Entrepreneurial Design
FROM THE IDEA TO ENTREPRENEURIAL DESIGN
ENTREPRENEURIAL DESIGN IS WHAT COUNTS
By Entrepreneurial Design, we don't mean business implementation. It is more. What is required is: A feel for the needs of customers, sensitivity to market developments, an eye for changes on the horizon. It needs, to put it popularly and drastically, "truffle pigs", nose and intuition. Patents or new technologies are raw material. Recognizing how they fit into an entrepreneurial design requires precisely those competencies that Schumpeter attributed to his type of innovative entrepreneur.
One of the fathers of entrepreneurship, Israel Kirzner, put it most clearly. He speaks explicitly of »discovery«.
And specifically about discovering what already exists. In other words, unlike the classic explorers who were the first to set foot on the North or South Pole, this was unknown territory at the time. Entrepreneurship is about what is already known, not about inventing or exploring. But the known is only actually known; it must also be recognized as significant. And often it has to be shaped before it can become really significant and successful in the market.
There is fierce competition; the consumers determine the market and have the greater influence. We therefore speak of demand-driven markets. Under such market conditions, the crucial task is to correctly assess the psychology of markets and their changes, to be able to deal with rapid technological change, and to develop a concept that has a chance of lasting in such a difficult environment. This is different from the competencies that form the core of the "Master of Business Administration" program. Even the term "administration" reveals that it is about management, but under commercial-administrative aspects. Business economics came into being in order to keep track of things in large companies. This is where its strength lies, not in the development of original and sustainable idea concepts. The inventor / businessman team was a successful model in an era when conditions were quite different.
WHAT A GOOD ENTREPRENEURIAL DESIGN MUST DO
Patents and inventions are raw materials. The decisive questions as to whether and how something can be done with it that will prove itself in everyday market life have yet to be answered. This is not to say that there are not inventions and research results that can be relatively easily turned into marketable products. However, this is not the normal case. Something that has been invented or researched, no matter how brilliantly, is not automatically marketable. Research logic and market logic are fundamentally different.
We have to make high demands on the Entrepreneurial Design, because it has to solve a whole range of problems for the founder:
1. work out clear market advantages
2. secure an advantage over imitators
3. protect against technological obsolescence
4. protect against economic obsolescence
5. minimize the financing costs
6. develop marketing as an integral part of entrepreneurial design
The first and most important criteria is that the idea concept has market advantages over established competitors. Business economists know the unique selling proposition with which you should appear on the market. But there is more to it than that. The greater the market advantage, the more likely a startup is to succeed. So it's worth tinkering with the architecture of your design until a significant market advantage can be carved out.
The clearer the advantage over your competitors, the better, of course. But the advantage must also be clearly recognizable. Should you succeed, one thing is certain: imitators. But they can be very dangerous to you. If your imitators have established sales networks or high advertising budgets, the risk of being overtaken is real.
Would a patent protect here? The modern answer is yes, but only for a short time. As soon as the competition recognizes that there is a new solution, they will find other ways around the patent. A technological innovation, say Mitchell and Coles, gives a company at most a six- to 12-month head start; an advantage in concept can have a longer impact, especially if you develop it continuously.
But even if the company succeeded in staying at the forefront of technology, that alone would not be enough for success. The company would also have to hold its own on the level of economic obsolescence. If this or a comparable product is manufactured tomorrow in China in a larger series with better economies of scale, the founding company will lose out.
Paradoxically, it follows from these considerations that the chances of survival increase if the company does not focus on its own high-tech development. Instead, it remains open and flexible and buys the most technologically advanced or least expensive solution on the market.
Of course, there are successful technology-oriented start-ups. But to be fair, one must emphasize the high risks faced by founders with a high-tech development in view of the intensity of research and competition worldwide.
FINANCING EFFORT AND MARKETING
The lower the financing effort your Entrepreneurial Design requires, the better for you. Not only will you save yourself the many trips to banks and other capital providers, you will also be more on the safe side overall. Above all, the less debt capital you need, i.e. capital that you have to repay and that is not part of your company's capital stock, the lower the risk that you will be driven into a liquidity shortage by anxious investors who quickly lose faith in your success and call in their loans. So it pays to fiddle around for a long time to keep your capital expense as low as possible. The important thing is to make the amount of capital you spend part of and a measure of the quality of your entrepreneurial design.
