By Simon Bere
Carl Von Clausewitz one of the god fathers of strategy argued that any strategy work must begin with the clearly defining the terms to be used in strategy. This is a profound insight which at first appears to trivial. But in today’s world including the corporate world famed for effectiveness on account of being staffed with educated people including the degreed, getting the full potential from the individuals, teams and opportunities is severely undermined not by lack of financial and physical means but by lack of clear, complete, accurate and actionable body of knowledge; the raw material of the theory of things. This problem at its core are two three main things
- Poor definitions of key terms used in the organisation-most organisations and their people use academic definitions of key terms, which definitions help in understanding the subject but which do not help the practitioner.
- In applicable content-The content of most disciplines such as leadership, management and entrepreneurship used in the real world is from the academic world most of which content is designed for the intellectual and not the practitioner. Few people are able to convert academic content into forms that can help them be effective in the real world performance in the discipline. This fact is central to the training and development crisis the world faces with some researchers arguing that more than 75% of the USD400 billion poured into training and development is not producing desired results-there is no change in performance after people have passed through some “training” 85% of the times.
- Lack of a common understanding of key terms including terms such as strategy, performance, results, competency, SWOT, Vision, Mission, Values, Leadership, Management, Entrepreneurship, Marketing, Innovation, Creativity, Invention, Investment-the list is very long and you can also email the author for the full list. Ask any five top executives from the same team to define any key term such as strategy, leadership or management and you are mostly likely going to have five different definitions. There is no agreed definitions of any serious terms in many organisation; each person has her own meaning and interpretation; this seriously undermines the strategy of things in organisations. In this newsletter I will go through the following fundamental but confused terms;
Business Versus Entrepreneurship
I bring business and entrepreneurship together because many people confuse these two big time. This confusion is not limited to the layman, the confusion is very evident even in the academic world. It is evident in banks and other financial institutions. It is evident in institutions and organisation that aim at stimulating economic growth. It is evident in consultants in business, entrepreneurship and economic development. This confusion is everywhere.
Many people do not see, in their minds, any difference between business and entrepreneurship; they see entrepreneurship and business as one and the same thing. Most of the courses and training programs called “entrepreneurship” are clearly business causes where people learn how to start and do business. Hence all people who start businesses are called entrepreneurs. Many global conferences on “entrepreneurship” rare focus on entrepreneurship; they focus on business and most of content and lexicon is 90% business with a 10% of entrepreneurship jargon and content. Even many consultants and intellectuals who delve into entrepreneurship never real speak entrepreneurship; they focus on business. This is a mistake; the reason why the world’s attempts at stimulating entrepreneurship are failing.
Of course there is some relationship between business and entrepreneurship, but it is very important to understand that entrepreneurship and business are not the same thing. Business is business and entrepreneurship is entrepreneurship. The problem of failing to distinguish between business and entrepreneurship is also a big disadvantage to those who finance business projects because they do not understand that business people and entrepreneurs are not the same; they think differently and they approach business differently. Banks and other financial institutions, at least the traditional ones, do not understand this and they therefore throw out most of the entrepreneurs and support business people with their financial packages.
Business is as set of activities around products and services and customers. Business people bring convenience to the people.
Entrepreneurship is a way of thinking and sets of activities that create new value and/or bring major positive changes in society and the world. Entrepreneurship is a life style. Entrepreneurs create a future.
Entrepreneurs can be in business but not all business people are entrepreneurs.
One scholar on business and entrepreneurship argues that 97% of the people in business around the world are not entrepreneurs but proprietors or generic business people and enterprising people.
There are several other fundamental differences between business and entrepreneurship and between business and entrepreneurship which, for brevity, cannot be propounded here. If you are interested in more of the differences and references are available.
Innovation, Invention and Entrepreneurship
The confusion among these terms undermine economic development and bring heartaches especially to innovators and inventors. Surprisingly, even many key decision makers in many key economic and business institutions also confuse these three.
I once attended a half day “entrepreneurship” event in Harare Zimbabwe. The event was organised by a financial institutions and was graced by a prominent international speaker. Several youngsters were also presented their “business” projects and they were labelled upcoming entrepreneurs.
I was sitting among the audience and to my surprise, none of the key speakers presented anything that could be called entrepreneurship and the youngster who were billed as entrepreneurships clearly had some good business ideas, but they lacked in either business acumen or any entrepreneurial flare. There presentations dwelt on the nitty-gritty of what they view as the ingenuity of their projects. None of them showed any clarity on how they would convert their ingenious ideas into full scale business and what real new value they would bring. I could not tell, in the end, whether this conference called entrepreneurs conference was an entrepreneurship conference or an innovation conference or a business conference. Even the line-up of all the speakers showed no flow and a common thread. In the end, it was one of those conferences when you walk in with nothing and come out with really nothing valuable.
