List two traditional business strategies and two innovative business strategies. Identify a business that uses one of these two

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Course Learning Outcomes for Unit VI Upon completion of this unit, students should be able to:

2. Analyze the role of an entrepreneurial mindset in opportunity recognition. 2.1 Analyze how failure can increase innovation.

4. Examine business models.

4.1 Apply the connections between business models and innovative thinking. 4.2 Integrate business plan frameworks. 4.3 Interpret the connections between business models and revenue models in writing a business

plan.

5. Differentiate innovative business strategies. 5.1 Distinguish traditional business strategies and innovative business strategies.

Course/Unit Learning Outcomes

Learning Activity

2.1

Unit Lesson Chapter 11 Student Resource: Why a Business Can Fail Student Resource: Embracing Failure Unit VI Case Study

4.1 Unit Lesson Chapter 15 Unit VI Case Study

4.2

Unit Lesson Chapter 10 Student Resource: Busines Plan Tips Unit VI Case Study

4.3 Unit Lesson Chapter 10 Unit VI Case Study

5.1 Unit Lesson Chapter 15 Unit VI Case Study

Required Unit Resources Chapter 10: Planning for Entrepreneurs Chapter 11: Anticipating Failure Chapter 15: Engaging Customers Through Marketing In order to access the following resources, click the links below. Navigate to the Video and Multimedia area in Student Resources for Chapter 10 of the eTextbook to view the item listed below.

• Business Plan Tips

UNIT VI STUDY GUIDE

Innovative Business Strategies

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Navigate to the Video and Multimedia area in Student Resources for Chapter 11 of the eTextbook to view the items listed below.

• Why a Business Can Fail

• Embracing Failure

Unit Lesson

The Importance of Planning The business plan requires the entrepreneurial team to think through its decisions to consider if decisions are consistent, operational, sustainable, and profitable within a reasonable timeline. The business model must align with the value proposition and the venture’s structure. Even though creating a new venture includes many unknowns, variables that cannot be specified or predicted, the work in completing a business plan can prevent the entrepreneurial team from making decisions that decrease the chance for the venture to succeed. For example, pricing the product at a price point that the customer would perceive as too low to represent a quality product, or too high causing the customer to ignore consideration of purchasing the product. Another important part of creating a business plan is to identify milestones and decision points. A milestone is reaching a break-even point, the point at which additional sales results in the venture turning a profit, or the point at which expansion into a larger facility is needed. Identifying these types of milestones and decision points provides direction in planning how to support the best action connected to the growth of the new venture. The business plan communicates where the venture is headed into the future based on the entrepreneurial team’s goals for their start-up venture. Writing the business plan also requires the entrepreneurial team to communicate and agree on the vision for the future of the venture. This is not always an easy discussion as some people on the team might want to grow the venture within a long-term perspective while other team members might focus on growing the venture only to the point of harvesting the venture, that is, selling the venture to a larger organization. Within the entrepreneurial world, the phrase begin with the end in mind is an important mantra. Design and build the venture with the end goal determined. Identifying this vision and receiving agreement about the vision in the planning stage removes conflicts at a future date and guides decision-making.

Business Plans, Business Models, and Revenue Models Two key topics that the business plan needs to work through are the business model, how the venture creates, captures, and delivers value to the desired target market, and the revenue model which defines how the venture will earn an income that results in profit. To clarify these differences, the business model describes the value that the venture creates while the revenue model describes the process to generate income from the created value. Both of these topics should be described within the business model. In writing the business plan, the business and the revenue models are related as each needs to align with one another. The reality though is that all parts of a business plan need to be aligned. For example, a marketing plan needs to relate to the target market and present the image that aligns with both the business model and the revenue model. The image is in alignment with the value presented in the business model, and the pricing built into the revenue model. Describing these two models within the business plan provides opportunities to make adjustments to find the optimum alignment between the business model and the revenue model.

Traditional Business Strategies and Innovative Business Strategies Traditional business strategies include the commonly seen approaches to expansion—growth and building a competitive advantage. These goals also fit entrepreneurial ventures. However, conducting research and accessing an entrepreneurial network can provide new ideas in creating innovative business strategies. The tools covered in this course focused on divergent thinking, design thinking, and other creativity-enhancing activities can also provide new perspectives on developing innovative business strategies. Again, we see the

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benefit of an entrepreneurial mindset in being open to new approaches in developing the choices, processes, and outcomes within the business plan.

Business Plan, Preventing Failure, and the Entrepreneurial Mindset The business plan plays an important role in preventing failure by placing markers at key decision points. These markers are placed at danger points as a reminder to the entrepreneur to take a step back to get on track if the venture is not moving in the right direction. For example, a marker should be placed as a connection to sales levels and revenues. If sales hit a specific level somewhere below the desired or projected level, the marker is triggered to discuss why sales are not at the level expected. This discussion is really about the future potential for this venture and whether there is anything that can be done to improve the success of the venture. Specific markers can also be placed at points that, if reached, indicate the venture is not viable, and discussions for closing the venture need to be the focal point. Setting up these markers or decision points as a part of the business plan identifies the point of no return, the point at which discussions need to take place on what actions are available to either move the venture into a new direction or close the doors. Establishing these markers in the business plan before the venture opens removes some of the emotions tied to hoping that, by some miracle, a decision can be made that saves the failing venture from its demise.

