How Smart Entrepreneurs Adapt in Order to Succeed
Author: Taffy Williams
Pub Date: November 2014
Print Edition: $23.00
Print ISBN: 9780814434307
Page Count: 224
e-Book ISBN: 9780814434314
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Agility in Turbulent
In the past, most successful entrepreneurs possessed a
single-minded focus that served them well. Sometimes obstinate
and other times obsessive, they drove toward their goals with
unwavering commitment. This approach to business—effective
in a time of relatively slow change, moderate complexity, and
more local than global competition—helped them overcome
obstacles and seize opportunities.
While entrepreneurs still benefit from being driven and
single-minded, such a mindset can also be a major handicap in
our current environment of great volatility and unpredictability.
Technological breakthroughs, economic shifts, and other changes
occur seemingly every week. There’s the adage Man plans, God
laughs. Substitute entrepreneur for man and you understand why
it’s no longer possible for entrepreneurs to lock unwaveringly onto
a product, a marketing approach, a business plan, a funding
Agility is essential for entrepreneurial success. I’ll share two
stories that demonstrate why this is so.
Though Steven Jobs was an extraordinary and unique business
pioneer, he was also a classic entrepreneur in many senses.
Early on, he was obsessed with creating the best possible personal
computer, and his drive resulted in some remarkable products.
But when he returned to Apple after years of exile, he recognized
that things had changed. Plenty of people were still buying personal
computers, but the market had topped out. He noticed the
emerging mobile computing consumer segment, though, and was
able to shift his thinking—and the direction of the company—to
serve this market (among others). Jobs’s flexibility enabled Apple
to dominate the space for several years.
Arsen Avakian founded Argo Tea, a retail tea seller, in 2003
and now is the head of a 27-store chain with $20 million in revenue.
Initially, Avakian’s vision was to make Argo stores the tea
equivalent of Starbucks. This hugely ambitious vision, however,
did not fit with changing market and economic realities. It also
didn’t jibe with Starbuck’s acquisition of tea retailer Teavana and
the coffee company’s plan to open tea bars. So instead of trying to
become a giant in the industry or do battle with one, Avakian
shifted gears. In a September 9, 2013, article in the Chicago
Tribune, he was quoted as saying that Argo wanted to be the
“Apple of tea . . . where you will fall in love with the brand.” To
that end, Argo has started a bottled-tea business in addition to
their retail establishments.
Making these shifts sounds easier on paper than it is in reality.
Entrepreneurs often fall in love with their business ideas, their
visions for a business, and their theory of how to make their companies
successful. To let go of something they love and believe in
is difficult; to change it in any way seems disloyal, fickle, and even
Yet letting go requires strength; it’s an acknowledgment of a
new reality for an entrepreneur. Agility facilitates movement from
the tried-and-true past to the changing present.
NOTHING STAYS THE SAME FOR LONG
It’s not just that the pace of change has been accelerating, but the
types of changes are expanding as well. From the economy to
technology to the global marketplace, everything is evolving at a
fast clip. More than that, many of these changes aren’t predictable.
Mobile technology, big data analytics, and social media
may seem as if we should have seen them coming, but in fact only
hindsight makes it appear that way. Ten years ago, when people
used cell phones for traditional phone-to-phone communication,
few would have predicted the widespread use of smart phones in
ways that make phone conversations a secondary or tertiary function.
And until the economic downturn of 2008, the majority of
small businesses that required financing sought loans. Who could
have predicted that these loans would become almost impossible
for many startups to obtain?
In the face of these rapid and widespread changes, entrepreneurs
have no choice but to be flexible. If entrepreneurs are
unable to shift direction and find new sources of funding, or if
they can’t reformulate their products when a Chinese company
brings out a similar one at half the price, they’re out of luck. But
before we look at what agility means and how it translates into
specific business behaviors, let’s review some of the types of
changes that make agility imperative:
- Funding. It’s not just that banks have tightened their purse
strings, but that venture capital firms have diminished in number;
and those that remain are more selective about who they fund.
We’ve seen the rise of angel investors—wealthy individuals or
groups who fund ventures in exchange for a share of ownership.
We’ve also witnessed the rise of what I refer to as “startups for
sale”—cash-strapped entrepreneurs who launch companies on a
shoestring with the hope of becoming acquired by a large company.
