We are all born as highly innovative beings who love to explore, invent and create. We are also provided with numerous problems, screaming for innovative and creative solutions. All we need is the freedom to apply our talents in solving these problems. We therefore need a climate of basic law and order on the one hand, but critically important on the other hand, we also need economic freedom.

It is during this creative problem-solving process that entrepreneurs normally experience self-actualisation. We are all blessed with different talents, begging to be utilized to the benefit of all on this planet. If we could all apply these gifts, we would not only be able to satisfy the ego, but also benefit one another in an optimum manner. By using our God-given abilities to solve problems, we will, in effect, not only benefit man, but we will also benefit our planet as a whole. Human and environmental problems are one and the same. Man needs the planet in order to survive.

Economic growth needs to occur in order to create a better standard of living for all. The general perception of the average person is unfortunately that economic prosperity is a function of resources like oil, gold, copper, etc. Today, in the modern economy, the importance of these kinds of resources has largely been marginalized. There was however, a time in history, when the wealth of countries, governments and kings, were determined by the amounts of land they owed, and the mineral wealth their countries possessed. It is the strong memory of these historic times, which is the cause for the current illusion regarding the importance of resources. This mindset was also the driving force behind colonialism, and the indicator of power and wealth right up to the early and even the middle part of the last century.

Prosperity in the new economy is not achieved by the richness of the minerals owned, but rather by the transformation of these resources into problem solving products and services artefacts. Entrepreneurs applying creativity innovation are necessary to turn minerals and metal into valuable problem-solving articles. These resources are totally useless, unless they are transformed into problem-solving articles and artefacts like motorcars, aeroplanes computers and machines. Wealth is created by entrepreneurs who had the abilities to transform minerals, metals and oil into something useful.

In the new economy today, some of the wealthiest countries in terms of mineral resources are rated as very poor. The general standard of living is sometimes below the breadline. These countries are also normally characterised by violent political fraction fighting, diseases, hunger and general poverty. Examples are most African countries, most Middle Eastern countries, parts of South America, Russia, as well as others in Eastern Europe. Russia and most countries in the Middle East possess massive mineral wealth, but the great majority of people living there are desperately poor. Why are these countries so poor? The simple truth is that prosperity is created by creativity, innovation and entrepreneurship and not by resources per se.

Prosperity is the primary result of the natural abilities of the human mind to solve problems. The major problem-solving instrument, utilised effectively in the prosperous economies of the world, is called business. Businesses compete with one another in their quest to make money by solving customers’ problems. The businesses providing the more effective and efficient solutions, will make the most money. The businesses that fail to satisfy customers’ needs optimally will go out of business. Any business can therefore only survive, if it can effectively and efficiently manage to solve problems for people, and/or organisations. These problems have also to be solved in such a way, that the receivers of these solutions are willing to pay for it. This willingness to pay is the acid test, determining the real value of the solution. The word “business” is synonym for the action of trading – “you give me something I want, and I will give you something you want.” If both parties give and receive satisfactorily, they have done business. Business, however, is more than the trading of articles or artefacts – business is also the trading of talents in the form of services. Businesses are created and grown by entrepreneurs. Therefore if we are serious about economic growth we have train more people to become entrepreneurs!

 

Entrepreneurship unpacked

An entrepreneur is a person, who has entrepreneurial abilities and utilises these abilities to practise entrepreneurship. The term entrepreneurship was for the first time been described in the 1800’s when the French economist Jean Baptiste Say produced the following definition:

“An entrepreneur is a person who shifts economic resources out of an area of low productivity into an area of higher productivity and greater yield” (GEM, 2009:11).

