Bachelor program Galina Shirokova, Professor, Strategic and International Management

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1 ENTREPRENURSHIP Program Instructor Department Bachelor program Galina Shirokova, Professor, Strategic and International Management Teaching assistant Course status Specialization Year Tatyana Tsukanova, Elective All 3 year Term Spring 2013 Workload: Prerequisites: Course abstract Course aim and objectives: 6 ECTS, 45 hours of classes Business planning Entrepreneurship course is an introductory course intended to provide students with a solid foundation in terms of the vital role played by entrepreneurs and entrepreneurship in the 21st century global economy. During this semester, we will assess, explore, critique, and celebrate the phenomenon of entrepreneurship. Entrepreneurship is approached as a way of thinking and acting, as an attitude and a behavior. Our emphasis is on entrepreneurship as a manageable process that can be applied in virtually any organizational setting. Moreover, our interest is in sustainable entrepreneurship, or entrepreneurship over the life cycles of people s careers, the life cycles of organizations as they evolve from start-up enterprise to sizeable corporation, and the developmental cycles of societies as they move from undeveloped to post-industrial. However, our principal focus will be on the creation of new ventures, the ways that they come into being, and factors associated with their success. This is a course of many ideas and questions, and you will be encouraged to develop and defend your own set of conclusions regarding each of these issues. It is also a course that integrates a number of different disciplines, ranging from sociology and psychology to economics, finance, marketing, and human resource management. Further, it is a course that mixes theory with practice, and you will be challenged to apply principles, concepts and frameworks to real world situations. The course is built around a number of core objectives. By the end of the semester, students should be able to: Recognize the entrepreneurial potential within themselves and others in their environment; Appreciate the role of entrepreneurship within society, at the level of the organization, and in the personal life; Grasp the fundamental importance of key values in explaining entrepreneurial success; Understand the process nature of entrepreneurship, and ways to manage the process; Identify the many ways in which entrepreneurship manifests itself, including start-up contexts, corporate contexts, social contexts, public sector contexts, and others; 1

2 Develop an appreciation for opportunity, how to recognize it, and how to evaluate it; Appraise the nature of creative new business concepts and business models that can be turned into sustainable business ventures. Knowledge and skills Students gain knowledge on entrepreneurship process and how to develop a successful new venture in the turbulent business environment. Students will be able to evaluate a business model of organization and develop recommendations for improvement the combination of the key components of the business model. Course content: Topic 1. Introduction to Course and to the Nature of Entrepreneurship. Topic 2. Who is the Entrepreneur? Topic 3. Understanding The Nature of Opportunity Topic 4. Developing a Great Business Concept and Business Model Topic 5. Feasibility analysis and ecosystem analysis Topic 6. Getting to Plan B: Breaking through to a Better Business Model Topic 7. Growing the Venture Teaching Methods: Lectures, guest lectures, case studies, group work, presentations of group projects. A participative approach is used to enable learning by discovery Grading Policy: Final evaluation Pass/Fail Pitch book report (extended presentation of the business concept + business model) 30% Class participation 20% Final test 50% Final grade 100% Evaluation system Pitch Book Report evaluation 100% Requirement of handing in report in time 10% The quality of the report 50% Pitch presentation (Business concept + 40% business model) Students should bring the Pitch Book Report on the 29 th of May into the classroom before their presentations Class participation Class participation will be assessed in several key aspects: group exercises, case discussions, peer-review participation. Each case and exercise is graded in points [0-10]. Pitch Book Report model Each team of students will come up with an original business idea, 2

