A decade ago, few from the B-schools would venture out on their own, try to become entrepreneurs or do something new. Only people from business families or rich people, who were not afraid of taking risks, chose this path. In the past few years though, the concept of entrepreneurship has undergone a transformation, thanks to a spurt in new entrepreneurs joining the industry ranks. Many of them, still in their 20s, have taken the plunge straight after college, or even while at college, to try out something on their own instead of the time-tested practice of joining the corporate sector and earning big dollars.
This phenomenon is changing the basic tenets of entrepreneurship and rewriting the rules of business in general as anyone with an idea today seeks to become an entrepreneur in his or her own right. This, say global experts, is because of a drastic change in the conditions that today allow people to become entrepreneurs and the presence of big industry icons who started as entrepreneurs. Says Prof Ramana Nanda, associate professor at the Harvard Business School, “Entrepreneurship has gained prominence in recent times in part because of the huge successes of ventures like Google, Facebook, Airbnb and other such ventures that have gained explosive growth and revolutionised the industries they are in.”
At another level, he says, many things have changed, making it much easier for people to jump in and become entrepreneurs. “First, the cost of starting new firms has fallen dramatically. The advent of open source, and cloud computing in particular (but also simulation technologies, rapid prototyping, gene sequencing and others), have enabled individuals to start companies with far smaller sums of money—and hence have ‘democratised entry’. It has meant that the paradigm of ‘entrepreneurship as experimentation’ is more true today than ever before.”
Ramana feels that today a lot more people are able to try entrepreneurship and investors are willing to take a bet on young, unproven teams. This, he says, has raised the profile of entrepreneurship and led to a greater acceptance that it is fine to try and fail as most entrepreneurial experiments do not work out, but a few that do can be transformational.
Obviously, the availability of cheap and effective technology is playing a big role in this new transformation. Says Prof Dipak Jain of the Sasin Graduate School of Business Management, Bangkok, and former dean at Kellogg School of Management and INSEAD, “Technology has also made it possible for entrepreneurship to be truly global. Even in developing countries where access to new technologies has been relatively recent, entrepreneurs have some advantages because of what they call the ‘leapfrog effect’: they have skipped certain technologies like personal computers, and gone straight to mobile technology.”
For most global thinkers, the concept of ‘entrepreneurship’ was for long identified with two very different things. One, it referred to what was known as ‘captains of industry’—such as Andrew Carnegie and John D. Rockefeller who built vast business empires. The concept of entrepreneurship was also used to refer to informal businesses, particularly in low-income countries. As a result, entrepreneurship wasn’t necessarily perceived to be something that was central to economic growth—it was seen as either a rare activity, or an activity that didn’t add up to much.
In today’s world, though, this thinking has changed. Says Ramesh Jagannathan of the New York University, Abu Dhabi, “First, technology commoditisation has led to the democratisation of entrepreneurship. State-of-the-art manufacturing and service platforms, once only available to MNCs, are now within everyone’s reach. It has become increasingly globalised and open. Second, there’s the steady institutionalisation of entrepreneurship. The way businesses are formed, built and run follow a similar path with certain milestones at certain stages of growth.”
However, entrepreneurship is today the principal driver of job creation and innovation across the globe. As a result, more organisations and governments have become serious about building supportive environments. Dane Stangler, V-P with US-based Kauffman Foundation, says, “There is still no commonly accepted definition of entrepreneurship. For some, it means the creation of a new business. For others, it only refers to the creation and growth of high-tech companies. For still others, it refers to nearly any kind of creative activity. But, in a broader sense, today there is wide recognition of both the economic and social importance of entrepreneurship.”
Obviously, start-ups have brought in a new meaning to entrepreneurship. Says Stangler, “The rise of the start-up culture and the prominence of ‘unicorns’ (start-ups with billion-dollar valuations) has certainly brought more attention to entrepreneurship.” It’s also brought in change in the way entrepreneurship is being understood. Says Jagannathan, “Entrepreneurship as a field of study and in practice will shape the way we understand the start-up genre. It will also shape the way they are being created and run. It will also further institutionalise the entrepreneurial ecosystem.”
With Asian countries among the fastest growing in the world with great entrepreneurial success stories, the question everyone is asking is whether it will be the seat of entrepreneurship in the future. Global thinkers feel the signs are promising and, going forward, it will be Asia leading the way. Says Stangler, “There’s a strong history of entrepreneurship in Asian countries, though it is often overlooked. Trends like smartphone adoption make Asia an entrepreneurial leader in the 21st century.”
Agrees Sasin’s Dipak Jain, “Asian consumerism is growing, and the burgeoning middle class in many countries means that the markets are here. Governments need to support this...more importantly, B-schools need to strengthen entrepreneurship curriculums. Management education can be a foundation on which new successful ventures are built.”
Meanwhile, Asian consumerism is being pushed by a burgeoning middle class. Says Jagannathan, “The economic centre of gravity is shifting east and will soon be anchored in either India or China. Policies need to be developed to support the rising ‘new middle class’, over two billion of them by 2050, concentrated primarily in megacities. Their need for a quality lifestyle will drive a vast need for products and services that western business models can’t supply.”
But is Asia geared up to face this challenge? Says Kavil Ramachandran, professor at Hyderabad-based Indian School of Business, “Asians have proven to be highly innovative and imaginative. It continues to be a zone of high potential but that needs to be exploited properly.”
And where does India stand in this? Despite a vibrant start, it’s still a long way to go for India to do justice to its entrepreneurial potential, feels experts. That effort has to start from the college level. Ramachandran feels not enough is being done here, even at the premium IIT, IIM level. He urges industry to step in, give it the big push this requires. Perhaps that will unleash India’s potential to lead with success stories in the next decade.
