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ENTREPRENEURSHIP AND VALUE CREATION

How Entrepreneurs Differ from Businessmen

• Entrepreneurs have an empowering perspective of failure

EXAMPLE: Our traditional school system trains children to close their books and not ask for help at
test time. It grades them on a scale from pass to fail. Along the way, it also trains kids to believe that
failure is bad. In reality, failure is simply feedback. Failure is the way we learn and grow. It shows us
where there needs to be correction. For most people, however, failure is not a correction but
rejection.

Never take failure personally. Remember:

Failure is a verb, not a noun.

Failure is just something a person does – it’s not something s/he is. We have all failed many times and
we will fail again. It’s part of life. Failure is the opportunity to begin again in a new and better way.
Successful entrepreneurs believe failure is inevitable and educational (Smith, 2012).

Failure is feedback from the real world, and one of the first benefits that a
person can gain from that feedback is the knowledge that he took action. He
created a result. He made an impact on the world. Positive or negative, he
made a difference through your own actions and created an experience he
could learn from.

Entrepreneurs must seek and find the answers they need. It does no good to stay angry and blame
others for a failure after it has happened. Entrepreneurs must learn to detach from blame.
Entrepreneurs must stay strong and choose to get stronger during the failures of life (Smith, 2012).

• Entrepreneurs know a little about a lot

EXAMPLE: Smith once heard a story about a CEO who was having a meeting with someone from
outside of his company. During the meeting, an employee burst in and said, “We’ve got a problem.
We’ve got to handle this right now!” The CEO calmly looked at the employee and said, “Remember
rule number five (5).” The employee thought for a second and then smiled, relaxed, and said, “Right
– rule number five (5). Thank you,” and then turned and walked out of the room. The CEO resumed
his conversation and within minutes another employee came running in and said: “Something has just
come up that requires your immediate attention.” Once again, the CEO calmly looked at the employee
and said, “Remember rule number five (5).” The employee visibly relaxed and said, “Oh yeah – rule
number five (5). Sorry, I forgot.” Then he smiled and walked out of the room.

Rule number five (5): Don’t take yourself so seriously.

At this point, the visitor is confused and surprised, because he hasn’t seen anything like this before.
When he asked the CEO what rule number five (5) was, the CEO smiled and said, “Rule number five

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(5) is ‘Don’t take yourself so seriously.’ The visitor asked, “How many rules are there?” The CEO gave
an even bigger smile and said, “Just one.”

The moral of the story is that things are rarely as serious as they may first appear. While inexperienced
entrepreneurs may run around trying to put out fires, a more seasoned entrepreneur will let many
fires just burn themselves out. Why? Because entrepreneurs know a little about a lot, and this
broader, more generalized view allows them to see what’s truly important and keep things in a more
balanced perspective. Knowing a little about a lot makes you realize that although everyone’s role is
important, no one role is so serious that it means success or failure in and of itself (Smith, 2012).

• Entrepreneurs give and receive praise correction

EXAMPLE: A karate teacher uses a powerful tool to get the best from his students and himself. It’s
called “PCP”, which stands for Praise, Correct, and Praise. Rather than criticizing or correcting errors
immediately, when the instructor spots a mistake during a student’s training, he uses the PCP strategy
to get better results, first praising or complimenting the student on what he did right, then correcting
the mistake, and then praising the improvement. Take a kick, for instance. If a child halfheartedly kicks
his leg instead of kicking with force, the instructor might say, “Great, excellent, you got your leg
moving in the right direction. Now let’s do it with more strength.” When the child kicks harder, the
instructor gives him a high five and says, “That’s it, good job!” Praise, then correct, then praise again.

A spoonful of sugar helps the medicine go down.

Praise is like sugar; correction is like medicine. Adults enjoy being praised just as much as children do,
and praising people is a key secret of success (Smith, 2012).

• Entrepreneurs fly with eagles

EXAMPLE: Ken Krogue, a writer at Forbes, had his friend, Troy Fullmer, experience a slight
inconvenience during their meal together. He asked the waitress for a little change in how his meal
was prepared and the waitress responded with, “Oh, we can’t do that, I’m sorry.” Troy replied with
“Quack quack, I need an eagle. Can I talk to your manager?” The manager came out and Troy
immediately received the slight change he requested. It was obviously possible.

People before process. Customers before policy.

Just like eagles, entrepreneurs are fearless, and thus, very results-oriented. Also, they are always
prepared for change. Just like what the manager had done, he put Troy’s comfort first knowing that
his concern is a form of a constructive feedback, rather than a harsh criticism on their management.

Entrepreneurs nurture their team. Eagles build nests and hunts for their eaglets. While eagles push
their eaglets on the edge of the cliff, the father eagle catches them until they start flapping their wings.
The manager showed the waitress how to properly handle the situation, so that by the next time it
happens, the waitress will know what to do.

