MODULE

#1

MODULE G ALS FLEX Course Material

Develop the
entrepreneurial mindset
of the students
Appraise the effectiveness
of mindset in
entrepreneurship

Developing an
Entrepreneurial
Mindset

“All human beings are entrepreneurs. When we were in the

caves we were all self-employed… finding our food, feeding
ourselves. That’s where human history began… As civilization
came we suppressed it. We became labor because they stamped
us, ‘You are labor’, We forgot that we are entrepreneurs”
– Muhammad Yunus, author and social entrepreneur
Template by NUCCIT
 LESSON

#1
LEARNING
OUTC MES

Different
Differentiate the effectual
principle

Principles of
Effectuation

Effectuation: the idea that the future is

unpredictable yet controllable
Template by NUCCIT
 LESSON #

#1 Bird in Hand
Principle
Effectual Principle
1. Bird-in-hand
Principle
2. Lemonade
Principle
When expert entrepreneurs seek to
3. Crazy Quilt
Principle build a new venture, they start with
their means. These means can be
4. Pilot-in-the-Plane
grouped into three categories:
Principle
5. Affordable Loss • Who I am—my traits, tastes, and
Principle abilities
• What I know—my education,
training, expertise, and experience
• Who I know—my social and
professional networks.
Using a combination of these means,
the entrepreneur begins to imagine
possibilities and take action. Most often,
she starts very small with the closest
means and moves almost directly into
implementation without elaborate
planning (fire, aim versus aim, fire). With
each action, possible outcomes are
reconfigured. Eventually, certain
emerging effects coalesce into clearly
achievable and desirable goals—
landmarks begin to appear on the blank
map. The end goals are the combined
Template by NUCCIT

result of the imagination and aspirations

of the entrepreneur and the people she
has interacted
3
with during the process.
 LESSON #

#1 Lemonade
Principle
Effectual Principle
1. Bird-in-hand
Principle
2. Lemonade
Principle
If you come across lemons, make
3. Crazy Quilt
Principle lemonade! The third principle of
effectual reasoning is at the heart of
4. Pilot-in-the-Plane
entrepreneurial expertise—the ability to
Principle
turn the unexpected into the profitable.
5. Affordable Loss Expert entrepreneurs learn not only to
Principle
work with surprises but also to take
advantage of them. In most contingency
plans, surprises are bad—the worst-case
scenarios. But because entrepreneurs
do not tie their idea to any theorized or
preconceived “market,” anything and
everything is potentially a surprise that
can lead to a valuable opportunity.
Template by NUCCIT

4
 LESSON #

#1 Crazy Quilt
Principle
Effectual Principle
1. Bird-in-hand
Principle
2. Lemonade
Principle
The crazy quilt principle of effectual
3. Crazy Quilt reasoning is the focus on building
Principle partnerships rather than beating
4. Pilot-in-the-Plane competitors. Since entrepreneurs tend to
Principle start the process without assuming the
5. Affordable Loss existence of a predetermined market for
Principle their idea, they don’t know who their
competitors will be, so detailed
competitive analyses have little value.
Instead, entrepreneurs generally take the
product to the nearest potential customer.
Some of the people they interact with
make a commitment to the venture,
committing time and/or money and/or
resources and, thus, self-select into the
new-venture creation process. The
partnership principle dovetails well with
the affordable loss principle to bring the
entrepreneur’s idea to market with very
little cash expenditure. Obtaining pre-
commitments from key stakeholders,
suppliers or customers helps reduce
uncertainty in the early stages of creating
an enterprise. Finally, since the
entrepreneur is not wedded to any
particular market for his or her idea, the
Template by NUCCIT

expanding network of strategic

partnerships determines, to a great extent,
which market
5
or markets the company will
eventually end up entering or creating.
 LESSON #

