Reflections on Entrepreneurism

A week ago, I was conducting a programme in Thailand on Customer Satisfaction and Loyalty issues. The participants were all senior managers from a range of industries – from petroleum and plastics to pharmaceuticals and food products. I gave them a broad vista on how the market has changed with the impact of globalization, liberalization and better technology; where the crying need is now to differentiate the product or services from competitors, by providing better customer satisfaction to ensure continuing customer loyalty.

I talked to them about going beyond technical skills and even human skills by acquiring conceptual skills; where you look at the organization as a whole and see how it can be made to conform to the needs and the wants of the ultimate customer. At the end of the two-day programme some of the participants came up to me and said that they needed some direction. They were not very happy with all that we had talked about – or even examples of other companies and what they had done to ensure an ongoing customer satisfaction. These participants wanted a “cookie cutter”. In fact, many “cookie cutters” to just fit every conceivable situation that may arise. They wanted a “formula” to provide customer satisfaction and ensure customer loyalty!

The senior managers from the pharma industry were unhappy that we had not discussed more examples from that industry and the senior managers from the consumer products companies were dissatisfied that we had not discussed examples from consumer product companies and more specifically the packaged food business, rather than the toiletries and detergents business.

Why did this happen? These were all senior managers from a range of some of the biggest companies in Thailand. They had worked for many years; had been promoted over these years; and the company obviously kept them trained over the years. But they still had not mastered the ability for conceptual thinking; for innovative thinking and for thinking with a focus on the customer.

This reminded me of the writings of Larry Farrell which I read over fifteen years ago where he said, “the key to success today cannot be found in modern management science, but in old-fashioned entrepreneurship.” It was an article with which I was greatly impressed and for me a former senior manager, now entrepreneur, renewed my faith and hope in entrepreneurship. I even went further to encourage young people to become entrepreneurs (provided they had a spark for entrepreneurship) by writing a book: “Entrepreneur – I Believe You Can Move Mountains”.

Larry Farrell says that at the end of a lecture in China, a frail Chinese man approached him saying he wanted to thank him for coming to China to share his ‘management wisdom.’ Larry asked him what his job was and the man said ‘Manager of a rolling steel mill outside of Beijing.’ Larry then asked him how many employees he managed. The man answered ‘sixty-five thousand.’ Larry gulped and wondered if the man had any questions about management. He nodded and handed Larry a slip of paper on which was written the word – “entrepreneur”– He said “I want this. Can you teach me to be this?”

That simple sounding question completed baffled him. Larry has spent the last many years trying to get the answer through a worldwide investigation of entrepreneurs and their high-growth companies – a search for common sense. Some of these entrepreneurs were giants. Many were unknown. They all offered a damning indictment of modern management theory.

Larry continues ‘the message here is straightforward. Old-fashioned entrepreneurship, not modern, professional management, is the driving force of successful, high-growth companies. Indeed the 21st century promise of the giant, rational corporation as the engine of prosperity comes up a myth. The facts show that the real growth in all economies comes from younger, smaller, more entrepreneurial companies.’

Do you know that inspite of all that we read and talk about Fortune 500 companies, 70% of the exports from the USA are from small and medium sized companies which do not belong to Fortune 500? The silver lining for India is that it is among the most entrepreneurial countries in the world. India has the most shops in the world – one for every twenty families, which is more than the USA, UK and Singapore. Forty million people are employed in unorganized retail. Since 50% of Indian’s population is self-employed, many of them take to petty retail trade. And this is a good beginning, which makes India fertile soil for entrepreneurs.

Farrell says common sense should tell us that if we really want to get at the basics of enterprise, we have to search out the masters of entrepreneurship. The lessons of enterprise don’t come from the world’s best-managed bureaucracies. They certainly don’t come from business schools or even consultants. They come from world-class entrepreneurs. It’s their business practices that are the true engines of prosperity. They all adopt the four fundamentals to achieve high growth:

  1. High purpose: picking the right customer/product strategy and ensuring that the culture is connected to that strategy.
  2. Absolute focus on customer and product: being a product expert and a customer expert at the same time.
  3. High speed innovation: constantly coming up with new, creative ways to please customers.
  4. Self inspired behaviour: enabling ordinary people to do extraordinary things.

High purpose: In the beginning, all organizations reflect the sense of mission of their founders. They know the only way to stay alive is to produce products and services that someone, somewhere will pay for. Sense of mission is about picking the right customer/product strategy.

In pursuit of their mission, builders of companies devote enormous energy to what they are doing – corporate strategy – and how they go about it – corporate culture. It does not get any more basic than this. To entrepreneurs, the what of the enterprise can only mean: what customers and what products will I pursue? Being wrong on those questions is certain bankruptcy.

In 1918, Konosuke Matsushita invested his life savings of one hundred yen in imported electric sockets. His mission: resell them all. He went bankrupt. By his own account, he was unsuccessful because he was thinking too much about selling and not enough about what customers really wanted.

He went back to all the people who wouldn’t buy and asked them how the sockets could be improved. He went back to the market and tried again and again. It was this process of back-and-forth customer/product strategizing that produced Konosuke Matsushita’s marvelous invention: the world’s first two way electric socket.

Ever since, the what of the business at Matsushita has been dominated by knowing which customers want what products? This has been the driving competitive advantage of Matsushita Electric for 100 years!

The entrepreneurial approach to strategy is pretty down-to-earth. Here’s how entrepreneurs approach it.

  • It is a matter of survival. The goal is survival, not a nod from the board. If we fail, we don’t get to try again next year. We’re history.

Companies like Kellogg in India could afford to make a mistake and waste a few years. They have pockets deep enough. Small time entrepreneurs do not have this luxury and have to do it fast!

William Hesketh Lever, founder of Lever Brothers used to say “the conduct of successful business merely consists in doing things in a very simple way, doing them regularly, and never neglecting to do them.”

  • Stay focused on customers. They know more and cost less than market researchers and consultants. Design your strategy with them, not at them.

Afprint in Nigeria a company of Indian origin from the Chanrai Group, developed ‘Elegance’ a branded Nigerian women’s’ wear for the first time in Nigeria which went on to be a significant success. The succeeded because they made the customer a part of the development process rather than insulating themselves in the design department.

  • Stay focused on products. What keeps entrepreneurs in business is make sure their customers love their product or service.

This is what makes customers want to come back to the Taj or the Oberoi Hotel or keep using Odomos.

So now your vision of markets and products is clear. They only thing standing between you and them is knowing how to get there. This is where corporate culture gets plugged into the business.

Entrepreneurs keep asking the three questions again and again which sometimes are forgotten at higher echelons in big business.

  1. Who to serve?
  2. What to offer?
  3. How to deliver?

Walter Vieira is a senior management consultant, former Chairman of ICMCI, world apex body of Management Consultants and author of eleven books including “Entrepreneur-I Believe You Can Move Mountains.”

This Blog entry was originally published in the The Economic Times – Corporate Dossier, dated 04 April 2008.

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2 Comments on “Reflections on Entrepreneurism”

  1. Luke Faccini Says:

    This is Excellent! Thanks for your insights Walter. I found this post to be very true. I also believe that the core of a successful business is developing a powerful company culture (Vision, Mission and Core Values) which clearly align with the desires defined by your buyer persona’s.

  2. Walter Vieira Says:

    Dear Mr Faccini,

    Thank you for your comments.

    It was kind of you to respond.

    Walter Vieira

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