What makes an Entrepreneur: 14 Behavioural Competencies

What makes an Entrepreneur: 14 Behavioural Competencies

From the time the Allan Gray Orbis Foundation was established in 2005, our aim has been simple: to nurture high impact, responsible entrepreneurs. However, it’s one thing to implement a programme with a clear objective, and quite another to prove – scientifically and empirically – that the programme is achieving its intended goals.

That’s why the Foundation embarked on a formal validation study in 2017. By this time, the success profile methodology used to select participants for our programme had been in place for five years. We wanted to be sure, beyond doubt, that our tools were optimally accurate and effective in terms of assessing candidates. We also wanted to determine whether our selection and development framework was the right one. Could we be certain that the competencies we selected for were, indeed, indicators of academic performance and entrepreneurial potential?

Our validation study was informed and underscored by our understanding that, when establishing a business, success is largely determined by three critical elements: the Person (their skills, competencies, mindset and values) the Context (political and socio-economic) and the Process (the steps taken to start the business). The Foundation’s work is unique in that we select young people at pre-ideation stage; in other words, we select for individual entrepreneurial potential, rather than the business idea. This means that an individual’s mindset and competencies are of paramount importance, because they are indicative of the ability to develop into a responsible, high impact entrepreneur.

THE PROCESS

Our journey to greater effectiveness began with testing all the selection tools employed in our Scholarship and Fellowship programmes. We followed this with a qualitative review of our success profile framework and methodology.

Our initial findings revealed three critical insights. For a start, we learned that there was limited insight into our theory and rationale. For instance, we might select for resilience, but the theoretical link to this construct was weak. In fact, if you asked two different people to link resilience to high impact entrepreneurship, you’d receive two different responses.

Our second finding related to the lack of outcomes domains. We hadn’t provided an unambiguous definition of our outcomes, which meant that even though we were doing great work around entrepreneurial development, the impact of our initiatives couldn’t be measured in terms of predictive validity towards entrepreneurial performance and/or development. We therefore had to formalise the links between outcomes and constructs.

Finally, we found that the success profile competency framework lacked discriminant validity between our various constructs, and, in many cases, they overlapped.

The reasons for these areas of improvement were manifold; the relativeness newness and complexity of the field of entrepreneurialism being one of the most significant. There is, consequently, limited research available on the topic, especially pertaining to what makes an entrepreneur. This is particularly true of the age group targeted by the Foundation. Thus, our selection process was the most rigorous in place when it was first formulated, in spite of its shortcomings. Nonetheless, as a learning organisation, we were eager to address these and enhance the process wherever possible – as we will continue to do in the future.

Our quest for improvement meant that we had to return to the beginning, to take a fresh look at our theoretical and empirical roots and, in so doing, establish more clearly defined entrepreneurial competencies with a South African-centric focus.

THE NEXT STEPS

The first phase of the project centred around generating a literature review and developing our entrepreneurial research survey. Using desktop research, we conducted an empirical analysis of both local and global data to identify 17 models of high impact entrepreneur-ship.

Next, we hosted a workshop with our reference group – which comprised external experts, internal stakeholders, and established entrepreneurs – to extract key competencies from these models.

We had now identified 19 key competencies, all of which had been shown to lead to entre-preneurial action. More than this, we also gleaned an understanding of where to pitch our entrepreneurial outcomes: where previously we had concentrated on CEO or conductor levels, we realised the need to establish a greater degree of involvement, earlier on in the entrepreneur’s journey. We therefore shifted our emphasis to start-up entrepreneurs, whose abilities may then be nurtured, allowing them to follow different paths.

We concluded this phase with a literature review, drafted by the University of Pretoria, which created conceptual and operational definitions of each competency and assessed the developability of each construct, also noting whether each could be measured. We now had a conceptual and operational definition for each construct, and a clear path on how to take each forward.

This led us to the second phase of the project: finalising our research survey on the 19 competencies. This included a survey on entrepreneurial action, so that we were better equipped to measure such action.

The entrepreneurial action scale (McMullen and Shepherd, 2006) consists of 17 items to measure the business start-up activities on a five-point Likert-type scale where respondents were asked to what extent they have engaged in the listed activities toward venture creation in the last three years, ranging from 1 (never) to 5 (always) (see Table 1). Entrepreneurial action was split into three constructs using the Exploratory Factor Analysis. The entrepreneurial outcomes for each entrepreneurial action phase are listed below.

 

 

BEFORE SETTING UP OUR SAMPLE GROUP,

we piloted the study among Allan Gray Fellows, then incorporated their feedback and refined our questionnaires before distributing them among our sample of 1°200 start-up and established entrepreneurs-noteworthy for being the third largest entrepreneur sample in South Africa. The hybrid nature of the sample is noteworthy, too, as accessing start-up entrepreneurs is difficult. We were aided in the data collec-tion process by a company that enjoys relationships with a number of entrepre-neurial agencies and institutions.

Once we had collected the data, it was time for analysis, a phase that took place between December 2018 and February 2019. One of our aims here was to refine the 19 competencies identified during the previous phase, narrowing them down to those which had been shown to be most closely aligned to entrepreneurial action.

We were now set up for Phase Three: moving data analysis from our respondents, using a structural equation modelling process. We also undertook statistical analysis to examine the strength of each construct compared to the entrepreneurial action outcomes, allowing us to target the constructs with the most significant relationships to entrepreneurial action.

The ultimate result? A scientific, empirical model that shows a good fit between 13 constructs. Further, the reference group who assisted throughout the research project, believed that as a precursor to opportunity assessment is opportunity recognition, which did not fall into the 13-competency model and subsequently decided to add Opportunity recognition as a competency.

This is important, because we now know beyond any doubt that if we select for certain constructs, and develop them, entrepreneurial action of some sort is guaranteed. Empirically tested and proven, these constructs now form the basis of the Foundation’s selection and development initiatives of its candidates and beneficiaries. Consequently, our already carefully formulated selection process has been enhanced by our increased knowledge of entrepreneurship, which has allowed for our more scientific approach.

Our scrutiny of all constructs and their relationship with entrepreneurial action was significant in another way, too: it confirmed findings from a previous study we conducted in partnership with the Entrepreneurial Learning Institute (ELI), where we had attempted to establish a growth mindset model. During this study, five competencies had emerged as key: a growth mindset, self-efficacy, locus of control, resilience and attribution theory. Interestingly, four of these (resilience, locus of control, growth mindset and self-efficacy) were once more revealed as statistically significant, reaffirming the model developed in collaboration with ELI and ensuring that we have now validated, and empirically tested, the constructs leading to entrepre-neurial action.

WHERE TO FROM HERE

Having defined scientifically and empirically tested competencies required for successful entrepreneurship and entrepreneurial action at a startup level, we’re now poised to apply our research at high school and university level. This will enable us to develop candidates at these levels with optimal efficiency, so that they are able to kickstart their entrepreneurial careers as soon as they graduate from our programmes or best case, during.

Our way forward lies in using the research and customising the competencies to enhance the selection processes for our Scholarship and Fellowship programmes, and to ensure that we are developing each competency, for each individual, optimally.

WHY THIS MATTERS

Our final task lay in aligning our new entrepreneurial competency and mindset framework throughout the Foundation’s pipeline – and, moreover, ensuring that the results are available to our ecosystem partners.

This is, perhaps, one of the most important steps in the process, because the ramifications of our competency review are tremendous. Obviously, the outcomes hold clear advantages for the Foundation itself, enabling us to select candidates with far greater efficiency. What’s more, because we have established which competencies are trait-based and which are developable, we are able to nurture our candidates at different levels – and, if a certain competency is not greatly developed, candidates can learn which they can strengthen in order to become a more well-rounded entrepreneur. This insight is particularly heartening when it comes to the mindset constructs, as each of these can be developed. This gives credence to our belief that entrepreneurship is not an innate quality but can, in fact, be taught.

This study could help the entrepreneurship community understand why entrepreneurial intention does not always translate into action, because we know which specific mindsets and competencies are predictors of entrepreneurial action. These competencies can be measured using validated tools in various programmes for baseline data, which can then be used to tailor or customise development programmes for future entrepreneurs.

Moreover, helping entrepreneurs become aware of their entrepreneurial potential can allow them to enter the space with greater confidence, as the findings emphasise the role of personal development and self-mastery.

The implications for organisations and business owners are interesting, too, especially in terms of team recruitment, allowing companies to identify the complementary traits required to build an entrepreneurial, cohesive and effective team. These measures could also assist in profiling various types of entrepreneurs going forward.

