Post on 01-Jan-2017
©Sy Mokadi, October 2009 1
SUSTAINABLE ENTREPRENEURSHIP
A JOURNEY OF DIFFERENTIATION, AGILITY, RISK-TAKING AND ENDURANCE
Sy Mokadi
Entrepreneur and Training Facilitator
Abstract
The purpose of this paper is to share insights on sanctities used by successful
entrepreneurs to build sustainable businesses. Research reveals that, among
others, sustainable entrepreneurship is a journey of differentiation, agility,
risk-taking and endurance. A business that does not differentiate skates on thin
ice; it is not whether but when it will slip away. So is a business that lacks
agility, whose offering is not in synchronisation with customer needs and
expectations. A business that misaligns its offering to customer needs and
expectations skates on thin ice. Such a business is also in trouble because it
fails to spot and seize new and relevant opportunities presented in the
marketplace by change, or fails to use current trends to anticipate and prepare
to seize future opportunities. A business that is risk-averse also skates on thin
ice. Business is a process of risk-taking. It is not risk-aversion but rather the
way risks are dealt with that to a great degree determines business success or
failure. Fourthly, as sustainable entrepreneurship is not an event, nor is it an
easy journey, it is imperative for businesses to prepare to endure, at times,
against sustained adversity that comes from various sources: unfavourable
social conditions, competition, industry regulations, suppliers, trade unions or
even (dissatisfied) customers.
Keywords: differentiation; agility; endurance; virtues of square;
entrepreneurial mindset
©Sy Mokadi, October 2009 2
HYPOTHESIS
What does it take for a country to experience increased entrepreneurial
activity? It takes an entrepreneurial mindset. Entrepreneurial businesses do
not necessarily fail because there are no government support programmes, nor
do they necessarily fail because there is no enabling environment. They fail
mainly because those who own or manage them lack an entrepreneurial
mindset. Without an entrepreneurial mindset, people deny the businesses they
own or manage the opportunity to rely on differentiation, agility and risk-
taking, and are also unable to prepare them to endure (future) hardships.
RESEARCH METHODOLOGY
A two-pronged documentary research methodology is used. Firstly, there is an
analysis of existing data from various reports of the Global Entrepreneurial
Monitor (GEM) study. Currently, GEM is one of the reliable international
sources on factors that influence increase or decline in total entrepreneurial
activity. The analysis is followed by an interpretation presented in the form of
findings. Secondly, 16 case studies on lessons from successful entrepreneurs
are used as empirical evidence to substantiate both the study‟s findings and
recommendation: to experience increased entrepreneurial activity, South
Africa needs to cultivate an entrepreneurial mindset.
1. INTRODUCTION
Figure 1: The Great Wall of China
The journey of sustainable entrepreneurship is as arduous as attempting to walk the
6 000 kilometres of the Great Wall. Sustainable entrepreneurship is a journey
comprising three enduring journeys: survival, success and sustainability. The three
©Sy Mokadi, October 2009 3
journeys are enduring because they require patience, sacrifice and hard work. For
each journey to succeed, it requires differentiation, agility, risk-taking and endurance.
Differentiation is the ability to go against the grain and create something new, or
refine something in existence in order to enhance its value. Michael Porter (2008)
defines value as “the ability to meet or exceed the needs of customers, and do so
efficiently”. When value appeals directly to customers, it helps a business to attract
and retain customers, thereby increasing its chance of survival.
Agility enables a business to develop an alert mindset that, in turn, enables it to use
good timing as a competitive strength. Agility is the reflexive ability to spot and seize
(new) opportunities presented in the marketplace by change, ensure that the offering
of a business is in continuous synchronisation with customer needs and expectations,
and/or use current trends to anticipate and prepare to seize future opportunities.
“Business, more than any other occupation, is a continual calculation, an
instinctive exercise in foresight” (Henry R. Luce cited in Stutely, 2002)
In business success, endurance is indispensable and inevitable. As Fourie points out
“If you don‟t have a 15-year view on a business when you start it, don‟t to it. There
are no “quick” businesses” (2009). Endurance is a tenacious spirit of patience, hard
work and sacrifice, an ability to rise from failure, dust oneself, give it a go again and
prevail.
“Victory comes to the most persevering” (Napoleon Bonaparte)
The three journeys also involve risk-taking. First, a business is a venture and no
venture is risk-free. Second, differentiation, agility and endurance encompass risk-
taking. To go against the grain is an act of risk-taking („what if I am wrong‟). To spot
and seize a new opportunity before others do is an act of risk-taking („what if the new
opportunity is not what it seems to be‟). Endurance is the tenacious spirit to triumph
over adversity. Risks constitute adversity („what if all the sacrifice and hard work to
prevail over risks is in vain – what if it is not worth it‟).
“Being an entrepreneur is about having the will and determination and not
being frightened of getting it wrong” (Jason Drummond, British Internet
Entrepreneur).
2. SOUTH AFRICA’S TOTAL ENTREPRENEURIAL ACTIVITY IS LOW
According to Timmons et al. (1985), 40% of small businesses in America fail in their
first year, 60% in their second year and 90% in their tenth year. Years later, Cleary
and Malleret (2006) found the same pattern of failure rate. They found that only 10%
of new businesses in America survive (meaning 90% fail). They also found that 10%
of “established” businesses go out of business every year.
South Africa finds itself in the same boat, maybe even worse. Judging by the number
of small businesses that are younger than three-and-a-half years in South Africa,
sustainable entrepreneurship is close to a pipe dream. According to the 2006 Global
©Sy Mokadi, October 2009 4
Entrepreneurship Monitor1 (GEM) Report, only five of every 100 South African
adults own or manage a business younger than three-and-half years. The universal
average is 13 for every 100 adults.
In the latest 2008 GEM report it is indicated that South Africa has a total
entrepreneurial activity2 (TEA) rate below the average rate. South Africa‟s TEA rate
is 7.8%, which is lower than the average for all efficiency-driven economies3 (11.4%).
Since 2001, GEM has found that South Africa has lower than expected
entrepreneurial activity rates, as well as a low TEA opportunity index4. A country at
South Africa‟s stage of economic development is expected to have a TEA rate of
13%, double its rate of 7.8%.
In addition to its low TEA rate, South Africa fares badly in the measurements of new
firm and established business. In the new firm measurement, the percentage of
businesses older than three months, South Africa ranks 38th
out of 43 countries, with a
prevalence of 2.1%, lower than the average of 4.9% for all efficiency-driven
countries. Ridiculous as it may sound, it means that people expect businesses to break
even and make profit in the first or second month of their existence. When this
(illusion) does not become reality, their owners close shop. The 2005 GEM report
remarks that with the exception of Mexico, South African start-up businesses are least
likely to mature to the new firm stage.
In the established business measurement, the percentage of businesses younger than
three-and-a-half years, South Africa ranks 41st out of 43 countries, with a rate of
2.3%, lower than the average rate of 6.9% for all efficiency-driven countries (three
times the rate of South Africa). Herrington, leader of the South African GEM team,
concedes that unless a large number of start-up businesses “graduate” into the
established business category, the situation will be more precarious (Entrepreneur,
July 2009).
