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Entrepreneurs and Opportunity

The road to becoming an entrepreneur starts with an idea. In fact, that isn’t strictly speaking always true, for it sometimes happens that it starts with the decision to become an entrepreneur. In these cases, this gives rise to the search for an idea. In both cases, the idea is the genesis of the entrepreneurial activity. However, the idea on its own is not enough, as the identification of ideas is possibly the easiest part of the whole entrepreneurial process, and indeed there exist well-tried techniques—brainstorming, for instance—for assisting this process.

A Business Opportunity

What has to happen after the identification of the idea is the determination as to whether it constitutes a sound opportunity, which raises the question, “What constitutes a business opportunity?” Many definitions have been put forward over the years, but our favourite one is this: a business opportunity has the qualities of being attractive, durable, and timely, and is anchored in a product or service that creates or adds value for its buyer or end-user.

In other words, if there isn’t a market for your idea, then it isn’t an opportunity, as it isn’t capable of being exploited commercially in such a way as to profitably sustain an enterprise.

This reflects the principal underlying truth of all exploitable ideas, and that is that they are anchored in some sort of unsatisfied need, thus providing the latent demand that can be turned into a market. Following on from this are further observations that are key for the would-be entrepreneur to keep in mind:

• The landscape is constantly changing, thus opening the way for ideas that weren’t feasible yesterday. Similarly, what constitutes a great opportunity today, may not do so down the road, hence the need for all enterprises to reinvent themselves as they go forward.
• Whenever anybody expresses dissatisfaction with the way something works or how something is done, that signals a potential need to be filled.
• An opportunity may simply involve taking something that is successful in one part of the world and introducing it in another.

All these points are basic, unalterable truths that entrepreneurs ignore at their peril. One of the main reasons for so many company failures during the dotcom euphoria was the simple fact that all too often the attitude was that there would be a market; all you had to do was provide the service, an attitude that was summed up in the phrase “Build it, and they will come.”

The prevailing belief was that the Internet would change all the rules of buying and selling. At the same time, not many people were asking consumers if they were going to make a mad dash to the Internet to buy items like dog food, plants and furniture.

As a result, many pure-play e-tailers selling such items ended up on the dot-com scrap heap. Demand simply did not materialise. Look at all the business-to-business exchanges that people were touting as the end of business as we know it. It didn’t happen.

Many young people were dazzled by early dotcom success stories, and there was an immense rush worldwide to get into the act and not be left out.

True, some companies did survive, but all those who did were either serving a clear need right from the start (for instance, eBay), or had to reinvent themselves in order to identify a need they could serve, sometimes metamorphosing out of all recognition from their origins.

The Vital Points

We should, perhaps, make one point clear at this juncture: our purpose is by no means to make light of, still less to deride, the emergency of what has been termed the ‘knowledge-based’ economy. We simply wish to underline two crucial points:

• New business ideas stemming from a ‘knowledge’or high-technology root still need customers in the good old-fashion way.
• Not all new businesses need to stem from a “knowledge” or high-tech root. If what you want to do is open an exotic ice cream parlor and there are customers willing to buy from you, then go for it.

What is indubitably true is that tomorrow’s high-growth, globally active firms with the potential to change the world are more likely to be “tech” companies. Having said that, we have a suspicion that there will always be room for the McDonald’s and Starbucks of this world.

Entrepreneurship in Asia was for many years rooted in trading—bringing new products to the country where the entrepreneur lived; selling abroad products from his or her home country; and progressively, exploiting trading opportunities between third countries.

Support activities, such as banks and transport companies, grew up around these activities. Such opportunities still exist today, and probably always will, but it is now already a long time since they constituted the bulk of entrepreneurial activity.

The Industrial Revolution in Europe in the 19th century set the stage for a new breed of entrepreneur to emerge, moving away from a purely buying and selling activity, which essentially adds little or no value, to more value-adding activities, such as engineering or manufacturing. The famous engineers of the period were in many ways archetypal entrepreneurs, of which two of the best known are Isambard Kingdom Brunel and Gustave Eiffel, who had created his own company specialising in metallic structures in 1864, 25 years before the construction of his famous tower in Paris.

In the early part of the 20th century, entrepreneurial activity accelerated in the Western world, thus providing the subject matter and inspiration for Joseph Schumpeter’s seminal theoretical work on entrepreneurship during the 1930s and 1940s.

There were, of course, exceptions. In Japan, for instance, the company that was to become Sony was founded in 1945 by Masaru Ibuka, who was joined later by Akio Morita. And long before then, in 1911, Masujiro Hashimoto founded one of the companies that would eventually find themselves fused to become Nissan, already in 1915 manufacturing and selling a vehicle called the Dat Car, predecessor of the Datsum.

However, it wasn’t until toward the end of the 20th century that entrepreneurial activity in Asia really caught up with the rest of the world, not necessarily in terms of quantity, but in terms of focus.

The emergence of Silicon Valley as an entrepreneurship powerhouse had a galvanising effect on most of the countries in the region, with the result that in many cases, attempts have been made to emulate the Californian experience. In dozens of places, innovation centres have been created in attempts to emulate the cluster of businesses created out of the “networking, trusting, collaborative, nurturing, supportive, resilient, resource and opportunity-rich habitat” for innovation and entrepreneurship that is Silicon Valley.

Excerpt from ‘Mastering Business in Asia: Entreprenuership’, by Chris Boulton and Patrick Turner. Price Rs 349 Published by Wiley India Pvt Ltd