Interview (Language: German)
Jens Tönnesmann
hat ein Interview mit dem Entrepreneurship-Prof Günter Faltin geführt.
Faltin erklärt, wie gute Ideen entstehen und wieso der Begriff "Unternehmer" abgeschafft gehört.
Professor Faltin, Finanzkrise und Rezessionsangst quälen auch die Gründer: Es ist viel schwieriger, an Geld zu kommen, als noch vor einigen Monaten. Kommt jetzt die Gründerflaute?
Ich denke nicht. Denn Geld spielt beim Gründen eine viel geringere Rolle, als wir immer denken. Natürlich brauchen Unternehmen Kapital, wenn sie beispielsweise neue Medikamente oder Prototypen entwickeln. Aber anders als zu Zeiten der Industrialisierung ist Geld für Gründer inzwischen nicht mehr der größte Engpass.
Woran mangelt es dann?
An guten Ideen. Heutzutage müssen Sie Ihren Kopf anstrengen, um etwa als Internet-Gründer Erfolg zu haben. Sie brauchen ausgereifte Konzepte, geradezu Ideenkunstwerke - wie ich es nenne.
Das müssen Sie erklären.
Viele gehen mit unfertigen Ideen an den Start. Einfälle hat man viele. Meine Erfahrung zeigt: Aus diesen "Rohideen" muss man erst ein "Ideenkonzept" entwickeln.
Wie geht das?
Sie sollten nicht sofort loslegen, wenn Sie eine Idee haben. Schauen Sie zuerst, was wirklich dahintersteckt. Sie müssen die Idee öffnen und zu einem funktionierenden Konzept entwickeln.
Eine Idee öffnen - das klingt eher esoterisch als unternehmerisch.
Es geht nicht um Kreativitätsspiele und bunte Bilder. Sie müssen sich als Entrepreneur ein paar sehr wichtige Fragen stellen.
Und zwar?
Nehmen wir an, Sie wollen ein Restaurant eröffnen. Die herkömmliche Gründungsberatung würde fragen, wie Sie das betreiben wollen, wie Sie Räume und Mobiliar finanzieren und wie der Markt aussieht. Das ist alles wichtig - aber es ist erst der zweite Schritt. Ich interessiere mich erst mal dafür, warum der Gründer das eigentlich machen will, was ihn bewegt. Erst wenn aus seinen Antworten ein stabiles Gedanken-Bauwerk wird, das Imitatoren, Konkurrenten und Veränderungen berücksichtigt, dann sollte er sein Unternehmen starten. Besonders wichtig ist: Solange Ihnen bei den Antworten Zweifel kommen, gründen Sie nicht!
Sie vergleichen Entrepreneure mit Künstlern. Wie talentiert müssen Gründer sein?
Der Vergleich soll deutlich machen, dass Entrepreneure mehr Ähnlichkeit mit Künstlern haben als mit Managern - weil sie etwas Neues schaffen. Talent kann da sicher nicht schaden - aber viel wichtiger ist, dass man etwas macht, mit dem man sich identifiziert, für das man sich im Idealfall sogar begeistert.
Wie wichtig ist dann noch Gründerhandwerk?
Handwerk ist wichtig. Aber Ausbilder und Berater fokussieren sich oft auf die falschen Dinge.
Auf schön gestaltete Businesspläne?
Genau. Man muss die Konzepte durchdenken, nicht schöne Pläne schreiben oder sie sogar von anderen schreiben lassen. Oft sind diese Geschäftspläne nur eine Pflichtübung. Man muss sie absolvieren, wenn man Geld von Banken braucht. Für Banker sind die Pläne eine Versicherung, dass sie wirklich alles geprüft haben.
Was sollten Gründer stattdessen tun?
Sie müssen sich darauf konzentrieren, ein überzeugendes Konzept auszuarbeiten. Dazu muss man nicht einmal etwas Neues erfinden. Man kann auch vorhandene Dinge neu kombinieren. Skype hat weder das Telefonieren noch das Internet noch Webcams erfunden - ist aber erfolgreich damit, Telefongespräche übers Netz anzubieten.
Gründen ist anstrengend. In Ihrem Buch schreiben Sie aber von der "Lust, ein Entrepreneur zu sein".
Woher kommt die Leidenschaft?
Ein Ideenkonzept zu entwickeln ist wie Puzzlespielen: Sie haben immer ein Erfolgsgefühl, wenn zwei Teile zueinander passen. Und das Gefühl wird immer stärker, wenn sich das Fragment zu einem Ganzen entwickelt. Das ist zwar harte Arbeit, aber es hat durchaus etwas Lustvolles. Und es ist spannend! Ich gehe schon seit Jahren nicht mehr ins Kino, weil Filme, verglichen mit der Arbeit an eigenen Ideen, langweilig sind. Eine neue Realität zu gestalten ist aufregender als Fiktionen von anderen anzusehen!
Beim Puzzeln gibt es Phasen, in denen man aufgeben will. Beim Gründen auch?
Ja. Aber sie helfen Ihnen letztlich. Denn je intensiver man eine Idee auf die Probe stellt, desto besser ist sie am Schluss.
Denken Sie da an einen bestimmten Gründer?
Ein gutes Beispiel ist Werner Wiesner. Er ist kein Ingenieur oder Elektrotechniker und hat trotzdem ein erfolgreiches Unternehmen gegründet, das Energiesparlampen herstellt. Er musste in Gerichtsverfahren seine Entwicklung gegen Patentanwälte eines großen Konzerns verteidigen. Das war eine gute Probe. Und er hat sich sämtliches Wissen selber angeeignet. Als Entrepreneur kann man sich - anders als ein Angestellter - die Ressourcen selbst zusammensuchen und neu kombinieren.
Sie sprechen immer vom "Entrepreneur" und fordern, die Bezeichnung "Unternehmer" zu vermeiden. Warum?
Das Wort ist schlichtweg ungenau und steht für völlig widersprüchliche Funktionen: Mit "Unternehmer" kann der Gründer, der Manager oder auch der Eigentümer gemeint sein. Und wenn man von ihm alles auf einmal verlangt, ist er schnell überfordert.
Was sind Entrepreneure dagegen?
Das sind diejenigen, die Trends erkennen, eine neue Idee in die Welt bringen, andere dafür begeistern. Sie müssen nicht zwangsläufig auch alles durchrechnen und verwalten können oder gar einen MBA haben. Im Gegenteil: Der Verwalter ist der Feind des Neuen, weil er naturgemäß schon Mühe hat, die Komplexität des Bestehenden in den Griff zu kriegen.
Aber Startups, die keinen Überblick über ihren Cash-Flow haben, fliegen auf die Nase.
Richtig. Deswegen sage ich meinen Gründern: Ihr müsst Ideen entwickeln und Entscheidungen treffen. Aber holt euch jemanden ins Haus, der die Verwaltung übernimmt, einen, der das gelernt hat. Das muss ein Profi sein, denn schon die Buchhaltung einer GmbH ist sehr schwierig.
Experten beklagen, dass die Hochschulen nicht genug Gründer produzieren. Was läuft falsch?
Viele denken, das Fach Entrepreneurship sei so etwas wie "BWL für Gründer". Das ist eine unzulässige Verkürzung und führt dazu, dass die Studierenden oft nur Formeln aus Lehrbüchern nachbeten. Und der Professor denkt dann, er hätte Gründer geboren. Aber: Wenn man nur das Curriculum nachbeten kann, wird man als Gründer keinen Erfolg haben.
Was muss sich denn an den Unis ändern, damit mehr Gründer die Hörsäle verlassen?
Man müsste den Studenten mehr Beispiele und Freiraum bieten. Es sollten Dozenten oder Gastredner lehren, die selber gegründet haben und aus ihrer eigenen Erfahrung berichten. Anstatt zu versuchen, möglichst viel Wissen in möglichst kurzer Zeit in die Köpfe zu bringen, sollte man stärker versuchen, neue Ideenkonzepte zu entwickeln. Die Hochschulen wären dafür eigentlich ein hervorragender Ort.
Sie haben 1985 Ihr erstes Unternehmen gegründet und seitdem immer neue Ideen hervorgebracht. Auf welche sind Sie besonders stolz?
Einer meiner Studenten, Holger Johnson, hat das Startup Ebuero gegründet, eine Art virtuellen Büroservice, der die wichtigsten Funktionen eines konventionellen Büros erfüllt, aber nur zehn Prozent der Kosten verursacht. Oder Ratiodrink, eine Gründung von Rafael Kugel und mir. Das Unternehmen verkauft Fruchtsaftkonzentrat in Großpackungen, der Kunde muss nur noch Wasser dazumischen. Das ist deutlich billiger als wenn Sie Flaschen im Geschäft kaufen.
Versiegt so ein Ideenstrom irgendwann?
Ich habe einen ganzen Ordner voller Ideen, und es kommen immer noch welche dazu. Ich glaube, je öfter man Ideen entwickelt, desto besser wird man darin und umso mehr Spaß macht es.
Haben Sie ein Beispiel?
Man könnte zum Beispiel die Form von Glasflaschen überdenken. Vielleicht ließen die sich auch so konstruieren, dass man sie als Baustein für eine Wand weiterverwenden kann. Dazu muss man sich über die historisch entstandene Konvention, wie eine Trinkflasche auszusehen hat, hinwegsetzen und von der Funktion ausgehend denken: Vielleicht sind Flaschen in Quaderform, die sich über ihren Hals verbinden lassen, die bessere Lösung.
Das klingt ziemlich verrückt.
Weil Sie an die Konvention gewöhnt sind. Bei meinem ersten Unternehmen Teekampagne war es ähnlich: Traditionell wurde Tee nur in kleinen Packungen und über mehrere Zwischenhandelsstufen verkauft. Das war teuer. Also haben wir uns auf eine Sorte Tee beschränkt. Dadurch lassen sich Zwischenhandel und die Lagerhaltung einsparen. Das macht den Tee billiger - und uns zum größten Importeur von Darjeeling-Tee weltweit.
Wie gehen Sie vor, wenn Sie Alltagsgegenstände wie Saftpackungen quasi neu erfinden?
In vielem, was es schon gibt, steckt noch großes Potenzial. Um das zu entdecken, könnte ich Spontantheater machen. Sie rufen mir einen Begriff zu wie "Möbel" beispielsweise, und mein Kopf fängt an zu arbeiten: Kann man nicht schwebende Möbel erfinden? Die die Decken und Wände einbeziehen? Solche Anfangseinfälle sind das Knetmaterial, mit dem ich weitermachen würde - bis etwas Neues entsteht, das sich umsetzen lässt. Wenn es soweit ist, werden Sie es spüren. Sie können dann gar nicht mehr ruhig sitzen! Das nötige Kapital zu besorgen ist dann nur noch der zweite und meist kleinere Schritt. Bei wirklich gut ausgearbeiteten Ideen laufen Ihnen die Geldgeber hinterher.
Sunday, September 7, 2008
Compentcies for Innovative Entrepreneurship (Prof.Dr.Günter Faltin 2)
Günter Faltin
Freie Universität Berlin Februar 1999
Competencies for Innovative Entrepreneurship
Paper presented to the UNESCO meeting
on the Future of Work and Adult Learning,
Hamburg, 1999, February 19 – 21
Introduction
Operating in a competitive and increasingly complex environment arguably demands
entrepreneurial behaviour and, of course, people who have the competencies to work
within such a context.
„This is the entrepreneurial age. Entrepreneurs are driving a revolution that is
transforming and renewing economies worldwide. Entrepreneurship... gives a market
economy its vitality. New and emerging businesses create a very large proportion of
innovative products that transform the way we work and live... They generate most of
the new jobs” (Bygrave 1994, p. 1).
Even if you call this an exaggerated and typical American euphemism - to thoroughly
comprehend innovative entrepreneurship may add valuable insights into the future of
work. It can be argued that assisting entrepreneurship most certainly will constitute
some characteristics of the skills and competencies in the future.
The common rationale for this seems to lie in the need to cope more effectively with
high rates of change in society, particularly as they contribute to much higher levels of
uncertainty in business, and consequently, the labour market. At the root of the policy
concern is the issue of competitiveness and the ability of economies to sustain economic
and social development in an increasingly ‘open’ society. In the labour market context it
is argued that there is a need to find means of helping individuals cope with
circumstances under which they may need to change jobs, occupations and locations
numerous times during their careers (Gibb 1998, p. 1)
On a national or societal level there is the context of the concern for the development of
‘entrepreneurial cultures’ in society (op. cit., p. 4).
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1. Trying to Understand Entrepreneurship
1.1 Entrepreneurship in Economic Theory
Let us take a closer look at how the figure of the entrepreneur is treated in economic
theory. We have a surprise in store. Astonishingly, in the literature of economics the
entrepreneur has been largely left out. “Entrepreneurship is an important and, until
recently, sadly neglected subject,” says Mark Casson (1990, p. XIII), who could be
called the rediscoverer of the entrepreneurial figure.
In the past ten years, research has taken a new direction, bringing out the separate and
distinct function of the entrepreneur in contrast to that of the manager. Why is so much
emphasis placed on this difference? Because it is about a quality all of its own,
something new. “The essence of entrepreneurship is being different,” says Casson.
What is so different here? The manager, one could argue, must operate under normal
conditions and in routine business, while for successful entrepreneurship exactly the
opposite qualities are needed.
The entrepreneur is not the capitalist, either, a distinction that goes back to J. B. Say and
which was taken up by Joseph Schumpeter (quoted from the 1993 edition, p. 217), the
classic economic reference for entrepreneurial behaviour. This distinction is significant,
since the two functions have been repeatedly treated, in non-specialist literature but to
some extent in the history of economics as well, as if they were one and the same. The
difference can be otherwise expressed in a current bon mot: "The entrepreneur creates
jobs, the capitalist opens them up.” The entrepreneur has an idea, founds a business,
employs people. The capitalist has money, buys into an enterprise and tries to increase
the return on his capital. He rationalizes or closes unproductive parts of the business,
thereby tending to make employees redundant. Schumpeter, too, describes the
entrepreneur as forsaking well-trodden paths to open up new territory and as turning
(believe it or not!) dreams into reality (op. cit., p. 125 f.). Schumpeter puts the stress on
innovation, not on the invention. The entrepreneurial function consists not of inventing
things, but rather of bringing knowledge to life and into the market (op. cit., p. 128 f).
Schumpeter himself assumes that with innovation existing structures are destroyed. He
saw the markets, realistically viewed, as dominated by oligopolies. Competition, and
with it a more efficient allocation of resources, arises only through the invasion of these
markets by new entrepreneurs, who destroy the existing market equilibrium with their
innovations. This mechanism has been taken into economic discourse and is termed
“creative destruction”.
Hans Hinterhuber (1992) points out a special relationship between the entrepreneurial
vision and the person: entrepreneurial ideas, he says, are an expression of one’s own life
and professional experience. He even speaks of the “feeling of a mission”. This sense of
mission must be present to set free the energies needed to market a product successfully.
The author gives several examples of some entrepreneurial ideas that have marked our
society more than others, because their originator had “an idea in the Platonic sense”
and were imbued with a sense of mission: Gottlieb Duttweiler in Switzerland, with his
idea of breaking down traditional commercial structures and offering products much
cheaper, especially to poorer population groups, or Steven Jobs and Stephen Wozniak,
with their vision of democratizing the computer. Interesting, too, the indication that
entrepreneurial vision is “an idea of sweeping, classic simplicity” (op. cit., p. 44). Going
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along with this is a sense of reality: ideas by themselves do not yet constitute vision. A
sense of reality means seeing things as they are, not as one wishes them to be. And
finally the ability to withdraw from reality: the “highhanded” creation of new basic
conditions which redefine the rules of the game. In the American literature, this latter is
often described thus: “The entrepreneur has to put the odds in his favour, even if – and
especially if – founders of enterprises when first presenting their ideas often cannot
make them comprehensible.”(Faltin, 1998, p. 4)
1.2 Chances and Restrictions of Micro-Entrepreneurship
Is entrepreneurship a concept for the rich and educated only?
At first glance entrepreneurship seems to exclude almost all people in society. Do you
have the great idea and the financial funds to create a business company? A venture that
can survive in an increasingly tough competitive environment? In fact, most surveys
indicated that small enterprises are at a disadvantage to large companies.
However, since de Soto published his “El Otro Sendero”, the informal sector (which in
many developing countries produces up to 40 % Gross National Product and employs
more than half of the working population) has become the focus of new interest into
micro-entrepreneurship. De Soto has shown that it is not the lack of capital that is
putting micro-enterprises at a disadvantage but the bias of bureaucracy and restrictions
against micro-entrepreneurs (de Soto, 1992).
In an experiment known as microcredit which has been replicated by other organisations
in dozens of other countries, Muhammad Yunus’ Grameen Bank has set an example
that the poor can run micro-enterprises in a surprisingly successful way. Since its start
21 years ago the bank has lent $ 2.3 billion to more than 2 million clients. “I’m against
charity,” he says, “it takes away human dignity and initiative” (International Herald
Tribune, Febr. 28 – March 1, 1998, p.5).
In history, entrepreneurship was an important chance for outsiders, such as the Jews or
the Indians in East Africa. For a great majority of the poor it is practically the only one.
They do not find jobs in the formal sector, yet they have to survive in the informal
sector.
Most conservatives, in the past, favoured entrepreneurship but dismissed the values and
chances of micro-entrepreneurship. They regarded large projects and the formal sector
to be the only possible approach to development. However they are beginning now to
recognize the potential for micro-enterprises, particularly for the poor people.
Our educational system, as it is, seems not to facilitate an adequate approach towards
entrepreneurship, maybe not towards real life situations in general. As Ivan Illich
pointed out, most learning does not take place in schools. It is rather the result of
unrestricted participation in real life situations. The picture of the market which the
educational system projects, is in most cases quite different from reality. Not the
ruthless egoist is demanded and rewarded here. In the reality of functioning markets,
there is quite a different lesson to be learned: that one’s entrepreneurial idea, one’s
quality and pricing must fit people’s demands; that one’s customers and staff are the
people one depends on; that one has to build reliable relationships as one’s most
4
valuable asset. One has to participate in community matters to keep gangsters, corrupt
police and bureaucracy on the sidelines.
Is it mere ecotopia to believe that the distribution of goods can be possibly organised by
micro-enterprises? In an ecological way? No expensive outlets, no waste of packaging
materials, no overheads or corporate boardrooms? Can we imagine these small units to
become something like a substitute for department stores? Who commands retail
business in the way it is organised in the Western hemisphere? If you walk around in
Bangkok, you will find lots of young people selling fashionable garments just in front of
department stores in which exactly the same items are sold at much higher price.
