Category Archives: Entrepreneurship

deals with issues related to entrepreneurship and business start ups

Challenges in the Acceptance of Originality


 

I have observed a paradox in life. Many people want you think outside the box but they do so from the box of accepted norm. Many people encourage originality and yet when they are presented with novel solutions to life problems their default position is: “Where has this been done before?” This really frustrates the originals. If it has been done before then it’s not original! Its inside the box. Incredible!

Rob Minkoff correctly observed, “Originality is what everybody wants, but there is a sweet spot. If it’s not original enough, its boring or trite. If it’s too original, it may be hard for the audience to understand. The goal is to push the envelop, not tear the envelop.”

Adam Grant proposes that while radical originality is often necessary to put a stake in the ground, one needs a wider audience to make an impact. He proposes that to reach that wider audience one needs a tempered approach rather than radicalism in order to have others buy-in to your radical concept. He thus advances the following two approaches to creating alliances for your original idea:

  1. Instead of assuming that others share your values and principles of originality or instead of trying to convince them to adopt your values: you may need to consider presenting your original values and principles as a means to pursue their own values and goals. Demonstrate how your original ideas accentuate their dreams and pursuits. He argues that it is much easier to link your agenda to familiar values and principles that they already hold.
  2. Instead of being fully transparent with your full concept and ideas, it may be wise to disguise them through reframing your original concepts in order for them to appeal to the audience. This is because as Minkoff notes. “With absolute originality, you can lose people.” They are too comfortable with the status quo even when it does not serve their purposes. Most people cover their back by staying in their comfort zone professionally. It is therefore critical to take your audience stage by stage from the known to the unknown. This has to be done gradually or you shock their system with a radical innovation that they then reject as either a scam or fake.

Originals’ values depart from traditions and common practice. Their ideas go against the grain so they may have to become tempered radicals. They need to learn how to tone down their radical original ideas by presenting them in ways that are less shocking and more appealing to the mainstream audience. In some cases they may need to make their implausible ideas plausible by deliberately obscuring the more extreme features of their ideas in the first instance.

Many originals fail because they refuse to moderate their radical ideas. They often forget that while they have worked hard to understand their concept the audience is getting the initial exposure. So a better way is to use a “foot in the door” technique whereby you introduce a smaller aspect of your original idea to secure initial commitment before revealing the more incredible aspects. Take one step at a time.

Do not be too excited about your novel concept because that can kill it. Some colleagues and I discovered an innovative solution to some problems in Africa and naively started presenting them to decision makers. We expected our audiences to wholeheartedly espouse our solutions. Since the concept was too novel the audience could not believe the solution. It seemed too good to be true and so we failed to secure any commitments. We have since learned to tone down our proposals to gain initial commitment. We are now committed to pushing the envelop and not tear it. It takes lots of restraint from the innovator because you see the end game which your audience cannot see yet.

It is therefore important to make your innovation palatable by slowly exposing various aspects of the original idea rather than fully exposing it all at once. One has to demonstrate how this concept will not force people to change their values or deeply held beliefs about this concept. Show rather how it actually builds on their current belief. Your original concept has to be accepted for it to be useful to the community and profitable to you.

Source: These thoughts were inspired by Adam Grant’s “Originals”

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De Javu vs Vu Jade


I have just discovered a new vocabulary which I am finding fascinating. Please join me on this journey. Humour me a little.

Vuja dé pronounced as “voo zha-day” is the opposite of de javu . Just a reminder that de javu  means the phenomenon where an event happens and you feel that it has happened before or that you dreamed/predicted/instinctually felt it would happen. Put simply you see something for the first time and yet get this strong sense that you have seen this before or you visit a pace for the first time and you get the strong sense that you have been there before. 

French : déjà, already + vu, seen

Something that very few people know the true meaning of. Even though deja vu is French for “already seen”, it actually is used to describe the strange feeling you get when you’re in a situation, and feel like you’ve been in the exact same situation before, but really haven’t. It is the experience of thinking that a new situation had occurred before.  It is an illusion of having already experienced something which in actual fact it is being experienced for the first time. 