Finally, entrepreneurship accelerators and incubators stand to benefit from our findings by applying the knowledge of which competencies to use when selecting participants. This affords accelerators greater clarity in terms of the traits they are looking for, as well as the traits that need to be developed.

THE 14 COMPETENCIES

Our research showed the following competencies to be crucial:

 

1. OPPORTUNITY ASSESSMENT:
The ability to evaluate an opportunity and make a decision around it.

Conceptual definition:
The process of evaluating an idea, concept, or opportunity to determine whether there is sufficient strategic, market, and financial merit for continued consideration and possible development into a product. (Moris, et al. 2013)

Operational definition:
The ability of the entrepreneur to evaluate the opportunity before them and to make a decision regarding the opportunity. Testing a gut feeling of good versus not-so-good opportunities. (Baron, 2006; Haynie, Shepherd & McMullen, 2009)

Link to entrepreneurship:
Opportunity assessment increases the probability of entrepreneurial success, as the opportunity is analysed to ensure the performance of an identified opportunity. This can be developed by encouraging entrepreneurs to meet with the customer, review internal resources, develop a strategy, conduct a risk assessment and plan (OBrochta, 2001).

The developability:
Measuring elements in the window of opportunity and the viability of an opportunity can increase a person’s chances of becoming an entrepreneur. This is done by the opportunity assessment process that evaluates the viability and of profitability of the window of opportunity, an assessment of the opportunity over time and its long term viability (Lévesque & Maillart, 2008).

Can it be measured?
Yes. We used a scale developed by Moris et al. (2013) and obtained a Cronbach alpha value of 0.94.

 

2.PROBLEM SOLVING:
The ability to identify problems, redefine them and create opportunities out of them.

Conceptual definition:
Creative problem solving is a skill that is based on the accumulation of effort, imagination, knowledge and evaluation of the problem (Turker & Sonmez Selçuk, 2009) (McMullen & Kier, 2017:2).

Operational definition:
Creative problem solving is described as the ability to identify problems, redefine the problems and create opportunities out of the problems by developing new and innovative solutions to problems (McMullen & Kier, 2017:2), (Morris et al., 2013:357).

Link to entrepreneurship:
Creative problem solving (CPS) builds entrepreneurial mindset. CPS is defined as seeking original ways to reach goals when the means to do so are not readily apparent. Entrepreneurship involves recognising a business opportunity, mobilising resources and persisting to exploit that opportunity. Esomonu (1998) defined entrepreneurship as the effective manipulation of human intelligence as demonstrated in a creative performance. This singular risk-taking act leads an individual to create something of value from practically nothing.

The developability:
Creativity and CPS can be developed by stimulating creative thinking and the ability to tap into one’s inventive side. This can be measured by determining how creative one is, how inventive, how often one comes up with novel ideas and the ability to identify opportunities (Hmieleski & Corbett, 2006).

Can it be measured?
Yes. Creative problem solving (creativity) scales have been developed and tested by (Kristiansen & Indarti, 2004), and obtained a Cronbach alpha of 0.85.

 

3.INNOVATION:
The ability to be creative and turn ideas into reality.

Conceptual definition:
Innovation can be described as the development of a new idea, method or device (Dahlander & Jeppesen, 2014).

Operational definition:
The ability to turn imaginative and creative ideas into reality (Jain, 2011:130-139), Boyles (2012)

Link to entrepreneurship:
Innovation is the mechanism by which organisations produce the new products, processes and systems required for adapting to changing markets, technologies and modes of competition. Innovation represents today’s competitive advantage, supported by strong mainstream capabilities in quality, efficiency, speed and flexibility. Innovation can help firms play a dominant role in shaping the future of their industries. High performing innovators are able to maintain a giant juggling act of capabilities, and consistently bring new high-quality products to the market faster, more frequently and at a lower cost than competitors. Moreover, these firms use process and systems innovation as a way of further improving their products and adding value to customers. This combination creates a dynamic and sustainable strategic position, making the organisation a constantly moving target to competitors (Lawson & Samson, 2001).

The developability:
Innovation capability is proposed as a higher-order integration capability; that is, the ability to mould and manage multiple capabilities.

Can it be measured?
Yes. Innovation scales developed and tested by (Lukas & Ferrell, 2000; Mitchelmore & Rowley, 2010), obtained a Cronbach alpha of 0.78. Innovation scales developed and tested by (Higgins, 1995), obtained a Cronbach alpha of 0.70.

 

4.RESILIENCE:
The ability to work through challenges.

Conceptual definition:
Resilience can be described as an entrepreneurs’ ability to face challenges and still persist (Ayala & Manzano, 2014:128).

Operational definition:
Resilience is measured through the capacity of a dynamic system to adapt successfully to disturbances that threaten system function, viability, or development (Fisher, Maritz & Lobo, 2016:40).

Link to entrepreneurship:
Resilience, according to Tedeschi and Calhoun (2004:4), is an entrepreneur’s ability to continue living a resolute life, no matter the adversity or difficulties that are faced.

The developability:
Operational flexibility enables resilience through allowing the organisation to respond quickly and effectively to disruptions (Sheffi 2007). As such, the organisational capabilities offer the potential for adjustment under conditions of uncertainty and encompass the notion of innovation within organisational systems.

Can it be measured?
Yes. Resilience scales developed and tested by (Sinclair & Wallston, 2004) obtained a Cronbach alpha value of 0.69

 

5.AUTONOMY:
The belief that, as an individual, you have control over your outcomes.The belief that, as an individual, you have control over your outcomes.

Conceptual definition:
Locus of control is the degree to which people believe that they have control over the outcome of events in their lives, as opposed to external forces beyond their control (Lefcourt, 1991).

Operational definition:
To measure whether a person enjoys being in control of every aspect of their business (Spector, 1988).

Link to entrepreneurship:
Entrepreneurs tend to have a strong internal locus of control. Locus of control is a concept defining whether a person believes he/she is in control of his/her future, or someone else is in control of it. For example, we all know people who believe they have no control over their lives. They believe that what happens to them is dictated by outside forces.  People who feel they are victims of outside forces have an external locus of control – “it’s not my fault this happened to me.” By contrast, entrepreneurs have a very strong internal locus of control. They believe their future is determined by the choices they make (Hansemark, 1998)

The developability:
Rotter (1966) made a significant contribution to this tradition with the development of a “locus of control” construct. According to Rotter, an individual perceives the outcome of an event as being either within or beyond his or her personal control and understanding. In individualistic cultures we found an increased likelihood of an internal locus of control orientation. There was also support for the hypothesis that an entrepreneurial orientation, defined as internal locus of control combined with innovativeness, is more likely in individualistic, low uncertainty avoidance cultures than in collectivistic, high uncertainty avoidance cultures (Mueller & Thomas, 2001).

Can it be measured?
Yes. Locus of control scales developed and tested by (Spector, 1988) obtained a Cronbach alpha of a range from 0.91 to 0.94.

 

6.CURIOSITY:
A drive to find out information without being prompted.

Conceptual definition:
Curiosity is the catalyst ingredient, which leads entrepreneurs to pry into status quo products and services to find new solutions to better solve customers’ problems. A sense of curiosity means you look at even the smallest problems and seek a better solution (Steyaert, Hjorth & Gartner, 2011).

Operational definition:
Curiosity arises when an entrepreneur is bored or interested in gaining additional information that is specifically linked to entrepreneurship. It is measured when a person is no longer comforted by the novel stimulus surrounding them and wants to find new opportunities or information necessary in business (Fletcher, 2011).

Link to entrepreneurship:
There is a link between entrepreneurial curiosity and entrepreneurship results in learning tasks related to entrepreneurship and the ability to incorporate new experiences to improve or develop a business.  Curiosity can further be described as finding answers which enable a person to improve decision making. An entrepreneur who has a high level of curiosity will be interested in understanding how the economy works, how to improve results and how business works (Fletcher, 2011).

The developability:
Curiosity is made up of perceptual curiosity (intellectual information), epistemic curiosity (experience) and operationalised international curiosity (new information of people). Entrepreneurial curiosity is the desire that drives the individual to learn how to perform specific tasks which are directly related to entrepreneurship, such as how to conduct market research, the development of new ideas, financial analysis, how to achieve and set goals and the use of marketing.

Can it be measured?
Yes. Curiosity scale developed and tested by (Fletcher, 2011) obtained a Cronbach alpha value of 0.94.

 

7.VALUES DRIVEN:
The extent to which an individual is committed to their personal or organisational values.

