BUSINESS DEVELOPMENT, ENTREPRENEURSHIP AND INNOVATION
2016 HANDOUT 1 (GBS 751)
INTRODUCTION TO ENTREPRENEURSHIP AND INNOVATION
1.0 INTRODUCTION
In order to have stable, sustainable and regular sources of income to sustain their livelihoods and those of their families, people world over need to work hard. This can be done by;
a) Wage employment
b) Self- employment
c) Both wage employment and Self employment
It must be mentioned, however, that formal employment visa-a vis wage employment is on the decline in most countries including Zambia. Job losses are the order of the day. For instance, in Zambia, there were a lot of job losses in 2015 and even 2016 especially on the Copperbelt. While the number of formal employment opportunities are on the decline, the number of people, particularly youths who need jobs is on the increase. In Zambia for instance, it is estimated that over Three Hundred Thousand (300,000) youths are offloaded onto the labour market every year from High Schools, colleges and university and yet formal employment opportunities are hardly available.
Self- employment therefore, becomes a very key career option or substitute to formal employment, and the concept of self-employment is anchored on Entrepreneurship, Innovation and Small Business Development. Countries that have embraced the culture of Entrepreneurship, Innovation and Small Business Development have recorded National Economic Development and poverty reduction. The most popular examples of countries that have used Entrepreneurship, Innovation and Small Business Development to fight hunger, unemployment and poverty are the “Tiger Economies” of the Far East, which include Malaysia, Indonesia, Taiwan, Singapore, China and many others.
2.0 TYPES OF EMPLOYMENT
There are basically three types of employment namely;
a) Wage Employment
This is where someone is employed by another person, or organisation which agrees to pay him a fixed salary or wage daily, or weekly or monthly as the case may. Examples include Civil servants, employees of both private and public limited companies, NGOs etc
b) Self-employment
This refers to a situation where someone establishes and runs a business venture thereby enabling him to draw a livelihood from the ownership and management of his enterprise or business venture.
c) Both Wage employment and Self-employment
Other individuals combine the above two options, where they use their formal employment as a basis to generate and save funds to eventually invest in their own business venture
2.1 WAGE OR SEL-EMPLOYMENT: A CHALLENGING CAREER CHOICE
After completion of education, at whatever level, one has broadly two career options. One can be employed in Government, Public or Private or NGOs sector accepting a fixed wage or salary. The other career option is self- employment under which one perceives an idea, mobilises resources to turn that idea into a business venture to earn his own income from managing and owning the said business. These two career options available to all of us differ from each other in terms of Nature, Scope, Orientation, Satisfaction, contribution, Earnings and Status.
# / Concept / Wage Employment / Self-Employment1 / Nature / Self- Saturating / Self-generating
2 / Scope / Limited / Unlimited
3 / Orientation / Routine type, status quo, problem solving avoiding, dependent / Creative, innovative, problem solving, independent
4 / Satisfaction / Through compliance / Through pursing own ideas and creativity
5 / Contribution / Usually consumes national wealth, e.g Parastatals / Generates National wealth
6 / Earnings / Fixed, subsistence / Potential large earning, Growing and generating surplus
7 / Status / Employee/Servants / Employer/ Servants
In the ultimate analysis, the lasting solution of acute problem of unemployment and poverty lies in self-employment and not wage employment, that is, through the entrepreneursation of the Zambia Society.
2.2 Advantages and Disadvantages of Wage Employment
Advantages
i. Specific or fixed responsibility
ii. Stead income
iii. Fringe benefits
iv. Fixed hours of work
v. More certain future
vi. Span of control
vii. Minimal risks
Disadvantages
Ability not easily recognised
Follows order
Low and Set income
Limited responsibility
Difficult to implement own ideas
Dependent on the employers
2.3 Advantages and Disadvantages of Self-Employment
Advantages
i. Leads rather than follows
ii. Easy to implement own ideas
iii. Creativity
iv. Potential income is unlimited
v. Independence
vi. Controls work environment
vii. Takes initiative and risks
viii. Gives orders to others
Disadvantages
i. Long irregular working hours
ii. Broad and many responsibilities
iii. Must take risks
iv. No fringe benefits
v. Always involved in almost all decisions eg, finance, marketing etc
vi. Uncertain future
vii. Hard to delegate tasks
viii. Learning never ends
3.0 ENTREPRENEURSHIP
There is no agreed definition of what entrepreneurship is and many scholars have come up with different definitions. We shall look two of them.