3 translating the idea into a well conceptualized business concept, and then turn the concept into a formal business model following the business model canvas. This business model must demonstrate the basic market and economic feasibility of the proposed business idea. Pitch Book is an extended presentation which should include: Executive summary Problem Business idea Customer value proposition (incl. USP) Market (incl. characteristics, i.e. customer segments) Competition (analogies & antilogies) Revenue streams (incl. pricing) Key resources/key partners Cost structure Conclusion Pitch presentation should include the following parts: Cover Slide: name, presenter s name, tagline Problem (Size) & Opportunity Slide: make it clear that there is a big important problem Solution & Benefit Slide: Describe what you are offering to the target market and concentrate on key benefits for the customers (customer value proposition) Revenue Model Slide: Describe how you will make money (e.g. your pricing) and how you will go to market. Financial Projections Slide: 3-5 years forecasting, describe the key elements that drive your revenues, expenses and growth (e.g. customers, unit sales). Outline profit, cash flow and break-even. The presentation will be assessed based on the originality of the business idea and feasibility analysis of the business concept and interrelation of all elements of the business model. The presentation should last 10 min and is graded in points [0-10]. The Interview and the Entrepreneurship Diary: Students can earn up to five points in order to add to their final grade if they missed classes for good reasons by interviewing an entrepreneur. This must be done individually. The interview must follow the outlined structure provided in class and found in the Coursepack at the Blackboard. Selected entrepreneurs must have ventures at least two years old with a minimum of five employees and preferably ten or more employees. Students can also earn up to five points when missing classes for good reasons by keeping a personal diary of business ideas. There should be at least one entry (an idea for a new business) in your diary for each week in the course. These ideas can come from anywhere, including reading various business publications, your own life and work experiences, or things you observe in everyday life that could be done differently or better. For example, is there a good or service that you desire but cannot readily obtain? Are there goods or services that are of poor quality or 3

4 Required reading: delivered poorly? Ideas can also come from observing friends and relatives. As you proceed through the course, you should develop the ability to judge the potential of each idea. When it comes time to produce the Original Concept and Business Model, the best ideas in your diary will be potential concepts. Type Textbook Title Bruce R. Barringer and R. Duane Ireland, Pearson Prentice Hall. Entrepreneurship: Successfully Launching New Ventures, (2011) Number of students 50 Number of copies in GSOM Library Optional reading 1. Blank S. The Four Steps to the Epiphany: Successful Strategies for Products that Win, 2007, Cafepress.com. 2. Blank S., Dorf B. The Startup Owner's Manual: The Step-By- Step Guide for Building a Great Company, Mullins J., Komisar R. Getting to Plan B: Breaking Through to a Better Business Model, Harvard Business Press. 4. Osterwalder A., Pigneur Y. Business Model Generation: A Handbook for Visionaries, Game Changers, and Challengers, New Jersey: John Wiley & Sons, Inc. 5. Read S., Sarasvathy S., Dew N., Witbank R., Ohlsson A-V. Effectual Entrepreneurship, 2011, Routledge. 6. Reis E. The Lean Startup: How Today's Entrepreneurs Use Continuous Innovation to Create Radically Successful Businesses, New York: Crown Publishing Group. 7. Timmons J.A., Spinelli S. New Venture Creation: Entrepreneurship for the 21 st Century, 2008, McGrawHill. Participation Policy Usage of online resource databases at GSOM Students are required to be involved in all the weeks on the course by reading the assigned material, preparing the cases, going through the PowerPoint slides, and participating in the class discussion. Failure to meet these responsibilities each week is not acceptable except in highly unusual, emergency situations. In these cases students are able to have additional assignments mentioned as extra-credit: interview with entrepreneur and entrepreneurship diary. Blackboard Computer Software MS Power Point,