Nobody organises (and exploits) these young entrepreneurs. Do you expect customers
not to purchase from these poorly equipped shops? People do buy and particularly those
educated tourists who do not feel attracted by extravagantly equipped outlets. Of course,
the established and influential shop owners (tax payers!) try everything to get rid of
these competitors. They do not succeed because the city administration has accepted the
colourful “shops” and their attraction not only for tourists but also for improving inner
city life (Faltin 1993).
What makes up the difference between our little utopia and reality? Maybe it’s our lack
of imagination only. The distribution of goods, at least of some, could be indeed
conquered by micro-entrepreneurs. That would even – or particularly – make sense in
terms of ecology. Such a market can be simple, very efficient and cost-saving. It could
be more exiting and human than those posh constructions of steel, glass and
extravagance. As a side effect you get more employment, allow more enterprising spirit,
make for participation of the poor, and give a chance of taking market share from the
established groups. If you want to tax the informals, do it. Paying taxes in exchange for
guaranteed access to the market will pay off well for the informal entrepreneurs. In the
case of the internet the success of micro-enterprises has already visibly come true.#
1.3 Harness Entrepreneurial Behaviour in Non Economic Life into
Entrepreneurship
We are all fascinated with peak performance and new achievements, Tomecko (1998)
argues, and we only have to flick through the thousands of entries in the Guinness Book
of World Records to confirm that the sense of competition and achievement is
widespread and vibrant. (It is expected that over 100 million copies of the Guinness
Book of World Records will be sold by the year 2000.)
! The world record for the tallest stack of standard playing cards is held by Brian Berg
who used 700 decks of cards to build a house of cards that was 6.2 meters high with
105 storeys.
! The record for „tree sitting“ is held by an Indonesian, Bungkas, who went up a palm
tree in his village 25 years ago and is still up there.
The challenge is how to harness this energy and innovation that is so often spent on
trivialities and channel it towards the improvement of the human condition by means of
innovative entrepreneurship.(op. cit., p. 1)
2. Entrepreneurship and Intrapreneurship
5
Most commonly, the term entrepreneur is referred to as the person that founds a new
business venture. This interpretation inherently seems to put entrepreneurship out of
reach for the vast majority of people. („I‘m not a genius, and I‘ve not the financial
background necessary, hence how can I think of entrepreneurship?“)
But it is even the large grown-up organisations that have come to realize that they lack
entrepreneurial thinking. Hence they have an interest in entrepreneurship in a much
broader scope, sometimes labelled „intrapreneurship“ (Pinchot 1985) defined as the
harnessing of entrepreneurial behaviour within the large company or institution
associated with changes in corporate culture, organisation and structures often in favour
of smallness and decentralisation. The impact of the information technology, leading to
greater interest in the potential for distributed networks, has reinforced interest in the
management of disaggregated organisations (Gibb 1996).
This could induce a profound change in educational goals and maybe the orientation of
job seekers. Normally they offer their certificate of education, and wait for an employer
to buy into it. Were they to offer an entrepreneurial idea or mind-set, their bargaining
power and chances immediately would improve – as would the potential of the
company that hires them!
How can they deal with each other? The applicant could offer: "If you employ me, I am
willing to put my business idea into practise in your company." This is an attractive
offer for a company that lacks innovative entrepreneurship. The deal would also be
attractive for the applicant: He does not get involved with the burden of establishing and
running his own business administration. It would be a novel approach and it would be
interesting to see how the mutual benefits can be negotiated in the deal.
3. Entrepreneurship versus Self-employed
3.1 “Overburdened and Overworked”
The German term for self-employed, selbständig, which is often used to describe the
small shop owner, has another, quite popular connotation: You have to do it all yourself
(selbst) and you have to do it all the time (ständig). This, of course, is not an attractive
prospect. You get overburdened and overworked.
As quite often self-employment is given the same meaning as entrepreneurship we
understand why many people don´t see any perspective in entrepreneurship.
Running an enterprise by choice, or if you will, by heart, as opposed to an enterprise
possibly forced upon you by circumstances are two very different situations.
To put it in pictures:
The entrepreneur is like a surfer, with an optimistic mindset for his sport, building on
his own talents and preferences, enjoying the challenge of ever changing waves and
winds, quickly overcoming mistakes or minor defeats. The surfer is open minded to
sharpening his skills, gathering new know-how, welcoming all available inputs and
using them in a creative and efficient manner.
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The self-employed is like a sailor on a battered sailing ship with all the elements as if
sworn against him, cursing the ever-changing waves and winds, lacking adequate
materials and qualifications. Maybe his original occupational choices could not be
pursued, were not available at all or this situation turned against him: so here he is,
stuck with his sailing ship. He is in a desperate mood, seeing nothing but trouble and
storm, sceptical towards new ideas or new inputs.
Hence, it is very important not only to have an innovative idea but also that this idea is
in harmony with the entrepreneurs personality.
For the self-employed, permanently overburdened, his unfortunate situation seems to be
translated into an enormous catalogue of knowledge requirements.
The traditional concept of self-employed qualification is that he has to know almost
everything: accounting, keeping inventory on hand, negotiating with suppliers and
customers, legalities, the tax man's requirements, managing employees, equipment
maintenance, creating team spirit, and so on. One could put an almost endless list of
qualifications and competencies that an self-employed needs for business operations. It
is this understanding and demand for an all-round qualified person that not only makes
it rare to find, and difficult to train, but also a deterrent to ordinary people.
No question that it is helpful for entrepreneurs to have a basic know-how and
understanding of business management. But: to what extent is it necessary for the
entrepreneur to have all these competencies fully developed in his own person?
4.2 Apply the Principles of Division of Labour to the Entrepreneur's Abilities
There is a growing notion in American economic literature that entrepreneurship is
different from business administration.
The emphasis in entrepreneurship is on innovation and the start-up of a new venture
whereas business administration emphasizes the organisational aspects of existing
entities. It does not seem a good idea to demand the competencies for both fields in one
person. (Unfortunately, if you ask successful business founders of the old generation
about the skills that were required for their success, they will enumerate exactly all the
different qualifications mentioned above).
We should be aware that in future the concept of an all-round qualification is obsolete.
We most certainly will have to apply the principle of division of labour to this problem.
People have different skills, attitudes and preferences. For example, instead of trying to
educate an engineer how to become a smart salesperson (which is very much against his
professional and personal attitude) it seems better to separate these two functions and
allocate them to two different persons.
There are too many business techniques to be learned. To handle each of them
adequately would be simply overwhelming.
Maybe we have to rethink the entrepreneur as a regisseur in a movie production: he is
the brain to put the different actors, requisites and services together. This constitutes a
more than full time job already.
Probably this is the reason to emphasize a "lead entrepreneur" supported by a
"management team" (Timmons 1990, Bygrave 1994).
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4. Focus on Idea Development
"There are plenty of ideas around", is often said, "the important part is to put them into
practice". Isn´t that reflecting reality quite well? In fact there are lots of ideas in a sense
of impressions and thoughts that come to your mind. But to generate a new and
innovative idea (in Schumpeter's sense of innovation) is a totally different operation.
These types of ideas or concepts are not easily available. The attempt to generate them
needs in-depth analysis in the particular business field and perseverance in trying to
create a new solution.
Of course ideas have to be put into practise and it is certainly not an easy task to do this.
But as it is an arduous process, it would be a pity to build the whole edifice on a weak
foundation. If you are going to produce a movie and expend a lot of effort and money -
does it make sense to base it on a weak story?
The quality of the entrepreneurial idea is of utmost importance. Whether you can
successfully conquer the market or you have to fight for mere survival does very much
depend on the quality of the concept that you developed and refined.
As an entrepreneur you do not necessarily need to be an inventor but you should be an
innovator. Why? If your idea is not innovative, those businesses already in the
marketplace will have a competitive edge over you. They are the ones who already have
customers, they have the experience with suppliers, and they know the specifics of the
product itself; they are well known in their environment whereas you as a newcomer are
not. In short, they have all the advantages and you likewise have a corresponding
number of disadvantages. Hence, to enter the marketplace it is almost a necessity to
have a new idea.
So, innovation is an important ingredient for success and survival. Statistics show that,
at least in developed countries, about 50-80 % of all new start-ups do not survive more
than five years. (Compared to entrepreneurial ventures, Russian roulette looks like a
better prospect: five of six shots let you survive, but in entrepreneurship four of five
shots will destroy you). Most probably the innovative element of your business idea is
your most crucial partner for survival.
You also need innovation to stay competitive. This is perhaps more difficult than the
original start-up because company founders find themselves unexpectedly in a new,
unfamiliar territory: A more or less big organisation. Day-to-day administration then
burns up increasingly greater amounts of their time and energy on detail, rather than on
enhancing or adapting their original idea or vision. To have an innovative idea in the
beginning is not sufficient for the long term. Imitators will come up, big companies will
make use of their size and influence. You need continuous reaffirmation to innovation.
5. De-mystify Creativity
You need not be a genius to create a good idea.
Although it is a common perception that creativity is something rare and outstanding,
modern research findings do not substantiate such an assertion. There are a number of
rules that can be learned by almost everybody. Goleman, Kaufmann and Ray (1993)
8
have demonstrated how creativity is accessible to each of us. One of their points
emphasised (keep a prepared mind, i.e. don't give up, let the solution to a problem grow
with time) agrees exactly with an observation of the German researcher Goebel (1990):
he found that within a group of about fifty young successful entrepreneurs it was their
persistent reassessing of a problem that was the only characteristic shared by all.
My own experience with students at Freie Universität is that what they regard as an
entrepreneurial idea is something like a flash, a first impression of what they would go
for - but far from anything one would call a mature entrepreneurial idea. Regularly their
idea is not thoroughly thought or researched through. Connecting links, analogies, cross
associations have not been tried - in short, the potential of generating a powerful idea is
not realised. On top of this you can find a certain attitude which I would call "fixated on
a first idea". Like falling in love or down a trapdoor these students are unable to let go
of the fixation. The phenomenon of fixation was similarly experienced in the advisory
work of the Berlin Institute of Entrepreneurship.
It is helpful to explain this phenomenon to the clientele and deliberate on it. In my own
workshops, called "Entrepreneurship Laboratory", I offer a kind of contract. We discuss
the initial idea but the one who brought it in continues to be the owner of the idea. By
this contract the owner gets his idea enhanced and enriched, whereas the fear, the idea
could be stolen, is diminished. (The fear is exaggerated anyway; it would take much
more intimate knowledge and thought to copy or steal an idea than the holder imagines).
Providing young people with appropriate entrepreneurial skills means essentially
developing programmes with a strong pedagogical emphasis upon encouraging
creativity, problem solving, development of leadership skills, decision making, risk
taking, initiative taking, persuasion, negotiations, selling and a variety of other life
skills. Such pedagogy can be developed within any curriculum context: it does not
necessarily have to be business-related (Gibb 1996, p. 26).
This is not to be confused with training in business administration which does not
provide real insight into idea generation and the start-up of a new venture.
6. Adapt to Society's Values
The concept of market economy as a set of rules has no inherent value, no inherent
direction. Its "value", if you want to call it that, is to lead to the most efficient use of
resources. Economists tend to regard this lack of a value system as an advantage.
Almost everybody else does not.
Of course we can not impose a set of values on entrepreneurship. But we should be
aware that it is values which motivate and it is a value system that creates culture in
society.
By creating a culture of entrepreneurship, by opening up the field for more groups of
society which are not traditionally linked to business, we can expect an input of more
values, of new patterns of problem solving, of new ideas being put into
entrepreneurship. Entrepreneurs would be in good companionship and on central stage.
Max Weber has described this phenomenon most strikingly. "For Weber the main
motivating factor for the entrepreneur was religious belief or the Protestant work ethic
which established social norms that discouraged extravagance, conspicuous
consumption and indolence. The result was higher productivity, increased savings, and
9
investment, all factors which are vital to growth." (Kolshorn/Tomecko 1995, p.3). In a
time where we become increasingly aware of our limited resources it seems not too far
stretched to predict a comeback of at least some of these values.
Assume an entrepreneur, not unlike an artist or a scientist, wants to create something
extraordinary and unique, something that makes his or her name shining. Naturally the
emphasis will be on creating an extraordinary idea. Goebel (1990), in his survey of
young entrepreneurs in Germany describes the positive aspects of such an obsession.
The idea, he says, of doing something that nobody else has done or thought of, sets
tremendous energies free. It makes the person capable of working hard and effectively
even under extremely difficult and adverse conditions (p. 87). We should appreciate and
utilize such stamina and enthusiasm.
If someone chooses the field of entrepreneurship, instead of art or science, what is
wrong with such an effort? On the contrary we should encourage those attempts. It will
enlarge and enrich the corps of entrepreneurs. Not the least, it will enhance the standard
and attractiveness of entrepreneurship in society. We have to cast the net farther to
create a more vivid and diverse culture of entrepreneurship.
Entrepreneurial ideas must be woven into the fabric of societal values and shared
problems. What Gareth Morgan (1991) demands from managers (p.292), is even more
valid for innovative entrepreneurs: Indifference to social problems scares the public,
undermines confidence, and almost always backfires, especially in the long run.
Entrepreneurs of the future will have to develop a much greater sense of responsibility,
not for lofty moral reasons, but for their survival and success1.
“Ethic pays” is not an idealistic assumption anymore. Not only will it improve the
relation to your customers but also to the media and journalists. Having good relations
to them is a huge advantage. Articles written about your idea are much better public
relation than smart and expensive advertising. Big companies spend a lot of money for
public relations. Nevertheless you rarely see a positive article about these firms, actually
quite the contrary (think of the Shell's platform disposal in the North Sea and the
reaction to it). With an innovative idea you will have a good change to draw the
attention of journalists and benefit from free and positive exposure.
Back to the "Laboratory". I like to invite participants from extremely different
1 Does it pay in real life to tune in with society’s values?
At least there is some anecdotal evidence. According to Lipper International, an agency that evaluates
investment funds performances, American investors that put their money into socially screened funds
did better than their counterparts, the ordinary funds, (not long ago the idea of screening funds for their
investment philosophy and emphasising on social issues was the target of all kinds of jokes among the
Wall Street community).
A possible explanation for this phenomenon could be that it is not so much the social criteria that are the
reason for good performance, but the company’s managers‘ willingness to understand and follow their
customers‘ philosophies and needs, recognizing new trends at an early stage and reacting accordingly.
A typical fund of this kind „does not invest in companies that manufacture tobacco, alcohol, nuclear
power, or derive more than two percent of gross revenues from the production of military weapons or
supply services to gambling operations“. Stocks that pass this screen - which is fairly typical of most
funds – get priority from investment managers if they practise good „corporate citizenship“, like putting
women and minorities on their boards and in top management positions, having strong benefit programs
for employees and „progressive policies towards gays and lesbians“, showing „respect for the natural
environment“ and making „safe and useful products“. (Washington Post, 7.2.99)
10
disciplines. It opens up a wide spectrum of ideas you can play the puzzle with. (Beware
of people with dogmatic and lecturing attitudes; go for curious participants). No need
that they already have plans for entrepreneurship: it makes sense to invite people who
are concerned about social and environmental issues. It is these participants who are
most focussed on societal causes, indicating new directions and trends. Prefer
participants who are non-conformists and outsiders in their field (again beware of the
dogmatic). It is this mix of people - with clear-cut structure and methodological inputs
from your side - which creates amazingly powerful ideas. As a by-product you will find
an increasing number of participants unwilling to wait for political parties,
governments, or broad national initiatives, but who themselves recognise
entrepreneurship as a promising venue for change.
Environmental concerns are the most frequently raised issues that offer a fertile
breeding ground for entrepreneurial ideas, as well as social causes, that are usually
regarded as non-profit and non-business areas. It is not only kindergartens, schools and
hospitals that come to mind. We may even think of the work with delinquent youths or
prisons (in fact there are approaches to this in the United States already) and develop
better, more imaginative and less bureaucratic solutions. Combine entrepreneurial spirit
with the spirit of socially committed people who lack an entrepreneurial background.
7. Refine the Idea
After the entrepreneurial idea has passed the explorative phases, has got an innovative
core and has proved - theoretically - to provide a competitive edge, the next step has to
be idea refinement. While idea development is a process of “opening up” to new
horizons and contents, idea refinement is a process of focussing, of going into details.
Without opening up, we will not get an innovative part in our business idea; without
refining, we will not get the idea to run in real life smoothly.
Refinement means more than just giving a finishing touch. Refining questions are: Are
there any areas left for further improvement of the idea? Or: What developments have to
be watched carefully which could affect the original idea?
An important aspect can be synergies. Is there anything that can be used simultaneously
that someone else also uses or needs? Are there any by-products, for example, that offer
spin-offs? Maybe my input is someone else's output?
The Thai farmer Mahaju provides an excellent example how to use synergies. He
invented a production circle consisting of pigs, ducks, fish and rice where the waste
product of one stage became the input of the next stage.
Synergies are a field of their own where idea refinement can be applied to make creative
use of potentials.
You have not started yet and have the chance to anticipate mistakes without having to
pay for them. Refinement also means the chance to study your future customers more
carefully, maybe doing some more detailed research on it. Get as much precise and
intimate knowledge of your target groups as possible. If your idea is really innovative
and provides better value-for-money for your clients, why not, for example, find out
whether pre-financing, payment in advance by customers, is a possibility. It would be a
cheaper means of financing and you would get rid of hassles with banks and
bureaucratic work.
11
Refinement of your idea also relates to your future business partners. Find out who
would be your most cost-effective and reliable supplier, advisor, tax consultant and so
on. (Part of this is traditionally encompassed in the business plan. Frequently these
people can provide knowledge for improving your entrepreneurial idea further).
Anticipate your market-entry. Refine your strategy to counter possible imitators of your
idea. How can you make sure, for example, that it is you who should be regarded as the
genuine authority and remain to be perceived as this, even with more resourceful
competitors coming on stage.
Beware of experts at the early stage of idea development. Get the experts and
professionals in only after your baby - the new idea - has gained some strength.
Otherwise it may easily be killed by their conventional views and their sarcasm. Now,
in the process of idea refinement, the professionals are of good use for the reality check.
But be aware that they are naturally biased against genuine new approaches to their own
field (of course there are exceptions to this observation). "You are a fool - until your
idea becomes a success", Mark Twain already stressed. It´s a pattern that can be found
in the biography of almost all innovative entrepreneurs.