Conceptual definition:
This is a type of leadership that puts values into practice, where they act as guiding principles with regards to business and personal lives (Mussig, 2003).

Operational definition:
Examines the extent to which a person has values and how committed they are to follow those values (De Bruin & Buchner, 2010).

Link to entrepreneurship:
Generally, there is agreement that a vision is a pattern for a future; having elements of time and scope, it is values driven, has a purpose, and often evokes a mental image or picture that can be communicated (Bird & Brush, 2003). People with protean career attitudes are values-driven as they shape their careers according to their own internal values and beliefs (Uy, Chan, Sam, Ho & Chernyshenko, 2015). Entrepreneurship is the driving force in economic development throughout the world. Yet, some have argued that entrepreneurship is fundamentally a values-driven activity (Berger 1991; Lipset 2000).  Kilby (1993) notes that values are instrumental in advancing a constructive understanding of human behaviour and consequent change. Thus, it would seem that personal values should have important implications not only for the decision to pursue entrepreneurship, but the way in which the entrepreneur approaches a venture. Values reflect the entrepreneur’s conscious view of himself or herself (Feather 1990). In addition to this, the view (or belief) that one has about himself or herself directly shapes movement toward action, or one’s motives (McClelland 1961).

The developability:
What values will drive the company? And what will your role be in this organisation? The vision of your venture should be a short statement that can be easily communicated, or presented in an image (Brush, 2008). The values that the Foundation drives, can be developed.

Can it be measured?
Yes. Value driven scales developed and tested by (De Bruin & Buchner, 2010) obtained a Cronbach alpha of 0.654.

 

8.ACTION ORIENTATION:
The extent to which a person is willing to take action to solve a problem without being prompted.

Conceptual definition:
Action orientated is when a person is willing or likely to take practical action to deal with a problem or situation (Low, 2001).

Operational definition:
Measures the extent to which a person is willing to pursue development and hopefully a business (Frese, Kring, Soose & Zempel, 1996).

Link to entrepreneurship:
Action orientation or personal initiative is a proactive, self-starting, and persistent long-term orientation that attempts to shape environmental conditions (Frese, Kring, Soose, & Zempel, 1996); extending proactiveness to personal initiative which, over and above proactiveness, entails approaching business issues in a persistent and self-starting manner which forms the basis of entrepreneurship (Krauss, Frese, Friedrich & Unger, 2005)

The developability:
Action orientation can be measured by enquiring about attitudes and values concerning change and initiative, as well as about entrepreneurial intentions (Johannisson, Landstrom & Rosenberg, 1998).

Can it be measured?
Yes. Action orientation scales developed and tested by (Frese et al., 1996) obtained a Cronbach alpha between 0.67 and 0.87

 

9.CALCULATED RISK-TAKING:
The ability to identify, manage and take risks to improve the ultimate chance of success.

Conceptual definition:
Risk management/mitigation involves the systematic monitoring, assessing, hedging, transferring, and/or exploiting of multifaceted risks encountered as an innovation initiative unfolds (Baum et al., 1998)  (Pillay & Morris, 2016), (Thekdi & Aven, 2016:278)

Operational definition:
The successful identification and management of risks leading to a reduction in potential losses but still enabling the small business to pursue opportunities (Brustbauer, 2016:70; Murmann & Sardana, 2013:192).

Link to entrepreneurship:
Risk taking propensity makes it easier for the firm and the entrepreneur to adapt to environmental changes, consumer preferences, technological developments and competitor moves (Kellermanns, Eddleston, Barnett & Pearson, 2008:5). Risk taking management (Miller & Friesen, 1978:926; Park, Min & Min, 2016:122).

The developability:
Calculated risk taking involves a successful identification, coordinated valuation and prioritisation of risks in order to reduce, monitor and control the likelihood of an unforeseen event (Vonortas & Kim, 2015:122).

Can it be measured?
Yes. Calculated risk-taking scales developed and tested by (Morris et al., 2013) obtained a Cronbach alpha of 0.826.

 

10.VALUE CREATION:
The ability to evaluate the potential to create new value for a client or organisation.

Conceptual definition:
Value creation is an integral part of the business model, as it is the process of pursuing new markets, new revenue streams and new business opportunities, while determining how the business products or services will create sufficient value for the customers (Bocken, Short, Rana & Evans, 2014:43; Teece, 2010:172).

Operational definition:
Evaluates the extent to which new value can be created by the entrepreneur in his business, products or services (Dyer et al., 2008).

Link to entrepreneurship:
At a societal level, the process of value creation can be conceived in terms of programmes and incentives for entrepreneurship and innovation intended to encourage existing organisations and new entrepreneurial ventures to innovate and expand (Lepak, Smith & Taylor, 2007).

The developability:
Business begins with value creation. It is the purpose of the institution: to create and deliver value in a way that is sufficiently efficient to ensure it generates profit after cost.

Can it be measured?
Yes. Value creation scales developed and tested by (Dyer et al., 2008), obtained a Crobach alpha between 0.74 and 0.78.

 

11.GROWTH MINDSET:
The ability to evaluate the potential to create new value for a client or organisation.

Conceptual definition:
The belief that intelligence is not fixed but can be developed is a comparably strong predictor of achievement, and exhibits a positive relationship with achievement (Dweck,2015)

Operational definition:
The growth of business activities is evident if entrepreneurs consider this a priority in their businesses (Gundry and Welsch, 2001).

Link to entrepreneurship:
The literature existing on entrepreneurship implicitly assumes that entrepreneurial orientation (EO) and growth orientation are positively related with each other.

The developability:
Some research has identified factors that enhance or reduce the willingness of the entrepreneur to grow the business. Factors include the strategic origin of the business (i.e., the methods and paths through which the firm was founded); previous experience of the founder/owner; and the ability of the entrepreneur to set realistic, measurable goals and to manage conflict effectively (Gundry and Welsch, 2001).

Can it be measured?
Yes. Growth mindset scales developed and tested by Dweck (2015) and Gundry and Welsch (2001), obtained a Cronbach alpha of 0.86.

 

12.LEADERSHIP:
The ability to lead a group of people towards the attainment of a specific goal.

Conceptual definition:
The action of leading a group of people or an organisation (Yıldız et al., 2014).

Operational definition:
Leadership involves establishing a clear vision, sharing that vision with others so that they will follow willingly, providing the information, knowledge and methods to realise that vision, and coordinating and balancing the conflicting interests of all members and stake-holders. A leader steps up in times of crisis and is able to think and act creatively in difficult situations (Daft, 1999).

Link to entrepreneurship:
Entrepreneurship is a special case of leadership (social leadership) and is distinguished from other forms of leadership because in this instance, the leader is one who created a company rather than manages an existing one. The underlying premise in entrepreneur-ship research is that it is the entrepreneur (that is, the leader) who makes the difference in new venture success, often through risk-taking propensity. (Cogliser & Brigham, 2004).

The developability:
No one is a born leader but everyone can develop leadership skills, and everyone can benefit from using them. The following steps may help to develop leadership:

  1. Communicate effectively.
  2. Keep everyone working toward agreed upon goals: ·
  3. Get to know the people around you
  4. Treat others as individuals
  5. Accept responsibility for getting things done
  6. Problem solves in a step-by-step way

Can it be measured?
Yes. Leadership scales developed and tested by (Rush, Thomas & Lord, 1977) obtained a Cronbach alpha of 0.74

 

13.SELF-EFFICACY:
An individual’s belief in her own ability to solve problems and achieve goals.

Conceptual definition:
Self-efficacy is a motivational construct that has been shown to influence an individual’s choice of activities, goal levels, persistence, and performance in a range of contexts (Zhao, Seibert & Hills, 2005).

Operational definition:
Self-efficacy appears to be similar to self-esteem, expectancy, locus of control, and attribution concepts of personality and motivation; however, self-efficacy beliefs emphasise an assessment capability (can I do this?) as opposed to a concern with outcome expectations (if I do this, what will happen?) (Urban, 2006).

Link to entrepreneurship:
Self-efficacy is an individual’s belief in his or her innate ability to achieve goals. Self-efficacy is a construct first devised by Bandura (1977) in the psychological field, and is understood as the strength of people’s convictions of their own effectiveness in executing the behaviour required to achieve certain outcomes. People with a high level of self-efficacy tend to set challenging goals, persist even in the face of failure and approach difficult tasks as challenges to be mastered rather than issues to be avoided (Botha & Bignotti, 2016). Entrepreneurs are known for having high levels of self-efficacy. Self-efficacy also has a very strong relationship with entrepreneurial intention (Thompson, 2009).

