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After an opportunity is fully researched,

and an idea is fully formulated and

developed, we can put it all together into a kind of business concept.

Now, if you'll look at that fourth stage of the model, you can

see that the elements of opportunity and idea are within the transaction.

A, B, and C from the idea and X, Y, and Z from the opportunity

are united together in the core of that transaction.

And then you have two parties, 1 and 2, undertaking a kind of exchange.

Now, this is really the core of any business.

In other words, an entrepreneur should be able to state clearly and

concisely what they provide to a market or

to a community, but also what they get in return.

This has everything to do with how they make money, and how they make impact.

And it becomes very easy to talk about the business concept if

the opportunity is well researched and the idea is well formulated.

We'll have a couple of examples later on in the course.

And we're also going to talk to a couple of entrepreneurs

throughout the course that'll make this more clear.

But for right now, just understand that when you're talking about

pitching an entrepreneurial venture, and somebody asks you how you make money, and

what you give to the market, and what the market gives back to you,

that will become really, really clear if you understand the opportunity space well.

Because you've already researched the constituents and the potential customers

and the different delivery methods and so forth that make up the opportunity.

But in the idea stage when you formulated your idea and developed your idea,

maybe based on technology or based on a certain kind of online platform or

another sort of approach to taking advantage of the opportunity.

You will have done all of the research, and you will have developed all of

the understanding required to describe the business concept in detail.

And this applies even to the largest companies that are out there.

Facebook for example, when they went public some years ago you can go back and

find the documentation online.

But in their original S1 documentation,

if you read it, they talk about in the middle of the narrative

about no matter how big they get, no matter what they eventually evolve into,

all of their business can be boiled down to a simple, single concept.

And that has something to do with, as they described it, individuals sharing

experiences and knowledge with other individuals in a complementary way.

And that's what businesses like that do.

Ventures like Facebook and other sort of

social media ventures connect people who otherwise would not be connected.

And oftentimes they share complementary or compatible knowledge and experiences.

Now, a business concept is almost like a static

photographic, if you will, of a business.

It's not dynamic and it's not growth oriented.

And like we talked about in lesson number one, an entrepreneurial venture needs to

be growth oriented because that's what makes it entrepreneurial.

This is what brings us to the mission, the mission of a venture.

This is the context that you put a business concept into

to give it that story.

That growth oriented story, not just the what in terms of what they do,

but now we're getting into why an entrepreneur does it.

The business concept, if it helps you to think about it clearly,

you can think about it in terms of the what,

and now you can think about the venture mission in terms of the why.

Why does an entrepreneurial venture do what it does?

Now, let's talk about the venture mission for just a minute.

Here we're talking about why the venture started, who they served,

how they serve them, what sort of value and impact a market segment or

a constituency will get out of the experience of dealing with that venture.

And just like any venture you can find online has a mission statement.

That's what we're talking about here.

A narrative explanation for what the venture stands for and what it does.

Oftentimes you can get a really good sense of an entrepreneurial venture's culture

and what is important to them.

In other words, what are their values by reading their mission and

learning to understand their mission.

And that's what puts a business concept into a growth-oriented context.

Now, if you move on to what we're calling the model, the business model,

now we can start to really think about growth in creative ways.

And here I would like to give you a brief example that I think will pull all of

this together for you.

Look at the model stage of this overall seven-stage framework that

we're looking at, and think about a venture, another really large venture,

that most of you are familiar with, Amazon.com.

Amazon.com was originally founded in response to a capacity problem.

If you go back and look at the case of Amazon, and really dig into the history,

you'll see that the original founder, Jeff Bezos, who is the CEO of Amazon today,

was looking at the growth of the Internet and thinking about item categories.

So books are one item category, but we also have items such as music and

different kinds of products out there in the world that people want to buy.

And he recognized books as one very large item category

that many times people would go to a physical bookstore to buy a book,

but they would not be able to find the book they wanted.

And as a result of that they would have to order the book or

get it through some other sort of channel.

And so that was the inefficiency or

the social problem like we talked about earlier.

Now, the opportunity here had to do with the number of

people that actually experience this problem, the number of books that there

are in the world, the number of physical bookstores that deal with this problem.

The research around that opportunity space led to the idea that you could put

all books in the world, in theory, you could put all books online.

And then all people would have access to the Internet and

be able to find the book that they're looking for.

And then they'd have to order it.

Now, that's the basic business concept, selling a book to an individual who

pays money through the online transaction system and

then they get the book shipped to them.

But the venture mission, that's what we're talking about really, right now,

as a growth oriented narrative that drives a model.

So we all know that Amazon.com sells books on the Internet, but think about the other

offerings that they have rolled out since they were founded in the mid-90s.

So, for example, the Kindle,

which it's been years now since they first introduced the Kindle.

But think about the problem that the Kindle solves.

The Kindle also solves a capacity problem.

Whereas before, if you were, say, traveling or carrying books with you,

you might only be able to carry eight to ten at most, right?

The Kindle allows you to carry many,

many more books than that, because it's a different kind of framework.

So if you think about the venture mission

of a company like Amazon in terms of solving this capacity problem.

It opens the way for a kind of diversification and

growth when we get to the model stage of an entrepreneurial venture.

So now, selling books on the Internet is one thing that Amazon can do.

But as the business grows, they can begin to serve the market more perfectly by

offering other types of products and services, the Kindle, for instance.

And that is another way to solve the same

problem with a very different kind of product.

Now moving forward, we're at the last stage of the model now, the plan.

If you think back about all those different stages that we talked about.

It's easy for

an entrepreneurial venture to think about what it might do in the future.

If it has a range of offerings that it is already

conducting business around based on a mission.

Planning becomes easy when you know the directions in which you should move and

the directions in which you should not move.

The Kindle would make since to a company like Amazon.

It looks like a very unique and different kind of product to an outside observer,

but to people who know the mission of that entrepreneurial venture really,

really well, it's going to look like a logical, strategic, bold,

risky move that's going to generate value.

And that is how this model leads up to planning progressively and

it make planning easier as we work through it.

Now, as I said,

we'll return to this model at the end of Module Four and reflect on it briefly.

But what we've done over this past 25 minutes or

so is we've honed in on these various stages and we've defined them.

But what I want you to take away from this lecture is

that these stages build on each other.

If it's hard for you to come up with a venture mission it's probably because some

earlier stage or stages of this model are not fully defined or clear to you.

Similarly, if you can't recognize an opportunity it's probably because you

haven't really stumbled upon a problem yet that is

ripe for recognizing an opportunity.

If it's hard to come up with an idea, that's probably because there's not

an opportunity to come up with one, so on and so forth.

The model is progressive.

So I look forward to hearing your feedback and receiving your questions.

I hope you've enjoyed working through this rather large model that's

designed to explain a rather large and complex process.

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A Seven Stage Approach - Part 3

Entrepreneurship I: Principles and Concepts

Meet the Instructors