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List of figures
Figure 1 Stages of product life cycle…………………………………………………………… 5
Figure 2 The Porter’s (1980) Five Forces framework…………………………………….. 7
Figure 3 Maslow’s hierarchy of human needs……………………………………………….. 9
Tables of contents
1. Evaluation of some good prescriptions for entrepreneurial success in 2050……….. 2
2. The best prescription for entrepreneurial success in 2050 – Being highly innovative. 3
2.1 Literature review of innovation and entrepreneurship………………………… 3
2.2 Analysis of being highly innovative as the best prescription for entrepreneurial success in 2050 3
2.2.1 Deal with even shorter product life cycles………………………………….. 3
2.2.2 Enhancing personal and organizational capacity…………………………. 7
2.2.3 Strengthen the leadership and innovative culture formation…………. 9
2.2.4 Help create new business models and thinking…………………………. 10
3. Conclusions…………………………………………………………………………………………….. 11
1. Evaluation of some good prescriptions for entrepreneurial success in 2050
A prescriptive perspective in entrepreneurship suggests that entrepreneurs who seek a particular performance should adopt a certain personality style. According to Wojciech W. Gasparski (2011, p. 96) because the future world would also be in an order manner though with some changes, the formulation of such rules and principles will also result in various policy and prescriptive claims that the future entrepreneurship ought to follow. There are many prescriptions for success of entrepreneurship in 2050, and some of them are discussed below: firstly, entrepreneurs in 2050 could not rely on the unchanged business model and way of thinking to win the competition in the market, hence being highly innovative a principle for survival and business success in 2050 for the entrepreneurs; a second prescription for entrepreneurial success in 2050 would be willing to take greater risks. With the increasingly complex and complicated social and market environment and situation, risks and uncertainties become inevitable and the management of the risk will become more important. The management of risk would require the entrepreneurs to have very good understanding of the market opportunities which helps perceive the business opportunities, and also when good opportunities are there, risk taking will be critical to the business success; the third widely accepted prescription for entrepreneurial success in 2050 is to have stronger self-efficacy which refers to an individual confidence in her or his ability to work towards and attain a goal (Bandura, 1982). With more uncertainties in the future business environment, it is important for entrepreneurs to be more confident and know how the business goals could be achieved.
2. The best prescription for entrepreneurial success in 2050 – Being highly innovative
In my understanding, being highly innovative could be considered as the best prescription for entrepreneurial success in 2050. The reasons will be carefully discussed after the below literature review of innovation and entrepreneurship.
2.1 Literature review of innovation and entrepreneurship
Innovation consists of the generation of a new idea and its implementation into a new product, process, or service, leading to the dynamic growth of the national economy and the increase of employment as well as to a creation of pure profit for the innovative business enterprise. Speaking from the nature of the term, innovation is not a one-time phenomenon but rather a long and cumulative process of decision making processes from idea generation to implementation stages (Urabe, Child & Kagono 1988, p. 3).
2.2 Analysis of being highly innovative as the best prescription for entrepreneurial success in 2050
2.2.1 Deal with even shorter product life cycles
As in our understanding, there are many industries and markets in which product life cycles seem to be quite short. For example, in the middle of last century, Levitt (1965) already advised that “Depending on the underlying nature of the software, most software markets are characterized by a short product life cycle”. And based on the history of the development of many similar industries such as the personal computer and smart phone, there is a witnessed trend that the product life cycles and even the industrial life cycles have been significantly shortened.
Figure 1 Stages of product life cycle
Source: Kumar 2010, p.62
Another typical short product life cycle belongs to the personal computer products. With the development of the related technologies and also the fierce competition in the industry, a more powerful computer model could be replacing the current models within only one or two years. And many personal computer products would not be having gone through all the stages in a complete product life cycle when they are replaced. With the maturity of the labor skills and the advancement of a lot of technologies, it is been widely accepted that the increasingly shortening and incomplete product life cycle will continue in the future which means that in the future, people will be more and more getting adapted to a fast product upgrading and replacing one product with another in a rapid pace. Under such assumptions and visions about the future shortening product life cycles, the competition among the future entrepreneurs will be more focusing on the ability of being high innovative for the following reasons:
First of all, according to the definition of the innovation, the concept is about the generation of new ideas, and the idea generation is considered as the first step in the process of the new product development which helps cope with the shortening of the product life cycle because the existing products are so easy to be moved out of the market and constantly developing new products would become a must. And in order to facilitate the idea generation some techniques could be adopted such as treating the product as part of a system, group creativity, perceptual map gap analysis and checklists (Schöttler 2003, p. 10). For example by treating the product as a part of the system, the majority of the functions of the products would be able to treated as steps in a series of sequential operations which will need to carried out to achieve the ultimate targets. In this way, the idea generation as a major feature and function of innovation will help facilitate and contribute to the new product development process.