In this way, they gain the finances and other resources necessary
to grow their idea into a profitable enterprise; “startups for
sale” has become the dream goal of many entrepreneurial Internet
companies. And then there’s the crowdfunding movement—people
who use the Internet to launch their ideas for new businesses
and attract financial backing from individuals who see potential in
that idea; Kickstarter is the most well-known example. We’ll focus
on funding options that have arisen in recent years in Chapter 5,
but as this brief description indicates, the environment is completely
different from how it was as little as ten years ago.
- Technological. New technologies impact entrepreneurs
in every field in countless ways, and they require all types of
adaptations. On the most basic level, technological innovations
have caused entrepreneurs to change the way they conduct daily
business. For instance, Texas Instruments introduced handheld
calculators around 1967 and IBM introduced its first personal
computer around 1981. In 1973, a scientist working for Motorola
successfully made the first portable handset, and by 1987, over 1
million cell phones were in use in the United States. These
devices are now part of our daily existence while the older technologies
are phasing out. In the 1990s, the fax was the dominant
mode of communication in business. Today, it is quickly going
the way of the electric typewriter, as email and other Internet
forms of communication have become dominant.
The social media demand that entrepreneurs rethink customer
relationships; and information technology necessitates that
competitors and potential competitors know about your product
breakthrough almost immediately after you achieve it. Virtual
meetings across continents routinely take place on Skype and
other sites. New technologies are being introduced every day, and
today’s smart phone will be tomorrow’s fax machine.
Entrepreneurs who aren’t able to adjust their businesses to capitalize
on these technological changes will be left behind.
- Regulatory. The EPA, FDA, USDA, and SEC are just
some U.S. agencies that have been active in altering their regulations
in recent years—and aggressively pursuing those who fail to
comply. Any small business that has grappled with the SEC
regarding 2002’s Sarbanes-Oxley legislation is well aware of how
regulatory changes require all sorts of new policies and procedures.
Many times, agility is required just in terms of time and
resources allocated to respond to those changes. In other
instances, entrepreneurs may need to make major shifts in their
business operations. New environmental regulations, especially,
can create all sorts of issues for small companies: the material
you’ve been planning to use to manufacture your product has just
been ruled an environmental hazard, the FDA decides to create
new nutrition regulations, or the Department of Energy places
greater restrictions on nuclear energy creation and use.
- Market-by-Market. Entire industries are being transformed
through global, virtual, and other means. In the medical
field, increased scrutiny by insurers is cutting into medical business
revenues. The ability to reduce hospital re-admission rates
and the shift toward personalized medicine are causing healthcare
professionals to alter the way they do business. Small medical
practices have aligned with other groups to create larger
medical practices in order to have greater clout with insurers. In
other fields ranging from agribusiness to software to beverages to
retailing, transformations are also taking place. While big corporations
in these fields are affected, the entrepreneurs often are
the ones who must be the most agile. Big companies have the size
and resources to change more slowly and still survive; smaller
entrepreneurs must adapt or perish.
- Competition. Until relatively recently, some entrepreneurs
could occupy a market niche and expect minimal or at most
moderate competition. Today, competition has heated up to the
point that this is no longer possible. In a world where everyone is
in global competition and technology makes it much easier for
companies to knock off products, services, and unique selling
propositions, entrepreneurs must be nimble enough to fend off
competitors. This may mean coming up with a new pricing strategy,
redesigning your packaging, changing product formulations,
or myriad other responses.
Consider a small, entrepreneurial pharmaceutical company
that is developing a new cancer drug. They’re planning on investing
$50 million in its development and are testing the drug with
patients who have not been helped by other therapies. They’re
tremendously excited by initial results—the drug seems to produce
a 24 percent improvement in survival rates—and the company
begins working toward FDA approval. Then, news arrives
that an Australian pharmaceutical company has gained approval
for a similar product. It may be that this competitor’s new product
makes it impossible to continue development. More likely,
however, is that this competitor’s success simply means that
adjustments must be made. It could be that the Australian company’s
product will open up a new market, and there’s a strategy
to piggyback on their initial efforts. It may be that there’s the possibility
of a merger. It may be that the entrepreneur’s product will
deliver superior results during testing. The entrepreneur needs to
be open to and assess all possibilities and then adjust the development
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