Much have been written about what makes the difference between good companies and great companies. In the final analysis it is people that make companies great – Here is how three great companies do it…
Image source: www.best-business-schools.org
Much have been written about what makes the difference between good companies and great companies. In the final analysis it is people that make companies great – Here is how three great companies do it…
Image source: www.best-business-schools.org
Daniel Isenberg conceptualized the domains of the entrepreneurship ecosystem which consists of 6 imperatives, i.e. (1) Policy, (2) Finance, (3) Culture, (4) Support, (5) Human capital, and (6) Markets. More specifically, an environment conducive for entrepreneurial activity would require (1) enabling policies and leadership, (2) availability of and access to appropriate finance, (3) an encouraging culture, (4) a variety of institutional and infrastructural supports, (5) quality human capital, and (6) venture-friendly markets for products. When observing Silicon Valley, for example, its entrepreneurship ecosystem is seemingly very conducive for entrepreneurial activity to flourish. Individually the 6 imperatives as subsystems are each evidently functioning vibrantly. However, not only do they individually function vibrantly, but there is healthy interaction between them which is the key requirement for a high performing entrepreneurship ecosystem. Individually the domains mean little; it is when symbiosis occurs and they interact that the ecosystem comes alive and spawns entrepreneurship.
Thus, the mere existence of the 6 systemic imperatives does not imply a healthy entrepreneurship ecosystem. The requirement is symbioses – healthy interaction between the “organisms”; the existence of mutually beneficial relationships between the different factors.
In terms of the South African context, the question then beckons: What is the state of the South African entrepreneurship ecosystem when considered at a macro level? What do each of the six imperatives look like, and is their healthy interaction between them? Let’s take a concise high-level overview of each:
Policy: South Africa (SA) has government initiatives that provide investment- and financial support to aspiring entrepreneurs. Although one of the Department of Trade and Industry’s strategic objectives is to “create a fair regulatory environment that enables investment, trade and enterprise development in an equitable and socially responsible manner,” many voices from industry, academics and entrepreneurs themselves conceive the SA regulatory environment as unfriendly towards new venture creation. As far as leadership is concerned, there is explicit support for entrepreneurship, although, in many instances it remains lip-service.
Finance: SA has ample availability of venture finance, with the numerous venture- and private equity capital funds, as well as debt finance. Although there is abundant availability of finance, accessing it is often cumbersome and challenging, with limited success to the entrepreneur. The micro-loan sector in SA is vibrant, but unfortunately the focus from lenders is consumption oriented and not to finance small and micro ventures. Furthermore, in general, there is very little appetite for funding small and micro ventures from sector participants’ perspective. The SA public capital market counts amongst the best in the world; however not easily accessible for the smaller entrepreneur. The angel investor is still a relatively foreign concept in SA, and not many high net worth individuals actively invest in new venture creation.
Culture: There are numerous South African success stories of wealth generation for founders and stakeholders, and international reputation. The Oppenheimer family, the Rupert family, Patrice Motsepe and Christo Wiese are the four South African names that feature in Forbes’ billionaire list. Other success stories include Adrian Gore, Alan Knott-Craig, Anant Singh, Ann Ellis Brown, Brian Joffe, Gary Morolo, Herman Mashaba, Jenna Clifford, Kim Jones, Koos Bekker, Mandy De Waal, Mark Lamberti, Mark Shuttleworth, Matebello Motloung, Ndaba Ntsele, Nkhensani Nkosi, Pam Golding, Raymond Ackerman, Robbie Brozin, Sam Mathe, Sharda Naidoo, Sol Kerzner, and Whitey Basson. However, in terms of societal norms in relation to entrepreneurship, South Africans generally have low to moderate tolerance for risk, mistakes and failure. In addition, innovation, creativity and experimentation are the exception rather than the norm, and ambition, drive and hunger for entrepreneurship as career choice are limited. The Global Entrepreneurship Monitor research provides ample evidence to support the aforementioned.