You need to have eye-opening capabilities. Like a child that lives in a world of
permanent discoveries, innovative entrepreneurship needs curious eyes and an attitude
that there are plenty of discoveries still to be made.
New participants of the "Laboratory" often tell me that they feel like they live in a world
where everything exists already and is merchandised. In fact, if you go through
magazines and sales catalogues you are tempted to feel the same. Is it true that all our
reasonable needs have been met already and the products for those needs are on offer?
I personally do not believe that the products for our needs have already been developed.
Quite the opposite may be true: That we are in need of a new breed of entrepreneurs,
who, embedded in their social culture, develop a better understanding of their
contemporaries' needs and bring with them a childlike curiousness, humour and
perseverance.
12
Literature
Bygrave, W.D. (1994), The Entrepreneurial Process. In: The Portable MBA in
Entrepreneurship. Ed. by W.D. Bygrave.
Casson, Mark (Hg.) (1990), Entrepreneurship, Vermont/USA
Faltin, Günter (1998), Das Netz weiter werfen. In: Faltin, Günter/Ripsas, Sven/Zimmer,
Jürgen (1998), Entrepreneurship – Wie aus Ideen Unternehmen werden, München
Faltin, Günter (1993), Educational vs. Entrepreneurial Values, in: Out-of-School-
Education, Bonn, 1993
Faltin, Günter/Zimmer, Jürgen (1996), Reichtum von unten. Die neuen Chancen der
Kleinen, Berlin
Gibb, Allan (1996), The Role of Education and Training in Small and Medium
Enterprise (SME) Development (manuscript)
Gibb, Allan (1998), Can we build ‚effective‘ entrepreneurship through management
development (manuscript)
Goebel, Peter (1990), Erfolgreiche Jungunternehmer. Welche Fähigkeiten brauchen
Firmengründer, München
Goleman, D. /Kaufmann, P./ Ray, M. (1993), The Creative Spirit. Penguin Books.
Hinterhuber, Hans H. (1992), Strategische Unternehmensführung, 5. neubearbeitete
und erw. Auflage, Berlin/New York
Kirzner, Israel M. (1987), Unternehmer – Finder von Beruf, in: Wirtschaftswoche
3/1987
Pinchot, G. (1985), Intrapreneurship, New York.
Kolshorn, R./ Tomecko, J. (1995), Understanding Entrepreneurship and How to Promote
It. GTZ / CEFE International. Eschborn.
Morgan, Gareth (1991), Emergin Waves and Challenges: The Need for new
Competencies and Mindsets. In: Creative Management. Ed. by J. Henry. London,
Newsbury Park, New Dehli.
Soto, Hernando de (1992), Marktwirtschaft von unten. Die unsichtbare Revolution in
Entwicklungsländern, Zürich
Schumpeter, Joseph (1993), Theorie der wirtschaftlichen Entwicklung, 8. Aufl.,
unveränderter Nachdruck der 1934 erschienenen vierten Auflage, Berlin
Timmons, J. (1990), New Venture Creation. Entrepreneurship in the 1990s. 4th Edition.
Boston.
Tomecko, Jim: Identifying Competencies for a Brave New World, presented to the 3rd
International GT//CEFE Conference in Belo Horizonte, Brazil, September 14 –
16, 1998
Freie Universität Berlin Februar 1999
Competencies for Innovative Entrepreneurship
Paper presented to the UNESCO meeting
on the Future of Work and Adult Learning,
Hamburg, 1999, February 19 – 21
Introduction
Operating in a competitive and increasingly complex environment arguably demands
entrepreneurial behaviour and, of course, people who have the competencies to work
within such a context.
„This is the entrepreneurial age. Entrepreneurs are driving a revolution that is
transforming and renewing economies worldwide. Entrepreneurship... gives a market
economy its vitality. New and emerging businesses create a very large proportion of
innovative products that transform the way we work and live... They generate most of
the new jobs” (Bygrave 1994, p. 1).
Even if you call this an exaggerated and typical American euphemism - to thoroughly
comprehend innovative entrepreneurship may add valuable insights into the future of
work. It can be argued that assisting entrepreneurship most certainly will constitute
some characteristics of the skills and competencies in the future.
The common rationale for this seems to lie in the need to cope more effectively with
high rates of change in society, particularly as they contribute to much higher levels of
uncertainty in business, and consequently, the labour market. At the root of the policy
concern is the issue of competitiveness and the ability of economies to sustain economic
and social development in an increasingly ‘open’ society. In the labour market context it
is argued that there is a need to find means of helping individuals cope with
circumstances under which they may need to change jobs, occupations and locations
numerous times during their careers (Gibb 1998, p. 1)
On a national or societal level there is the context of the concern for the development of
‘entrepreneurial cultures’ in society (op. cit., p. 4).
2
1. Trying to Understand Entrepreneurship
1.1 Entrepreneurship in Economic Theory
Let us take a closer look at how the figure of the entrepreneur is treated in economic
theory. We have a surprise in store. Astonishingly, in the literature of economics the
entrepreneur has been largely left out. “Entrepreneurship is an important and, until
recently, sadly neglected subject,” says Mark Casson (1990, p. XIII), who could be
called the rediscoverer of the entrepreneurial figure.
In the past ten years, research has taken a new direction, bringing out the separate and
distinct function of the entrepreneur in contrast to that of the manager. Why is so much
emphasis placed on this difference? Because it is about a quality all of its own,
something new. “The essence of entrepreneurship is being different,” says Casson.
What is so different here? The manager, one could argue, must operate under normal
conditions and in routine business, while for successful entrepreneurship exactly the
opposite qualities are needed.
The entrepreneur is not the capitalist, either, a distinction that goes back to J. B. Say and
which was taken up by Joseph Schumpeter (quoted from the 1993 edition, p. 217), the
classic economic reference for entrepreneurial behaviour. This distinction is significant,
since the two functions have been repeatedly treated, in non-specialist literature but to
some extent in the history of economics as well, as if they were one and the same. The
difference can be otherwise expressed in a current bon mot: "The entrepreneur creates
jobs, the capitalist opens them up.” The entrepreneur has an idea, founds a business,
employs people. The capitalist has money, buys into an enterprise and tries to increase
the return on his capital. He rationalizes or closes unproductive parts of the business,
thereby tending to make employees redundant. Schumpeter, too, describes the
entrepreneur as forsaking well-trodden paths to open up new territory and as turning
(believe it or not!) dreams into reality (op. cit., p. 125 f.). Schumpeter puts the stress on
innovation, not on the invention. The entrepreneurial function consists not of inventing
things, but rather of bringing knowledge to life and into the market (op. cit., p. 128 f).
Schumpeter himself assumes that with innovation existing structures are destroyed. He
saw the markets, realistically viewed, as dominated by oligopolies. Competition, and
with it a more efficient allocation of resources, arises only through the invasion of these
markets by new entrepreneurs, who destroy the existing market equilibrium with their
innovations. This mechanism has been taken into economic discourse and is termed
“creative destruction”.
Hans Hinterhuber (1992) points out a special relationship between the entrepreneurial
vision and the person: entrepreneurial ideas, he says, are an expression of one’s own life
and professional experience. He even speaks of the “feeling of a mission”. This sense of
mission must be present to set free the energies needed to market a product successfully.
The author gives several examples of some entrepreneurial ideas that have marked our
society more than others, because their originator had “an idea in the Platonic sense”
and were imbued with a sense of mission: Gottlieb Duttweiler in Switzerland, with his
idea of breaking down traditional commercial structures and offering products much
cheaper, especially to poorer population groups, or Steven Jobs and Stephen Wozniak,
with their vision of democratizing the computer. Interesting, too, the indication that
entrepreneurial vision is “an idea of sweeping, classic simplicity” (op. cit., p. 44). Going
3
along with this is a sense of reality: ideas by themselves do not yet constitute vision. A
sense of reality means seeing things as they are, not as one wishes them to be. And
finally the ability to withdraw from reality: the “highhanded” creation of new basic
conditions which redefine the rules of the game. In the American literature, this latter is
often described thus: “The entrepreneur has to put the odds in his favour, even if – and
especially if – founders of enterprises when first presenting their ideas often cannot
make them comprehensible.”(Faltin, 1998, p. 4)
1.2 Chances and Restrictions of Micro-Entrepreneurship
Is entrepreneurship a concept for the rich and educated only?
At first glance entrepreneurship seems to exclude almost all people in society. Do you
have the great idea and the financial funds to create a business company? A venture that
can survive in an increasingly tough competitive environment? In fact, most surveys
indicated that small enterprises are at a disadvantage to large companies.
However, since de Soto published his “El Otro Sendero”, the informal sector (which in
many developing countries produces up to 40 % Gross National Product and employs
more than half of the working population) has become the focus of new interest into
micro-entrepreneurship. De Soto has shown that it is not the lack of capital that is
putting micro-enterprises at a disadvantage but the bias of bureaucracy and restrictions
against micro-entrepreneurs (de Soto, 1992).
In an experiment known as microcredit which has been replicated by other organisations
in dozens of other countries, Muhammad Yunus’ Grameen Bank has set an example
that the poor can run micro-enterprises in a surprisingly successful way. Since its start
21 years ago the bank has lent $ 2.3 billion to more than 2 million clients. “I’m against
charity,” he says, “it takes away human dignity and initiative” (International Herald
Tribune, Febr. 28 – March 1, 1998, p.5).
In history, entrepreneurship was an important chance for outsiders, such as the Jews or
the Indians in East Africa. For a great majority of the poor it is practically the only one.
They do not find jobs in the formal sector, yet they have to survive in the informal
sector.
Most conservatives, in the past, favoured entrepreneurship but dismissed the values and
chances of micro-entrepreneurship. They regarded large projects and the formal sector
to be the only possible approach to development. However they are beginning now to
recognize the potential for micro-enterprises, particularly for the poor people.
Our educational system, as it is, seems not to facilitate an adequate approach towards
entrepreneurship, maybe not towards real life situations in general. As Ivan Illich
pointed out, most learning does not take place in schools. It is rather the result of
unrestricted participation in real life situations. The picture of the market which the
educational system projects, is in most cases quite different from reality. Not the
ruthless egoist is demanded and rewarded here. In the reality of functioning markets,
there is quite a different lesson to be learned: that one’s entrepreneurial idea, one’s
quality and pricing must fit people’s demands; that one’s customers and staff are the
people one depends on; that one has to build reliable relationships as one’s most
4
valuable asset. One has to participate in community matters to keep gangsters, corrupt
police and bureaucracy on the sidelines.
Is it mere ecotopia to believe that the distribution of goods can be possibly organised by
micro-enterprises? In an ecological way? No expensive outlets, no waste of packaging
materials, no overheads or corporate boardrooms? Can we imagine these small units to
become something like a substitute for department stores? Who commands retail
business in the way it is organised in the Western hemisphere? If you walk around in
Bangkok, you will find lots of young people selling fashionable garments just in front of
department stores in which exactly the same items are sold at much higher price.
Nobody organises (and exploits) these young entrepreneurs. Do you expect customers
not to purchase from these poorly equipped shops? People do buy and particularly those
educated tourists who do not feel attracted by extravagantly equipped outlets. Of course,
the established and influential shop owners (tax payers!) try everything to get rid of
these competitors. They do not succeed because the city administration has accepted the
colourful “shops” and their attraction not only for tourists but also for improving inner
city life (Faltin 1993).
What makes up the difference between our little utopia and reality? Maybe it’s our lack
of imagination only. The distribution of goods, at least of some, could be indeed
conquered by micro-entrepreneurs. That would even – or particularly – make sense in
terms of ecology. Such a market can be simple, very efficient and cost-saving. It could
be more exiting and human than those posh constructions of steel, glass and
extravagance. As a side effect you get more employment, allow more enterprising spirit,
make for participation of the poor, and give a chance of taking market share from the
established groups. If you want to tax the informals, do it. Paying taxes in exchange for
guaranteed access to the market will pay off well for the informal entrepreneurs. In the
case of the internet the success of micro-enterprises has already visibly come true.#
1.3 Harness Entrepreneurial Behaviour in Non Economic Life into
Entrepreneurship
We are all fascinated with peak performance and new achievements, Tomecko (1998)
argues, and we only have to flick through the thousands of entries in the Guinness Book
of World Records to confirm that the sense of competition and achievement is
widespread and vibrant. (It is expected that over 100 million copies of the Guinness
Book of World Records will be sold by the year 2000.)
! The world record for the tallest stack of standard playing cards is held by Brian Berg
who used 700 decks of cards to build a house of cards that was 6.2 meters high with
105 storeys.
! The record for „tree sitting“ is held by an Indonesian, Bungkas, who went up a palm
tree in his village 25 years ago and is still up there.
The challenge is how to harness this energy and innovation that is so often spent on
trivialities and channel it towards the improvement of the human condition by means of
innovative entrepreneurship.(op. cit., p. 1)
2. Entrepreneurship and Intrapreneurship
5
Most commonly, the term entrepreneur is referred to as the person that founds a new
business venture. This interpretation inherently seems to put entrepreneurship out of
reach for the vast majority of people. („I‘m not a genius, and I‘ve not the financial
background necessary, hence how can I think of entrepreneurship?“)
But it is even the large grown-up organisations that have come to realize that they lack
entrepreneurial thinking. Hence they have an interest in entrepreneurship in a much
broader scope, sometimes labelled „intrapreneurship“ (Pinchot 1985) defined as the
harnessing of entrepreneurial behaviour within the large company or institution
associated with changes in corporate culture, organisation and structures often in favour
of smallness and decentralisation. The impact of the information technology, leading to
greater interest in the potential for distributed networks, has reinforced interest in the
management of disaggregated organisations (Gibb 1996).
This could induce a profound change in educational goals and maybe the orientation of
job seekers. Normally they offer their certificate of education, and wait for an employer
to buy into it. Were they to offer an entrepreneurial idea or mind-set, their bargaining
power and chances immediately would improve – as would the potential of the
company that hires them!
How can they deal with each other? The applicant could offer: "If you employ me, I am
willing to put my business idea into practise in your company." This is an attractive
offer for a company that lacks innovative entrepreneurship. The deal would also be
attractive for the applicant: He does not get involved with the burden of establishing and
running his own business administration. It would be a novel approach and it would be
interesting to see how the mutual benefits can be negotiated in the deal.
3. Entrepreneurship versus Self-employed
3.1 “Overburdened and Overworked”
The German term for self-employed, selbständig, which is often used to describe the
small shop owner, has another, quite popular connotation: You have to do it all yourself
(selbst) and you have to do it all the time (ständig). This, of course, is not an attractive
prospect. You get overburdened and overworked.
As quite often self-employment is given the same meaning as entrepreneurship we
understand why many people don´t see any perspective in entrepreneurship.
Running an enterprise by choice, or if you will, by heart, as opposed to an enterprise
possibly forced upon you by circumstances are two very different situations.
To put it in pictures:
The entrepreneur is like a surfer, with an optimistic mindset for his sport, building on
his own talents and preferences, enjoying the challenge of ever changing waves and
winds, quickly overcoming mistakes or minor defeats. The surfer is open minded to
sharpening his skills, gathering new know-how, welcoming all available inputs and
using them in a creative and efficient manner.
6
The self-employed is like a sailor on a battered sailing ship with all the elements as if
sworn against him, cursing the ever-changing waves and winds, lacking adequate
materials and qualifications. Maybe his original occupational choices could not be
pursued, were not available at all or this situation turned against him: so here he is,
stuck with his sailing ship. He is in a desperate mood, seeing nothing but trouble and
storm, sceptical towards new ideas or new inputs.
Hence, it is very important not only to have an innovative idea but also that this idea is
in harmony with the entrepreneurs personality.
For the self-employed, permanently overburdened, his unfortunate situation seems to be
translated into an enormous catalogue of knowledge requirements.
The traditional concept of self-employed qualification is that he has to know almost
everything: accounting, keeping inventory on hand, negotiating with suppliers and
customers, legalities, the tax man's requirements, managing employees, equipment
maintenance, creating team spirit, and so on. One could put an almost endless list of
qualifications and competencies that an self-employed needs for business operations. It
is this understanding and demand for an all-round qualified person that not only makes
it rare to find, and difficult to train, but also a deterrent to ordinary people.
No question that it is helpful for entrepreneurs to have a basic know-how and
understanding of business management. But: to what extent is it necessary for the
entrepreneur to have all these competencies fully developed in his own person?
4.2 Apply the Principles of Division of Labour to the Entrepreneur's Abilities
There is a growing notion in American economic literature that entrepreneurship is
different from business administration.
The emphasis in entrepreneurship is on innovation and the start-up of a new venture
whereas business administration emphasizes the organisational aspects of existing
entities. It does not seem a good idea to demand the competencies for both fields in one
person. (Unfortunately, if you ask successful business founders of the old generation
about the skills that were required for their success, they will enumerate exactly all the
different qualifications mentioned above).
We should be aware that in future the concept of an all-round qualification is obsolete.
We most certainly will have to apply the principle of division of labour to this problem.
People have different skills, attitudes and preferences. For example, instead of trying to
educate an engineer how to become a smart salesperson (which is very much against his
professional and personal attitude) it seems better to separate these two functions and
allocate them to two different persons.
There are too many business techniques to be learned. To handle each of them
adequately would be simply overwhelming.
Maybe we have to rethink the entrepreneur as a regisseur in a movie production: he is
the brain to put the different actors, requisites and services together. This constitutes a
more than full time job already.
Probably this is the reason to emphasize a "lead entrepreneur" supported by a
"management team" (Timmons 1990, Bygrave 1994).
7
4. Focus on Idea Development
"There are plenty of ideas around", is often said, "the important part is to put them into
practice". Isn´t that reflecting reality quite well? In fact there are lots of ideas in a sense
of impressions and thoughts that come to your mind. But to generate a new and
innovative idea (in Schumpeter's sense of innovation) is a totally different operation.
These types of ideas or concepts are not easily available. The attempt to generate them
needs in-depth analysis in the particular business field and perseverance in trying to
create a new solution.
Of course ideas have to be put into practise and it is certainly not an easy task to do this.
But as it is an arduous process, it would be a pity to build the whole edifice on a weak
foundation. If you are going to produce a movie and expend a lot of effort and money -
does it make sense to base it on a weak story?
The quality of the entrepreneurial idea is of utmost importance. Whether you can
successfully conquer the market or you have to fight for mere survival does very much
depend on the quality of the concept that you developed and refined.
