vii
Contents
Acknowledgments ......................................................................... xvii
Introduction ................................................................................... xix
1 Entrepreneurial Timber ...............................................................1
1.1 Introduction ........................................................................................1
1.2 Entrepreneurial Anatomy ...................................................................3
1.3 The Entrepreneurial World.................................................................3
1.4 Entrepreneurial FAQ ...........................................................................5
1.5 Success Characteristics .......................................................................5
1.6 Failure Characteristics.........................................................................5
1.7 Risk Is a Four-Letter Word ...............................................................11
1.8 Challenges of Entrepreneurship .......................................................11
1.9 The Ten Commandments of Entrepreneurship ...............................12
References .................................................................................................15
2 Intrapreneurship: Corporate Entrepreneurship ........................17
2.1 Introduction ......................................................................................17
2.2 Denitions ........................................................................................17
2.2.1 Kelly Johnson’s 14 Rules of Skunk Works ............................18
2.3 Theory of Intrapreneurship ..............................................................20
2.3.1 The 3M Illustration ................................................................21
2.4 Characteristics of Intrapreneurs .......................................................24
2.5 External and Internal Business Environment ..................................25
2.6 Culture regarding Innovation ...........................................................26
2.7 Corporate Support for Internal Business Creation ..........................27
2.8 Critical Issues in Intrapreneurship ...................................................28
viii ◾ Contents
2.9 The Spin Zone ..................................................................................30
2.9.1 The Spin-Out .........................................................................31
2.9.2 The Spin-Off Reorganization ................................................33
2.9.3 The Equity Carve-Out ...........................................................34
2.10 Intrapreneurship in Academia .........................................................37
2.11 The Ten Commandments of Intrapreneurship ................................38
References .................................................................................................39
3 Women and Entrepreneurship ...................................................41
3.1 Introduction ......................................................................................41
3.2 Global Impact of Women Entrepreneurs ......................................... 41
3.3 Personal Challenges Faced by Female Entrepreneurs ..................... 43
3.4 Women and Success .........................................................................43
3.4.1 Dening Success ....................................................................44
3.4.2 Twenty-Five Leading Female CEOs ......................................44
3.5 Hurdles to Overcome .......................................................................45
3.6 Role of Angel Groups .......................................................................46
3.6.1 Angel Capital Market and Female Entrepreneurs .................47
3.7 The Green Alliance. A Female-Owned Business ............................ 47
3.7.1 Prole of Sarah Brown, Owner, Director .............................47
3.7.2 The Green Alliance Business Model .....................................48
3.7.3 Business Conceptualization...................................................49
3.7.4 Green Alliance Mission .........................................................50
3.7.5 The “Green” Business Enterprise ..........................................50
3.8 An Interview with Sarah Brown ...................................................... 51
3.8.1 The Importance of Emotional Support .................................52
3.8.2 Don’t Undersell Yourself .......................................................53
3.8.3 Overcoming Perceptions, Gaining Respect, and Finding
Success ...................................................................................54
3.8.4 Putting It in Perspective ........................................................54
References .................................................................................................54
4 The Entrepreneurial Environment ............................................. 57
4.1 Introduction ......................................................................................57
4.2 Leadership Qualities .........................................................................59
4.2.1 Leaders vs. Managers ............................................................59
4.2.2 The Centrality of Leadership in a StartUp ............................ 61
4.2.3 Leadership Is Situational .......................................................62
Contents ◾ ix
4.3 Establishing Your Founder Team .....................................................64
4.3.1 Elements of Skilled Teams ....................................................64
4.3.2 Establishing Your Board of Directors ...................................65
4.3.3 Selecting Your Board of Advisors .........................................66
4.4 Authority, Power, and Inuence ......................................................68
4.5 The Founder and Organizational Politics ........................................69
4.5.1 Power, Politics and Inuence ................................................71
4.5.2 Organizational Persona .........................................................72
4.6 The Dominant Coalition ..................................................................74
4.6.1 Dominant Coalition as Change Agent ..................................75
4.6.1.1 Theory of Change ....................................................76
4.6.1.2 Force Field Analysis .................................................77
4.7 Leaders Need Followers ...................................................................77
4.7.1 Current Views of Followership .............................................79
4.7.2 The Followership Universe ...................................................80
4.8 Time Management ............................................................................80
4.8.1 The Urgent-Important Matrix ................................................81
4.9 Conict Management .......................................................................82
4.10 Entrepreneurial Rewards ..................................................................84
4.11 Entrepreneurial Types ......................................................................85
4.12 The Ten Commandments of Leadership .........................................86
References .................................................................................................87
5 New Venture Creation ................................................................89
5.1 Introduction ......................................................................................89
5.2 Corporate Life Cycle .........................................................................90
5.3 Global Fortune 500 Annual Turnover..............................................91