Speaking of failure, how do you define failure? Surprisingly, people define failure differently. Some people define failure as not achieving the intended outcome. Some people define failure as quitting, and other people define failure as a learning opportunity, a chance to gain new insights. As you might guess, people with an entrepreneurial mindset are people who define failure as a learning opportunity, a chance to gain new insights, and the potential to demonstrate agility in using the information gained from the experience to regroup by using the new information to recreate and bounce back with a better idea or a better business model.

Business Plan and Core Values Even with this positive perspective about failure, not meeting the intended or planned goals and expectations can be devasting and highly emotional. These feelings, and the situation, present challenges in maintaining

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one’s moral compass. When your back is against the wall and when you feel that you have lost control and your future expectations are being destroyed, staying true to your values becomes even more difficult. This is why in the beginning steps of creating your business venture, in the planning stage, you should create core values and principles as guiding beliefs that you and your team agree to never cross. Crossing ethical lines and even legal lines can become a serious temptation when a person feels their life plan is slipping away. Making decisions in this highly emotional situation is more challenging than when a person feels balanced and comfortable within their life situation. This is why defining values and principles in the early startup stage is important, as well as why identifying key markers within the business plan are important. These values and principles provide a basis for how you and your team, will respond to challenges and even crises that can arise for the business venture. Ethics and compliance with all laws are essential to protect your integrity and reputation. Coming back from a business idea that did not bring in the anticipated gains or meet the expected and planned results is always a possibility, but coming back from unethical or illegal activity is much more serious as this is a permanent mark against you that potential investors will remember and associate with your character. Being aware of the risks of thinking that compromising your values might save your business should give you the strength and courage to stay true to the core values you established for your conduct. Failure is an opportunity to learn and use this learning to come back with an even better idea, an opportunity for innovation, or other creative idea generation. Changing your perspective about failure is a sign of intelligence and perseverance, key characteristics of an entrepreneur.

Failure and Exit Decisions Generally, the quicker the decision to exit the venture, the more choices you have in how you want to exit the venture. Remember that this does not signify that there are no other opportunities ahead of you. You now have more knowledge and experience that helps in determining your next direction. In planning your exit, are there any other learning opportunities that you want to explore before closing the venture? This exit plan could result from your completion of the business plan before even opening the doors in starting the venture. Writing the business plan is an action that provides insight into the potential success of the venture, or the potential for lack of success. Recognizing that the idea will not be successful, before opening the doors, is much wiser than moving forward and expending resources that will eventually prove unsuccessful.

Failure, Timing, Change, and Success Remain optimistic about your future as an entrepreneur. The timing in opening the venture is frequently the most critical factor for the success of the venture. Your idea might still be viable if opened at a different time. Or you might find an alteration to the business model or product or changes that increase the potential for success. A quick example is the triple-blade windshield wiper. The original creators of the triple-blade wiper placed the wipers for sale at large retailers where their product was lost among the other choices for windshield wipers. Another person bought the company, changed the distribution system to television infomercials, and the product became successful. This one change completely altered the success of the business; the product did perform better than the competitor’s products, but the target market was not aware of the advantages until the marketing and distribution system was more closely aligned with the target market promoting information on the unique features and benefits of the wiper. Costs were also decreased as the buyer could purchase the triple-blade wiper through a phone call. Once the product became popular and the business successful, the triple-blade wiper was once again placed in the retail space but, this time, through automotive supply franchises. Moving into unchartered territory is part of the entrepreneurial experience. If you were copying someone else’s business, you would not be an entrepreneur. Stepping into unchartered areas means many unforeseeable situations are often impossible to predict. Conducting research and writing your business plan is intended as a tool to help you think through your decisions before spending money and using valuable resources. Realizing a failure on paper is much easier than realizing a failure after you have become financially and emotionally invested in the new venture. Following the advice from the eTextbook authors and the information herein is an important part of being an entrepreneur. Congratulate yourself for having an entrepreneurial mindset, for being open to new ideas, and for seeking out new possibilities for providing value in solving a problem. Track what you have learned from the experience and keep an open mind on how the

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experience might open new possibilities in the future. Perseverance, even in the face of closing an entrepreneurial venture, is one of the characteristics of an entrepreneur.

Marketing and the Entrepreneurial Mindset Marketing, from an entrepreneurial perspective, is often about how to implement a marketing campaign with low levels of resources. This is often called guerilla marketing, a more creative approach to marketing the new venture’s products or services. Guerilla marketing is another strong fit with innovation and an entrepreneurial mindset. The image below includes the focus on the customer, the value proposition offered from the customer’s perspective, the solution to the problem provided by the new venture, education, and access. These are important in understanding promotion and place to restate the 4Ps of marketing into an entrepreneurial mindset perspective.

Interactive Activity

In order to check your understanding of concepts from this unit, complete the Unit VI Knowledge Check activity. Unit VI Knowledge Check PDF version of the Unit VI Knowledge Check Note: Be sure to maximize your internet browser so that you can view each individual lesson on a full screen, ensuring that all content is made visible. Remember, this is a nongraded activity.

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Conclusion Some tools, like writing a business plan, fit recommended actions for starting a small business. The difference from an entrepreneurship perspective is the word innovation, the idea of approaching creating the new venture by offering something unique, building a venture that redefines the traditional approach followed by traditional businesses.

Learning Activities (Nongraded) Nongraded Learning Activities are provided to aid students in their course of study. You do not have to submit them. If you have questions, contact your instructor for further guidance and information. In order to access the following resources, click the links below. Utilize the following Chapter 10 Flashcards, Chapter 11 Flashcards, and Chapter 15 Flashcards to review terminology from the eTextbook.