Entrepreneurial Strategies 145Entrepreneurs who wish to take a more systematic and deliberate approach can break
the process up into more discrete parts. Opportunity assessment has five different stages
(see Figure 4.3). Each stage focuses on analysis and the actions that must be taken.
Analysis rests on the entrepreneur’s understanding of the nature of the business that he
or she wishes to create. Traditionally, entrepreneurs must ask the question, What is my
business? They then attempt to answer the question in terms of a target customer and
the target’s buying needs, tastes, and preferences. In a world with volatile markets and
changing tastes and preferences, keeping up is a dicey proposition. So, in opportunity
assessment, entrepreneurs should initially assess their core, stable set of internal capabil-
ities rather than volatile external resources.
Stage 1: Identification
The first stage requires entrepreneurs to identify and classify the resources they current-
ly have and can control in their initial efforts to create a new venture. Identification and
classification should be structured using the six categories previously described: finan-
cial, physical, human, technological, reputational, and organizational assets. A resource
is currently controlled if the entrepreneur and the top-management team have immedi-
ate and unimpeded access to it, legally and physically. An asset is controllable to the
extent that it may be obtained sometime in the future. For a rigorous analysis, a proba-
bility distribution can be conducted that indicates the likelihood of obtaining the
resource. If it is extremely high or low, this probability can be factored into the next part
of the stage 1 assessment.
The second part of stage 1 entails determining the relative strengths and weaknesses
of the resource bundle and configuration. The entrepreneur should then examine how
to use these resources and explore what business opportunities exist to make the most
of them. What criteria should the entrepreneur use for this evaluation? The four attrib-
ute criteria: Is the resource under investigation rare, valuable, hard to copy, and nonsub-
stitutable?
The entrepreneur also needs to ask, to what degree. To the extent that the entrepre-
neur can answer yes to the first question and quite a bit to the second, he or she has the
basis for competitive advantage.
Stage 2: Capabilities
A firm’s capabilities are the skills, knowledge, and abilities needed to manage and con-
figure resources.^58 The second stage, then, is similar to the first, except the analysis focus-
es on capabilities instead of resources. Few resources, as pure inputs, can form the basis
for a successful business. Usually these resources must be used in some way—a way
defined by the capabilities of the entrepreneur and those of his or her team.^59 Capability
makes the resources productive. The firm should have efficient capabilities to coordinate
resources and foster cooperation. The hardest part of this analysis is maintaining ob-
jectivity. Entrepreneurs are tempted to overestimate their abilities and skills, or dwell on
past accomplishments from which they may not be able to generalize.
- There is no one-to-one relationship between resources and capabilities. Each firm can cre-
ate its own relationship to manage its resources. Most important, though, this relation-
ship should result in smooth coordination and cooperation among the team members