The developability:
Self-efficacy is a motivational construct that has been shown to influence an individual’s choice of activities, goal levels, persistence, and performance in a range of contexts.

Can it be measured?
Yes. Self-efficacy scales developed and tested by (Spector, 1988) obtained a Cronbach alpha value of 0.91

 

14.OPPORTUNITY RECOGNITION:
The ability to understand information and identify the potential of something to be of value.

Conceptual definition:
The capacity to perceive changed or overlooked possibilities in the environment that represent potential sources of profit or return to a venture (Morris, et al. 2013).

Operational definition:
This is based on the development of patterns that recognise the link between an identification of a business opportunity, measuring the ability to discern information and whether a person can identify the potential of something to be of value (Baron, 2006).

Link to entrepreneurship:
In earlier studies, opportunity recognition or identification was referred to as entrepreneurial intention. For example, Shaver and Scott (1991) state that entrepreneurs have the type of motivation to make the entrepreneurial process result in opportunity realisation, which is known as entrepreneurial intention or intent. Likewise, Krueger et al. (2000) found that the opportunity identification process is an intentional process and therefore also offers a means to better explain and predict entrepreneurship. The role of the entrepreneur in opportunity search and identification is controversial, because intention models posit that entrepreneurs intend to be entrepreneurs before they locate opportunities (Krueger 1993). In later studies, it is proposed that individuals with a stronger desire to be an entrepreneur will have the ability and competency to identify opportunities (Volery, Müller, Oser, Naepflin & Rey, 2013). Krueger (1993) associated self-efficacy with opportunity recognition, and Short, Ketchen, Shook, and Ireland (2010) later proved that self-efficacy is directly related to entrepreneurship, thus deducing that opportunity recognition and entrepreneurship have a bidirectional relationship.

The developability:
SThe pattern recognition of opportunity recognition is used as it integrates three factors into a basic framework that is comprised of assessing a person’s alertness to opportunities, prior knowledge of the industry and actively looking for opportunities. Pattern recognition helps explain why one person is able to identify certain opportunities and while others do not. Pattern recognition suggests specific ways in which an entrepreneur can be trained to identify opportunities (Baron, 2006).

Can it be measured?
Yes. Opportunity recognition scale developed and tested by Morris et al. (2013) obtained a Cronbach alpha value of 0.71 and 0.90.

The State of Entrepreneurship in South Africa

The State of Entrepreneurship in South Africa

Entrepreneurs are always going to face challenges. That much is a given. But what about entrepreneurship itself? Are we, the stakeholders who are trying to create fertile ground for individuals who choose this route, destinated to have a similar struggle?

The answer to this question is critical, because it reveals much about the state of entrepreneurship in South Africa. And, at present, it’s an answer that gives cause for concern.

Never in South Africa has there been such a crying need for entrepreneurs who not only succeed, but who have the ability to positively impact and transform their community. However, at the same time, it’s clear that these people are not receiving the support that would allow this to become a reality.

This was highlighted during the State of the Nation Address given by President Cyril Ramaphosa during February. Although Mr Ramaphosa admittedly had a number of challenges that required urgent attention, the omission of entrepreneurship as a national priority was a glaring one. Unfortunately, this concept remains a “by the way” – and, as long as this is the case, our entrepreneurs will continue to struggle.

This is evidenced by the rate of growth in South Africa. Quite simply, the outcomes of entrepreneurship do not keep pace with the inputs.

Compare our playing field with that of other African countries, for example. By all accounts, we are to be envied: it appears as though our efforts and successes in the area of entrepreneurship exceed that of our peers in many instances. However – and this is the crux – our entrepreneurs seem doomed to fail. Yes, we record an impressive number of start-ups, but few of these translate into sustainable jobs. In fact, only 15% of our start-ups go the distance.

This means that entrepreneurship in South Africa is failing in one of the key areas where it is intended (and where it is sorely needed) to have the most impact: job creation.

One of the reasons for this failure is the lack of alignment between skills and ideas. Our entrepreneurs may have outstanding insights that allow them to identify niches with potential to become lucrative businesses, but they don’t have the skills to take the business from point A to Point Z.

At first glance, it may appear that the existence of such a gap is absurd, given the significant array of resources that have been established precisely to provide entrepreneurial support in South Africa. However, the resulting ecosystem is fragmented: yes, there is a wealth of information and infrastructure out there, but none of it addresses the entire spectrum of entrepreneurial support, from end to end.

Moreover, many entrepreneurs aren’t aware of where they are in their journey. Which source do they consult, if they don’t know where they are in their entrepreneurial career trajectory, and what this means in terms of their support requirements and potential company growth? These are not questions that can be answered with a quick reference to company profitability, business valuation and market size, because the entrepreneur’s experience is typically a dynamic one characterised by change, adaptation and iteration – all of which create complications when it comes to accurately predicting company growth. In an ideal world, an individual with entrepreneurial potential would have clear guidelines regarding the support sources available, and which would be the most appropriate and best placed to provide advice and skills based on their current and future developmental phases. But this is certainly not the case at present.

Government’s current focus on FET-related skills poses is a further obstacle. While this is, indeed, a progression from the notion that a professional career is the only (or, at least, the best) option for every individual, regardless of their aptitude, progress in putting in place a future-ready curricula that boosts critical thinking, creativity and emotional intelligence in addition to fast-tracking the attainment of digital and STEM skills that will enable the workforce of the future to participate in the digital economy – has been stagnant. After all, the digital economy is where the greatest opportunities for today’s entrepreneurs reside, and it is therefore crucial to ensure that they have the requisite skills to take advantage. Our present model does not allow for this, however.

Currently, we don’t have a clear picture of knowledge and skills acquisition as they relate to employment, and how these can be best harnessed to drive rapid innovation and optimise industrial growth. Consequently, the majority of skills development initiatives in place in South Africa are geared towards bolstering existing, established industries and trades – but, since a future shaped by Artificial Intelligence holds very little certainty for any industry, we have to acknowledge the need to take risks on unknown quantities. One way of doing this, is seeking out industries that have the potential to enable, derail or disrupt existing sectors. Difficult though this is – it is, after all, almost impossible to imagine a world that currently exists only in terms of “what ifs” – tools like systems-thinking and design thinking may help us identify the gaps and opportunities offering the greatest potential for entrepreneurial action.

Education is failing our entrepreneurs in other areas, too. We cannot ignore the coming impact of the Fourth Industrial Revolution on our world; nor can we close our eyes to the fact that the industries which will prove most productive in the years to come probably don’t exist at present.

The skills required to gain mastery over these industries are, naturally, very different from those which served previous generations. But, then again, the people who will work in these industries have shown themselves to be very different, too. Just as workplaces were initially challenged to accommodate the personalities and tendencies of millennials – the pioneers of the ‘slashie’ or gigging generation, for whom it is commonplace to invest time and energy in a number of different jobs rather than pledging loyalty to an organisation – it’s likely that further adjustments will need to be made if we are to optimally harness the strengths of Generation Z.

On the one hand, and working in our favour, is the intrinsic entrepreneurial flair that seems to come naturally to many of this generation. However, they are also hampered by short attention spans. They are, moreover, more global in their thinking, and more individualistic, than any generation before them.

If we are to help them on their path to successful entrepreneurship, we need to take these differences into account and, perhaps most importantly, end our view of entrepreneurs as one-dimensional people.

At a more pragmatic level, entrepreneurial training in the future will need to go beyond focusing on the basic skills that are essential for starting a business. We will also need to tap into the values and motivations of individual entrepreneurs, while helping them leverage their social networks; perhaps one of the most important tools they’ll have at their disposal.

In other words, we need to steer clear of a blanket approach to teaching, and strive instead for methods that resonate on a more individual level. More than anything, we need to get young entrepreneurs thinking: not about the ventures that are most likely to succeed in financial terms, but which are most likely to solve the challenges currently facing our communities and societies.

The Allan Gray Orbis Foundation’s Fellowship programme has been carefully designed to address as many of these challenges as possible. Our chief differentiator, distinguishing us from other initiatives aiming to support entrepreneurs, regards the individuals selected to take part. Rather than honing in on people who have already established startups and require resources to ensure sustainability or take them to the next developmental phase, we target individuals who have displayed entrepreneurial flair, or who have the propensity to become an entrepreneur. We consider the metamorphosis – from potential entrepreneur to actual entrepreneur and, ultimately, entrepreneurial career – to be one of our greatest successes, because it means that people who otherwise would have followed traditional career paths (and thereby entrenched the current status quo) are instead given a chance to realise their full entrepreneurial potential.