Secondly, by engaging at innovation entrepreneurs will able the assist their company to win the competition and keep away the possible entrants and thus reduce the threat of entry. Based on Porter’s (1980) Five Forces framework, one of the five forces that increase the industrial competition and thus reduce the market attractiveness is the threat of the new entrants. By engraining in a faster new product development process through major innovations, the existing companies would be able to lead the industry and keep the possible entrants away because the environment is unstable and the profit margin could be reduced to zero if the new entrants could be follow the pace of the established companies. Such faster innovation movement is effective to keep away the possible entrants and also kick off the existing competitors is also known as enjoying a first mover advantage which refers to offering a unique customer value before competitors do so (Lussier 2009, p. 23). In the future, such first mover advantage will still be helpful for entrepreneurs to move faster and keep the competitors lagged behind.
Figure 2 The Porter’s (1980) Five Forces framework
Source: Adapted from Porter (1980)
Thirdly, proprietary products, design, skills and ideas could be obtained through key innovations. New product usually define the market and industrial standard together with a number of related proprietary products designs and knowledge which keeps the company in a leadership position and makes the market penetration by other companies more difficult or even quite impossible. For example, as claimed by Apple’s previous Chief Executive Official (CEO) Steve Jobs, Adobe’s Flash products are 100% proprietary. They are only available from Adobe, and Adobe has sole authority as to their future enhancement, pricing, etc (Apple.com 2010). And in the foreseeable future, even in the middle of this century, it would still be anticipated that copy rights would be more protected and respected. Hence, by innovations in the key technologies led by the entrepreneurs, it is help to the entrepreneurs’ companies to enjoy a leadership position in a longer period and keep the competitors and entrants lagged behind because the industrial standards are well established and the copyrights are kept to the innovators.
2.2.2 Enhancing personal and organizational capacity
Organizational capacity building refers to an organization’s ability to achieve its mission effectively (Preskill & Catsambas 2006, p. 120) and such organizational capacity could be in term of the skills and competencies of the organization’s individual members and leaders and also the good company structure and other company design and functions. And to enhance the individual employees’ and leaders’ personal capacity is to empower people on a sustained basis and one of the major ways is through the teaching of idea of innovation in a company wide basis.
Firstly, innovation speeds up the learning process. A learning process could be understood generally as the process to integrate new skills and ideas into one’s knowledge base which will contribute to the expansion of one’s individual capacity. For example, in many traditional state own enterprise in the 1990s when computers were first introduced into the companies, many employees especially the senior employees and managers are forced to lean the operation of Windows, Words and many professional and special software. Similar cases happen in a countless firm every day. And in the middle of this century, with the rapid knowledge explosion expected in various fields, there will be more and more skills and knowledge to be mastered by the employees which means that life time learning will be necessary. In this point, introducing innovations into the business practices will be helpful to increase the individual capacity of the employees because many employees will not be learning if not forced. And when innovations happen frequently, employees will have an open mind by embracing the new knowledge in a regular basis.
Maslow’s hierarchy of human needs
Source: Adapted from Maslow 1987
Secondly, innovation brings in a sense of achievement to the employees and keeps the employees motivated. As we know, according to our working experience employees are not motivated solely by salary to date though it is still important, employees now need more to get themselves dedicated to the business and daily operations. Abraham Maslow classified the human needs into five layers as shown in the figure above: physiological needs. Safety and security needs, love and belonging, esteem and self-actualization as the below figure shows. By engaging in the innovation activities led by the entrepreneurs, there will be more opportunities for employee participation such as the above mentioned group creativity activities to encourage the new ideas generation, there will be grater chances that the employee participation will stimulate the satisfaction of needs of esteem such as self-esteem, confidence and achievement among the participating employees. And also though making successful innovations, employees will have a stronger sense of belonging to the teams, groups and the companies that they have worked for. For example, in one of the most innovative companies in the work, Google Inc, the company allows employees to spend 20% of their time on projects of their choice and it is believed that this has been one of the key factors contributing to the high employee motivation and high individual and organizational capacity of the company. The innovation activities usually means new ideas, new thinking and needs to overcome a number of challenges that have not been met before and these are all the suitable conditions to help employees to become confident and self-motivated through making breakthroughs in their work. Though this way, innovation helps motivate the employees to perform their full potential which in return also enhances the personal and organizational capacity in achieving the overall company objectives.
