By Theodore Panayotou
While people have begun to accept that the new economic model of the country must incorporate innovation and entrepreneurship, very few see themselves taking part in this transformation. Most claim that there is no money to invest because starting one’s own business requires a huge investment. Having deep pockets is viewed as a sine qua non for being entrepreneurial.
Others equate entrepreneurship with buying (low) and selling(high)and fail to see that entrepreneurship, unlike trade and commerce, involves an element of innovation. Still others believe that innovation is highly scientific and technical and you cannot be innovative unless you have a doctorate in science, engineering or high tech. Perhaps they confuse innovation with invention, though not all inventions are technological, much less innovations. Then there are those who focus on the lack of local demand,ignoring the fact that we are part of a European and global economy of billions of people.
As a result, very few ever attempt to build their own innovative enterprise, preferring to remain employees forever.In fact the misconceptions, indeed myths, about innovation and entrepreneurship in this country are so many and so deep that one can write volumes in attempting to debunk them. We will make a modest effort here to encourage more young people to think creatively, act entrepreneurially and put their ideas into practice by starting their own business.
Misconception 1: Creativity is always linked to art or fine arts (painting, design, advertising, music etc.) and therefore only artistic people can be creative. This is patently false. Both academic research and practical experience show that everyone can be creative if they practise the skill of creative thinking. Almost any every day problem has a conventional solution and a range of creative alternatives which we choose, for our convenience, not to think about, explore or try.
Misconception 2: Innovation always involves technology and especially high technology.To become an innovator you must have advanced scientific knowledge acquired through advanced degrees in science and/or engineering. For technological inventions this may be true, although there have been exceptions. For innovations, all that is required is creativity and imagination. Even for many innovations that are based on technological inventions, advanced scientific knowledge is not an absolute requirement, just look at the wide skill-range of people who develop web-based applications and online innovative products and services. Certainly, we must not confuse innovation with primary invention.
Misconception 3: The most difficult part of innovation and entrepreneurship is to come up with an important idea. This is not true. There are many ideas around and each of us can think of many more. Selecting the right idea is more important, but even more crucial is implementing it. To do this entails having the right team of partners, selecting the right business model, researching market demand, developing the right strategy and marketing the product in the right way.
Misconception 4: You need to keep your business ideas secret from others who may copy them and execute them before you do. This is a corollary of the previous misconception. Even if someone steals your idea, he will not implement it the same way as you, because he doesn’t have the same background of experiences or the same team. Moreover, he will not have the same passion and drive to implement it as successfully as its originator.
Misconception 5: Entrepreneurship is always concerned with profit making which is always driven by greed. Again this is a false generalisation. People start a business for a variety of reasons. Profit is one. Recognition is another. Preferred lifestyle is a third. Independence, being one’s own boss, is yet another. A good number abroad (very few in Cyprus) start a business for a social purpose, to create value for their community or to help the disadvantaged. This is what we call social entrepreneurship. Those interested in finding out more should Google “social entrepreneurship” or visit the “Ashoka” website.
Misconception 6: Nine in ten start-ups fail. This was true in the past, before the “lean start-up” and “pivoting” had been invented. Now you don’t have to gamble your home to start a business by investing heavily in an untested idea, which is probably the wrong one, or at least not the right one in its initial formulation. With a lean start-up you begin small; you put your idea or prototype product on line, solicit feedback from potential customers, investors and partners, and you pivot (make changes accordingly) until you reach a winning configuration. Those interested should consult the book by Eric Rees Lean Start-up: How Today’s Entrepreneurs Use Continuous Innovation to Create Radically Successful Businesses.
Misconception 7: Business risk-taking is akin to gambling. This may have been the case before the Lean Start-Up Movement, and still is if someone hasn’t done his homework, or is not flexible and agile enough to pivot. Even when a business fails, it doesn’t fail if valuable lessons are learned so as to make the next one a success. There is evidence that the second time around, the chances of success are doubled.
Misconception 8: Starting a business takes a lot of money and needs a deep-pocket funder to sponsor you, preferably one who doesn’t mind if his money is lost, such as the government, the EU, a very rich person or a downright fool. This is the very first excuse that is thrown by a reluctant would-be entrepreneur when it is suggested that starting one’s own business might be the answer to unemployment or a dead-end job. In the early stage of a start-up, you don’t need to hire staff or secure premises. What is needed is dedicated hours of voluntary hard work by the originator of the idea and his team and a bare minimum of money mobilised from own savings, friends, and family. At a later stage crowd-funding and competitively won funds from government and EU programmes certainly come in handy. The ability to raise some funds directly from investors is important because it is interpreted by larger investors as a proof of concept.
Misconception 9: To start a business you need a lot of planning and a detailed business plan with an extensive market research study. This is also a big myth as too much planning leads to paralysis by analysis. To take your product to the market you do not need to perfect it first with many expensive experiments. In the world of instantaneous communication, hyper-competition, open-source assistance, crowd funding, and lean start-ups, speed is of the essence. The fast fish eats the slow fish. If you have a good business idea, you start implementing it within weeks, soliciting input face-to-face and online from customers, potential investors and open source advisors and pivoting accordingly.
Misconception 10: To become an entrepreneur you need to start your own business, or at least buy one and become self-employed. Actually you don’t. You can become an entrepreneur in the company you are working as a hired employee. You can become an intrapreneur. Employees with creative thinking and entrepreneurial spirit are in great demand and are paid a premium. They are usually the last people to lose their jobs in a crisis, because they are the ones that can help their company get out of the crisis the most. Today, in the midst of the financial crisis, most of our companies need creative and entrepreneurial people to help them regain their international competitiveness by improving and differentiating their products or developing new products and opening new markets abroad.
Dr. Theodore Panayotou, 2007 NOBEL Peace Prize contributor, is director of the Cyprus International Institute of Management (CIIM), visiting professor at Tel Aviv University and member of the Cyprus President’s Council of the National Economy. He taught economics for 25 years at Harvard University, served as senior economist at the Rockefeller Foundation and advised presidents and premiers in 15 countries including China, Mexico, Russia and the USA. He has published over 100 books, monographs and peer-review articles on economics and business. Contact: [email protected]