Entrepreneurship and Innovation

Entrepreneurship and South Africa

The Global Entrepreneurship Monitor (GEM) report ranks South Africa among the lowest of five African countries looking at new business ownership. Total early-stage entrepreneurial activity (TEA) was a mere 6.9% against a 17.6% regional average in 2017. Looking at entrepreneurial intentions against actual ventures formed, the report also reflected a decline of almost 3% decline in the last couple of years. Moreover, continuous political uncertainty and economic instability also contribute to many multi-national corporations exiting South African markets, causing the economy to rely heavily on entrepreneurial activity. Although economic conditions favour entrepreneurial activity in South Africa, evidence continues to show a decline in venture formation. It, therefore, remains essential to stimulate employment and improve global competitiveness through education and training to combat massive youth unemployment and mediocre economic growth for South Africa.

But why entrepreneurship?

Entrepreneurship is the action of exploiting an opportunity like setting up a business or taking on financial risk in the pursuit of making a profit. Therefore, entrepreneurship represents the process of starting a new venture, growing the business, and then scaling the venture to become a dominant player in a market. To be entrepreneurial is to display characteristics that are associated with the processes of identifying an opportunity, evaluating the opportunity, and then exploiting the opportunity.

An opportunity in the entrepreneurial sense will be when new goods, services, raw materials and/or organizing methods can be introduced and sold at a higher rate than what they cost to produce, and therefore showing a profit. Opportunities originate from multiple sources, but mostly start with an idea. All ideas do not always transform into opportunities as they might not be desired at the time, or it might not be feasible to act on them. Therefore, some ideas might be paused for later development, or rejected al together. Having a desired and feasible idea, however, requires action to transform the idea into an opportunity. Therefore, to transform an idea into an opportunity, a judgement about the opportunity’s feasibility must be made, as showed above. To do this, knowledge is needed about: (1) the nature of the opportunity, (2) the contextual environment (market) in which the opportunity was discovered or created, and (3) the ability of the individual who wants to exploit the opportunity. In other words, acting will require prior knowledge regarding the type of opportunity, and the environment and skills needed to perform these actions.

How does innovation then fit into entrepreneurship?

Innovation is the key to business growth and radical change. Creativity feeds innovation, meaning that innovation must not be confused with creativity. The key differences are that creativity stimulate idea generation, whereas innovation is more concerned with implementation which focus on commercialization. Innovation therefore, can be termed, the commercialization of an invention with the aim of economic gain. Meaning that, the idea, technology, business model, or some intellectual property (IP) is core to innovation, however, it does not mean that the entrepreneur needs to be the creator or inventor. That said, the capabilities to commercialize an invention is needed and does not always reside with the inventor. In this case the entrepreneur becomes the commercialization agent. It should be stressed at this point that innovation is not limited to technology advances alone. Innovation can also come from novel or adjusted processes, business models, ways of positioning, and more.

How does STADIO approach entrepreneurship?

Entrepreneurship from STADIO’s perspective focuses on the entire entrepreneurial process which starts with idea generation, finding resources, developing a business plan, and then managing the business to grow and scale. This entails, searching for business ideas, evaluating these ideas for feasibility and viability to determine whether the idea can become a lucrative business opportunity. This is when creativity and innovation become critical. Then, resources must be sourced in terms of funds, facilities, processes, programs etc. The entrepreneur now must develop a business plan/model to align all the actions required to start the venture, therefore, linking internal business functions with external environmental factors. The business plan is a valued document that serves both an internal and external purpose. Internally, the business plan/model provide a bird’s eye view of the ventures internal business processes. Externally, it shows how the business will be managed in a larger market and external environment which, as we know, can be uncertain and volatile. Then, lastly, any entrepreneur must manage their business effectively and efficiently, which becomes very important when the venture grows. It is here, that many businesses fail after starting the business successfully. From an educational perspective, it is at this point where entrepreneurship and other modules in STADIO's programmes connects. Entrepreneurship, as a module, provides an overview of these functions, whereas other modules provide more in-depth understanding of why, and how to manage these different business functions. Some of the most familiar are, the Financials of the venture; how the business are influenced by Economic factors; how the venture must be Marketed in a specific market; how employees will be managed through their Human Resources practices; what Operational processes will be required, and so on.

 

DATE: March 2022 | DISCLAIMER: The content of this blog is accurate at the time of publication. STADIO reserves the right to change the content due to changes in legislation, as well as for market requirements and other reasons.