An impression of having seen or experienced something before when in fact you have not. 

Deja vu is the strange feeling you get you when something happens that you feel like has happened before, when it hasn’t. It is the illusion of having already experienced something actually being experienced for the first time. Apparently it’s due to a blip in your brain process which gives you the illusion that you’ve been somewhere/done something before, and technically, you have – a fraction of a second ago. 

Vuja de is that funny feeling that something that you have known all along has never happened to you before. Its like nothing you have ever seen or felt before. The distinct feeling that you have never been in a particular place or circumstance in the past and yet you have been. 

So Vuja de, is the propensity for discovering something new in something you’ve already seen a million times before. It’s when something or somewhere that should be familiar is suddenly very different.

 The term Vuja dé (also called preamnesia) describes the experience of feeling that one has not witnessed or experienced a situation previously. The term was coined by Kurt Kemp in 2007 in his book (The Weird Ideas I Get). 

The experience of Vuja dé is usually accompanied by a compelling sense of unfamiliarity, and also a sense of shock, awe, or suddenly feeling lost. It is noticing something for the first time that has been there all along; the realization that you’ve been unaware of something you should have noticed a long time ago.

Vuja de is important for innovation. It requires that we should always look at the familiar with new eyes, and from a fresh perspectives. It makes us observe things about the familiar that we had never seen before. It requires looking at the familiar in an unfamiliar way. This enables us to create new options from familiar situations. Its possible we are looking too far for creativity. Try looking Vu Jade – at the usual jobs and opportunities in front of you. You will be amazed at how much we do not see because we are too familiar. Looking at an old problem with a Vuja De attitude can open up incredible entrepreneurial opportunities or you can see new solutions to old problems. Its a matter of perspectives. Its amazing how much we do not notice because of familiarity.

Here is a simple biblical example: Many of us have read the story of Jesus birth numerous times and believe that the wise men (the magi) came and met Jesus as a baby in swaddling clothes in a manger. In fact that narrative is wrong. The Wise men did not see Jesus as a baby in a manger but as a child (?probably close to 2 years old) and in a house.

Check this out: Matthew 2:11, 16

11″And when they had come into the house (Ed: not manger), they saw the young Child (ed: not baby) with Mary His mother, and fell down and worshiped Him. And when they had opened their treasures, they presented gifts to Him: gold, frankincense, and myrrh. ——
16Then Herod, when he saw that he was deceived by the wise men, was exceedingly angry; and he sent forth and put to death all the male children who were in Bethlehem and in all its districts, from two years old and under, according to the time which he had determined from the wise men.”  (edit: Herod established the age of children to kill from the time the star was seen, so it is logical to consider that Jesus was about 2 years old by then.)

We have been conditioned by the familiar and so do not see the obvious. We need a Vu Jade perspective to relook what we have considered familiar if we are to be creative. Even in research,researchers often revisit previous studies to see whether they can observe new patterns in old data and provide new perspectives and explanations to things which seemed familiar.

I hope you enjoyed the new vocabulary and the journey. And more importantly I hope you will choose to relook at the familiar with an unfamiliar perspective. You may just discover your diamond in the rough.

Stay blessed and in charge!

The Myth of First Mover Advantage


In entrepreneurship there is a myth that if you are first to market you always win. Its called the firsts mover advantage. Prof Adam Grant in his book, Originals, reports on a classic study by Peter Golder and Gerard Tellis which compared the success of first mover (pioneers) and settlers. Settlers are companies which were slower to launch their product and who waited for pioneers to create the market. Their first finding was that pioneers had a  47% failure rate while settlers had only an 8% failure rate. This leads to the conclusion that : being original doesn’t require being first. It just means being different and better. Since the market is generally more focused and easily defined when settlers enter, they can focus on providing superior quality instead of defining the product or service. They bust this myth by identifying the following disadvantages of first movers:

  1. When originals rush to pioneer they are prone to overstep. For example one study showed that 75% of pioneers in a study of 3000 startups failed because of premature scaling of their business when the market was yet ready to support it.
  2. Settlers tend to be ore risk- averse while pioneers act out of intuition and take radical risks. So settlers tend to balance their portfolios of risk and reduce the risk of failure. They also wait for the right opportunity. They do not spend lots of money developing the market unlike the pioneers. In other words settlers are not recklessly ambitious but they enter the market cautiously.
  3. Settlers get the opportunity to improve the pioneers’ technology or service delivery model to make better products. The pioneers have to make all the mistakes themselves and at their own expense while settlers learn from the mistakes of pioneers.
  4. While pioneers often get stuck in their first offering settlers can observe the market changes and shifting consumer tastes and so adjust their offering accordingly. Obviously settlers can afford the luxury of waiting for the market to be ready.

This however should not be a wholesale discouragement of first mover advantages. Its just placing balance to the picture. Obviously if we all wait to be settlers then there will be no pioneers and nothing original would be created. First mover advantage seems to work best when patented technology is involved or when there are strong network effects (e.g the product becomes more valuable when there are a greater number of users like on social media). However the odds of failure if you are a pioneer are higher.

When the market is uncertain, unknown or underdeveloped, then its better to enter as  settler rather than a pioneer.

Wishing you the best. God bless as you push your entrepreneurial dream.

Reasons for Start Up Failures in Home Business


I have recently been reading about the main causes of failure for start up businesses and I found them interesting. I will discuss these in this posting in the light of home businesses or businesses started by people who do not want to start by investing too much money upfront.
Many people mistake a hobby for a business and vice versa. This often results in lifestyle businesses. These are businesses that do not grow at all but are simply there to fund a lifestyle. There is no strategy as long as it allows the founder to supplement his/her income. Ideally a business should grow to the level that it requires your full time attention before you can institutionalise it where it does not need your hands own involvement.
Some fail because they fail to self appraise properly. For example considering oneself an entrepreneur simply because one is good technically. Technical competence does not easily equate to entrepreneurial competence. For example a skilled dentist does not necessarily make a dental entrepreneur or a skilled investment banker does not necessarily make a bank owner.
Others fail because of lack of commitment and motivation and/or underestimating the required effort to convert the opportunity into a realistic business proposition. Many people assume that once they start the business will automatically do well. They do not realise there is need to exert massive energy and effort to overcome the inertia of the business. For anything to move forward you spend more energy in trying to overcome inertia and cause it to be mobile. Inertia is the inability, unwillingness and resistance to action or motion. Anything in life requires significant force to overcome this inherent tendency. Business does not simply flow but require commitment and strong motivation for someone to start them. Many would be business owners underestimate the amount of energy required to convert a business opportunity into a viable business. In my work with online multilevel entrepreneurs, I have discovered that many sign up to start but never overcome that inertia even though the business system we work with does not require financial investment to start. You can check it out at http://www.raphacaretrust.com
Other start up business and home businesses fail because of inadequate financing often due to overly optimistic sales projections. Many people suffer from an illusion that comes from unproven sales projection. This results in the business failing to meet its short term financial obligations. There are many multilevel business opportunities like SFI, Forever Living and Syntek which require minimal cash investments because of the way they are structured. These are preferable for those who are not good at sales projection. They are proven systems.
Another cause of failure is misreading the market, often indicated by failure to reach the “critical mass” required in sales volume and profitability due to competitive disadvantages or market weakness. One can often assume more demand than actually exists in the market. The net result is that you take your business to market with heavy stocks and machinery investment. Once all your money is locked into the business you then discover that there is no demand. A simple example is numerous first time authors who self publish and print thousands of copies of their book because it is a must read. They only discover with money locked into hard copies that it may take them years to sell the first edition unless they actively market the product. This is where print to order self publishing comes in so that one does not carry stock.
There are other causes like poorly crafted or executed strategy and/business model management shortcomings, including inadequate financial controls, inexperience, and neglect. Most of these shortcomings can be mitigated by either attending courses or starting businesses with are franchised with a proven system. I highly recommend multilevel marketing systems as an entry into business that reduce failure rates of start ups.
Here is to wishing you all the success! Meet you at the top.