The GEM report (2009:11) states that there are numerous contemporary definitions, many of which evolved during the latter half of the 20th century and were well summarised by Hitt, Ireland, Camp and Sexton in 2002. (See table 1.1)

 

Table 1.1 

Author Definition
Schumpeter (1934)

Entrepreneurship is seen as new combinations, including the doing of new things that are already being done in a new way. New combinations include:

  • Introduction of new goods
  • New method of production
  • Opening of new markets
  • New source of supply

New organisations

Kirzner (1973) Entrepreneurship is the ability to perceive new opportunities. This recognition and seizing of the opportunity will tend to “correct” the market and bring it back to equilibrium.
Drucker (1985) Entrepreneurship is the act of innovation that involves endowing existing resources with new wealth capacity.
Stevenson, Roberts & Grousbeck (1985) Entrepreneurship is the pursuit of an opportunity without concern for current resources or capabilities.
Rumelt (1987) Entrepreneurship is the creation of new business; new business meaning that they do not exactly duplicate existing business but have some element of novelty.
Law & MacMillan (1988) Entrepreneurship is the creation of new entrepreneurs.
Gartner (1988) Entrepreneurship is the creation of organisations: the process by which new organisations come into existence.
Timmons (1977) Entrepreneurship is a way of thinking, reasoning and acting; that is opportunity obsessed; holistic in approach, and leadership balanced.
Venkataraman (1977) Entrepreneurship research seeks to understand how opportunities to bring into existence future goods and services are discovered, created and exploited, by whom and with what consequences.
Morris (1998) Entrepreneurship is the process through which individuals and teams create value by bringing together unique packages of resource inputs to exploit opportunities in the environment. It can occur in any organisational context and can result in a variety of possible outcomes, including new ventures, products, services, processes, markets and technologies.
Sharma & Chrisman (1999) Entrepreneurship encompasses acts of organisational creation, renewal, or innovation that occur within or outside an existing organisation.

 

The common denominator in the above definitions is the ability of the entrepreneur to create something new to the benefit of the entrepreneur and to mankind in general.

The important role entrepreneurship plays in our wellbeing should never be taken for granted. This human ability should rather be nurtured and developed to its full potential. The cars we drive, the food we eat, the houses we live in, the clothes we wear and most important the jobs we have, are all made possible by entrepreneurial activities.

Humans, from a physical perspective, are extremely ill equipped to survive on this planet. Therefore, if there were no entrepreneurs in this world, we would not only have been easy pray for carnivores, we would still live in caves, die from extreme temperatures, and many other horrible things would have happened to us daily.

The standard of living a community is experiencing is simply the result of the number of entrepreneurial activities happening in their local economy and is not the result of money per se. Entrepreneurship and not money is driving economies towards higher standards of living. Money is merely the measure of the economic activity happening in an economy and is simply printed and provided by the reserve bank. If there is more money than what the economic activities in an economy require, it leads to inflation; and too little money will cause a depression.

The difference between rich and poor nations can only be explained by the number of entrepreneurial activities happening in the various economies and also not by the quantity or quality of mineral resources they have. There are too many poor economies with vast mineral and other natural resources and plenty very rich economies with limited natural resources.

Poor countries will never overcome poverty if they do not start to create and cherish entrepreneurial cultures in their economies. This can be done by creating an entrepreneurial friendly business environment and to invest heavily in entrepreneurial development research and education. It is time to face the fact that poverty will never be eased by financial assistance or other similar actions. The only solution to overcome poverty is to develop the entrepreneur in every human on this planet.

 

Entrepreneurship – a trip down memory lane

Economic activity started when ancient entrepreneurs used bartering as an economic need satisfying process. For example, an entrepreneur with the abilities to make effective knives would barter his offerings for other need satisfying products/services. However, optimum trade with this bartering process had a serious limitation. Trading could not take place in cases where demand and supply did not correspond – the knife maker did not want what someone else was producing, and was, therefore, not willing to trade. To overcome this limitation, money was invented. Entrepreneur “A” could now sell her/his offerings to a willing buyer, earn money and buy from “B”.

With the introduction of money, a new method of determining the values of products and services had to be invented. In a simple bartering transaction, values were determined by consensus between the bartering parties. Auctions were probably then invented to determine values of products and services through mass consensus. In the auction process, the price of a product/service was determined by demand and supply, which could be viewed as a process of mass consensus regarding price determination. It was only after the discovery of money, the introduction of auctions where demand and supply determine prices that entrepreneurship activities started to get momentum.

