4. Entreprenuership

7/28/2019 4. Entreprenuership

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ENTREPRENUERSHIP

By

O.A. Bamiro

Professor of Mechanical Engineering

Faculty of Technology

University of Ibadan

Paper prepared for the Mandatory Continuing Professional Education (MCPE) Course for

Prospective Corporate Members organized by Nigerian Society of Engineers


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PREAMBLE

First, I shall like to express my sincere gratitude to the Nigerian Society of Engineers for giving

me the opportunity to share my thoughts on this emerging subject with members of our

dynamic profession. The issue of entrepreneurship has assumed an urgent dimension under the

on-going globalization of the world economics. As engineers, we must appreciate the

responsibility thrust on us towards salvaging our local economy. All that I seek to achieve in this

short paper is: first, to sensitize readers to the challenges posed by the on-going economic

globalization and the role of engineering entrepreneurship in the sustainable development of

our economy; and second, as to be expected, carry out an expose on the basic concept of

engineering entrepreneurship for the benefit of engineers, quite a number, I dare say, that are

yet to be familiar with the term. In respect of the latter, I have drawn from experience of

carrying out case studies of some Nigerian entrepreneurs to show that there are still positive

developments in the economy despite the rather anti-business climate that seems to exist in

the country poor infrastructural support, high cost of doing business, multiple taxation, etc. I

dare say that a true entrepreneur is never totally limited by environmental factors. The

environment often times provides him or her with exploitable opportunities!

It is my hope that after going through the text, you will feel challenged to seek to acquire, in

case you have not been borne with them, the entrepreneurial skill to become either an

entrepreneur that owns his or her own business or an entrepreneur that works in a company or

firm.

WHY ENTREPRENEURSHIP?

It is not common to talk about entrepreneurship in relation to engineering either at the level of

education and training or in the practice of the profession. The fact is, engineering students

dont usually have much exposure to business issues because most of our traditional courses

focus on engineering fundamentals. The tendency is to leave business to our colleagues in the

social sciences. Little wonder that rarely do engineers in big corporations emerge as managing

directors or chief executive officers. This seems to be the exclusive preserve of the accountantsand the financial directors for reasons not far removed from the fact they usually have the big

picture of the business while engineers, more often than not, operate within the narrow

confines of production management with most feeling a sense of achievement becoming just

the Engineering Manager! But two phenomena- graduate unemployment and globalization of

world economics- are set to change the picture as encapsulated below.


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GRADUATE UNEMPLOYMENT

The educational sector in Nigeria has witnessed rapid growth both in size and output. From less

than 3,000 at independence in 1960 with a total enrolment of 1.3 million pupils, there are now

44,000 primary schools nationwide with an enrolment of more than 20 million. At the

secondary schools level, the Federal Ministry of Education (1994) statistics show that the

number of schools rose from 883 in 1960 to 5,868 in 1994 while enrolment went up from

170,000 to 4.5 million during the same period.

At the tertiary level, there are now more than 148 institutions made up of universities

polytechnics and colleges of education with a total population in excess of 800,000. It is

estimated that about 3 million people enter the labour market in Nigeria every year, most of

these graduates or dropouts from the various levels of the educational sector, it is widely

accepted that about 10% of these graduates find jobs in the formal sector. The vast majority of

the remaining 90% are usually unemployed or underemployed for many years, with many

drifting into the informal sector.

As a result of the above, there have been calls for clear policy and action on introducing

entrepreneurial education into the national educational system, particularly at Technical and

Vocational Education (TVE) level- Technical Colleges and Polytechnics and also into University

curricula. This is to enable trainees be prepared to go into self employment and to start their

own businesses as well as to work productively in small and medium sized businesses.

Such policy initiative has already been taken by some African countries. Kenya, for example has

successfully integrated entrepreneurship in all government vocational and technical training

institutions while some of her universities have introduced entrepreneurship as electives at the

undergraduate level, and as Masters and even PhD degree programmes at the Postgraduates

level. Other countries including South Africa, Ghana and Zambia are developing similar

initiatives.

To the best of my knowledge, garnered over 28 years of teaching engineering in the Premier

University in Nigeria, the nearest course to business in our curricula for the basic engineering

degree programmes of mechanical, electrical/electronics and civil, is Engineering Management.

Even it was not easy prescribing the latter as a compulsory course for engineering students as


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some intellectual purists opined that more time should be devoted to the engineering

fundamentals while management skills should be left to industry to impart on the pupil

engineers. Also, the minimum academic standards foisted on the university system several

years ago by the National Universities Commission (NUC) are still operational despite the

apparent disconnect between the acquired skills of the products of the system and therequirements of industry. Suffice it to note that the demand of industry and the economy has

changed so much that there is now an apparent disconnect between the universities and

industry; an issue which should be of concern to the Nigerian Society of Engineers and COREN, I

dare say that what is required of the products of our engineering schools now transcends NUCs

usual cosmetic prescriptions.