Entrepreneurial Paradoxes 1


Entrepreneurship is filled with paradoxes which people need to balance. It can be confusing sometimes when one engages these apparent contradictions. A paradox is a seemingly absurd or contradictory statement or proposition which when investigated may prove to be well founded or true.  In the next few postings we discuss a few paradoxes of entrepreneurship that every business start up owner needs to be aware of. Ignorance of these often lead to frustration or giving up on one’s dream of financial independence.

The Paradox of Entrepreneurship
The Paradox of Entrepreneurship

While we often speak of business opportunities, it is possible that  an opportunity with no or very low potential can be an enormously big opportunity. It depends on the mindset of the entrepreneur. Business opportunities are not always obvious.  A story is told of a white commercial farmer who used to send farm workers and labourers to pick up some white stones and bring to him. He paid $10 for every bucket load of white stones. The workers thought this farmer was crazy and they called him vaMatombo (Mr Stones). Little did they realise that these white stones were alluvial diamonds. He saw potential when everyone else was seeing stones. Some were even using these white stones (diamonds) for killing birds with stone slings.

This principle is also noticed in real estate investing. Many amateur investors will leave a cheap apparently dilapidated property which is structurally sound because they are looking for a nice looking property. They do not realise that this apparently dilapidated property is a diamond in the dirt. It needs someone to just polish and then expose its beauty through renovation. An old run down property may be an opportunity which is not apparent until an astute real estate developer notices it buys it cheaply and converts this eye sore of a property into lucrative and luxurious  cluster homes.

To make money you may have to first lose money. Or put another way before you can have a harvest you have to plant or sow your seed. In investment terms we often speak of investing money that you can afford to lose. You have to invest something you desperately need in order to make money. When you start a business you will need to invest finances when you least afford it. Its like priming a water tap with water before you can get water out of the tap. Some people want to harvest where they have not sown. They want people to fund their business dreams without them putting any of their own cash or effort at risk. You have to be willing to risk or lose your money for you to make money. Sometimes like in multilevel marketing you may risk minimal amounts of money to start a business. But in these cases you will still invest lots of time and energy (which can be viewed in monetary terms) before you make money. The wise people opt for businesses that require minimal capital to start and lots of sweat capital. Multilevel marketing opportunities such as SFI and Forever Living are great examples. They exchange sweat capital for financial investments.

To recap: To make money in entrepreneurship you may need to lose money (or its time and energy equivalent). What looks like a non-opportunity may be a massive opportunity for business. What are the things that are in your hands that you are discounting their business opportunity value? Are you willing to lose your money , time or effort in order to make money? What will you exchange for the wealth you are pursuing? Invest time and money.

Entrepreneurial Risks


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Risk is a question of perspective. One person can look at these pictures  and feel very uncomfortable because he feels its risky. While another will take precautions and jump onto these balancing rocks without any measure of risk.

The common view that entrepreneurship is risky is incorrect. It is really a myth and not factual. It is a matter of perception.  Your perception can become your reality.  There are risks associated with starting new ventures just like there are risk for not doing anything. In life there is rarely anything that is risk free. If you are sitting in your house there is a risk that a plane may fall upon your house and kill you. However in normal circumstances this risk is low. Similarly in entrepreneurship there is risk but it can be managed so that entrepreneurial risks are moderate and not high. Many people confuse entrepreneurship and speculative gambling with capital in the hopes of making  it big in business. Entrepreneurs take calculated risks. Entrepreneurship is really not risky but there are risky entrepreneurs and entrepreneurs who simply take calculated risks. Whether you pursue a business opportunity or not, you are taking a risk.