Pilot-in-the-Plane
#1 Principle

Effectual Principle

The struggle for

personal control is In fact, psychological research suggests that an
as old as enormous range of human behaviours relate to
humankind itself control striving in some way and are intrinsically
linked to healthy human functioning. For example,
—primitive and personal control is linked to the development of
innate. There is self-esteem and the reduction of stress, whereas
loss of control increases the likelihood of feelings of
abundant helplessness and depression. In other words, having
evidence that a desire for control over your life doesn’t make you
a “control freak” (despite what your friends may
most people say!). Instead, it is normal and healthy. Many
desire control of entrepreneurs instinctively recognize the
the events in their importance of personal control: fundamentally,
many chose entrepreneurship because they want to
lives, indeed over be their own boss and choose their own course.
their lives, and Control enables entrepreneurs to work on things
they think are important, set their own schedules
that such strivings and work with whom they want. Many
for control span entrepreneurs attest that they feel differently about
running a business they own as compared with
history and working for a wage, and that they value being in
cultures. The control. For them, the experience of personal
control is closely associated with freedom, self-
venues, direction and autonomy. The strength of a person’s
mechanisms and desire for control can be thought of as an element
instruments for of his or her means: “Who you are.” While everyone
has some desire for control, the intensity of that
control-striving desire varies among individuals and over the course
today are different of a lifetime. For example, a high desire for control
may motivate someone to become an entrepreneur,
than they used to but the experience of working for himself may
Template by NUCCIT

be, but the issue strengthen the desire even further—he may not be
able to imagine working for anyone else again.
remains.
6
 LESSON #

#1
Affordable Loss
Principle

Effectual Principle

In much of the They decide what they are willing to lose rather
than what they expect to make. Instead of
business world, the calculating upfront how much money they will
manager in charge need to launch their project and investing time,
of launching a new effort, and energy in raising that money, the
effectual entrepreneur tries to estimate the
product analyses downside and examines what she is willing to
the market and lose. The entrepreneur then uses the process of
chooses segments building the project to bring other stakeholders
on board and leverage what they can afford to
with the highest lose together. An estimate of affordable loss
expected value. It is does not depend on the venture but on the
a natural reflex that person. It varies from person to person and even
across his or her life stages and circumstances.
is the result of For the Greenwoods (GoodKaarma article),
years of training affordable loss did not permit the use of cash,
around a single but did include the use of their old farmhouse.
By allowing estimates of affordable loss to drive
mantra: maximize decisions about which venture to start,
returns by selecting entrepreneurs stop depending on prediction.
the optimal Instead, they focus on cultivating opportunities
that have a low failure cost and that generate
strategy for your more options for the future. The combination
target. Expert enables cheap failure and learning that can be
entrepreneurs turn applied to the next iteration of the opportunity.
This does not mean that entrepreneurs choose
this logic on its projects that won’t cost a lot if they fail—or that
head—they think in they do not expect to make a lot of money. It
terms of affordable simply acknowledges that uncertain new
venture opportunities are difficult to value
loss rather than upfront, whereas the investment of time,
expected returns. money, and other resources is quantifiable,
Template by NUCCIT

manageable and controllable.

7
 LESSON

#2
LEARNING
OUTC MES

The Power of
Discuss the power of
mindset

Mindset
Template by NUCCIT
 LESSON #

#2

When we wake up in
the morning, we have
a choice between the
“easy” way and the
“right” way. Depending
on our mindset, we
will choose one path or
the other. Research
has shown that our
mindset needn’t be
“set” at all. Stanford
What Is
University psychologist
Carol Dweck proposes
that there are two
Mindset?
different types of
mindset: a fixed
mindset and a growth Fixed mindset: the assumption held by
mindset people who perceive their talents and
abilities as set traits.

Growth mindset: the assumption held

by people who believe that their abilities
can be developed through dedication,
effort, and hard work.
Template by NUCCIT

9
 LESSON #

#2

Entrepreneurial
mindset: the ability
to quickly sense, take
action, and get
organized under
uncertain conditions

The Mindset for

Entrepreneurship

The growth mindset is essential to a

mindset for entrepreneurship.