Table 1: South Africa’s TEA rankings by GEM
Year Ranking Number of countries
2001 14 28
2004 20 35
2005 25 35
2006 30 42
1 GEM is the world‟s largest multinational entrepreneurial study, launched in 1997 to study the phenomenon of
entrepreneurial activity. Its primary purpose is to measure entrepreneurial spirit and entrepreneurial activity
through different phases of the entrepreneurial process, in order fully to comprehend the various factors that
enhance or inhibit entrepreneurship, to help countries develop enabling policies. 2 TEA represents the percentage of adults who are entrepreneurs.
3 GEM classifies participating countries into three categories: factor-driven economies, efficiency-driven
economies and innovation-driven economies. South Africa falls under efficiency-driven economies. 4 The TEA opportunity index refers to the ability of a country‟s population to take advantage of opportunities
presented in the marketplace.
©Sy Mokadi, October 2009 5
2008 23 43
2.1 GEM recommendations
According to the 2008 GEM report, entrepreneurial activity in South Africa is low
owing to environmental and personal factors. To experience a significant increase in
entrepreneurial activity, South Africa needs an enabling environment that will
encourage individuals to see entrepreneurship as a financially viable employment
option. The 2008 GEM report recommends a dual focus, (a) improve the country‟s
human capital through education and skills training, and (b) create a more enabling
environment through access to finance, friendly entrepreneurial policies and
government support programmes. A more enabling environment is also necessary to
reduce the cost of running a business.
In apparent response to these recommendations, in 2005, the Department of Trade and
Industry implemented a three-pillar strategy aimed at transferring entrepreneurial
skills, creating a more enabling environment and boosting South Africa‟s total
entrepreneurial activity, by (a) promoting entrepreneurship through campaigns,
leadership training and awards, (b) creating an enabling environment through flexible
regulations, better access to finance and markets, improved infrastructure facilities
and business support and (c) enhancing competitiveness and capacity at enterprise
level through skills training, more focused quality productivity and competitiveness
support and the facilitation of technology transfer and commercialisation of
incubation.
As a result of the three-pillar strategy, by 2007 the Department of Trade and Industry
had provided more than R2 billion in finance to small businesses. The Department‟s
advisory wing, the Small Enterprise Development Agency, had 40 offices
countrywide. The Umsobomvu Youth Fund had supported the establishment of 10
000 formal businesses and assisted about 20 000 in total and given R440 million in
loans to young entrepreneurs (Claasen, 2007).
A closer look at South Africa‟s 2008 GEM rankings in relation to the above
government efforts reveals that the efforts were in vain. In the footsteps of these
efforts the 2008 GEM rankings do not show much improvement. In the 2008 GEM
report South Africa ranks 23rd
out of 43 countries in total entrepreneurial activity.
3. FINDINGS
These are the findings that seem to explain why South Africa has lower than expected
TEA. Firstly, the lack of entrepreneurial mindset is identified by GEM in its 2006
report as one of the critical factors missing among South African entrepreneurs.
“One of the most important findings is that potential entrepreneurs lack the
mindset and skills to become true entrepreneurs … The research suggests that
apart from the skills needed to run a business, mindset is the biggest driving
factor to creating an enterprise.”
©Sy Mokadi, October 2009 6
For Michael MacDonald, Steel and Engineering Industries Federation of SA
economic and services manager, lack of an entrepreneurial mindset is fatal. Without it
people venture into business unaware of, in particular, the risks involved.
“…most budding entrepreneurs are not made aware of the risks involved when
starting a business. As a result, they are unprepared for the harsh reality of
starting a business. Starting a business is a risky process that often involves
cycles of failure.” (Gauteng Business, 2007)
Secondly, according to the 2006 GEM Report, South Africans have the tendency to
prefer “sameness”.
The report notes that real innovation is not taking place on a large scale because
“when South Africans see a good idea they copy it”. Shelley‟s findings (2004) support
the GEM observation. He found that though they may be highly entrepreneurial in
spirit, entrepreneurs in Africa tend to follow the herd rather than innovate. They tend
to concentrate on traditional sectors such as retailing, car repair, commuter minibus
services, bars and restaurants. The problem with “sameness” is that it leads to quick
saturation and quick failure. Fisher (Entrepreneur, 2009) advises that to attract
customers, businesses need to be distinctly different … because failure to distinguish
their offering is a recipe for entrepreneurial disaster.
Thirdly, consecutive GEM reports found that South Africa has low a TEA opportunity
index;, that South Africans lack the agility to envisage entrepreneurial opportunities
and act on them in a timely fashion. Also that South African entrepreneurs lack the
agility to spot and seize opportunities presented in the marketplace by change.
Fourthly, against the belief that “nothing ventured, nothing gained”, GEM found a
pattern of reluctance among South Africans to venture into business, preferring
instead formal employment. South Africans associate risk-taking with the hunt for
failure, forgetting that as the Chinese proverb declares, risk and business are siblings;
being a venture, business is never risk-free.
“If you don‟t enter the tiger‟s den, how can you get the cub” (Chinese
proverb).
The Chinese worldview on the relationship between risks and opportunities concurs
and goes further to suggest that to fear risks is to fear success. For the Chinese, risks
and opportunities are two sides of the same coin. Opportunities come with risks and
risks come with opportunities. Therefore, it is not risk aversion but rather the way
people deal with risks that to a great degree, determines the survival or failure of their
businesses.
Fifthly, South Africa‟s rank of 38th
out of 43 countries in percentage of businesses
older than three months (2008 GEM Report) bears evidence that against Winston
Churchill‟s advice that, “when going through hell, keep going” (Dennis, 2007), when
entrepreneurs encounter hardships, they easily give up and close shop. It suggests that
some of them venture into business without the two drivers of endurance: passion and
self-discipline. Passion is love for what people do; it drives people to sacrifice and
enduring hardships. Self-discipline refers to self-management and focus. It helps
©Sy Mokadi, October 2009 7
people to become consistent in what they offer, thereby bettering the value of their
offering. Maxwell (2003) writes that without self-discipline, talent resembles an
octopus on roller skates – meaning that talent without self-discipline lacks focus – it is
in a chaotic state and unlikely to endure hardships.
3.1 Implications of findings
The above findings suggest that South Africa‟s TEA is low owing to lack of an
entrepreneurial mindset5, preference for sameness, lack of agility, risk aversion and
lack of endurance. The findings and the failure of the Department of Trade and
Industry‟s 2005 Three-tier Strategy to turn the tide against high entrepreneurial failure
suggest that,
Entrepreneurial businesses do not necessarily fail because there are no
government support programmes, nor do they necessarily fail because there is
no enabling environment. They fail mainly because those who own or manage
them lack an entrepreneurial mindset and the qualities associated with an
entrepreneurial mindset, such as differentiation, agility, risk-taking and
endurance.
Without an entrepreneurial mindset, people deny their businesses the opportunity to
rely on differentiation, agility, risk-taking and endurance in order to build sustainable
businesses. Reliance on these is critical in building sustainable businesses.
4. RECOMMENDATIONS
For Timmons et al. (1985), “There is no more powerful teacher than a good example.
Seeing what has been and can be done cleanly and simply points the way and plants
the seed of what is possible. No wonder, then, that numerous studies show a strong
connection between the presence of role models and the emergence of entrepreneurs”.