5 Course Structure and Reading Assignments Please note that we may at times move at a slower or faster pace depending upon class circumstances, student questions, and comprehension Topic 1. Introduction to course and to the nature of entrepreneurship Class 1. 6 hours Time: April 15, Lecture, guest lecture, video and discussion Defining entrepreneurship What is an entrepreneurial mindset? The entrepreneurial process: different approaches Why approaching entrepreneurship as a process is central to the course and the concept? An integrative model of entrepreneurship Forces in the environment that facilitate and constrain levels of entrepreneurship in a society or community How to encourage greater levels of entrepreneurship (results of GEM project) Why students want to become entrepreneur: the main results of GUESSS project The main elements of Rocket pitch presentation to: Explain entrepreneurship and discuss its importance Explain the entrepreneurial mind set and key elements of entrepreneurial framework Outline the entrepreneurial process and the main stages of this process Understand the different approaches in entrepreneurial process: casual rationality versus to effectuation reasoning Understand the integrative model of entrepreneurship Explain the main forces in the environment that facilitate and constrain levels of entrepreneurship in a society or community Learn the basic principles of the pitch presentation Guest lecture: Igor Rozdestvensky, director of business incubator Ingria Exercise 1. Warm-up: Marshmallow challenge. Exercise 2. Group discussion on the definition of entrepreneurship. Exercise 3. Group discussion on the entrepreneurial process elements based on video. Exercise 3. Case discussion on Mark Juarez case and presentations of the results to the class. Exercise 4. You as entrepreneur. Rocket pitch of innovative business idea inside Smart city concept. 5

6 Guest lecture: Igor Rozdestvensky, director of business incubator Ingria Video: Entrepreneurial process: Blank S. The Startup Owner's Manual: Cracking the Code of Entrepreneurship: Entrepreneurial professor: Good examples of pitches: Read textbook: Bruce R. Barringer and R. Duane Ireland, Pearson Prentice Hall. Entrepreneurship: Successfully Launching New Ventures, (2011), Chapter 1 1. Read S., Sarasvathy S., Dew N., Witbank R., Ohlsson A-V. Effectual Entrepreneurship, 2011, Routledge. (Chapter 1) 2. Timmons J.A., Spinelli S. New Venture Creation: Entrepreneurship for the 21 st Century, 2008, McGrawHill. (Chapter 3) Home task: Read the case ONA Clinic Create a team of 4-6 people and prepare the pitch presentation of your business idea (1.5 min) Class 2. 6 hours Time: April 22, Topic 2. Who is the entrepreneur? Lecture, guest lecture, video and discussion. The different types of entrepreneurs Sociological and psychological characteristics of entrepreneurs Creativity as a main driver of entrepreneurship The main reasons for being entrepreneur Differences between entrepreneurs and corporate managers Effectuation vs rationality: the basic principles of effectuation What managers can learn from entrepreneurs? Idea enrichment: dashboarding to: Explain the five common myths regarding entrepreneurship Discuss three main reasons people decide to become entrepreneurs; Identify four main characteristics of successful entrepreneurs; Explain the five common myths regarding entrepreneurship Learn the basic principles of effectuation Learn how to use dashboarding tool for idea enrichment 6

7 Guest lecture: Dmitry Knatko, entrepreneur. Exercise 1. Warm-up on creativity. How to come up to a creative solution in a team? (Draw 10 pictures in 3 min). Exercise 2. Why become an entrepreneur? Characteristics of successful entrepreneurs. Exercise 3. The similarities and differences between entrepreneurs and corporate managers. Exercise 4. You as entrepreneur. Presentations of the business idea using dashboarding tool. Exercise 5. Case discussion on the case ONA Clinic. Video: Saras Sarasvathy [video] on entrepreneurship at BigThink.com corporate effectuation what managers can learn from entrepreneurs Read textbook: Bruce R. Barringer and R. Duane Ireland, Pearson Prentice Hall. Entrepreneurship: Successfully Launching New Ventures, (2011), Chapter Read S., Sarasvathy S., Dew N., Witbank R., Ohlsson A-V. Effectual Entrepreneurship, 2011, Routledge. (Chapter 1, 7) 2. Reading in the Coursepack (An Interview with an Entrepreneur sample student interview) 3. Reading in the Coursepack: Mullins J., Komisar R A business plan? Or a journey to Plan B? MIT Sloan Management Review, March Home task: Use dashboarding tool for idea enrichment. Prepare 5 min presentation Read the case The Untsiya company: Business development in Russia Class 3. 6 hours Time: April 29, Topic 3. Understanding the nature of opportunity Lecture and discussion. Defining opportunity Windows of opportunity Sources and types of opportunity Ways for identifying opportunities Evaluating opportunity Opportunity recognition process Techniques for generating ideas Worldmaking: understand transformation Business ethnography as research method for identifying customers needs 7