3.1 What is entrepreneurship?
Entrepreneurship is the art of creating or developing a business through innovation, creativity, progressive imagination and risk taking initiative, or
Entrepreneurship is the art identifying viable business opportunities and mobilizing resources to convert those opportunities into a successful enterprise through creativity, innovation, risk taking and progress imagination.
The key words in most definitions are; Art, development, innovation, creativity, progressive imagination and risk taking. Entrepreneurship is premised on the understanding that ideas are more important than MONEY. An entrepreneur without any money at all, will use ideas and/or his progressive imagination to make money, whilst a person with huge sums of money but without sound entrepreneurial ideas will eventually misuse or lose that money.
3.2 Who is an entrepreneur?
Entrepreneur is a derived name from the French work “entreprendre” ie “entre (to enter) and “prendre”(to take), and in a general sense, applies to any person starting a new project or trying a new opportunity
An entrepreneur is a person motivated by a strong desire to achieve positive and sustainable business results through hard work, risk taking abilities, determination and generation of progressive ideas.
4.0 CREATIVITY AND INNOVATION
A recent study by the Small Business Administration in 2010 in the US, found that smalls firms produce more economically and technically important innovations than large firms. What is the entrepreneurial secret for creating value in the market place? In reality, the secret is no secret at all. It is applying creativity and innovation to solve problems and exploit opportunities that people face every day.
4.1 What is creativity?
Creativity is the ability to develop new ideas and discover new ways of looking at problems and opportunities.
4.2 What is innovation?
Innovation is the ability to apply creative solutions to those problems and opportunities to enhance or enrich people’s lives. Harvard’ Ted Lett says that creativity is thinking new things and innovation is doing new things. Management legend Peter Drucker said innovation is the specific instrument of entrepreneurship, the means by which they exploit change as an opportunity for different business or different service
Creativity and Innovation lies at the heart of small companies’ ability to compete successfully with their large rivals. Even though they cannot outspend their larger rivals, small companies can create powerful, effective competitive advantages over big companies by over-creating and over-innovating their larger rivals.
4.3 Barrier to creativity and innovation
i. Fear of mistakes and failure
ii. Focusing on being logical
iii. Blindly following the rule
iv. Avoiding ambiguity
v. Fear of looking foolish
vi. Searching for one right answer
vii. Being over specialised
viii. Believing that you are creative and innovate when in fact not
4.4 How to enhance creativity and innovation
- Including creativity and Innovation as a core company value
- Rewarding and supporting creativity and innovation
- Viewing problems as challenges
- Developing procedures for capturing new ideas
- Talking to customers
- Embracing diversity
- Expecting creativity and innovation and tolerating curiosity
- Creating a change of scenery periodically
5.0 TYPES OF ENTREPRENEURS
Entrepreneurship experts contend that there are basically two types of entrepreneurs in the world; Pulled entrepreneurs and Pushed entrepreneurs. Entrepreneurship is usually seen as resulting from a situation of high unemployment and/or deprivation of a social or economic nature (crisis situation) or the existence of market opportunities and successful entrepreneurs as role models in society. When Entrepreneurship is as a result of a response to a crisis situation, then it is said to be Pushed Entrepreneurship. On the other hand, when Entrepreneurship is as a result of a market opportunity that has occurred or the existence of successful entrepreneurs as role models, then it is said to be Pulled Entrepreneurship.
5.1 Pushed and Pulled Entrepreneurship Compared
Pushed Entrepreneurship / Pulled EntrepreneurshipBeing pushed to start a business after being dismissed from your job or getting retrenched / Being attracted to start your own business because you desire to earn more income than what you earn from your employers
Being pushed to start a business after the company you were working for, has been closed / Being attracted to start your own business upon seeing how successful your role model or an entrepreneur that you know, has become
Being pushed to start a business after the death of your parent/guardian who was fending for you / Being attracted to start your own business in your quest to lead your own independent lifestyle and become your own boss
Being pushed to start a business upon your graduation from college or university due to failure to get a job on the labour market (high unemployment levels in the country) / Being attracted to start your own business upon identifying viable market opportunities.
