In the past, small companies used to try to emulate the business practices of corporate giants like Virgin, Google, and Apple. Nowadays, the tables have turned. More and more entrepreneurs are looking to one another for inspiration, and they’re not the only ones. According to many of the panelists at Entrepreneur Middle East’s 2015 Enterprise Agility Forum presented by du, an increasing number of multinational corporations are trying to learn how startups are driving innovation, promoting happier workplaces and integrating CSR efforts into their business models. Throughout the event, it was interesting to see how one question seemed to be posed over and over again. What is the question, you ask? What should a startup avoid when… Or in other words, what are multinationals doing wrong or inefficiently and how can startups do it faster and better? With that in mind, I have identified some things that startups need to avoid if you want your business to maintain an edge on big corporations, and a few other salient points gleaned from the speakers at the second annual edition of the Enterprise Agility Forum.
1. Don’t think that size and impact are directly proportionate
Can a startup be like a multinational? Absolutely. In fact, being a startup in the Conceptual Age is ideal, because they are agile in almost every respect. One of the biggest drawbacks of being a multinational is bureaucracy and endless red tape. Usually in a MNC, by the time a decision on anything has gone through the appropriate channels to be approved by the necessary people, it has already become irrelevant. However, in a startup, this isn’t the case. Not only does the lean structure of a startup allow entrepreneurs to be “closer” to their customers, it also allows them to be more aware and responsive to sudden changes in consumer behavior. This thus allows entrepreneurs to continuously engage in an ongoing cycle of idea adaption and implementation, which is key when it comes to promoting innovation, growth and customer satisfaction.
The size of a startup is not the only thing that allows a startup to be “closer” to its customer. Internet, smartphones and other technologies have also allowed startups to scale globally and compete with established international brands in ways that were never possible before. In the age of the Internet, the size of a company no longer defines its impact; a fact that has got both startups and MNCs thinking about how they conduct business. And this is precisely why corporate executives like Talal El-Khalil, the General Manager and Senior Vice President of PepsiCo in the MENA region, are looking to operate their enterprises more like SMEs.
2. Don’t underestimate the power of your start up’s “personality”
One of the greatest things about being an entrepreneur is the creative license that comes with the position. In fact, the unique narratives, presentation and customer service of startups are the very things that make them stand out in a crowded business ecosystem. In a digital world where consumers are constantly bombarded with information, a business’ personality often becomes the only determining factor when a consumer has to choose between two similar products or services, thereby making the preservation of a company’s persona and ethos a key part of its survival.
So, what does a startup’s personality entail? It includes everything from why you started your business, to how you source your materials, to who your partners are, to how you bring value to your customers and the market. As the old saying goes, show me who your friends are and I’ll show you who you are. This goes for people and businesses. For Frida Kleimert-Knibbs, Head of Channel and Commercial Sales for Cisco in the UAE, choosing your partners and maintaining positive business relationships is vital when it comes to reaffirming your business’ personality and promoting your strategic growth. Ultimately, entrepreneurs should always strive to establish a startup with a strong personality and culture of sustainable and ethical business practices that can grow with the company.
3. Don’t underestimate the value of your team
In a world where customers are overwhelmed by choice, a startup’s personality is often the only thing that sets it apart from the rest. So, how can you create a startup personality that will attract customers to your product or service? Make sure you have a great team. According to Ramez Mohamed, the CEO of Flat6Labs, your team is the most important aspect of your startup. Why is that? Because consumers don’t want to deal with faceless conglomerates anymore. We live in an age where we are bombarded on a daily basis with information, which makes it difficult to create a meaningful connection with anyone, let alone a company. Subsequently, unless your startup and your team can leave a lasting impression on consumers, they simply won’t survive.
In addition to bringing valuable skill sets to the table, team members also need to add value through their ethics and personality. After all, what’s the point of having a brilliant coder or accountant, if they can’t think creatively or they don’t value the importance of social responsibility? To survive in the current startup ecosystem, hiring a team of “generalists” is way more important than hiring a team of specialists. You want to hire the engineer who is also a painter or the interior designer who is also a math professor, because they represent the versatility and the ingenuity that successful startups thrive on. While most people measure ROI in financial terms, I believe that, in the future, it will be measured by the “return” that the “right” people bring to your team. So, make sure you choose team members who will bring the best financial, ethical and creative “dividends” for your company.
