There were a number of competitors in the area, so they needed a competitive advantage. Through creative and lateral thinking, they managed to come up with two ideas. Firstly, they decided that they would attempt to create a pleasant shop atmosphere and leave customers a good impression by not only delivering goods, but quality service. Secondly, they would attract customers to continue buying from the shop by introducing a card system where the customer would be rewarded, for example, with a 20% discount on their next purchase after they had bought from the store 4 times. This would help increase their sales.
After starting up the business, it was an immediate success. Sales proved to be excellent and they made a good profit margin very quickly. In fact, they were able to return the bank loan after just 2 months. Many customers returned to their store because of their friendly customer service and atmosphere, and their card system. Soon, they were able to pay employees to help run the store. However, they had already established a reputation for good customer service, and did not wish to lose it. Therefore, again being creative and thinking of new ideas, Ms Jin decided to offer and incentive system to her employees, where they would be rewarded with 5% of the sales and an additional sum for good customer service, in addition to a basic daily salary (instead of rigid hourly pay). This was also an excellent idea, and helped reduce the strain on Ms Jin and her partner (they were both in university) while not impacting heavily on their profits or customer service.
As the business grew, Ms Jin needed to attract new customers to keep making profit and to sell their clothing. Therefore, she came up with another clever scheme to advertise. The business had plenty of stock which remained unsold, which needed to be sold quickly, because if the clothes went out of style, they would be harder to sell. However, instead of pushing to sell them directly, she offered to donate some of her products for the upcoming university balls (which were quite important events), if the universities put them on show in the ball. This was an ingenious way of advertising, and helped to attract more customers for the business.
For my primary research, I created a questionnaire for Ms Jin to answer, asking her what enterprise skills she considered to be most important. She replied, selecting the following skills as most important: creativity, planning, drive/motivation, and initiative. She remarked that creativity was “paramount for me because many of my important ideas were derived from lateral thinking” and that “without the initiative to start up my own business, I would have found it difficult to pay my student loans”.
Ms Jin’s business was an outright success, but why? A number of factors and causes, rooting from the entrepreneurial skills shown by Ms Jin, have had effects which have massively increased the chance of the business succeeding and becoming more profitable.
The detailed planning demonstrated at the start helped not only to decrease risk and increase the chance of success but also help Ms Jin to decide whether going ahead with the venture was a good idea. For example, judiciously deciding on her target market and then researching it is very helpful with deciding what products might be suitable, or what price range is suitable. Knowing the market thoroughly and hence being able to tailor the products to the needs of the consumer can drastically reduce the risk of the business failing. This is one way in which planning/researching skills in enterprise are very helpful.
In addition to research, calculating the risk numerically is an excellent way to help make a decision on whether starting a business is a good idea. This way, the risk is directly compared to the reward. By calculating the risk, Ms Jin has considered both the potential upsides and the downsides of starting the business and therefore can accurately judge the viability of this venture.
However, although planning is important, there is a skill just as important for Ms Jin. As she mentioned herself, the initiative to start up a business is often the crucial factor. Rather than passively thinking about a business idea, she had the initiative to actively make things happen by putting the idea into practice by creating a small business. This is also intimately linked with drive and motivation. Motivation lends itself to confidence, which helps entrepreneurs like Ms Jin to take the risk of starting a venture. Ms Jin really believed in her idea and drove herself to initiate her business. Without initiative, a potential entrepreneur may never reach his/her aspirations.
Perhaps another lesson to be learnt from Ms Jin’s success story is creativity. Creativity is a means of creating new ideas, whether they are small or large schemes. Ms Jin may not have succeeded in the way that she did if it were not for her creativity (in creating schemes which would give her a competitive advantage over her rivals). There were other established rivals in the area who were competing for the same market segment, but these creative schemes helped her attract customers to buy from her business rather than from competitors. For example, her innovative ‘card’ system rewarded customer loyalty and this helped her business establish itself in the market. Loyal customers might even recommend the business to other potential customers. Her other idea of creating a relaxed and pleasant atmosphere and friendly customer service would again be very good for maintaining customer loyalty, as a good experience of service is almost as important as the quality of the goods themselves. Another demonstration of this creative capability is the advertising system, where Ms Jin used lateral thinking to formulate a solution to the problem (too much stock). This managed to get rid of some of their stock for the purpose of advertising, which in turn attracted more customers to buy their products. As can be seen by its various applications, creativity is a vital skill for all entrepreneurs.