To heed the advice by Timmons et al. and turn the tide against low total
entrepreneurial activity, South African entrepreneurs should follow the trail of
successful entrepreneurs (and/or successful entrepreneurial businesses). The trail (see
case studies below) presents empirical evidence that supports the conclusion reached
in 3.1, Implications of findings:
5 Of the findings, lack of entrepreneurial mindset is the most critical missing link.
©Sy Mokadi, October 2009 8
Entrepreneurial businesses do not necessarily fail because there are no
government support programmes, nor do they necessarily fail because there is
no enabling environment. They fail mainly because those who own or manage
them lack an entrepreneurial mindset and the qualities associated with an
entrepreneurial mindset, such as differentiation, agility, risk-taking and
endurance.
Table 2: Differentiation, agility, risk-taking and endurance case studies
Entrepreneurs *Differentiati
on
Agility Risk-
taking
Endurance
Richard Branson √ √ √ √
Miuccia Prada √
Kaizer Motaung √ √
Zara √ √
Raymond Ackerman √ √
702 Talk Radio √
General Motors (Versus
Ford)
√
Richard Maponya √
Rachel Elnaugh √
Donald Trump √
*The word differentiation is used as a synonym for innovation.
*By and large, differentiation is an act of strategy, risk-taking and agility.
*Businesses use differentiation to evade entry barriers (strategy), to attract new
customers or venture into new markets (risk-taking and/or to be in synchronisation
with changing/changed customer needs and expectations.
©Sy Mokadi, October 2009 9
4.1 Differentiation case studies
4.1.1 Richard Branson
When Branson and his business partner, Powell, opened a record shop (Virgin
Records) to take on the two giants of music retailing, WH Smith and John Menzies,
they observed that customers went into music shops, bought and left within ten
minutes. They then created an environment for customers to come to Virgin Records
and listen to records with their friends before deciding which ones to buy. This went
down well with customers and paved the way for Virgin Records to “birth” nearly
twenty-five companies (Branson 2008). Virgin Records was sold in 1992 to Thorn
EMI for $1 billion (Tilley, 2008).
The second occasion came after Branson and fellow passengers were stranded in an
airport in the Virgin Islands en route to Puerto Rico, after an American Airlines flight
was cancelled. This experience prompted him to start an airline, Virgin Atlantic, “to
provide unrivaled service”. Branson singles out Virgin America, a hybrid of Virgin
Atlantic, as the embodiment of unrivaled service. Virgin America provides a
liberating customer experience – it gives passengers enough options to be free to
decide what to do with their flying time - passengers can work on their laptops, use
seat-to-seat chatting with friends/cousins using a QWERTY keyboard in the armrest,
order a sandwich, listen to music, create a playlist and watch a movie.
To top it all, Virgin America is the only airline in the world that offers on-demand
food ordering. For Branson, free airline food is a failed model because customers
have low expectations of free food. Branson reckons that because customers are
writing about their flying experience with Virgin America in their blogs it means that
the idea of liberating customer experience is spot on.
4.1.2 Miuccia Prada
Prada is a family business founded in 1913 by Mario Prada, the paternal grandfather
of Miuccia Prada, the current head designer and owner. Prada used to be a small
family business that specialised in leather luggage bought by wealthy Italians, until
the 1970s when Miuccia took over and turned it into a fashion superpower. Today,
Prada clothes, shoes, handbags and accessories are symbols of opulence, quality and
status in 80 countries around the world.
The Prada brand is so popular that in addition to winning several awards, there is even
a movie named The Devil Wears Prada. The message from the 2003 movie is that
Prada designer clothes and shoes are so much in demand that even the devil prefers
them. The success of Prada is credited to Miuccia‟s unusual fashion aesthetic, a
signature of Prada‟s philosophy to go against the grain. For instance, when she
observed that most fashion companies design clothes for women‟s bodies, she decided
©Sy Mokadi, October 2009 10
to design clothes not for women‟s bodies but for their brains. Her clothes do not flaunt
much flesh.
Says Miuccia Prada of her unusual fashion aesthetic,
“I once tried to make lace unsexy and I achieved it … I doubt everything. I
always resist things that are obvious, even though what usually sells is the
most obvious stuff … I always want to be creative, as a way to progress. At
the beginning, I wanted to make a soft bag out of stiff leather. I wanted to
make rich materials look poor, and poor materials look rich … In the end,
that‟s probably why people like Prada” (Sooke, DATE????)
She was one of the first designers with an interest in military uniforms. Her much-
imitated backpack, in the 1980s and 1990s, was made from military specifications
black industrial nylon and trimmed with leather.
4.1.3 Kaizer Motaung
Impressed by the running of Atlanta Chiefs as a commercial enterprise, where he was
on loan from Orlando Pirates, on his return, Motaung suggested that Orlando Pirates
be run as a commercial enterprise. Pirates‟ management dismissed his suggestion. So,
at the age of 25, Motaung left Orlando Pirates to start a new football club on
7 January 1970 and named it Kaizer Chiefs, a combination of Motaung‟s first name
and that of Atlanta Chiefs.
Motaung and co-founders attracted supporters by turning Pirates‟ culture of
intolerance into an opportunity. Orlando Pirates‟ slogan is Ezimnyama Ngengane. It
means “black by force”. The slogan is supported by an insignia of a ghost (death), a
depiction of the club‟s culture of intolerance and violence, which encouraged beating
or stabbing supporters of opposing teams. To position Chiefs as an alternative,
Motaung and co-founders opted for Michael Porter‟s notion of substitute product.
Chiefs was positioned as a club of tolerance, love and peace, through the slogan
“Abafana bakuthula noxolo”, “boys of love and peace” (who shun intolerance and
violence – who promote friendship and sportsmanship).
Chiefs also differentiated on best talent. It hired experienced foreign coaches and
bought best local players. It became a pioneer in trying new things: the first South
African football club to have headquarters on its own land, a club associated with
trophies and league championships and the richest club in Africa before Patrice
Motsepe, a billionaire, bought Sundowns Football Club. Chiefs also has its own
Magazine, Amakhosi. It recently launched Chiefs TV, broadcast on Supersport. It
©Sy Mokadi, October 2009 11
plans to be the first South African football club to own a soccer stadium. Chiefs is
believed to have surpassed Pirates‟ support base, to claim pole position.
4.1.4 Zara
Zara is a zero marketing fast fashion retailer, founded in 1963 by its chairman,
Amancio Ortega, in his bedroom, in Galicia, Spain, selling bathrobes. The first Zara
store was opened in 1975, in Coruna, Galicia. In 1988, the first store outside Spain
was opened in Porto, Portugal, followed by Zara stores in New York and Paris
(Ferdows et al., 2002). In 2008, Zara had 3 900 stores in 70 countries (Guardian News
& Times Ltd, 2008).