GLOBALIZED ECONOMY

It is well acknowledged fact that one of the important prerequisites for the economic well being

and prosperity of any nation is the sustainable development of industry. As noted by Ntim, it is

industry that provides services to members of a society by making consumer and capital goods,

creating new products and processes, generating new companies and opportunities, and

providing, in the process, unlimited new jobs for the population. The key to the success of

modern industrial development is science, technology and engineering (SET): The application of

technology to industrial development and maintenance is made possible by SET professionals

(scientists, engineers, technologists, craftsmen, artisans, etc) whose education and training

must, at all times, reflect, at least, the requirements of industry. Universities as the producers

of some of these key SET professionals undoubtedly, have the important responsibility of

making sure that they turn out graduates that are industrially acceptable. According to

Machando

the new industrial revolution will multiply the technology management complexity ten fold. Developing countries

quantitative requirements in terms of number of skilled human resources are certainly astronomical. They will have

to satisfy the needs of existing enterprises, of newly created enterprises of innovation system agents such as R & D

Centers, consulting enterprises, standards and metrology boards, financial institutions, science and technology

policy agents incubators and many others.

This is a situation that calls for a strong university- industry partnership. The need for such

partnership is further underscored by challenges of competition in the industrial place arising

from the on-going globalization of world economics. As noted elsewhere, we can no longer

ignore the forces of globalization as they seek to shape everything economic, social, cultural,

etc in ways that are not totally edifying for a developing nations such as ours. The nature and


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consequences of global competition are rather unsetting especially for developing economics,

(including the Nigerian economy) that are still, by the large, the globalized or captives from

the front lines of what some have characterized as World War III. As remarked by Korten:

It is a very different kind of conflict. There is no clash of competing military forces and the

struggle is not defined by national borders. But it does involve an often violent struggle for

control of physical resources and territory that is destroying lives and communities at every

hand. It is a struggle between the forces and institutions of economic globalization and the

communities that are trying to reclaim control of their economic lives. It is a conflict between

competing goals economic growth to maximize profit for absentee owners versus creating

healthy communities that are good places for people to live. It is a competition for the control

for markets and resources between global corporations and financial markets on the hand and

locally owned businesses serving local markets on the other.

Underline is mine in the above quotation to accentuate the nature of competition faced by our

productive sector, particularly the micro, small and medium enterprises (MSMEs). As a

developing economy, and also as professionals we must wake up to the truth of economic

globalization characterized by the enormous concentration of power and wealth in the hands of

fewer companies and people. According to Korten, the number of billionaires in the world rose

from only 274 in 1991 to 477 in 1997 with their combined assets roughly equal to the combined

annual incomes of the poorest half of humanity 2.8 billion people. UNDP figures showed that

of the 100 biggest economics in the world, 51 are now not countries but Transnational

Corporations, a direct consequence of an unregulated global economy. The 500 largest

corporations in the world shed 4.4 million jobs between 1980 and 1993- while increasing their

sales by 1.4 times, their assets by 2.3 times, and compensation for their chief executives

officers by 6.1 times the value world wide corporate mergers and acquisitions completed in

1995 exceeded the total for any previous year by some 25%. And the consolidation continues

(ExxonMobil, TotalFinaEIF, CompaqHP, Chevron/Texaco, etc).

I like to observe that the imperatives of global competition demand that we reclaim and build

our local economics. As remarked by Korten we face basic choices as to how we will divide our

efforts between competing for a share of the declining pool of good jobs that global

corporations offer and working to create locally owned enterprises that sustainably harvest and

process local resources to produce jobs and the goods and services that local people need to

live healthy, happy, and fulfilling lives in balance with the environment: in other words the

nurturing of our industrial actors and emerging entrepreneurs, particularly the engineer


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entrepreneurs to compete fairly in the local markets. This is akin to preparing our local amateur

teams at least for the local league with some hopefully venturing into the international league.

*The comet Newspaper of May 3, 2004 carried the following story Shell Petroleum Development Company

(SPDC) begins its re-organization; over 4,000 jobs are to go in the controversial exercise. Also to go according to

sources, are four directors, following the companys plan to scrap some department and merge others.

WHAT IS ENGINEERING OR TECHNOLOGICAL ENTREPRENEURSHIP?