As an entrepreneur you do not necessarily need to be an inventor but you should be an
innovator. Why? If your idea is not innovative, those businesses already in the
marketplace will have a competitive edge over you. They are the ones who already have
customers, they have the experience with suppliers, and they know the specifics of the
product itself; they are well known in their environment whereas you as a newcomer are
not. In short, they have all the advantages and you likewise have a corresponding
number of disadvantages. Hence, to enter the marketplace it is almost a necessity to
have a new idea.
So, innovation is an important ingredient for success and survival. Statistics show that,
at least in developed countries, about 50-80 % of all new start-ups do not survive more
than five years. (Compared to entrepreneurial ventures, Russian roulette looks like a
better prospect: five of six shots let you survive, but in entrepreneurship four of five
shots will destroy you). Most probably the innovative element of your business idea is
your most crucial partner for survival.
You also need innovation to stay competitive. This is perhaps more difficult than the
original start-up because company founders find themselves unexpectedly in a new,
unfamiliar territory: A more or less big organisation. Day-to-day administration then
burns up increasingly greater amounts of their time and energy on detail, rather than on
enhancing or adapting their original idea or vision. To have an innovative idea in the
beginning is not sufficient for the long term. Imitators will come up, big companies will
make use of their size and influence. You need continuous reaffirmation to innovation.
5. De-mystify Creativity
You need not be a genius to create a good idea.
Although it is a common perception that creativity is something rare and outstanding,
modern research findings do not substantiate such an assertion. There are a number of
rules that can be learned by almost everybody. Goleman, Kaufmann and Ray (1993)
8
have demonstrated how creativity is accessible to each of us. One of their points
emphasised (keep a prepared mind, i.e. don't give up, let the solution to a problem grow
with time) agrees exactly with an observation of the German researcher Goebel (1990):
he found that within a group of about fifty young successful entrepreneurs it was their
persistent reassessing of a problem that was the only characteristic shared by all.
My own experience with students at Freie Universität is that what they regard as an
entrepreneurial idea is something like a flash, a first impression of what they would go
for - but far from anything one would call a mature entrepreneurial idea. Regularly their
idea is not thoroughly thought or researched through. Connecting links, analogies, cross
associations have not been tried - in short, the potential of generating a powerful idea is
not realised. On top of this you can find a certain attitude which I would call "fixated on
a first idea". Like falling in love or down a trapdoor these students are unable to let go
of the fixation. The phenomenon of fixation was similarly experienced in the advisory
work of the Berlin Institute of Entrepreneurship.
It is helpful to explain this phenomenon to the clientele and deliberate on it. In my own
workshops, called "Entrepreneurship Laboratory", I offer a kind of contract. We discuss
the initial idea but the one who brought it in continues to be the owner of the idea. By
this contract the owner gets his idea enhanced and enriched, whereas the fear, the idea
could be stolen, is diminished. (The fear is exaggerated anyway; it would take much
more intimate knowledge and thought to copy or steal an idea than the holder imagines).
Providing young people with appropriate entrepreneurial skills means essentially
developing programmes with a strong pedagogical emphasis upon encouraging
creativity, problem solving, development of leadership skills, decision making, risk
taking, initiative taking, persuasion, negotiations, selling and a variety of other life
skills. Such pedagogy can be developed within any curriculum context: it does not
necessarily have to be business-related (Gibb 1996, p. 26).
This is not to be confused with training in business administration which does not
provide real insight into idea generation and the start-up of a new venture.
6. Adapt to Society's Values
The concept of market economy as a set of rules has no inherent value, no inherent
direction. Its "value", if you want to call it that, is to lead to the most efficient use of
resources. Economists tend to regard this lack of a value system as an advantage.
Almost everybody else does not.
Of course we can not impose a set of values on entrepreneurship. But we should be
aware that it is values which motivate and it is a value system that creates culture in
society.
By creating a culture of entrepreneurship, by opening up the field for more groups of
society which are not traditionally linked to business, we can expect an input of more
values, of new patterns of problem solving, of new ideas being put into
entrepreneurship. Entrepreneurs would be in good companionship and on central stage.
Max Weber has described this phenomenon most strikingly. "For Weber the main
motivating factor for the entrepreneur was religious belief or the Protestant work ethic
which established social norms that discouraged extravagance, conspicuous
consumption and indolence. The result was higher productivity, increased savings, and
9
investment, all factors which are vital to growth." (Kolshorn/Tomecko 1995, p.3). In a
time where we become increasingly aware of our limited resources it seems not too far
stretched to predict a comeback of at least some of these values.
Assume an entrepreneur, not unlike an artist or a scientist, wants to create something
extraordinary and unique, something that makes his or her name shining. Naturally the
emphasis will be on creating an extraordinary idea. Goebel (1990), in his survey of
young entrepreneurs in Germany describes the positive aspects of such an obsession.
The idea, he says, of doing something that nobody else has done or thought of, sets
tremendous energies free. It makes the person capable of working hard and effectively
even under extremely difficult and adverse conditions (p. 87). We should appreciate and
utilize such stamina and enthusiasm.
If someone chooses the field of entrepreneurship, instead of art or science, what is
wrong with such an effort? On the contrary we should encourage those attempts. It will
enlarge and enrich the corps of entrepreneurs. Not the least, it will enhance the standard
and attractiveness of entrepreneurship in society. We have to cast the net farther to
create a more vivid and diverse culture of entrepreneurship.
Entrepreneurial ideas must be woven into the fabric of societal values and shared
problems. What Gareth Morgan (1991) demands from managers (p.292), is even more
valid for innovative entrepreneurs: Indifference to social problems scares the public,
undermines confidence, and almost always backfires, especially in the long run.
Entrepreneurs of the future will have to develop a much greater sense of responsibility,
not for lofty moral reasons, but for their survival and success1.
“Ethic pays” is not an idealistic assumption anymore. Not only will it improve the
relation to your customers but also to the media and journalists. Having good relations
to them is a huge advantage. Articles written about your idea are much better public
relation than smart and expensive advertising. Big companies spend a lot of money for
public relations. Nevertheless you rarely see a positive article about these firms, actually
quite the contrary (think of the Shell's platform disposal in the North Sea and the
reaction to it). With an innovative idea you will have a good change to draw the
attention of journalists and benefit from free and positive exposure.
Back to the "Laboratory". I like to invite participants from extremely different
1 Does it pay in real life to tune in with society’s values?
At least there is some anecdotal evidence. According to Lipper International, an agency that evaluates
investment funds performances, American investors that put their money into socially screened funds
did better than their counterparts, the ordinary funds, (not long ago the idea of screening funds for their
investment philosophy and emphasising on social issues was the target of all kinds of jokes among the
Wall Street community).
A possible explanation for this phenomenon could be that it is not so much the social criteria that are the
reason for good performance, but the company’s managers‘ willingness to understand and follow their
customers‘ philosophies and needs, recognizing new trends at an early stage and reacting accordingly.
A typical fund of this kind „does not invest in companies that manufacture tobacco, alcohol, nuclear
power, or derive more than two percent of gross revenues from the production of military weapons or
supply services to gambling operations“. Stocks that pass this screen - which is fairly typical of most
funds – get priority from investment managers if they practise good „corporate citizenship“, like putting
women and minorities on their boards and in top management positions, having strong benefit programs
for employees and „progressive policies towards gays and lesbians“, showing „respect for the natural
environment“ and making „safe and useful products“. (Washington Post, 7.2.99)
10
disciplines. It opens up a wide spectrum of ideas you can play the puzzle with. (Beware
of people with dogmatic and lecturing attitudes; go for curious participants). No need
that they already have plans for entrepreneurship: it makes sense to invite people who
are concerned about social and environmental issues. It is these participants who are
most focussed on societal causes, indicating new directions and trends. Prefer
participants who are non-conformists and outsiders in their field (again beware of the
dogmatic). It is this mix of people - with clear-cut structure and methodological inputs
from your side - which creates amazingly powerful ideas. As a by-product you will find
an increasing number of participants unwilling to wait for political parties,
governments, or broad national initiatives, but who themselves recognise
entrepreneurship as a promising venue for change.
Environmental concerns are the most frequently raised issues that offer a fertile
breeding ground for entrepreneurial ideas, as well as social causes, that are usually
regarded as non-profit and non-business areas. It is not only kindergartens, schools and
hospitals that come to mind. We may even think of the work with delinquent youths or
prisons (in fact there are approaches to this in the United States already) and develop
better, more imaginative and less bureaucratic solutions. Combine entrepreneurial spirit
with the spirit of socially committed people who lack an entrepreneurial background.
7. Refine the Idea
After the entrepreneurial idea has passed the explorative phases, has got an innovative
core and has proved - theoretically - to provide a competitive edge, the next step has to
be idea refinement. While idea development is a process of “opening up” to new
horizons and contents, idea refinement is a process of focussing, of going into details.
Without opening up, we will not get an innovative part in our business idea; without
refining, we will not get the idea to run in real life smoothly.
Refinement means more than just giving a finishing touch. Refining questions are: Are
there any areas left for further improvement of the idea? Or: What developments have to
be watched carefully which could affect the original idea?
An important aspect can be synergies. Is there anything that can be used simultaneously
that someone else also uses or needs? Are there any by-products, for example, that offer
spin-offs? Maybe my input is someone else's output?
The Thai farmer Mahaju provides an excellent example how to use synergies. He
invented a production circle consisting of pigs, ducks, fish and rice where the waste
product of one stage became the input of the next stage.
Synergies are a field of their own where idea refinement can be applied to make creative
use of potentials.
You have not started yet and have the chance to anticipate mistakes without having to
pay for them. Refinement also means the chance to study your future customers more
carefully, maybe doing some more detailed research on it. Get as much precise and
intimate knowledge of your target groups as possible. If your idea is really innovative
and provides better value-for-money for your clients, why not, for example, find out
whether pre-financing, payment in advance by customers, is a possibility. It would be a
cheaper means of financing and you would get rid of hassles with banks and
bureaucratic work.
11
Refinement of your idea also relates to your future business partners. Find out who
would be your most cost-effective and reliable supplier, advisor, tax consultant and so
on. (Part of this is traditionally encompassed in the business plan. Frequently these
people can provide knowledge for improving your entrepreneurial idea further).
Anticipate your market-entry. Refine your strategy to counter possible imitators of your
idea. How can you make sure, for example, that it is you who should be regarded as the
genuine authority and remain to be perceived as this, even with more resourceful
competitors coming on stage.
Beware of experts at the early stage of idea development. Get the experts and
professionals in only after your baby - the new idea - has gained some strength.
Otherwise it may easily be killed by their conventional views and their sarcasm. Now,
in the process of idea refinement, the professionals are of good use for the reality check.
But be aware that they are naturally biased against genuine new approaches to their own
field (of course there are exceptions to this observation). "You are a fool - until your
idea becomes a success", Mark Twain already stressed. It´s a pattern that can be found
in the biography of almost all innovative entrepreneurs.
You need to have eye-opening capabilities. Like a child that lives in a world of
permanent discoveries, innovative entrepreneurship needs curious eyes and an attitude
that there are plenty of discoveries still to be made.
New participants of the "Laboratory" often tell me that they feel like they live in a world
where everything exists already and is merchandised. In fact, if you go through
magazines and sales catalogues you are tempted to feel the same. Is it true that all our
reasonable needs have been met already and the products for those needs are on offer?
I personally do not believe that the products for our needs have already been developed.
Quite the opposite may be true: That we are in need of a new breed of entrepreneurs,
who, embedded in their social culture, develop a better understanding of their
contemporaries' needs and bring with them a childlike curiousness, humour and
perseverance.
12
Literature
Bygrave, W.D. (1994), The Entrepreneurial Process. In: The Portable MBA in
Entrepreneurship. Ed. by W.D. Bygrave.
Casson, Mark (Hg.) (1990), Entrepreneurship, Vermont/USA
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Jürgen (1998), Entrepreneurship – Wie aus Ideen Unternehmen werden, München
Faltin, Günter (1993), Educational vs. Entrepreneurial Values, in: Out-of-School-
Education, Bonn, 1993
Faltin, Günter/Zimmer, Jürgen (1996), Reichtum von unten. Die neuen Chancen der
Kleinen, Berlin
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Enterprise (SME) Development (manuscript)
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development (manuscript)
Goebel, Peter (1990), Erfolgreiche Jungunternehmer. Welche Fähigkeiten brauchen
Firmengründer, München
Goleman, D. /Kaufmann, P./ Ray, M. (1993), The Creative Spirit. Penguin Books.
Hinterhuber, Hans H. (1992), Strategische Unternehmensführung, 5. neubearbeitete
und erw. Auflage, Berlin/New York
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3/1987
Pinchot, G. (1985), Intrapreneurship, New York.
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It. GTZ / CEFE International. Eschborn.
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Competencies and Mindsets. In: Creative Management. Ed. by J. Henry. London,
Newsbury Park, New Dehli.
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Entwicklungsländern, Zürich
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unveränderter Nachdruck der 1934 erschienenen vierten Auflage, Berlin
Timmons, J. (1990), New Venture Creation. Entrepreneurship in the 1990s. 4th Edition.
Boston.
Tomecko, Jim: Identifying Competencies for a Brave New World, presented to the 3rd
International GT//CEFE Conference in Belo Horizonte, Brazil, September 14 –
16, 1998
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Literatur list of Entrepreneurship
H. RubinSoloing. Die Macht des Glaubens an sich selbst. Frankfurt a.M. 2003.
G. Faltin, S. Ripsas, J. Zimmer (Hrsg.)Entrepreneurship. Wie aus Ideen Unternehmen werden. München 1998.
H. de SotoFreiheit für das Kapital. Warum der Kapitalismus nicht weltweit funktioniert. Berlin 2002.
A. Jensen, W. KretschmerScience goes business. Vom Wissenschaftler zum Unternehmer. München, Wien 2001.
J. Kushell The young entrepreneurs edge. Using your ambition, independence, and youth to launch a successful business. New York 1999.
D. Brandes Konsequent einfach. Die ALDI Erfolgsstory. München 2001 (2. Aufl.).
M. Malek, P.K. IbachEntrepreneurship. Prinzipien, Ideen und Geschäftsmodelle zur Unternehmensgründung im Informationszeitalter. Heidelberg 2004.
M. HorxSmart Capitalism. Das Ende der Ausbeutung. Frankfurt a.M. 2001.
D. ShekerjianUncommon Genius. How great ideas are born. New York 1991.
F. Gratzon The lazy way to success. Ohne Anstrengung alles erreichen. Bielefeld 2004.
J. CameronDer Weg zum kreativen Selbst. Sieben Pfade zur Entdeckung des inneren Künstlers. München 2001.
N. LaudaDas dritte Leben. München 1998.
H.H. Dalai Lama, H. C. CutlerThe art of happiness. A handbook for living. London 1999.
H. RubinSoloing. Die Macht des Glaubens an sich selbst. Frankfurt a.M. 2003.
G. Faltin, S. Ripsas, J. Zimmer (Hrsg.)Entrepreneurship. Wie aus Ideen Unternehmen werden. München 1998.
H. de SotoFreiheit für das Kapital. Warum der Kapitalismus nicht weltweit funktioniert. Berlin 2002.
A. Jensen, W. KretschmerScience goes business. Vom Wissenschaftler zum Unternehmer. München, Wien 2001.
J. Kushell The young entrepreneurs edge. Using your ambition, independence, and youth to launch a successful business. New York 1999.
D. Brandes Konsequent einfach. Die ALDI Erfolgsstory. München 2001 (2. Aufl.).
M. Malek, P.K. IbachEntrepreneurship. Prinzipien, Ideen und Geschäftsmodelle zur Unternehmensgründung im Informationszeitalter. Heidelberg 2004.
M. HorxSmart Capitalism. Das Ende der Ausbeutung. Frankfurt a.M. 2001.
D. ShekerjianUncommon Genius. How great ideas are born. New York 1991.
F. Gratzon The lazy way to success. Ohne Anstrengung alles erreichen. Bielefeld 2004.
J. CameronDer Weg zum kreativen Selbst. Sieben Pfade zur Entdeckung des inneren Künstlers. München 2001.
N. LaudaDas dritte Leben. München 1998.
H.H. Dalai Lama, H. C. CutlerThe art of happiness. A handbook for living. London 1999.
Prof.Dr.Günter Faltin
CREATING A CULTURE OF ENTREPRENEURSHIP
Prof. Dr.Günter Faltin
JOURNAL OF INTERNATIONAL BUSINESS AND ECONOMY Fall 2001 123
CREATING A CULTURE
OF
INNOVATIVE ENTREPRENEURSHIP
Freie Universität Berlin
ABSTRACT
Entrepreneurship has more to it than just self-employment and hard work; to tap its full potential one needs to
put emphasis on the generation and development of ideas. Research on creativity suggests that all of us are able
to engage in this kind of creative activity. This essay presents techniques for, and examples of, generating
entrepreneurial ideas. Its goal is to show that in the present age, which is marked by rising levels of education,
growing consumer sophistication and increasing opportunities for comparing values, ideas that are developed
in harmony with society's values have good and growing chances for success in the marketplace. Ultimately, a
culture of innovative entrepreneurship is envisioned, which is able to incorporate economic, artistic, and social
activities as parts of one coherent spectrum of human creativity.
Key Words: business model, creativity, culture of entrepreneurship, entrepreneurship education, idea
creation, idea development
ENTREPRENEURSHIP -- A PERSONAL PREFACE
I felt attracted to the field of economics quite early, having started to invest my pocket money in the
stock market at the age of 14. My family and teachers disapproved, since at that time this was
regarded as an inappropriate and evil activity.
Naturally, I went on to study economics. To my surprise, the subject that I had experienced as
being so exciting and breathtaking, at university turned out to be boring and meaningless. I finished
my coursework quickly, completed a dissertation in order to savor university life a little longer, and
subsequently found myself being offered a lifetime tenured professorship at the age of 31. When I
accepted the position, I promised myself to approach the subject in a markedly different way. In my
mind enterpreneurship was clearly the most vibrant way to bring economics to life. But how to create
a company? I went around deliberating over which business field offered good prospects. During
visits in developing countries like Tanzania and India, I was stunned to see how expensive products
like coffee, sugar, and tea were in
Germany, compared to the prices in the producing countries. In tea, especially, the difference was
huge. With little knowledge until then about tea, I began crunching numbers and compared the results
with products in other fields. It turned out that price competition was least evident in tea, as was
innovativeness. I started in-depth analyses of the costs of trading tea. So that by rearranging almost
everything that had been standard in the tea business, I created a business idea that seemed crazy to
everybody else, but made sense in terms of costsaving: one variety of tea only, big packets only, "buy
your supply for a year." The company — looking like a joke in the beginning — made its way. It has
grown to become the biggest mail-order tea company in Germany and the biggest buyer of Darjeeling
tea in the world.