2.2.3 Strengthen the leadership and innovative culture formation
The leadership trait theory believes that leaders own some common traits that make them able to perform the leadership role and influence to followers to believe what they believe. According to Jean Philippe Deschamps (2008) innovation leaders are those unique people who possess or are able to mobilize the full set of qualities needed to deliver an innovative product. By this definition which helps us to understand the concept of innovation in the role of a leader, entrepreneurs should also own the leadership traits of being high innovative to perform a qualified job of a lead in the companies. In this area, Apple’s former Chief Executive Official (CEO) Steve Jobs had made an excellent example as a master of innovation in leading the Apple to the current status which envies the world. By engaging in the most innovative products, the iPhone series, iPod, iMac and iPad and also other product line, Steve Jobs though a lot of innovations had transformed the personal computer industry, music industry, the mobile device industry and even the publishing industry (through the iPad effect). It is believed that Steve Jobs is not merely interested in profit making but rather he is really in making new things happen. Innovation is a key trait describing Steve Jobs’ leadership style. Though Steve Jobs could be very innovative in his understanding of what people might need in the future, this alone is far away from being enough to push forward innovation in such a big company. Another important field is the effect of the innovation by the entrepreneurs on the company’s culture which influences the behaviors of all the employees. Look back on the cases of Apple and Google, one shared successful factor is that the companies manage to integrate the innovation in the company culture and the beliefs held by every employee.
2.2.4 Help create new business models and thinking
As talked above, being innovative is about producing new ideas; this could be used for the new situations or to generate better solution for the existing scenario. This concept and way of thinking will be necessary to create new business models and thinking for managing new business challenges which could not be explained and addressed well by the current way of managerial science. For example, for a long time there has not been a concept of managing workforce diversity, but when some most disputable issues such as sex change, discrimination of foreign workers and women workers and also other problems caused by the diversified work forces in the trends of globalization and individualism, the concept has been created to guide the peaceful settlement of the problems. In many situations, the entrepreneurs would need to based on the company’s and industrial conditions to create new business models and concepts to get adapted to the changed environments and even propose changes in such a direction that it will enhance the business of the company. And such creation is actually a process of changes that need inputs of a series of innovation activities and thinking. For example, one major innovation in the auto industry is carried out by Toyota which yields the one of the famous system in the industry: The Toyota Production System (TPS) which is an integrated socio-technical system, developed by Toyota that comprises its management philosophy and practices (Weck, Roos, Magee & Vest 2011, p.129). The creation of the Toyota production System has indicated that the company has innovate not only its operating management in term of manufacturing and logistics for automobile manufacturing but also the company’s culture and value shared by the all the employees of the company including the leaders and the executive employees. And this system is believed to strengthen the company’s core competitiveness and enhance the organization capacity and has assisted the company to grow since the end of the World War II from a small company to the current global leaders in the auto industry.
Based on the above discussion and analysis, some conclusion could be made regarding the predictions of how entrepreneurial success could be achieved in 2050. Though there are many prescriptions proposed by many researchers such as being risk taking, being highly innovative and relocating factories to the developing and emerging economies, in my understanding being highly innovative would be the best prescription for the entrepreneurial success in 2050. The reasons behind this judgment are that: it could better deal with the shortening product life cycles, enhancing the personal and organizational capacity by innovation activities, strengthening the leadership and encourage the formation of an innovative culture and also innovation will help create new business models and thinking to tackle the unexpected situations and changing environment in the future. Hence it would be recommended that the future entrepreneur would need to be highly innovative to cope with the future business environment and achieve the business success.
Apple.com 2010. Thoughts on flash. Updated on April 2010, accessed on 1 Dec 2011 [online]: http://www.apple.com/hotnews/thoughts-on-flash/
Bandura, A. 1982. Self-efficacy mechanism in human agency. American Psychologist, 37, 122 – 147
Deschamps, J. P. 2008. Innovation leaders: how senior executives stimulate, steer and sustain innovation. West Sussex: John Wiley & Sons Ltd.
Gasparski, W. W. 2011, Entrepreneurship: Values and Responsibility. New Jersey: Transaction Publishers. p. 96
Kumar, P. 2010, Mktg Of Hospitality & Tourism Serv. New Delhi: Tata McGraw Hill. p.62
Levitt, T. 1965. Exploit the product life cycle, The United States: Graduate School of Business Administration, Harvard University.
Lussier, R. N. 2009, Management Fundamentals: Concepts, Applications, Skill Development. Mason: South – Western, Cengage Learning. p. 23
Maslow, A. 1987 Motivation and Personality, 3rd edition New York: Harper and Row. Motivation
Porter, M. E. 1980. Competitve strategy, New York: The free press.
Preskill, H. S. & Catsambas, T. T. 2006, Reframing evaluation through appreciative inquiry. California: Sage Publications, Inc. p. 120
Schöttler, J. S. 2003, Innovation and New Product Development: Launch Strategy and Market Plan for New Product Development. Norderstedt Germany: GRIN Verlag. p. 10
Urabe, K. Y., Child, J. & Kagono, T. 1988, Innovation and management: international comparisons. Berlin: Walter de Gruyter & Co., p. 3
Weck, O, L. D., Roos, D., Magee, C. L. & Vest, C. M. 2011, Engineering Systems: Meeting Human Needs in a Complex Technological World. Massachusetts: Massachusetts Institute of Technology, p.129