BM2211

ENTREPRENEURSHIP AND VALUE CREATION

Entrepreneurial Traits

1. Entrepreneurs Have an Empowering Perspective of Failure - failure is simply feedback. Failure is

the way people learn and grow. For most people, failure is not a correction but a rejection.

2. Entrepreneurs Know a Little About a Lot (Rule #5 – Don’t take yourself so seriously.

3. Entrepreneurs Give and Receive Praise Correction (Praise-Correct-Praise)

4. Entrepreneurs Fly with Eagles - remember the story of the customer, the manager and the
waitress in a restaurant
5. Entrepreneurs Look into The Future – looking with a vision;
- While it is important to value hindsight, don’t let it limit your foresight.

Entrepreneurs that Changed the World

The following are the entrepreneurs who changed the world:
 Tony Tan Caktiong (Jollibee)
 Angeline Tham (Angkas Ride Sharing App)
 Howard Schultz (Starbucks Coffee Company)
 Phil Knight (Nike)
 Reed Hastings (Netflix)
 Amancio Ortega (Zara)
 Walt Disney (The Walt Disney Company)
 Mark Zuckerberg (Facebook)
 Steve Jobs (Apple)
 Elon Musk (SpaceX)
 Anne Wojcicki (23andMe)
 Larry Page and Sergey Brin (Alphabet)

Value Creation
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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.
The value of products and services today is based on creativity (the 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 that 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 research and
development (R&D) at the company and overseen promising new launches, such as the cancer drug
Keytruda.

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 and
are 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 in the world 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.
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?

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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), the rise of 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 standards of living. 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 the form of 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 went 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 [4] 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,
2008).
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 its energy from crises, usually driven
by an underlying emotion of fear (fear of the consequences if we fail to solve the problems).

A sustainable future will involve bringing over time 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 aims that have genuine meaning for them, 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.

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Tapping and developing the potentials 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, it would instead 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, 2008).
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, 2008).

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