Thursday, March 31, 2016

The Advantages of Entrepreneurship

A reader on a previous blog post left an intriguing question in the comments box: 
"Are the advantages or the disadvantages of entrepreneurship more important? Why?"
I love the question, and offered the following reply:

Great question!

The advantages of entrepreneurship are many and varied:
• Self-reliance.
• Confidence.
• Independence.
• Accountability for one’s own obligations and mistakes.
• Fiscal discipline.
• Evaluating risk.
• Develops strong communication skills, as well as vision, creativity, strategy, planning and leadership.

Communities of entrepreneurs invariably develop additional strengths, such as collaboration, mentoring, coaching and partnering. They create bottom-up solutions based on personal passions and fiscal responsibility. Other forms of economic activity (reliance on big government or big business) encourage imposed, top-down solutions, and individual conformity, dependence and social/economic passivity.

What are the disadvantages of entrepreneurship?

• Occasionally, bad actors create companies or products that rip people off. The solution is 2,000 years old: Caveat Emptor!
• Many people are not cut out to be entrepreneurs, preferring to be followers rather than leaders. Solution: entrepreneurs create jobs for people who are not entrepreneurs!
• Elites (companies with market dominance, established interests, monopolies, and governments that prefer to concentrate power in themselves) are often discomfited by the changes and disruption created by entrepreneurs’ hustle and innovation. Solution: They change and adapt, or they buy up the entrepreneurial solution – thereby freeing the entrepreneur to go out and start again!
• Sometimes entrepreneurs achieve market dominance themselves, and then behave selfishly or arrogantly. Solution: Other entrepreneurs will find new ways to create value for customers in that market, and will cut arrogant producers down to size. Entrepreneurship breeds its own solutions!

Friday, March 18, 2016

We Make our Own Luck in the World

Here's a column I wrote for PROFIT magazine more than five years ago.

Hard to believe people were complaining about only (!) 2% growth!

But the message of innovation and global competitiveness is the same. Except more urgent now, because we are five years closer to being surpassed in knowledge, research, innovation and marketing pizzazz by what used to be known as "the developing world."

(The photos are from my trip last month to Dubai, the UAE city that wants to own the future.)

The skyscrapers of Dubai
Our economy is going nowhere. Unemployment remains high, inflation is rising and interest rates will climb, too. And don’t even think about taxes; Ottawa has spent $50 billion deferring the full impact of the recession, and the bill is coming due.
I recently endured a presentation by Scotiabank chief economist Warren Jestin that painted a dismal picture for 2011 and beyond. He predicts several sloppy years of 2.5% growth in North America — “not the 3% we used to think was normal.” He thinks growth in Europe will average just 2%, and Japan will shuffle along at less than 2%.
The good news is that the U.S., Europe and Japan don’t matter like they used to. Global economic clout is shifting, and new economic powers such as Saudi Arabia, the United Arab Emirates, Brazil, China, India and Indonesia will set the tempo. “The world will become less U.S.- and Europe-centric,” says Jestin. “It’s going to be more balanced.”
A balanced world is a good thing. Unless, of course, you’ve become used to having more than your fair share, which is Canada’s problem. Once, we legitimately belonged to the G8 group of dominant world economies — although we were let into the club mainly because the Americans wanted a friend in the room. Since then, the economies of Spain and Brazil have leapfrogged ahead of Canada’s, and India and Russia are about to overtake us. Thanks to our half-continent full of natural resources, Canada has always gotten by more on luck than pluck. Now that per capita incomes worldwide are growing to measurable levels, we must find a new role for ourselves.
We must make our own luck. Or, as Jestin put it: “Sticking with the familiar over the next decade is probably a losing strategy.” Now is the time when Canadians — no slouches at hauling ore out of the ground or grinding up forests — have to prove they can add value in a changed world.
By Canadians, of course, I mean you. “Canada” — the sum of our parochial governments and hidebound intellectual elite still lamenting the fall of the Auto Pact  — is locked in paralytic anomie, like a dysfunctional family fighting old battles while the house burns down around them. Change must come from our entrepreneurs.
The good news is that this transforming world offers more opportunity than ever. Gleaming new cities are rising in China; newly sophisticated middle classes in India and Latin America are clamouring for better goods and services; and new factories in Africa need engineering and logistics help from people who’ve been there. Jestin’s new “balance” is the world’s most promising economic resource.
But these opportunities aren’t like the old ones — rivers to be dammed, oil wells just waiting for the drill bit. We have to go out and win these opportunities. We must meet these customers, adapt our solutions to their needs and sell them on our capabilities, experience and willingness to serve.
There’s nobody better prepared than Canadians to do this. Our entrepreneurs are used to thinking in niches. Our workforce hails from around the world and speaks all its languages. Our communication and transportation links are as good as any. Best of all, we have experience trading and winning in a modern economy. We can introduce the new members of our co-prosperity sphere to the luxuries of a consumer economy — maple candy, Beaver Tails or President’s Choice cookies — while helping build their infrastructure by selling our expertise in areas such as engineering, environmental controls, information technology, housing construction, finance and business management.
But there’s one thing most entrepreneurs aren’t good at: purposeful innovation. To succeed in these competitive world markets, you have to become much better at adapting your products to specific markets. Off-the-shelf solutions won’t do. You have to create more focused products and services that outpoint the competition and fit customers’ varying needs. I like to think that innovation is simple; it’s all about doing more of what you do best. This is how you conquer the new economy, step by step:
  • Analyze what makes you great. Which of your products or services inspires your workforce most, produces the highest margins or wins the most customer raves? This is where you should focus your efforts.
  • Target your markets. Which new markets need your solution the most? Who will pay the most? Which of these markets do you know best, or where can you create your own openings? Dodge the competition. Where are your competitors strongest? What are their weak points? How can you leverage your strengths against their weaknesses?
  • Work closely with your prospects to fine-tune your new products or services to meet their needs. Offer discounts to those willing to become co-developers, beta testers or early adopters. Create a customer advisory board for each market segment to stay in touch with their needs.
  • Remember that innovation is as much about process as product. While you upgrade quality and functionality, keep improving your production and distribution processes, create more pricing options and find new ways to attract and keep customers.

Wednesday, March 02, 2016

The Best Business for You?

I got an email today from a reader in a rural area asking what business opportunities I might recommend him to pursue.

Sadly, there's no one-size-fits-all answer to this question. The industry you choose, the product you sell and the niche you approach are all dependent on you, your personality, your experience and your network.

So this is what I wrote back. 

Hi, Phil (not his real name). Thanks for your note.

I would not presume to advise you without knowing a little more about you. What work experience do you have? What are you best at? What do you most enjoy doing? Do you enjoy working with people? How much money do you have to invest in a business?

These are all crucial questions that can help you or others hone in on what business is right for you.

I'll let you know  if I hear from him again.