When Zara started to do business outside Spain, it opted to save time and use saved
time to build an unassailable lead time over competitors. To achieve this it controlled
the five areas that constitute the pulse of its business: production, pricing,
distribution, retail and imaging. Control of the five areas enables Zara not only to
save time but also to sell quality items at low prices. Control on production ensures
that Zara manages the quality process. Control on distribution enables Zara to deliver
orders to its stores faster than competitors. Control on pricing enables Zara to deliver
items to its stores that are already labelled and priced and offload them straight onto
the shop floor. Control of retail ensures that Zara stores are imaged the same way and
that Zara also lives by its policy of limited stock by item – what you see on the shop
floor is what is in stock. For Muguel Diaz of Zara, to control the pulse of a business
creates better access to customers.
“It is critical to have five fingers touching the factory and the other five
touching the customer” (Ferdows et al., 2002)
While most businesses see time as a scarce resource that needs to be well-managed,
Zara managed to turn it into a competitive asset, into speed (an unassailable lead time)
– to outwit competitors. As a result, Zara was able to “contravene” most fast fashion
“covenants” and in 2008, it overtook its US rival, Gap, to become the world‟s largest
clothing retailer. For Zara,
“The success of the model lies in being able to adapt what you‟re offering in
the shortest time possible to what clients want … time is the principal factor to
take into account, more so than the costs of production” (Guardian News &
Media Ltd, 2008).
Table 3: Fast fashion “covenants” versus Zara
“Covenant” Zara
Develop new product and sell = six
months
Two weeks
©Sy Mokadi, October 2009 12
Production of items per year = 2 000 – 4
000
10 000
Prototype design duration = week or two Few hours (in-house prototyping)
Introduce new designs beginning of
season
Ongoing (owing to in-house
prototyping and production)
Items stay on shop floor longer Less than four weeks
Customer store visit average – three times
a year
17 times
4.2 Agility case studies
4.2.1 Richard Branson
In high school, Branson spotted an opportunity for an alternative voice to the official
school magazine and started a student magazine to campaign against issues affecting
many British schools, such as corporal punishment and compulsory chapel. To be in
synchronisation with the “student power” mood of the time, he named the magazine
Student. In January 1968 the first issue of Student was published, but struggled to
make money.
Branson spotted a new opportunity and switched to it. He observed that music shops
were not selling discounted records and started Virgin Mail Order Records to sell
discounted records per order via the post office. Virgin Mail Order Records did far
better than Student, until January 1971, when post office workers went on a protracted
strike that rendered the business dysfunctional. Branson switched to a music shop to
take on the two giants in music retailing, WH Smith and Menzies, and prevailed.
When during the first week that his new airline, Virgin Atlantic, flew from London to
New York, his bank told him that the Virgin Company was insolvent and advised him
to shut the airline down, he went to another bank, asked for a “bail-out” and saved the
airline and company.
4.2.2 Raymond Ackerman6
After he was fired from Checkers (a food/grocery retailer), Raymond Ackerman
founded Pick ‟n Pay (a food/grocery retailer). Ackerman says he was fired because he
placed customers first and not profits. While accepting that profit is the bloodstream
of a business, Ackerman believes that customers are the soul of a business. Ackerman
saw an opportunity that if Pick ‟n Pay became customer-centric, it would build a loyal
customer base among Living Standard Measurement (LSM) 7 to 10 and outwit
6 Pick ‟n Pay is still under the stewardship of Raymond Ackerman. He is the current chairperson of the board and
frequently meets with the CEO to chart the way forward (Succeed, October 2009)
©Sy Mokadi, October 2009 13
Checkers. Pick ‟n Pay adopted the customer service philosophy“ if we make the
housewife queen, she will make us king”.
“Rather than going with a pre-formed view of a customer, we follow the
customer trend … We have come to understand our customers much better
and we now gear our offering accordingly” (Barry Knichel, Merchandise
Director, Pick „n Pay).
Pick ‟n Pay‟s customer-centric approach has paid off. In the TNS Research Surveys
(released in October 2009) Pick ‟n Pay is number one in the category of Grocery
Shopping Experience – overall shopping experience is a key factor in determining a
brand‟s relationship with customers. Pick ‟n Pay scored well in terms of consumer
perception of the quality of its products and good service. Pick ‟n Pay‟s arch-rival,
Checkers, comes in third place, after Shoprite. According to the TNS Research
Survey Checkers has high customer recognition but low value perception.
When Pick ‟n Pay bought Score stores (located in townships), Ackerman anticipated
that the LSM 4 to 7 market segment would become a strong emerging market with
huge potential for future growth. Recently, Pick ‟n Pay conducted market research in
Soweto, the largest township in South Africa, and thereafter, decided to openly pursue
LSM 4 to 7, by rebranding Score stores to Pick ‟n Pay stores.
“It occurred to us that people did not realise that Pick ‟n Pay owned Score.
When we told them, the response surprised us. Soweto shoppers asked “if that
is the case, why don‟t you just give us Pick ‟n Pay? (Badminton, CEO, Pick ‟n
Pay).
Its decision to rebrand Score stores is paying dividends. Each of the rebranded Score
stores has experienced a sharp rise in turnover.
“Since rebranding the Score stores, turnovers have gone up 93%, an
unprecedented rise … As many as 52% of our shoppers and 40% of spend is
now from LSM 7 and below. Over the period 2007-8, the number of Pick ‟n
Pay shoppers in the LSM 4 - 7 segment grew from 4.1 million to 4.8 million,
an increase of 18%” (Badminton, CEO, Pick ‟n Pay).
4.2.3 702 Talk Radio
“…perhaps the most intriguing part of the 702 history is its chameleon-like
ability to transform to meet the needs of the people, milk anxiety out of them
on air and do good – all at the same time. Oh, and market the hell out of itself
in the process” (Maverick, 2008)
702 Talk Radio is a regional radio station with a footprint in Gauteng Province, one of
the nine provinces in South Africa. It was started in 1980 as a family business, by
©Sy Mokadi, October 2009 14
Issie and Natie Kirsh. When it started it was a music radio station, until 1986 when
Radio 5, a radio station of the South African Broadcasting Corporation (SABC),
switched from AM to FM. 702 could not compete with SABC‟s Radio 5 top 40. To
survive, it switched to talk radio. The timing was perfect. In 1986 the struggle against
apartheid had intensified and South Africa was “burning” and “ungovernable”. 702
seized the opportunity. It became an unofficial “voice of the struggle against
apartheid”, says the then marketing and sales director, Katz,
“We were opportunistic. Apartheid was unsustainable. We were pro-
democracy and anti-racism and we were on this side of a groundswell. We
opened up the lines and people were saying whatever was on their minds.
There were black aspirations and white fears … If you were listening to
SABC, you would think you were in two different countries” (Maverick,
2008).
When 702 cars drove into Soweto, instead of being stoned and burnt, they were met
with “Viva 702 Viva!” The switch from music to talk became profitable. In 1985,
revenue was at R13 million. After the switch, in 1994, revenue was at R70 million.
Just as 702 Talk Radio was riding the crest, democracy dawned, bringing a new
landscape in which anti-apartheid issues were history. Revenue plummeted from R70
million posted in 1994 to R38 million in 2002. 702 faced the prospect of closing shop.
Like a cat with nine lives, it has bounced back. To be in synchronisation with
democracy, it switched to the angst of the middle class, LSM 7 to 10. About 400 000
listeners tune into 702 per week, to complain and debate about despair such as
recession, crime, corruption, potholes, strikes and service delivery protests, and share
hopes on prospects of the 2010 Soccer World Cup, economic growth, job creation and
poverty alleviation. In June 2008, 702 expected to post a record annual revenue of
R123 million.
