How great innovators succeed at building great businesses!
THERE IS A LOT TO BE LEARNT from the fact that all businesses always begin as new ideas. However, though it is trite knowledge that new ideas have always been the creative forces that propel the birthing of new businesses, it is important to enter the caveat that it is only new ideas that can be proven to have significant economic potentials that can provide a credible basis of birthing a feasible and viable new business. The evidence is that the most feasible and viable new businesses are mostly those that are inspired by three categories of new ideas which include the following:
- New ideas that represent significant innovation
- New ideas that represent new or better solutions to new or existing problemsthat are known to have significant economic value and
- New ideas on how to meet or better meet new or existing needs that are known to have significant economic value!Each category of new ideas represents a stream of creative thinking within the broad spectrum of ideation in which it is not uncommon for a new idea that represents significant innovation to concurrently provide a new or better solution to an economically-significant problem that is new or existing and/or meet or better meet an economically-significant need that is new or existing. New ideas typically tend to easily proliferate by inspiring new thinking that produces even bigger waves of new ideas!
The big difference between a new idea and a new business!
Though it is true that new ideas have always been the creative forces that propel the birthing of new businesses, it is important to understand that there is a big world of difference between the ability to articulate a new idea that represents significant innovation, a new or better solution to an economically-significant problem or the new or better means of meeting an economically-significant need. While the key requirement for the articulation of new ideas is the ability to think in creative terms, the key requirement for birthing a new business is the ability to think in business terms.
For example, while Bill Gate‟s creative thinking could generate the new idea that is the Microsoft Software, he could only build Microsoft Corporation into a thriving business on the strength of sound business thinking. In the same token, while Steve Jobs and Steve Wozniak could undertake the creative thinking that shaped the new idea that is the Apple Notebook, Apple Corporation could only be built into a thriving business on the strength of sound business thinking. The fact is that though Bill Gates and Steve Jobs are among the most creative thinkers and greatest innovators of their generation, Microsoft Corporation and Apple Corporation could only grow into thriving businesses on the basis of their ability to combine pace-setting innovative thinking with sound business thinking. It has been repeatedly proven that being a great creative thinker and innovator is not synonymous with being a great business founder.
The five core philosophies of business success
Though business failure has rarely been linked to philosophical gaps, the reality is that business is so thought-intensive and therefore, philosophically-driven that the tendency to pursue any business in any industry or market without a clearly-defined philosophy of business success easily sets the stage for such a business to suffer incipient failure! Though idea generation and business formation are equally thought-intensive, the thinking that goes into founding a thriving business must be influenced by the understanding that entrepreneurship is so profoundly philosophical that there is no greater risk than venturing into any business in any industry, market or economy without being thoroughly-grounded in the core philosophies of business success! The key requirement for the successful completion of the transition from ground-breaking innovation to the birthing of a thriving business is to be grounded in the five major dimensions of entrepreneurial philosophy which include the following:
- The customer-centered philosophy of business success
- The people-centered philosophy of business success
- The product-centered philosophy of business success
- The innovation-centered philosophy of business success and
- The profitability-centered philosophy of business successIdeally, the vision, mission, core values and strategies of a business should reflect its clearly-recognizable philosophy of business success. The key is to understand that the articulation of the corporate vision, mission, core values and strategies of a business succeed best when they are preceded by the choice of the philosophy of business success that will fundamentally shape its entrepreneurial mindset and thinking as well as its overall entrepreneurship.
1. The customer-centered philosophy of business success
It was Peter Drucker who posited that „The sole purpose of business is to create and keep a customer.‟ Drucker‟s statement reflects a profoundly customer-centered philosophy of business success which is very popular among 21st century businesses. Entrepreneurs and enterprises that are mainly influenced by the customer-centered philosophy of business success typically build their business models around customers and prioritize investment in the development of distinctive CRM capabilities. Expectedly, the competitive agenda of customer-centered businesses is focused on building and growing the customer base. The core strategy of customer-centered businesses is to target the recruitment and retention of high- value customers by ensuring as-ordered customer deliveries based on accurate knowledge of customers. The corporate vision and mission of Microsoft Corporation are great examples of the customer-centered philosophy of business. The Vision of Microsoft is “To help people and businesses throughout the world realize their full potential.” The Mission of Microsoft is “To empower every person and every organization on the planet to achieve more.”
2. The people-centered philosophy of business success
When a business leader declares that people are the most important assets of his enterprise, he is espousing a profoundly people-centered philosophy of business success. It is usually businesses that practice the customer-centered philosophy of business success who concurrently commit to practicing the people-centered philosophy of business success as a mark of their recognition of the link between recruiting and retaining the best people and recruiting and retaining the best customers! The critical link between recruiting and retaining the best people and recruiting and retaining the best customers makes it imperative for service businesses to be equally committed to practicing the customer-centered philosophy of business success and the people-centered philosophy of business success.