Support: Professional support for entrepreneurs in SA is world-class. Our legal and accounting fraternities are of exceptional quality and in ample supply. Technical experts and advisors also abound. In terms of SA’s infrastructure, it boasts telecommunications, transport, logistics and energy infrastructure that can be compared with prominent developed countries. In addition, numerous industrial development zones and incubation centres have been established successfully in SA in support of entrepreneurs and new venture creation. Non-government initiatives such as entrepreneurship conferences and business plan contests also serve to enhance support.
Human Capital: The South African labour market is characterised by an oversupply of unskilled labour which result in an inherent set of challenges in terms of absorption into the formal economy. It could become even more difficult into the future as technological advancement rely less and less on unskilled labour. There is hence a dire need to up-skill the unskilled, and various public and private initiatives aims at addressing this. Our higher educational institutions that provide general professional and academic degrees are in good stead compared to that of the US and Europe. In terms of specific entrepreneurship training, we find that many universities are infusing entrepreneurship across faculties and not just business and engineering faculties. It is at primary and secondary level that entrepreneurship development is seriously lacking.
Markets: The markets for early adopters for proof-of-concept products and services (i.e. to introduce product / service for testing under real conditions) will ultimately depend on the type of product or service. Early adopters in SA for technology related solutions, as an example, are relatively small compared to developed country markets, whereas early adopters for lower-end consumer related products and services are potentially larger. South Africa also has ample expertise in productizing (i.e. modifying a concept to become suitable as a commercial product) across sectors, as well as the establishment of distribution channels. As a result of globalisation, many local entrepreneurs’ networks reach across the globe which enables potentially larger markets. In addition SA’s diaspora communities, resultant from trade or labour migrations, often maintain strong ties with their homeland which also stimulates access to markets. South Africa’s multinationals furthermore contributes to our reaching markets beyond our borders.
No doubt then that the six domains of an entrepreneurship ecosystem are present, active, and in some cases vibrant in South Africa. What is then the problem? Why don’t we see the high levels of entrepreneurial activity that we see in other developing countries? Could a case be made that the underlying problem lies with the symbioses between the six domains? If so, where is/are the weak link(s)? Perhaps the time has come for round-table discussions between the main players in each domain to find solutions to enable healthy interaction between them, and in so doing, creating a healthy entrepreneurship ecosystem in SA – on national-, provincial-, regional-, town- and community level… Who will take the initiative?
On June 18, 2008 I wrote about the “IBM roadrunner“, the then world’s fastest supercomputer with a computational speed of one petaflop. Then, on December 24, 2009 I reported on the the “Jaguar” that dethroned the Roadrunner at a staggering 2.33 petaflops. Since then the upward trajectory of supercomputer computational power has been quite steep, and today I read about the “K Computer“, the first supercomputer to achieve 10 quadrillion operations a second (10 petaflops). Japanese IT giant Fujitsu and the government-funded RIKEN research lab announced that “K Computer” can speed through 10.51 petaflops, making it the world’s fastest supercomputer. Check out the detail here.
When observing the world of business and commerce, one cannot help notice the startling homogeneity of organisational forms and practices. In addition, while various kinds of professionals within an organisation may differ from one another, they exhibit much similarity to their professional counterparts in other organisations. How do we explain this?
The sociological theory of isomorphism, which refers to the similarity of the processes or structure of one organisation to those of another, proves useful in explaining this homogeneity. Di Maggio and Powell (1983:150) identified three mechanisms through which institutional isomorphic change occurs, each with its own antecedents: (1) Coercive isomorphism results from both formal and informal pressures exerted on organisations by other organisations upon which they are dependent and by cultural expectations in the society within which organisations function. (2) Mimetic isomorphism results from uncertainty that encourages imitation. When technologies are not clearly understood, goals are ambiguous, or when the environment creates uncertainty, organisations may model themselves on other organisations. (3) Normative isomorphism results primarily from professionalisation, which is the collective effort of members of an occupation to define the conditions and methods of their work and to establish a cognitive base and ligitimation for their occupational autonomy.
Due to my involvement in higher education, and more specifically in MBA education, I am naturally inclined to consider the role management education plays in contributing to normative isomorphism which, among others, has to do with establishing a cognitive base for management practice. Di Maggio and Powell (1983:152) contests that the resting of formal education and of legitimation in a cognitive base produced by educational specialists is an important source of isomorphism.