4.2.4 General Motors (versus Ford)
Henry Ford failed to spot and seize opportunities presented by changing customer
tastes because he suffered from denialism, giving competitors like General Motors the
opportunity to wrestle the pole position. Sigmund Freud says that denialism is a state
of knowing-but-not-knowing, a state of rational apprehension that does not result in
appropriate action (Tedlow 2008). In 1908 Ford introduced the Model T automobile
that over two decades sold 15 million units. But by 1927 sales had declined. Henry
Ford refused to acknowledge this, attributing the decline to an act of manipulation by
competitors. Tedlow believes that what Henry Ford missed is that every product or
service has two components: the core (product/service‟s primary purpose) and the
augmented (additional functions and features).
In 1908 the core was predominant: the primary purpose of an automobile was “to take
you there and bring you back”. But by the 1920s customers had more money and
preferred the car‟s augmented function. They viewed a car as a symbol of status. Ford
insisted that he knew what customers wanted: basic transportation. He believed that
this customer desire would never wane. For him, as articulated in his slogan, what
mattered was that “The Model T takes you there and it brings you back”. He believed
©Sy Mokadi, October 2009 15
that to change the Model T would be an admission that the 15 million customers who
bought it were wrong. But he was wrong, because as Ackerman points out,
“You can only sell what customers want” (Raymond Ackerman, founder of
Pick ‟n Pay).
Unlike Ford, General Motors responded to the changed consumer behaviour with an
augmented-product strategy. It manufactured cars in a variety of models and colours:
“Chevrolet for the hoi polloi … Pontiac for the poor but proud, Oldsmobile for the
comfortable but discreet, Buick for the striving, Cadillac for the rich. By being in
synchronosation with changing consumer tastes, General Motors managed to overtake
Ford, claim pole position in the 1920s and never letting go.
4.3 Risk-taking case studies
4.3.1 Richard Branson
Branson took a risk when he ventured into his first business. He bought 400 seeds to
plant and sell Christmas trees, knowing that there were rabbits in the area. The seeds
cost him £5 and he planned to sell each tree for £2, making a total of £800. The
rabbits taught him a lesson and ate the Christmas trees. To recoup his losses, he shot
and sold the rabbits to a local butcher. Instead of developing fear of risk-taking, as a
result of the failure of his first business, Branson‟s risk appetite increased. In high
school, he risked to be charged with incitement (agitation) when he started a student
magazine, Student, to campaign against issues such as corporal punishment and
compulsory chapel. Impressed by his risk appetite for business ideas, but not with his
effort on schoolwork, the headmaster told Branson that he would either go to prison
or become a millionaire.
In January 1968, the first issue of Student was sold in the streets of London. When
Student failed to break the bank, Branson ventured into a mail order records business
to sell discounted music records per order via the post office. In January 1971 post
office workers embarked on a protracted strike that rendered the mail order records
business dysfunctional. He then started a music records retail shop, Virgin Records,
his most successful billion-pound venture that “birthed” nearly 25 companies that
make up the Virgin Group of Companies.
Then came the highest risk. During the first week when his new airline, Virgin
Atlantic, flew from London to New York his bank told him that the Virgin Company
was insolvent. To save it, he was advised to shut the airline down. Instead and
probably relying on a gut feel, Branson went to another bank and asked for a “bail-
out”, increasing his financial liabilities. The move paid off, though. He saved the
airline and the Virgin Company. Today Virgin Atlantic has hybrids such as Virgin
America and Virgin Blue (Australia). There are plans to launch Virgin Nigeria and
Virgin Russia.
4.3.2 Kaizer Motaung
©Sy Mokadi, October 2009 16
When Motaung left Orlando Pirates and started a new football club, Kaizer Chiefs, in
1970, and recruited some of the players from Orlando Pirates, he knew the risk: he
could be killed by Pirates die-hards. Pirates die-hards were known to beat and stab
opponents.
“We lived with a lot of threats and our lives were in danger because people
couldn‟t accept our departure from Pirates” (Moya, 2006).
After surviving initial threats, Motaung and co-founders took another risk, albeit more
calculated. They differentiated Chiefs from Pirates as a club that shunned intolerance
and violence, as a club of love and peace (of sportsmanship and friendship). The love
and peace message attracted support from “hippies” and others who disliked the
gangster mentality of Pirates supporters.
“Unlike Pirates, who had created a following of the street-smart with a knack
for drawing gangster figures into the team, Chiefs personified cool …Chiefs
supporters were drawn from the so-called hippies, who did not approve of
Pirates‟ reputation as bullies who intimidated referees, other teams and
supporters” (Moya, 2006).
Motaung‟s will to go ahead with the Chiefs venture even in the face of death threats
paid off. Chiefs is believed to have surpassed Pirates‟ support base, to claim pole
position. Chiefs is the first South African football club to have headquarters on its
own land, Naturena. It was the richest club in Africa before Patrice Motsepe, a
billionaire, bought Sundowns Football Club. Recently it launched Chiefs TV,
broadcast on Supersport. It plans to be the first South African football club to own a
soccer stadium.
4.3.3 Raymond Ackerman
After he was fired from Checkers “because he put customers before profit”,
Ackerman ventured into the food/grocery retail business to take on Checkers. To start
Pick ‟n Pay was probably blind risk-taking motivated by revenge for his dismissal.
But it was the risk to differentiate Pick ‟n Pay from Checkers by making it customer-
centric that paid off. In the TNS Research Surveys (released in October 2009) Pick ‟n
Pay is number one in the category of Grocery Shopping Experience – overall
shopping experience is a key factor in determining a brand‟s relationship with
customers.
When Pick ‟n Pay bought Score stores, it took a calculated risk, envisaging LSM 4 to
7 that reside in townships as a strong emerging market. Emerging markets have
potential for future growth because more often than not some of their “members”
climb up the social ladder, increasing their purchasing power. In South Africa, post-
1994, a black middle class known as “black diamonds” has emerged. Some, if not
most, still reside in townships where Score stores are located. Recently, Pick ‟n Pay
decided to pursue the LSM 4 to 7 emerging market openly by rebranding Score stores
in Soweto to Pick ‟n Pay stores. Partly because of the purchasing power of “black
diamonds” the move yielded unprecedented results.
©Sy Mokadi, October 2009 17
“Since rebranding the Score stores, turnovers have gone up 93%, an
unprecedented rise … As many as 52% of our shoppers and 40% of spend is
now from LSM 7 and below. Over the period 2007-8, the number of Pick ‟n
Pay shoppers in the LSM 4 - 7 segment grew from 4.1 million to 4.8 million,
an increase of 18%” (Badminton, CEO, Pick ‟n Pay).
4.3.4 Zara
When Zara started to do business outside Spain, it took the risk to control the five
areas that constitute the pulse of its business: production, pricing, distribution, retail
and imaging. Control over production ensures that Zara manages the quality process.
