents a paradigmatic shift in the way that we understand entrepreneurship. Since its introduction, however, few researchers have attempted to empirically test Since its introduction, however, few researchers have attempted to empirically test effectuation. Our purpose is to encourage effectuation research. To do so, we review the effectuation. Our purpose is to encourage effectuation research. To do so, we review the effectuation literature and make suggestions for how to design and conduct empirically effectuation literature and make suggestions for how to design and conduct empirically rigorous effectuation studies consistent with the developmental state of the research stream.rigorous effectuation studies consistent with the developmental state of the research stream.

Entrepreneurship scholars have made significant efforts to explain how and why new firmsEntrepreneurship scholars have made significant efforts to explain how and why new firms originate, survive, and grow (Davidsson, 2004; Gartner, 1985; Schumpeter, 1934). Theseoriginate, survive, and grow (Davidsson, 2004; Gartner, 1985; Schumpeter, 1934). These efforts have converged into a teleological model of entrepreneurship as a rationally planned,efforts have converged into a teleological model of entrepreneurship as a rationally planned, risk-taking and linear process of opportunity recognition and exploitation (e.g., Bhave, 1994;risk-taking and linear process of opportunity recognition and exploitation (e.g., Bhave, 1994; Bird, 1988; Jenkins & Johnson, 1997; Shane & Venkataraman, 2000). This model has nowBird, 1988; Jenkins & Johnson, 1997; Shane & Venkataraman, 2000). This model has now become the mainstream model of the entrepreneurship process. Recently, however, somebecome the mainstream model of the entrepreneurship process. Recently, however, some scholars have started to question the validity of this model. As an alternative, these scholarsscholars have started to question the validity of this model. As an alternative, these scholars have developed a model of entrepreneurship as a means-driven, risk-aversive, and circularhave developed a model of entrepreneurship as a means-driven, risk-aversive, and circular process involving ‘bricolage’ and ‘effectuation’ (e.g., Baker & Nelson, 2005; Sarasvathy,process involving ‘bricolage’ and ‘effectuation’ (e.g., Baker & Nelson, 2005; Sarasvathy, 2001a; Sarasvathy & Dew, 2005). This alternative model could be described as the2001a; Sarasvathy & Dew, 2005). This alternative model could be described as the pragmatist model of entrepreneurship (cf. James, 1907; Peirce, 1931; Rescher, 2005).pragmatist model of entrepreneurship (cf. James, 1907; Peirce, 1931; Rescher, 2005). The merit of the pragmatist model is that it provides a counterbalance against an overlyThe merit of the pragmatist model is that it provides a counterbalance against an overly rational view on entrepreneurship. As such, it addresses some of the limitations of therational view on entrepreneurship. As such, it addresses some of the limitations of the teleological model. teleological model.

ContCont

At the same At the same time however, it has appeared that also the pragmatist modeltime however, it has appeared that also the pragmatist model

does not provide a sufficient explanation of the entrepreneurship process and its relation todoes not provide a sufficient explanation of the entrepreneurship process and its relation to

firm survival and growth. This has led scholars from both sides to believe that, to arrive at afirm survival and growth. This has led scholars from both sides to believe that, to arrive at a

better explanation, both models are needed or that the two models should be combinedbetter explanation, both models are needed or that the two models should be combined Comparison of the Two ModelsComparison of the Two Models In several of her publications, Sarasvathy systematically compares the causation and theIn several of her publications, Sarasvathy systematically compares the causation and the effectuation model. Six dimensions appear repeatedly in these comparisons, mostly in theeffectuation model. Six dimensions appear repeatedly in these comparisons, mostly in the form of dichotomies: means-driven vs. ends-driven, control vs. prediction, affordable loss vs.form of dichotomies: means-driven vs. ends-driven, control vs. prediction, affordable loss vs. expected returns, new vs. existing products and markets, cooperation vs. competition, andexpected returns, new vs. existing products and markets, cooperation vs. competition, and cyclicality vs. linearity (see Table 1). Below we summarize Sarasvathy’s arguments andcyclicality vs. linearity (see Table 1). Below we summarize Sarasvathy’s arguments and assess them.assess them.