The age of enterprise has arrived. Strategic use of technology in all sorts of businesses makes

the difference between success and failure. The global, and even, local competition in

manufacturing, product distribution and multinational enterprises will continue to translate to

a demand for engineers and technologists with entrepreneurial spirit, the drive and the

persistence to make a difference to their companies. Large and medium sized corporations will

seek the intrapreneur (an entrepreneurial individual who prefers to work inside a larger firm

rather than to start or run their own) to be the leaders. However, there is an increasing demand

for people seeing the advantages of doing their own thing, in their own way, in their own time

i.e. entrepreneurs.

While self-employment generates jobs, many people wanting to establish their own enterprise

experience difficulties in converting their ideas into reality. Education and training in scientific

and technical subjects is vital to well-being as it helps in creating qualified man-power for the

industrial and service sectors. However, the scientific and technological knowledge itself may

not be sufficient for those considering self-employment by establishing their own small private

enterprise. Experiences from other developing and developed economies have shown that

there is a need for a more focused and deeper exposure of such people to technology and

business so as to impact a set of skills oriented towards setting up of new business ventures

based on exploiting technologic-driven market opportunities. Such opportunities includes:

proprietary technological innovations based on scientific research and development.

Unfortunately, the little tradition of cooperation between business and research communities

has led to only a few cases of R & D results lading to new enterprise formation in most

developing economics (reference Appendix A for the summary of a case study of and R & D

result leaving the laboratory for the market in Nigeria). Addressing these issues comes under

the purview of what is now recognized as technical entrepreneurship or technopreneurship or

technological entrepreneurship or engineering entrepreneurship. In what follows, I have

adopted the word technopreneurship as defined below:


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Technopreneurship is the innovative application of scientific and technical knowledge by one or

several persons who start and operate a business and assume financial risks of achieve their

vision and goals.

Technically, engineers are well qualified in may respects for this activity, but often lack the

necessary business skills and entrepreneurial mentality. Through proper education and

experience, engineers, scientists, and technologists provide an essential bridge between the

continuous development of science and the practical needs of society. With increase access of

todays computing resources; engineers can be equipped to translate scientific discoveries into

useful products and services. Through the possession of such tools and know-how, they can

improve substantially the quality of lives; ensure the attainment of macro-economic objectives

(e.g. unemployment reduction, balance of payments surplus and by innovating in goods and

services and generating durable, knowledge-based employment).

Implementation of technical entrepreneurship, as distinct from general business

entrepreneurship, has started to gain momentum in many countries-developed and developing.

For example in Canada, the National Steering Committee on Technological Entrepreneurship

(NASCENT) was formed by the Canadian Academy of Engineering to implement policies and

programmes geared towards the enhancement of technological entrepreneurship in the

country. Several universities and training centers in Canada, United States and Latin America

have been developing programmes and teaching models on technopreneurship in Sub-SaharaAfrica, Kenya, Ghana, Namibia, South Africa, Uganda, Chad, Cameroon, and Burkina Faso are

involved with the subject matter to varying degrees. All this is predicated on the belief that

although people may be borne with entrepreneurial traits, however, entrepreneurship skills can

still be taught.

WHO IS AN ENTREPRENEUR?

An entrepreneur has the following four basic characteristics (Alos)

Sees opportunity Turns it into a business Creates value Mobilizes resources.


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An entrepreneur sees opportunities in a situation while others do not. In this connection, I shall

like to refer you to Appendix B containing a few records through history of shot- sightedness,

oftentimes bordering on arrogance, by those commenting on visionary ideas of entrepreneurs.

One of the interesting illustrative stories goes like this:

So went to Atari and said, Hey, weve got this amazing thing, even built with some of your parts, and

what do you think about funding us? Or well give it to you. We just want to do it. Pay our salary; well

come work for you. And they said, No so then we went to Hewlett-Packard, and they said, Hey, we dont

need you. You havent gone through college yet.

The above was the story by Apple Computer Inc. founder Steve Jobs on attempt to get Atari

and HP interested in his and Steve Wozniaks highly innovative personal computers in an era of

mainframe computers. The rest is history as Apple Computer Inc. shook the computer world

with the Apple PCs beyond the imagination of Atari and HP. The latter could not see theopportunity offered them by the two Steves on a platter of gold. Off course, they must have

paid dearly for this through having to play the catching-up games to join the PC market much

later.

This is in contrast to the present buy and sell syndrome epitomized by the present Dubai trade in Nigeriasuch activities do not create value and are by no means within the preview of entrepreneurship

technological or non-technological

The Canadian Academy of Engineering commissioned a study on technological entrepreneurship in Canadawith background report published in 1997 NASCENT was established to implement the study

recommendations.

Another equally interesting story goes like this:

While enjoying a vacation in Florida, Dr. Hauck wondered about the sand on the beaches where

he sat. At night he took a mineral light out to explore and saw an interesting fluorescence. He

decided to ship samples off to a lab and discovered it contained important elements for atomic

use. He used his connections in Washington D.C. to get permission to mine the sands along the

east coast of Florida which provided him with hafnium, a metallic element which is used for

control rods, the safety valves for nuclear reactors. Others sat on the sand too, but they justdidnt ask themselves any questions!

