Released by: Manager@Work, The Edge
Date: : 27 April 2009
Despite a few bright sparks in today's dim economic landscape, such as Wells Fargo's surprising 9 April announcement of their expected first quarter earnings of US$3 billion and, closer to home, our Government's RM60 billion stimulus package unveiled on 10 March, our economic woes are far from over. The thousands who were retrenched earlier have yet to be gainfully re-employed. Although personal
asset values and regular sources of income have either shrunk or vanished, our daily and monthly bills have not - for some people, their bills keep mounting indiscriminately - impervious to our economic and emotional distress.
Entrepreneurship - driver of economic growth
The premise that entrepreneurship offers a long-term solution to a nation's economic problems was the basis for a survey on Entrepreneurship and Economic Recovery conducted by the Ewing Marion Kauffman Foundation in February 2009. Findings of that survey show that 72 percent of the 2,000 respondents think the US government should be doing more to encourage individuals to start businesses and
create more jobs, while 48 percent agree that an entrepreneurship campaign is as important as a stimulus package in creating jobs, compared to 24 percent who disagree and the rest unsure. These findings corroborate with the situation we have in Malaysia where a company such as Hai-O has successfully helped thousands of ordinary Malaysian bumiputera become millionaires through its
entrepreneurship development business model. In times of economic slowdown, many other homegrown companies should emulate the example of Hai-O to create opportunities and self-employment for our people. The Government should also initiate
and quickly mount a campaign for entrepreneurs' development for all races based on merits as this is one of the measures to create self-employment and counter the economic crisis.
According to Professor Russell Sobel of West Virginia University, economists find that it is not infusions of venture capital funding which necessarily foster entrepreneurship. Funding does NOT create new ideas - it is people who create new ideas. Funding merely follows and flows to where the new ideas come from, and helps to commercialise the venture. In Malaysia, the Government encourages ideas
and provides funding through Cradle Sdn Bhd for the seeding of these commercially viable ideas for would be entrepreneurial start-ups (http://www.cradle.com.my/cms/index.jsp).
As such, I present here five insights which deal with the mindset within individuals from whence entrepreneurship arises.
Insight #1: Entrepreneurs are created in good and bad times. Many start from the latter.
Enterprises are created by many in tough economic times when people rely on their entrepreneurial ideas, know-how, intuition and some measure of luck to start a business. It is when the conventional support structures, which you have traditionally relied upon for so long, begin to crumble all around you that you must endeavour to create opportunities for yourselves. Hence, if "Necessity is the
mother of invention", then "Opportunity is the father of innovation" and the child is entrepreneurship. Some forms of entrepreneurship are borne out of necessity (thus giving rise to "necessity entrepreneurs") while others emerge from opportunity (thereby raising "opportunity entrepreneurs"). Refer to the Global Entrepreneurship Monitor (GEM) 2008 Research Study ( http://www.gemconsortium.org) for a comprehensive definition of necessity and opportunity entrepreneurship. In an economic slowdown, many who become displaced in employment will turn to necessity entrepreneurship to
survive. They will be engaged in subsistence enterprises such as food stalls, sundry provisions and the cottage industry. Others in downturn will seize opportunities to start enterprises that would normally be difficult to start during good times. Whereas in the corporate arena, we might find mergers and acquisition taking place as entrepreneurial leaders seek out opportunities for sustainable
growth and value creation.
Insight #2: Realise your entrepreneurial G-I-F-T-S
With dire external conditions as the catalyst, let the latent entrepreneurial G-I-F-T-S that have been dormant within you be ignited - Grit, Innovativeness, Flexibility, Tenacity and Shrewdness. Grit gets you to take that first bold step, to take the plunge so to speak. Innovativeness helps you find creative and resourceful ways to take the opportunity and
make things happen. Flexibility enables you to adapt and modify your enterprise model to cater for the endless changing circumstances that will doubtless come your way. Tenacity is what will keep you steadfast despite failures, instead of bailing out at the first sign of trouble. Shrewdness and "streetwisefullness" prevents you from being made a sacrificial lamb by the many ravenous
wolves in the business jungle out there.