I am not saying this to praise my own company, but to make my message clear: It is amazing
how quickly you can conquer a well-established business segment with a good idea. It is a message
that is underscored by many recent examples. Concentrate on the development of a good
entrepreneurial idea: it might well be the main foundation to your entrepreneurial success. This may
be surprising to you as it was surprising to me. It definitely is in stark contrast to the mainstream point
of view, which usually stresses the importance of management, marketing and financing capabilities
as the major requirement to an entrepreneur´s success, rather than the quality of his or her
entrepreneurial idea.
INTRODUCTION
Entrepreneurship is becoming an important part in political and educational programs in many
countries around the world. Emerging not only in the USA but also in Europe is the idea of an
"enterprise culture". So far, the primary focus is on the emergence of more small-sized enterprises,
fast growth firms with technology based businesses (European Commission FIT 2000, Gibb 2001a.
Similar tendencies are being observed in transition economies (European Training Foundation 1996,
Buck 2000). Recent reviews of what is being taught in the field of entrepreneurship in Europe and
North America indicate that the emphasis is substantially on the business plan as the framework for
organizing knowledge. This core is supplemented by functional economic inputs, delivered by
business schools or economics faculties (Gibb 2001b). There is very little outreach into social sciences
and arts faculties.
Entrepreneurship is a complex and multifaceted phenomenon. It also has a creative dimension
that is in parts beyond economic-rationale discourse. The concerns of one academic discipline
regarding their standards of academic rigor and respectability must not lead to the curtailing of this
phenomenon. This paper attempts to steer the focus towards fields of entrepreneurship in which the
creative dimension plays a substantial role. It seems that the importance of intense work on an idea
has been subsumed by the dominance of the teachings of business knowledge. What is
necessary is to remove entrepreneurship from this narrow confine and the often close association with
business administration, a too narrow paradigm for entrepreneurship (Gibb 2001b).
On this basis, the factors of success regarding the launch of a new venture are discussed to
assess the importance of idea creation and development in the interplay with the other factors (people
and resources). In this regard, it can be shown that the need for innovativeness does not result only
from intensifying competition but also, in a broader sense, includes social issues, so as to identify in
advance new tendencies in the market place.
Recent findings on the subject of creativity (Goleman, Kaufman and Ray 1993,
Csikszentmihalyi 1999) combined with the findings of Vesper (1993) that successful business ideas
usually are a natural outgrowth of an individual's background open up a perspective with a far greater
range, thereby setting free the potentials for the development of successful entrepreneurial ideas. An
attempt is being made to detect patterns and to set examples which could facilitate a systematic
working out and processing of idea development, as an integral and substantial part of the business
model. In addition to this perspective, it will be shown that adapting to societal values and shared
problems is an increasingly essential factor in the successful launching of an enterprise.
The attempt undertaken is to analyze the interplay of all these factors in their impact on the
conditions for a more open, more accessible and more widespread culture of entrepreneurship.
UNDERSTANDING INNOVATIVE ENTREPRENEURSHIP
Let us take a closer look at how the figure of the entrepreneur is treated in economic theory. Until
quite recently, the entrepreneur was largely left out of the literature of economics. ”Entrepreneurship
is an important and, until recently, sadly neglected subject,” according to Mark Casson (1990 XIII),
who could be called the rediscoverer of the entrepreneurial figure.
Over the last few years, research has taken a new direction, bringing out the separate and
distinct function of the entrepreneur in contrast to that of the manager. The manager, one could argue,
must operate under normal conditions and in routine business functions, while exactly the opposite
qualities are needed for successful entrepreneurship. Here, you have to emphasize the innovative
momentum and a fresh start, in contrast to the organizational aspects of existing entities.
Schumpeter describes the entrepreneur as forsaking well-trodden paths to open up new
territory and as turning (believe it or not!) dreams into reality (op. cit., 125 f.). The entrepreneurial
function consists not of inventing things, but rather of bringing knowledge to life and into the market
(op. cit. 128 f.). Schumpeter saw the markets,
realistically viewed, as dominated by oligopolies. Competition, and with it a more efficient allocation
of resources, arises only through the invasion of these markets by new entrepreneurs, who destroy the
existing market equilibrium with their innovations. This mechanism has been taken into economic
discourse by the term ”creative destruction.”
Hans Hinterhuber (1992) points out a special relationship between the entrepreneurial vision
and the person: entrepreneurial ideas, he says, are an expression of one’s own life and professional
experience. He even speaks of the ”feeling of a mission.” This sense of mission must be present to set
free the energies needed to market a product successfully. The author gives several examples of
entrepreneurial ideas that have marked our society more than others, because their originators had ”an
idea in the Platonic sense” and were imbued with a sense of mission: Gottlieb Duttweiler in
Switzerland, with his idea of breaking down traditional commercial structures and offering products
much cheaper, especially to poorer population groups; or Steven Jobs and Stephen Wozniak, with
their vision of democratising the computer. Interesting, too, is the notion that entrepreneurial vision
often comes with ”an idea of sweeping, classic simplicity” (op. cit. 44).
This is in contrast to economic textbook theory which usually assumes that profits make up
the motivation in the field of business. “The essence of entrepreneurship is being different”, says
Casson (op. cit.). And, as Richard Olsen, the Swiss founder of a research institute for applied
economics, adds: “If your main motivation is money, you will not have the perseverance that you
need to create a successful entrepreneurial venture.”
Entrepreneurship - says Timmons (1994) - means the ability to set up and build something out of
practically nothing; it is therefore an elementarily human, creative act. In this regard, it should be
made clear that an entire area of entrepreneurship has always given and continues to give great weight
to the creative aspect of developing an entrepreneurial idea.
A reason why the importance of the quality of the entrepreneurial idea has been so little
regarded is that in politics, but partly also in scientific literature entrepreneurship is closely equated
with self-employment – which in real life is regularly based on business ideas that are not particularly
new or innovative. To open a fashion boutique, restaurant or a copy shop improves unemployment
statistics and is an important and courageous step in societies where self-employment is still a great
exception. However, they are not especially promising, as evidenced by their high failure rates.
In Germany the term for self-employed, selbstständig, which is often applied to the small
shop owner, means literally “standing on your own” or “independent,” but it also has a humorous (and
quite popular) connotation: you have to do it all yourself (selbst) and you have to do it all the time
(ständig). This, obviously, is not an attractive
prospect. But, lacking an innovative idea, it is all too often a reality.
APPLY DIVISION OF LABOR PRINCIPLES TO ENTREPRENEURSHIP
It seems that the reality of self-employment even translates into a description of knowledge
requirements for entrepreneurship. The traditional concept of an entrepreneur's qualification is that
s/he has to know almost everything: accounting, keeping inventory on hand, negotiating with
suppliers and customers, legalities, the taxman's demands, managing employees, equipment
maintenance, creating team spirit, and so on. One could tally up an almost endless list of such
qualifications and competencies required of an entrepreneur. Not only is such a universally qualified
person hard to find, and difficult to create from training, but such demands also deter ordinary people.
It is certainly helpful for entrepreneurs to have basic know-how and understanding of the subjects
mentioned. But to what extent is it necessary for the entrepreneur to have all these competencies fully
developed in his or her own person?
We should be aware that in future the concept of an all-round qualification will become obsolete. We
most certainly will have to apply the principle of division of labor to this problem much more
stringently. People have different skills, attitudes and preferences. For example, instead of trying to
teach an engineer how to become a smart salesperson (which is very much against his professional
and personal attributes) it seems better to separate these two functions and allocate them to two
different persons. There are too many business techniques to be learned. To handle each of them
adequately would be simply overwhelming. It eats up too much of the time and energy that could
otherwise be devoted to leadership and vision. If you get down to earth, you get stuck. You must try
to keep flying! A compelling idea keeps you flying.
Perhaps we should imagine the entrepreneur as a movie director: s/he is the brains that brings the
different actors, props and services all into play. This is already more than a full-time job for one
person to manage alone. It goes along with the idea articulated in entrepreneurial studies, that startups
need a "lead entrepreneur" supported by a "management team" (Timmons 1994, Bygrave 1994).
Applying the principles of division of labor could ultimately lead to a new relationship
between innovative entrepreneurship and business administration. Imagine the entrepreneur standing
vis-à-vis a company. How would they come to an agreement on working together? The entrepreneur
might suggest, "If you employ me, I am willing to put my business ideas into practice for the benefit
of your company." This is an attractive offer for a company that lacks innovativeness. The deal is also
attractive for the entrepreneur: s/he does not need to get involved him/herself with the burden of
establishing and doing the day-to-day running of the business. It is a novel approach and it will be
interesting to see how mutual benefits can be negotiated in such a deal.
(This approach would induce a profound change in the educational goals and the mindset of
job seekers, as well. Normally, what they have to offer is their educational degree or certification, and
they must wait for an employer to take them up on it. Were they to offer an entrepreneurial idea, their
bargaining power and chances would improve instantly).
SUCCESS FACTORS TO NEW VENTURE CREATION
Taking the Timmons model (1994) - which can be regarded as the standard (Bygrave 1994, 10-11,
Ripsas 1997) – as a basic, one can summarize the critical factors in three main groups:
- The people
(the founders, including the management team as well)
- The idea
(as developed and refined concept in order to exploit market opportunities)
- The resources
(which are important for the setting up of the business and making it grow)
All three factors play an important role. One can certainly argue over what emphasis to place
on the individual factors. Venture capitalists would incline to allot the greatest influence to the
personality of the founder(s). Those who teach business administration and also those who deal with
the typical problems of small scale enterprises will incline to place marketing, management skills and
sufficient financing in the fore - not least with the good argument that these areas have been well
researched and developed and that there are proven formulas to deal with these problems successfully
in practice.
In contrast to this the effect and function of innovative ideas have received scant examination.
The thought that the quality of the idea could make a difference in the successful launching of a new
venture is not particularly popular with managers or bankers. "There are plenty of ideas around", it is
often said, "the important part is to put them into practice". Isn't that reflecting reality quite well? In
fact, there are lots of ideas in the sense of impressions and thoughts, that come to your mind. But
generating a new and innovative idea (even if not in Schumpeter's dimension of innovation) is a
totally different operation. These types of ideas or concepts are not easily available.
Even if we cannot agree where to put the main emphasis, there is one striking consideration at
hand: the factors mentioned are interdependent, in the sense that strengths in one area can compensate
for weaknesses in other areas. Hence another valid point is: very good solutions in one area can lead
to partial solutions in other
areas or can reduce the demands coming from other fields significantly. For instance, the enormous
economic advantages which the idea of the tea campaign enabled us to offer such a favourable price
that we could request our customers to advance us check payments, which, in turn, virtually
eliminated the problem of financing.
When we look at the economic fate of many of the newly founded dot.com-companies, how
can we explain their failures? They were provided with management competencies and capital to an
extent rarely seen before. It makes for a strong argument – agreed to by most analysts – that it was the
lack of idea development, that the business model was not worked through or refined enough.
If your idea is not innovative, those businesses already in the market place will have a
competitive edge over you. They are the ones who already have customers, they have the experience
with suppliers, and they know the specifics of the product itself, they are well-known in their
environment, whereas you, as a newcomer, are not. In short, they have all the advantages, and you
have a corresponding number of disadvantages. Hence, to enter the market place, it is almost a
necessity to have a new idea. Most probably the innovative element of your business idea is your most
crucial partner for survival.
Whether you successfully conquer the market or have to fight for mere survival depends very
much on the quality of the concept that you have developed and refined. As it is an arduous process to
found a company, it would be a pity to build the whole edifice on a weak foundation.
However there is a need for innovations in a much broader sense. Sweeping new ideas do not,
as a rule, arise from workaday business life and within the context of rational economic thinking.
Such ideas often draw vibrant inputs from proximity to unconventional thinkers, socially involved
people, ecologically engaged people, or artists. These people can contribute their ways of thinking and
possibilities from their fields of interest to ideas for the improvement of the quality of life. It takes a
broad range of people to respond to existing problems with social, economic and artistic imagination.
The history of successful entrepreneurs offers numerous examples for this openness, much like the
history of the economic sciences themselves which got essential impulses from people and viewpoints
outside of its own discipline.
DE-MYSTIFY CREATIVITY
Many start-ups base their business ideas on imitation or arbitrage. Even if the imitation does not
infringe on patent rights or trademarks, there are substantial disadvantages. By imitating, it is you who
arrives second (or even further down) in the marketplace, and there may be many others to come. Cutthroat
competition is commonly the result. Of course, the temptations to imitate are obvious;
imitations save costs for research and development and offer the safety of using a proven,
successful idea as a model. But beware: you may face a backlash of public opinion against you.
Imitation, akin to stealing, may be popular if you are the underdog, but it often carries a bad taste
with it. Most often, the whole operation amounts to a gambling of sorts in the short term: weighing
the cost of your investment against the chances for a temporary return. Arbitrage - making use of
different prices at different locations or times - has similar implications. Like you, others will spot the
opportunity, but may have deeper pockets and/or lower costs than you; entry costs into the market are
low thereby attracting many players; by the time you are fully established and operational and have
secured customers, the price advantages might have become smaller or may have disappeared
altogether. The way out is trying to create something that is not open to competition on such a scale.
Vesper (1993) did research on the life of about one hundred successful entrepreneurs to find
out what they all have in common. What he found was that the development of entrepreneurial ideas
is different from what is commonly perceived. New venture ideas, he says, are usually a natural
outgrowth of an individual´s education, work experience and hobbies. This is an important point,
because it stresses that successful ideas relate back to oneself, one’s background, education, work or
leisure activities. In conclusion, Vesper points out that most entrepreneurs succeed by pursuing ideas
that are not only good business opportunities but also relate directly to their personal criteria and
values. These findings are very significant because they challenge the common view that first of all
we have to study market needs. That would be important for business administration, but not
necessarily for creating an innovative entrepreneurial idea. Vesper´s reasoning suggests that your
individual background is the point to begin with. It is like in art. If you start by looking at market
needs and sales, you will never become an artist with a genuine style.
Popular advice for would-be entrepreneurs, Vesper continues, all too often suggests that ideas
arise largely through a mysterious combination of day dreaming and inspiration. But from his
research, Vesper draws a different conclusion:
Idea creation can be approached deliberately and systematically.
This is a kind of revolution. The promise that you can deliberately and systematically create ideas is
in complete contrast to the still prevailing belief that only extraordinary people have convincing new
ideas. Vesper’s research suggests that it is within the reach of almost everybody to create a genuine
idea.
Although it is commonly believed that creativity is something rare and outstanding, modern
research data on creativity in general do not substantiate such an assertion. Goleman, Kaufman and
Ray (1993), Csikszentmihalyi (1999) have demonstrated how creativity is accessible to each of us.
There are a number of rules that can be learned by almost anybody. One need not be a genius to create
a good idea that works. One of the researchers’ suggestions is: keep a prepared mind, let the
solution to a problem grow with time.
These observations go along well with the findings of Goebel (1990), who describes a group
of about fifty successful entrepreneurs from Germany. The only characteristic shared by all was their
persistent reassessment of a problem.
CASTING THE NET FARTHER
This chapter deals with two dimensions of innovation that relate to the notion of a broad based
enterprise culture:
- creating entrepreneurial ideas systematically
- opening up entrepreneurship to social groups which had previously been excluded
Techniques for the Creation of an Innovative Entrepreneurial Idea
I have long suspected that it must be possible to open a venue for the systematic generation and
refining of ideas . The following list, rough and sketchy as it is, is an attempt to define certain
characteristics that successful business ideas have in common. It is the attempt to recognize the
pattern and to bring to the fore the commonality of various relevant to idea development.
"Discovering Something Existing"
One of the most accurate descriptions - by Joseph Kirzner – shows how quite a few entrepreneurial
ideas are found. Discover something that exists already? This sounds like a paradox. How can one
discover something if it already exists? To “discover,” in this context, means to see a new potential in
something which is already known.
A famous example of this is the telefax. The invention has existed for a long time, and it has been
successfully introduced worldwide by firms altogether different from those who invented it and those
who first tried to market it.
"Functions, not Conventions"
This is a pattern that comes close to Schumpeter's description of the enterpreneur as an innovator of
new products or processes. The instruction reads thus: forget the convention; strictly analyse the
function. There is always a more or less conventional way of doing things. It is not necessarily the
best way to do it. New technology or new materials may be available. Needs may have changed.
Take the example of the Berlin Tea Campaign:
In the beginning, it was only a thought, a vision that it might be possible to organise tea
trading in a completely different way and to offer high quality at a lower price. I choose the
example of the Tea Campaign as I launched it myself.
The formation of the idea for the Tea Campaign, too, is like a puzzle, which took years to put
together. The starting point: producing-country prices for coffee, tea, cocoa, bananas or sugar are
about one tenth of the prices in Central Europe. Why? Because of the costs for freight and insurance?
It turned out that the expense lay neither in freight nor insurance but rather in the packaging material
for the small quantities that are usual in German tea retailing, and in the high costs of distribution. So
why not reduce packaging cost by using bigger packages and finding a simple distribution channel?
Slowly the puzzle takes shape.
What about preserving the quality of the tea? This is important if a consumer is to switch
from buying small to large quantities. The experts say that tea keeps well for two to three years. Even
if it kept well for only one year, this would allow the customers to purchase supplies for one year.
Then one could sell in bulk, and the customers could reap big price advantages from cutting down on
packaging costs. But what about the variety of brands? Can you reduce it? If a choice of many brands
causes a lot of costs and makes distribution expensive, why not just sell one brand? And with a big
enough order, doesn’t it make economic sense to buy at source, circumventing the middleman?
Can consumers be persuaded to choose only one brand of tea out of 140 and to drink the same
brand for an entire year? For a moment it looks as if the idea has failed just because of that. If
customers are used to choosing between many brands, why should they restrict themselves? After a
long break to think things over, optimism returns. It's probably better to restrict drastically the number
of brand. If the purchase price of the tea is only of secondary significance (because it is relatively
low), then you can reach for a very high quality of tea. You can even take the best tea in the world!
(The experts agree that it grows on the southern slopes of the Himalayas in a district called
Darjeeling.) If consumers can get such an excellent tea at a good price, they will probably not feel bad
about having such a limited choice. The puzzle is completed.