It is the perception of opportunity by entrepreneur that has led to one of the traditional

definitions of the entrepreneur as creative and innovative. It is commonly thought that the

entrepreneurs creativity leads him to breaking new grounds by doing new things or to

discovering an innovative way of doing what other people are already doing. But the definition


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of an entrepreneur as creative and innovative is not sufficient. There are innovative thinkers

who never get anything done. So, besides identifying opportunities, there are additional

characteristics that define the true entrepreneur. Of significance is the ability of an

entrepreneur to turn to the opportunity in to a business idea, that is, he creates an innovation

to exploit the opportunity. Thats exactly what Steve Jobs did when he envisioned personalcomputing. Thus an entrepreneur translates his innovative concept into a combination of

activities that, when put together, work out to generate a viable operation. This practical

approach to opportunities distinguishes the entrepreneur from the adventurer in search of

quick success who lacks understanding of the intricacies of the business. Experience and

expertise help the entrepreneur to figure out well-tuned concepts that may make his business

idea viable.

A third dimension of the entrepreneur is his ability to mobilize resources to turn the businessideas into a business reality. In this context, entrepreneurs put together all the resources

needed- the capital, the management, the people and the business strategy- to transform the

business idea into a product, process, or service innovation that finds a market and creates

value for the customers. In other words, they build whole companies upon their innovations.

Finally, entrepreneurs take significant, calculated, personal risk in building their companies.

Typically, they put at risk their financial security, their professional reputations, and sometimes

their personal relationship to pursue their visions. Granted that entrepreneurs take risks, but sodoes anyone engaged in any kind of economic activity. As noted by Alos:

The essence of economic activity is the commitment of present resources to future expectations, and that means to

uncertainty and risk. People who need certainty are unlikely to make good entrepreneurs. But such people are

unlikely to do well in a host of other activities as well. In all pursuits, decisions have to be made, and the essence of

any decision is uncertainty. What really makes entrepreneurship risky is that so many entrepreneurs lack the

methodology and they violate elementary and well known rules.

As this other goes, Steve Jobs toured a Xerox research facility 1979 and saw a computer with an experimental

graphical user interface (GUI) Xerox did not see a large market for this technology. But Jobs was quick to see the

potential for GUI and sold the revolutionary Apple Macintosh in the 1980s. Today, millions of PC users in the world

operate with a user friendly interface descended from Jobs original innovation.


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ENTREPRENEURSHIP AND THE BUSINESS LIFE CYCLE

Before discussing some of the myths surrounding entrepreneurship in the next section it is in

place to quickly draw attention to the concept of business life cycle. This is particularly

important in relation to the existence in this country of thousands of small and medium

enterprises (SMEs) that have not gone beyond the limited vision of the owner/manager. These

are enterprises that are not growing; they remain small, non-innovative and marginal. Such,

even if they remain marginal, can definitely not grow the economy or create additional job

opportunities. Some have even referred to such founders as non-entrepreneurial. What is

highly desired are what is referred to in literature as entrepreneurial growth companies (EGCs)

that idea into business, i.e. a production outfit, and then innovatively grows the business by

bringing in more investment, professionalizing the business management, etc and taking the

company along the path conceptualized in Fig. 1

Fig. 1: The Business Life Cycle

Revenue

Birth(Post-natal)

Start-up

Gro wth Matu rity

Time

(Pre-natal)

Opportunity

THE STAGES OF THE BUSINESS LIFE CYCLE

In this section, the author has drawn considerably from the lecture of Prof. A. J. Alos at the

Lagos Business School on the subject as well as joint case studies of some Nigeria Businessesconducted by him and the author. Some of the ideas presented herein will be appearing in a

book to be published soon.

The stage immediately before the birth of the new company- the pre-natal state- is the right

time to analyze the problems prior to the birth of the company to the point of no return. Unlike

living beings, whose parents have very limited control over what their offspring will be like, in


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the case of the new companies, entrepreneurs can significantly influence the nature and future

of their new born companies.

Some skills are particularly important at this stage. The technique par excellence around which

entrepreneurship courses in business schools currently revolve is the business plan, a detailed

outline of the new company covering its most important aspects. Although experience shows

that the bur a number of businesses that were to later experience growth did not start with any

iron-clad business plan. Fore example, Mr. Gbenga James, the founder of Avian Specialties, an

integrated poultry farm in Ibadan with turnover now running into several millions of naira, had

this to say about business plan:

I never did a business plan, if I had done, I might not have started. But I now see that I

expanded without adequate planning and I had no alternative but to take a bank loan of N30m

with a promise to pay back in 3 months! It took me 7 months of financial engineering to pay

back N15m. So I had to take another N20m loan.