So, one can still move on from a crumbled employee career towards an entrepreneurial career by creating an enterprise of your own; turn the unplanned disruption into a brand new direction of your choice; harness the energy from fending your initial anguish into fuelling your ultimate autonomy. But how do we operationalise our venture into business? For the finer details, you could read books such
as Be Your Own Boss published by the Malaysian Institute of Management. However, for a broad perspective, continue to read on.
Insight #3: Balance between what you like and what you are good at.
The ideal situation would be to embark on a business which you have the expertise in as well as have an intense passion for. But in reality, we often have to make a choice between what we like to do and what we are able to do. You might love singing and even fantasize about being a Malaysian Idol, but can you realistically make it as a professional singer, or should you stick to teaching which
provides your bread and butter? Practical wisdom would dictate that, if you had to choose, you should first do what you are competent at before you opt to do what you love but are not yet proficient at.
Figure 1 shows you a 2-by-2 Competency-Passion Matrix which represents the decision making process of a would-be entrepreneur. Whilst it is shown here as a two-dimensional framework, in the real world, the situation tends to be multidimensional with other mitigating factors influencing the entrepreneurial decision making, for example, the availability of funds and other resources as well as the
nature of markets, existing infrastructure, technology et cetera.
Insight #4: Acquire the necessary knowledge and competencies to succeed.
Having entrepreneurial GIFTS is one thing, having the right prerequisite knowledge and entrepreneurial competencies is another matter. You may have the shrewdness to spot a marketing opportunity but do you know how to evaluate market size, market share and market forces? You might have true grit in taking risks but do you know how to analyse risk and manage them? Yes, you might hire someone with
those competencies, but you cannot rely 100% on them and be totally ignorant yourself. You need to possess at least some basic competency in areas such as financial management especially cash flow management, business and strategic planning, sales and marketing. Understanding the business, legal and competitive environment is also important to business success. Get adequate formal training and
coaching in these areas to reinforce and complement whatever experience and on-the-job learning you are undergoing along the way.
Insight #5: Envision the end in mind - decide `Lifestyle' or `Gazelle'.
What kind of entrepreneur do you want to be? Do you want to be your own boss, simply because you no longer wish to be answerable to anyone else ever (lifestyle entrepreneurship), or do you wish to build a business with a view to growing it and eventually selling it off to the highest bidder at the right time ("gazelle" or "high-growth" model) or take it to public listing? Deciding your
entrepreneurial destination earlier has its merits as the model you choose will impact the way you make decisions and manage outcomes. For instance, going gazelle might mean that an entrepreneur ensures the business makes money as soon as possible so that he can sell it off or "IPO-rise" it at an attractive premium within a targeted timeframe. To achieve this, he needs to have a specific growth
strategy as well as a clearly defined exit strategy. Venture capitalists and private equity firms seek out these types of enterprises.
Just do it!
When all's said and done, the ultimate exhortation, like the Nike's tag line, is to "just do it"! Many people have business ideas and dreams but they don't take action to realise those dreams. True entrepreneurs act in spite of fear and uncertainty, and follow the philosophy of ready, fire, aim instead of waiting to get the aim exactly right before daring to fire. Failure is not an excuse for not
trying; in fact for many entrepreneurs, failure has been a necessary learning for them to fulfill and actualise their business success and entrepreneurial propensity.
Dr Wilson Tay, MMIM, MIM-CPT is CEO of the Malaysian Institute of Management, the national management organisation of Malaysia. MIM invites companies and professional managers to be members. Contact MIM Membership Support and Outreach at (603) 2164 5255; fax (603) 2165 4681; e-mail: enquiries@mim.org.my or visit www.mim.org.my.
