Entrepreneurship as the Real Engine of Growth - Case Study Example

and No Entrepreneurial Processes 09 September Introduction An entrepreneur is someone who has a brilliant idea and undertakes to take risks so he or she can provide a new product or service to the market. The entrepreneur serves as the link between capital and labor in exchange for financial, psychic and other rewards. He is mainly an innovator who introduces new ideas, products, services and firms into society. Most of the entrepreneurs are themselves innovators in this regard by bringing about changes in business and societal norms known as creative destruction (McCraw, 2007, p. 179) in which the people who are entrepreneurs bring about changes to the market. There is also no exact definition of what an entrepreneur is and what makes an entrepreneur tick. Some say it is due to the right combination of circumstances and opportunities with the right people in the right place. There are two generally accepted types of entrepreneurs: people who start a new business and those in charge of big corporations but have essentially retained their entrepreneurial qualities. Entrepreneurs possess certain qualities that make them different from the usual crowd. Among these requisites are leadership, willingness to take risks and accept full responsibility for their results, management ability and people skills to build the right teams. There are two kinds of entrepreneurs which are business entrepreneurs who engage themselves primarily for profit and the second type are the social entrepreneurs who endeavor to create social value by solving societys problems using a business-oriented approach but not necessarily for profit. It is also conceded by academics that entrepreneurs undergo a four-step process for them to have become successful entrepreneurs in the real sense of the word. This is the main subject of this paper and the processes are discussed in the succeeding pages. Discussion There are four broad processes by which entrepreneurs go about their tasks. These are discovering, recognizing or identifying the business opportunity, developing or formulating a right business plan, securing or organizing the required resources and lastly, managing in turn the resultant new business venture. This four-step process applies to all entrepreneurs, that is, whether the new enterprise is organized for profit or not and also to pure entrepreneurs who work outside big corporations and their insider counterparts termed as intrapreneurs. People who are entrepreneurial by nature are driven by innovative and creative ideas, quick to see a new opportunity and are motivated by their visions of success. The four different steps are discussed here in the order of their importance, in my personal opinion. Identifying an Opportunity – I rank this first because this is the most crucial aspect of entrepreneurship. Successful entrepreneurs are people who have a sharp eye for something new and think creatively about seeing an opportunity to enter the market based on prevailing inadequacies in that market. With this crucial characteristic or ability to see something which others failed to see anything significant, entrepreneurs usually become the very first people to venture into something that is at times untested, and therefore, relatively risky. They are very willing to take risks because the entrepreneurs have weighed the odds against them and found out they have a good chance of succeeding if certain things are managed correctly. Entrepreneurs are extremely alert people who have this capacity to see any objective information and transform this combination of factors into something workable. By so doing, they bring innovation and new technologies which in turn increase efficiency or productivity. Some academicians think entrepreneurs know implicitly they have an imperfect access to all kinds of information but they have this rare ability to push ahead despite these imperfections. In other words, they are able to correct these deficiencies (Steyaert & Hjorth, 2004, p. 107). In a way, correctly identifying a potential opportunity as it presents itself requires the synthesis of new ideas and realizing that market processes will always contain errors in them. The entrepreneur, however, corrects these errors and imperfections by noticing and grasping the opportunities inherent in what they see which other people failed to see. Psychologists who studied entrepreneurial people see this as a perceptive process by which the opportunity recognition is a mental exercise or cognitive process. All the subsequent steps in the entrepreneurial process stem initially from this step. Without the ability to spot an opportunity quickly, the other steps are useless and irrelevant. Further, it is important to know that entrepreneurs tend to act quickly on what they see as the emerging opportunity because they know an opportunity can be spotted by someone else who may be quicker than them in acting on it (Baron & Shane, 2007, p. 88). People call this as the “window of opportunity” which is the time for someone to act on it before it disappears. The other critical ingredient in identifying an opportunity is plain common sense. Opportunities emerge out of changes in existing technologies, markets, demographics, environment factors and perhaps government policies (ibid.) and these needed to be spotted as quickly as possible. Formulating a Business Plan - this is a written document which details how the new venture will proceed to exploit an identified market opportunity (Kuratko, 2008, p. 348). It can be something formal consisting of several pages of typed documents or it can be informal written on a scrap of paper or napkin. In today’s business graduate school lingo, it is called as the business model. In this regard, the whole point of having a business plan is to integrate all the necessary resources and actions to be taken to bring a new idea to market fruition. In this business plan or model, everything concerning the venture is discussed such as current status and other aspects like expected results or projected sales revenues. Research, marketing, sales, management structure, financial projections, critical risks, timeline of