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• Entrepreneurs look into the future

Few people understand the power of vision. A good marriage doesn’t just happen without a vision to
make it happen. Vision makes things happen; good health doesn’t just happen without a vision to
make it happen; financial freedom doesn’t just happen without a vision to make it happen. Vision
attracts power. It’s what attracts wisdom.

Great entrepreneurs use vision to create a balanced approach to productivity. We balance our time
by planning for the future and taking action in the present. Most entrepreneurs spend very little time
looking into the past. It’s not that hindsight isn’t important – it is, and can be used to develop good
foresight – it’s what we choose to put more of our emphasis on the future (Smith, 2012).

While it is important to value hindsight, don’t let it limit your foresight.

Entrepreneurs that Changed the World

• Tony Tan Caktiong (Jollibee)

Tony Tan Caktiong started as an immigrant from a large Chinese family. When he was 22 years old, he
started an ice cream parlor franchise – one located in Cubao, and the other in Quiapo. Two (2) years
later, he decided to serve other dishes such as hamburgers, fried chicken, and spaghetti, as people
grew tired of eating ice cream. From there, Caktiong renamed it to Jollibee - a fast food resto that
every Filipino child grew up with.

Caktiong was not intimidated when McDonald’s had its first outlet in the Philippines, mainly because
the foreign fast food chain didn’t know the local food culture: Filipinos have a sweet taste on food,
and that they like to smell everything they eat.

Jollibee Foods Corporation started to establish franchises outside of the Philippines: Southeast Asian
countries, Hong Kong, the Middle East, USA, Italy, and the most recent, Canada. These enabled
millions of Filipino overseas workers to get a taste of their home in other countries.

• Mark Zuckerberg (Facebook)

At age 31, Mark Zuckerberg is one of the world’s youngest billionaires worth more than $46 billion.
As the co-founder and CEO of Facebook, he also helms the world’s most popular and influential social
media site that, as of the fourth quarter of 2017, had more than 2.2 billion active monthly users.

He developed the social networking site with friends while an undergraduate student at Harvard,
ultimately dropping out his sophomore year to focus on Facebook full-time. He opened an office in
Palo Alto, California, where he raised $12.7 million in venture capital.

Since then, Zuckerberg has aggressively grown the company, which went public in 2012. Not only has
he developed a robust advertising and sales arm, but he has rigorously built out Facebook’s
capabilities and user bandwidth by enabling native video services and live streaming. Zuckerberg also
spearheaded a number of acquisitions, including Instagram, Oculus VR and a Snapchat-like app called
Masquerade.

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• Steve Jobs (Apple)

Steve Jobs started Apple Computer in his parents’ garage in Palo Alto, California with engineering
buddy Steve Wozniak in 1976. Their mission was to build a personal, portable computer that everyone
could use. They achieved that with their second model of personal computer, the Apply IIc. In 1980,
Apple went public with a market value of $1.2 billion by the end of its first day of trading.

• Elon Musk (SpaceX)

Elon Musk founded the aerospace company in 2002 in order “to revolutionize space technology, with
the ultimate goal of enabling people to live on other planets,” according to the company website.
SpaceX launched its newest rocket – Falcon Heavy, the most powerful operational rocket in the world
with reusable launchers – last February 6, 2018, with zero (0) failure.

In addition to SpaceX, Elon Musk serves as chief executive of Tesla Motor Co., an electric car company,
is chairman and co-founder of SolarCity and is working to build a high-speed “Hyperloop”
transportation system, which – in theory – could revolutionize travel by cutting commute time from
Los Angeles to San Francisco to 30 minutes.

• Anne Wojcicki (23andMe)

She is the co-founder and CEO of 23andMe, which sells direct-to-consumer genetic testing kits that
are easy to use – it simply requires a person to mail in a saliva sample – and relatively inexpensive, at
$99 a test. The company’s genome kits, which was named ‘Invention of the Year” by Time magazine
in 2008, tests for 36 recessive disorders, including sickle cell anemia and cystic fibrosis.

In 2013, the company ran into trouble when it was ordered by the Food and Drug Administration
(FDA) to stop selling its kits over questions about the reliability of the results. Instead of arguing with
FDA, Wojcicki worked closely with the agency to prove that the tests were accurate. Thus, in 2015,
23andMe launched an FDA-approved testing kit.

The company continues to innovate, recently raising $115 million (at a $1.1 billion valuation) to
develop its drug-discovery arm.

