To invent or to innovate?

Innovation and Entrepreneurship: It is important to recognise that innovation implies action, not just conceiving new ideas. When people have passed through the stages of creativity, they may have become inventors, but they are not yet innovators. Let's see why... For starters, the difference between invention and innovation is:

• Invention - is the creation of new products, processes, and technologies not previously known to exist.
• Innovation - is the transformation of creative ideas into useful applications by combining resources in new or unusual ways to provide value to society for or improved products, technology, or services.

So what are we saying? Well, in essence the elements in the innovation process are:

• Analytical planning - to identify: product design, market strategy, financial need.
• Organising resources - to obtain: materials, technology, human resources, capital.
• Implementation - to accomplish: organisation, product design, manufacturing, services.
• Commercial application - to provide: value to customers, reward of employees, revenues for investors, satisfaction for founders.

What is it to be... inventor or innovator? Personally I'd rather be an innovator than an inventor and have no one to share my new creation with. The adage, “necessity is the mother of invention” might be true. But that is only one side of the coin. The necessity will not be met without transforming the creative idea into a useful application. If it stops at invention, the need will remain.

Three Key Principles

Ewing Marion Kauffman in 1950 quit his job because of his treatment by the president of the company for which he worked. "The year before," Kauffman says, "I made more money than the president so he cut back my commission. The next year I made more money than he did again, so he cut back my territory. So I quit and started Marion Labs in my basement." His entrepreneurial genius created Marion Laboratories, Inc. which grew to $1 billion in revenues, $6.5 billion in market cap, and had over 300 millionaires among its 3,400 employees. Kauffman grew the company on three principles:

(1) Treat people as you would want to be treated.

(2) Share the wealth with those who contribute to its creation.

(3) Give back to the community.

Creative Destruction

Creative destruction: what kind of phrase is that? It sounds like a paradox - an oxymoron. How can the word creative, which has its origin in the root-word “create”, be linked to destruction, which in turn is rooted in “destroy”?

This dichotomy is, however, deeply embedded in the entrepreneurial phenomenon. Schumpeter (1942) outlined an economic process of "creative destruction," by which wealth was created when existing market structures were disrupted by the introduction of new goods or services that shifted resources away from existing firms and caused new firms to grow. The key to this cycle of activity was entrepreneurship: the competitive entry of innovative "new combinations" that propelled the dynamic evolution of the economy.

In essence entrepreneurship can therefore also be seen as a force of “creative destruction” whereby established ways of doing things are destroyed by the creation of new and better ways to get things done.

Just think for a moment of products and technologies that have become obsolete over the past 20 years or so... The floppy disk and stiffy making way for the memory stick; BETA and VHS video tapes making way for DVDs; on the brink of extinction one can think of the music cassette that is replaced by the CD. Also think of the development of the transistor and then the semiconductor.

Today Moore ’s Law – the power of the computer chip will double every 18 months at constant price – is actually being exceeded by modern chip technology. Combine this with management guru Peter Drucker’s Postulate: A tenfold increase in the productivity of any technology results in economic discontinuity. Thus, every five years there will be a tenfold increase in productivity. Author George Gilder recently argued that communications bandwidth doubles every 12 months, creating an economic discontinuity every three to four years. It does not take a lot of imagination to see the profound economic impact of “creative destruction.”

TOIL for Success

Synonyms for toil are labour, hard work, sweat, slog, plug away, strive, hustle. While all these words are true for any successful venture, whether for-profit or non-profit, the word "TOIL" spells an essential acronym for success.

T = Team: It is the team that makes the dream. As someone said: "In the world today, there's plenty of technology, plenty of entrepreneurs, plenty of money, plenty of venture capital. What's in short supply is great teams. Your biggest challenge will be building a great team."

O = Opportunity: At the heart of the entrepreneurial process is the opportunity. Countless time, money and effort is wasted on chasing ideas that are going nowhere. An important skill, therefore, is the ability to size up quickly whether serious potential exists, and how much time and effort to invest.

I = Innovation: Innovative talent has become the hallmark of the entrepreneur. According to Peter Drucker, the most important distinguishing characteristic of the entrepreneur is his or her ability to innovate. Because of entrepreneurial innovation – by management and employees – an organisation will be able to exploit new, different and more relevant resources, techniques, processes and product or service configurations.

L = Leadership: Everything rises and falls on leadership (John Maxwell). Leadership is about influencing others to voluntarily pursue organisational goals. It is about vision, cheerleading, enthusiasm, trust, verve, passion, obsession, consistency, and creating an environment that brings out the best in people.