That said, the Fellowship programme is neither prescriptive nor restrictive. It recognises that the most fulfilling careers are based on an “either and” rather than an “either or” mindset, and that career paths evolve over time. We accept that for some, entrepreneurship is a goal in itself; for others, it is a milestone that is part of a greater journey. We encourage participants to adopt a similar understanding of their careers, and the open-mindedness which develops as a result is a powerful motivator when it comes to taking risks and engaging with the process of starting a business. This milieu has allowed some Fellows to acquire the work experience required to establish their own start-ups, while others use their learnings from this environment to create a clearer idea of what kind of business they would ultimately like to create.

One of the instruments we have employed to nurture this mindset is the Dual Track Programme, introduced in 2018. Cognisant of the struggle for the many entrepreneurs who do not want to concentrate solely on academics or the theoretical side of entrepreneurial training, this initiative provides support for those who have already launched their own businesses, allowing them to take a sabbatical from their studies for a year to extend their degrees. The remarkable take-up of this programme pays credence to our belief that although entrepreneurship may well be an inherent skill, it can also be developed, provided the individual receives appropriate inputs, including opportunities for collaboration, personal mastery, networking and lifelong learning.

We have set up a variety of other tools to fashion a safe environment where they may flex their entrepreneurial muscles without fear of failure. These include the Ideation, Validation and Creation programme, our Accelerator programme and our annual jamboree, all of which are platforms for developing essential entrepreneurial skills and networking.

We have, furthermore, consolidated our learnings over the past 14 years, tweaking our curriculum to ensure a greater chance of success for our programme participants. Of most significance here is the abundance of information regarding entrepreneurship that has become available since the Foundation was first established in 2005. From being a relatively unknown quantity, entrepreneurship has become far better documented. Consequently, we have more accurate insights regarding the characteristics of successful entrepreneurs, and how best to leverage these.

As a result, our programme has become considerably more structured. We have also adjusted the criteria of our Selection Camps to accommodate potential high impact entrepreneurs whose previously limited exposure may disadvantage them. In this, we have worked towards greater objectivity and consistency. With this in mind, we have, moreover, reviewed our successful profiles and application forms.

While these triumphs speak to the efficacy of our programme, we regard them not as our own successes, but as successes for the field at large – and, hopefully, we will see them create a springboard to boost entrepreneurship in future years.

Download infographic here

Greater rigour, greater impact

Greater rigour, greater impact

The Allan Gray Orbis Foundation is looking forward to a new era, integrating assessment processes and development processes for greater impact and enhancing the predictive value of tools.

When the Allan Gray Orbis Foundation was founded in 2005, it was with an eye to nurturing a culture of entrepreneurialism that would not only result in job creation; but which would also ultimately benefit the entrepreneurs’ communities. There is no doubt that it has been successful in these aims: now operating in four countries (South Africa, Swaziland, Botswana and Namibia), the Foundation has received more than 33°000 scholarship applications, and funded over 3°500 years of education. Consequently, the Foundation has provided funding to more than 157 scholars to attend school at reputable high schools and has seen Fellows go on to establish businesses valued at over R1.5 billion, which have created 679 jobs.

However, in spite of this success, the Foundation identified a need to review its selection processes, ensure the validity and reliability of its tools, and entrench greater objectivity during the recruitment process, so that it could improve its results further still.

Download report here

Download infographic here

Entrepreneurship: The key to financial stability for youth | By: Lethabo Tloubata

Entrepreneurship: The key to financial stability for youth | By: Lethabo Tloubata

IMG_0565 2In 2017, unemployment rates in South Africa are reported at an all-time high, which, coupled with the start of a recession, makes the prospects for young people making a successful living seem impossible. Although corporate South Africa is doing its best to retain its talent at this stage, we need to consider a sustainable way to further develop the economy of the country. The best way thought possible is through the participation of more young people in entrepreneurial activities, however, one may not know what opportunities are there for them in the entrepreneurship space.

With the findings in the GEDI report earlier this year, South Africa was placed second in the continent in Entrepreneurship activity. What this alludes to is that the future is not so bleak.

Let’s take a closer look some of the opportunities that are available for the entrepreneurial at heart.

  1. Skills training for youth in entrepreneurship

Having a natural knack for business is one thing, however, running a successful business requires one to have some knowledge of their customer base, how to recruit and retain the best Talent as well as how to manage financial resources that they may have, amongst other skills. South Africa (and the continent) has seen an increase in programmes that offer basic skills that one may need to run a successful business. These skills-based programmes all have a strong focus on mentorship while running structured programmes that help entrepreneurs take their ideas from one phase to the next.

  1. Funding sources

Banks, angel investors & venture capitalists have been, for a long time, the natural source of funding for ventures. Though these sources are widely and readily available to people who wish to push their ideas to the next stage, it is not easy to get access to them as they often either have hectic requirements to qualify for funding or they may have a specific focus on who they fund, such as tech-based businesses.

Although the above-mentioned are still a great source of funding for entrepreneurs, we have, in the last couple of years seen a growth in crowdfunding sources which enable the entrepreneur to not only get funding from a bigger pool of sources, but to also promote their businesses and share a bit of their story and what influenced their decision to begin their venture. Crowdfunding allows one to request funding from friends, family and anonymous individuals who would identify with the inefficiency that the entrepreneur is hoping to find a solution for.

  1. Further Education & Training

Following the successes that have been seen since the inception of a National Diploma in Small Business Management at some Universities of Technology, more and more universities have included entrepreneurship studies in some form or another in their faculty offerings. These offerings range from either a National Diploma in Entrepreneurship, (which not only gives one the theoretical knowledge behind entrepreneurship but also includes a practical component which enables the student to experience the everyday life of entrepreneurship), to postgraduate diplomas in Entrepreneurship with a similar focus to the National Diploma.

While these are some resources one could use to run a successful entrepreneurial venture, it is important to know that this is not all that is out there. Innovation labs, hubs & other communities are also great resources to help grow your business.

As an entrepreneur, it is very important to explore your environment and see what and who else is there to support the growth of your business. Social network platforms, like Instagram, are being widely used to run online shops. While this does not take away from the traditional eCommerce platforms, it is there to enhance your business.

Here are some links for you to look at when exploring these opportunities that are available to you. You are also encouraged to explore further than this and make the most of the opportunities available to you.

 

 

 

 

Benefits of an Engaged Community | By: Teri Richter

Benefits of an Engaged Community | By: Teri Richter

A key outcome in the Allan Gray Orbis Foundation is the importance of creating a valued community for Allan Gray Beneficiaries. This is applicable to all three streams of the Foundation and is experienced slightly differently in the Scholarship, Fellowship and Association.

The value of communityAGO(16.04.24) 31

The Foundation understands that to achieve greatness individuals must work together and learn from one another. It is with this purpose that the Foundation spends much time and emphasis on the need to create a strong and supportive community in which Allan Gray Beneficiaries can seek guidance, learning, collaboration and inspiration.

Beginning a business venture can be an isolating task. The Foundation aims to encourage collaboration and thought partnership within our beneficiary community through meaningful engagement.

The Allan Gray Orbis Foundation Community

At its core, the Foundation community aims to create a support system to beneficiaries to encourage their success academically, personally and entrepreneurially. The Foundation’s approach to community is facilitated differently in each programme.

Intended benefits

At Scholarship level the Foundation community aims to create a strong support network to ensure that Scholars can flourish in their new school environments and are able to begin challenging their own as well as fellow Scholars thinking. The Foundation ensures that Scholars have personal relationships with Foundation Programme Officers, fellow Scholars and Candidate Fellows as well as teachers from Allan Gray Placement Schools.

Within the Fellowship, the Foundation community aims to remain a space that fosters beneficiary support, yet also begins to extend the network of beneficiaries through linking Fellows from the Alumni programme as well as business mentors. At this level, the community begins to centre around network development and thought partnership. Candidate Fellows are encouraged to challenge each other’s thinking and thereby learn from each other.

At Association level, the Foundation community aims to provide a thinking space for Fellows to test their business ideas, learn from each other’s mistakes and seek opportunities for collaboration.

The image below depicts key outcomes from community engagement for beneficiaries at different stages and demonstrates how the Foundation builds and develop the value beneficiaries extract and contribute over the three programme phases. The initial phases of community building are centred on providing resources, support systems and access to like-minded individuals who inspire each other. This foundation is built on by developing a strong focus on network building and thought partnerships, which culminates in collaboration and business development at Association level.