5.4 Corporate Life Cycles .......................................................................91
5.4.1 Greiner’s Model of Organizational Growth ..........................93
5.4.2 Churchill and Lewis Growth Model .....................................94
5.4.3 New Product Life Cycles .......................................................96
5.5 A Small Company Is Not a Little Big Company ..............................99
5.5.1 Cash Is King ........................................................................101
5.6 Your Innovative Organization ........................................................103
5.6.1 Types of Innovation ............................................................103
5.7 Creating Your Own Innovation Culture ........................................106
5.8 Strategic Planning for StartUps .......................................................107
5.9 Your Value Chain Analysis ............................................................. 108
5.10 Your Value Proposition ..................................................................109
x ◾ Contents
5.11 SWOT Analysis ...............................................................................112
5.12 The Early Adopters .........................................................................113
5.13 Bridging the Valley of Death ......................................................... 115
References ............................................................................................... 115
6 Financing Your Dream ............................................................. 117
6.1 Naming Your Baby ......................................................................... 117
6.1.1 Bad Company Names .......................................................... 117
6.1.2 Bad Product Names .............................................................118
6.2 Incorporating Your New Venture ..................................................118
6.2.1 Characteristics of Corporations ........................................... 119
6.3 Selecting the Optimal Legal Structure ........................................... 119
6.4 Legal Powers of Corporate Executives ..........................................121
6.5 Creating Value for Your Stakeholders ............................................123
6.6 Employee Benets .......................................................................... 123
6.7 The 3 Fs, Angels, and VC ............................................................... 124
6.7.1 Friends and Family ..............................................................125
6.7.2 Angel Investors ....................................................................126
6.7.3 Venture Capital ....................................................................126
6.8 Principles of Raising Capital...........................................................127
6.9 Persuasive Business Presentations .................................................128
6.9.1 Rookie Mistakes ...................................................................131
6.10 Your Elevator Pitch ......................................................................... 131
6.10.1 Must Haves ..........................................................................132
6.10.2 Brief Descriptions ................................................................ 133
6.10.3 Last Three Bits of Advice ....................................................133
6.11 Estimating StartUp Costs ................................................................133
6.12 Valuing You and Your Team ..........................................................133
6.13 Valuing Your New Venture (Calculating Pre-Revenue
Valuation) .................................................................................... 134
6.13.1 Basic Calculations ................................................................134
6.13.2 Valuation Examples .............................................................135
References ...............................................................................................136
7 Organizational Structure .........................................................137
7.1 Introduction ....................................................................................137
7.2 The Founding Team .......................................................................137
7.3 Hiring Your Executive Team .......................................................... 139
7.3.1 Teamwork Not Titles ...........................................................140
Contents ◾ xi
7.3.2 Team Discipline ...................................................................140
7.3.3 Focus on Outcomes, Not Activities .....................................141
7.4 Too Many Chiefs, and Not Enough Productive Indians ................141
7.5 Accountants and Lawyers ..............................................................142
7.5.1 Accountants .........................................................................142
7.5.2 Lawyers ................................................................................ 142
7.6 Managing Managers .......................................................................143
7.6.1 How Is Managing Managers Different from
Managing Projects? ..............................................................143
7.6.2 A Roadmap for Managing Managers Effectively .................143
7.7 Selling Your Vision to Your Team .................................................. 145
7.8 Fail as Fast as You Can ..................................................................146
7.9 Overcoming Organizational Inertia and Defenses ........................ 147
7.9.1 Organizational Inertia .........................................................148
7.9.2 Organizational Defenses .....................................................149
7.10 An Old Aphorism ...........................................................................150
References ............................................................................................... 151
8 Power Negotiations .................................................................. 153
8.1 Business Negotiations 101 .............................................................. 153
8.1.1 Negotiation Wheel ............................................................... 154
8.1.2 Negotiation Strategies .......................................................... 154
8.1.3 Distributive Negotiation .......................................................156
8.1.4 Integrative Negotiation ........................................................ 157
8.2 The Entrepreneur as Chief Negotiator ........................................... 157
8.2.1 StartUp Negotiator Fears .....................................................158
8.2.2 The Neophobia Syndrome ..................................................158
8.2.3 If You Expect More, You Get More .................................... 159
8.3 Knowing Your Negotiation “Counterpart” ..................................... 159
8.4 Your First Negotiation ....................................................................160
8.4.1 Aligning Interests ................................................................. 161
8.5 Planning Your Negotiation Success ............................................... 161
8.6 The Negotiation Agenda ................................................................162
8.6.1 Preparing the First Draft of Any Document .......................163
8.6.2 Measuring Success ............................................................... 164
8.6.3 Negotiation Strategies ..........................................................164
8.6.4 Negotiation Styles ................................................................166
8.6.5 Negotiation Tactics ..............................................................166
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