Entrepreneurship Notes

Sudhanshu Rai, Professor, Copenhagen Business School Kristjan Jespersen, PhD Fellow, Copenhagen Business School A good business plan reflects upon four different and distinct points: aspirations, leadership, integration and society. These are components and ideas that a business creator, an entrepreneur has to sit down and think about. 1. Aspirations: Aspirations need to be clarified before you start writing your business plan. Where do you want to be in six months, fives years or one year? If an entrepreneur has ambiguity about this aspirational question, that ambiguity will translate into the business plan. 2. Leadership: Your leadership style needs to become visible in the business plan. The organization that you build is very much derived - it derives its energy from the creator of the organization. So, your style, your philosophy of leadership, your belief in a leadership, has to be very aligned to the organization you create. 3. Ability to integrate: Integration describes what re...

Ted Ladd, Professor, Social and Internet Entrepreneurship, Hult International Business School Professor Ted suggests that one should not write the business plan too early. Outline and test different pieces of the business model. You need to have valid, validated business model. A good business plan has four projection sections: 1. Financial: Revenue and costs 2. Staffing: Who is going to be there on your team? 3. Marketing: How are you going to reach your customer? 4. Operations: How are you going to actually produce the goods or the services and get it to the customers? These four projections are interlinked with each other. Have a baseline for each section, that is, what you think is going to happen if everything goes well - the best case scenario. Also, have a dream scenario for when everything goes so well and worst case scenario when everything is going down. If it gets worse than worse case scenario, you should have self discipline to stop or mindset to change, make major cha...

Kai Hockerts, Professor, Copenhagen Business School Financial projections are a key part of a business plan. You want to build a long-term projection that might run over the next five years. However, the key element is actually the next 12 to 24 months.Tell us what you expect, how your company will develop. Anything beyond that is highly uncertain, and only gives us an idea of what your plans for the future are. Therefore, it is important that you look at different scenarios, different options for the future. It is crucial that when you provide financials, you don't just give us overall turnover numbers. You need to provide the single unit economics. What is your variable cost? How many numbers of products are you planning to sell? If you have different products and services, tell us which ones are going to make up what part of your turnover. This blog post is based on my learnings from the course on ‘social entrepreneurship’ offered by Copenhagen Business School through Coursera (...

Kai Hockerts, Professor, Copenhagen Business School There are three areas that your business plan will have to cover: 1. How large is the market? How many beneficiaries are out there who you want to help with your social enterprise. How many of those can actually be reached, and how many of those are going to be reached by you? 2. Why you? Who is on the management team? What is your secret ingredient? You will have to address barriers to entry, competitive advantages, a long-term outlook, your path to profitability, when you expect to break even, your exit strategy. 3. An analysis of your competitors: Who are they? Non-profit organizations, charities or for-profit companies selling same services. How you differentiate yourself from these - different technologies & cost structures that allow you to be competitive in this market. Three typical problems in the business plans: 1. The biggest issue is that one doesn't get it. The logic in the business plan is simply too difficult to...

Kai Hockerts, Professor, Copenhagen Business School The goal of a business plan: 1. To align your team members' expectations, visions and missions. 2. Provides an operational plan, which outlines which steps you will have to walk through on your way towards starting the social enterprise. 3. A way of communicating externally and internally what your organization is about. 4. A business plan is about attracting funding. 5. Might also be used for merger of your organization or acquisitions by a larger social enterprise. What do readers typically look for in a business plan? 1. How the founders link together. How detailed oriented the founders are? 2. How big is the market that this social enterprise wants to serve. Is there a sustainable competitive advantage for your social enterprise? 3. How you plan to grow and replicate your social enterprise. What does your road map look like for the years ahead? 4. Financial projections: a key part of a business plan. Other things to keep in mi...

Sudhanshu Rai, Professor, Copenhagen Business School The co- creation is about diverse knowledge. That means that knowledge has to be multidimensional. Consider a project of designing a pen. Only engineers cannot take part in the design process. It can be a writer, a poet, an artist or fluid dynamicist working independently or in a team on the design process. The knowledge has to be diverse. You're only as good as how you get your team to work. So, that's the first feature. The second is to shift the focus from the locus of the problem, that is the pen, to the problem space, that is writing, the experience of writing. The third feature is of silence. When you're co-creating, it's not about all the time chitter-chatter. It's not about my idea's better than yours. It's about sometimes quiet, silent reflection before engagement. So silent reflection is something that is extremely important for co-creation. The fourth feature is rapid prototyping. Get some ideas...