Screen Shot 2017-04-11 at 9.59.55 AM

Actual benefits

Beneficiaries describe the benefits they experience from their engagement with the Allan Gray Orbis Foundation Community including support, engagement and thought partnership with peers as well as the encouragement and inspiration they get from each other:

“The best thing about the Fellowship was the people and the support. I felt that I had someone who constantly believed in me, and through the Candidate Fellows I was able to get assistance and support that I needed at times.” Year Engage Candidate Fellows, Western Cape, University of Cape Town

“These are the people you can take an idea to and they will give you constructive feedback” 2011 Fellows

AGO(16.04.24) 11You are amongst a pack of really ambitious and emerging entrepreneurs but at the same time finding people in the pack who are at a similar place to you where it’s fine to go into corporate and sharpen your blade and understand how the world works so that you can emerge at the end of it with some understanding of how your impact can be felt in the world.” 2011 Fellows

“What the Foundation has done this year, or something I haven’t realised is that they are providing a network and I never like grasped that until I went to the Jamboree and Candidate Fellows were all talking about how they collaborated with each other”. Grade 11 Scholar, Western Cape

Recommendations for building communities from the Allan Gray Beneficiaries

Over the years, the Allan Gray Scholars, Candidate Fellows and Fellows have contributed valuable suggestions on improving community engagement and enhancing the experience within the community. These suggestions include:

  1. Ensuring diverse engagement across beneficiaries: Beneficiaries note that engagement across year groups and programmes, ensuring that new and more seasoned beneficiaries, as well as younger and older beneficiaries can get to know each other and share experiences and learning, increases the value gained from the community.
  2. Facilitating peer mentorship: Introducing systems where Candidate Fellows can mentor Scholars, Fellows can mentor Candidate Fellows and the like ensures that beneficiaries can learn from each other and form deep and meaningful relationships.
  3. Developing diverse engagement platforms: As physical engagement becomes increasingly challenging particularly among our working beneficiaries, Fellows suggested the introduction of live streamed networking events which connect beneficiaries across cities, provinces and countries.
  4. Building lasting connections through genuine relationships: Fellows suggest that the individuals they have had the strongest connections with are those that they have met in less formal contexts and where relationships have could develop naturally. This leads to the suggestion to facilitate networking through casual social events where the pressure to connect for entrepreneurial gain is not the focus of the event.
  5. Attracting beneficiary attendance through interesting and relevant content: Fellows have noted that they are most likely to attend community events when the topic of the event is applicable to their entrepreneurial ventures.

In the spirit of collaborative achievement, we feel the greatest stride towards successfully reaching the Foundation goal of creating high impact entrepreneurial ventures is as a community. In this pursuit of entrepreneurship, our experience suggests that participating in a community that provides resources, support, knowledge, inspiration and collaborative partners makes the journey not only less isolating but more impactful.

2017 – The Year for South African Entrepreneurship

2017 – The Year for South African Entrepreneurship

Not all opportunities are created equal and some are able to have a disproportionate impact on a country’s future trajectory. In our own nation who would have believed that sporting events such as winning the world cup rugby combined with Madiba’s wearing of the No. 6 jersey could give such impetus to nation building, followed years later by the national pride that emerged from the successful hosting of the Soccer World Cup. Or in the entrepreneurial world, where Colombia’s transformation from a lost country filled with drug lord’s, murder and violence into a thriving, peaceful country, bursting with innovation and enterprise, was confirmed with the hosting of the 2016 Global Entrepreneurship Congress in Medellin.

2017 is such a moment for South Africa, as we host the 2017 Global Entrepreneurship Congress in Johannesburg from 13th to 16th March. It has become the Olympics of Global Entrepreneurship and it will be coming to Africa in less than two months’ time.   The eyes of the global entrepreneurship community will be on South Africa and we can use this as a powerful opportunity to change the perception of our national and continental entrepreneurial potential. If we doubt the impact of these type of events, we can interestingly draw encouragement from the Olympics itself. So what then is the link between the Olympics and entrepreneurship?

The answer is the island of Jamaica and the lesson for the emergence of South Africa’s entrepreneurial potential contained in the sprinting dominance of this small island. This nation’s athletic performance is staggering, as an article in the New York times identifies, “Among the most enigmatic features of Jamaica, an island of only 2.8 million people, is its astonishing supremacy in running. Currently, the world’s fastest man and woman are both Jamaicans. Nineteen of the 26 fastest times ever recorded in 100 meter races were by Jamaicans.” How is this possible.  It can’t be a matter of genetics as many Jamaicans ancestors are from West Africa which has few exceptional sprinters. How can a nation smaller than the city of Cape Town so consistently and comprehensively dominate a global sport?

champs-aerial-jamaicaA major reason is that in Jamaica sprinters are identified early and then very intentionally developed in a supportive culture.  Only in Jamaica is a high school track and field meeting attended by 30,000 people including the superstars such as Usain Bolt and considered by some margin the premier sporting event in the country. Champs, or the Inter-Secondary Schools Sports Association Boys and Gils Athletics Championships is evidence of how passionate and intentional this nation is about running talent – and the final results speak for themselves.

This insight into Jamaica’s success encourages the Foundation, because just as with running, if we are consistently able to identify entrepreneurial talent early and intentionally develop it, supported by a culture that drives such aspiration, we will reap great entrepreneurship results. So let’s make sure that GEC 2017 is an entrepreneurial Champs for this country and the catalyst for an enduring dedication and passion for fostering entrepreneurial spirit.

The Foundation will continue its own effort to consistently support such an entrepreneurial culture with our commitment every year to find the most entrepreneurial young individuals we can find across every last corner of the country and to bring them into an intentional system of now some 800 individuals to develop that ability for as long as it takes to bring home those entrepreneurial gold medals.  The Foundation’s Allan Gray Fellowship campaign opens on Monday 23rd January.

So let’s take hold of the opportunity provided by GEC 2017 and make 2017 a significant year in our entrepreneurial history. That people would record in due course that it was the year that brought us closer to realising the potential for enterprise to be a force for the common good, to be an engine of responsible growth, driving down the levels of unemployment and inequality in this nation.

What would you like to hear about in 2017 on the Foundation blog – let us know in the comments below or you can respond directly to stratcomservices@allangrayorbis.org

How to add R2.5 trillion to the South African economy – why in entrepreneurship quality matters more than quantity.

How to add R2.5 trillion to the South African economy – why in entrepreneurship quality matters more than quantity.

screen-shot-2016-11-29-at-8-32-56-amAs South Africa looks to harness the full economic potential of entrepreneurship, it is easy to fall into the seemingly logical thinking that more is better. We often hear the rallying cry: “We need more entrepreneurs!” But the answer is not as simple as it might appear, because when it comes to entrepreneurship quality matters more than quantity. If it was only about more being better, then the most entrepreneurial country in the world would be Senegal (with nearly 40% of the country involved in entrepreneurship).  Yet it is a country ranked 163rd on the Human Development Index.

Why is there a problem with focusing on quantity? The answer is given by Zoltan Acs, author of the Global Entrepreneurship Index (GEI) and one of the most widely published academics on entrepreneurship in the world, where he states “contrary to popular belief, the most entrepreneurial countries in the world are not those that have the most entrepreneurs. In entrepreneurship, quality matters more than quantity. To be entrepreneurial, a country needs to have the best entrepreneurs, not necessarily the most”

This differentiation between quantity and quantity explains why there are often such contrasting outcomes between two of the most established global measures of entrepreneurship, the GEI Report and the Global Entrepreneurship Monitor (GEM) Report.  In simplified terms GEM is more focused on quantity while GEI focusses on quality.

So it was interesting to note, in the midst of all the entrepreneurial activity recently during Global Entrepreneurship Week, the launch of the 2017 Global Entrepreneurship Index (GEI).  It again highlighted the difference for our understanding of South African entrepreneurship depending on whether we think in terms of quality or quantity.

In the 2017 GEI the picture of South African entrepreneurship is shown in a far more positive light (ranked 55 out of 137 globally) than suggested by the measures contained in the Global Entrepreneurship Monitor (GEM) – a report that suggests South Africa is one of the worst countries on the continent when it comes to entrepreneurship.