Pulled entrepreneurs are generally said to prepare adequately before launching their enterprises and have therefore, a higher rate of success. Pushed entrepreneurs on the other hand, are said to respond to crisis situations or unplanned circumstances and normally start business under conditions of stress and through trial-and-error. As a result pushed Entrepreneurs exhibit lower rates of success
5.2 Intra-preneurship?
Intrapreneurship also known as Corporate Entrepreneurship refers to situations where top Management run the companies with a lot of entrepreneurial qualities and flair as though those companies were their personal enterprises. They use leadership styles and make decisions based on sound entrepreneurial attributes and behaviours.
5.3 Techno-preneurship
Techno-preneurship is the art of using or taking advantage of the constantly advancing technology or State-of-the-Art technology to create new entrepreneurial and innovative business enterprises. In Zambia, for instance, we have witnessed the emergency of several state-of-the-Art based ventures such as money transfer facilities like Zoona, swift cash, Airtel money, MTN Mobile money transfer etc or in the banking sector where we have internet banking, ATM banking, e-wallet (FNB), Xapit (ZANACO) etc
Entrepreneurs should use intra-preneurship and techno-preneurship to enhance the efficiency and effectiveness of their enterprises. Entrepreneurs should attempt to employ workers that are intra-preneurs in nature so that they add value to their enterprises and should always endeavour to take advantage of state-of-the-Art technologies in their operations in order to embrace techno-preneurship.
6.0 THE ENTREPRENEURIAL PROCESS ILLUSTRATED
The Entrepreneurial Process may be viewed and summarised to have the following fundamental steps:-
Step 1: The existence of entrepreneurs
Step 2: Their (entrepreneurs) constant search for business opportunities
Step 3: Their abilities to marshal or assemble required resources
Step 4: Their prompt creation of business ventures usually under conditions of creativity, innovation, risk and uncertainty.
Step 5: The eventual exploitation and utilization of the identified opportunities
7.0 WHAT IS TRIGGERING ENTREPRENEURSHIP?
The forces that are driving and triggering Entrepreneurship include the following:-
Entrepreneurs are viewed as heroes, successful people and role models in Society
In most societies, entrepreneurs are increasingly being viewed as heroes, successful people and role models and they therefore, inspire others to aspire to be entrepreneurs too.
Entrepreneurial Education and awareness campaigns
Most educational institutions, whether Secondary Schools, Vocational Training Centres, Colleges or indeed Universities are increasingly appreciating the need for embracing and incorporating Entrepreneurship as a key subject or course in their institutions' curricula. This approach is contributing a great deal to the growth of the concepts of Entrepreneurship. As a result, students are learning to appreciate the need to opt for Self-employment as a career option to formal employment, upon their graduation. Even the constant awareness campaigns at places of work, at church gatherings or fellowships and through the print and electronic media, are impacting very positively on the growth of entrepreneurship.
High Unemployment Levels
The high unemployment levels being experienced in the country coupled with equally high poverty levels have forced many progressive citizens who have the survival instinct, to opt for self-employment initiatives, thereby fuelling an increase in entrepreneurial activities among citizens.
The booming Service and Trading Sectors of the Economy
Because of their relatively low start-up costs, Service and Trading Sectors have become very attractive and popular among most entrepreneurs in Zambia and to a large extent globally. Potential entrepreneurs find it relatively easy to set up enterprises in the service and trading sectors because the required seed capital is much lower than other sectors such as Agriculture, Construction, Mining and Manufacturing. The booming service and trading sectors therefore, have been contributing to the growing entrepreneurial process in Zambia.
Technological Advancement
The constantly advancing technology in the world today, has brought about numerous modern business equipment and machinery such as laptop computers, tablets, I-phones, internet banking, mobile banking, Facebook, and many others. This advancement in technology has therefore opened up many technology related business opportunities that have contributed to an increase in the level of entrepreneurship among nations including Zambia.
Growing desire for independent lifestyles
Many people in the world today are very desirous of independent and self-sustaining lives. Increasingly, society is witnessing people who want freedom to choose where they live, the number of hours they work, and what they do, all of which are largely dependent on one being self-employed and engaging in entrepreneurship. This desire for independent lifestyles is therefore, equally triggering the entrepreneurship spirit among nations.
E-commerce and the World Wide Web (WWW)
The proliferation of the World Wide Web, the vast network that links computers around the world via the internet and opens up huge bundles of information to users, has generated thousands of entrepreneurial ventures. Online commerce has therefore contributed to the growth of entrepreneurship in many nations around the globe.