activities and important milestones are described in greater detail. This is important if new capital is required. Organizing the Required Resources – besides financial requirements, other resources are necessary for the new venture to take off. Among these are hiring the right people to run the venture, with the entrepreneur exercising his or her leadership by looking for and hiring people who share the same business or organizational vision and mission. Resources include financing for start-up ventures which is why the business plan needs to be formulated so this can be presented to potential investors. A formal business plan is variously called as a venture plan (for potential partners), a loan proposal (intended for banks and other lenders) or as an investment prospectus (for interested investors). Managing the New Venture – entrepreneurs will eventually go to this last stage of the entrepreneurial process when the business is already up and running. Managing an enterprise often requires completely different skills which is why it is sometimes advisable to hire a new set of professional managers to run the venture. Some entrepreneurial people are good at how to spot new opportunities, hiring the right people and formulating a convincing business plan. However, some entrepreneurs fail as business or organizational managers because they may lack the needed experience, industry insights, have imposed ineffective operating procedures or due to their brilliance, may have formulated unrealistic business plans. Once a venture is already operational, it is better to let professional managers handle routine daily management. Individual Perspective – the most important element, in my view, will be identifying the business opportunity. This ability is a uniquely individual trait and no one else can do this except the entrepreneur through his unique insights using creativity and imagination. All great business undertakings began with individuals who correctly assessed the situation, saw the need for a new product or service, found a way to serve it better than existing firms can and so went on to be successful business enterprises. No one can duplicate this feat of identifying the market opportunities at the moment these opportunities presented themselves. In my opinion, no corporate committee can do this better than the entrepreneurial mindset of an individual. Corporate Perspective – from a corporate viewpoint, organizing the needed resources and managing the enterprise are the most important elements. These two elements are best suited to an organizational structure because if an entrepreneur continues to do these things, it will distract him from the more important task of strategizing the plans a venture will take in the future. The second element, which is formulating a business plan, can likewise be done by someone else hired by the firm to do it. The entrepreneur must be focused solely on analyzing new market trends, identifying threats and weaknesses, spotting newer opportunities and in a more important task of strategy formulation by aligning resource capabilities with aims. Entrepreneurship and Health Care Delivery – there are basic rights and necessities in life and these include food, shelter, education and health care. Many entrepreneurs have been applying business models to health care delivery as a basic right by social entrepreneurship. It is the type of entrepreneurship pursued in developing countries where people render medical services to address a range of social issues such as poverty and lack of medical care access. It is adopted as the new model to achieve sustainable social changes (Nicholls, 2008, p. 3). An example are social entrepreneurs who offer low-cost health services in lieu of the usual profits to give the health benefits to people who cannot afford them (Patil, 2010, p. 1). On the other hand, entrepreneurship has caused health care costs to spiral in the developed countries due to their profit motive. However, entrepreneurs have vastly improved the health care services and various health products by providing the necessary funds for research. Two examples are in medical technology and medical insurance where entrepreneurs helped a lot. Conclusion Entrepreneurship is the real engine of growth in any democratic and capitalist society. It provides the necessary impetus for changes to occur, changes which lead to progress in the short term and in the long run. Enterprising people dreamed new health care delivery systems such as telemedicine, robotics and medical devices and in general, brought about all beneficial changes in the health care system of most countries. These two innovative ideas in health care show how new entrepreneurial business models can be successfully applied in the field of health care delivery. Entrepreneurs go through the four-step process discussed earlier with not a few of them doing it informally while others present formal plans to the business sector if they want to avail of venture capital. According to Schumpeter, it is entrepreneurship which effectively prevents any economic and technological stagnation from occurring in our society (Gasparski, Ryan & Kwiatkowski, 2010, p. 166). The fast growing trend of consumer-driven health care around the globe offers many entrepreneurial opportunities for those who want it. Reference List Baron, R. A. & Shane, S. A. (2007). Entrepreneurship: A Process Perspective. Mason, OH: Cengage Learning. Gasparski, W., Ryan, L. V. & Kwiatkowski, S. (2010). Entrepreneurship: Values and Responsibility. New Brunswick, NJ: Transaction Publishers. Kuratko, D. F. (2008). Entrepreneurship: Theory, Process and Practice. Mason, OH: Cengage Learning. McCraw, T. K. (2007). Prophet of Innovation: Joseph Schumpeter and Creative Destruction. Boston, MA: Harvard University Press. Nicholls, A. (2008). Social Entrepreneurship: New Models of Sustainable Social Change. Oxford, UK: Oxford University Press. Patil, G. (2010). Social Entrepreneurship: Low-cost Health Care Delivery. Gaebler Ventures. Retrieved from http://www.gaebler.com/Low-Cost-Health-Care-Delivery.htm Steyaert, C. & Hjorth, D. (2004). New Movements in Entrepreneurship. Northampton, MA: Edward Elgar Publishing Limited. Read More