Control over distribution enables Zara to deliver orders to its stores faster than
competitors. Control over pricing enables Zara to deliver items to its stores that are
already labelled and priced and offload them straight onto the shop floor. Control over
retail ensures that Zara stores are imaged the same way. Control over, in particular,
production, distribution and retail is costly. For Zara
“The success of the model lies in being able to adapt what you‟re offering in
the shortest time possible to what clients want … time is the principal factor to
take into account, more so than the costs of production” (Guardian News &
Media Ltd, 2008).
It appears that control of the five areas was a risk worth taking. Zara is able to save
time and turn it into a competitive asset, by building an unassailable lead time over
competitors. The biggest reward came in 2008 when Zara overtook its US rival, Gap,
to become the world‟s largest clothing retailer.
4.4 Endurance case studies
4.4.1 Richard Branson
In high school, Branson saw an opportunity for an alternative voice to the official
school magazine and started a student magazine, Student, to campaign against issues
affecting many British schools, such as corporal punishment and compulsory chapel.
Branson left high school in 1967 for London. In January 1968, the first issue of
Student was published and struggled to make money. His family weighed in and
helped him to sell copies of Student in the streets of London.
©Sy Mokadi, October 2009 18
“My parents and Lindi came up to help us sell copies of the magazine. Mum
took a bundle to Speaker‟s Corner in Hyde Park and pushed them into the
unsuspecting hands of tourists” (Branson, 2002)
When he observed that music shops were not selling discounted records, he started
Virgin Mail Oder Records to sell discounted records per order via the post office.
With Virgin Mail Order Records Branson‟s business fortunes started to turn, until
January 1971, when post office workers went on a protracted strike that rendered the
business dysfunctional. He was not deterred. He opened a music shop to take on the
two giants in music retailing, WH Smith and Menzies, and prevailed.
In another hurdle, in the first week that his new airline, Virgin Atlantic, flew from
London to New York, his bank told him that the Virgin Company was insolvent. To
save the company, he was advised to shut the airline down. Against the advice of his
bank, Branson went to another bank, asked for a “bail-out” and saved the airline and
company. Today Virgin Atlantic has hybrids such as Virgin America and Virgin Blue
(Australia). There are plans to launch Virgin Nigeria and Virgin Russia.
4.4.2 Richard Maponya
Richard Maponya explains why he beat the odds under apartheid and prevailed,
“The reason I succeeded during the apartheid era was because I never took
„no‟ for an answer; because if you say no to me, there must be a very good
reason. If there wasn‟t [a] reason I would keep on knocking at your door
demanding to know the reason why” (Makura, 2008)
When he was refused a license to open a clothing shop in Soweto, because under
apartheid clothing licenses were only granted to whites, Maponya kept on bugging the
authorities until they relented. Though he was not granted a clothing license, but a
license to sell foodstuffs, he felt vindicated. He opened Dube Hygienic Dairy in the
1950s and delivered fresh milk during peak hours to customers – who had no
electricity or refrigerators – by way of a small fleet of boys on bicycles. By the 1960s,
Maponya‟s business “empire” boasted a butchery, grocery stores and a restaurant. He
later added bottle stores, filling stations, a General Motors dealership and a BMW
dealership.
To cap his endurance, Maponya fulfilled his dream to “take Sandton City to Soweto”.
In 2007, he opened Maponya Mall, a R540-million mall in Soweto with a 21st century
structure of glass, aluminium and natural stone. To build the mall, it took him more
than 20 years of fighting for the ownership of the land where the mall stands today. In
1979, Maponya leased the land from the West Rand Administration Board for 30
years, on condition that he used it. During apartheid, nobody was prepared to finance
a shopping mall in Soweto. So, he knew that there would be attempts to take the land
away. He hired a lawyer and fought against attempts to take the land away from him,
until 1994 when he got the title deed, after which it took him 13 years to get finance,
and eventually he built the mall.
4.4.3 Rachel Elnaugh
©Sy Mokadi, October 2009 19
Rachel Elnaugh started Red Letter Days in July 1989 with her brother‟s girlfriend,
Sabina, who was also a friend of hers. Red Letter Days sold two types of packages,
firstly, Christmas gift packages and secondly, 20 experiences arranged with interested
suppliers, such as motor racing, balloon flights and health spa weekends. Rachel and
Sabina expected their business to do well during the first Christmas season, but it was
not to be, despite spending £25 000 on advertising. In fact, in its first six months the
business made a turnover of £10 000. When millions did not come overnight, Sabina
wanted out, but Elnaugh soldiered on (alone).
Her fortunes turned after Barry Davis, a marketing expert, helped to re-design her
business brochure, after which 100 000 copies were targeted at the rich area of Surrey.
Thereafter, the phone never stopped ringing. Soon, Red Letter Days had a turnover of
£300 000, followed by a turnover of £1.2 million in 1996 and a profit of £1 million
from a turnover of £10 million in 2001. But the hurdles kept coming. In 1998, Red
Letter Days had a backlash from customers after they went to suppliers only to find
that Red Letter Days had forgotten to inform suppliers. The complaints reached the
BBC TV‟s Watchdog programme and Elnaugh was hauled onto television to respond.
She managed to weather the storm.
The final straw came when she took advice to introduce a “proper management
structure” and hire a “proper CEO”. Under the “proper CEO”, right-brain
entrepreneurial marketing people were replaced with an army of left-brain project
managers who spent their time writing 28-page project initiation documents and Gant
charts instead of taking care of customers. In a little more than a year Red Letter Days
plunged from a £1-million profit a year to sustaining a loss of £4.7 million in 2003.
Elnaugh spent two and a half years, in vain, trying to salvage the business. So, on 1
August 2005, Red Letter Days folded. In reflection of her journey of endurance, she
writes,
“...there isn‟t a businessperson alive who has had an entirely smooth ride. In
fact, I would venture to suggest that it is actually adversity … that hardens
those who are tough enough to survive it from being just wannabes, to
becoming the most brilliant entrepreneurs of our age” (Elnaugh, 2008).
4.4.4 Donald Trump
In the 1970s, Trump saw a site in New York that he liked. The site was owned by
Maxey Jarman and his son, Franklin Jarman, under a company called Genesco. After
Franklin forcefully took over the site from his father in 1975, Trump approached him
with an offer of purchase. After their meeting, Franklin Jarman‟s parting shot was,
“You‟ve got to be crazy if you think there‟s any way we‟d ever sell this
incredible site” (Trump, 1987)
Holding onto his belief that “sheer persistence is the difference between success and
failure”, Trump spent three years pestering Jarman with letters. Jarman ignored them
all. Then, in June 1978, he read in a Business Week magazine that Genesco was facing
bankruptcy and that a turnaround manager, John Hanigan, was in charge and willing
to sell assets to pay off money owed to banks. After three years of persistence through
©Sy Mokadi, October 2009 20
letters (which did not help), Trump bought the Bonwit Teller site for $25 million,
starting his entrepreneurial chapter in real estate deal making.
Then, in the 1990s, he faced the nightmare of his life when the US real estate market
crashed. Ninety-nine banks wanted repayments of loans totaling $900 million, of
which he had personally guaranteed $100 million. The guarantee meant that he faced
personal bankruptcy. He reckons that he was faced with two choices: be fearful and
give up or fight. He chose to fight.
