Post on 29-Nov-2014
description
A Case for Quality in
Enterprise Development
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By Allon Raiz
TWO LIVES
A• Private Education
B• Private Education• Private Education
• Tertiary Education
• Starts Working in Family Business at 22
• Leaves family business @ 24
• Starts own business @ 25
• Private Education
• Tertiary Education
• Starts Working in Family Business at 22
• Family business goes insolvent @ 26
• Starts own business @ 27
An emotionally invested Mentor
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• Starts own business @ 25
• Business Fails
• Starts new business @ 27 and sells it.
• Builds large business, sells it. Builds another
• Starts own business @ 27
• Business Fails
• Becomes a struggling insurance broker
• Still battling at 43��������� �������� �����������
TWO LIVES
C• Born in Alex
D• Born in Alex• Born in Alex
• Schooled in Alex
• Father is a poor plumber based in Alex
• Dream is to become a travel agent
• Gets bursary to the USA
• Born in Alex
• Schooled in Alex
• No Father, mother is a domestic worker
• Dream is to run a beauty parlour/hair parlour
• Finds a NVC programme
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• Gets bursary to the USA
• Fait intervenes
• Builds her father’s plumbing business (Millionairess)
• Educates her brother and sister at private school
• Finds a NVC programme
• Starts own parlour
• Business fails within first year
• Working in a bakery as a teller��������� �������� �����������
An emotionally invested Mentor
What do they have in Common?
• A • They were “selected” based on their “blue heart”
• C
on their “blue heart”
• Someone believed in them
• They were surrounded with a team
• They were now part of a “community”
• They now employ 10’s of
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people
• They are now doing the same for others (virtuous cycle)
Entrepreneurial Questions?
• If I have an idea, does that make me an entrepreneur?
• If I have been a survivalist hawker for 8 years, am I an entrepreneur?• If I have been a survivalist hawker for 8 years, am I an entrepreneur?
• If I have never started or run a business before, am I the ideal entrepreneurial mentor?
• If I have great academic qualifications, and no experience running or starting a business, am I the ideal mentor?
• If I have 30 years experience but no people skills, am I the ideal mentor?
• Do I need the same type of mentoring for my finance issues and my
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• Do I need the same type of mentoring for my finance issues and my self doubt issues?
• As an Entrepreneur, which do you pay first; the tax man or the landlord?
Not Selecting the
Entrepreneurs
Correctly/at all
Some causes for low levels
of impact in ED
Not selecting the Mentors
correctly
Learning is not practical
enough
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Providing low-touch support
Challenge 1
We are not Selecting the
Entrepreneurs correctly/at
all
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The Challenge with the current ED Approach
Not Everyone is an Entrepreneur
Only 4 -7% (GEM Report 2006/7/8/9)
Is a hawker an entrepreneur?
Only 4 -7% (GEM Report 2006/7/8/9)
Not every Entrepreneur is Successful
96% of businesses will fail in 10 years
Not every Business is Growth Business
Self Employed Vs Growth Entrepreneurial
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Self Employed Vs Growth Entrepreneurial
Challenge 2
We are not Selecting the
Mentors correctly
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The Challenge with the current ED Approach
Not every person with experience can communicate well and shift peoplecommunicate well and shift people
The are often paid by the hour. Many are ex corporate without entrepreneurial experience.
Not every academic can communicate well and shift people
They often cannot relate to the practical application of knowledge
Is an old professor a good mentor?
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They often cannot relate to the practical application of knowledge
Not every academic with experience can communicate well and shift people
Challenge 3
Entrepreneurship is a complex
endeavor requiring multiple endeavor requiring multiple
types of inputs (high-touch)
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Becoming an entrepreneur cannot be taught in a classroom alone.
The Challenge with the current ED Approach
classroom alone.The combination of classroom learning, The combination of classroom learning, inin--business business learning and learning and
mentoring increases uptake by a staggering 80%.mentoring increases uptake by a staggering 80%.
Entrepreneurship is as much about learning business skills as it is about learning personal skills.
A single dimension approach to ED cannot work
The dynamic nature of the entrepreneurial challenge
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The dynamic nature of the entrepreneurial challenge means that different inputs will be required at different times.
Is an old professor a good mentor?
Challenge 4
Entrepreneurship cannot be
effectively taught in an academic effectively taught in an academic
format only, it must be practical
and experiential
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Studies have found that entrepreneurial training that uses the business plan as the foundation
The Challenge with the current ED Approach
that uses the business plan as the foundation does not work
Schwartz (2006) states that entrepreneurship curriculum reform is more a matter of educating teachers rather than students
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teachers rather than students
Schwartz - the development of entrepreneurship education is closely tied to the teacher’s own learning process
Questions
What happens when you take a shotgun approach to Enterprise Development?approach to Enterprise Development?