Comparison of the causation and effectuation modelComparison of the causation and effectuation model Dimension Causation model (teleological) Effectuation model (pragmatist)Dimension Causation model (teleological) Effectuation model (pragmatist) Starting point Ends are given Means are givenStarting point Ends are given Means are given Assumptions on future Predictability means controllability Controllability reduces need to Assumptions on future Predictability means controllability Controllability reduces need to

predictpredict Predisposition towards risk Expected return Affordable lossPredisposition towards risk Expected return Affordable loss Appropriate for Existing products and markets New products and marketsAppropriate for Existing products and markets New products and markets Attitude toward outside firms Competition CooperationAttitude toward outside firms Competition Cooperation Type of model Linear CyclicalType of model Linear Cyclical Means-driven vs. ends-drivenMeans-driven vs. ends-driven

Important PointsImportant Points The key distinction that Sarasvathy stresses in all her publications on The key distinction that Sarasvathy stresses in all her publications on

effectuation is theeffectuation is the

different starting point of the two models. She argues that the causation model different starting point of the two models. She argues that the causation model starts withstarts with

goals as a given and that the basic decision for that model is the decision on what goals as a given and that the basic decision for that model is the decision on what meansmeans

should be accumulated to achieve these goals. Effectuation, on the other hand, should be accumulated to achieve these goals. Effectuation, on the other hand, starts withstarts with

means and focuses on the decision on what effect can be created given these means and focuses on the decision on what effect can be created given these means. The ideameans. The idea

that effectuation starts with means and takes them as a given does not imply that it that effectuation starts with means and takes them as a given does not imply that it is merely ais merely a

variation of the resource based view (e.g., Barney, 1991).variation of the resource based view (e.g., Barney, 1991).

contcont Strategic Management and Entrepreneurship contains four module, the first Strategic Management and Entrepreneurship contains four module, the first

module is about the Strategic management concepts, it will cover the module is about the Strategic management concepts, it will cover the organization’s Vision , Mission, Objectives, Goals, Strategies and Tactics. The organization’s Vision , Mission, Objectives, Goals, Strategies and Tactics. The second module is about Company Resources and capabilities, this will explore the second module is about Company Resources and capabilities, this will explore the value of SWOT Analysis, Environmental Scanning, Five Force Theory and value value of SWOT Analysis, Environmental Scanning, Five Force Theory and value chain analysis. The third module is about Strategy Choice, Formulations and chain analysis. The third module is about Strategy Choice, Formulations and Control that will cover the details about Corporate Strategies, Types of Control that will cover the details about Corporate Strategies, Types of diversification and Strategic Control. The last module will equip an MBA students diversification and Strategic Control. The last module will equip an MBA students about the Entrepreneurship Development, it will deals with entrepreneurial about the Entrepreneurship Development, it will deals with entrepreneurial competence and mobility, motivation , development and growth strategies for competence and mobility, motivation , development and growth strategies for small business enterprises. This entire modules will cover almost 30 hours.small business enterprises. This entire modules will cover almost 30 hours.

Module 1:  Strategic Management ConceptModule 1:  Strategic Management ConceptThis module will explore the definitions and applications of purpose of strategic This module will explore the definitions and applications of purpose of strategic management concept, the organization’s Vision, Mission, Objectives, Goals, management concept, the organization’s Vision, Mission, Objectives, Goals, Strategies and Tactics, Concept and process of strategic Management, Strategic Strategies and Tactics, Concept and process of strategic Management, Strategic Business Unit (SBU).Business Unit (SBU).

Module II: Company Resources and CapabilitiesModule II: Company Resources and CapabilitiesThis module will discuss the Environmental Scanning, the SWOT analysis, the This module will discuss the Environmental Scanning, the SWOT analysis, the Internal and External environmental analysis, Competition Analysis: Porter’s Internal and External environmental analysis, Competition Analysis: Porter’s Approach to Generic strategies, Five Force Theory, Competitive Advantage, and Approach to Generic strategies, Five Force Theory, Competitive Advantage, and Value chain analysis.Value chain analysis.

contcont Module III: Strategy Choice, Formulation and ControlModule III: Strategy Choice, Formulation and Control

This module will explore the Business Strategy, Corporate Strategy, This module will explore the Business Strategy, Corporate Strategy, Diversification: Mergers, Acquisitions, Strategic alliances (Joint ventures), Diversification: Mergers, Acquisitions, Strategic alliances (Joint ventures), Divestment, BCG, GE Matrices, Overview of Strategic evaluation and Strategic Divestment, BCG, GE Matrices, Overview of Strategic evaluation and Strategic Control.Control.

