Tag Archives: Entrepreneurship

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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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.

Paradox of Entrepreneurship 2


In the previous posting we considered two paradoxes on entrepreneurship. Today we take a look at two more.
Paradox 3: To create and build wealth, one must relinquish wealth. It is critical to understand that wealth is created through the principle of seed. You sow a seed to have a harvest. You expend some energy in order to produce a result. To build wealth one has to give up some seed capital. There is no business that does not require an investment of time and money. The only difference is that some wealth creating systems require less monetary investment and more time and effort investment. The other way to view this paradox is that in order to pursue one wealth creating opportunity you have to give up another opportunity that may be equally potentially viable. Not many people can successfully pursue many entrepreneurial opportunities at the same time. There is thus an opportunity cost involved in relinquishing some wealth opportunities for the one you ultimately pursue. In other words one needs to focus on the opportunity at hand. Many do not understand this principle and so pursue their opportunity half heartedly while looking around for other alternatives. Entrepreneurship requires commitment to pursue the one opportunity and abandon other potentially good ideas until this opportunity releases its harvest. So you relinquish wealth in order to pursue wealth. In some cases you may need to relinquish the wealth of your current career and stable job in order to pursue wealth within an entrepreneurial setting. However if you opt to go this route it is better to start a second income stream while still at your current job. There are multitudes of second income opportunities online as well as work at home opportunities that can be exploited like this.
Paradox 4: Entrepreneurship requires considerable thought, preparation, and planning, yet is basically an unplannable event. Many times we can plan and work our plans in order to achieve our dreams. But sometimes entrepreneurship is a result of “divine coincidence.” One can plan for ever and never get the opening break to launch while someone can just happen on a ripe opportunity. So in effect entrepreneurship is more a mindset ready to identify and exploit an opportunity that suddenly presents itself. I know a colleague who went to buy a fitted kitchen and was treated badly by the staff of a renowned fitted kitchen company. She was so insulted that the bad experience inspired her to realise that the arrogance of this company was due to lack of competition. It also made her realise that if she has been handled this badly there should be many disgruntled customers who were also treated like this who are looking for alternatives. She went out and without experience started her own fitted kitchen company which has give the original company a run for its money. She has done very well. This opportunity was really unplanned. So in a sense we can say that we need to be ready for the opportunity when it suddenly appears. As someone once said, “Opportunities of a lifetime should be seized and exploited during the lifetime of the opportunity”. We can therefore conclude that entrepreneurship is the art of planning for the unplannable opportunity.
To recap: To create and build wealth, one must relinquish wealth. Entrepreneurship requires considerable thought, preparation, and planning, yet is basically an unplannable event.

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.

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)

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.

Entrepreneurial Principles from ReNaissance Financial Holdings


Editor: I have left this post exactly as it is in Entrepreneurship On Trial which I penned in 2010 for a purpose.

Entrepreneurial Principles

This case study shows how an entrepreneur was formed, how each decision led to new doors and greater opportunities. It’s too early to adequately evaluate the FML foray. So far so good! But what events could cause this to become an albatross? How might Timba
avoid those vulnerabilities? What are the likely scenarios of how this investment will proceed from here? How might Timba proceed more effectively? What risks should he avoid taking? Answering these questions is the challenge of strategy.

The learning points for entrepreneurs from this case study are:

1. An entrepreneurial business is built on a solid business model and philosophy. The business model can be remodelled, as Prof. Mitchell argues so powerfully in his books.

2. In entrepreneurial investments sometimes one does not have to own the asset if he can control and derive benefit from it. For example using Econet Wireless Capital’s resources when his had run out, Timba managed to acquire control of FML.

3. A keen concern for the human resources of the entrepreneurial venture and delivering value to them increases the value of the business.

4. Cultivating and protecting a network of relationships is critical for an entrepreneur. Timba’s relationships with Strive Masiyiwa, Shingai Mutasa and Gideon Gono, for example, have proved beneficial to him.

5. Business challenges can be converted to opportunities, depending on how one views them. It all depends on one’s mindset. The threat that FML posed to RFHL was successfully converted to an immense opportunity.

6. Decisiveness is critical to entrepreneurs but this does not imply risk-taking without counsel. Surrounding oneself with strong leaders who can offer counsel is beneficial in the high stakes game of business.

7. A strong and supportive family environment is crucial to business success.

8. At times, fortuitous decisions define an entrepreneur’s path. Strategy is not only planned but can also emerge. There is an unseen hand directing the steps of humanity. At times it is important align to oneself with that direction.

9. Prior experiences enable an entrepreneur to face more challenging tasks. Entrepreneurs analyse their experiences to derive learning points. Timba gained critical experience in being faithful and diligent in handling other people’s business and this qualified him for his own.

10. Entrepreneurs are very deliberate in their strategic thought processes.

Entreprenuerial Lessons from Royal Bank Zimbabwe


The entrepreneurial journey is fraught with risk but can be very rewarding. Some lessons that can be learned from the Royal Bank case study are as follows:

1. Entrepreneurs take calculated risks. Mzwimbi did not use all his resources on the bank but left his shareholding in Econet intact. He also sought to diversify his wealth by keeping some investments with FML and Screen Litho. This has been the mainstay of his wealth creation strategy. The disaster that befell the bank did not completely wipe him out because of this prudent investment strategy.

2. Entrepreneurs learn from the experiences. Mzwimbi’s vast experience taught him critical lessons. His international banking experience enabled him to see the emerging trends as Barclays and Standard Chartered withdrew from country towns, creating a route for his entry strategy. His work with Econet taught him perseverance as he and his colleagues fought legal battles with government for the award of the licence. Little did he know that this was just training ground for the battle of his life – the battle for Royal Bank.

3. Entrepreneurs continuously scan the environment for threats and opportunities. Whereas Mzwimbi and his team were good at noticing the emerging positive trends in the environment at inception, they failed to pick the changes in the regulatory environment when the new governor came on board.

4. Entrepreneurial strategy emerges rather than follows a given plan and therefore entrepreneurs should be flexible. Although Royal Bank had a plan to grow at a steady pace, when the opportunity arose to acquire other branches cheaply the entrepreneurs seized the opportunity.

5. Entrepreneurs are faced with credibility challenges as customers, regulators and suppliers test the credibility of newcomers. Royal Bank minimised this by recruiting experienced and well known personnel in the market. However the lack of institutional shareholders led to credibility gaps with some corporate clients.

6. Entrepreneurs need to craft into their strategies both managerial and leadership competences to ensure both the ability to exploit opportunities (entrepreneurial activity) and sustainable company performance (strategic management). The more contemporary view of entrepreneurship transcends just the venture creation and now encompasses strategic growth. Although Mzwimbi was an excellent leader he needed a strong and powerful manager to consolidate the gains and create solid systems to sustain the rapid growth. Leaders thrive on change while managers thrive on handling complexity and creating order.

7. Business is built on relationships as these can help in scanning the environment e.g. critical information about opportunities and threats was obtained from close relationships
Let us close this with a few questions that an entrepreneur should consider. For instance, if Mzwimbi had expanded less aggressively, would Royal Bank have been safer from the regulators? How could Mzwimbi have protected Royal Bank from political and regulatory interference if he anticipated those risks? If Mzwimbi had selected to pursue his enterprise ideas in a country with a more dependable political and regulatory environment, how would he have performed? Would it have been wiser to keep the equipment, real estate and other assets in Royal Financial Holdings or other corporate entity and only lease them to the bank? In that scenario would the predators have been able to pounce on the bank?