If you take steps to start a business to exploit your opportunity you risk failing. You may take your boat to sea and then sink the boat. This is called “Sinking the Boat Risk.”  On the other hand if you see an opportunity and you fear to sink the boat and therefore do not pursue the entrepreneurial opportunity you incur an opportunity cost. You will see someone do exactly what you thought about and make it big. You lost an opportunity. Its  called “Missing the Boat Risk.”

I know Zimbabwean people who were so scared of risk that instead of investing they kept their money in the bank until it was wiped out by hyperinflation in 2007-8. So although they thought they were conservative it turned out that the risk of not investing cost them opportunities of a life time and left them poor and destitute. Those who during those times invested in hard assets appeared risky but turned out to be more prudent when the hyperinflation wiped away all bank savings.

Like someone correctly put it, “Opportunities of a lifetime should be seized during the lifetime of the opportunity.” The “window of opportunity” will open, and remain open just long enough. We cannot be the only entrepreneurs that perceive these opportunities. How long will it be before the need becomes compelling enough for others to jump in? How long before the opportunity passes because the window of opportunity has closed?

I will briefly touch on the key risks in entrepreneurship and give pointers on how to minimise them:

  • Uncertainty of income – if possible do not start without at least six-twelve months working capital to cover both the business and your living expenses. Or alternatively start the business while still gainfully employed. Do not hastily quit your current source of income.
  • Risk of losing entire invested capital- Do not invest all your resources but rather invest an amount you can afford to lose. Be prudent in your cashflow projections and rigorous in assessing and evaluating your business idea. Not every business idea is a viable business opportunity. Do your homework thoroughly before you risk your capital.
  • Lower quality of life until business gets established. This is managed by easing your way into the business unless you have been forced into it by a retrenchment or some other unforeseen external event.

So will you continue to sit and watch the clouds or will you seize the moment and plant your seed capital into your dream? Cloud watchers rarely achieve anything meaningful. The Bible says that those who watch the clouds will not sow!

Definition of Entrepreneurship


In this post having considered a number of entrepreneurship definitions over the past few years I  proffer my own.  Unless you can define what it is, it is difficult to pursue it. You become a dentist by studying and training in dentistry, you become a lawyer by studying and training in law BUT you become an entrepreneurs by creating an enterprise and running it viably. You do not become an entrepreneur by studying the concepts but by applying them to create a venture!

My starting premise is that entrepreneurship is  a balancing act that is based on a solid foundation being laid. The structure of these balancing rocks located near our rural home demonstrate the need for a correctly balanced structure made up of many rocks of various shapes and sizes. That to me is the picture of entrepreneurship.

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Entrepreneurship is a way of thinking, reasoning and acting that is opportunity obsessed, holistic in approach, and leadership balanced that results in a process of uncovering, developing and seizing an opportunity to create value through innovation without regard to either resources (human and capital) or the location of the entrepreneur ( – in a new or existing company) through devoting the necessary time and effort, assuming the accompanying risks (financial, psychic, and social), and receiving the resultant rewards (monetary and personal satisfaction of independence.)

From this definition we can derive the following key activities required for entrepreneurship to happen as follows:

  • Developing an entrepreneurial mindset that is opportunity focused, holistic in approach and balanced in its leadership outlook
  • Identifying and evaluating an opportunity
  • Pursuing, exploiting or developing this opportunity
  • Focusing on value creation
  • Refusing to be limited by current resources under your control
  • Preparing to exert energy, effort and spent time in converting the opportunity to a viable business model and proposition,
  • Willingness to assume calculated risk in order to make the business a reality
  • Launching a new venture as a vehicle for realism the opportunity
  • Running a new business successfully to ensure sustainability and
  • the mental preparedness of harvesting the reward of your labours.