Ted Ladd, Professor, Social and Internet Entrepreneurship, Hult International Business School Additions to consider for social business model canvas are: the government regulation, the affected harm and the affected benefit. The government regulation In many social ventures they're operating in places where there perhaps is no government regulation or if there is, it is precarious and perhaps dynamic. It's moving, so an entrepreneur needs to understand what is the existing regulation, and what could happen to the regulation in future. The affected harm and the affected benefit We all as social entrepreneurs need to recognize that our goal is to leave the local community better off, than when we found it. So we need to explicitly recognize the affected harm, the pre versus post benefit we're going to create. We also need to recognize that even if we have good intentions, we're going to create problems. A social venture canvas needs to recognize that there are possible co...

Ted Ladd, Professor, Social and Internet Entrepreneurship, Hult International Business School The first step in becoming social entrepreneur and to envision, test, and then implement social ventures is to recognize what a business model is. It's the logic by which an entrepreneur creates and captures value. It's not the product. Indeed it's everything outside of the product. In the middle of the business model canvas you'll see one element that's for a value proposition. That's not the features, the functions, the colors of the product or the service that you want to offer. That is the core benefit that the customer will receive by using this particular product or service. And then everything else around the business model is an extension of that. Business model canvas is a prescriptive model. And, in a single graphic, this is a demonstration, graphically, that all of the elements of a business model are interrelated. If you're going to change one item of th...

Kai Hockerts, Professor, Copenhagen Business School The first step in building the business model canvas is to identify its customer segment or segments. Only after a specific customer group has been identified, can the value proposition be described. It refers to how and why a product or service is relevant to a specific customer group. The value proposition needs to do four things. It needs to identify the problem the customer has. It needs to specify how the product solves that problem and thirdly, it needs to quantify the specific benefits delivered. Then finally, you should argue for why your enterprise is better positioned to deliver that value. This is called differentiation. Many social entrepreneurs are too much occupied with their own startup to spend much time on studying the market environment, and to understand how the incumbents, the people in the market differentiate themselves. Breaking into an existing market is always difficult. Don't make it more so by failing to...

Apply the business model canvas method to Hueforbi. Given that the assignment should be short you are not required to address all elements of the canvas. However, in any case you should focus on value propositions, channels, and customer segments. Add as many additional canvas elements as you like and spell out how you see the business model of Hueforbi develop. My answer: Hueforbi is a social enterprise selling beanies made from leftover wool and helping the people of the street. Applying the business model canvas method to Hueforbi: Value propositions: This is what Hueforbi offers to its customers (products or services). Customers get "beanies" which are produced using the leftover wool. Apart from beanies, customers find this product valuable as this contributes in helping the community and is environment friendly (as it is made up of recycled material). Customer channels: These are channels through which products reach customers. For Hueforbi, mouth to mouth publicity is ...

Karim Jabber, External Lecturer, Copenhagen Business School The financial viability side, represented by the revenue streams and the cost structure. Unless there is a positive balance between the revenue side and the cost side, the business will not be viable. Revenue Streams The revenue streams are the monetary income generated when the company, or organization delivers its value proposition to the customer segments. As mentioned, the flows can come directly from the customer segment making use of the offer. Or, it can be carried by another customer segment that is subsidizing this usage. Revenue streams can take many shapes. For example - direct sale, usage fee, service fee, subscription fee, licensing fee, commission fee, advertising etc. Choosing the right kind of revenue model is extremely important for a business. Even if there is a good fit between value proposition, the customer side and the customer segments, the right channels, the right customer relationship, etc. The type o...

Karim Jabber, External Lecturer, Copenhagen Business School The infrastructure side, that is - the back end or the supply side. Here, you can see how the business organizes itself to generate their offer. Which key resources it has at its disposal, which activity it undertakes, and which key partners it engages with. Key Resources Resources fall in several categories. Physical resources, that is buildings, manufacturing plants, vehicles and machines, systems, distribution networks, etc. Intellectual resources, that is brands, IP, proprietary knowledge, partnerships, strong customer databases, etc. Or human resources, the right kind of HR profiles for the development of the offer. Note that in some companies in industries the quality of human resources plays a more important role than in others, such as the pharmaceutical or aerospace industries. Financial resources, access to capital and financial guarantees. Key Activities Activities also fall in several categories. Production activit...

Karim Jabber, External Lecturer, Copenhagen Business School According to Osterwalder and Pigneur, there are many types of customer segments. And various business models will address these customer segments differently. Business models can either address the mass market, niche markets, segmented markets, diversified markets or multi-sided markets, also known as multi-sided platforms. Business models focused on mass markets do not distinguish between customer segments. They offer the same value proposition to all customers segments and deliver this offer through the same sales channels, and with the same type of customer relationship. For example, most companies selling consumer electronics, detergent or soft drinks address the mass market. Business models focused on niche markets on the other hand, cater to one specific specialized customer segment. The core of what is being offered is the same, but the specific offer and methods of delivery and retention might vary. Which would require...

