Young entrepreneurs more socially aware
Entrepreneurship boils down to two things: solving a problem and doing so with resources you don’t initially have.
Resourcefulness is a key characteristic of entrepreneurs. They operate from a principle of abundance – a belief that anything is possible and they just have to find a way to be successful. They thrive on challenge.
Most non-entrepreneurs operate from a scarcity principle – they believe there’s not enough money, not enough talent or not enough human resources.
One of the weaknesses of the academic tradition is the belief that, for every problem, a rational solution is possible. This is simply not true. Disciplined, deductive logic is a very powerful tool, but complex societal challenges require a different approach.
The economic crisis in Europe is very different to what is happening in Greater China. In Greater China, in addition to external challenges, there is an internal structure that seems to be inherently unstable.
In dynamically changing conditions such as those we are currently experiencing, uncertainty about the future is very high. This makes planning difficult as underlying assumptions also keep changing. This can lead some managers to adopt a reactive management style, as they rely less on long-term strategic planning and more on dealing with problems as they come up. This may be more common in Greater China than in the US or Europe.
I am personally excited about the definition of social entrepreneurship as building profitable, sustainable businesses whose primary objective is to provide goods or services that contribute value to society. This is still a rather broad definition, but clearly distinguishes these types of activities from, on the one extreme, charities and non-governmental organisations, and on the other, businesses that seek to maximise profits.
Any business that wants to sustain itself must earn a profit. The question is: what do we want to do with the profit? Is it to be used for more R&D, for training staff, for providing more benefits for employees, or dividends to shareholders? More people today recognise that the dictum, erroneously attributed to “capitalism”, that businesses exist to maximise profit, is not sustainable in the long-term.
Young people, especially today, have more of a social conscience. They are more aware of inequities in society, the globally shared responsibility for environmental quality, and other global issues such as public health. Because of this, they are developing new approaches to contributing to solutions.
The “keystone” strategy was articulated by Professor Marco Iansiti at Harvard Business School in 2004 in an article entitled “Ecosystem Strategy: Keystones and Dominators”. The basic premise was that in every business ecosystem, there were entities that, as part of their core business strategy, dedicated resources to maintaining and enhancing the health of the entire ecosystem.
Consider the Apple App Store as a keystone strategy pursued by Apple. This is a comprehensive platform on which software developers who build “apps” can take advantage. Apple invested millions of dollars in creating the App Store and must continue to invest to maintain the quality and a consistent end-user experience. This is self-serving, of course, but the return on investment to Apple is indirect. Apple benefits because software developers build on the platform and, as they make money, Apple makes money.
Microsoft, being connected to over 640,000 companies, has an amazing “ecosystem” it can leverage. For every dollar that Microsoft earns, companies in its ecosystem earn eight. In China, its leverage is even better. For every yuan that Microsoft earns in China, companies in its ecosystem earn more than 16.
Amazon and Wal-Mart are two more examples of companies that support massive ecosystems. This shows another very interesting trend. In the knowledge economy, many business models are being built by leveraging intangible assets owned by other companies.
Think about how dramatically different this is from traditional businesses of 50 years ago. These were businesses that used tangible raw materials to manufacture physical products in physical factories and then physically shipped these products to physical consumers. Today, the entire supply chain consists of intangible elements.
Dr Wu Po-chi is adjunct professor at the School of Business and Management and the School of Engineering of the department of Mechanical Engineering at the Hong Kong University of Science and Technology
As told to Michael Taylor