Lessons in Entrepreneurship

I managed to squeeze out time today to update/conclude on the topic I delved into in my last post. By the way, a big “thank you” to all of you who took out time to send me feedbacks on that post (even the ones I considered “annoying”).

What does it take to be an entrepreneur?

The word “Entrepreneur” is a borrowed French word which was first defined by Richard Cantillon, the Irish economic theorist with a Spanish name who lived in France. He is regarded by historians as the first great Economics theorist. Subsequent development of the definition of this word/concept in academic circles led to a widely accepted definition of the entrepreneur as an individual who efficiently combines and manages the factors of production to create new wealth-producing resources or endows existing resources with enhanced potential to create wealth (Entrepreneurship, A contemporary approach, 4th Edition). Having set this background of definition, I may as well just close the topic and allow your intelligent minds to make the pragmatic deductions. Entrepreneurship entails the use or if you like, management of the factors of production to create wealth. Factors of production include Land, Labour and Capital. For combination to occur at least two entities must be involved.

Several theories and myths surround the concept of entrepreneurship and what it takes to be an entrepreneur. General perceptions (although debatable) among modern economists is that entrepreneurs are “risk-hungry”. Arguably, businesses that yield the most returns are the ones that can be described as “high-risk” ventures. Successful entrepreneurs would take risks but NOT with the attitude of a gambler. The Schumpeterian entrepreneur is vigilant. He watches and screens his market before undertaking a risk. He uses one major skill - his power of intuition to surprise his competitors. The 20th century saw this entrepreneur flourish in Germany and the U.S. and he still exists in today’s 21st century. The entrepreneur, according to Schumpeter’s model is vigilance incarnate. In selecting a business enterprise, he inspects, screens, selects, he adapts and then couples his available resources to make the enterprise work and yield the desired result(s). He takes risks but never gambles. He researches his market and is never afraid to give something to gain something. His decisions are guided by a thorough accumulation of knowledge in his area of interest and possible pros and cons of his decisions. One of the failure triggers in any enterprise is a mish-mash of all sorts of decisions which cannot wait

The entrepreneur brings market and technology together at the corridor of entrepreneurship. He uses his ideas and in most cases, combines his ideas with other people’s ideas to reconstruct the economy within his locality through persistence and ability to anticipate. His ability to anticipate opens his eyes to opportunities which he certainly converts into action that would yield practical results to meet a specific need. This is called innovation.

Innovation entails bringing two different worlds (Market and Technology) together and so it is not as simple as it sounds. This is because the two elements being married evolve in an unpredictable way. It is like firing a shot in the dark or better still, firing a rocket from a platform whose coordinates are poorly calculated into a planet whose trajectory we do not have an idea of.

For innovation to be meaningful and yield the desired results, the entrepreneur must not compromise “learning as you go”. For example, after learning through several trials that functionality and profitability of fuel cells depends on catalysts which were not fully developed in the 20th century, the electric vehicle was deemed a project which realistically may not see the light of the day before the end of that century. Innovation has failed and continued to fail because so-called entrepreneurs spend more time learning and reading about managing innovation and pay less attention to lessons which can be learnt from causes and reasons for failure(s) of a venture. An innovation is said to have succeeded if it satisfies a demand. It is against this background that the facilitator be described as an entrepreneur. The price of your invention matters little; follow the market and your target consumers and you’ll certainly be counting your gains, financially and in terms of satisfaction.

To innovate is to change the consumer. Research and identify your market. Identify a need within that market and create a product that will change your consumers. But once the rules of the game are reversed, the cards redistributed, the change may actually bifurcate and put you right in the palms of your competitor(s). Innovation is created by instability and unpredictability which no method, however refined will be able to master in its entirety. Uncertainties involved in innovation include (a) Decision priority (b) Cost (c) Market fluctuations. (d) Consumer behaviour

The customer (consumer) is said to be king, but of an empire whose boundaries are poorly defined and whose laws can be described as vague. This is why market research and the power of intuition are necessary tools in entrepreneurship.

Based on the foregoing, I’ll surmise that any individual entrepreneur needs all or most of the following skills for a successful entrepreneurship;

1. Insight
2. Intuition
3. Sense of anticipation
4. Quick reaction to changes in the environment
5. Skills in the target enterprise