Module IV: Entrepreneurship DevelopmentModule IV: Entrepreneurship DevelopmentThis module will deals with the Concept, Growth , Characteristic of This module will deals with the Concept, Growth , Characteristic of Entrepreneur, Factors affecting entrepreneurial growth, entrepreneurial Entrepreneur, Factors affecting entrepreneurial growth, entrepreneurial motivation, competencies and mobility, Entrepreneurship Development motivation, competencies and mobility, Entrepreneurship Development program. Growth strategies in small business.program. Growth strategies in small business.

contcont Entrepreneurial Creativity is about coming up with innovative ideas and turning them is about coming up with innovative ideas and turning them

into value-creating profitable business activities.into value-creating profitable business activities. Entrepreneurial creativity = Entrepreneurial creativity = creativitycreativity × entrepreneurial × entrepreneurial actionaction..     ""EntrepreneurEntrepreneur is a person who habitually creates and innovates to build something is a person who habitually creates and innovates to build something

of recognized value around perceived opportunities.of recognized value around perceived opportunities.11

In this definition of the Entrepreneur, "creates" means starting from scratch and In this definition of the Entrepreneur, "creates" means starting from scratch and bringing into being something that was not there before. bringing into being something that was not there before.

Leading for Creativity Advantage in Entrepreneurial StartupsLeading for Creativity Advantage in Entrepreneurial Startups Key Concept ~ The creativity of the organization must be a strategic Key Concept ~ The creativity of the organization must be a strategic

imperative for success in the 21st century.  Unless you’re a Millennial, we imperative for success in the 21st century.  Unless you’re a Millennial, we all must appreciate the fact that we matriculated through a business world all must appreciate the fact that we matriculated through a business world that was optimized for the Industrial Age.  Leadership philosophies, that was optimized for the Industrial Age.  Leadership philosophies, managerial processes, attitudes towards inclusion and process that we managerial processes, attitudes towards inclusion and process that we were taught are completely incongruent with the nature of business today. were taught are completely incongruent with the nature of business today.  Fortunately, the first calibration entrepreneurs need to make in order to  Fortunately, the first calibration entrepreneurs need to make in order to embrace the new paradigm is close to home…it lies within one’s self.  embrace the new paradigm is close to home…it lies within one’s self.  

Connecting people to one another. Connecting seekers to data. Connecting businesses Connecting people to one another. Connecting seekers to data. Connecting businesses to each other. Connecting tribes of similarly minded individuals into larger, more to each other. Connecting tribes of similarly minded individuals into larger, more effective organizations. Connecting machines to each other and creating value as a effective organizations. Connecting machines to each other and creating value as a result.  In the connection revolution, value is not created by increasing the productivity result.  In the connection revolution, value is not created by increasing the productivity of those manufacturing a good or a service. of those manufacturing a good or a service. Value is created by connecting buyers Value is created by connecting buyers to sellers, producers to consumers, and the passion to cater each other’s to sellers, producers to consumers, and the passion to cater each other’s needs.”needs.”

Leading for creativity advantage demands that the soil be tended and cared for in order Leading for creativity advantage demands that the soil be tended and cared for in order for intellectual property to germinate.  This starts with the leader’s level of for intellectual property to germinate.  This starts with the leader’s level of consciousness, with their insights and understanding of how to connect, engage, and consciousness, with their insights and understanding of how to connect, engage, and inspire those around them.  In order to do this with resonance, the leader must first inspire those around them.  In order to do this with resonance, the leader must first connect, engage, and inspire their authentic self.  Transformation cannot occur without connect, engage, and inspire their authentic self.  Transformation cannot occur without transparency.  The answers to our adaptive challenges aren’t transparency.  The answers to our adaptive challenges aren’t out thereout there floating in the floating in the technological ether, they’re technological ether, they’re in herein here, within our own capacity to create new neural , within our own capacity to create new neural pathways and actually change the way we see, think about and react to the world.  This pathways and actually change the way we see, think about and react to the world.  This does entail some self-reflective work, and typically doesn’t emerge of its own accord.does entail some self-reflective work, and typically doesn’t emerge of its own accord.

