The 7 New Business Facts Of Life For Entrepreneurs
Join us at Entrepreneur magazine's Growth Conference, Dec. 15 in Long Beach, Calif. for a day of fresh ideas, business mentoring and networking. Register here for exclusive pricing, available only for a limited time.
Startups are the corporations of the future, and I have long believed entrepreneurs who study existing corporate models (rather than ignoring them with disdain) will likely profit from the effort. This means you need to recognize early and capitalize on the changes that are bringing many big companies to their knees, before that company is yours.
We see evidence in the news every day of these irresistible forces of change, like the pervasive global penetration of the Internet, the impact of terrorist activities even to peaceful countries, the power of social media in building business relationships and the depletion and pollution of natural resources. These are all huge challenges, as well as huge opportunities, for entrepreneurs.
A new book by business consultant Diana Rivenburgh, The New Corporate Facts of Life, highlights these challenges and opportunities to the corporate world, but I believe they need to be understood by every startup as well. Here is my interpretation of Rivenburgh’s forces for the entrepreneurs out there:
1. Disruptive innovation. This occurs when a new product, service or business model renders the old way of doing business obsolete. It used to happen only a few times per century, but now I see disruptive innovation highlighted in almost every business plan I read. That means if your new startup doesn’t plan for continuous innovation, the company may never reach corporate status.
2. Economic instability. Financial uncertainty today threatens all countries, industries and people. Our hyper-connected world links economies around the globe, so manufacturing moves to emerging nations and tiny country woes ripple quickly to impact the most innovative companies, like Apple and Nike. Yet, instability is also an opportunity to prosper.
3. Societal upheaval. Poverty, pollution, unemployment, limited education and inadequate health care are sparking some of the biggest opportunities for social entrepreneurs today. The best startups also see these as opportunities for brand recognition and viral marketing, to simultaneously benefit people and boost the bottom line.
4. Stakeholder power. For years, public companies have been too focused on board members and shareholders as the only stakeholders with power, leading to unintended consequences. Today, the roles have changed: Customers and employees are the new stakeholders for every business. Explore new models like conscious capitalism, a model dedicated to advancing humanity, while using tried and proven business principles, and benefit corporation that focus on socially-conscious mission statements to win with all stakeholders.
5. Environmental degradation. The old model that humans can plunder the earth at will and suffer no consequences is obsolete. Negative perceptions of a company’s impact on the environment decrease brand value, while positive perceptions increase it. Going green doesn’t always hurt the bottom line, and many investors now look for startups with sustainability.
6. Globalization. Our world is getting smaller and markets continue to overlap, as communications technology and rapid transportation are connecting all citizens of the world together. We now talk about “reverse innovation,” where customers in developing countries adopt new technologies first and global reach allows scaling of young companies to happen almost overnight. Be there.
7. Demographic shifts. With more people on the planet and faster shifts from one demographic to another, more products and services are consumed -- from basics to high technology. Luxury goods flood into emerging nations and urbanization brings needs for sustainable development. Startups can win carrying less baggage onto this playing field.
The new facts of business life will not go away any time soon, and they will increasingly determine whether you will succeed or fail as an entrepreneur. Every time you make a business decision, you should consider the implications with respect to the new business facts of life.
For companies just launching, a key step is to design a resilient organization from the start. Organizational resilience means building in the flexibility to manage challenges, putting in place a future-oriented structure to distribute accountability, linking functions with networks to get tasks done and a focus on the best people practices.
Great entrepreneurs and great leaders are the ones who are energized by these opportunities, rather than overwhelmed by the challenges. Is your energy and your new business idea big enough and bold enough to set the model for the new corporate world?