In the main GEM measure known as TEA (Total Entrepreneurship Activity rate), South Africa fluctuates between 7% to10% of the adult population involved in entrepreneurship, which is about two thirds of the efficiency driven economy (our country classification) average and about half of the African continent average.  And yet in the GEI report South Africa is placed second in Africa and is in the top 40% of the world’s economies.

These conflicting report outcomes are best explained by understanding the distinction between entrepreneurs that are necessity driven versus those that are opportunity driven.  Necessity driven entrepreneurs are those that pursue entrepreneurship out of necessity – they have no other option in the economy for making money. Opportunity driven entrepreneurs are those that are pursuing an opportunity. These are the entrepreneurs that generate productive economic success, that grow and create jobs. The GEM TEA rate in measuring quantity, captures an increasing proportion of necessity entrepreneurs with higher TEA rate levels. In effect it becomes a measure of self-employment rather than economically productive entrepreneurship.  This is evidenced by the fact that the TEA rate is negatively correlated with economic growth, economic freedom and global competitiveness. In contrast, the GEI focusses on innovative, growth orientated, opportunity entrepreneurs and is positively correlated with these measures – the fruits of pursuing quality rather than quantity.

There is a significant economic implication in better understanding the distinction between quantity and quality.  In the 2017 GEI Report, GEI is plotted against GDP as per the figure below.screen-shot-2016-11-29-at-9-13-49-am

This shows a clear positive relationship between GDP and GEI and a correlation of 0.62. The relationship suggests that improvements to GDP could be effected by changes that improve GEI scores. Specifically, if South Africa were to raise its GEI score by 10% it could add an incredible R2.5 trillion to our economy.  It is time to end the confusion, to focus on entrepreneurial quality, to ignite our best and brightest with entrepreneurial passion and achieve this 10% GEI shift. Now that is a target worthy of pursuit and importantly it would finally move us out from under the shadow of entrepreneurial negativity generated by too much focus on GEM reports.

 

 

The Allan Gray Orbis Foundation contributes to the GEC+  Glocal Entrepreneurship Education

The Allan Gray Orbis Foundation contributes to the GEC+ Glocal Entrepreneurship Education

GEC+-PostThe GEC+ in Daegu, South Korea the City of Hope also referred to as “Colourful Daegu” hosted an international audience of entrepreneurship education experts, practitioners, policy makers and academia. The theme “Glocal” was designed to illustrate the power of collaboration between global and local ecosystems and the focus was to strengthen capacity for entrepreneurship education in all GERN member countries.

 

The GEC+ coincided with the Creative Economy Festival in Seoul where President Park Geun-hye checked in on the progress of the strategy outlined in her 2013 inauguration speech to make the creative economy a key priority for her government. Daegu represents the pinnacle of this strategy in action, deliberately positioning itself as a knowledge economy through active support for convergence between arts, culture, digital and environmental industries. A vibrant city with a rich cultural heritage bustling with innovation and creativity and judging by all the urban construction, also a growing city.

The Allan Gray Orbis Foundation was invited to contribute to the opening panel “Entrepreneurship Education” where our CEO, Anthony Farr joined Anders Rasmussen, representing the Danish Foundation – Young Enterprise and  Phil Yun-Sock Lee from the Korea Entrepreneurship Foundation. This panel, under the moderation of Prof Byunjoon Yoo from Seoul National University, focused on the importance of entrepreneurship education as a key component for future economic growth and development. The participants looked at entrepreneurship education beyond the realms of just starting and running a business and explored how an entrepreneurial approach to solving problems is useful for socio-economic advancement. The panel advanced the idea that the cultivation of an entrepreneurial mindset as a learning discipline installed in education has the potential to reach a much wider audience. When this happen the impact can be profound, as we’ve come to witness in the story of Israel’s economic miracle, Startup Nation. The Foundation was able to share our learning from a decade of cultivating entrepreneurship, explore what makes us successful and shine the spotlight on the achievements of our Fellows.

Our participation extended beyond the opening panel with a Round Table discussion on “Measuring the Impact of Entrepreneurship Education”, moderated by our CEO. Here I was afforded the opportunity to join an esteemed panel which included the Secretary General of the Korea Entrepreneurship Foundation, Gi-Hyun Kum, Anders Rasmussen and Prof Johannes Lindner who leads the Initiative for Teaching Entrepreneurship in Austria. Mr Kum pointed out that entrepreneurship will be installed as a compulsory subject in the Korean school curriculum in 2018 and measuring impact is an important consideration. Defining impact for the Foundation was relatively easy to articulate as our long term goals clearly capture the impact we want to achieve, a R1bn company every two years, 50 000 meaningful jobs by 2030, and 500 enterprises. These goals offer direct evidence of the economic impact we want to achieve and also serve as a guideline for how we track progress and evaluate our success.

The GEC+ also exposed us to a rich learning environment with many examples of best practice in entrepreneurship education as well as ecosystem development. It was very satisfying to see that experiential learning and gamification are well entrenched in entrepreneurship education methods of many other countries. Similarly, the key message from most entrepreneurship ecosystem practitioners was that collaboration between government, private sector and academia is essential to build sustainability and scale. In addition to this, most presenters and contributors stressed the significance of “glocal”, local relevance and global reach. Local relevance takes advantage of local human, environmental and economic capital while global relationships focus on markets and skills transfer that will contribute to the growth of the local ecosystem. One point that stood out is the requirement for patience especially when it comes to building relationships with policy makers, getting government support and private sector buy-in. This resonates very well with our long term focus as a Foundation and encourage us to see things through despite temporary setbacks and to be relentless in pursuit of our long term goals.

We left Daegu on a very high note, our presence on this stage serving as acknowledgement that our work is admired and respected by those who pursue the same goals that we do when it comes to cultivating entrepreneurship. The GERN community is excited to support our deep dive into entrepreneurship mindset and there is significant evidence that our programme interventions are not far from what is happening on the frontier of entrepreneurship education.

 

Challenges for Female Entrepreneurs  (Part I) by Margie Worthington-Smith

Challenges for Female Entrepreneurs (Part I) by Margie Worthington-Smith

The fact that we still make a distinction between entrepreneurs and female entrepreneurs is a striking sign of how little progress the world has made. If the world were a truly equal place there would be no reason to make such a distinction.  Some of the factors that conspire to make us perpetuate such inequality are obvious but there are also not-so-obvious ones.

To start, let’s look to the outliers – those women who have been able to  “lean in” and be accepted on merit as successful.  Sheryl Sandberg, COO of Facebook had this to say about equality:

“A truly equal world would be one where women ran half our countries and companies and men ran half our homes. I believe that this would be a better world. The laws of economics and many studies of diversity tell us that if we tapped the entire pool of human resources and talent, our collective performance would improve.

Legendary investor Warren Buffett has stated generously that one of the reasons for his great success was that he was competing with only half of the population. The Warren Buffetts of my generation are still largely enjoying this advantage.

When more people get in the race, more records will be broken. And the achievements will extend beyond those individuals to benefit us all … Conditions for all women will improve when there are more women in leadership roles giving strong and powerful voice to their needs and concerns.”

The most obvious factor

Let us now name the most obvious difference between men and women.  Women are equipped to give birth.  Many do and when they do they take on a role that is totally consuming both physically and emotionally over a long period of time.  While men naturally have a role to play in this dynamic it is a fact that this additional responsibility minimally if not rarely influences their work commitments. In contrast, it requires of women to either exit the workplace race (briefly or forever) or participate in it with an additional facet not required by men.

There are many delightful anecdotes by working women of the challenges that they face in the juggling act of home and work.  The practical reality is that many women exit the race because the energy required is overwhelming.  The workplace is not accommodating of mothers and to try to take on leadership responsibilities while rearing children requires compromise one way or the other.  Those women who are able to get to a position of leadership are positioned in the public eye (and more importantly other female eyes) as role models.  Without these role models other women cannot see the possibilities.  However, this leadership very often comes at a cost and certainly takes courage and resilience.

Factors specific to South Africa

How does South Africa match up to the rest of the world in terms of the courage of our women entrepreneurs and what are the factors that are holding us back?

One only has to have scant knowledge of South Africa’s history to know that small a country as we are, we have for a long time punched way above our weight. We have an enviable infrastructure and have unlocked remarkable natural resources making us a serious player in many (particularly mineral and agricultural) exports.

However, a review of that same history will also show that what could be perceived as a major threat – but which is in fact a major opportunity – is the fact that the potential of our human resources remain largely untapped.  The most exciting opportunity created by the miracle of 1994 was the possibility of unlocking this huge unutilised resource – which, combined with the already unlocked natural resources, would put us way up there on many economic and other rankings.

