Although many believe that entrepreneurship is a singular concept – as any entrepreneur will tell you, it isn’t. In the scientific literature, entrepreneurship is described as a process which entrepreneurs take from opportunity recognition to established business to harvesting the rewards of hard work, through sale or closing down or continued success (or well-earned experience). Each phase of the entrepreneurial process requires support from the local entrepreneurial ecosystem and each has its own learning curve for the entrepreneur.
There are four basic phases of the process :
1. Recognising opportunities
2. Assembling resources
3. Launch of venture
4. Harvesting and succeeding
|The process (GEM terminology in brackets)|
Phase 1: Recognizing Opportunities
How do some entrepreneurs recognise opportunities and others don’t? What types of training or backgrounds support this (e.g. international experience, wide interests, specialised knowledge, etc.) and what factors impede it (e.g. fear of failure, limited interests, lack of access to R&D findings, etc.).
Also, how do we support recognising opportunities within organisations (be it governmental or private firms)? In the UAE we can look to successful intrapreneurial ventures such as Saaed traffic unit of the Abu Dhabi police which are responsible for traffic related accidents in the Emirate (I had a group of students do an excellent report on this) or the start of the Entrepreneurship Club at Zayed University in Abu Dhabi J. In global firms my favorite example is Nestle’s Nespresso – now one of the main profit centres for the huge multinational (and the innovation that makes me smile every morning).
Phase 2: Assembling Resources
From idea to beginning to assemble resources takes support – and courage, and gathering the necessary resources for any new entrepreneur can be a daunting task. Here is where the entrepreneurial ecosystem of the nation, city, region, economy, really plays a supporting role. There are several parts of the ecosystem which can be used to support this sometimes difficult process, including physical infrastructure such as roads and ports (like the newly opened Khalifa Port in Abu Dhabi will create many opportunities for entrepreneurs in the Emirate and the country) and telecommunications systems; non-physical infrastructures such as supporting networks of external advice for entrepreneurs (e.g. RUWAD, Khalifa Funds, Saud bin Rashed funds, Mohammed Bin Rashid Est. for Small & Medium Enterprises), access to capital markets, availability of necessary data needed for researching opportunities and the general supportive culture of the economy (e.g. awards, and television programs such as The Entrepreneur to launch this fall).
Phase 3: Launch of New Venture
What are the rules, regulations and costs associated with starting a new business? Where can a potential entrepreneur go to get the licenses and permissions? Future entrepreneurs will not launch new ventures if the environment in which they want to operate is not considered supportive. This environment, or entrepreneurship ecosystem is an absolute requirement in any economy that wishes to foster entrepreneurship risk taking.
Entrepreneurship Ecosystem: Ecosystems are inherently local. While national policies shape the economy in profound ways, the institutions and activities of regions differ. Indeed, multiple actors that share an interest in entrepreneurship —large firms and organisations (e.g. banks, large scale manufacturers), government entities, educational institutions, community non-profits, etc.—must come together to enrich the ecosystem.
Previous research has found that start-ups that become dominant players have strong early-stage relationships with established companies. Large companies could give smaller suppliers access to internal resources helping them break into global export markets through referral or international assistance.
Clusters of Innovation: Often arise out of large physical infrastructure (e.g. ports) and large anchor companies (such as Aluminum smelters, Yas Marina Sports Complex, etc.) – they spur smaller entrepreneurs to take advantage of the customers that are drawn to these places, or the companies and people working in them (e.g. a laundry service to service hotels).
Phase 4: Success and Harvest
The final, and perhaps most enduring phase of the entrepreneurial process is the success, or continued existence of the new venture and could even mean the exit of the entrepreneur through the sale of the firm to another. A great example of an Emirati SME that is “harvesting” their hard work is Just Falafel – which is now franchising around the world.
Of course, many SME ventures do not succeed – but, in the West (especially in the United States and most especially in Silicon Valley) a failure of a venture is seen as a badge of honour and courage and experience. So the first “failure” might teach the entrepreneur to be a better entrepreneur the next time, or might inspire another to take the leap themselves.
So, the basic four phases – the story will continue with a more in-depth look at each phase and some local entrepreneurs and their stories (so if you have a story to share, please contact me). Entrepreneurship (and intrapreneurship) is exciting and a key to economic diversification and personal job satisfaction – if our jobs were just about pushing paper how boring would life be?