“A pessimist sees the difficulty in every opportunity; an optimist sees the opportunity in every difficulty.” (Sir Winston Churchill)

persistence


When faced with challenges, persist. Persistence pays. Perseverance always outlasts persecution. Perseverance is a hallmark of entrepreneurs. There is need to sacrifice in order to create long term wealth. Immediate gratification and consumptive patterns rob the future.

“In order to succeed, most of the things that we value require us to be able to break through the wall of short term pain in order to have long term pleasure. (However) many people focus on how to avoid pain and gain pleasure in the short term, and thereby create long term pain for themselves.” Anthony Robbins.

 

Pafunge!

Entrepreneurial Principles from Institutional Investors Perspective


Entrepreneurial Principles
1. It’s important to have a credible business plan and model.
2. Who you are is more important than your business idea. The substance and integrity of the promoters is critical because investors invest in people and not business plans.
3. Be prepared to lose control in order to grow the business. 30% of a bigger pie is better than 100% of a miniature pie. Promoters are sometimes shortsighted and once successful become greedy and want institutional investors to exit. They forget that these supported them when no one else would.
4. Give the investor a level of comfort so that he believes that he has a competent and capable steward over his investment. Investors take calculated risks.
5. Your past matters. Where have you been? What have you accomplished or done? How faithful and successful where you, wherever you have been? How did you relate to others? Can you be trusted? These character issues are more important than competence. The Bible teaches that faithfulness in another’s business qualifies you for your own.
6. Investors are comfortable in the credibility of a pool of resources and competences in a team of promoters rather than risking their money on one person’s skills. Whenever there is a team the robustness of the internal relationships among promoters is critical. Compare the Unibank and Century scenarios to solid teams like Trust, NMB,
Kingdom, ReNaissance, Royal etc.
7. Demonstrate to investors that you are also putting your own resources at risk for the business idea.
8. To build transgenerational businesses one needs stability of shareholder base. However depending completely on institutional investors may be unwise as these tend to quickly change their positions and offload their equity. Most institutional investors think short term. It follows that once a business is established efforts should be made to replace short term investors with some stable long term friendly investors e.g. Econet Wireless Capital and Meikles in Kingdom Financial Holdings.
9. Entrepreneurs in the banking sector coming from a poverty mentality failed to convert to an abundance mindset. Consequently some focused more on personal success than the success of the business that would create transgenerational legacies.
10. Have a clear perspective of the purpose for wealth creation agenda. Why are you creating wealth and for whose benefit?
11. You can not build a structure without solid foundations. Success is about principles and values rather than gifting.
12. Do not be a copycat. Understand the business and the rules of the game you want to play.
13. Refrain from being greedy and selfish. As you share the cake, your piece grows.
14. Be transparent with, and communicate with clarity to investors and customers.
15. When faced with challenges persist. Persistence pays. There is need to sacrifice in order to create long term wealth. Immediate gratification and consumptive patterns rob the future.

“The one thing people and nations must understand is that in order to prosper they must be willing to sacrifice. I am willing to sacrifice now – knowing that the benefits will manifest in the future.” Founder of Daewoo.

Entreprenurial Principles


An extract of entrepreneurial principles drawn from the Trust Bank case study.

1. Perseverance always outlasts persecution. Perseverance is a hallmark of entrepreneurs. Its not for the fainthearted or the easily quit types.

 

2. Entrepreneurs are prepared to risk their own resources for the entrepreneurial dream.

 

3. Entrepreneurs are risk-takers. They however take calculated risks. Do not assume unnecessary risks without a cost benefit analysis. Risk taking does not equate to foolishness.

 

4. Broadening shareholder base spreads the risk of entrepreneurial ventures. Including employees in equity uptake motivates them.

 

5. Staying close to the customer and improving customer responsiveness is key to entrepreneurial success.

 

6. A strategic mindset is vital for success.

 

7. Entrepreneurs know how to handle loss and failure without allowing them to incapacitate them. In fact they view these as learning experiences.