The economy of the world evolved through major phases, starting with the extraction phase where Man discovered how to extract metal from rock. This phase was followed by the artisan phase where man made artefacts from the various metals. The artefact phase was followed by the industrial phase (late 18th and early 19th century), which had a huge impact on the general standard of living. In this phase, entrepreneurs managed to build machines which were capable of producing in mass. As machines replaced artisans and workers, many people lost their jobs. The demand for crafty hands was fortunately soon replaced by a huge demand for administrative skills.

The next phases to follow emerged due to increased competition between mass producers. Marketing (principles and concepts) was invented by entrepreneurial producers to create a competitive advantage, and to gain market share.

The marketing phase then paved the way for customisation and niche marketing.

The so-called new economy emerged when information technology replaced many administrative skills. This is a mirror image of what happened during the industrial revolution when manual jobs were taken over by machines.

At this point, producers started searching for new markets. These “new” markets, too, reached saturation, and the “new economy” is now in need of revolutionary new products/services and therefore new economic solutions. These solutions are in the form of goods/products/services, created to solve problems for customers in various target markets.

Real entrepreneurs are, however, only individuals who manage to create new and/or better “economic solutions” for the market. New venture creators are definitely viewed as real entrepreneurs, but many other individuals could also fit this description.

These individuals were and still are responsible for the improvement of the standard of living of mankind.

This new economic phase will require more lateral (intuitive) thinking, not only vertical (logical) thinking, which was perceived to dominate during the industrial economy. New revolutionary products and services need to be created.

Education institutions are slow to adapt and are still producing “administrators” and not entrepreneurs, while entrepreneurship is the key-driving force in the “new economy”. Even in the United States, as recent as 2000, entrepreneurship was not fully accepted as an academic discipline. (Twaalfhoven and Pratt, 2000). In Europe entrepreneurship was trying to find its home, and efforts are fragmented and driven by external factors instead of by the education system itself (European Commission, 2002).

We, therefore, need a “fundamental rethinking of what education systems are actually supposed to deliver”. This factor is also endorsed in GEM report (2009:88) by the following statement: “The South African experts raised concerns about the level of entrepreneurial education delivered by the education system”.

 

Entrepreneurship makes the world go around

The car you drive, the food you eat, the house you live in, the cloths you wear and most important the job you have, were all made possible by entrepreneurship activities. Humans, from a physical perspective, are extremely ill equipped to survive on this planet. In other words, if there were no entrepreneurs in this world, we would not only have been easy pray for carnivores, we would still live in caves, die from extreme temperatures, and many other horrible things would have happen to us on a daily basis.

The standard of living a community is experiencing is simply the result of, the number of entrepreneurial activities happening in their local economy. Wealthy economies therefore have more people who are practicing entrepreneurship in comparison to poor economies.

Entrepreneurship and not money is driving economies towards higher standards of living. Money is simply the measure of the economic activity happening in an economy and is provided by the reserve bank. More money than the economic activities require in the economy, leads to inflation and too little money will cause a depression. The difference between rich and poor nations can therefore only be explained by the number of entrepreneurial activities happening in the various economies and definitely not by the resources thy have. There are too many poor economies with vast mineral and other natural resources and plenty very rich economies with limited natural resources. Poor countries will never overcome poverty if they do not start to create and cherish entrepreneurial cultures in their economies. This can be done by creating an entrepreneurial friendly business environment and to invest heavily in entrepreneurial education.

Politicians must realize that it is impossible for entrepreneurship to flourish in a highly regulated environment. Optimum entrepreneurial activities do not require economic legislation preventing the creation of new or better solutions and/or restrain competition. Governments can however enhance entrepreneurship by investing in entrepreneurial education and by providing assistance in raising start-up capital if required. It is time to face the fact that poverty will never be eased by financial assistance or other similar actions. The only solution to overcome poverty is to unleash the entrepreneur in every human on this planet.

Entrepreneurship is indeed making the world go around.