Around this time, he got an invitation to a black-tie bankers‟ convention. First, he felt
he could not face people he owed a lot of money, but he changed his mind and joined
2 000 people, mainly bankers. At the convention he sat next to a banker who ignored
his attempts to engage in conversation. He later learnt that the banker worked for a
bank that Trump owed $149 million, and also learnt that the banker had a track record
of forcing 37 real estate people in New York into bankruptcy.
As the evening wore on, Trump managed to befriend the banker and ended up
arranging a meeting to renegotiate his terms of repayment. Thereafter, he obtained
appointments with the other 98 banks to renegotiate terms of repayment, becoming
personal friends with some of the senior bank executives. As Trump would say in
self-praise,
“I‟m the first to admit that I am very competitive and that I‟ll do nearly anything
within legal bounds to win” (Trump, 1987)
4.5 Lessons from case studies
These are the lessons deduced from the case studies on differentiation, agility, risk-
taking and endurance. Firstly, a business that does not differentiate skates on thin ice;
it is not whether but when it will slip away. For Porter (2008), differentiation works
when what is different is difficult to replicate: “A company can outperform rivals only
if it can establish a difference that it can preserve …” If it can be replicated its
difference evaporates; so does the competitive advantage of the business.
Branson suggests that to succeed a business should engage in continuous
differentiation.
“Businesses surf the waves of changing circumstances, and I can‟t offhand
think of any industries whose best players are not constantly engaged in
reinvention of one sort or another. Making changes and improvements is a
natural part of business …” (Branson, 2008).
Differentiation does not always mean improvement to a product or service. These are
some of the differentiation factors successful entrepreneurs opt for.
Honesty (integrity)
Efficiency (reliability)
Consistency (service excellence)
Culture (care/respect for customers)
©Sy Mokadi, October 2009 21
Lead time (speed).
Secondly, a business that lacks agility skates is taking a huge risk. This is a business
whose offering is not in syncchronisation with customer needs and expectations. To
misalign an offering to customer needs and expectations is to ask for trouble. Such a
business is also in trouble because it fails to spot and seize new and relevant
opportunities presented in the marketplace by change, or fails to use current trends to
anticipate and prepare to seize future opportunities.
“The world is changing very fast. Big will not beat small any more. It will be
the fastest beating the slow” (Rupert Murdoch, cited in Knott-Craig, 2009)
Estragon: Charming spot. Inspiring prospects. Let’s go.
Vladimir: We can’t.
Estragon: Why not?
Vladimir: We’re waiting for Godot
(Samuel Beckett, Waiting for Godot)
Wait for Godot at your own peril.
Thirdly, a business that is risk-averse is also in jeopardy. Business is a process of risk-
taking. It is not risk aversion but rather the way risks are dealt with that, to a great
degree, determines business success or failure. Risk and business are siblings because,
being a venture, business is never risk-free.
“…risk is the business of business, and the fundamental job … is to anticipate
… and manage it on the basis of an opinion about the future. This, in the end,
is what risk management is all about. As the great Austrian economist, Ludwig
Von Mises, put it fifty years ago, “what distinguishes the successful
entrepreneur … from other people is precisely the fact that he does not let
himself be guided by what was and is, but arranges his affairs on the ground of
his opinion about the future … In his actions, he is directed by an opinion
about the future which deviates from those held by the crowd” (Cleary &
Malleret, 2006)
Fourthly, entrepreneurship is not an event, nor is it an easy journey. Therefore, it is
imperative for businesses to prepare to endure, at times, against sustained adversity
that comes from various sources: unfavourable social conditions, competition,
industry regulations, suppliers, trade unions or even (dissatisfied) customers.
Endurance is better described by Winston Churchill‟s advice that “when going
through hell, keep going” (Dennis, 2007). It is the tenacious spirit to rise from failure,
dust oneself, give it a go again and prevail. It is both the struggle against and the
ability to prevail over adversity and to use the triumph over the current adversity as a
learning curve to tackle the next adversity.
The essence of endurance is captured by this extract from an address by American
President Theodore Roosevelt, at the Sorbonne, Paris in 1910.
©Sy Mokadi, October 2009 22
“It is not the critic who counts: nor the man who points out how the strong
man stumbles, or where the doer of deeds could have done better. The credit
belongs to the man who is actually in the arena; whose face is marred by dust
and sweat and blood; who strives valiantly; who errs and comes short again
and again; who knows the great enthusiasms, the great devotions, and spends
himself in a worthy cause, who, at the best, knows in the end the triumph of
high achievement, and who, at worst, if he fails, at least fails while daring
greatly, so that his place shall never be with those cold and timid souls who
know neither victory nor defeat” (Stutely, 2002; Elnaugh, 2008; Entrepreneur,
2008).
4.5.1 Implications of lessons from case studies
The essence of these lessons is that entrepreneurial success without reliance on
differentiation, agility, risk-taking and endurance is improbable. Hence,
differentiation, agility, risk-taking and endurance, including the other three (ethical
conduct, strategy and business model) are herein referred to as Sanctities for
Business Sustainability™. As the lessons show, these sanctities are indispensable
hallmarks for sustainable entrepreneurship. Furthermore, and of the utmost
importance, is that in general, Sanctities for Business Sustainability such as
differentiation, agility, risk-taking and endurance are viewed as competitive qualities.
Therefore, reliance on the interplay among Sanctities for Business Sustainability
represents the presence of a competitive mindset; Sanctities for Business
Sustainability are a toolkit required to develop a competitive mindset.
As shown in Table 4, Sanctities for Business Sustainability owe their existence to four
attributes, herein referred to as Virtues of Square™: creative imagination, passion,
self-confidence and self-discipline. For instance, differentiation requires creative
imagination; endurance requires passion, self-confidence and self-discipline; risk-
taking, agility and a profitable (and unique) business model require creative
imagination and self-confidence. Entrepreneurs develop a competitive mindset by
using Virtues of Square as entrepreneurial capital to build and rely on Sanctities for
Business Sustainability.
Table 4: Virtues of Square produce Sanctities for Business Sustainability
Virtue Sanctity (consequence)
Creative imagination
Differentiation
Strategy
©Sy Mokadi, October 2009 23
Agility
Opportunity analysis7
Decisiveness
Business model
Passion
Ethical conduct
Endurance
Sacrifice – perseverance –
dedication
Risk-taking
Self-confidence
Ethical conduct
Endurance
Risk-taking
Business model
Decisiveness
Self-discipline
Focus
Consistency
Ethical conduct
Endurance
Delay of gratification
Re-investment in business
The interdependent relationship between Virtues of Square and Sanctities for
Business Sustainability means that to succeed, a business needs to embed and turn
Virtues of Square and Sanctities for Business Sustainability into its DNA, into its
personality. This interdependent relationship further suggests that an entrepreneur can
be defined as follows: An entrepreneur is a creative, passionate, self-confident and
self-disciplined being who subscribes to ethical standards that help his/her business to
establish a trust-based relationship with customers. S/he uses strategy as a device for
differentiation, risk-taking, agility, business modelling and endurance.
This definition has the following implications:
The foundation of entrepreneurial success is Virtues of Square.
Without living by Virtues of Square, Sanctities for Business Sustainability are
hard to come by.