The message is: it is highly desirable to have a business plan, but a lot happens beyond the

business plan as things seldom work to the plan thereby requiring the entrepreneurial spirit to

keep going against all odds, as illustrated later.

Once the company is born, it is imbued with a certain group of characteristics that it will carry

for a long time, much like the DNA in the sells of living beings, and will determine the nature of

its future course. There are companies that are born strong and yet others that are stillborn.

Most businesses may be able to start small, but all require tremendous energy any

adventurousness on the part of their founders. An enormous amount of energy is brought into

play to cross the line from an opportunity to the first living cell of a new company. New babies

consume a lot and need much attention. A new business venture starts with sacrifice and the

entrepreneur must be ready for hard work at this stage no fixed hours, no fixed pay.

The step by step progress of the new companys birth is very important and the entrepreneur is

involved in practically every aspect of the start-up. He is primarily interested in survival and his

planning horizon may be as short as a week. But the intensity of the moment may make the

entrepreneur forget certain crucial aspects, not find the optimal sequence for his actions, go

too fast or too slow, commit too much or not enough. Decision making thus becomes very

critical at this stage.


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Companies that survive after birth and are confirmed in their viability, enters the post-natal

state. This is the time when it can be discovered if the company has been born with serous

problems and to diagnose if it will continue to be a dwarf because evidence shows that a series

of assumptions that should stimulate rapid growth were incorrect. If that is the case, an

accurate and objective diagnosis may lead to the project being canceled before it consumes anexcessive amount of time, resources and prestige.

At this stage, almost all companies are still marginal and success to get out of marginality will

depend on what is done. Some distinctive skills are now required to manage the new business.

The entrepreneur needs to train and motivate his people to deliver his business idea to his new

customers, set in place his marketing strategy and organize his operations. His capital cost,

operating costs and his revenues become better known and he is already in a position to

evaluate his cash flow, his planning horizon may expand to longer period possibly beyond ayear.

If everything progress satisfactorily, the company reaches the growth stage. Having been

absorbed in getting through the post-natal period and being confirmed in his profitability, the

entrepreneur has no time to think of the future of the company. Confronting the challenges of

growing, the business is now his major concern. But if one takes a critical look at the Nigerian

businesses, most start small and tend to stay small. On the one hand, the business may not

offer any productivity improvement or growth. The owner/manager may have limitedaspirations, being satisfied with the acquired independence and economic support for family

and children. He is averse to equity participation that may be required to grow the business as

his innate desire is to continue to have it as family business to be handed over to his siblings.

Most fail to see the danger posed by the on-going globalization of the economy with attendant

demand for innovation to stay in business. Little wonder that most Nigerian SMEs never

survived their founders.

For the entrepreneurial growth company (EGC) audacious goals are at the heart of what theyare doing. Right from the start, most successful entrepreneurs aim to create a large, national or

multinational company and intend to do whatever is required to achieve that objective.

Whatever they eventually succeed or not, this difference marks an EGC as different from most

small businesses, and shapes a whole series of decisions. A good example of an EGC in Nigeria

from our case studies is Tantalizers. It took the entrepreneurial spirit of the founder, Mr. Folu


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Ayeni to grow the fast food chain from one outlet to the present 22 plus outlets with several

additional outlets in the offing and a turnover now close to N1.7 billion.

Managing growth is closely related to building sustainability. Most often an enterprise needs togrow in order to attain sustainable advantages in the market. Once the enterprise has proved

to be successful, other enterprises will try to imitate her and competition will build up. Other

times, the need to exploit economics of scale for a more cost effective operation may also

determine the need to expand its activities. And, most important, the need to attract and retain

customers and employees may require the enterprise to keep expanding.

Managing a growing enterprise is a challenge job for any executive because growth adds the

imperative of constant change. He needs to change the way of managing the increasingcomplexity of his activities and establish more formal structures in his growing organization.

A good example is the production and sale of pure water in the country. The market is awash with pureand not so pure water, packaged and unpackaged and yet all branded and carrying NAFDAC numbers of

approval!

He needs to delegate responsibilities so that he can accomplish a larger number of tasks

through others. He may start to feel at this point the threats of his competitors more

intensively and needs to be closer to the changing needs of his customers. In order t meet these

challenges, entrepreneurs must have a special set of skills. The essential task of the

entrepreneur changes radically during this growth stage.

