Lecture 7

lecture 7 is about entrepreneurial strategy and creating shared value

The main difference between these two sets of concepts is their starting point and how they view the entrepreneurial process. Discovery and Causation lean towards the idea that entrepreneurship is a linear process that involves set goals and the environment offering opportunities. Creation and Effectuation view entrepreneurship as a non-linear process that involves an iterative interaction with the environment, where entrepreneurs play a significant role in shaping their opportunities and goals.

discovery: Analyze, plan, and then execute

First, choose the ends and then look for the means to achieve those ends

creation: Execute, get feedback, adapt

First, acknowledge the means at hand and then choose a possible end

Causation:

• This approach is about setting a specific goal and then selecting the best means to achieve that goal.

• It's effective when you are operating in a stable or predictable environment, such as existing markets where you can plan based on what has worked in the past.

• The emphasis is on exploiting existing knowledge to create a planned outcome.

• The mindset is: if you can predict the future, you can control it through careful planning and execution.

Effectuation:

• Instead of starting with a goal, you start with the means available to you and ask what possible outcomes you can achieve with these means.

• It's suitable for uncertain environments where the future is unpredictable, like new markets.

• The focus is on being creative and flexible, using contingencies (unexpected opportunities) to your advantage.

• It's guided by the questions: "Who am I?" "What do I know?" "Whom do I know?" This is about using your identity, knowledge, and network to guide the entrepreneurial process.

• The philosophy here is that instead of trying to predict the future, you work with what you have to control the direction you're heading in, effectively creating the future as you go.

In summary, causation is a more traditional, goal-oriented approach, while effectuation is a dynamic, resource-based approach that thrives on flexibility and the ability to adapt to new opportunities.

1. Products and Services: The idea is for companies to create products and services that not only generate profits but also address societal needs. This could mean developing solutions that improve health, environmental sustainability, or education.

2. New Markets: The focus is on serving unmet needs in underserved communities. This is often referred to as "Bottom of the Pyramid" (BoP) business models, which target the largest but poorest socio-economic groups that have not been served by traditional business models.

The slide discusses the concept of "Creating Shared Value" by building supportive industry clusters:

1. Identify Local Gaps: Companies should look at their local suppliers and community to identify inefficiencies or gaps. This could be a lack of certain suppliers or institutional weaknesses that create extra costs for the firm.

2. Benefits of Strong Local Clusters:

   • A strong local cluster, which is a geographic concentration of interconnected businesses and institutions in a particular field, can lead to greater productivity for a company.

   • It improves supply chain efficiency because local suppliers are close by.

   • It can reduce environmental impact through decreased transportation distances and more sustainable local practices.

   • There is better access to skilled workers and shared knowledge within the cluster.

3. Encourage Collaboration:

   • Companies should work together with other local businesses and institutions to strengthen these clusters.

   • Collaboration can lead to mutual benefits, such as shared resources, innovation, and a more skilled workforce.

4. Strengthen Company-Community Ties:

   • By building strong local clusters, companies can link their success with that of the community, leading to shared prosperity.

In simple terms, the slide suggests that companies can create value both for themselves and their communities by focusing on local collaboration and strengthening the business ecosystem in which they operate.