4. Don’t think you’re too small to make a difference
When most people think about CSR, they usually think about big companies, which makes sense because the C in CSR does stand for corporate. While this acronym has come to be the blanket term used by the business community to refer to all the goodwill exercises executed by companies, I believe that it needs to be amended. My biggest grievance with the C in CSR is that it doesn’t reflect the amazing social impact that countless SMEs are having across the globe. Once upon a time, unless you were a charity, NGO or MNC, implementing a social program didn’t seem financially feasible or necessary. However, a new generation of entrepreneurs and corporate executives are changing that perception. The founder and CEO of Nabbesh, Loulou Khazen Baz, recently launched Fursati with Qatar-based NGO Silatech. Fursati is a campaign to connect Palestinian youth with dedicated freelance opportunities online. Not only is Fursati allowing Khazen Baz to leverage her company’s marketplace, it’s also benefiting the disenfranchised Palestinian youth in Gaza and West Bank: a perfect example of the mutually beneficial relationships that businesses are capable of establishing, if they are willing to do so.
5. Teaming up is beneficial for everyone- your business and their business
Many people believe that corporate success must come at the expense of communities or the environment, but this is simply not true. In fact, many corporate executives, like Lina Hourani, the Director of Al Ahli Holding Group’s CSR division, are trying to play an active role in counteracting this mentality. The Global Business Opportunities program, a program that helps Al Ahli Group identify business opportunities and develop entrepreneurs, is yet another great example of how the attitude towards social responsibility is changing in the corporate world. CSR (or Business Social Responsibility as I would like it be referred to henceforth) should be the modus operandi of every business, no matter what the size. Luckily for us, just like production and revenue, social responsibility is also scalable. With that in mind, I believe that it is our responsibility to start nurturing cultures of “scalable compassion” in our business ecosystems.
6. Don’t be afraid to introduce new cultures of thinking
If you were to ask an entrepreneur in the MENA region today what their two biggest fears were, they would probably say the inability to find funding, and the difficulty in getting people to adopt their service or product. Unfortunately, skepticism, as I have discussed before, is rampant in Arab culture. For some reason, Arab consumers have an inherent distrust of “homegrown” solutions to pressing regional problems. Consequently, Arab entrepreneurs with innovative ideas often struggle to survive in MENA markets. However, there’s an important element of idea and process innovation that entrepreneurs often overlook. You can’t introduce new ideas to consumers without creating a culture around them. Consumers have to understand why your idea is important and how it adds value to their lives.
For instance, by consistently creating quality blog content and interacting with their audience, not only can entrepreneurs establish a “culture of need” around their product or service, they can also build a loyal following for it. But before we can start to chip away at the culture of skepticism that negatively impacts entrepreneurship in the Arab world, we also have to focus on nurturing more resilient entrepreneurs. According to Essa Ali Bin Salem Al Zaabi, Senior Vice President of Support Services at the Dubai Chamber of Commerce and Industry, SMEs represent 95% of the Dubai Chamber’s members. However, do they make up 95% of the force that is driving Dubai’s economy? Probably not. If Arab countries, like the UAE, want to promote a culture that produces and accepts entrepreneurship, we have to start teaching our communities about the importance of the ecosystem.
7. Build an entrepreneurial culture into existing learning framework
If we want to nurture an entrepreneurial culture in a country, then Marwan Mohammed Al Suwaidi, the Director of Finance at the Khalifa Fund for Enterprise Development, believes that courses on entrepreneurship must be integrated into the UAE’s educational system. In order to promote meaningful and long-lasting change in the MENA region, both our citizens and entrepreneurs need to learn how to promote cultures of change to adapt to the ever-evolving demands of the Conceptual Age.
8. Be a trendsetter in the entrepreneurial ecosystem
While it is undeniable that the global startup ecosystem is becoming more and more competitive by the day, entrepreneurs should always resist the urge to jump on the “popularity bandwagon” to make a living. Regrettably, the business ecosystem in the Arab world is greatly affected by “entrepreneurial group think.” In other words, if somebody opened a gourmet hot dog shop today that took off, five or six similar shops are soon seen to surface in the following months.
