A Trilogy On Entrepreneurship: Preparing for Entrepreneurship: Book One

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FOREWORD

Book One, Preparing for Entrepreneurship, opens the curtains on A Trilogy on Entrepreneurship. As the title proclaims, Book One endeavors to take the entrepreneur through the step-by-step process of Opportunity Seeking, Opportunity Screening and Opportunity Seizing. The first step allows the entrepreneur to unravel the myriad possibilities in finding a good business venture by following any one of several proven methodologies. This is a creative and divergent thinking process. The second step evaluates the possibilities using logical and convergent thinking based on criteria deemed important by the entrepreneur. The third step enables the entrepreneur to focus on the critical variables that could make or break a business venture and to craft a positioning statement that would differentiate the business and its products from competitors.

To ensure success, the entrepreneur must validate the opportunity through rigorous Market Research. In addition, Customer Profiling and Location Analysis are the two crucial research endeavors which the entrepreneur must embrace fully. The first one enables the entrepreneur to target a specific and appropriate market segment while the second one chooses the best place for doing business and selling products.

Finally, Preparing for Entrepreneurship, delves into the systematic process of New Product Development, the jump-off point towards creating a new enterprise.

Chapter One

Opportunity Seeking

Entrepreneurs are innovative opportunity seekers. They have an insatiable curiosity to discover new or different ideas that will work in the marketplace. This curious streak is what separates them from the ordinary businessman whose obsession is, simply, to make a profit from producing, buying and selling goods. A lot of business venturers set up shop to repeat what everybody else is doing but this is not really entrepreneurship. It is just doing business as usual. So what is an entrepreneur and what does innovative opportunity seeking got to do with it?

When the word entrepreneurship was coined, the discerning economist wanted to stress the point that entrepreneurs contribute significantly to the economy by raising productivity from one level to the next. Entrepreneurs create value by introducing new products or services or finding better ways of making them. They may innovate on the design of a product or add features to existing ones. They may experiment on work flows and operating systems to extract greater efficiencies. They may improve technologies to gain better economies or achieve unassailable superiority. They may create new demand from undiscovered customers. They may expand horizontally or vertically to maximize market coverage or ensure production control. They push their competitive advantage to the limit in order to gain industry dominance. They will not stop seeking for that proverbial pot of gold at the end of the entrepreneurial rainbow.

The entrepreneur as seeker begins with the Entrepreneurial Mind Frame. This mind frame allows the entrepreneur to see things in a very positive and optimistic light. What is garbage to others is green gold to them. In my favorite anecdote on opportunistic optimism, there were these very young twin brothers who woke up one morning to the foul smell of horse shit. The first twin, an incorrigible pessimist, moped woefully on his bed. When mom smells that, she will tell us to get rid of it because it is near our window. Then I have to solve this messy problem by getting a dust pan, a broom and a plastic bag to get rid of the horse shit. Then I have to throw it in the garbage can, making sure I put the lid on. The second twin, a pollyanic optimist, exuberantly exclaimed, if there is horse shit, there must be a pony somewhere. He then ran out the house to look for the pony.

The mind frame of the entrepreneur puts a positive spin even on problematic situations in order to generate innovative ideas. In contrast, many managers in the business world will only focus on what they are paid to do, which is to solve business problems. They may find the solutions but that just brings them back to where they were. In many business schools, the focus of discussion is to find the central problem in a business case, determine the areas of consideration, screen the alternative solutions according to certain criteria and assess the pros and cons of the alternatives in order to arrive at the best solution. This is actually well and fine but business schools do not stress the positive and creative part of business. They tell students to stick to the case facts and not stray away from them. However, the entrepreneurial mind frame is different. The entrepreneur experiments on possibilities by asking, In how many ways can I solve the problem? and goes beyond problem solving into the realm of creative thinking.

The optimistic mind finds the potential even in crisis situations. The pessimistic mind sees the risk. Many pundits on entrepreneurship often repeat the observation that the Chinese calligraphic representation for the word crisis is composed of two characters: the first character means danger while the second character means opportunity. This reminds me of one of the darkest years for the Philippine economy following the assassination of Senator Benigno Aquino Jr. The country lost all international support. There was massive capital outflow. The GNP growth rate turned negative. Real estate prices dropped precipitously. An entrepreneur friend of mine encouraged me to buy a condominium. He himself was borrowing money in order to buy ten units. He said it was the best time to buy. I did buy one. Two years later, the martial law government was overthrown. A year after that, real estate prices multiplied seven times in the Makati district where we bought the condominiums. The same thing happened after the Mt. Pinatubo volcanic eruption. Mansions could be bought in Pampanga for a song.

The entrepreneurial mind frame makes me doubt the adage that entrepreneurs are risk takers. From the many case studies I have written on entrepreneurs, they did not seem to be worried about the risks as much as they were enthusiastic about the opportunities. Many, in fact, think like inventors who know that they must attempt many times in order to find success, even if there would be a lot of failed experiments along the way. Each experiment is a step closer to success. Provided the entrepreneur reacts quickly to his or her failures, then they are not risks but heuristic processes towards finding success. Again, this inventor mind frame is important because entering the world of business throws the entrepreneur into many uncontrollable situations where there are too many variables shifting from time to time.