Karim Jabber, External Lecturer, Copenhagen Business School The value proposition, simply put, is what the product or service does for the customers making use of it. The value proposition, in other words, seeks to solve customer problems and satisfy customer needs. The value proposition is more than the specifications of a given product or service. It is the value that this product or service adds to the customer. For example, cup that can hold 20 centilitres, made of recycled material and sold in boxes is not its value. But value for the end user is affordability, disposability, time saving and a good conscience that one is using recycled material. The value proposition is always very closely linked to the customer segments making use of the product or service. There always needs to be a strong fit between the value proposition and the customer segments. This is what is referred to as the product-market fit. If this fit is weak or missing, the company will never be able to thrive. In...

[ Click on image to enlarge] Karim Jabber, External Lecturer, Copenhagen Business School Alexander Osterwalder & Yves Pigneur are the brains behind the world-renowned “business model canvas” – instrumental in helping new businesses put strategy into practice. Osterwalder and Pigneur define a business model as follows: A business model describes the rationale of how an organization creates, delivers and captures value. A business model canvas is a visual representation that is simple, relevant and intuitively understandable. The business model canvas can be divided into nine building blocks that show the logic of how a company intends to make money. It covers the four main areas of business: customers, offer, infrastructure, and financial viability. When you take a glance at the canvas it is quite intuitive to see how these four areas are connected. In the center, you have the offer, the value proposition and to the right, the customer side , that is - market side or demand side. ...

Business models provide a set of generic descriptors of how firm organizes itself to create, and distribute value in a profitable manner. A scale model is an exact copy of reality at a smaller dimension. Role models on the other hand are meant as an inspiration for others who can use that model as a point of departure, for building their own business model. Role models describe success factors that should be replicated.  When we talk about business models as model organisms for investigation, business models are very rarely stable scale models. Business models are kind of like a laboratory set-up, in which we can think through different manipulations. Business models are art as well as science. This blog post is based on my learnings from the course on ‘social entrepreneurship’ offered by Copenhagen Business School through Coursera (2014).

Ester Barinaga, Professor, Copenhagen Business School Microfinance is a financial technique initiated in the developing countries as a tool to help people get out of extreme poverty. Professor studied what happens when you translate such a social innovation - microfinance from the developing world to a world, or to such a different context as Sweden. She followed the effort to introduce microfinance to a developed welfare state, such as Sweden, where you don't have a lack of financial infrastructure . We may think of a social problem as identical in different national contexts, and it's not. Poverty in India or Bangladesh is one thing. Exclusion and poverty in a welfare state like Sweden is quite a different thing. And to believe, to have the illusion that we're going to be able to use the same social innovation to address poverty in both places. It might be an illusion. Whereas in India or Bangladesh, it might be a matter of lack of material access to financial networks. I...

Should you start a social business? I don't know. I think it's a fantastic opportunity. I don't actually think the social business is something new. I think social business has existed forever. A social business is something where you want to find a solution to communities, or people, or countries, or areas needs. It's a need which you'd like to cover in a way which has a social aspect. If you want to do that, I think you should team up, find some people who can share your vision about what social challenge you would like to do something with, and you should quickly go into collecting data about it. If somebody already has done it, if you can learn from others and then build a prototype on this. See if it works. Go out and ask those you would like to help with their needs if this really is right. If this really is the best model for covering that. Then refine your model and then see how you can scale it and learn from it. Don't be afraid of sharing it, your mist...

Microfinance is a category of financial services targeting individuals and small businesses who lack access to conventional banking and related services. Microfinance includes microcredit, the provision of small loans to poor clients; savings and checking accounts; microinsurance; and payment systems, among other branches. Microfinance services are designed to reach excluded customers, usually poorer population segments, possibly socially marginalized, or geographically more isolated, and to help them become self-sufficient. (Wikipedia) Kiva is a 501 non-profit organization that allows people to lend money via the Internet to low-income entrepreneurs and students in 77 countries. Kiva's mission is "to expand financial access to help underserved communities thrive." (Wikipedia) MYC4 was an internet marketplace where you and investors from around the world can lend money directly to entrepreneurs who are doing business in Africa and create growth together with them. That me...

Your Assignment for the week will be a bit more challenging. We ask you to select one of the following four social problems and to try to identify an opportunity for turning the problem into an opportunity for social innovation. 1. Only one in three blind people is employed. 2. Boys with ethnic minority backgrounds tend to drop out of school early and are at higher risk of unemployment. 3. Poor people do not have essential resources such as access to clean drinking water due to a lack of support infrastructure. 4. Producers of handicraft often have to work in an environment in which they do not have access to electricity making production unreliable. My answer: I would like to provide solutions to problems faced by handicraft producers in Africa. Producers of Africa have no access to electricity, but they have the skills to produce handicrafts which can be used to solve the problem. When producers have access to electricity, production of handicrafts will be reliable and this will enab...