Posts Tagged innovation
Entrepreneurs do best in the face of uncertain conditions, but mature firms have a hard time with uncertain conditions because they plan for what is certain and has worked for them in the past. Entrepreneurs can succeed by doing what they do best and creating uncertain conditions for mature competitors.
ImproMed is one such company that has made “attack never defend” its mantra. Ron Detjen, ImproMed’s founder and president, says his company continues to grow and add employees because it keeps a competitive attitude. Detjen argues companies that go on the defensive can never grow as fast as companies that go on the offensive. Detjen encourages his employees to go on the offensive by finding something they excel at and keep working on it (Anonymous, 2011). What an excellent approach!
ImproMed is a company that helps veterinary practices deal with complex recordkeeping needs and has developed the world’s leader software products for both the business and medical needs of veterinary practices. ImproMed stresses a consultative approach for its employees is the key to its extraordinary growth (Anonymous, 2011).
A company that focuses on what its employees do well wins. Employees are critical to a small company because they are responsible for how the company performs. Encouraging employees to focus on strengths puts competitors at a distinct disadvantage because they do not know what to expect. A good entrepreneur works from his or her strengths and not weaknesses.
How does your company attack? I would love to hear your comments. If you want to know more about how you can design a way to attack using strengths you can learn more here.
Anonymous. (2011). 2011 Winners small business success stories Corporate Report Wisconsin, 26(7), 30-35. Retrieved from http://search.proquest.com/docview/864104598?accountid=35812
Economic recovery depends on restoring middle class workers to the prominence they once had. Many large firms have moved operations overseas leaving holes in the market both from the absence of middle class jobs and tax revenues lost from large companies that moved overseas. The logical choice to fill these holes comes from small business. Small businesses quickly adapt to market voids and offer the creativity to fill holes, but small businesses grow into larger firms and lose their flexibility. Schumpeter (1975) coined the term “creative destruction” to describe when large firms falter and lose their adaptability to create. A blurred line exists about when “creative destruction” happens, but this condition is a normal part of the business cycle.
Most of the goods and services produced in the United States up to the mid-19th century came from small business. By 1914, firms with 500 or more employees accounted for about a third of the industrial workers with another third working in firms with 100 to 499 workers. Smaller firms developed market niches or supplied larger companies with 500 or more employees to compete in the markets until the mid-20th century (“The Limits of Small Business,” 1992).
From 1952 to 1979 the percentage of business receipts from small businesses plummeted from 52% to just 29%, but by the late 1970s and early 1980s the United States experienced a resurgence of small businesses. For example, out of 17 million businesses less than 10,000 firms employed more than 500 workers. By 1986 small firms produced 64% of the 10.5 million new jobs created (“The Limits of Small Business,” 1992). History repeats itself.
The time has come for another resurgence to replace the void left by large firm that have migrated overseas and take the country back to its roots. Small business is in the right place because small business is closest to consumers and has the ability to adapt and create what consumers want and need. The resurgence takes time to gather steam to propel the United States economy out of the recession. Small business entrepreneurs can sense holes in the market and will rebuild what the market has lost to “creative destruction.”
Are you up for the challenge? Learn more.
The Limits of Small Business. (1992). Available from EBSCOhost lkh. (03633276). Retrieved Summer92, from Woodrow Wilson International Center for Scholars http://search.ebscohost.com/login.aspx?direct=true&db=lkh&AN=10129578&site=lrc-plus
Schumpeter, J. A. (Ed.). (1975). Creative destruction from capitalism, socialism and democracy. New York: Harper.
Entrepreneurs can do extraordinary things no one ever imagined! Often people believe to succeed in an established industry bigness matters. Judith Rosen (2005) dispels this notion explaining how several successful writers like Walter Mosley do well using small publishers instead of “big six” publishers. Rosen noted that each year some of the best books come from the smaller publishing houses.
As an example, 82-year old Kurt Vonnegut, one of America’s most popular writers, used Seven Stories Press, a small publisher, to find his success. America knows Vonnegut for his Slaughterhouse 5 and Cat’s Cradle. Similarly, Steve Kaplan used Bard Press for his book Bag the Elephant on how to woo big clients. Bard Press had expected this book to land on the best sellers’ list which would make it the 12th publication out of 25 to achieve this status (Rosen, 2005).
Rosen (2005) offered four other titles, which became successes through smaller publishing houses. Publishing is just one industry, but the point is big does not mean better. Other industries can compete with the big guys just like the smaller publishers do with the “big six.”
The key is to develop products the big guys have not thought of or did not wish to invest in because they thought no market existed for them. Entrepreneurs take the risk to go where the big guys fear to tread. Entrepreneurs have an advantage because they are closer to consumers and understand what they want.