My second source will be an investigation into the entrepreneur Thomas Pellereau, the recent winner of the reality TV show ‘The Apprentice’. As the winner, he was offered a 50:50 partnership deal to go into business with Lord Sugar, who would provide an initial investment of £250,000. But before setting up this business with Lord Sugar, he has been through an arduous process to prove his entrepreneurial capability. So what entrepreneurial skills has Tom demonstrated?
Tom Pellereau is an innovator (not an inventor). The difference between innovation and invention is slight but significant. Invention is the discovery of a completely new idea (for example, designing the first TV would be an invention) while innovation is the improvement or transformation of an existing idea (like plasma screen TVs). In practice, this means that Tom discovers flaws in some existing products and redesigns them to make the product better, before bringing the new product to market. An effective innovation can be as profitable as an invention, because if an innovation is significantly better than the previous version of the product, the previous product may be phased out and the innovation can ‘steal’ a large portion of the original market (LCD and Plasma TVs have almost completely replaced cathode ray tube TVs).
However, Tom’s products have often failed to hit the mark. Some of them were branded as ‘failures’, which was disappointing for Tom to say the least. There are also risks associated with innovations, as sometimes they may just not be popular. However, Tom still drove onwards, motivated by his passion for innovation, and eventually succeeded. His determination throughout his innovating career has been essential to his success. Had he given up earlier, he would not be in the position he is today. In Tom’s case, drive/determination was an essential skill.
Innovation is a skill that stems from creativity, the ability to create new ideas. Creative ideas and innovations may appear in a ‘flash of inspiration’, often after the innovator has used and found a fault in an already marketed product and tried to fix it with their own innovation. Tom’s creative flair allowed him to conceive many new innovations which were very popular when brought to market: an improved and product has a competitive advantage over its rival products. For example, Tom’s ‘Stylfile’ product, a nail file, was created by his innovation. Instead of the traditional flat edge of a nail file, he innovated and came up with a curved nail file, to suit the shape of the nail. This gives it a competitive advantage over other nail files, because it performs better. Creative, innovative ideas, such as these created by Tom, are much more likely to succeed in a competitive market than a product which is just the same as all the other rival products. Tom claims that he ‘finds gaps in the market and finds products for those gaps’. [3]
Tom’s creativity really shone in ‘The Apprentice’, where he was continually praised for his ability to come up with new ideas. For example, he came up with the BixMix biscuit idea, of two biscuits mixed together and chocolate on one half of the biscuit. It was a novel and innovative concept, failed only by the team’s inability to create a good taste. However, it was a clear show of Tom’s innovative capability. He also objected when the idea of ‘Every Dog’ was suggested, as the target market was too general and there was no USP/competitive advantage. He was later proved right when the product was rejected.
After Tom was selected to participate in the final, he came up with yet another creative idea for his potential partnership with Lord Sugar. This time, he came up with office chairs, which could help relieve back pain. While this was a concept which had already been thought of, Tom’s product took it one step further, by being able to detect whether the user may suffer from back pain in the future. This additional function helps prevent back pain and could be an innovative edge over other, similar products.
It is clear that Tom’s main entrepreneurial attribute is creativity. All ideas stem from creativity, and ideas and innovations are essential for business. In Tom’s case, without his creativity, he would not have been an entrepreneur, as his innovations have dominated his whole entrepreneurial career. The other major skill which Tom has shown is drive/determination. He has continued to innovate and create even through difficulties and failures, which is an admirable quality. It shows that he is prepared to learn from mistakes and try again and again until he succeeds.
I have attempted to contact Tom with a questionnaire but have received no reply thus far.
My third source will be an internet source (study entitled ‘Entrepreneurial creativity and innovation’). [4] This study emphasizes the importance of creativity and innovation as a part of enterprise, and therefore also for starting and running a business. In the study, the author recognizes that creativity and innovation are ‘central to the entrepreneurial process’. The study investigated into small enterprises and asked them questions to collect primary data. Here are some of the results:
- Notably, out of the thirteen owners of small enterprises who took part in the first phase of this study, only one said that his business offered more of the same, and even the individual in question said that he was ‘always trying to design new products … always trying to create something new’. This suggests that creative ideas and innovations are very important to small enterprises, because they need to have a competitive advantage over their rivals.