The same applies to marketing. The questions of how your marketing should work are part of the tasks in your idea concept. As a principle we can formulate: The more offbeat your ideas are, the greater your chances of being noticed by the public. Quirkiness is a positive factor when it comes to marketing. What does my market advantage need to look like to make marketing easy? Your ideas determine how successful your marketing can be. Marketing is created when the concept is developed, not added as an afterthought. Marketing is an integral part of a good concept. Not: We have a product - yes, how do we sell it now?
YOU NEED A REALLY GOOD AND MATURE CONCEPT
Good Entrepreneurial Design is the result of a search process similar to experimenting and putting together a puzzle.
But where are you supposed to get the faith that at the end of the puzzle work you will find a concept that can undermine the established competitors? Haven't many others already thought about this? Where do you, who may come from the outside and do not have many years of relevant professional experience in a field, hope to find such a compelling solution?
If you're almost ready to give up yourself, take some advice from Daniel Goleman. This US psychology professor, known for his studies on emotional intelligence, describes the difference between a genius and a normal person. It's only a small difference, he says, but it's a crucial one.
Both - genius and normal person - are working on a problem and cannot solve it. Both are faced with the decision to give up because the problem seems unsolvable.
What is the difference then? The normal person gives up - which seems perfectly reasonable in view of the time spent in vain and the hopelessness of the endeavor. The "genius", according to Goleman, also gives up - but not completely. It shifts the problem to a back part of the consciousness - and waits. It is not uncommon for a pattern to appear in a completely different place than the way one was looking for it. By not pushing the problem completely out of consciousness, the person has the chance to recognize the pattern in its meaning and apply it to the problem that has almost been abandoned.
Is there a guarantee that you will find a solution to the problem? No. But what is the alternative? That you resign right away and thus finally deprive yourself of the chance to perhaps find a solution after all? How long should you hold out? Hang in there, after all, it costs you nothing to keep a thought in the back of your mind, semi-consciously, and check from time to time to see what it looked like.
Just as the Danish philosopher Søren Kierkegaard worked on six standing desks in parallel - because he found that whenever he was writing on a text, more thoughts came to him about texts he wasn't currently working on - you can also play on several puzzles at the same time.
PRINCIPLES OF HIGH POTENTIAL ENTREPRENEURIAL DESIGN
Abraham Lincoln is credited with the phrase:
„If I had ten hours to cut down a tree, I would spend nine of them sharpening the axe.”
That's how you should keep it when it comes to founding. In the field of concept-creative start-ups, the quality of entrepreneurial design is the decisive requirement for the success of a company.
Your Entrepreneurial Design will be truly excellent if it succeeds in following three other principles when working out the idea puzzle.
Scalability
Simplicity
Minimize risks
The concept must enable scalability. It must be possible to duplicate the services. If possible, in the sense that capacities do not have to be expanded proportionally as growth occurs, but synergy effects occur. Software is the best-known example of this. Professionally programmed software makes this possible. Even in the case of unexpectedly high capacity expansions, the programs should not have to be rewritten.
Simplicity is a helpful principle. Most start-up failures arise from unmanaged complexity. Especially during rapid growth, problems multiply and lead to typical growth crises in newly founded companies. There is an old saying that any moron can make things complicated. It takes more brains to think things through so that they remain as simple and manageable as possible.
„Be willing to take risks!” This is an often heard, but nevertheless really stupid sentence. At least when it is uttered to founders. The principle must instead be: „As a founder, you must avoid as much risk as possible.”
We can illustrate this idea with the example of alpine mountaineering. To climb the north face of the Eiger, you not only have to prepare well, you also have to eliminate all identifiable risks as far as possible. There are then still enough risks left even for experienced climbers. Precisely because you are moving in high-risk terrain - even as a founder - you must avoid as many risks as possible. A single wrong step can mean death. Your stakes and crash rate are simply too high. In the flatlands or as civil servants, perhaps we should be more risk-averse. But as founders, we can't afford to be.
»After all, you don't recognize many problems until you're in the field!«
Of course, theory and practice are different. Very different, in fact. Imagine you are supposed to walk across a high wire. On the left and on the right, you look down into the depths. Your coach tells you it's very easy. You just have to keep your balance. He's right. At least in theory. He can even write the formula for balance on the board. The formula is correct.
But what use is it to you? Is it really about balance? If you walk on a rope ten centimeters above the ground, it's a piece of cake. If the rope is stretched 20 meters high, it's theoretically still a question of balance. But in practice, there's a huge difference: Suddenly, fear comes into play, failure experiences from your childhood come to mind, your stress stability plays a big role. Look for role models or advisors who have walked the high wire as many times as possible.