Are you a sleeper waiting for consumers to discover what you have to offer? Learn more.
Rosen, J. (2005, 2005/08/29/). Six sleepers for fall. Publishers Weekly, 252, 27+.
Today small businesses find it tough enough to survive let alone expand in the global markets. Opportunity does exist, however, in the global markets through making alliances with strategic partners. The partners to alliances look at alliances as temporary or until considered no longer necessary and the alliance has served its need (Grosse, 2000).
The idea behind strategic alliances is to co-create value, but often businesses find it difficult because of the unwillingness to share or a lack of common values. The small business alliance depends on trust and openness to work toward a common value. The parties to a strategic alliance have to negotiate to fill in their strategic weaknesses and improve the competency of the alliance (Grosse, 2000; Mockler & Gartenfeld, 2001). Mockler and Gartenfeld argued effective negotiation at the start of the alliance cements the likelihood of a successful partnership.
Liu (2009) asserted international alliances should collaborate to find critical technology and knowledge in a strategic alliance and negotiate learning activities leading to competitive advantage. The partners to an alliance should structure the alliance so it becomes a “race to learn” by mixing competition in with cooperation, but this structure leads to instability. Grosse (2000) argued a one-sided alliance leads to unstable relations and the objective should seek to strengthen weaknesses in the competencies of the alliance partners.
Grosse (2000) claimed the strategic alliance partners need to find a strategic fit by settling the cooperation level, the effectiveness of the cooperation level, and molding the culture of the alliance. Partners should seek a significant understanding of each other to form an effective alliance. An understanding will help foster a successful work relation and avoid failure. A successful partnership will promote value creation through knowledge gathering. Planning has a critical role in forming successful strategic alliances.
Do you have what it takes to expand through inter-firm alliances to succeed into global markets? If you need help planning for global expansion contact us to learn more.
Grosse, R. E. (2000). Thunderbird on global business strategy. New York: John Wiley & Sons.
Liu, W. K. (2009). Advantage competition of inter-partner learning in international strategic alliance. Journal of Global Business Issues, 3(2), 123-128. Retrieved from http://search.proquest.com/docview/223750245?accountid=35812
Mockler, R. J., & Gartenfeld, M. E. (2001). Using multinational strategic alliance negotiations to help ensure alliance success: An entrepreneurial orientation. Strategic Change, 10(4), 215-215. doi: 10.1002/jsc.536
“History repeats itself” is a saying I hear on occasion and often wonder about. Today, for example, some businessmen say they cannot work because of uncertain conditions, yet Adam Smith designed capitalism as the “epitome of risk taking” (Bernstein, 1996, p. 19). According to Bernstein, up to the time of the reformation, the stable Protestant tradition stressed abstinence to avoid risk. Protestants considered the danger inherent in risk-taking as akin to gambling. Adam Smith (1904) introduced capitalism believing the danger attached to risk also came with opportunity. Instead of looking at risk as a zero-sum game where someone wins and someone loses, Smith believed trade resulted in a mutually worthwhile pursuit. Smith believed both parties to trade and risk taking could become wealthier contrary to practice before the reformation that relied on exploitation to gain wealth (Bernstein, 1996).
Recent conversations have talked about how unacceptable the transfer of wealth is from the elite to its underlings. Some business people espouse the pre-reformation idea that wealth transfer should only come from exploitation of underlings, while others see wealth transfer more like Adam Smith did. Smith believed business is risky, but full of opportunity and new wealth came to those adventuresome people willing to innovate (Bernstein, 1996). Today with the coming of supply-side economics, some want to return to the days of exploitation and stymie adventuresome entrepreneurs willing to innovate and create new trade. Does history repeat itself? Has the pendulum swung too far in the wrong direction?
I believe an efficient economic system has to balance opportunities with risk taking. If business people do not take risk, I do not see where innovation comes from under such conditions. Stable well-established businesses do not like to remove themselves from their comfort zone and their products and services eventually become stale and do not satisfy consumer needs. Meanwhile, society needs to provide more incentives to entrepreneurs to innovate and create new trade.
What do you think? Is our economic system returning to the stable pre-reformation days bereft of any risk taking relying solely on exploitation? Are you willing to take a risk in today’s economic setting? What incentives do you believe would help entrepreneurs to resume their efforts to innovate new trade? Please leave your thoughts here. Do you want to know more about incentives to small business entrepreneurship to its rightful role? Click here.
Bernstein, P. L. (1996). Against the gods: The remarkable story of risk. Hoboken, NJ: John Wiley & Sons, Inc.
Smith, A. (1904). The wealth of nations (5th ed.). London: UK: Methuen & Co., Ltd.