In short, creativity/creative idea alone will not help. To grow, survive and prosper, an In short, creativity/creative idea alone will not help. To grow, survive and prosper, an Entrepreneur, needs to put his creative thought into:Entrepreneur, needs to put his creative thought into:

1)1) Explore the right opportunity to invest/expand/start his firmExplore the right opportunity to invest/expand/start his firm

2)2) Implement strategies basis the type/nature of business/business needs/Action by Implement strategies basis the type/nature of business/business needs/Action by connecting with people (buyers, sellers, producers, consumers)connecting with people (buyers, sellers, producers, consumers)

3)3) Engaging with his staffEngaging with his staff

4)4) Looking at the technology/any technological upgradationLooking at the technology/any technological upgradation

5)5) Take up issues & face the challengesTake up issues & face the challenges

6)6) Be passionate and transparent in what ever he is doingBe passionate and transparent in what ever he is doing

Krafting Strategy Krafting Strategy Planning Versus Crafting Strategy:Planning Versus Crafting Strategy:

Henry Mintzberg offers a distinction between planning strategy and crafting Henry Mintzberg offers a distinction between planning strategy and crafting strategy:strategy:

Imagine someone Imagine someone planning strategy.planning strategy. What likely springs to mind is an image What likely springs to mind is an image of orderly thinking: a senior manager, or a group of them, sitting in an office of orderly thinking: a senior manager, or a group of them, sitting in an office formulating courses of action that everyone else will implement on schedule.formulating courses of action that everyone else will implement on schedule.

The keynote is reason — rational control, the systematic analysis of competitors The keynote is reason — rational control, the systematic analysis of competitors and markets, of company strengths and weaknesses, the combination of these and markets, of company strengths and weaknesses, the combination of these analyses producing clear, explicit, full blown strategies.analyses producing clear, explicit, full blown strategies.

Now imagine someone Now imagine someone crafting strategy.crafting strategy. A wholly different image likely A wholly different image likely results, as different from planning as craft is from mechanization. Craft evokes results, as different from planning as craft is from mechanization. Craft evokes traditional skill, dedication, perfection through the mastery of detail.traditional skill, dedication, perfection through the mastery of detail.

What springs to mind is not so much thinking and reason as involvement, a What springs to mind is not so much thinking and reason as involvement, a feeling of intimacy and harmony with the materials at hand, developed through feeling of intimacy and harmony with the materials at hand, developed through long experience and commitment. long experience and commitment. Formulation and implementation merge Formulation and implementation merge into a fluid process of learning through which creative strategies into a fluid process of learning through which creative strategies evolve.evolve.

1) Discussion on: Which is the most important motivating factor for an entrepreneur?1) Discussion on: Which is the most important motivating factor for an entrepreneur?

A) Desire to work independentlyA) Desire to work independently

B) Earning ProfitsB) Earning Profits

C) Family BackgroundC) Family Background

D) Success Stories of all EntrepreneursD) Success Stories of all Entrepreneurs

2)2) One of your school friends, Rohit, an entrepreneur, who pioneered cost effective and One of your school friends, Rohit, an entrepreneur, who pioneered cost effective and environment friendly Garbage Disposal System some 10 years back. He was rewarded and environment friendly Garbage Disposal System some 10 years back. He was rewarded and recognized by the Government of India for his innovative idea and was earning profits. But he recognized by the Government of India for his innovative idea and was earning profits. But he is extremely de motivated due to large competition in his business, shrinking profit margins, is extremely de motivated due to large competition in his business, shrinking profit margins, lack of demand, no new clientele and no recognition for his work. How will you motivate him?lack of demand, no new clientele and no recognition for his work. How will you motivate him?

3)3) An entrepreneur creates An entrepreneur creates Value by “connecting buyers to sellers, producers to Value by “connecting buyers to sellers, producers to consumers, and the passion to cater each other’s needs.” – If yes, then how?consumers, and the passion to cater each other’s needs.” – If yes, then how?

4)4) Give examples for different type of entrepreneurs.Give examples for different type of entrepreneurs.

Professional – Bill Gates, Steve Jobs, Narayan MurthyProfessional – Bill Gates, Steve Jobs, Narayan Murthy

Serial – Richard Branson, Mukesh AmbaniSerial – Richard Branson, Mukesh Ambani

Spontaneous – Meru CabsSpontaneous – Meru Cabs

Life Style – Shehnaz Husain, Javed HabibLife Style – Shehnaz Husain, Javed Habib

Pure – Sunil Mittal, Kishore BiyaniPure – Sunil Mittal, Kishore Biyani

Social – Tata, GD Birla, Baba RamdevSocial – Tata, GD Birla, Baba Ramdev

AssignmentsAssignments

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