In an ever-changing business landscape, an organisation's ability to "TOIL" will, to a large extent, determine its growth and survival. Even the absence of only one component of the acronym could have an adverse effect on longevity. Therefore, be prepared to "TOIL" if you want to grow and survive. And yes, it implies labour, hard work, sweat, slog, plug away, strive and hustle!

The South African SME Toolkit

Global computer giant IBM, local company Business Partners, the International Finance Corporation (IFC) and the Department of Trade and Industry have come together to offer South African entrepreneurs and small enterprises a free web-based toolkit to help them start, finance and grow their businesses.

The South Africa Business Toolkit, launched on Tuesday, contains "the latest information and communication technologies to help small and medium enterprises (SMEs) in emerging markets learn and implement sustainable business management practices", IBM said in a statement.

The aim, IBM said, was to increase the reach of South African small business into the global economy by improving the productivity, efficiency and capacity of the estimated 600 000 active small businesses in South Africa, as well as by improving their access to capital and new markets.

The South Africa toolkit was developed by IBM and the IFC, a member of the World Bank Group. It is available both as online and offline modules which include the website, offline CDs, mobile alerts and classroom training.

Source: http://www.southafrica.info/doing_business/trends/newbusiness/smetoolkit.htm

It all starts with opportunity

Many entrepreneurs that start businesses, especially the first time, run out of cash at a quicker rate than they bring in customers and profitable sales. While there could be many reasons for this, it is more than often because they have not focused on the opportunities. Unsuccessful entrepreneurs usually equate an idea with an opportunity; successful entrepreneurs know the difference.

It is therefore absolutely essential to select and screen an opportunity with great care before taking the plunge. It is common that venture capital investors on average invest in only 1% of all ventures they review, emphasising the fact that a good idea is not necessarily an opportunity.

According to researchers Hisrich & Peters (2002) the evaluation of the opportunity is perhaps the most critical element of the entrepreneurial process, as it allows the entrepreneur to assess whether the specific product or service has the returns needed compared to the resources required. This evaluation process involves looking at the length of the opportunity, its real and perceived value, its risks and returns, its fit with the personal skills and goals of the entrepreneur, and its uniqueness or differential advantage in its competitive environment.

Opportunity analysis is one way of evaluating an opportunity. It is not a business plan. Compared to a business plan, it should be shorter; focus on the opportunity, not the entire venture; and provide the basis for making the decision of whether or not to act on the opportunity.

Investec TV Commercial

Thinking of moving your business online?

I found this great advice from an article on Bizland by former CEO of kalahari.net, Hein Pretorius to entrepreneurs who want to move their businesses online:

• Make sure you intimately understand the market you want to be involved in.
• Understand what the business entails from start to finish (on-line models are sometimes more complicated than they might appear).
• Make sure the business is designed and set-up with the customers being the centre of your entire universe and reason for living.
• Above all, make absolutely sure you have the right people with the right expertise and mindsets on board.

[kalahari.net is South Africa's leading online bookstore]

Read the full article at http://www.bizland.co.za/articles/success/kalahari.htm

What is Entrepreneurship?

Ask ten people what their understanding of the word "entrepreneur" or "entrepreneurship" is, and you get ten different answers. It seems to be a highly misunderstood phenomenon. Many stereo­types and oversimplifications exist, and people hold widely disparate views. It is also in danger of becoming yet another “buzzword” popularised by the press, consultants, and entrepreneurs themselves.

An “entrepreneur” is a creative innovator who, acting on initiative, seeks and maximises opportunity, takes the required risk, and energetically takes it to a worthwhile conclusion, in other words one who recognises economic needs and combines other production factors in order to fulfil those needs.

“Entrepreneurship” is the process through which individuals and teams create value by bringing together a unique collection of resources to take advantage of opportunities, to create value and grow by fulfilling wants and needs through innovation and uniqueness, no matter what resources the entrepreneur currently has.

It’s all about a way of thinking, reasoning, and acting that is opportunity obsessed, holistic in approach, and leadership balanced. Entrepreneurship results in the creation, enhancement, realisation, and renewal of value, not just for the owner, but for all participants and stakeholders. At the heart of the process is the creation and/or recognition of opportunities, followed by the will and initiative to seize these opportunities. It requires a willingness to take risks – both personal and financial – but in a very calculated fashion in order to constantly shift the odds to your favour, balancing the risk with the potential reward.

