Brief Summary
The lecture distinguishes between two types of entrepreneurship: Small and Medium Enterprise (SME) entrepreneurship and Innovation-Driven Enterprise (IDE) entrepreneurship. SME focuses on local markets with linear growth and limited cash flow, while IDE targets global markets, requires significant capital investment, and aims for exponential growth through innovation. The speaker highlights that the skills, training, and risk profiles differ significantly between the two, comparing them to different sports like basketball and baseball.
- SME: Local focus, linear growth, owner-controlled.
- IDE: Global focus, exponential growth, requires external investment.
The lecture begins by defining entrepreneurship and immediately distinguishes between two fundamental types: Small and Medium Enterprise (SME) entrepreneurship and Innovation-Driven Enterprise (IDE) entrepreneurship. SME entrepreneurship involves small companies that typically remain local, focusing on serving local needs with services like dry cleaning, nail salons, or restaurants. These businesses exhibit linear growth and are often owner-managed. In contrast, IDE entrepreneurship targets global or super-regional markets, requiring substantial capital investment to fuel exponential growth.
SME businesses generally experience linear growth with limited cash flow, whereas IDE businesses often incur initial losses before achieving exponential growth. IDEs rely on unique innovations to address broader markets, necessitating external shareholders and a different management approach compared to the owner-controlled SME model. The speaker emphasises that while both types are important, the training, skills, and underlying systems required for each differ significantly.
The lecture draws an analogy to basketball and baseball to illustrate the differences between SME and IDE entrepreneurship. While there may be some crossover in skills, the training and risk profiles are distinct. IDEs require individuals skilled in managing multiple stakeholders and driving innovation. Although IDEs carry more risk, they have the potential to generate significant job growth, even with a smaller number of successful ventures, whereas SMEs are more geographically distributed and numerous.
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Transcript
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0:05 hi my name is billette and I'm going to talk about disciplined entrepreneurship 24 steps to successfully launching a new Venture what uh I'm going to start with is what is entrepreneurship because this term is used all the time it's bandied about everyone's for entrepreneurship however there's two fundamentally different types of Entrepreneurship that I want to talk about um first of all we we have entrepreneurship we have what we call entrepreneurship smme stands for small medium Enterprise entrepreneurship these are fundamentally small companies that will stay small and they may have been around for a while they're focused on
0:50 local markets they're often service service businesses that are servicing a local opportunity but they're not something that's looking to go Global they know there's know there's a need local they want to address that this could be a dry cleaner this could be a nail salon this could be a restaurant or or or pizza parlor as we referen in the paper that Fiona Murray and I wrote um these are fundamentally important companies to an economy in a region because they serve a need but relative to the the the way they're made up is the system that they create is one that shows kind of linear growth and then at some point it it it usually Taps out of
1:37 the market now this is an an approximation of what goes on but that's what it look usually looked like linear growth R but you notice that that if this is cash flow here from the business that there's not a tremendous amount of cash flow out again a simplification however when we go to ibes over here which I will call Innovation driven entrepreneurship um or innovation driven Enterprise entrepreneurship we have a fundamentally different business um this one is looking for Global markets or Super Regional markets to serve and the while while this one is usually owner the the owner is usually
2:25 you know maintaining control of it this one is going to require more cash because because the Dynamics of this business look it loses money and then it's going to start showing exponential growth so there's this negative cash flow here if this is cash flow on the Y AIS and this is time along the x-axis it'll initially have to require some Capital be put into it but then if it works it will take off because it's got basically unlimited markets underlying what they're doing here is an innovation That's Unique that allow allows them to address much broader markets so they're not just focused on the local market but much broader markets this is very important because this is going to require more cash as I mentioned while
3:11 this is owned by the you know this is controlled by the family or the owner this over here is going to have shareholders and a bunch of other people this is very important difference here because while this business is is a very important business the underlying demographics for the underlying system and training for this does not look the same as this it's almost like you have two Sports basketball and baseball you know here you run in both you jump in both but what and that's true of these but Michael Jordan was a great basketball player he turned out not to be a great baseball player all his training was for that so likewise there could be some crossover here but generally there's more risk in these the people that are trained for these are
3:57 doing you know how to manage multiple stakeholders how to do an underlying innovation in the next section we're going to look at what is innovation and Define that more precisely but the point of this is two types of Entrepreneurship small medium ENT Enterprise entrepreneurship small companies distributed geographically and then Innovation driven Enterprise entrepreneurship companies that might not make it but then if they make it they get to grow and be very very big these end up um you don't need a lot of these to generate a lot of jobs these you need a lot these tend to be more clustered these tend to not be so clustered