3. The product-centered philosophy of business success
When a business makes the design, development and delivery of competitive-edge products the center-piece of its competitive agenda, it demonstrates that its business mindset and thinking are shaped by a predominantly product-centered philosophy of business success. Apple‟s corporate mission makes it clear that it is a highly product- centered corporation. The mission of Apple Corporation showcases its flagship products thus, “Apple designs Macs, the best personal computers in the world, along with OS X, iLife, iWork and professional software. Apple leads the digital music revolution with its iPods and iTunes online store. Apple has reinvented the mobile phone with its revolutionary iPhone and App store, and is defining the future of mobile media and computing devices with iPad.”
4. Innovation-centered philosophy of business success
A business that chooses to mainly compete on the basis of the development and delivery of innovative products and so makes innovation the center-piece of its competitive agenda demonstrates that its business mindset and thinking are shaped by a predominantly innovation-centered philosophy of business success. While the Mission of Apple reflects its product-centered philosophy of business success, its vision reflects its profoundly innovation-centered philosophy of business success. The vision of Apple states that “We believe that we are on the face of the earth to make great products and that’s not changing. We are constantly focusing on innovating. We believe that we need to own and control the primary technologies behind the products that we make, participate only in markets where we can make a significant contribution. We believe in saying no to thousands of projects, so that we can really focus on few that are truly important and meaningful to us. We believe in deep collaboration and cross-pollination of our groups, which allow us to innovate in a way that others cannot. And frankly, we don’t settle for anything less than excellence in every group in the company, and we have the self-honesty to admit when we’re wrong and the courage to change. And I think regardless of who is in what job those values are so embedded in this company that Apple will do extremely well.” It is instructive to note that Apple Corporation is by no means contradicting itself by adopting a Corporate Mission that signals that its business mindset and thinking are fundamentally shaped by a predominantly product- centered philosophy of business success while espousing a Corporate Vision that signals that its business mindset and thinking are fundamentally shaped by a profoundly innovation-centered philosophy of business success.
Apple‟s commitment to the practice of both the product-centered philosophy of business success and the innovation-centered philosophy of business success represents its recognition of the critical link between its innovation capabilities and its product capabilities which makes it imperative for it to be multi-dimensional in its entrepreneurial philosophy.
The profitability-centered philosophy of business success
The profitability-centered philosophy of business success is the crown jewel of entrepreneurial philosophy because a business can still fail despite being demonstrably committed to the development of a markedly customer-centered, people-centered, product-centered and innovation-centered business paradigm if it is unprofitable. As a matter of fact, it is the profitability-centered philosophy of business success that determines the validity, viability and value of all other philosophies of business success. The profitability-centered philosophy of business success is built on the key assumption that the level of profitability of a business is the most accurate measure of its overall health, performance and competitiveness as well as the most important justification for its founding and continuance, and therefore, the most important challenge of business development is to ensure that the business is built to be highly and
sustainably profitable under changing industry/market conditions! The fundamental logic of the profitability-centered philosophy of business success is that the main reason for the failure of start-up, mature, big and small businesses is that they are either ab initio not founded on sound and sustainable profitability fundamentals or their profitability fundamentals become compromised one way or another at some point. Thus, it can be argued that the ability to birth an enterprise that can be highly and sustainably profitable is the most valid proof of successful entrepreneurship in all industries, markets and economies. The crux of this argument is that company formation and business development should always begin with the development of thorough grounding in the fundamentals of business profitability. This is an especially important first step because profitability is the oxygen that breathes life into business and this makes it imperative for the development or possession of profit-making capability to always form the concrete basis of launching a new business!
The practice of the profitability-centered philosophy of business success is based on four fundamental laws of profitability which include the law of profit-making capability, the law of profit potential, the law of multi-level profitability and the law of sustainable profitability.
Building on the philosophy of business success
The philosophy of business success is especially important as the creative link between ideation, business formation, business development and business performance. As a matter of fact, the real meaning of being in business is to possess the philosophical grounding that is needed to both articulate a viable and feasible business idea and birth the enterprise that is sufficiently-equipped with the key competencies and capabilities required to translate the business idea into a marketable product or service that is capable of both attracting a fair market price and achieving its highest competitive market position. Nothing positions a business for short term and long term success as strongly as an entrepreneurial business architecture that is designed and built on the specifications of an underlying philosophy of business success. Thus, the two most important challenges of business success include:
The challenge to develop grounding in the philosophy of business success and
The challenge to develop the ability to build the entrepreneurial business architecture of a business on the specifications of its underlying philosophy of business success
While it is development of grounding in the philosophy of business success that fundamentally shapes the business mindset and thinking that will define the overall entrepreneurship of a particular entrepreneur or enterprise, it is the entrepreneurial business architecture that is built on an underlying philosophy of business success that
fundamentally shapes the form and drives the functioning of such an enterprise as shown in the diagram below.