In analyzing this and other events, I see that there is still a lot of confusion between invention, innovation and entrepreneurship. Here is the facts;
- Innovation and invention and entrepreneurship are all three different animals altogether.
- Being a great inventor is not any passport to being a great entrepreneur; many great inventors since time immemorial never became successful financially with then invention because they lacked the entrepreneurship thing. This includes the inventor of the Coca Cola syrup, John Stith Pemberton (July 8, 1831 – August 16, 1888), who got a paltry USD70 000 when an entrepreneur bought the rights to his syrup to Atlanta pharmacist, Asa Griggs Candler, for US$1,750, which in 2022 purchasing power is equal around USD70 000. Pemberton died poor.
- Henry Ford is not the inventor of the automobile. He was the entrepreneur who saw the opportunity in the automobile and thought of mass production for the world. That was the entrepreneur in Ford. At the time, there were others who had developed the ability to build automobiles; but for their own use. They were innovators and engineers, but never thought of making money from it. They lacked the entrepreneur thing and the business thing.
- Invention involves producing, for the first time, something that never existed before. Invention involves productive imagination and insights. Invention involves both the tangible and the intangible. Processes, concepts, software, models, algorithms, methods, formulae and solutions, though not visible, are also invented. In Africa, they think invention is only about tangible things like machines and this is a huge loss.
- Innovation is creativity exploited for commercial use. It involves working with, or on what already exists, to improve it in some way. Many in Africa people think about innovation only in terms of physical, tangible things. Some of the most powerful and high value innovations are in the invisible things like concepts, ideas, methods, models. The Japanese have the 3K philosophy in terms of innovation the kakushin, kaizen and kaikaku of things.
• Kaizen=Kai(Change)+Zen(Better) or small changes over time
• Kaikaku=Kai(Change)+Kaku(Revolution) or massive, rapid change in a very short space of time
• Kakushin=Kaku(Revolution) which is coming up with different or new based on the old
Now, for businesses, organisations, economies and society, it is important to understand that all three of entrepreneurship, innovation and invention are critical to business, economic and societal success. However, confusing and mixing this terms undermines the capacity to effectively work with all them effectively. Both oil, water and gasoline are important for a petrol engine to work properly, but mistaking one for the other is a disaster. The same with entrepreneurship, innovation and invention.
- Without entrepreneurship, invention is useless.
- Without entrepreneurship innovation does not produce the best possible financial returns
- Entrepreneurship thrives on invention and innovation but it is a mistake to mistake invention or innovation for entrepreneurship.
- Business acumen and activity is key to convert entrepreneurship, innovation and invention to financial value for the entrepreneur, innovator and inventor but not every business need any innovation, invention and entrepreneurship. There are many businesses that survive without much if any entrepreneurship, innovation and invention although most such businesses then remain small to medium operations that never grow and that live on the verge of collapse because they lack survival forces provided by invention, entrepreneurship and innovation.
The term investment has been hijacked by the financial sector to a point when people, rather sadly, talk about investment only in terms of money. Then they miss the big opportunities than come from understanding the concept of investment in a broader terms.
Investment, in my own definition, is the use of resources in a way that creates value to be enjoyed some time in the future. Investment produces some positive increase in either quantity or value or both. In other words investment is not just about money but any other resources available to humans as individuals, teams and organisations. The general principle is;
- At any given time, we are either consuming or investing our resources. Resources include more than just money.
- We invest something into something
- All real investment involves a risk. One cannot expect zero risk from investing.
- Physical assets
- Mental assets
In many organisations, companies, economies and societies, copious amounts of time and other resources are wasted or consumed because people think investment only in terms of money and “investors” without thinking about themselves of investors of some other resources especially time.
People would lose time to save money even when we all agree that while money lost can be recovered, time lost is lost forever. How many times do you find even senior executives and decision makers failing to realise that they would rather save time than save money? How many times do you see us consuming all our time in things like social media discussing vanity and issues that never bring anything positive?
Something to Think About?
- Will getting clear about the terms business, entrepreneurship, invention, creativity, investment and innovation produce any positive changes in your performance and results in those areas?
- Now that you have read this article, what specific actions are you going to take as a result? Saying it is a nice read or it was a helpful article won’t make any difference? What are you doing to do next?
- If in your organisation innovation is one of your values
a. Do you have a clear, correct and working definition of innovation
b. Is your organisation configured to make innovation a practical and systemic reality?
c. Do you have serious entrepreneurship to convert your innovations into practical value?
d. Do you have serious business acumen supporting entrepreneurship and innovation to covert the innovations and new value into practical financial results?
- If you found this article useful are you going to share it with others so that we spread the gospel and improve how things are done in our world?
Let’s continue the conversations
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