Management educators are important centres for the development of organisational norms. Generally speaking, however, most providers of management education draws from the same management theories to create a cognitive base. Although the principles and methods of instruction vary, the theoretical foundation is largely similar.
My submission is that the existing cognitive base has the potential to create a pool of almost interchangeable individuals who occupy similar positions across a range of organisations and possess a similarity of orientation and disposition. But is this necessarily negative? I propose, as far as, for example, business ethics, social responsibility, corporate governance and emotional intelligence is concerned, it is most definitely beneficial. However, when the similarity of orientation and disposition may override innovation in management principles and processes that might otherwise shape organisational behaviour, I regard it as negative.
So, what can management educators do to not get trapped in normative isomorphism? Well, for starters I propose including philosophy into the methods of instruction and readings; philosophy addresses the “big questions” which do not fall into other disciplines, i.e. how we should act (ethics), what exists (metaphysics), how we know what we know (epistemology), and how we should reason (logic) (Anissimov, 2011). Philosophy’s goal is nothing less than a systematic world view. Other fields study particular kinds of things; philosophy asks how it all fits together (Sinnott-Armstrong, 2011). Coetzee (2011) also argues that philosophy is what is required to break the glass-ceiling of MBA education.
Next I propose more emphasis on innovation in management principles and processes. According to Hamel (2006:75) a management innovation can be regarded as a marked departure from traditional management principles, processes, and practices or a departure from customary organisational forms that significantly alters the way the work of management is performed. Put simply, management innovation changes how managers do what they do, and can create long-lasting advantage.
Thirdly, I propose enforcing the uniqueness principle; in terms of the uniqueness principle of Nadler and Hibino’s (1998) breakthrough thinking theory, one should not copy a solution or use a technique from elsewhere just because the situation may appear to be similar. We can’t clone others’ successes; copying what others do or have done doesn’t necessarily produce the same results. No two situations are alike; to begin with, people in each situation are different.
In the quest to ensure that graduates are equipped to meet the challenges of contemporary global business and capable of managing in environments marked by constant change, management educators should take note of the benefits and disadvantages of normative isomorphism as a result of the cognitive base produced by them. Build on the benefits and seriously reflect on addressing the disadvantages… we owe it to commerce and industry.
Instinct refers to the inborn pattern of behaviour often responsive to specific stimuli. In terms of entrepreneurship that could imply the inborn pattern of behaviour a person exhibits in response to the stimuli from the environment the person finds him/herself in; with specific reference to opportunity recognition and then applying human energy (mentally, emotionally and physically) to initiate a concept and realise a value creating venture.
I think instinctively mankind desires to “make meaning,” to “create value,” to “satisfy needs and wants” in response to the stimuli of our physical environment. From the invention of the wheel around 8000 BC to the advent of the Internet this is evident. Surely, this instinct is more acute, more “awake” in some people than in others. This more intensified state in some, I posit, could be ascribed to exposure to learning though education, training and development, whether informal (in family or communal context) or formal (schooling). In other words, entrepreneurial instinct is akin a seed that lies dormant in all humans, and is fertilised by upbringing, social interaction, primary-, secondary and tertiary schooling – what I call total societal exposure. In other words, exposure to the collection of relationships between individuals, that consists of distinctive cultural, economic, educational, political, religious, and technological properties. It is in this exposure that entrepreneurial conditioning takes place (or do not take place) – subliminal conditioning – conditioning that takes place below the threshold of conscious perception.
Yes, I hear voices that argue a case for certain attributes that are desirable for entrepreneurial success, attributes not prevalent in all people, and, yes, I’m in accord. However, looking at human ability in general, most people can run, albeit not all at the same speed; most people can hold their breath, albeit not all for the same length of time; most people can pick up things, albeit not all the same weight; most people can sing, albeit not all at the same tone. There are thus abilities inherent to all people, and I propose, entrepreneurship is one of them. Rather than to categorise people in two distinct different groups, i.e. those who can be entrepreneurial en those who cannot be entrepreneurial, I propose that, generally speaking, most people can be entrepreneurial
Yes, I am generalising, and that is exactly my thesis: All humans with a sound mind, ceteris paribus, have the innate potential to think and act entrepreneurially. The antithesis would juxtapose that not all people with a sound mind has the innate ability to be entrepreneurial, a proposition I submit that is not grounded in sufficient empirical evidence.