Another example of a “sexy” entrepreneurial trend that’s taken off recently is “social enterprise.” Soushiant Zanganehpour, founder and Director of Tribeca Impact Partners, dislikes the term, because he feels that it is often misused or overused by many startups. Think about it, why does this category even exist? Although it means well, it does unintentionally perpetuate the idea that only a certain kind of business can have a positive impact on society. At the end of the day, a social enterprise is a business just like any other. Perhaps it is time for us to retire this category from our “entrepreneurial lexicon” and make BSR, leadership and responsible governance the ethos of all businesses. By replacing the label of “social enterprise” with “impact-driven,” we can encourage more startups and corporations in the MENA region to engage in business and social activities that benefit local and global communities and work forces.
9. Don’t expand for the sake of expanding
Almost every entrepreneur starts a business with the goal of growing. That being said, a startup’s growth should never be haphazard or without cause. According to Joshua Rajkumar, co-founder and Chief Operating Officer of The Sustainability Platform, it is important for a business to manage its growth and to make sure that it is not expanding for the sake of expanding. It is also vital for a startup to understand their product or service and their existing and desired customer base, so they can define what growth means for them. For some startups, growth might take on a more local character. For others, it might be more international. Regardless of how or where a startup grows, it is crucial for an entrepreneur to set the scope and their long-term objectives, so they can plan their budget and future fundraising rounds accordingly.
10. You can leverage technology to take your business regional (or global)
Chris Bartlett, the General Manager of Small, Midmarket Solutions and Partners of the Microsoft Corporation in the MENA region, strongly believes that technology has played a key role in allowing business to scale and operate in new markets. So now, startups no longer need to have the resources of a MNC to operate like one. Having said that, it is necessary for a startup to manage all aspects of their company’s growth as they scale. Not only do entrepreneurs have to be able to scale their business activity, they also have to be able to scale all of the talent, communications and resources needed to keep their operations running smoothly.
11. Capitalize on your small size as it is correlated with agility
Drawing on his experience as long-term executive in the product and development business, Jose Valles, Vice President- Enterprise, Commerce, New Business and Innovation at du, believes that one of the greatest advantages that a startup has over a larger corporation is its ability to take and implement decisions quickly. So, if you’re a startup and you’re considering expansion, make sure you keep two things in mind. Firstly, you shouldn’t expand just because you think you should- expand when the right opportunity presents itself. Secondly, whether you’re expanding into another neighborhood, district, city or country, make sure that you can effectively scale your decision-making process, so you can maintain the quality and agility of your business.
12. Don’t put all your financial eggs in one basket
Once upon a time, there was only one way that people financed an entrepreneurial venture: a bank loan. Nowadays, young entrepreneurs are looking for new ways to fund their startups, and one reason is that many founders already have student loans, car loans and more, and they just can’t bear the thought of taking on one more loan. Consequently, more and more young entrepreneurs are seeking investments from family members and friends. Some are even turning to online crowdfunding platforms to campaign for money. Personally, I think that crowdfunding is a very interesting way to raise money because such platforms encourage entrepreneurs to do several things.
Firstly, the campaign profiles and videos introduce entrepreneurs to the pitching process and allows them to hone their skills in that. Secondly, giving perks to campaign investors allows entrepreneurs to build a community of loyal brand ambassadors and get valuable feedback on their product or service. Last but not least, crowdfunding allows first-time entrepreneurs to build credibility, by allowing them to show future investors how they have raised, handled, and spent money in the past. According to Sam Quawasmi, Managing Director and co-founder of Dubai-based crowdinvesting platform Eureeca, equity crowdfunding is commonly misunderstood by many entrepreneurs, but it can be a very valuable way to raise funds for a startup. If you’re confident in your startup idea, you know how much equity you’re willing to give up and you’re looking to build a community of truly “invested” brand ambassadors, equity crowdfunding might just be the thing for you.
13. Remember, potential investors are looking for a few key markers
Regardless of who you’re pitching or what fundraising stage you’re in, there are three things you need to show any potential investor, says Sonia Weymuller, co-founder of VentureSouq. You must be able to show them your past spending, a complete understanding of your future expenditures, and a thorough understanding of your current competition. If you can do that, the last thing you have to do is to make sure that your startup’s valuation isn’t unreasonably high. High valuations can scare away potential investors, thus jeopardizing future funding prospects, and that’s a definite no-no for any venture looking to scale up.
More pictures from Entrepreneur Middle East's Enterprise Agility Forum 2015 can be seen by clicking here.