8 to: Explain why it s important to start a new firm when its window of opportunity is open Explain the difference between an opportunity and an idea Describe the three general approaches entrepreneurs use to identify opportunities Identify the four environmental trends that are most instrumental in creating business opportunities List the personal characteristics that make some people better at recognizing business opportunities than others Identify the five steps in the creative process Describe different techniques for generating ideas Implement different types of transformation in order to create new business ideas Implement some tools of business ethnography in identifying the customers needs Exercise 1. Pith presentation of the business ideas using dashboarding tool. Discussion and evaluation of the each business idea. Exercise 2. Group discussion on identifying and evaluating an opportunity inside Smart City concept. Exercise 3. Group discussion on Venturing scenario. Implementation of transformation for new idea development. Exercise 4. Group discussion in business ethnography techniques and presentations of the results. Exercise 5. Case discussion on Untsiya case. Opportunity recognition process. Read textbook: Bruce R. Barringer and R. Duane Ireland, Pearson Prentice Hall. Entrepreneurship: Successfully Launching New Ventures, (2011) Chapter 2 Read S., Sarasvathy S., Dew N., Witbank R., Ohlsson A-V. Effectual Entrepreneurship, 2011, Routledge. (Chapter 2, 10) Home task: Field research in chosen area for identification the main problems and main dislikes of the customers (apply Smart city concept). Use business ethnography techniques. Then propose the solution of the problems based on 3 criteria: revenue for the company; degree of innovation; customer happiness. Prepare the presentation (10 min) for the next class. Assigned Case: Dve Palochki Topic 4. Developing a Great Business Concept and Business Model Class 4. 6 hours 8

9 Time: May 6, Lecture and discussion, pitch presentations. The nature of successful business concepts; sources of concepts What makes for a good concept Business model definition From business concept to business model What is innovation business model Business model canvas Approaches to innovative business modeling Customer value proposition and unique selling proposition to: Learn the difference between business concept and business model Identify the main parts of a good business concept Explain a concept statement and its contents Develop a business concept statement Identify the main components of business model Implement the business model canvas Learn the different approached to business modeling Understand why customer discovery should be done at the early stage of new business development Learn the differences between customer value proposition and unique selling proposition Exercise 1. Presentations of the results of the field research: problem and innovation concept Exercise 2. Development and testing the business concept Exercise 3. Business model canvas. Wanted: a new consulting business model. Exercise 4. Business idea and customer needs. Customer value proposition and unique selling proposition. Exercise 5. Case discussion on Dve Palochki case. The business concept and the business model of the company. Read textbook: Bruce R. Barringer and R. Duane Ireland, Pearson Prentice Hall. Entrepreneurship: Successfully Launching New Ventures, (2011), Chapter 6. Osterwalder A., Pigneur Y. Business Model Generation: A Handbook for Visionaries, Game Changers, and Challengers, New Jersey: John Wiley & Sons, Inc. Home task: Prepare the presentation of your business model using the business model canvas (5 min) Assigned case: Chainaya Lozhka company 9

