by Anthony Farr on 03/08/12 at 12:33 pm
The growing necessity for fast tracking our economic development in South Africa and the pivotal importance of entrepreneurship in achieving this has led to recent calls for an entrepreneurial revolution in this country. This sense of proactive urgency is to be encouraged, yet such calls can be undermined when we lack a clear understanding of the tools for such a revolution. Part of this is symptomatic of a broader entrepreneurship challenge. We see its powerful benefits, but after 40 years of intensive research we have not made significant progress in unlocking the secrets of the entrepreneurship phenomenon.
This tension is captured in a recent forward to Leadership Magazine, where Raymond Ackerman concluded that the entrepreneur is the modern alchemist, making something out of nothing. This simple description captures both the power associated with entrepreneurial culture yet also reinforces the mystery surrounding its process. And it is this notion of mystery that continues to hinder the full potential that entrepreneurial thinking and action can bring to society.
It is normally seen as the domain of those particularly gifted and brilliant, outside the reach of the ordinary man. The process itself is also not well understood, resulting in it being seen as a phenomenon rather than something that can be given more broad application. Yet if we reverse a few hundred years, this so called “great man” explanation was exactly the situation where science found itself in the sixteenth century. Before the intervention of Francis Bacon, scientific endeavour was the preserve of those special people, equipped with unique talents, who were able to divine the patterns of Nature. Scientific progress was accidental, circumstantial and largely dependent on the breakthroughs of a select few. In short it was a phenomenon.
Then Bacon initiated the process of codifying the actions of scientists, leading to the understanding of empirical evidence and experimentation that became the building blocks of the scientific method. In so doing he launched a scientific revolution with profound implications. The simplest illustration of the benefits of the scientific method is that at the time of its introduction we travelled in horse carriages at a few kilometres per hour along the ground and now a mere two hundred years later we can travel at thousands of kilometres per hour into space. The expansion of science has been so dramatic that according to Resnik, there are more scientists alive right now than have ever lived in the last two and a half thousand years of human history. Today, the scientific method is taught indiscriminately. Not only is it taught to potential scientists at graduate and postgraduate levels, but everyone at every level, and especially starting at a young age, is taught it as an essential mindset and skill that is carried through, and forms part of the core of all education. The scientific method therefore gave us the tools for the scientific revolution allowing us to harness the potential of Nature.
What if the key to unlocking an entrepreneurial revolution was to similarly see entrepreneurship not as a phenomenon but as a method? Entrepreneurship would then be released from the confines of a sub-category of economics and elevated to the level of a social force. In Entrepreneurship as Method: Open Questions for an Entrepreneurial Future, Professor Saras D. Sarasvathy and Sankaran Ventakaram postulate exactly this – that entrepreneurship should be seen as a method comparative to the scientific method.
The impact of codifying entrepreneurship in this way has the potential to be as significant in the field of human endeavour as the scientific method was in the field of Nature. Sarasvathy predicts that the entrepreneurial method will achieve no less than unleashing the potential of human nature. This paradigm is still at an early stage of exploration, but already the implications are significant. Firstly everyone can benefit from the reasoning and problem solving skills that emerge as part of this method. (It would become necessary to introduce its logic as an essential part of basic education) Secondly, it creates a powerful tool that can be more intentionally used to take on large problems at the centre of progressing humanity.
But if experimentation was the tool of the scientific method, what is the tool of the entrepreneurship method? Sarasvathy stumbled upon a possible answer after completing a study on 27 expert entrepreneurs.
Despite the perception that we live in a commercial world dominated by prediction (a world where the aim is to use causal or rational thinking to achieve a previously identified goal), the findings of this study showed that the dominant logic of these individuals was effectual thinking – the exact opposite of causal thinking. Effectual thinking is a mode of thinking where possible new ends are imagined using a given set of means. An illustration of the difference between causal and effectual thinkers is seen by the examples of conquerors such as Alexander the Great creating his empire out of the known world (causal) in comparison to explorers such as Columbus discovering the new world (effectual).
Building on the base of effectuation, the entrepreneurial method explores a method of human action that starts with what you have available, both in terms of your internal and external resources before then iteratively moving forward, taking into account evolving uncertainties and building partnerships to co-create a new future. The implications of these tools for South Africa are particularly exciting.Firstly part of South Africa’s entrepreneurship struggle is due to a simple lack of belief. In the 2011 Global Entrepreneurship Monitor Report, the percentage of the South African population who perceive that they have the capabilities to be entrepreneurial was just under 43%, which is nearly 10% below the average of our peer countries. If the entrepreneurial method inculcates an understanding that the process starts with our given means, however limited those means might be, it will act as a powerful catalyst to counter the current lack of belief in our abilities.
Secondly, a key finding in the initial studies around the entrepreneurial method is that entrepreneurial action is largely about interaction. This is in contrast to the historical focus on the role of the individual or the team, rather than the importance of the interactions between them and the numerous stakeholders involved in the entrepreneurial journey. While this might seem a small shift, an orientation towards negotiation and relational exchanges with a more sociological bias as a basis for value creation, plays directly to the inherent and proven strengths of South Africa’s history – a heritage that a cursory glance at the categories of our Nobel Prize winners immediately demonstrates.
This requirement for the tools of a revolution was illustrated again in an unexpected context recently when Waleed Rashed, co-founder of the April 6th Youth Movement that led to last year’s freedom revolution in Egypt met with a small group of Allan Gray Fellows. Besides the inspiration of interacting with a 29 year old who already has “liberating his country” on his CV, the abiding insight from his story is how intentional they were in understanding how the tools of social media, understanding the mindset of their target market and creating channels for those aspirations would ultimately ensure that the “revolution would no longer sit inside you, but be taken out and made realities”. Whether it be in science, freedom or entrepreneurship, revolutions require tools.
A picture of large scale adoption of the entrepreneurial method fast tracking our economic progress by leveraging the power of entrepreneurship as a social force is a compelling one. It is a picture of the entrepreneurial revolution – a revolution finally activated with the right tools. No longer need we deal with the mystery of alchemy, instead focusing on the certainty of science, applying an understood logic and thinking process to improve the state of the country.
Anthony Farr is the CEO of Allan Gray Orbis. Anthony is passionate about the power of education and the upliftment of entrepreneurs. Anthony Farr completed his Bachelor of Business Science (Finance) at UCT before qualifying as a CA(SA) during articles at Deloitte in Cape Town and Luxembourg. After working for Standard Bank London for a number of years in their international corporate finance team, Anthony co-founded the Starfish Greathearts Foundation. View more articles by Anthony Farr.