- Another entrepreneur remarked: ‘Having new ideas is very important, if you’re going to be like everyone else, you’re just going to fall in with the rest of the crowd’. This is very true, because in the competitive world of business, rival businesses will be splitting the customers, resulting in lower numbers of customers and less profit, or even a loss. New ideas can be developed, and if viable, can be a valuable competitive advantage that makes your business stand out from the rest.
- In addition to the qualitative data from the first phase of the survey, there was also quantitative data from the second phase. 89.5% of entrepreneurs surveyed said that new goods or services that they launched were generally successful (see chart below):
Clearly, new, innovative products or services have an excellent success rate (nearly 9 out of 10). This indicates that an USP or competitive advantage is very important, because the product or service will either have a totally new edge which is likely to attract customers, or be able to perform better than its competitors. Hence, these new goods or services are generally quite successful.
My fourth source is an investigation into Apple. Apple is now one of the biggest electronics companies in the world, selling a range of products from the iPhone to the iPad. Many of these products are innovations, which have revolutionised the electronics world.
Steve Jobs and Apple have shown great creativity in designing their products. For example, the iPod is a multifunction device, mixing many things that were already available. It was not a new invention, because all of its functions were available before its arrival. Yet it was a massive success, because it was innovative, putting many of the tools that a consumer needs into one device, and bringing it into market. Their research groups found out what people needed, and presented it in their own, unique product. This creativity, the actual creation of the idea, was the root of the greatly successful iPod. But Apple have not just relied on this one product. They have also innovated many other products. Perhaps even more notably, the iPad is a total innovation of the tablet computer industry. Before the iPad, despite the technology having been invented, no company had been able to take advantage of it. Apple saw the opportunity and pounced on it, carefully designing the tablet so it would be pleasant to use and capable, unlike the predecessors in this industry. They succeeded and made a massive profit, tapping into the full profits of an almost untouched industry. Apple is arguably the most creative and innovative company in the electronics industry. Apple continue to innovate their products to be unique for customers, which is why they attract so many customers.
Overall, at this stage, given the evidence in the four sources I have analysed, there is evidence to suggest creativity is the most important skill for an entrepreneur. This is because creativity has proven vital for all the businesses/entrepreneurs which I have investigated, and the study also explains why creativity, and innovating new ideas is so important. Creating new ideas is a means of advancing, of creating a competitive advantage over rivals, which means that more customers will buy the product or use the service. A ‘me too’ approach is less likely to succeed, because there will be many competitors doing the same thing who are already established. In Ms Jin’s business, many of her important concepts which made her business successful were derived from lateral thinking and creativity. Tom Pellereau relies heavily on creativity and innovation in his entrepreneurial career, creating new products. The study clearly shows that creativity and innovation are very important skills for enterprise. Finally, Apple’s continued creativity and innovation of existing products/industries make it one of the most successful businesses in the world.
The other skill that the evidence seems to highlight as the second most important quality is drive/determination. This is a common quality of Ms Jin and Tom Pellereau, who have both shown passion for their work. Ms Jin is very passionate about her work and makes sure all her employees are too. She has the drive to push things through and support the business throughout its lifetime. Tom has suffered many setbacks, but is still motivated and determined to succeed, which he has duly done after winning ‘The Apprentice’.
However, it could be argued that initiative is more important than determination. Ms Jin would not have created the business, let alone be successful, if she had not had the initiative to actually go ahead with her idea. While initiative is an important skill, there is more evidence to suggest drive/determination is more important, as both Ms Jin and Tom Pellereau needed it, and motivation and passion in the business is essential if a small business is to succeed. In addition, motivation and drive is very important to having the confidence to start up a business, and is very much linked with initiative.
Another skill which some may consider to be more important is planning. Planning is a crucial factor in starting up a business and helps increase the chance of the business succeeding. Ms Jin’s initial start-up was well researched and thought out, and this planning may have been a contributing factor to her success. However, this skill still depends on initiative and drive. If someone is not driven and motivated to start up a business, then no matter however detailed their plan is, they will not be able to push it through, especially when meeting difficulties.
To conclude, the evidence and research overall shows that creativity and drive/determination are the most important skills/qualities that and entrepreneur needs to possess.
References
[1, 2]: Edexcel GCSE Business: Introduction to Small Business Student Book
[3]: BBC Apprentice website: http://www.bbc.co.uk/apprentice/series7/tom-pellereau.shtml
[4]: ‘Entrepreneurial Creativity and Innovation study’: http://www.strategicfutures.eu/__data/assets/pdf_file/0011/87599/leonie_baldacchino_paper_entrepreneurial_creativity_innovation.pdf