From the beginning the entrepreneurial challenge facing the Tea Campaign was whether
buyers could be convinced to buy one year's supply in large packages, and to give up the convenience
of small packages in exchange for substantial savings in price. Contrary to conventional marketing
practices, we hoped it would be possible somehow to "teach" the consumers to get used to a new
concept which would ultimately bring them considerable advantages. The central point of this
entrepreneurial idea was that success could be achieved by combining a new simplicity with
persuasive economics.
A unique case? I don't think so. Remember Goebel (1990), who found that the entrepreneurs
he surveyed had one thing in common: taking an idea and working on it to the point where "normal"
people would think that they were odd, and then developing this idea until it was mature.
Gottlieb Duttweiler, the founder of the “Migros” retail chain in Switzerland, or Anita
Roddick, the founder of "The Bodyshop," could be cited as similar examples. Both of them didn't
belong to the business establishment; they were outsiders and started out on unfavourable terms.
Breaking radically with conventions and developing contemporary, rational procedures with clearly
recognisable advantages for the consumer were their recipe for success.
"Combining Anew"
A person who recognizes social problems, addresses them and wants to do something practical to
counter them, is something of an artist. As in art, innovative achievement not infrequently requires
being obsessed by an idea. Courage and tenacity are required to launch new ideas, and ultimate
success is rarely achieved without them. Of decisive importance here is the quality of the
entrepreneurial idea. Whether one makes a breakthrough in the market or just barely manages to stand
one’s ground (and is forced to use knees, elbows and the whole bag of little tricks and swindles)
depends heavily on the quality of the concept with which one enters competition.
”Think ceramic,” says Thijs Nel, author, painter and potter in Magliesberg, near
Johannesburg. An idea occurred to him, as a potter, concerning how better houses could be built (cf.
The Nation, Aug. 7, 1995). The inhabitants of the townships traditionally constructed their houses
from clay, with walls reinforced by sticks and twigs. The problem with this is that termites come,
devour the wood and leave behind fine water-conducting canals , with the result that the houses can
no longer stand up to rainy weather.
Nel’s entrepreneurial idea was roughly this: think of a cup. Turn it upside down. Let it grow
ever larger before your eyes and imagine holes in it. Now call the cup a house! This house-sized cup
with holes for windows must now be fired, like other pottery, with a flame that produces a high
temperature. You can organise the fire as a village festival. The result is a house far more durable than
the previous huts, but hardly more expensive. Here is the artist as architect and entrepreneur,
demonstrating an astonishingly simple and practical idea. Everyone is his or her own house-builder,
potter, and artist. It might even occur that settlements constructed like this are more attractive in
appearance than those designed by professional architects.
"(Re)integrating Functions"
Integrating functions is similar. You know very well that you have your own, separate institution for
everything. You have shopping malls, churches, restaurants, youth clubs, senior centres, etc..
Everything has its own function. So this is very simple: if you can use the equipment for a second
purpose or a third purpose, you immediately save a lot of expenses. In fact, if you look into nature,
you will find that nothing in it ever has a singular function only. Nature has always had a variety of
functions for any
one particular thing.
"Taking a Problem and Turning it into a Business Opportunity"
Problems are an obvious source of entrepreneurial opportunities. Where others only see the problem,
an entrepreneur may be challenged to search for an answer. Experience tells us the solution doesn´t
necessarily have to be sought head-on, particularly if mainstream people have looked at it already.
Quite often the solution lies somewhere else.
Take the problem of the water hyacinth. This plant proliferates in rivers and lakes in tropical
countries, reproducing rapidly and clogging the water. Much thought has been put into the question of
how water hyacinths could be put to some profitable use. Theoretically usable as pig fodder or
compost, the plant, because it consists of 98% water and a few tough fibers, turned out to be
uneconomical for these and most other applications. The research studies in this matter can fill a
thick binder while yielding no practical results.
A designer was impressed by the silken sheen taken on by the plant’s stems when put through
a press, and she processed some. Artfully woven onto a rattan frame, the dried stems can be made into
armchairs -- not just any armchairs, but very attractive and sturdy ones. For designers, this is an
interesting variation from other materials. What is this supposed to mean for an economist? Not much,
if she or he asks the conventional questions in this field: is there a growth market here? No. Is there a
market niche here that one could fill with little competition? Probably not.
It is right at this point that the entrepreneur prevails over the conventional economist: through
recognition of a potential in something that already exists, even though it doesn’t fit any typical
economic patterns. Water hyacinths? No potential; an often studied subject with no particular result.
An armchair? The furniture market is saturated. The fact that the armchair was noticed at all was
almost an accident. The handsome piece was created in the studio of the Thai designer Khun Tuk.
Neither part alone, the water hyacinth nor the armchair, suggested anything promising. Put the two
together, and they become thought-provoking: a nuisance weed suddenly becomes a raw material with
inexhaustible potential. Turning water hyacinths into furniture has meanwhile become a big business
in Thailand.
"Reorganising Work into Fun"
Do you remember Mark Twain's Tom Sawyer, who was ordered to paint his aunt's fence on Saturday
afternoon, the most precious time of the week? Tom divides the work into little pieces so that it
becomes an excitement to try it out: his friends eagerly form a queue to be allowed to paint a piece of
the fence, and they even pay for it. In the end, the fence is painted; Tom has not worked a lick, has
enjoyed the company of his friends, and has even made money.
This story fascinated me early on, as it embodies an approach to work that is not mere utopian
fantasy. There are certain types of work in certain situations where you can reorganise work along
Tom's approach. What defines work as laborious and boring often depends on the circumstances. To
milk a cow certainly is work for the farmer, but it may be fun and excitement for a tourist. Repetition
and skill requirements are Tom's enemies, but imagination and curiosity are his friends.
"Bringing Visions to Life"
This particular approach is remarkably similar to art. Just like an artist who wants to establish his or
her own style, an entrepreneur who wants to carry through a new idea often has to endure a phase of
rejection by society. We are familiar with such chapters in the biographies of famous artists as well as
in the lives of famous first-generation entrepreneurs. Associated with personal sacrifice, foolish
experiments, and the pitying smiles of the establishment, this phase nevertheless constitutes the allure
and the challenge in the life of the artist as well as of the entrepreneur. As a rule, most people will not
achieve success without such shaky starts, where new frameworks have to be envisioned and great
demands on courage and staying power are made.
In his study about famous American entrepreneurs, Hansen (1992) relates the following story.
A young man tries to carry out an idea; for eighteen years, he goes without success. He has the vision
of a horse carriage propelled by gasoline combustion (the first motors have just been developed) and
controlled by mechanical linkages. A brave and daring vision shared by few others of his time. His
father thinks he is crazy and on the wrong track. When the vehicle is ready to be driven for the first
time, the father refuses to get in because he doesn’t want to risk his life. The son piles failure on top of
failure. At last a car built by him wins an auto race, only because, sturdier than those of his
competitors, it actually reaches the finish line. The man is called Henry Ford. His story is instructive,
because he is indeed considered the prototype of the great capitalist, behind whose later successes the
fragility of beginnings, the nurturing of ideas, the persistency and obsessiveness of the outsider all
tend to disappear.
The techniques mentioned so far are like tools, helping to deal with pieces of a puzzle that
allow many more solutions than just one. Systematic idea development and refinement are rarely ever
found in the syllabus of entrepreneurship education. It is the widespread assumption that the founder
"brings in" his/her idea. This idea is then "processed" with an eye on the business plan. The tools for
this processing are the business knowledge and contents. But no matter how important these contents
are, the opportunities inherent in the intensive reworking of the initial idea as such will not be
sufficiently examined.
My own experience with entrepreneurs-to-be is that what they regard as an entrepreneurial
idea is something like a raw idea - far from anything one would call a
mature, refined entrepreneurial concept. Usually their idea is not thoroughly thought out or
researched. Connecting links, analogies, cross associations have not been tried against it - in short, the
potential to generate a powerful idea is not realised. Quite often, you can find an attitude which I
would call "fixation on a first idea." Like falling in love or down a trapdoor, this fixation is something
the person is unable to let go of. The fixation phenomenon was similarly experienced in the advisory
work at the Berlin Institute of Entrepreneurship. On top of this is the fear that the idea could be stolen,
leading to secretive behavior and reluctancy towards disclosing and discussing the idea.
It is helpful to explain these phenomena to one’s audience or clientele and deliberate on it together. In
my own workshops, called “entrepreneurship laboratories,” I offer the advisee an agreement of sorts.
We discuss the initial idea, but the one who has brought it in continues to be its owner. Under this
agreement, the owner gets the idea enhanced and enriched, while the fear that the idea could be stolen
is mitigated.
After the entrepreneurial idea has passed the explorative phases, has got an innovative core
and has proved – theoretically – to provide a competitive edge, the next step has to be idea refinement.
While idea development is a process of "opening up" to new horizons and contents, idea refinement is
a process of focussing, of going into details. Without opening up, we will not get an innovative part in
our business idea; without refining, we will not get the idea to run smoothly in real life.
Synergies can be an important aspect of idea refinement. (Is there anything that can be used
simultaneously that someone else also uses or needs?) Anticipate your market-entry. Refine your
strategy to counter possible imitators of your idea. (How can you make sure, for example, that it is
you who is be regarded as the genuine authority and will remain to be perceived as such, even with
more resourceful competitors coming on stage.) (For more details see Faltin 1999.)
With a well thought-out and exceptional concept certain problems regarding financing and
marketing can be resolved more easily : the financing of the tea campaign caused hardly any
problems, as we were in a position to request our mail-order customers to make advance payment.
And our marketing, due to the unusual nature of the idea, was taken care of by the editorial coverage
of the media.
Adapting to Societal Values and Shared Problems
Of course we cannot impose a set of values on entrepreneurship. But we should be aware that it is
values which motivate, and it is a value system that creates culture and cohesion in society. By
creating a culture of entrepreneurship, by opening up the field for more groups in society that are not
traditionally linked to business, we can expect a new influx of values, of new patterns of problem
solving, of new ideas being put into entrepreneurship, a new quality of participation in the economic
sphere. Entrepreneurs would be in good company and on central stage. Max Weber has described this
phenomenon most strikingly. "For Weber the main motivating
factor for the entrepreneur was religious belief or the Protestant work ethic which established social
norms that discouraged extravagance, conspicuous consumption and indolence. The result was higher
productivity, increased savings, and investment" (Kolshorn/Tomecko 1995, p.3). At a time when we
become increasingly aware of the diminishing cohesion in modern society, it seems not too farfetched
to predict a comeback of values.
Directing more attention to values will provide an incentive for those people who are not
attracted primarily by the prospect of quick money, by greed, or by extreme ambition; these are
people who want to keep their independence and their individuality even if that means a relatively low
income. They want to do something good, and their ambitions have a new quality: they want to turn
their lives into a “spannendes Lebenskunstwerk,” a forever fascinating and inspiring work of the art of
living (Horx, 1999, 240). This is important to note because many institutions and consultancies that
are in the business of promoting entrepreneurship stick to a conservative and conventional view: that
you have to sacrifice much of your life and work around the clock. I’m not saying that such virtues
don´t make sense. You do find many examples of this kind: entrepreneurs who work more than 16
hours a day and offer up their relationships and hobbies on the altar of their venture. But you will also
find a new type of entrepreneurs who manage to integrate entrepreneurship with their individual
values: a person who is not prepared to sacrifice his/her lifestyle, who wants to live with a partner and
have children or who doesn't necessarily want to be in charge of a large number of employees (op.
cit., 241). These observations no longer carry the notion of the entrepreneur as a heroic figure.
Fortunately, the field of entrepreneurial ideas is open for such dimensions of innovativeness:
Entrepreneurial ideas can be woven into the fabric of societal values and shared problems.
Indifference to social problems scares the public, undermines confidence, and almost always backfires
(Morgan 1991, 292). One can recognize and integrate the contextual values and shared problems of
the society in which one lives. In all likelihood, these ingredients will actually enhance the chance of
success1 .
Our societies are marked by rising levels of education, growing sophistication of consumers
regarding their choices, and fast and inexpensive tools concerning product and value-for-money
comparisons. There is also increasing awareness of companies' business conduct. These developments
lead to new conditions for success in the market place. "Ethic pays" is not an idealistic assumption
any more. There is even a
1 The image of founders and start-ups in society differs considerably between countries (Global Entrepreneurship Monitor
2000, Hay 2000). If entrepreneurial ideas are more in tune with societal values and shared problems in their respective
countries, this should enhance the image of the entrepreneur as well as of entrepreneurship.
need for moral positioning as an integral part of companies' strategies (Horx 2001, 117). As an
entrepreneur, being in tune with your customers' values and norms will create sympathy towards you
and your product; the media may report favorably about your new venture, and articles written about
your idea are much better publicity than flashy and expensive advertising.
These aspects should supplement the concept of opportunity recognition, particularly if we
want to cast the net wider and attract more people to innovative entrepreneurship. Talking about his
experience as an advisor for entrepreneurs-to-be, Bygrave (1994) describes how his clients are often
obsessed with trying to create an outstanding, unique idea that only they possess. Bygrave says that he
dislikes this obsession with uniqueness. His argument, like Timmons', is that entrepreneurship is
about opportunity recognition, and about putting that opportunity into practice.
But why should such an obsession, which leads to an endeavour to create something
outstanding, be negative? Perhaps it is just this desire for uniqueness that creates an opportunity and
leads to a particularly powerful innovation.
Let us assume that an entrepreneur, not unlike an artist or a scientist, wants to create
something extraordinary and unique, something that makes his or her name shine. Naturally the
emphasis will be on coming up with an extraordinary idea. Goebel (1990, 87), in his survey of young
entrepreneurs, describes the positive aspects of such an obsession. The idea of doing something that
nobody else has done or thought of, he says, sets free tremendous energies. It makes the person
capable of working hard and effectively under even the most difficult and adverse conditions. We
should appreciate and utilize such stamina and enthusiasm. Experience tells us that only in reaching
out for a piece of utopia can we expect that some innovative parts will still be left by the time of
realization.
If someone chooses the field of entrepreneurship, instead of art or science, what is wrong with
such an effort? We should encourage those attempts. Such encouragement will enlarge and enrich the
corps of entrepreneurs. Not least, it will enhance the standard and attractiveness of entrepreneurship in
society.
The concept of opportunity recognition as described by Bygrave and Timmons looks more
like an advanced game for experienced players -- professionals or venture capitalists, familiar with the
best practices in their fields and already connected to relevant groups of potential business partners.
For them the concept is a perfect set-up for quickly realising potential and organising the steps into
practice.
In my workshops, I like to invite participants from extremely diverse disciplines. This mixture
opens up a wide spectrum of ideas you can play with. It makes sense to invite people who are
concerned about social and environmental issues, because these participants who are most focussed
on societal causes indicate new directions and trends. Include participants who are non-conformists
and outsiders in their field (beware of the dogmatic). It is this mix of people - with clear-cut structure
and
methodological inputs from your side - which creates amazingly powerful concepts. As a by-product
you will find an increasing number of participants unwilling to wait for action from political parties,
governments, or national initiatives, but who themselves recognize entrepreneurship as a promising
venue for change.
CONCLUSION
Becoming an entrepreneur is no longer the 'Absonderlichkeit eines Lebenslaufs,' the idiosyncratic
twist of one person’s professional development, but a fulfilling career, a career one can plan for, a
career within reach of many more people than might have been imagined.
The attempt was undertaken to show that the interplay of several factors: the significance of the
entrepreneurial idea, the findings on creativity, chances for the systematic developing of ideas and
adapting them to society's values and problems, could set the stage for a larger part of the population
to participate in a more open, more accessible and more widespread culture of innovative
entrepreneurship.
REFERENCES
Berlin Institute of Entrepreneurship. 1999. The Berlin Proposition. Ten propositions to foster the
culture of entrepreneurship in German Universities. Berlin. Germany.
Buck, B. 2000. Increasing employability by integrating entrepreneurship in education and training.
Paper for the European Training Foundation Advisory Forum. June.
Bygrave, W.D. 1994. The Entrepreneurial Process. In: The Portable MBA in Entrepreneurship. Ed. by
W.D. Bygrave.
Casson, M (Ed.).1990. Entrepreneurship. Vermont/USA.
Cameron, J. 1995. The Artist´s way. A Spiritual Path to Higher Creativity. New York.
Csikszentmihalyi, M. 1999. Das flow-Erlebnis. 7. Auflage. Stuttgart.
European Commission. Enterprise Directorate General. 2000. FIT-Project. The Development and
Implementation of European Entrepreneurship Training Curricula. European Union. Brussels.
Evans, P. / Wurster, T.S. 2000. Blown to Bits. Boston/USA.
Faltin, G. / Zimmer, J. 1996. Reichtum von unten. Berlin.
Faltin, G. 1998. Das Netz weiter werfen. In: Faltin/Ripsas/Zimmer (Ed.) Entrepreneurship - Wie aus
Ideen Unternehmen werden. München.
Faltin, G. 1999. Competencies for Innovative Entrepreneurship. In: Adult Learning and the Future of
Work. Ed. By Madhu Singh, UNESCO Institute for Education. Hamburg.
Gartner, W. and Vesper, K. H. 1999. Entrepreneurship Education 1998. Lloyd Grief Center for
Entrepreneurial Studies. The Anderson School. University of California, Los Angeles.
Gelb, M. J. 1998. How to think like Leonardo da Vinci. New York.
Prof. Dr.Günter Faltin
JOURNAL OF INTERNATIONAL BUSINESS AND ECONOMY Fall 2001 123
CREATING A CULTURE
OF
INNOVATIVE ENTREPRENEURSHIP
Freie Universität Berlin
ABSTRACT
Entrepreneurship has more to it than just self-employment and hard work; to tap its full potential one needs to
put emphasis on the generation and development of ideas. Research on creativity suggests that all of us are able
to engage in this kind of creative activity. This essay presents techniques for, and examples of, generating
entrepreneurial ideas. Its goal is to show that in the present age, which is marked by rising levels of education,
growing consumer sophistication and increasing opportunities for comparing values, ideas that are developed
in harmony with society's values have good and growing chances for success in the marketplace. Ultimately, a
culture of innovative entrepreneurship is envisioned, which is able to incorporate economic, artistic, and social
activities as parts of one coherent spectrum of human creativity.
Key Words: business model, creativity, culture of entrepreneurship, entrepreneurship education, idea
creation, idea development
ENTREPRENEURSHIP -- A PERSONAL PREFACE
I felt attracted to the field of economics quite early, having started to invest my pocket money in the
stock market at the age of 14. My family and teachers disapproved, since at that time this was
regarded as an inappropriate and evil activity.