The 4-Celled Entrepreneurial Business Model is designed to promote an organic view of business as a plant that can only grow, mature and bear fruit on the fundamental basis of the optimal development and health of its cells! Understandably, the business plant derives its life, capacity and competitive strength from entrepreneurial cells. The four most important entrepreneurial cells of the business plant include the following:
- The Business Idea Cell
- The Business Philosophy Cell
- The Business formation/positioning Cell and
- The Business Performance CellThe logic of the 4-Celled Entrepreneurial Business Model is that it is the level of development and state of health of the entrepreneurial cells of a business plant that directly determine its quality of life, capacity and competitive strength. This means that the key to superior performance and competitive advantage is to ensure both that the business plant has the complete number of entrepreneurial cells and that the development and health of its entrepreneurial cells are maintained at comparatively higher levels than its peers and competitors. Any business plant that has incomplete entrepreneurial cells is bound to be so stunted in its development and growth that it will enter its target market as an endangered species from inception! Thus, based on the outlook of the 4-Celled Entrepreneurial Business Model, the four main developmental challenges that can threaten the quality of life, capacity and competitive strength of a business plant include the following:
- Poorly thought out business idea/poor management of the ideation process
- Failure to satisfy the philosophical demands of business
- Business formation/positioning gaps and
- Poor specification/development of the core competencies and capabilities needed to ensure the performance and competitiveness of the businessThough there has been significant progress in the understanding and management of operational, credit, technology, market and regulatory risk, there is much work to be done on those in-built (or inborn) enterprise risks that are linked to developmental gaps in the entrepreneurial cells of a business plant. While business formation without grounding in the philosophy of business success invariably builds deeply-embedded functional risks into the business, business development that is not hinged on a clearly- defined entrepreneurial business architecture that is built on the specifications of an underlying philosophy of business success renders a business prone to deeply- embedded structural risks.
Developmental problems at the level of idea generation can be the result of either poor thinking or the poor management of the ideation process such as through the failure to ensure the patenting, trade-marking and/or licensing of new ideas (a new or improved design, device or technology). The case of the Swiss who invented the quartz watch which they exhibited in the World Congress of watches as an unpatented invention that Seiko of Japan and Texas Instruments of USA acquired from them and shortly afterwards replaced them as the leaders in the worldwide watch market is proof that even great inventors and innovators can be poor managers of the ideation process! The invaluable lesson that the example of the Quartz watch whose inventor quickly became the victim of its market success teaches is that good business idea generation requires the combination of creative/innovative thinking with good patenting, trademark registration and licensing decision-making.
However, even where an entrepreneur excels in both idea generation and the management of the ideation process especially in terms of making the right patenting, trademark registration and licensing decisions, his failure to satisfy the philosophical demands of business will keep him from successfully completing the transition from innovation to business formation. Developmental problems that are linked to the failure to satisfy the philosophical demands of business are the most damaging because it takes thinking, planning, deciding and acting on the fundamental basis of an underlying philosophy of business success to succeed at building a thriving business. Quite often, the failure to satisfy the philosophical demands of business is the result of business developers crafting vision and mission statements as well as settling on strategies that are totally unrelated to any underlying philosophy of business success that they have carefully pondered as the pivot of their overall entrepreneurship. In any case, the evidence is that the tendency of many businesses to be far-more deal-oriented and transactional than strategic and entrepreneurial is mostly attributable to their failure to satisfy the philosophical demands of business.
Developmental problems that are linked to gaps in business formation and positioning include poor decision-making in terms of whether to incorporate a business that will always be a sole proprietorship or a partnership, a private enterprise or an enterprise that will go public under certain circumstances, the shareholding structure of the business, and the drafting of the partnership agreements upon which the business will be built. Developmental problems that are linked to gaps in business formation and positioning also include poorly thought out and/or poorly aligned vision and mission statements, poor definition of the corporate, competitive and business strategies of the business and poor business planning. Expectedly, it is developmental problems that are linked to gaps in business formation and positioning that produce unstable enterprises that easily tend to drift like rudderless ships. Developmental problems linked to the poor specification/development of the core competencies and capabilities that are needed to ensure the performance and competitiveness of a business can be triggered by the domino effects of ideation, philosophical and business formation/positioning gaps as well as lack of the know-how needed to optimize both the development of the operating, financing and investing activities of a business and the trilateral alignment between these cornerstone activities as the principal means of ensuring its profitability.
Conclusion
Based on the design of the 4-Celled Entrepreneurial Business Model which promotes the organic view of business as a plant, the key to superior performance and competitive advantage is to ensure both that a business plant has a complete cell structure and that the development and health of its entrepreneurial cells are maintained at comparatively higher levels than its peers and competitors! Business plants with a complete cellular structure and comparatively higher levels of cellular development and health will consistently out-perform and out-compete business plants with an incomplete cellular structure and/or comparatively lower levels of cellular development and health!
Philip Eyam-Ozung
Principal Consulting & Coaching Executive Enterprise Strategies Consulting