Like the Industrial Age before it, the Information Age is being replaced. Not by something new however, but by the return of an older age – the age of the entrepreneur.
Although small business has always been and continues to be the economic driver for most economies, the past century was a celebration of big business with its economies of scale and scope, the by-products of mass production and mass marketing. Unfortunately, many of the conditions that enabled North American firms to prosper during this time – a large and affluent middle class, relatively low labour rates, access to abundant raw materials, inexpensive energy, and an efficient transportation infrastructure – have either disappeared or shifted to other economic regions.
The perfect storm of favourable economic, geographic, and cultural factors, which once powered North America’s corporate growth, has been replaced by a new reality. Mass marketing as the fuel for our collective wants is being forced to change as traditional print and cable media are being out-competed by social media, and the ability to create customized solutions has fragmented the market.
Today, consumers have access to almost limitless amounts of information and product sources, which has increased the demand for customized or highly differentiated product options. They are also are seeking products from firms that source, produce, and promote products ethically and sustainably. Thanks to crowdfunding and crowdsourcing, consumers are now helping start companies as well as assisting in the design and launch of products that address these needs.
So, what does this mean for your business?
Large firms are not going to disappear, but the nature of work and the associated labour market has already begun to change. The entrepreneurial age demands a smaller, more nimble work unit, with leaders and employees who not only survive but thrive in dynamic market conditions and ambiguous environments.
Here are some tips to help you navigate through these changes.
Let value be your guide
Like an entrepreneur, employees must appreciate that all processes, products, and activities must generate customer, cultural, or company value. The message here is two-fold:
- Get to know the relationship between what you do and what your customers really value.
- Eliminate distractions, excess, and waste in order to focus on value. For instance, applying lean principles to a process that in itself offers no real value is a waste of valuable resources. As the name suggests, a lean startup operates on a shoestring, focusing on only the necessities that generate value.
Don’t create, innovate
Innovation, not creativity, is what companies need to grow and prosper. Creativity helps to generate new ideas, but without guidance, it becomes tangential and either distracts from the mission – or worse – serves to demotivate employees as their creative ideas never take root.
Innovation is the tangible change introduced to generate measurable change. It is far better to seek creative solutions to well-articulated problems, such as “How might we reduce the costs of transportation?” than to simply canvass employees for creative ways to cut costs. Using design thinking to tackle that kind of challenge might generate 50 creative solutions. Innovation occurs when the top ideas are implemented, and begin to create measurable change.
Foster ownership not management
Too many employees today are detached from, or unaware of, the vital role their company plays in customers’ businesses and the lives of consumers. Sadly, many of these employees are in mid-to-senior level management positions. The key word is “management,” as it suggests looking after something for someone else. Rarely do we care for the possessions of others as well as we care for our own.
In contrast, entrepreneurs often anthropomorphize a business, referring to it as my “baby,” a term that clearly emphasizes both attachment and importance. Ownership fosters engagement, and “babies” or “pet projects” are nourished by enthusiasm, care and dedication.
Entrepreneurs view risk differently. Often described as risk takers – willing to risk it all on chance or luck – entrepreneurs are actually risk averse. Rather, entrepreneurs do everything they can to mitigate the risks inherent in a new venture. For instance, they bootstrap their ventures, using as little cash as possible, reducing their investment in case the venture doesn’t work out.
More importantly, entrepreneurs adapt their business model to incorporate new information such as insights from potential customers. In this way, entrepreneurs manage the risk by revising projections, changing designs and constantly seeking validation with customers.
Finally, entrepreneurs consider the risk of missing opportunities, and not just the cost of pursuing them. Investing $10,000 to make $10-million in a venture with a 70-per-cent probability of success is a calculated risk. And yet, if you were to consider other options for that $10,000, you quickly realize that the risk of not investing is far greater than the risk of pursuing the venture – that is how entrepreneurs think.
A focus on customer value, innovation, passionate ownership, and the ability to identify and manage risk like an entrepreneur are critical attributes of the new business paradigm. Are you prepared to succeed in the entrepreneurial age?