While there is no one clear definition of

mindset and how it relates to
entrepreneurs, we believe the most
accurate meaning of an entrepreneurial
mindset is the ability to quickly sense,
take action, and get organized under
uncertain conditions. This also includes
the ability to persevere, accept and
learn from failure, and get comfortable
with a certain level of discomfort!
Template by NUCCIT

10
 LESSON #

#3 Passion and
Entrepreneurship
Among many elements of the
entrepreneurial mindset, one of the most
talked about is the element of passion. The
But what is passion, entrepreneurial mindset is about
and is it really that understanding yourself, who you are, and
important to
entrepreneurial
how you view the world. It deeply connects
success? In the context to your desired impact which some people
of entrepreneurship, equate to passion. In the past, researchers
passion can be defined tended to use passion as a reason to
as an intense positive explain certain behaviors displayed by
emotion, which is entrepreneurs that were thought to be
usually related to unconventional, such as perceived high risk
entrepreneurs who are taking, intense focus and commitment, and
engaged in meaningful a dogged determination to fulfill a dream. 7
ventures, or tasks and
activities, and which
Indeed, many well-known entrepreneurs
has the effect of such as Mark Zuckerberg (Facebook
motivating and founder), Jeff Bezos (Amazon founder) and
stimulating Pierre Omidyar (eBay founder) credit
entrepreneurs to passion for their success
overcome obstacles
and remain focused on
their goals.
Template by NUCCIT

11
 LESSON #

#4 Entrepreneurship as a
Habit
Habit: A habit is a sometimes unconscious
pattern of behavior that is carried out
a sometimes often and regularly. Good habits can be
unconscious learned through a “habit loop”—a
pattern of process by which our brain decides
behavior that is whether or not a certain behavior
carried out often should be stored and repeated. If we
and regularly feel rewarded for our behavior, then we
are more likely to continue doing it. For
example, toothpaste companies
instigate a habit loop in consumers by
not just advertising the hygiene benefits
of brushing teeth, but also the “tingling,
clean feeling” we get afterwards—the
reward. People are more likely to get
into a toothbrushing habit loop as a
result.
Template by NUCCIT

12
 LESSON #

#4 The Mindset As
The Pathway To
Action
The mindset is the pathway to action. There is
no entrepreneurship without action, and the
Fine line between mindset is antecedent to action. As we have
self-confidence, seen in the preceding sections, the
selfefficacy, and entrepreneurial mindset requires the habits of
selfleadership, creativity, and improvisation.
arrogance These habits create an emotional platform for
Arrogance leads a entrepreneurial actions. You can have the best
idea in the world, but without a mindset with a
person to believe bias for action, there is nothing—no new
that he or she venture, product, organization or anything else.
achieved success Taking action is the only way to get results. Even
the process of changing and expanding your
without help from mindset involves taking action through
others; further, deliberate practice.
the arrogant But taking action requires a degree of
person may feel confidence, and belief in our abilities— an
attribute known as self-efficacy
entitled to success
There have been an increasing number of
and entitled to studies on entrepreneurial selfefficacy (ESE),
“bend the rules” which is the belief entrepreneurs have in their
to get ahead. ability to begin new ventures. Self-efficacy is an
essential part of the entrepreneurial mindset,
and it is thought to be a good indicator of
entrepreneurial intentions as well as a strong
precursor to action. In fact, recent research
suggests that entrepreneurial self-efficacy can
enable the entrepreneur to more effectively
confront demands or stressors and thus
Template by NUCCIT

improve entrepreneurial performance. In other

words, the research suggests that when we
believe in our ability to succeed in something,
we are more likely to actively take the steps to
13
make it happen
 LESSON #

#4 The Role of
Mindset in
Opportunity
Recognition
As our mindset grows and expands through
practicing self-leadership, creating, and
improvising, we are more inclined to recognize
and create opportunities. In fact, Richard
Wiseman’s study of luck, described in the
Research at Work feature (p. 67), shows us that
people who consider themselves lucky are more
open to recognizing chance opportunities.

It is so easy to miss opportunities if we are not

in the right mindset.
Template by NUCCIT

14
 REFERENCES

1. H.M. Neck, C.P. Neck, & E.L Murray (2018).

Entrepreneurship - The Practice and Mindset, Sage
Publications Inc.
Template by NUCCIT

15