Business is not a mathematical equation with a definite method for solving the equation which has only one correct answer. Business is not an algorithm. It is, oftentimes, a trial and error process with a lot of art, rather than science, into it. Experience, education, contacts and connections, personality, market conditions, technological evolution and countless other factors enter the largely human equation of consumers, employees, suppliers and competitors. Juggling all these factors all at once necessarily means that each and every factor actually represents a risk. On a day to day basis, the entrepreneur is more engrossed in making all the juggled factors stay up in the air rather than focused on the risk contained in any one factor. Risk fetish would only serve to distract the entrepreneur into losing sight of the objective. In other words, the entrepreneur should concentrate on controlling the factors for success rather than obsessing about taking risks.

What drives the inventor also drives the entrepreneur. Both are consumed by the Entrepreneurial Heart Flame or that surging passion to find fulfillment in the act and process of discovery. Inventors and entrepreneurs do not even stop to relish the victory of their discoveries. Each discovery is just a step to another one. Hence, the fire of creation is always alive in their hearts. The entrepreneur as seeker will soon lose interest if the passion behind the seeking subsides. This passion springs from the perfect (or near perfect) fit between who the entrepreneur is as a person and what he or she is doing for a living. Passion comes from great desire to attain a vision or fulfill a mission. Passion is about wanting something so much that a person would be willing to devote one’s self totally to the quest.

Passion is, therefore, not for the dilettante nor the dabbler in business who thinks that a little effort is enough to get by. Passion is not for the person with some capital and asks, Now what is a good investment to put my money in? If one has to ask, then that person has no heart for entrepreneurship because it is passion that would make or break a business. The passionate person cannot easily be disheartened by business obstacles and setbacks. He or she will endeavor to overcome them. Passion is the critical ingredient for perseverance and long term sustainability.

The entrepreneur with a lot of heart will face business storms head on and there will definitely be a lot of storms while running a business. The entrepreneur will brace himself or herself for the long struggle to success. And even if some modicum of success has already been achieved, the entrepreneur will fight on to attain greater success.

Heart is also about emotional intelligence. This is often manifested in the entrepreneur’s relentless efforts to nurture relationships with customers, employees and suppliers. In many Asian societies, relations and relationships separate the good business network builders from the mediocre ones. Heart is about genuine interest in people, how to motivate, gestate and elevate them. Heart is about nurturing a caring culture in a goal-oriented enterprise because the entrepreneur cannot grow the organization by himself or herself. It needs the synergy of people working in harmony.

The final ingredient to the alchemy is the Entrepreneurial Gut Game. The gut symbolizes two things in common-day language. The first is the ability to sense without using the five senses. This is intuition or the ability to jump to insightful conclusions without the rigorous process of logical, systematic and sequential thinking. Entrepreneurs rely on their gut feelings when making decisions too complex to simplify in rational syllogisms. Their constant exposure and immersion in the marketplace heightens their observation skills and sharpens their ability to discern patterns in the behavior of customers and competitors. Their reflexes have been highly developed to react, proact and enact in their ever-changing business environment.

The second symbolism of gut is courage, intestinal fortitude and chutzpah, as in the phrase He has the guts to overcome the challenge. Guts enable entrepreneurs to withstand adversity and weather crises. Guts give entrepreneurs the courage to plunge into difficult ventures with all their traps and pitfalls, tests and temptations. Guts is the chutzpah of the entrepreneur who thinks that everything is possible. It is utter confidence in one’s self. It is the belief that everything is within reach if only the entrepreneur would aspire for it.

The Entrepreneurial Gut Game is the total involvement of the entrepreneur in the exciting game of business, demanding the keenest of intuitive abilities and the strongest of intestinal fortitude. For indeed, business is a giant game where stakes are high, players are legion, moves are plenty and rules are complex and changeable. The game field of business is not confined within circumscribed boundaries. Market forces are as volatile as the preferences and behavior of customers. New technologies render old ones obsolete overnight. Neophyte challengers rise as fast as faded champions exit the business game. Suppliers shift loyalties, some driven by price, others by logistics. People come and go, talking about greener pastures and wounded egos.

Management books, journals and dissertations are replete with recommendations on how to play and win the business game. Corporations spend huge amounts of money to train and educate their staff because there are, in fact, management methods and systems that help in improving business productivity and profitability. This is the learnable part of entrepreneurship but it requires discipline and a fair amount of brain power. Just like in any contest where there are many combatants, the entrepreneur must fortify himself or herself to enter and win the business game by employing the best techniques, choosing the right weapons and honing one’s skills. Entrepreneurs are made this way.

While the business game is being played, the myriad variables come into play. The entrepreneur with the sixth sense of rapid situational recognition and intuitive leap of brilliancy will win the coveted prize. This is the more unlearnable trait of entrepreneurs which make people say that entrepreneurs are born. Guts, will power, passion and innate inquisitiveness are the other elements of entrepreneurship that are difficult to learn.

The Many Sources Of Opportunity

The seeker has many sources of opportunity to choose from in order to succeed in his or her entrepreneurial quest. Some sources suggest looking at the entire forest. Other sources see the trees. Some focus on what is liked by customers, others rely on what is hated. Some capitalize on successes, others concentrate on failures. Some harp on hobbies and interests, others prefer the harsh road of science and technology. Whatever the source, the entrepreneurial mind, heart and gut sally forth into the fray.

Macro-Environmental Sources

The big picture of the macro-environment contains opportunities galore. Acts, events and trends in the social, political, economic, ecological and technological environment paint the forest scenario. This is the larger playground of the entrepreneur. The business rules of engagement are made here. The root determinants of market