Entrepreneurship in a Mature Economy
At first sight the mature economies of the West seem inhospitable to entrepreneurial penetration. These mature economies are characterised by high competition trends, saturated markets, and dominance by big corporations - this dominance having been reinforced by decades of M&A (merger and acquisition) activity.
But adjust the angle of vision and business creation opportunities are there. The competitive pressure faced by the corporates led to cost reduction via outsourcing, and this in the UK began in the early 1980s recession and has never stopped. All these things that have been outsourced, from IT services to design, security to catering, has meant business opportunity for new providers. This outsourcing trend has been reinforced by the impact of the core competence idea from the 1990s.
But perhaps more important than this is the fact that business creation has been decoupled from product innovation. Product innovation occurs but it is neither the only mode nor the dominant one.
There are several reasons for this, viz:
- the move from manufacturing to services, a move from saturated to unsaturated
- innovation in services is not always research or design dependent and may be cheaper than traditional industrial innovation
- the internet has facilitated many new services and is core for many newly configured companies.
More than this, however, is the fact that mature economies are complex. There are long supply chains, different routes to market, a variety of processes and operations that underpin product or service delivery. This in turn has created business opportunities, in the interstices of the established system and on its perimeters.
All this can be seen readily from the annual Sunday Times lists of the fastest growing hundred companies. The bulk of these are in services, typically innovative services. Some are also internet dependent. But a key feature is also an imaginative adjustment or even reconfiguration of more conventional business operations.
These fast track companies, as the Sunday Times calls them, are driven more by entrepreneurial imagination, by interpreting trends, spotting unmet or changing needs, reading markets. Even when these fast track companies are engaged in conventional lines of business, they are doing it better, or doing it cheaper, or both.
There are two morals to be drawn. First, change invariably creates business opportunity for someone. Second, in the more fluid context that currently prevails the ability to configure, to bring together a mix of resource and capability is paramount,
At no time has this classic role of the entrepreneur been more central.
Peter Lawrence is author of Enterprise In Action: A Guide To Entrepreneurship_._
This was posted in Bdaily's Members' News section by Peter Lawrence .