Few companies reach so far, but it is of key importance to the improvement of our society that

they do. The small marginal companies neither win nor lose, but neither do they offer any

future and quality of life. Only EGCs create new jobs stimulate competition and boost the

economy. Creation of jobs is likely to come in larger numbers from new growing companies

rather than from existing ones. Thus, the more entrepreneur that manage to bring their

companies up the life cycle curve to the stage of growth, the more economic vitality the nationwill have. Indeed, strengthening of entrepreneurship is a critically important factor for the

reinvigoration of our economy.

To successfully reach the growth stage, entrepreneurs need to develop the different

management abilities associated with each stage of the business life cycle. Each stage has its


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own characteristics and requires a different set of abilities to lead the company ahead in the

cycle. Some people are very entrepreneurial but lack sufficient leadership to carry people along

with them. Others are weak in management principles and make fundamental mistakes during

the post-natal stage. In both cases, their companies remain marginal, if they survive at all.

Experiences from successes and failures are helping to formulate useful guidelines formanaging the entrepreneurial business. Little wonder that most successful business schools,

including our own Lagos Business School, use the case methodology, including local cases to

teach entrepreneurs.

MYTHS AND MISCONCEPTIONS OF ENTREPRENEURS:

I shall be concluding this paper by briefly discussing some of the myths surrounding

entrepreneurship. As observed by the National Commission on Entrepreneurship of the United

States of America, one of the main problems facing entrepreneurship today is the limited and

often-incorrect conception of what entrepreneurship means and what entrepreneurs do in

order to succeed. Some of the identified myths are:

The Risk- Taking Myth The High- Tech Invention Myth The Expert Myth The Strategic Vision Myth

The Risk- Taking Myth:

This myth is derived from the perception that most successful entrepreneurs take wild

uncalculated risk in starting their companies. As mentioned earlier, risk is an intrinsic part of

any business venture. There is no doubt that the cost of uncertainty that comes with a new

venture can be staggering in terms of stress on family relationships, self image and personal

bank accounts. However, it has been observed that the highest measurable levels of risk to the

founder of the EGC- financially and professionally- come much later in the development of the

business and not at the start, as is commonly thought. At this earliest stage of development,

the founders of entrepreneurial growth companies do not take on the majority of the risks that

are associated with the company. They find others to take on these risks- friends, family

members, business partners, etc. for an example at the start of his integrated poultry business

with extremely limited funds, Mr. Gbenga James depended on credit supply of boiler day-old

chicks (DOCs) from Zartec, a big poultry farm, and also the supply of poultry feeds from a feed

mill operator for the period of about eight weeks required to raise the DOCs for sales as boilers.

The boilers were then contractually sold to Zartec with the farm making payment less the cost


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of the day-old-chicks supplied to James who in turn paid the feed supplier premium price for

the feeds supplied on credit. Through this financial engineering, James solved his cash flow

problem. The considerable profit which he accumulated over time operating such arrangement

was used for the growth of the business. He discontinued that arrangement after acquiring

financial muscle to build his own integrated poultry farm including a hatchery to produce DOCsfor his farm for sale. He later became a serious competitor to Zartec! However, it is new that

EGCs likes James Avian Specialties and Folu Ayenis Tantalizers are growing their businesses

that the conception of risk-taking entrepreneurs is right on target. This is because financial and

other risks that were previously shared among a broader group now fall heavily on the

company founder, who now must face the potential loss of all that has been created. And at

this point, there is much more to lose. The founder has invested a tremendous amount of time,

developed a successful product, invested early revenues back into the company, and has

responsibilities to his or her employees. Further growth requires increased investment which

may bring outside funders which may come in on terms that could radically reduce his

ownership of the company or even strip him of all control of the company. Grand ambition,

organizational and managerial ability and the willingness to take significant risks become much

more important at this stage, so does the ability to trust others to make key decisions about the

business and relinquish control.

The High- Tech Invention Myth:

This myth stems from the perception that most successful entrepreneurs start their companies

with a breakthrough invention usually technological in nature. This is not the case as there

are several successful entrepreneurs that succeeded with innovative ideas that can not by any

stretch of imagination be referred to as inventions. What is important is marketable

distinctiveness and not revolution at the beginning of most successful growth companies. In

many cases, entrepreneurial growth companies create distinctiveness and protect their

advantage by moving quickly, upgrading frequently and always keeping one step ahead of the

competition.

Even the case of the Dee Bee Wine, a product of research and development effort as presented

in Appendix A, was implemented with low-tech. the founder derived his initial success from the

distinctiveness of his product at all the time it was launched into the market. But the

entrepreneur founder had to continually upgrade the product quality, the product packaging

coupled with aggressive marketing. Also by guaranteeing a unique eating environment and


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uniformity of the eating experience, Tantalizers successfully entered the fast food industry in

Nigeria and successfully gained market share.