Today, entrepreneurship has evolved beyond the classic start-up notion to include companies and organisations of all types, in all stages.

Thus, entrepreneurship can occur – and fail to occur – in new firms and old; in small firms and large; in fast and slow growing firms; in the private, non-profit, and public sectors; in all geographic points; and all stages of a country’s development.

In essence, we can therefore conclude that:

• Entrepreneurship involves a process.
• Entrepreneurs create value where there was none before.
• Entrepreneurs put resources together in a unique way.
• Entrepreneurship is opportunity driven behaviour.

Navigation and the Entrepreneur's Expedition

They asked the famous climber, Mallory, why he tackled the high peaks? He replied: Because they are there." Ask most start-up entrepreneurs why they make the trade-offs that become part of their lifestyle, and their answer can be just as cliché.

Once entrepreneurs take the plunge, they spend the greatest percentage of their waking hours on the job. They put their lives on the line trying to reach the summit of their ventures, investing time, money and effort. On this journey they express their creativity, forge their self-esteem, resolve character-related issues, and cultivate relationships.

But how many of them, when they are honest with themselves, admit that in the process of climbing toward success they have lost their bearings? They’re no longer sure what really matters and where they’re heading.

They need a map to guide and help them, illuminating the signposts along the path to keep them oriented to the realities of their undertakings and its position in the marketplace. Without these markers, how they we be sure they are blazing the right trail - let alone climbing the right mountain?

Getting lost on an expedition is easy. With poor or outdated maps, the consequences for those relying on them can be fatal. Seasoned climbers make sure they are carrying reliable charts to guide them. Trying to navigate without dependable information is asking for disaster.

Successful entrepreneurs recognise the value of accurate navigation and look to their strategic orientation in relation to their reason for being as a reliable map to guide them. They simple know that, without it, they cannot know where they are going.

Businesses get so bogged down in routine tasks and the daily ritual of simply getting things done that it makes them forget exactly what they’re trying to achieve and where they are trying to go.

Take some time to consider the major changes that occurred in your industry over the past five or ten years. Could you have foreseen them? Perhaps yes, perhaps no. Perhaps some. More important, ask yourself if, ten years ago you spent some time to consider what the major changes over the next ten years would be. If you had, would your business be in a better position now?

It is therefore important for entrepreneurs to regularly call time-out to make sure that they…

• still understand their position in the marketplace;
• are still moving forward with a sense of direction, purpose and urgency; and
• are still focusing on the key issues of customers and markets, and the skills needed to deliver to those customers and markets.
  

The only businesses that do not need to be concerned about this are the ones that…

• have no competitors,
• are in total control of their destiny,
• remain unaffected by changes in the industry,
• exist in an environment that never changes.

Otherwise it is essential for every organization, large or small, public or private, service or manufacturing.When it comes to shaping the future, the entrepreneur must address a number of questions:

• Where are we now and how did we get here?
• What did we do well, or badly, to arrive at our current position?
• What business are we in?
• Will this remain the same, or will we need to change? If so, to what?
• What factors internal and external to the business will, or can, have an impact on what we do in the future?
• Where do we want to be in the future?

Once these questions have been addressed, the entrepreneur can start tackling the next question, namely, how are we going to get there? And this would primarily be about managing change… a topic for a next time.

Be "in the know" with latest news, rumors, and happenings.

Guy Kawasaki, Managing Director of the early stage venture capital firm Garage Technology Ventures and author of the exciting book "The Art of The Start" is at it again with his latest project Truemors.

According to the Truemors website, "The purpose of Truemors is to democratize and spread information. First, from a “citizen journalist/editor” perspective it enables you to “tell the world” - within the bounds of good taste and the law anyway. Second, from a reader perspective, it puts you “in the know” about the latest news, rumors, and happenings, so that “you know better” without having to spend hours every day searching for information."

Go check it out!

Investec Asset Management TV Ad

"Because ordinary won't change the world"

The Investec television ad featuring Lewis Gordon Pugh personifies the spirit of entrepreneurship, and the punch-line "because ordinary won't change the world" expresses the entrepreneurial attitude... creating value where there was none before... altering the future for the better.

Ordinary simply won't do... well, maybe for the survivalist entrepreneur, but not for the opportunity driven entrepreneur. Going beyond the mundane to truly make meaning requires thinking, reasoning and acting in ways that might cause one to be labeled an oddity.

Watch the video... it's really inspirational!