Out of 981 businesses who went on SETA New Venture Creation training for 12 months, how
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many businesses do you think succeeded?
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The Effects of a Shotgun –Non Selective approach to Enterprise Development
• Failure rates are extremely high• Failure rates are extremely high
• Funds are effectively wasted
• An already low self Esteem is impacted negatively
• Black Listing by Banks etc
• Debt Trap (increased overheads)
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• Debt Trap (increased overheads)
Question
If you took 31 mentors working in/for Government
programmes and you made them do a basic*programmes and you made them do a basic*in-tray test to see if they could work out the profitability of a hypothetical company, what percentage would work it out?
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6.5%
Unpacking the Mentor Challenge a little more
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What’s actually going on most of the time
You are my private teacher
Challenge 1 Challenge 2
All I want is your network
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How are we choosing them?
Experience Academics
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A Case for Quality in
Enterprise Development
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Question
• How many $ Billionaires do you think that Harvard, Stanford and the University of Harvard, Stanford and the University of Chicago have produced?
»103• Harvard – 62
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• Harvard – 62
• Stanford – 28
• UC - 13Source – Business Standard Sept 2010
What do these 3 Universities
have in common?
• One of the highest level of student selection in the worldthe world
• One of the best Faculties in the world
• One of the best and most comprehensive teaching methods in the world
• One of the best support infrastructure in the
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world
What are the obstacles
• Exclusive policies have historical connotations
• Perceived to be more costly• Perceived to be more costly
• Its hard to change
• Its hard to be pioneering
• There are other models that report success
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Raizcorp
• Established in 2002
• For-Profit Model (Not a for-profit masquerading behind a not for • For-Profit Model (Not a for-profit masquerading behind a not for profit) (We are Philosophically aligned)
• Supports in excess of 200 businesses (800 business graduated)
• Urban and Rural Models
• Equity and Fee models
• 6 current Prosperators 2010
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• 6 current Prosperators 2010
• 3 new planned for 2011
• International expansion with IFC and others
• Award winner locally and by the WEF
• We have had many failures, but many more successes
Access to
The Raizcorp Hypothetical
SELECTIONAccess to Knowledge
Access to
Support
Access to
Markets
SELECTION
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Access to Finance
The Move to Guiding
Self Accrediting
Co
ach
ing
Me
nto
ring
Guiding
Currently being
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Co
ach
ing
Me
nto
ringCurrently being
accredited by the British Gvt
The Five Won’ts
1. We will not not select
2. We will not Train only 2. We will not Train only
3. We will not Guide only
4. We will not Mentor
5. We will not provide funding (we leave that to the specialists)
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the specialists)
CURRENTLY INCOMPETENT CURRENTLY COMPETENT
CEG MEGPEGITGGuides/Mentors
CEG MEGPEGITG
PR
OS
PE
RA
TO
R
PIT
CH
& P
OLI
SH C
PD
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M E ABD CHIGH POTENTIAL
PR
E-P
RO
SP
ER
AT
OR
BIZ
GA
ZE
RE
AP
PIT
CH
& P
OLI
SH C
PD
Entrepreneurs
Filtering for Blue Heart
1. Expression of Interest
2. Interview2. Interview
3. Test
4. 3 Audits
5. Interview
6. Due Diligence
Rural Applicants writing test
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6. Due Diligence
7. Panel Interview
8. Contract Oupa Sekati presenting his business to the panel
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What Raizcorp provides
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Infrastructure
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Access to
Support
Personnel
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Access to
Support
Learning
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Access to Knowledge
Learning
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Guiding
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Access to Knowledge
Access to
Support
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Sales
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Access to
Internal Linkages
Sales
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Magic
Access
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Access to
Support
How are we choosing our Guides
Experience AcademicsEmpathy
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Creating the Metrics
• Financials
– Profitability– Profitability
– Growth %
• Employees (With a view to self sustainability)
• Cars
• Clients
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• Clients
• NAV
• Products
How do we measure lifecycle
Raizcorp Entrepreneurial Lifecycle MeasurementsLifecycle Measurements
(RELMs)
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Sustainability
The Categories
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Results
• 1 in 20 applicants enters a Raizcorp programme on averageprogramme on average
• 36% will fall out or be asked to leave for non-compliance within 1st year (90% of the 36% in first 6 months) – These are replaced
• >15% removed in year 2, and >5% in yr 3
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• 95% of those that remain on the programme experience an average growth rate in excess of 20% per annum
A new Era
• Mediocrity is a thing of the past
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It takes courage to be
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It takes courage to be excellent
QuestionsQuestions
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www.raizcorp.com
011-5662000