Even in the computer industry, it has been observed that the companies that thrive dont oftenoffer a unique product or service. Bill Gates is an example of a wildly successful entrepreneur

who pursued small, uncertain opportunities, without breakthrough technology.

The Expert Myth:

This myth is borne out of the perception that most successful entrepreneurs have strong track

records and years of experience in their industries. This is not true from several examples in

the business world. At the home front, Folu Ayeni started the Tantalizers fast food chain armed

with first degree in Psychology, Masters Degree in Business Administration and a strong

background in Marketing from employment, first at Lever Brothers and later at Xerox. The wife,

Bose Ayeni who is equally involved with the business and actually was responsible for running

the first three fast food outlets before Folu pulled out of Xerox to join her, also did not have any

strong background in fast food business. Providing insight on how the duo entered the fast food

business. Folu noted:

I had a professor in the business school, one day we had a discussion and we asked him what kind of

business he thought we should go into if we didnt want to work for anyone at the end of the training,

well the professor said, what I would tell you is that whatever business you mother or grandmother cando successfully you should consider that, because with your MBA, if you apply modern principles to the

business you will make a big success of it. My mother use to sell rice and chicken and that is what I am

selling now.

The Ayenis can therefore be credited with exceptional execution of an ordinary idea leading to

the creation of distinctiveness. Steve Wozniak, who helped found Apple Computers together

with Steve Jobs, was an undistinguished engineer at Hewlett Packard when he built the firs

Apple Computer.

All these examples go to show that while founders of successful companies may become the

knowledgeable and prominent in their field later on, it is surprising but true that growth

companies are just as likely to be started by relative amateurs, with little background

experience in the field. As the Ayenis gradually established additional outlets they also


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gradually developed clarity of vision to make and deliver the products or services that will win

market share. They did not have years in the industry, but they apparently knew what they

were doing. Ditto and Dr. Oguntuga of DeeBee Wines who started with Kola Wine and

globalized wine market in Nigeria. It is pertinent to note that during the transition to the later

stages, however, growth companies need a deep reservoir of industry expertise and specializedtraining in expending considerable amount on sponsoring management staff for specialized

training both locally and internationally. Even Bose Ayeni, is at present doing her MBA at the

Pan-African University, Lagos. All this is geared towards upgrading skills required for the

operation and management of the business and staying ahead of competition.

The Strategic Vision Myth:

It is easy to assume that most successful entrepreneur have a well considered business plan

and have researched and developed their ideas before taking action. As pointed out earlier in

the case of Avian Specialties, James did not have any rigorous business plan at the project take-

off. He was however ready to admit that he could not continue in such manner as the business

entered the later stage. He needed to have a better plan and vision of the business during the

process of transition to more developed state.

However, business plan is a must for a business in which the founder needs to source for finds

from the banking and finance sector. But even at that, an entrepreneur has to look beyond the

business plan as amply demonstrated by our case study of the Tacks Farms owned by a

Ghanaian couple, Samuel and Gloria.

Tacks Farm was the market leader in Ghana in the vegetables, mangoes and papyas export

market. Drawing from the experience of Samuel and knowledge of the export market, a

reputable financial institution packaged a business plan for the planned expansion of the tacks

farms. Half way into the project implementation, the prices of vegetables in the European

market nose-dived from the projected $2.34/kg in the business plan to just $0.5/kg. Prices of

mangoes were equally affected. The price crash was caused by stiff competition and majority

by the shift from products growth with chemical-based fertilizers to organic products which

attracted premium prices at $6.0/kg. This seriously affected the financial performance of Tacks

Farms. It took the entrepreneur spirit of Samuel, an engineer, to rescue his business. This he did

by quickly acquiring the new organic production process technology demanded by the market.

And, of course, the initial business plan had to be set aside!


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CONCLUDING REMARKS

The above analysis of the early stages of entrepreneurship, and by extension,

technoreneurship, suggests an environment that better prepares professionals with the skills to

be successful entrepreneurs. This will entail education that is excellent in both a general skills

sense (analytical, communications, and creativity) and also some specific training in the

requirements of entrepreneurship and business. Over the above the usual fundamentals of

engineering education and training, are training modules such as shown in Appendix C designed

for undergraduate students at the Imperial College, London. Such programme is aimed at

imparting skills to enable students to:

Evaluate the viability of a new venture Produce and present a business plan for a new or growing venture Analyze a new or growing venture from the perspective of an investor, a family-business

successor, or an owner/manager.

Finally, if you have read this paper up to this point, then you must probably be interested in

entrepreneurship. If so, I hope that I have given you something to enable you take the next

step. Best of luck!


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REFERENCES

1. Ntim B. A UNESCOs Role in Promoting Interaction between Engineering Schools andIndustry in Engineering Education and Industry Interaction, A report of the Inter-

Regional Seminar held at University of Science and Technology, Kumasi, Ghana, 29th

31st July, 1991.