Naturally, I went on to study economics. To my surprise, the subject that I had experienced as
being so exciting and breathtaking, at university turned out to be boring and meaningless. I finished
my coursework quickly, completed a dissertation in order to savor university life a little longer, and
subsequently found myself being offered a lifetime tenured professorship at the age of 31. When I
accepted the position, I promised myself to approach the subject in a markedly different way. In my
mind enterpreneurship was clearly the most vibrant way to bring economics to life. But how to create
a company? I went around deliberating over which business field offered good prospects. During
visits in developing countries like Tanzania and India, I was stunned to see how expensive products
like coffee, sugar, and tea were in
Germany, compared to the prices in the producing countries. In tea, especially, the difference was
huge. With little knowledge until then about tea, I began crunching numbers and compared the results
with products in other fields. It turned out that price competition was least evident in tea, as was
innovativeness. I started in-depth analyses of the costs of trading tea. So that by rearranging almost
everything that had been standard in the tea business, I created a business idea that seemed crazy to
everybody else, but made sense in terms of costsaving: one variety of tea only, big packets only, "buy
your supply for a year." The company — looking like a joke in the beginning — made its way. It has
grown to become the biggest mail-order tea company in Germany and the biggest buyer of Darjeeling
tea in the world.
I am not saying this to praise my own company, but to make my message clear: It is amazing
how quickly you can conquer a well-established business segment with a good idea. It is a message
that is underscored by many recent examples. Concentrate on the development of a good
entrepreneurial idea: it might well be the main foundation to your entrepreneurial success. This may
be surprising to you as it was surprising to me. It definitely is in stark contrast to the mainstream point
of view, which usually stresses the importance of management, marketing and financing capabilities
as the major requirement to an entrepreneur´s success, rather than the quality of his or her
entrepreneurial idea.
INTRODUCTION
Entrepreneurship is becoming an important part in political and educational programs in many
countries around the world. Emerging not only in the USA but also in Europe is the idea of an
"enterprise culture". So far, the primary focus is on the emergence of more small-sized enterprises,
fast growth firms with technology based businesses (European Commission FIT 2000, Gibb 2001a.
Similar tendencies are being observed in transition economies (European Training Foundation 1996,
Buck 2000). Recent reviews of what is being taught in the field of entrepreneurship in Europe and
North America indicate that the emphasis is substantially on the business plan as the framework for
organizing knowledge. This core is supplemented by functional economic inputs, delivered by
business schools or economics faculties (Gibb 2001b). There is very little outreach into social sciences
and arts faculties.
Entrepreneurship is a complex and multifaceted phenomenon. It also has a creative dimension
that is in parts beyond economic-rationale discourse. The concerns of one academic discipline
regarding their standards of academic rigor and respectability must not lead to the curtailing of this
phenomenon. This paper attempts to steer the focus towards fields of entrepreneurship in which the
creative dimension plays a substantial role. It seems that the importance of intense work on an idea
has been subsumed by the dominance of the teachings of business knowledge. What is
necessary is to remove entrepreneurship from this narrow confine and the often close association with
business administration, a too narrow paradigm for entrepreneurship (Gibb 2001b).
On this basis, the factors of success regarding the launch of a new venture are discussed to
assess the importance of idea creation and development in the interplay with the other factors (people
and resources). In this regard, it can be shown that the need for innovativeness does not result only
from intensifying competition but also, in a broader sense, includes social issues, so as to identify in
advance new tendencies in the market place.
Recent findings on the subject of creativity (Goleman, Kaufman and Ray 1993,
Csikszentmihalyi 1999) combined with the findings of Vesper (1993) that successful business ideas
usually are a natural outgrowth of an individual's background open up a perspective with a far greater
range, thereby setting free the potentials for the development of successful entrepreneurial ideas. An
attempt is being made to detect patterns and to set examples which could facilitate a systematic
working out and processing of idea development, as an integral and substantial part of the business
model. In addition to this perspective, it will be shown that adapting to societal values and shared
problems is an increasingly essential factor in the successful launching of an enterprise.
The attempt undertaken is to analyze the interplay of all these factors in their impact on the
conditions for a more open, more accessible and more widespread culture of entrepreneurship.
UNDERSTANDING INNOVATIVE ENTREPRENEURSHIP
Let us take a closer look at how the figure of the entrepreneur is treated in economic theory. Until
quite recently, the entrepreneur was largely left out of the literature of economics. ”Entrepreneurship
is an important and, until recently, sadly neglected subject,” according to Mark Casson (1990 XIII),
who could be called the rediscoverer of the entrepreneurial figure.
Over the last few years, research has taken a new direction, bringing out the separate and
distinct function of the entrepreneur in contrast to that of the manager. The manager, one could argue,
must operate under normal conditions and in routine business functions, while exactly the opposite
qualities are needed for successful entrepreneurship. Here, you have to emphasize the innovative
momentum and a fresh start, in contrast to the organizational aspects of existing entities.
Schumpeter describes the entrepreneur as forsaking well-trodden paths to open up new
territory and as turning (believe it or not!) dreams into reality (op. cit., 125 f.). The entrepreneurial
function consists not of inventing things, but rather of bringing knowledge to life and into the market
(op. cit. 128 f.). Schumpeter saw the markets,
realistically viewed, as dominated by oligopolies. Competition, and with it a more efficient allocation
of resources, arises only through the invasion of these markets by new entrepreneurs, who destroy the
existing market equilibrium with their innovations. This mechanism has been taken into economic
discourse by the term ”creative destruction.”
Hans Hinterhuber (1992) points out a special relationship between the entrepreneurial vision
and the person: entrepreneurial ideas, he says, are an expression of one’s own life and professional
experience. He even speaks of the ”feeling of a mission.” This sense of mission must be present to set
free the energies needed to market a product successfully. The author gives several examples of
entrepreneurial ideas that have marked our society more than others, because their originators had ”an
idea in the Platonic sense” and were imbued with a sense of mission: Gottlieb Duttweiler in
Switzerland, with his idea of breaking down traditional commercial structures and offering products
much cheaper, especially to poorer population groups; or Steven Jobs and Stephen Wozniak, with
their vision of democratising the computer. Interesting, too, is the notion that entrepreneurial vision
often comes with ”an idea of sweeping, classic simplicity” (op. cit. 44).
This is in contrast to economic textbook theory which usually assumes that profits make up
the motivation in the field of business. “The essence of entrepreneurship is being different”, says
Casson (op. cit.). And, as Richard Olsen, the Swiss founder of a research institute for applied
economics, adds: “If your main motivation is money, you will not have the perseverance that you
need to create a successful entrepreneurial venture.”
Entrepreneurship - says Timmons (1994) - means the ability to set up and build something out of
practically nothing; it is therefore an elementarily human, creative act. In this regard, it should be
made clear that an entire area of entrepreneurship has always given and continues to give great weight
to the creative aspect of developing an entrepreneurial idea.
A reason why the importance of the quality of the entrepreneurial idea has been so little
regarded is that in politics, but partly also in scientific literature entrepreneurship is closely equated
with self-employment – which in real life is regularly based on business ideas that are not particularly
new or innovative. To open a fashion boutique, restaurant or a copy shop improves unemployment
statistics and is an important and courageous step in societies where self-employment is still a great
exception. However, they are not especially promising, as evidenced by their high failure rates.
In Germany the term for self-employed, selbstständig, which is often applied to the small
shop owner, means literally “standing on your own” or “independent,” but it also has a humorous (and
quite popular) connotation: you have to do it all yourself (selbst) and you have to do it all the time
(ständig). This, obviously, is not an attractive
prospect. But, lacking an innovative idea, it is all too often a reality.
APPLY DIVISION OF LABOR PRINCIPLES TO ENTREPRENEURSHIP
It seems that the reality of self-employment even translates into a description of knowledge
requirements for entrepreneurship. The traditional concept of an entrepreneur's qualification is that
s/he has to know almost everything: accounting, keeping inventory on hand, negotiating with
suppliers and customers, legalities, the taxman's demands, managing employees, equipment
maintenance, creating team spirit, and so on. One could tally up an almost endless list of such
qualifications and competencies required of an entrepreneur. Not only is such a universally qualified
person hard to find, and difficult to create from training, but such demands also deter ordinary people.
It is certainly helpful for entrepreneurs to have basic know-how and understanding of the subjects
mentioned. But to what extent is it necessary for the entrepreneur to have all these competencies fully
developed in his or her own person?
We should be aware that in future the concept of an all-round qualification will become obsolete. We
most certainly will have to apply the principle of division of labor to this problem much more
stringently. People have different skills, attitudes and preferences. For example, instead of trying to
teach an engineer how to become a smart salesperson (which is very much against his professional
and personal attributes) it seems better to separate these two functions and allocate them to two
different persons. There are too many business techniques to be learned. To handle each of them
adequately would be simply overwhelming. It eats up too much of the time and energy that could
otherwise be devoted to leadership and vision. If you get down to earth, you get stuck. You must try
to keep flying! A compelling idea keeps you flying.
Perhaps we should imagine the entrepreneur as a movie director: s/he is the brains that brings the
different actors, props and services all into play. This is already more than a full-time job for one
person to manage alone. It goes along with the idea articulated in entrepreneurial studies, that startups
need a "lead entrepreneur" supported by a "management team" (Timmons 1994, Bygrave 1994).
Applying the principles of division of labor could ultimately lead to a new relationship
between innovative entrepreneurship and business administration. Imagine the entrepreneur standing
vis-à-vis a company. How would they come to an agreement on working together? The entrepreneur
might suggest, "If you employ me, I am willing to put my business ideas into practice for the benefit
of your company." This is an attractive offer for a company that lacks innovativeness. The deal is also
attractive for the entrepreneur: s/he does not need to get involved him/herself with the burden of
establishing and doing the day-to-day running of the business. It is a novel approach and it will be
interesting to see how mutual benefits can be negotiated in such a deal.
(This approach would induce a profound change in the educational goals and the mindset of
job seekers, as well. Normally, what they have to offer is their educational degree or certification, and
they must wait for an employer to take them up on it. Were they to offer an entrepreneurial idea, their
bargaining power and chances would improve instantly).
SUCCESS FACTORS TO NEW VENTURE CREATION
Taking the Timmons model (1994) - which can be regarded as the standard (Bygrave 1994, 10-11,
Ripsas 1997) – as a basic, one can summarize the critical factors in three main groups:
- The people
(the founders, including the management team as well)
- The idea
(as developed and refined concept in order to exploit market opportunities)
- The resources
(which are important for the setting up of the business and making it grow)
All three factors play an important role. One can certainly argue over what emphasis to place
on the individual factors. Venture capitalists would incline to allot the greatest influence to the
personality of the founder(s). Those who teach business administration and also those who deal with
the typical problems of small scale enterprises will incline to place marketing, management skills and
sufficient financing in the fore - not least with the good argument that these areas have been well
researched and developed and that there are proven formulas to deal with these problems successfully
in practice.
In contrast to this the effect and function of innovative ideas have received scant examination.
The thought that the quality of the idea could make a difference in the successful launching of a new
venture is not particularly popular with managers or bankers. "There are plenty of ideas around", it is
often said, "the important part is to put them into practice". Isn't that reflecting reality quite well? In
fact, there are lots of ideas in the sense of impressions and thoughts, that come to your mind. But
generating a new and innovative idea (even if not in Schumpeter's dimension of innovation) is a
totally different operation. These types of ideas or concepts are not easily available.
Even if we cannot agree where to put the main emphasis, there is one striking consideration at
hand: the factors mentioned are interdependent, in the sense that strengths in one area can compensate
for weaknesses in other areas. Hence another valid point is: very good solutions in one area can lead
to partial solutions in other
areas or can reduce the demands coming from other fields significantly. For instance, the enormous
economic advantages which the idea of the tea campaign enabled us to offer such a favourable price
that we could request our customers to advance us check payments, which, in turn, virtually
eliminated the problem of financing.
When we look at the economic fate of many of the newly founded dot.com-companies, how
can we explain their failures? They were provided with management competencies and capital to an
extent rarely seen before. It makes for a strong argument – agreed to by most analysts – that it was the
lack of idea development, that the business model was not worked through or refined enough.
If your idea is not innovative, those businesses already in the market place will have a
competitive edge over you. They are the ones who already have customers, they have the experience
with suppliers, and they know the specifics of the product itself, they are well-known in their
environment, whereas you, as a newcomer, are not. In short, they have all the advantages, and you
have a corresponding number of disadvantages. Hence, to enter the market place, it is almost a
necessity to have a new idea. Most probably the innovative element of your business idea is your most
crucial partner for survival.
Whether you successfully conquer the market or have to fight for mere survival depends very
much on the quality of the concept that you have developed and refined. As it is an arduous process to
found a company, it would be a pity to build the whole edifice on a weak foundation.
However there is a need for innovations in a much broader sense. Sweeping new ideas do not,
as a rule, arise from workaday business life and within the context of rational economic thinking.
Such ideas often draw vibrant inputs from proximity to unconventional thinkers, socially involved
people, ecologically engaged people, or artists. These people can contribute their ways of thinking and
possibilities from their fields of interest to ideas for the improvement of the quality of life. It takes a
broad range of people to respond to existing problems with social, economic and artistic imagination.
The history of successful entrepreneurs offers numerous examples for this openness, much like the
history of the economic sciences themselves which got essential impulses from people and viewpoints
outside of its own discipline.
DE-MYSTIFY CREATIVITY
Many start-ups base their business ideas on imitation or arbitrage. Even if the imitation does not
infringe on patent rights or trademarks, there are substantial disadvantages. By imitating, it is you who
arrives second (or even further down) in the marketplace, and there may be many others to come. Cutthroat
competition is commonly the result. Of course, the temptations to imitate are obvious;
imitations save costs for research and development and offer the safety of using a proven,
successful idea as a model. But beware: you may face a backlash of public opinion against you.
Imitation, akin to stealing, may be popular if you are the underdog, but it often carries a bad taste
with it. Most often, the whole operation amounts to a gambling of sorts in the short term: weighing
the cost of your investment against the chances for a temporary return. Arbitrage - making use of
different prices at different locations or times - has similar implications. Like you, others will spot the
opportunity, but may have deeper pockets and/or lower costs than you; entry costs into the market are
low thereby attracting many players; by the time you are fully established and operational and have
secured customers, the price advantages might have become smaller or may have disappeared
altogether. The way out is trying to create something that is not open to competition on such a scale.
Vesper (1993) did research on the life of about one hundred successful entrepreneurs to find
out what they all have in common. What he found was that the development of entrepreneurial ideas
is different from what is commonly perceived. New venture ideas, he says, are usually a natural
outgrowth of an individual´s education, work experience and hobbies. This is an important point,
because it stresses that successful ideas relate back to oneself, one’s background, education, work or
leisure activities. In conclusion, Vesper points out that most entrepreneurs succeed by pursuing ideas
that are not only good business opportunities but also relate directly to their personal criteria and
values. These findings are very significant because they challenge the common view that first of all
we have to study market needs. That would be important for business administration, but not
necessarily for creating an innovative entrepreneurial idea. Vesper´s reasoning suggests that your
individual background is the point to begin with. It is like in art. If you start by looking at market
needs and sales, you will never become an artist with a genuine style.
Popular advice for would-be entrepreneurs, Vesper continues, all too often suggests that ideas
arise largely through a mysterious combination of day dreaming and inspiration. But from his
research, Vesper draws a different conclusion:
Idea creation can be approached deliberately and systematically.
This is a kind of revolution. The promise that you can deliberately and systematically create ideas is
in complete contrast to the still prevailing belief that only extraordinary people have convincing new
ideas. Vesper’s research suggests that it is within the reach of almost everybody to create a genuine
idea.
Although it is commonly believed that creativity is something rare and outstanding, modern
research data on creativity in general do not substantiate such an assertion. Goleman, Kaufman and
Ray (1993), Csikszentmihalyi (1999) have demonstrated how creativity is accessible to each of us.
There are a number of rules that can be learned by almost anybody. One need not be a genius to create
a good idea that works. One of the researchers’ suggestions is: keep a prepared mind, let the
solution to a problem grow with time.
These observations go along well with the findings of Goebel (1990), who describes a group
of about fifty successful entrepreneurs from Germany. The only characteristic shared by all was their
persistent reassessment of a problem.
CASTING THE NET FARTHER
This chapter deals with two dimensions of innovation that relate to the notion of a broad based
enterprise culture:
- creating entrepreneurial ideas systematically
- opening up entrepreneurship to social groups which had previously been excluded
Techniques for the Creation of an Innovative Entrepreneurial Idea
I have long suspected that it must be possible to open a venue for the systematic generation and
refining of ideas . The following list, rough and sketchy as it is, is an attempt to define certain
characteristics that successful business ideas have in common. It is the attempt to recognize the
pattern and to bring to the fore the commonality of various relevant to idea development.
"Discovering Something Existing"
One of the most accurate descriptions - by Joseph Kirzner – shows how quite a few entrepreneurial
ideas are found. Discover something that exists already? This sounds like a paradox. How can one
discover something if it already exists? To “discover,” in this context, means to see a new potential in
something which is already known.
A famous example of this is the telefax. The invention has existed for a long time, and it has been
successfully introduced worldwide by firms altogether different from those who invented it and those
who first tried to market it.
"Functions, not Conventions"
This is a pattern that comes close to Schumpeter's description of the enterpreneur as an innovator of
new products or processes. The instruction reads thus: forget the convention; strictly analyse the
function. There is always a more or less conventional way of doing things. It is not necessarily the
best way to do it. New technology or new materials may be available. Needs may have changed.
Take the example of the Berlin Tea Campaign:
In the beginning, it was only a thought, a vision that it might be possible to organise tea
trading in a completely different way and to offer high quality at a lower price. I choose the
example of the Tea Campaign as I launched it myself.
The formation of the idea for the Tea Campaign, too, is like a puzzle, which took years to put
together. The starting point: producing-country prices for coffee, tea, cocoa, bananas or sugar are
about one tenth of the prices in Central Europe. Why? Because of the costs for freight and insurance?
It turned out that the expense lay neither in freight nor insurance but rather in the packaging material
for the small quantities that are usual in German tea retailing, and in the high costs of distribution. So
why not reduce packaging cost by using bigger packages and finding a simple distribution channel?
Slowly the puzzle takes shape.