10 Class 5. 6 hours Time: May 13, Topic 5. Feasibility analysis and ecosystem analysis Lecture, discussion, pitch presentations. The importance of feasibility analysis Product/service feasibility analysis New business concept test Industry/target market feasibility analysis Types of markets according to Steve Blank Organizational feasibility analysis Financial feasibility analysis First screen as a template for completing a feasibility analysis Ecosystem analysis to: Explain what a feasibility analysis is and why it s important Discuss the proper time to complete a feasibility analysis when developing an entrepreneurial venture Describe the purpose of a product/service feasibility analysis and two primary issues that a proposed business should consider in this area Describe the purpose of a buying intentions survey and how it s administered Describe the purpose of industry/market feasibility analysis and the two primary issues to consider in this area Identify three different types of markets Describe the purpose of organizational feasibility analysis and the two primary issues to consider in this area Explain the importance of financial feasibility analysis and list the most critical issues to consider in this area Apply the First Screen template for feasibility analysis Exercise 1. Warm-up on creativity. Silly cow. Develop a business model based on the cow. Exercise 2. Group discussion on feasibility analysis of the business ideas. Presentations of the results to the class. Exercise 3. Case discussion: Intuit: The Value of Validating Business Ideas Exercise 4. Presentations of the business models by the teams. Exercise 5. Case discussion on Chainaya Lozhka company Read textbook: Bruce R. Barringer and R. Duane Ireland, Pearson Prentice Hall. Entrepreneurship: Successfully Launching New Ventures, (2011), Chapter 3. Timmons J.A., Spinelli S. New Venture Creation: Entrepreneurship for the 21 st Century, 2008, McGrawHill. 10

11 Home task: 1. Prepare feasibility analysis for your business model using the First Screen template 2. Assigned Case: IMVU Topic 6. Getting to Plan B: Breaking through to a Better Business Model Class 6. 6 hours Time: May 20, Lecture and discussion, pitch presentations. The product development model vs. The customer development model Customer discovery Customer validation Customer creation and company building The Lean start-up concept The strategy is based on assumptions to: Learn the main differences between product development model and the customer development model Understand why the process of customer discovery is important Learn the main principles of the lean start-up concept and how to implement these principles to company building process Exercise 1. Presentation of the results of the feasibility analysis and the new business models based on this analysis. Exercise 2. Case discussion on IMVU case. The basic principles of the lean start-up concept. Read textbook: Bruce R. Barringer and R. Duane Ireland, Pearson Prentice Hall. Entrepreneurship: Successfully Launching New Ventures, (2011), Chapter Blank S. The Four Steps to the Epiphany: Successful Strategies for Products that Win, Lulu.com, 2. Blank S., Dorf B. The Startup Owner's Manual: The Step-By- Step Guide for Building a Great Company, 2010, 3. Mullins J., Komisar R. Getting to Plan B: Breaking Through to a Better Business Model, Harvard Business Press. 4. Reis E. The Lean Startup: How Today's Entrepreneurs Use Continuous Innovation to Create Radically Successful Businesses, New York: Crown Publishing Group Home task: Apply the lean start-up principles to your business model in order to create a plan for company creation 11

12 Assigned case: DiPaul company Class 7. 6 hours Time: May 27, Topic 7. Growing the Venture Lecture, discussion, pitch presentations. Pyramid of organizational development. Stages of organizational growth by E. Flamholtz. The ten most common organizational growing pains Preparing for and evaluating the challenges of growth Growth through internationalization Transition from entrepreneurship to professional management Comparison of professional management and entrepreneurial management. Steps of transition to professional management. Why entrepreneurs are not always great managers Management and mismanagement styles. What is a good manager? to: Explain what a main sources for entrepreneurial firm growth Identify the stages of entrepreneurial firm behavior Implement the tool for evaluating the growing pain level Learn the different internationalization strategies of entrepreneurial firms Exercise 1. Presentations of the business models based on lean startup principles. Exercise 2. Case discussion on DiPaul company Video: I.Adizes Management and mismanagement styles, Transition from entrepreneurship to professional management Read textbook: Bruce R. Barringer and R. Duane Ireland, Pearson Prentice Hall. Entrepreneurship: Successfully Launching New Ventures, (2011), Chapter Flamholtz E., Hua W. Strategic Organizational Development, Growing Pains and Corporate Financial Performance: An Empirical Test. European Management Journal (5); Iacobucci, D. and P. Rosa (2005), Growth, Diversification, and Business Group Formation in Entrepreneurial Firms, Small Business Economics 25, Springer, pp Students presentations of the business model 12

13 Class 8. 3 hours Time: May 29, Wednesday Final-term evaluation is based on the presentation of the business model and accumulated results for class participation Final test Class 9. 1 hour Time: May 29, Wednesday Final test 13