We are often led to believe that entrepreneurship is the domain of a select few. Of course, not everyone will become entrepreneurs, but that is not the issue; the issue is human potential; what people can become because of dormant instinct. We know that entrepreneurship is fundamentally a human, creative act, and involves: (1) a process, (2) the creation of value where there was none before, (3) putting resources together in a unique way, and (4) opportunity driven behaviour. I therefore propose that entrepreneurship is a blend of instinct and learned behaviour – It is inherently part of human nature and manifests in relation to the extent of the total social exposure. The extent of the exposure will thus determine the extent of the orientation.
The Milpark Business School (MBS) team that participated in the Global Social Venture Competition at the University of California, Berkley, arrived back in South Africa yesterday (12/04/2011). We are honoured and proud to have competed as one of the 12 global finalists in this prestigious competition. Over 800 teams from around the world entered the 2011 competition, and the 12 finalists battled it out after three rigorous rounds – an Executive Summary round, Regional Finals, and the Global Finals which took place at the Haas School of Business at UC Berkeley. During each round of the competition, social entrepreneurs presented the social, financial, and environmental values of their business.
The team form MBS presented their innovative and revolutionary water purification product primarily aimed at rural communities and Municipalities. The product offering, One-drop, is made from a non-hazardous, non-chemical solution produced through the formation of ions in the water, free of harmful chemicals and toxins. For millions of people living in the rural communities without running water who have to rely on non-piped raw water for their daily needs, One-Drop will be able to purify contaminated water that gives rise to water-borne diseases. The solution brings a portable purification system that does not require advanced physical distribution network. The One Drop product will be supplied through the community owned and operated distribution centres which will increase employment and activate social entrepreneurship in rural communities.
For the MBS team, the whole experience – starting with the executive summary round, and culminating in the global finals – was a perspective-shifting journey, a journey of growth, learning and discovery. We gained valuable exposure and feedback from some of the greatest minds in social innovation, and we made new friends from all over the world. A truly remarkable experience, and our sincere thanks go to the MBS executive who made our participation possible, our supporters in SA, our regional organizers, the Indian Business School in Hyderabad, India, and the global organizers, the Haas School of Business at UC Berkley.
We congratulate the 2011 winners: 1st place: NextDrop, University of California, Berkeley / Stanford University, USA; 2nd Place: Sanergy, MIT Sloan School of Management, USA; 3rd Place: TreePlanet, Handong University, Korea.
As faculty advisor to a team of Milpark Business School MBA students who participated in the Asia-Africa regional finals of the Global Social Venture Competition (GSVC) held a week ago at the Indian School of Business in Hyderabad, India, I am proud to share that the team was crowned the winners along with a team from GIBS. The two South African teams will now represent the region at the global finals to be held at the Haas School of Business at University California, Berkeley from 7-9 April 2011.
The Global Social Venture Competition is the largest and oldest student-led business plan competition providing mentoring, exposure, and prizes for social ventures from around the world. The purpose of the competition is to catalyze the creation of social ventures, educate future leaders and build awareness of social enterprises. The competition thus supports the creation of real businesses that bring about positive social change in a sustainable manner… Well done to the MBS-team! We are proud of you!
There is increasing consensus within South Africa about the importance of entrepreneurship in economic development. Although there have been significant steps taken towards increasing the level of entrepreneurial activity in South Africa, many challenges still remain. The Global Entrepreneurship Monitor (GEM) research continues to reveal that four major problems face entrepreneurship in South Africa, namely (1) a low level of overall education and training; (2) social factors that do not promote entrepreneurship as a career path of choice; (3) lack of access to finance; and (4) a difficult regulatory environment. Notwithstanding agreement on the importance of entrepreneurship in economic development, why is it then that South Africa finds itself in the position it is? There are many government and private sector initiatives aimed at promoting entrepreneurial development in South Africa. It, however, seems that the desired results are not achieved. Could it be that this is mainly attributable to the absence of a national strategy that encompasses stakeholders from both government and private sector? Or could it be that there is no aligned commitment, or the existence of a common goal, or coordination of initiatives on a macro level?
