Reprinted with permission from The Hindu Business Line.
Most people believe that entrepreneurship is not meant for them since entrepreneurs seem to be very different and even hero-like, as with entrepreneurs like Steve Jobs. The truth however, is that it is their business decisions that set entrepreneurs apart from the rest. And with the right guidance, anyone can be a successful entrepreneur.
Professor Saras Sarasvathy accurately sums up entrepreneurs with her definition: ‘Expert entrepreneurs do not necessarily begin with an opportunity or market research. Instead, they start with who they are, what they know and whom they know. These are their primary means. What they have, that is, capital assets, is a function of their identity, knowledge and networks’
What sets an entrepreneur apart from a professional manager is his way of thinking. Managers display causal thinking by first looking at the effect they wish to create and then determining how to create it. When a manager is given a goal, he typically looks at the different means of production available and chooses one which allows him to reach his goal in the most optimum manner. A manager plays by the rules and keeps his eye on the goal. On the other hand, an entrepreneur displays effectuation based thinking by taking into account who he is, what he knows and who he knows in order to come up with a new way to create value. An entrepreneur does not base his decisions on a pre-planned goal, and chooses instead to look at the several outcomes and ends made available to him with the means he possesses. He does not play by the rules, he changes the game because, like Professor Sarasvathy says ‘Building a business is more about using what you know than finding the perfect market niche or opportunity’.
A typical example of managerial thinking is the process used when creating a new enterprise. A large company looking at entering a new business will first look into market data, population growth, spending power of buyers, etc. Based on the research done, they will then determine the most viable business to enter (say, for instance, the restaurant business). Segmentation, based on geographical, social and economic terms is then done and the target segment determined. The business is then positioned keeping in mind the target segment. For instance, the restaurant may be positioned as offering healthy food for office goers. The various aspects of the business are then designed and developed in accordance with the positioning of the new business. For the restaurant, this would include recipes, menu, layout, ambience, etc.
While a manager displays a typical textbook MBA approach in creating a new business, an entrepreneur uses an approach that allows him to fully utilize the resources available to him. For instance, a chef in a hotel who wants to get into business but does not have the finances required to do so may choose to look at the other options available to him. Knowing that he is a good cook and deciding to work with what he has, he decides to look at who he knows. This may lead him to a friend in an administrative post in a software company who may get him an order to supply lunch to the employees there, leading to the creation of his catering business. During his interactions, a new customer may ask him to share his recipes which could give the entrepreneur the idea to publish a recipe book or even open a class to teach people how to cook healthy. This may lead to an invitation to speak at a seminar and open the door for the entrepreneur to enter public-speaking. Once the entrepreneur determines what works best for him, he can standardize processes so he can start scaling those activities. So an entrepreneur starts with who he is, what he knows and who he knows. As the entrepreneur goes about interacting with people and getting commitment from different stake holders, his identity, knowledge and network continue to evolve leading to the development of new means and ends which lead to more new means and ends, and the cycle continues. This, essentially, is the effectuation process.
Many share Dr Mathew Manimala’s view that ‘entrepreneurship can be called the science of muddling through’ since entrepreneurs take decisions and risks which others may not understand. The concept of risk is very different for entrepreneurs since no one has as much information about the business as they do, neither can anyone else fully understand the position they are in. Just as a tightrope walker knows that he has taken the necessary precautions to be safe despite onlookers believing that what he is doing is reckless, so too an entrepreneur knows that the risks or business decisions taken by him are backed by logic and reasoning.
For entrepreneurs who are just starting their journey, it is important to first get a better understanding of yourself. The best way to do this is to introspect and discover your strengths, your values and your beliefs to ensure that you’re doing something you love and value. Knowledge comes next. While it is important to know what you’re good at and the skills and expertise that you possess, it is equally important to keep picking up knowledge and expertise in different areas since these may come in handy at a later stage. Constantly building and cultivating your network is also important as you never know when it may come handy. An equality of these three things not only help build an enterprise, but also determine its success.
0 comments:
Post a Comment