The generic definition for opportunity references time or a set of circumstances that make it possible to do something. How opportunity is defined is perhaps not as important as what it means, especially for entrepreneurs and even more so in the current economic environment where South Africa’s growth is expected to reached a snail-pace of 0.7% for 2016 with expectations of an acceleration to 1.8% in 2017. The importance then is to focus on what can be done under the current circumstances to take advantage of opportunities to create value and perhaps push the growth rate for 2017 further north of 1.8%. If this is to happen we must take a bet on entrepreneurs for the creation of new industries, new jobs and additional value. This then will evoke an immediate question, where are these opportunities given the dire economic outlook.
My suggestion to bet on entrepreneurs in this trying time is grounded in the way entrepreneurship is defined by Timmons and Spinelli in New venture creation in the 21st century, the prescribed text for many MBA programmes. The definition, “entrepreneurship is a way of thinking, reasoning and acting that is opportunity obsessed, holistic in its approach and leadership balance for the purpose of value creation and capture” puts the obsession with opportunity as a key driver to discover, create and capture value. My optimism for entrepreneurs to step up in this challenging economic environment is grounded in this fact that opportunities for value creation are all around us irrespective of the trend of the economic cycle. This optimism is also fuelled by the fact that we are confronted with many problems and the bigger the problem, the better the opportunity for value extraction and the longevity of a robust business model. In South Africa we’ve got a plethora of problems ranging from basic services such as water and sanitation to general expected norms such as universal internet access. Globally there are 2.4bn people without access to sanitation while 600 million do not have access to clean water and One.org estimates that this is a US$32bn opportunity given that every US$1 investment in water and sanitation produce US$4 of economic benefit. In South Africa we enjoy universal access for water in urban areas, but you do not need to drive too far to observe that sanitation still presents a large opportunity. Internet access presents a similar opportunity with a current penetration rate of 61% by 33.6 million users as reported by Internet World Stats. The internet economy’s contribution to GDP and impact on GDP per capita is well covered in many global studies and reports with clear evidence of opportunity for value creation if one considers that ICT services grew by 30% per year from 2001 – 2013 as reported by the OECD in their 2015 Digital Economy Outlook. More recently the arrival of ransomware introduced new opportunities in the internet security space with Gartner forecasting US$434bn in spending for 2017 and US$547bn in 2018.
Capturing value from an opportunity then requires a significant focus on getting your timing right. In 2008, Barack Obama got his timing right and took advantage of an opportunity to run for the White House with a political campaign that created youth engagement for first time voters, scientifically crafted social media tactics and good old fashioned knock-on-doors community mobilisation. In the late 1990’s the Levy brothers spotted the opportunity in the prepaid market that was a result of the rapid growth of mobile subscriber penetration and launched what is today Blue Label Telecoms. One can argue that most of the listings on the JSE post democracy is a result of entrepreneurs who saw opportunity in the new South Africa and they leaped at it with an obsession to create and capture value.
Opportunities in the local ecosystem then are all located where there are problems to be solved and there are problems all around us. In Johannesburg for example we can do with traffic lights that are functional in the rain and if this is perhaps too trivial there are many others, such as affordable urban transport, affordable urban housing, affordable quality education. Sparks schools introduced a very compelling value proposition to the problem of quality affordable education and addressed it with a business model that has allowed it to roll out seven schools in Gauteng since launch in 2013 and facilitate growth into the Western Cape this year.
Our local ecosystem is well geared to support opportunity obsessed individuals who are driven for the purpose of value creation. Apart from the fact that we are faced with many problems that need innovative solutions, access to finance is not that big a constraint anymore if we look at the recent trends in private equity finance and all the additional funding made available through government programmes in support of the Black Industrialist. An entrepreneurial mindset is therefore most fitting to take advantage of opportunities presenting itself despite the current economic climate. As my daughter was reminding me quoting her teacher, “don’t say you can’t before you discover that you can” and discovering opportunities in the current economic environment will require a “can do” attitude.