In addition, South Africa as a nation must upgrade its ways of competing if successful economic development is to occur; our companies must shift from competing on comparative advantages (low-cost labour or natural resources) to competing on competitive advantages arising from unique products and processes, and move from tapping foreign distribution channels to building our own channels. From the literature on entrepreneurship, it becomes evident that it has the potential to improve and increase productivity and ultimately GDP. It is therefore safe to suggest that an increase in entrepreneurial activity could potentially lead to an increase in productivity (and employment) that in turn could lead to an increase in real GDP. An increase in real GDP induces increased sales flows to the different factors of production – managers, workers, landowners, shareholders, and other input suppliers – and national income increases correspondingly.
What needs to be accomplished is a national strategy for entrepreneurial development in South Africa to spearhead and coordinate entrepreneurial development in South Africa on a national level. The ultimate purpose is to induce economic growth and making South Africa a stronger competitor in the mainstream global economic arena. A vehicle to bring such a strategy to fruition could be a unified national centre consisting of stakeholders from government and private sector to lead and coordinate entrepreneurial development across the country. The four key performance areas should be to (1) improve the level of overall education and training; (2) promote entrepreneurship as a career path of choice; (3) improve access to finance; and (4) influence policy in terms of the regulatory environment.
Kurt Lewin conceived of change as modification of those forces keeping a system’s behaviour stable. In relation to this discussion, it implies modifying those forces keeping South Africa’s entrepreneurial behaviour stable. Change efforts falls on a continuum ranging from incremental changes that would involve fine-tuning South Africa’s entrepreneurial position to quantum changes that would entail fundamentally altering how South Africa operates in terms of its entrepreneurial activity. What we need is an “entrepreneurial transformation,” which implies radical changes in how South Africans perceive, think, and behave in terms of entrepreneurship. It must supersede “making things better” or fine-tuning the status quo. It concerns fundamentally altering South Africa’s assumptions about its entrepreneurial functioning and how it relates to the global environment. Changing these assumptions entails significant shifts in our philosophies and values and in the numerous structures and arrangements that shape our current entrepreneurial behaviour. This change will inevitably require leadership… who will stand up to the challenge?
When I am presented with a claim I reserve the right to reject that claim until such time as the claimant produces sufficient evidence to support that claim. If I find the evidence compelling, then I might provisionally accept the claim as true – provisionally because I may be presented with more evidence tomorrow that proves the claim to be false.
Obviously, the quality and quantity of evidence I require will vary from claim to claim. If you tell me that you have a car, I’ll probably accept the claim just on your word. You’re not likely to get anything out of making up stories about owning a car and I know that most people own a car. If you tell me that you have a car that flies, on the other hand, I’m going to want to at least see the car fly before I believe you.
This attitude is not cynicism – skepticism is not the same as cynicism. Cynicism is more an emotion of jaded negativity, or a general distrust of the integrity or professed motives of other people. Skepticism is a method for discerning truth from fiction, which merely starts from a neutral standpoint and aims to acquire certainty though scientific or logical observation. My position is thus one that seeks to establish the authenticity of scientific and historical claims through a logical and impartial evaluation of the available evidence. I believe this to be a reliable method to distinguish truth from fiction and to uniformly apply these principles to all ideas – new or old, established or controversial. If this makes me a skeptic, then I’m a skeptic…
I stumbled upon a very though provoking article on “strategy + business” by William Duggan, professor of innovation at Columbia Business School, titled, “How Aha! Really Happens.” The crux of the article is that conventional wisdom on how most companies understand and organize innovation has been overturned by science – the new science of intelligent memory. The left brain / right brain notion to creativity is being challenged, suggesting that analysis and intuition work together in all modes of thought – there is no left brain; there is no right!
The article resonated with me personally as I recognised the pattern alluded to in my my own cognition. Duggan suggests that we can expect more techniques based on the new science of intelligent memory to replace methods from the previous paradigm. He posits that companies that get there first will have a distinct advantage… Truly recommended reading – click here for the article.