Depressingly, 22 years after political freedom, we remain possibly worse off on this measure than ever before.

A glance at the diagram below shows the glaring deficiencies in South Africa’s human development when we are compared to the rest of the world.  Not surprisingly (due to a disastrously poor education system) startup skills are way below the world average.

Human capital development (as mentioned already) shows up as devastatingly poor and, not surprisingly given the poor previous two factors, the appetite to risk capital on such low level human capital and poor skills is negligible.

Screen Shot 2016-08-23 at 9.39.50 AM

Seen through a more positive lens, South Africa can still unlock its human potential and be an even greater entrepreneurial player.

Courageous Women

Nevertheless, in the three decades of working in the development sector, specifically in job creation and entrepreneurship development, time and again we have found that it is the women who seize the opportunities for skills development.  They are driven by the responsibility to provide for their children and they are the ones who show the grit and determination to succeed.  The South African Institute for Entrepreneurship (SAIE), which has been training and supporting emerging entrepreneurs for 21 years, works primarily with female entrepreneurs.  This year, of the 18 agricultural cooperatives that were assessed and selected for the training, 88% of members were women.  In addition, SAIE ran a SETA-funded New Ventures Creation course in 2016 where 83% of the participants were women.

The Female Entrepreneurial Index (FEI)[1] ranks South Africa at no. 36 in the world ahead of Montenegro and following Uruguay (out of 77 participating nations) with a Global Entrepreneurship Index (GEI)[2] score of 44.2 (the highest being the USA at 82.9 and the lowest being Pakistan at 15.2).

Critical bottlenecks

In examining what the enablers and barriers are to women entrepreneurs – certainly the inequalities of the world and the fact of motherhood are key elements.  However, there are other critical bottlenecks too.  In order for the sweet spot of entrepreneurship to be attained there needs to be an even balance between the abilities and aspirations of the woman and the attitudes of society.

There have been recent studies done that measure the state of entrepreneurship in South Africa.  Besides the annual Global Entrepreneurship Monitor (GEM), the GEI and the FEI as previously mentioned also do the same.  However, the two latter studies include research on three pillars namely Attitude (societies’ attitudes towards entrepreneurship), Ability (entrepreneurs’ characteristics) and Aspirations (quality aspects of startups and new businesses) to identify how well entrepreneurs are faring.

The 2016 GEI information on South Africa’s entrepreneurial status shows that it is strong on product innovation (the aspiration pillar), competition (the ability pillar) and on process innovation (also the aspiration pillar).  Added to that, the FEI indicates that women in South Africa fare well in terms of equal rights, technology absorption and innovation.

For the GEI, the bottlenecks in South Africa are startup skills (attitudes), our human capital (abilities) and our technology absorption (also abilities).  FEI’s research shows that bottlenecks in South Africa for women are technology sector business, internet and networks, a lack of highly educated owners and poor research and development expenditure.

You will notice that although South Africa is rated low by the GEI on technology absorption, the FEI has found that technology absorption for women entrepreneurs is an enabling (institutional) factor.  This paradox would be interesting to unpack in a further, more comprehensive analysis.

So the key positive takeaways from this research are that the country as a whole appears to be relatively strong in its ability to produce new products more cheaply or to adopt or imitate existing products.  It also has proven to be able to create new technology or perhaps apply the latest technology while maintaining its market uniqueness.  Through its sound constitution South Africa has created an environment where women’s equal rights are good with a parity of laws around capacity, property and employment.  The research also found female ICT role models in senior positions and in senior government.  There is a good firm-level technology absorptions capability in the country, which has been found to be one of the strengths of women entrepreneurs.

On the downside, however, the most damning findings confirm what we know and are painfully aware of: the fact that our education system has failed us.  The wonderful opportunity we had 22 years ago to renew and rejuvenate has not been realised. Poor management, vision and will have resulted in massive unemployment, poor skills and as yet still unlocked human potential.

In Part II of this discussion we will look at how a lack of education, specifically startup skills, influence female entrepreneurs.

 

The Next Economy

The Next Economy

“To be truly radical is to make hope possible, rather than despair convincing.” – Raymond Williams

Angela Coetzee, Strategy Communications Manager at the Allan Gray Orbis Foundation, storyteller and passionate believer in social transformation, recently attended the International Architectual Biennale Rotterdam (IABR 2016) through the Stellenbosch University Sustainability Institute Changemaker Programme. She shares some of her reflections emerging from this on the possibilities of the next economy.

We live in a world that is quickly changing, becoming more complex and overrun with challenges. This new world requires a new way of approaching and thinking about challenges. The Allan Gray Orbis Foundation believes that an entrepreneurial mindset can equip us to flourish in this new world.

It is predicted that by 2050 80% of the globe would have urbanised with 90% of wealth created in cities. As a result, an understanding of cities, the challenges and opportunities they present, is vital to cultivating responsible entrepreneurs. The sheer size and density of cities in the future calls into question a range of human and natural systems such as access to water and food, living and work spaces, places of learning and access to opportunity.

The IABR 2016, themed ‘The Next Economy’, connected designers, academics, and thinkers with decision makers, politicians, the private sector and the public with the realities of global cities. It presented more than 60 projects. Together, these projects show a range of possible futures; new housing and working locations, new clean energy systems, new models for area development, and new forms of collaboration, health care, and solidarity. ‘The Next Economy’ investigated the relationship between spatial design and the future development of the economy. The projects exhibited revealed how ordinary people, individuals and communities, are dealing with the social, political and economic challenges that the city presents.

There was an important African presence, celebrating projects of design in reality. The following projects stood out:

africa_ishack2_megan_kingiShack: The iShack Project, based in Ekanini, Stellenbosch, is using solar electricity to demonstrate how green technologies can be used appropriately to incrementally upgrade informal settlements and slums whilst build local enterprising capacity and resilience within a community. Enkanini is an informal settlement of about 6,000 people on the outskirts of Stellenbosch, Western Cape. This community is typical of many similar settlements around South Africa where hundreds of shacks are built in close proximity, with little or no access to clean and safe forms of energy, water or sanitation. The iShack solution did not come from outside of the community, but from within.

28261287Zabaleen: There are 70 000 Zabaleens as Cairo’s informal waste collectors. The word Zabaleen literally means ‘garbage people’. Over the years the Zabaleens have developed an intricate cycle in which about two-thirds of the 15 000 tons of garbage generated daily by Cairo’s 17 million inhabitants is salvaged and recycled. Their relationship with authorities has been tense and under former President Hosni Mubarak, the state contracted international firms to collect waste. This 10-year experiment in privatisation, however, proved inefficient and only served to further marginalize the Zabaleen. Lately, the Zabaleen have begun to organise themselves into formal businesses and the government have started to acknowledge the failure of privatization. The government is starting to formally employ the Zabaleen as waste collectors. This is a great example of how informal and formal economies can integrate in a productive way.

TEVOturtlePeopleSuame Magazine: This is an enormous industrial initiative within Kimasi, Ghana’s second city. It epotimises the ingenuity and resourcefulness of the informal sector. Cargo ships bring thousands of old European cars to Ghana every week, and this is where they are transformed and made fit for Africa’s chaotic cities and potholed roads. The cars and trucks from across West Africa are serviced and repaired in massive agglomeration of shops, factories and open air workshops. Suame Magazine has become an industrial ecosystem of small scale artisanal manufacturing where large volumes of material are being repurposed and recycled.

afrilabsAfrilabs: This is an umbrella organization serving 40 tech hubs that have thrived in 20 different countries across the continent, with an estimated 200 tech hubs in Africa. These hubs are emerging as networks for young African IT workers, commercial startups, entrepreneurs, social investors and innovators to connect, share knowledge and collectively build an African tech ‘ecosystem’. An important catalyst for this movement was initiated by a group of bloggers and programmers in Nairobi in the aftermath of the 2008 electoral crisis, when they created the open source crisis mapping platform, Ushahidi. Afrilabs was established to support the further development of the promising ‘innovation infrastructure’ that is fast spreading across the continent.

These are a few stories that map a new, different story of our present and what can and should be expected in the future. Ordinary people and communities, dealing with the realities of their world and thinking entrepreneurially create ‘The Next Economy’.

An inspired academic and thinker, Vanessa Von Der Heyde shared this insight after her time at the IABR 2016: “The future is ours to imagine and ours to create! Now the real work begins of figuring out what our own roles are in proactively working towards the next, socially inclusive, environmentally beneficial economy”.