• Larry Page and Sergey Brin (Alphabet)

Alphabet’s two co-founders, Page and Sergey, met as Ph.D. students at Stanford University in 1995.
Shortly after they collaborated on Backrub, a search-engine company, while living in a friend’s garage
in Menlo Park, California. The tech duo eventually changed the name of their search engine from
Backrub to “Google” and revolutionized the search-engine industry by using a new algorithm that
ranked a webpage based on its backlinks. Up until then, many existing search engines used human-
curated results.

In 2004, Google went public. Since then, the company has diversified, rolling out products including
Gmail, Google Maps, Google+, and Google Glass. The company is also developing products in the self-
driving car, robotics, life sciences and AI industries, among others. With so many simultaneous
projects, the founders created Alphabet, a parent company, in 2015 that serves as a holding entity to
its many subsidiaries, including Google. Brin serves as Alphabet’s president and Page as its CEO.

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Value Creation

The Entrepreneurial Value Creation Theory, as from the name itself, explains how entrepreneurs create
value through a venture.

Organizations have nearly perfected implementing the industrial model of managing work – the effort
applied toward completing a task. For individuals, this model ensures that we know what we’re supposed
to do each day. For organizations, it guarantees predictability and efficiency. The problem with the model
is that work is becoming commoditized at an increasing rate, extending beyond manual tasks into
knowledge work, as data entry, purchasing, billing, payroll, and similar responsibilities become
automated. If the organization draws value from optimizing repetitive work, one may find that it will be
increasingly difficult to extract value.

The value of products and services today is based more and more on creativity – the innovative ways that
they take advantage of new materials, technologies, and processes. Value creation in the past was a
function of economies of industrial scale: mass production and the high efficiency of repeatable tasks.
Value creation in the future will be based on economies of creativity: mass customization and the high
value of bringing a new product or service improvement to the market; the ability to find a solution to a
vexing customer problem; or the way a new product or service is sold and delivered.

Becoming “more innovative” has become a mantra of management gurus, but it is clear that this advice
is not enough. The challenge is not just creating value from innovation, but capturing that value as well.

EXAMPLE: Kenneth Frazier, chairman and CEO of the Merck & Co., believes that businesses exist to deliver
value to society. Since becoming CEO in 2011, he has earned praise for stabilizing Merck – an industry that
is always rocked by change. He has restored R&D’s prominence at the company and overseen promising
new launches, such as the cancer drug Keytruda.

VISION of Merck & Co.

To make a difference in the lives of people globally through our innovative medicines,
vaccines, and animal health products. We are committed to being the premier, research-
intensive biopharmaceutical company and are dedicated to providing leading innovations and
solutions for today and the future.

He believes that while a fundamental responsibility of business leaders is to create value for shareholders,
business also exists to deliver value to society. Merck has existed for 126 years; its individual shareholders
have turned over countless times. But their salient purpose in the world is to deliver medically important
vaccines and medicines that make a huge difference for humanity. The revenue and shareholder value
they create is an imperfect proxy for the value they create for patients and society.

Value Creation in a Sustainable World

Rationale for A Sustainable World

How did we get to the point where we are running out of the resources (such as oil) that support our
way of life, and others (such as clean air and fresh drinking water) that support life itself? And how did
entire industries, such as fishing and agriculture, find themselves in trouble as well, as chronic

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overfishing and the drive for ever-higher crop yields led to wide-spread depletion of fish stocks and a
historic loss of topsoil?

The short answer is: We are running out of resources due to our numerous technological success.

In the first stage of the Industrial Revolution (1750-1820), the rise of large-scale manufacturing caused
labor productivity in England to rise a hundredfold.

But the Revolution did not simply change the way we worked; it transformed
the way we lived, the way we thought about ourselves, and the way we
viewed the world. Nothing like it had ever occurred before.

It didn’t take long for innovations such as the assembly line to spread to other countries in northern
Europe and to the hinterlands of the United States, whose exploding population and vast store of
natural resources enabled the former colony to become the next industrial power. The industry was
booming and so, too, were the material standards of living. As the United States’ population increased
from about 10 million to 63 million between 1820 and 1890, the country’s industrial production grew
thirty-fold. The resulting fivefold growth in output per person was even greater than the productivity
gains on the other side of the Atlantic.

The impacts the Industrial Revolution had on the quality of life were undeniable. As industrial expansion
continued into the twentieth century, life expectancy in the industrial world roughly doubled, literacy
jumped from 20 percent to over 90 percent, and benefits hitherto unimaginable sprang up in the form
of products (from private cars to iPods), services (from air travel to eBay), and astounding advances in
medicine, communication, education, and entertainment. With this kind of success, it is little wonder
that the side effects of the Industrial Age success story went largely ignored.