2. Muchando A., Developing Technological Capabilities for MSMEs for GlobalCompetitive: Some Perspectives. Paper presented as the UNIDO Representative at the

3rd

NASME International Conference and Exhibition on Globalization and the Challenges

of SMEs Development in Africa, Abuja, Nigeria 14th

16th

November, 2000.

3. Bamiro, O. A. Imperatives of Infrastructure for Micro Small and Medium Enterprises in aCompetitive World, Paper presented at the 3

rdNASME International Conference and

Exhibition on Globalization and the Challenges of SMEs Development in Africa, Abuja,

Nigeria 14th

16th

November, 2000.

4. Korten David C., The Truth about Global Competition: The Economic Myths behindGlobalization, Development and Cooperation, No. 3, May-June 1996.

5. Alos, A. J., The Entrepreneur and the Business Life Cycle, Private Communication.6. Five Myths about Entrepreneurs: Understanding How Business Start and Grow,

Prepared by the National Commission on Entrepreneurship, USA, March 2001.


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APPENDIX A

DEEBEE WINES: FROM LABORATORY TO THE MARKET

Dolapo Oguntuga, a graduate of Biochemistry, started his foray into product research at the

Cocoa Research Institution of Nigeria (CRIN), which he joined in 1965. In January 1967, Dolapowent to Selwyn College, Cambridge, England, to carry out post-graduate studies in

Biochemistry. A short while after his arrival his supervisor called him one day and advised him

instead of specializing in electron microscopy and the study of plane cells, to work on

something that he could easily continue in Nigeria. Dolapo told him to his interest and earlier

studies on Cocoa, Cashew, and Kola-nuts. The professor said it was a good idea, and they

decided to do some studies on caffeine, which is the chemical compound responsible for kola-

nuts stimulating properties. Two events led the young scientist to the dream of making wine

from kola-nuts. The first was a comment made by one of his European colleagues when Dolapo

showed them the kola-nuts from Nigeria, and explained some of its properties to them. One ofthem was so impressed that said one day someone will turn these beautiful nuts into gold.

This fired Dolapos determination to be that someone . the second and land mark even took

place after one of the practical classes organized for student in Cambridge. One of the usual

practical classes involved the use of ptyalin from human saliva to digest starch to sugar, as a

way of testing for the presence of starch. One day, the Fledgling scientist performed the

experiment using kola-nuts, and found that the resulting solution was sweet on concentration!

This was the crucial idea generation stage or the recognition of opportunity and the beginning

of the journey to actualization.

On his return to CRIN in 1969, after completing his PhD Programme, he continued during his

spare time with furthering research into the development of his kola wine. However, by 1972,

he already had some wine for friends to tasted and he continued to improve on the quality

and taste of his drink. Friend, who tastes the drink, including this author, encouraged him to set

up a business to exploit the discovery, but he was not ready to take the plunge, and lack cited

of funds. His dream was to earn a lot of money from consultancy, which he would then invest in

setting up a big factory to produce his beverage. After talking it over, his father offered to help

him fund the start-up small venture to produce the wine. He told him he would need about#10,000, and his father gave him his passbook for his pension savings. Except for the persistent

encouragement of a friend, he probably would not have continued the production of the wine

because, shortly afterward, he got a $26,000 job from the Food and Agricultural Organization

(FAO) in Papua New Guinea. However, with his friends (a businessman) insistence, and his

fathers encouragement he decided to stay back to exploit his discovery, and thus shelved his

dream of starting off with a big factory.


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I had gone to my friends house with my appointment letter. Hoping to celebrate with him;

however, we immediately got talking about my wine. And he vehemently told me I would be a

fool not to set up something to exploit it. I ended up not even bringing the letter out of my

pocket.

Since he was not sure of the economic viability of the project he only drew only #5,000 from his

fathers account, and decided to produce the wine at home on a part-time basis, while

continuing his work at CRIN. One even after the other led to his resignation from CRIN to face

the uncertain world of business with his wine product which has undergone a rather limited

market acceptability test.

From the laboratory-scale production of wines from local kola-nuts to product development,

demonstration and marketing, Dr. Dolapo Oguntuga, a scientist entrepreneur finally established

a full-fledged winery. Through innovative product development as a Biochemist he widened his

product base to seven different labels including the Flagship Alcoholic, Black Label, SparkingKola Wined: the DeeBee Red also from kola-nuts and the popular non-alcoholic Popapine from

Pineapples. Today he has modern factory with an array of market-tested product, diverse

awards for excellence, medals of recognition, others, attesting to the success story of DeeBee

Wine Ltd.

4. Entreprenuership

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