What about preserving the quality of the tea? This is important if a consumer is to switch
from buying small to large quantities. The experts say that tea keeps well for two to three years. Even
if it kept well for only one year, this would allow the customers to purchase supplies for one year.
Then one could sell in bulk, and the customers could reap big price advantages from cutting down on
packaging costs. But what about the variety of brands? Can you reduce it? If a choice of many brands
causes a lot of costs and makes distribution expensive, why not just sell one brand? And with a big
enough order, doesn’t it make economic sense to buy at source, circumventing the middleman?
Can consumers be persuaded to choose only one brand of tea out of 140 and to drink the same
brand for an entire year? For a moment it looks as if the idea has failed just because of that. If
customers are used to choosing between many brands, why should they restrict themselves? After a
long break to think things over, optimism returns. It's probably better to restrict drastically the number
of brand. If the purchase price of the tea is only of secondary significance (because it is relatively
low), then you can reach for a very high quality of tea. You can even take the best tea in the world!
(The experts agree that it grows on the southern slopes of the Himalayas in a district called
Darjeeling.) If consumers can get such an excellent tea at a good price, they will probably not feel bad
about having such a limited choice. The puzzle is completed.
From the beginning the entrepreneurial challenge facing the Tea Campaign was whether
buyers could be convinced to buy one year's supply in large packages, and to give up the convenience
of small packages in exchange for substantial savings in price. Contrary to conventional marketing
practices, we hoped it would be possible somehow to "teach" the consumers to get used to a new
concept which would ultimately bring them considerable advantages. The central point of this
entrepreneurial idea was that success could be achieved by combining a new simplicity with
persuasive economics.
A unique case? I don't think so. Remember Goebel (1990), who found that the entrepreneurs
he surveyed had one thing in common: taking an idea and working on it to the point where "normal"
people would think that they were odd, and then developing this idea until it was mature.
Gottlieb Duttweiler, the founder of the “Migros” retail chain in Switzerland, or Anita
Roddick, the founder of "The Bodyshop," could be cited as similar examples. Both of them didn't
belong to the business establishment; they were outsiders and started out on unfavourable terms.
Breaking radically with conventions and developing contemporary, rational procedures with clearly
recognisable advantages for the consumer were their recipe for success.
"Combining Anew"
A person who recognizes social problems, addresses them and wants to do something practical to
counter them, is something of an artist. As in art, innovative achievement not infrequently requires
being obsessed by an idea. Courage and tenacity are required to launch new ideas, and ultimate
success is rarely achieved without them. Of decisive importance here is the quality of the
entrepreneurial idea. Whether one makes a breakthrough in the market or just barely manages to stand
one’s ground (and is forced to use knees, elbows and the whole bag of little tricks and swindles)
depends heavily on the quality of the concept with which one enters competition.
”Think ceramic,” says Thijs Nel, author, painter and potter in Magliesberg, near
Johannesburg. An idea occurred to him, as a potter, concerning how better houses could be built (cf.
The Nation, Aug. 7, 1995). The inhabitants of the townships traditionally constructed their houses
from clay, with walls reinforced by sticks and twigs. The problem with this is that termites come,
devour the wood and leave behind fine water-conducting canals , with the result that the houses can
no longer stand up to rainy weather.
Nel’s entrepreneurial idea was roughly this: think of a cup. Turn it upside down. Let it grow
ever larger before your eyes and imagine holes in it. Now call the cup a house! This house-sized cup
with holes for windows must now be fired, like other pottery, with a flame that produces a high
temperature. You can organise the fire as a village festival. The result is a house far more durable than
the previous huts, but hardly more expensive. Here is the artist as architect and entrepreneur,
demonstrating an astonishingly simple and practical idea. Everyone is his or her own house-builder,
potter, and artist. It might even occur that settlements constructed like this are more attractive in
appearance than those designed by professional architects.
"(Re)integrating Functions"
Integrating functions is similar. You know very well that you have your own, separate institution for
everything. You have shopping malls, churches, restaurants, youth clubs, senior centres, etc..
Everything has its own function. So this is very simple: if you can use the equipment for a second
purpose or a third purpose, you immediately save a lot of expenses. In fact, if you look into nature,
you will find that nothing in it ever has a singular function only. Nature has always had a variety of
functions for any
one particular thing.
"Taking a Problem and Turning it into a Business Opportunity"
Problems are an obvious source of entrepreneurial opportunities. Where others only see the problem,
an entrepreneur may be challenged to search for an answer. Experience tells us the solution doesn´t
necessarily have to be sought head-on, particularly if mainstream people have looked at it already.
Quite often the solution lies somewhere else.
Take the problem of the water hyacinth. This plant proliferates in rivers and lakes in tropical
countries, reproducing rapidly and clogging the water. Much thought has been put into the question of
how water hyacinths could be put to some profitable use. Theoretically usable as pig fodder or
compost, the plant, because it consists of 98% water and a few tough fibers, turned out to be
uneconomical for these and most other applications. The research studies in this matter can fill a
thick binder while yielding no practical results.
A designer was impressed by the silken sheen taken on by the plant’s stems when put through
a press, and she processed some. Artfully woven onto a rattan frame, the dried stems can be made into
armchairs -- not just any armchairs, but very attractive and sturdy ones. For designers, this is an
interesting variation from other materials. What is this supposed to mean for an economist? Not much,
if she or he asks the conventional questions in this field: is there a growth market here? No. Is there a
market niche here that one could fill with little competition? Probably not.
It is right at this point that the entrepreneur prevails over the conventional economist: through
recognition of a potential in something that already exists, even though it doesn’t fit any typical
economic patterns. Water hyacinths? No potential; an often studied subject with no particular result.
An armchair? The furniture market is saturated. The fact that the armchair was noticed at all was
almost an accident. The handsome piece was created in the studio of the Thai designer Khun Tuk.
Neither part alone, the water hyacinth nor the armchair, suggested anything promising. Put the two
together, and they become thought-provoking: a nuisance weed suddenly becomes a raw material with
inexhaustible potential. Turning water hyacinths into furniture has meanwhile become a big business
in Thailand.
"Reorganising Work into Fun"
Do you remember Mark Twain's Tom Sawyer, who was ordered to paint his aunt's fence on Saturday
afternoon, the most precious time of the week? Tom divides the work into little pieces so that it
becomes an excitement to try it out: his friends eagerly form a queue to be allowed to paint a piece of
the fence, and they even pay for it. In the end, the fence is painted; Tom has not worked a lick, has
enjoyed the company of his friends, and has even made money.
This story fascinated me early on, as it embodies an approach to work that is not mere utopian
fantasy. There are certain types of work in certain situations where you can reorganise work along
Tom's approach. What defines work as laborious and boring often depends on the circumstances. To
milk a cow certainly is work for the farmer, but it may be fun and excitement for a tourist. Repetition
and skill requirements are Tom's enemies, but imagination and curiosity are his friends.
"Bringing Visions to Life"
This particular approach is remarkably similar to art. Just like an artist who wants to establish his or
her own style, an entrepreneur who wants to carry through a new idea often has to endure a phase of
rejection by society. We are familiar with such chapters in the biographies of famous artists as well as
in the lives of famous first-generation entrepreneurs. Associated with personal sacrifice, foolish
experiments, and the pitying smiles of the establishment, this phase nevertheless constitutes the allure
and the challenge in the life of the artist as well as of the entrepreneur. As a rule, most people will not
achieve success without such shaky starts, where new frameworks have to be envisioned and great
demands on courage and staying power are made.
In his study about famous American entrepreneurs, Hansen (1992) relates the following story.
A young man tries to carry out an idea; for eighteen years, he goes without success. He has the vision
of a horse carriage propelled by gasoline combustion (the first motors have just been developed) and
controlled by mechanical linkages. A brave and daring vision shared by few others of his time. His
father thinks he is crazy and on the wrong track. When the vehicle is ready to be driven for the first
time, the father refuses to get in because he doesn’t want to risk his life. The son piles failure on top of
failure. At last a car built by him wins an auto race, only because, sturdier than those of his
competitors, it actually reaches the finish line. The man is called Henry Ford. His story is instructive,
because he is indeed considered the prototype of the great capitalist, behind whose later successes the
fragility of beginnings, the nurturing of ideas, the persistency and obsessiveness of the outsider all
tend to disappear.
The techniques mentioned so far are like tools, helping to deal with pieces of a puzzle that
allow many more solutions than just one. Systematic idea development and refinement are rarely ever
found in the syllabus of entrepreneurship education. It is the widespread assumption that the founder
"brings in" his/her idea. This idea is then "processed" with an eye on the business plan. The tools for
this processing are the business knowledge and contents. But no matter how important these contents
are, the opportunities inherent in the intensive reworking of the initial idea as such will not be
sufficiently examined.
My own experience with entrepreneurs-to-be is that what they regard as an entrepreneurial
idea is something like a raw idea - far from anything one would call a
mature, refined entrepreneurial concept. Usually their idea is not thoroughly thought out or
researched. Connecting links, analogies, cross associations have not been tried against it - in short, the
potential to generate a powerful idea is not realised. Quite often, you can find an attitude which I
would call "fixation on a first idea." Like falling in love or down a trapdoor, this fixation is something
the person is unable to let go of. The fixation phenomenon was similarly experienced in the advisory
work at the Berlin Institute of Entrepreneurship. On top of this is the fear that the idea could be stolen,
leading to secretive behavior and reluctancy towards disclosing and discussing the idea.
It is helpful to explain these phenomena to one’s audience or clientele and deliberate on it together. In
my own workshops, called “entrepreneurship laboratories,” I offer the advisee an agreement of sorts.
We discuss the initial idea, but the one who has brought it in continues to be its owner. Under this
agreement, the owner gets the idea enhanced and enriched, while the fear that the idea could be stolen
is mitigated.
After the entrepreneurial idea has passed the explorative phases, has got an innovative core
and has proved – theoretically – to provide a competitive edge, the next step has to be idea refinement.
While idea development is a process of "opening up" to new horizons and contents, idea refinement is
a process of focussing, of going into details. Without opening up, we will not get an innovative part in
our business idea; without refining, we will not get the idea to run smoothly in real life.
Synergies can be an important aspect of idea refinement. (Is there anything that can be used
simultaneously that someone else also uses or needs?) Anticipate your market-entry. Refine your
strategy to counter possible imitators of your idea. (How can you make sure, for example, that it is
you who is be regarded as the genuine authority and will remain to be perceived as such, even with
more resourceful competitors coming on stage.) (For more details see Faltin 1999.)
With a well thought-out and exceptional concept certain problems regarding financing and
marketing can be resolved more easily : the financing of the tea campaign caused hardly any
problems, as we were in a position to request our mail-order customers to make advance payment.
And our marketing, due to the unusual nature of the idea, was taken care of by the editorial coverage
of the media.
Adapting to Societal Values and Shared Problems
Of course we cannot impose a set of values on entrepreneurship. But we should be aware that it is
values which motivate, and it is a value system that creates culture and cohesion in society. By
creating a culture of entrepreneurship, by opening up the field for more groups in society that are not
traditionally linked to business, we can expect a new influx of values, of new patterns of problem
solving, of new ideas being put into entrepreneurship, a new quality of participation in the economic
sphere. Entrepreneurs would be in good company and on central stage. Max Weber has described this
phenomenon most strikingly. "For Weber the main motivating
factor for the entrepreneur was religious belief or the Protestant work ethic which established social
norms that discouraged extravagance, conspicuous consumption and indolence. The result was higher
productivity, increased savings, and investment" (Kolshorn/Tomecko 1995, p.3). At a time when we
become increasingly aware of the diminishing cohesion in modern society, it seems not too farfetched
to predict a comeback of values.
Directing more attention to values will provide an incentive for those people who are not
attracted primarily by the prospect of quick money, by greed, or by extreme ambition; these are
people who want to keep their independence and their individuality even if that means a relatively low
income. They want to do something good, and their ambitions have a new quality: they want to turn
their lives into a “spannendes Lebenskunstwerk,” a forever fascinating and inspiring work of the art of
living (Horx, 1999, 240). This is important to note because many institutions and consultancies that
are in the business of promoting entrepreneurship stick to a conservative and conventional view: that
you have to sacrifice much of your life and work around the clock. I’m not saying that such virtues
don´t make sense. You do find many examples of this kind: entrepreneurs who work more than 16
hours a day and offer up their relationships and hobbies on the altar of their venture. But you will also
find a new type of entrepreneurs who manage to integrate entrepreneurship with their individual
values: a person who is not prepared to sacrifice his/her lifestyle, who wants to live with a partner and
have children or who doesn't necessarily want to be in charge of a large number of employees (op.
cit., 241). These observations no longer carry the notion of the entrepreneur as a heroic figure.
Fortunately, the field of entrepreneurial ideas is open for such dimensions of innovativeness:
Entrepreneurial ideas can be woven into the fabric of societal values and shared problems.
Indifference to social problems scares the public, undermines confidence, and almost always backfires
(Morgan 1991, 292). One can recognize and integrate the contextual values and shared problems of
the society in which one lives. In all likelihood, these ingredients will actually enhance the chance of
success1 .
Our societies are marked by rising levels of education, growing sophistication of consumers
regarding their choices, and fast and inexpensive tools concerning product and value-for-money
comparisons. There is also increasing awareness of companies' business conduct. These developments
lead to new conditions for success in the market place. "Ethic pays" is not an idealistic assumption
any more. There is even a
1 The image of founders and start-ups in society differs considerably between countries (Global Entrepreneurship Monitor
2000, Hay 2000). If entrepreneurial ideas are more in tune with societal values and shared problems in their respective
countries, this should enhance the image of the entrepreneur as well as of entrepreneurship.
need for moral positioning as an integral part of companies' strategies (Horx 2001, 117). As an
entrepreneur, being in tune with your customers' values and norms will create sympathy towards you
and your product; the media may report favorably about your new venture, and articles written about
your idea are much better publicity than flashy and expensive advertising.
These aspects should supplement the concept of opportunity recognition, particularly if we
want to cast the net wider and attract more people to innovative entrepreneurship. Talking about his
experience as an advisor for entrepreneurs-to-be, Bygrave (1994) describes how his clients are often
obsessed with trying to create an outstanding, unique idea that only they possess. Bygrave says that he
dislikes this obsession with uniqueness. His argument, like Timmons', is that entrepreneurship is
about opportunity recognition, and about putting that opportunity into practice.
But why should such an obsession, which leads to an endeavour to create something
outstanding, be negative? Perhaps it is just this desire for uniqueness that creates an opportunity and
leads to a particularly powerful innovation.
Let us assume that an entrepreneur, not unlike an artist or a scientist, wants to create
something extraordinary and unique, something that makes his or her name shine. Naturally the
emphasis will be on coming up with an extraordinary idea. Goebel (1990, 87), in his survey of young
entrepreneurs, describes the positive aspects of such an obsession. The idea of doing something that
nobody else has done or thought of, he says, sets free tremendous energies. It makes the person
capable of working hard and effectively under even the most difficult and adverse conditions. We
should appreciate and utilize such stamina and enthusiasm. Experience tells us that only in reaching
out for a piece of utopia can we expect that some innovative parts will still be left by the time of
realization.
If someone chooses the field of entrepreneurship, instead of art or science, what is wrong with
such an effort? We should encourage those attempts. Such encouragement will enlarge and enrich the
corps of entrepreneurs. Not least, it will enhance the standard and attractiveness of entrepreneurship in
society.
The concept of opportunity recognition as described by Bygrave and Timmons looks more
like an advanced game for experienced players -- professionals or venture capitalists, familiar with the
best practices in their fields and already connected to relevant groups of potential business partners.
For them the concept is a perfect set-up for quickly realising potential and organising the steps into
practice.
In my workshops, I like to invite participants from extremely diverse disciplines. This mixture
opens up a wide spectrum of ideas you can play with. It makes sense to invite people who are
concerned about social and environmental issues, because these participants who are most focussed
on societal causes indicate new directions and trends. Include participants who are non-conformists
and outsiders in their field (beware of the dogmatic). It is this mix of people - with clear-cut structure
and
methodological inputs from your side - which creates amazingly powerful concepts. As a by-product
you will find an increasing number of participants unwilling to wait for action from political parties,
governments, or national initiatives, but who themselves recognize entrepreneurship as a promising
venue for change.
CONCLUSION
Becoming an entrepreneur is no longer the 'Absonderlichkeit eines Lebenslaufs,' the idiosyncratic
twist of one person’s professional development, but a fulfilling career, a career one can plan for, a
career within reach of many more people than might have been imagined.
The attempt was undertaken to show that the interplay of several factors: the significance of the
entrepreneurial idea, the findings on creativity, chances for the systematic developing of ideas and
adapting them to society's values and problems, could set the stage for a larger part of the population
to participate in a more open, more accessible and more widespread culture of innovative
entrepreneurship.
REFERENCES
Berlin Institute of Entrepreneurship. 1999. The Berlin Proposition. Ten propositions to foster the
culture of entrepreneurship in German Universities. Berlin. Germany.
Buck, B. 2000. Increasing employability by integrating entrepreneurship in education and training.
Paper for the European Training Foundation Advisory Forum. June.
Bygrave, W.D. 1994. The Entrepreneurial Process. In: The Portable MBA in Entrepreneurship. Ed. by
W.D. Bygrave.
Casson, M (Ed.).1990. Entrepreneurship. Vermont/USA.
Cameron, J. 1995. The Artist´s way. A Spiritual Path to Higher Creativity. New York.
Csikszentmihalyi, M. 1999. Das flow-Erlebnis. 7. Auflage. Stuttgart.
European Commission. Enterprise Directorate General. 2000. FIT-Project. The Development and
Implementation of European Entrepreneurship Training Curricula. European Union. Brussels.
Evans, P. / Wurster, T.S. 2000. Blown to Bits. Boston/USA.
Faltin, G. / Zimmer, J. 1996. Reichtum von unten. Berlin.
Faltin, G. 1998. Das Netz weiter werfen. In: Faltin/Ripsas/Zimmer (Ed.) Entrepreneurship - Wie aus
Ideen Unternehmen werden. München.
Faltin, G. 1999. Competencies for Innovative Entrepreneurship. In: Adult Learning and the Future of
Work. Ed. By Madhu Singh, UNESCO Institute for Education. Hamburg.
Gartner, W. and Vesper, K. H. 1999. Entrepreneurship Education 1998. Lloyd Grief Center for
Entrepreneurial Studies. The Anderson School. University of California, Los Angeles.
Gelb, M. J. 1998. How to think like Leonardo da Vinci. New York.
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