But the downsides of great prosperity were steadily accumulating from the very beginning. Some were
hard not to notice. In the 1800s, England’s level of fossil fuel combustion grew dramatically, and so too
did levels of water and air pollution. In the late 1800s, London’s infamous “fog,” particulate emissions
from burning coal, caused a virtual epidemic of respiratory diseases once confined to coal-mining
communities. By 1952, air quality in London was so bad that the “great smog” (four (4) days of toxic air
trapped over the city) killed more than 4,000 people and galvanized the government to create air
pollution regulations.

Although the problems of the Industrial Age have been evident for decades, there is now one important
difference, an increasingly inescapable mandate urging us to wake up and start operating differently;
global climate change (Senge, Smith, Kruschwitz, Laur, & Schley, 2008).

Creating Beyond Reactive Problem-Solving

Problem-solving is about making what you don’t want to go away. Creating involves bringing something
you care about into reality. This reflects a subtle yet profound distinction that, we believe, will make all
the difference for the future.

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Creating draws its energy from dreams or visions of what people truly want to
see exist, in concert with accurate and insightful understanding of what is.
Reactive problem solving draws its energy from crises, usually driven by an
underlying emotion of fear – fear of the consequences if we fail to solve the
problems.

A sustainable future will entail collective creating of every imaginable sort. It will involve bringing into
existence over time a new energy system, new types of buildings and transport, and new ways to
dramatically reduce waste and toxicity – based on new products, new processes, for making things, new
business models, and new ways of managing and leading. It will require passion and patience, people
working together toward aims that have genuine meaning for them and opening themselves to ideas
that may seem foreign and even threatening. And it will require the courage to act without all the
answers, moving beyond the comfortable approach of “figuring out the answer and then implementing
it.” The creative process is inescapably a learning process, which means venturing forth into difficult and
uncharted territory with openness and humility, continually discovering our shortfalls.

Tapping and developing the potentials of people and organizations to create the future rather than react
to the resent rests on two (2) foundations that have always been at the core of our work on
organizational learning: visions for the future and an understanding of the present reality.

The power of genuine vision is understood in cultures around the world, as reflected in the biblical
admonition “Where there is no vision the people perish.” But just as important is the ability to see the
current state of things as objectively as possible. This is often misunderstood by people who appreciate
the importance of vision but would rather not look at difficult or painful aspects of the current situation,
as well as by those who prefer to look only at the bad and not recognize what is positive about their
current situation that they can build on (Senge, Smith, Kruschwitz, Laur, & Schley, 2008).

In particular, seeing the present systematically is crucial to creating the future.

People get so drawn into fragmented views of the “problem” that

they often resort to superficial quick fixes.

EXAMPLE: People everywhere today are reacting to different facets of the sustainability crisis, but many
of the efforts represent reactions to what are seen as separate and distinct threats – climate change,
high oil prices, growing waste and toxicity, unhealthy food, water shortages, social and political stability
– as opposed to a deep reflection on the interconnections between these different issues (Senge, Smith,
Kruschwitz, Laur, & Schley, 2008).

REFERENCES
Bharatam, S. (2015, October 06). BHARATAM: Lessons entrepreneurs can learn from an eagle. Retrieved
April 17, 2018, from https://www.businessdailyafrica.com/magazines/Lessons-entrepreneurs-
can-learn-from-an-eagle/1248928-2900738-138eaulz/index.html

Hughes, J. (2014, August 07). What value creation will look like in the future. Retrieved April 02, 2018,
from https://hbr.org/2013/05/what-value-creation-will-look-like-in-the-future

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Ignatius, A. (2018, February 23). Merck CEO Kenneth Frazier: Businesses exist to deliver value to society.
Retrieved April 02, 2018, from https://hbr.org/2018/03/businesses-exist-to-deliver-value-to-
society

Krogue, K. (2013, November 06). Be an eagle, not a duck! Retrieved April 17, 2018, from
https://www.forbes.com/sites/kenkrogue/2013/05/10/be-an-eagle-not-a-
duck/3/#216a39ec4ac4

Oluwatosin, E. (2008, September 11). 7 principles of an eagle. Retrieved from

http://www.eolutosin.com/7-principles-of-eagle/

Primer Media Inc. (2017, March 07). Success story: Tony Tan Caktiong of Jollibee Group. Retrieved from
http://primer.com.ph/business/2017/03/07/success-story-tony-tan-caktiong-of-jollibee-group/

Senge, P., Smith, B., Kruschwitz, N., Laur, J., & Schley, S. (2008). The necessary revolution: How indidviduals
and organizations are working together to create a sustainable world. Clerkenwell: Nicholas
Brealey Publishing.

Smith, K. C. (2012). The top 10 distinctions between entrepreneurs and employees. New York: Ballantine
Books.

Sun, C. (2016, March 30). 9 iconic inventors who changed the world. Retrieved April 02, 2018 from
https://www.entrepreneur.com/slideshow/271993

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