To succeed and build a sustainable business, an entrepreneur should first pass
the survival stage – strategy, differentiation, risk-taking, agility and endurance
are first and foremost the hallmarks of survival and thereafter, they are the
hallmarks of business success and sustainability.
The definition and its implications inform the conclusion that sustainable
entrepreneurship is an enduring journey comprising three journeys: survival, success
and sustainability. The red colour and size of the survival stage in Figure 2
7 The underlying economics of an opportunity should show that the relationship between an opportunity‟s offering
and customers has a durable life span (that the relationship is profitable).
©Sy Mokadi, October 2009 24
communicate that being a journey of endurance, entrepreneurship is rather a process
of survival, and that survival (if achieved) paves the way for business success and
sustainability.
Figure 2: Sustainable entrepreneurship: An enduring journey comprising three
journeys
5. CONCLUSION
This paper reveals that to turn the tide against low total entrepreneurial activity, South
African entrepreneurs should bear three major lessons in mind. These three major
lessons are consistent with the conclusion reached in 3.1, Implications of findings:
Entrepreneurial businesses do not necessarily fail because there are no
government support programmes, nor do they necessarily fail because there is
no enabling environment. They fail mainly because those who own or manage
them lack an entrepreneurial mindset and the qualities associated with an
entrepreneurial mindset, such as differentiation, agility, risk-taking and
endurance.
They are also consistent with the recommendation made in 4, Recommendations:
South African entrepreneurs should follow the trail of successful entrepreneurs
(and/or successful entrepreneurial businesses).
The first major lesson is that sustainable entrepreneurship is a process of
interdependent relationships:
Sustainability
Success
Survival
©Sy Mokadi, October 2009 25
Virtues of Square and Sanctities for Business Sanctities
Virtues of Square and an entrepreneurial mindset
Sanctities for Business Sustainability and a competitive mindset
An entrepreneurial mindset and acompetitive mindset.
The second major lesson is that the foundation of entrepreneurial success is reliance
on Virtues of Square. Virtues of Square are most critical because they are the source
of an entrepreneurial mindset and Sanctities for Business Sustainability. They are
also, through Sanctities for Business Sustainability, the source of a competitive
mindset. Virtues of Square are not in-born attributes but learnable qualities. Firstly,
people learn to become creative by challenging their brains to create new things or by
spotting what is not obvious. For instance, Toyota encourages the creative
imagination of its employees by entertaining one million ideas per year. Toyota also
encourages its employees to ask the question “why” five times whenever they
encounter a problem, in order to find the root cause of the the problem. Secondly,
people fall in love (passion) with new things by using the positive elements of new
things as inspiration and reason to develop a relationship with them. Thirdly, people
learn to build their self-confidence by, for instance, learning more about areas they
feel insecure about; knowledge is power and the true source of emancipation.
Knowledge boosts self-confidence. Fourthly, people learn to be self-disciplined
through consistent focus on one thing or a few things that matter most.
The third major lesson is that for an economy, including a township economy, to
thrive, it needs people who understand the critical role played by an entrepreneurial
mindset (and competitive mindset) in building sustainable businesses. Virtues of
Square are a toolkit used to develop an entrepreneurial mindset. Sanctities for
Business Sustainability are a toolkit used to develop a competitive mindset. An
entrepreneurial mindset cannot exist without Virtues of Square. Similarly, Sanctities
for Business Sustainability cannot exist without Virtues of Square, and a competitive
mindset cannot exist without Sanctities for Business Sustainability. Therefore, there
is an interdependent relationship between an entrepreneurial mindset and a
competitive mindset, in which a competitive mindset owes its existence to an
entrepreneurial mindset.
Figure 3: The mindset paradigm
©Sy Mokadi, October 2009 26
In the mindset paradigm an entrepreneurial mindset is the foundation of
entrepreneurial success. An entrepreneurial mindset is the axis of sustainable
entrepreneurship. It educates (budding) entrepreneurs that sustainable
entrepreneurship is a journey of seven sanctities for business sustainability: ethical
conduct, strategy, differentiation, agility, risk-taking, a business model and
endurance.
With an entrepreneurial mindset, people venture into business fully aware of what
they are getting themselves into. They know, inter alia, about these business realities:
A business ends up as a sustainable business if its underlying economics are
sustainable; so entrepreneurs need to conduct opportunity analysis to establish
if an opportunity has the potential to become a viable business.
A business opportunity ends up as a sustainable business mainly through
differentiation; so for a business to succeed, entrepreneurs need to rely on
differentiation.
A business venture is a process of risk-taking; so entrepreneurs should be
prudent through research before deciding to pursue business opportunities and
be diligent once they have decided to pursue them.
A business operates in the realm of competition, where competitors wrestle
over the purchasing power of customers; so to outwit competitors a business
has to be agile – respond more rapidly to satisfy changed/changing customer
needs.
A business is not an event but a journey of endurance; so entrepreneurs should
be prepared for the long haul.
An understanding of the critical role played by an entrepreneurial mindset (and
competitive mindset) in building a sustainable businesses should include the critical
role the interdependent relationships among the components of the entrepreneurial
ecology play in entrepreneurial success.
Figure 4: The Entrepreneurial Ecology
Entrepreneurial
mindset
Competitive
mindset
©Sy Mokadi, October 2009 27
Virtues of Square, Sanctities for Business Sustainability and the well-being of the
salient essentials influence the survival, success and sustainability of a business. As
Virtues of Square and Sanctities for Business Sustainability have been discussed at
length already, a brief discussion of the salient essentials follows. The 12 salient
essentials constitute the essence of a business; they are the essential components of a
business. For a business to succeed it needs to take care of these twelv12e salient
essentials; their well-being is a critical success factor.
1. Values (Ethics)
2. Leadership
3. People
4. Value offering
5. Customers
6. Competitors
7. Marketing
8. Risks
9. Stakeholders
10. Time
11. Price
12. Finances.
In the 12 salient essentials, there are left-brain and right-brain8 salient essentials. For
instance, management of finances is mainly a left-brain activity and the management
of risks is mainly a right-brain activity. Observance of values (ethical standards) is a
left-brain activity and unique value-offering is a right-brain activity. Time
management is both a left-brain and right-brain activity – so is pricing. This means
that despite preferred bias towards right-brain activities in entrepreneurial success, no
business becomes successful without both right-brain and left-brain activities.
As with the 12 salient essentials, there are left-brain and right-brain Virtues of Square
and Sanctities for Business Sustainability. For instance, self-discipline and endurance
are left-brain activities. Creative imagination, differentiation and agility are right-
brain activities. This suggests that to succeed, a business needs both brains, with (of
course) bias towards the right brain.
8 Left brain refers to a scientific brain, e.g. control - order, protocol and procedures. Right brain refers to an artistic
brain, e.g. creativity – differentiation, strategy, agility and risk-taking.
Virtues of
Square
Salient
Essentials
Sanctities
©Sy Mokadi, October 2009 28
6. REFERENCES
Branson, R. 2008. Business Stripped Bare. London: Virgin Books.
Branson, R. 2002. Losing My Virginity: The Autobiography. London: Virgin Books.
Claasen, L. 2007. Small Business: Why Government‟s helping hand is hurting.
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