An entrepreneurship wave is sweeping the world. With the inspiration provided by Steve Jobs and the emergence of young and successful role models like Mark Zuckerberg, Phanindra Sama, Evan Spiegel and so on, the wave is continuing to grow, especially among the younger generation. Business incubators and accelerators are mushrooming in every part of the world from Cordoba in Argentina to Kochi in India. There are specialised tools like Business Model Canvas, The Lean Startup and Design Thinking to help aspiring entrepreneurs develop their ideas in a structured fashion. It is worth noting that entrepreneurship is not restricted only to businesses. It also applies to those who set out to solve complex problems on their own.
With increased access to capital, low barriers to entry and reduced risk as far as getting back into job tracks are concerned, this increasing interest in entrepreneurship has three major implications for large companies.
Business models need to be more 'open'
Attracting top-class talent to work for large organisations will increasingly become a challenge. Enabled by technology and by increased access to capital, any young, talented individual can set up shop anywhere in the world. In fact, not only are large corporations losing top talent, they also run the risk of getting disrupted by the start-ups launched by this talent.
"One of the ways companies are leveraging young talent and fresh ideas is by designing open innovation models in areas which are very strategic to a company."
Large companies can leverage the asymmetries between them and start-ups. Start-ups excel in paving the way for the first mile of a business while large companies can take proven business models for the rest of the distance because of their scale and reach. One of the ways companies are leveraging young talent and fresh ideas is by designing open innovation models in areas which are very strategic to a company.
Networking giant Cisco, for example, launched a new start-up innovation programme called Cisco Entrepreneurs in Residence (EIR) that allows the company to directly engage and support early-stage start-ups working on game-changing ideas for the Internet of Things, Cloud services, Big Data/Analytics and other areas that are strategic to Cisco's future. Through their engagement with these start-ups, Cisco aims to connect the previously unconnected and see the future direction of its industry as well as opportunities to co-create new business models. It also helps Cisco to learn what trends are affecting their business model and prepare to defend against disruptions. Companies like Johnson & Johnson, Unilever etc. set up their own VC arms that invest in promising start-ups in their strategic focus areas. Large companies also partner with incubators and accelerators to stay closer to start-ups.
The Global Community Partners of the Global Shapers Community, Coca Cola and The Abraaj Group, launch annual global challenges inviting scalable models from the Global Shapers and supporting the winners with a seed fund. This gives a sense of what issues young people care about in different parts of the world and allows them to design their sustainability strategies in tune with global realities. The winners of past challenges have addressed a range of issues such as empowering young people and women in Phnom Penh, Ankara and Rabat, developing myoelectric prosthetic limbs for disabled women and children living in rural areas of Kolkata, tracking crime patterns for a safer culture in Puebla, and generating electricity through solar power in Nairobi.
"Entrepreneurship is redefining every industry and young people are the enablers of this movement."
'Open' models are increasingly becoming mainstream in various industries. Companies can use these models to send employees to work in these start-ups to a) fulfil some of their entrepreneurial ambitions; b) bring start-up culture into their organization; and c) Prepare to defend against disruption.
Marketing is shifting from customer to community
As business models become more open, marketing departments need to adapt and change. In a way, one of the biggest shifts in the marketer's role is the emergence of community management as a key function. The success of a marketing manager lies in her ability to engage and manage communities in both the real and virtual worlds to create meaningful value for the company as well as for the customer.
Companies like Apple initially created online forums that leveraged the power of peer networks to solve routine problems faced by customers and in turn created value for both the customers as well as for the company. Over a period of time, the iPhone/iPad platform enabled individual developers and small companies to develop apps and created the iOS developer communities.
The extremely successful 3D animation software, Maya, currently owned by Autodesk, developed an API (application program interface) during its initial versions that were used by developers to create specialised plugins to help the animators. Maya then integrated some of the most successful plugins as a regular feature into their software and it turned out to be a big hit in the animation industry. In the case of Apple and Maya, value creation happens through the power of communities enabled by an open business model. In addition to managing entrepreneurial communities, marketers also have to create value through online communities (examples include Nike+ and Jawbone) and also manage customers who vent their anger in social media whenever they experience bad service.
Marketing departments now have to expand "customer relationship management" to include "community management". They now have to create guidelines, policies, rules of engagement and be available all the time.
HR needs to re-imagine the future of work
HR Leaders need to re-imagine job descriptions, organisational culture, as well as training and development to leverage this growing trend.
"Highly talented young people are not just looking for companies with a good purpose but also jobs that can give more purpose to their lives."
Job descriptions need to offer more than work: A recent survey done among the Global Shapers Community, made up of high-potential young leaders in the age group of 20-29, revealed that these young people rated "an opportunity to make a difference to society" as the top thing that they look for in a job. Jaideep Bansal is a Global Shaper from the Chandigarh Hub. He has been working for a leading multinational corporation in India after completing his mechanical engineering degree from IIT, Mumbai. Last year, Jaideep joined the Global Himalayan Expedition (GHE) to set up sustainable energy and education-based infrastructure in remote Himalayan regions. As part of the expedition, Jaideep, along with GHE team, carried solar equipment on horseback and walking in the steep mountains at 14,000ft for more than two days to reach a village which had never seen electricity before. The villagers danced and celebrated when their village was electrified and Jaideep had one of the most fulfilling experiences of his lifetime. He has taken a two-month sabbatical to repeat this journey to light six other Himalayan villages.
How are we going to engage the Jaideeps of the world? Companies like SAP are now offering social sabbaticals to encourage their employees to pursue some of their personal passions that give them the entrepreneurial jolt. It is important that companies start figuring out how to integrate more purpose into their job descriptions. Highly talented young people are not just looking for companies with a good purpose but also jobs that can give more purpose to their lives.
Also, while traditional training approaches are still relevant, companies need to increasingly think of how they can create an "entrepreneurial culture" in their organisations to stay in sync with the needs of young employees. HR also needs to invest heavily in training their senior executives to recalibrate the way they do things in order to keep up with the times. HR teams now need to find new ways to facilitate and bridge the "approach-divide" between Gen X and Gen Y to create entrepreneurial culture.
Eileen Guo is a Global Shaper and the founding curator of the Norfolk Hub in the US. A few years ago, Eileen went to Afghanistan and launched Impassion Media, Afghanistan's first digital media agency. Despite the difficult conditions there, Eileen incubated a new business in Afghanistan. In September 2013, Eileen brought together over 200 of Afghanistan's social media users from 24 provinces and abroad for the country's first ever social media summit.
The lessons that Eileen learned in Afghanistan are very unusual. Her rich insights on designing for extremes, building an eco-system to target non-consumers and how to build and operate new businesses in such complex settings will be of great value to any business leader. HR departments need to think of how they can design scalable "reverse mentoring" programs for senior executives wherein they can bring such experiences and insights through young talents like Eileen. HR also needs to identify and integrate exceptional young talents into the boards of their organisations to disrupt the status quo at the very top and enable an entrepreneurial environment.
Entrepreneurship is redefining every industry and young people are the enablers of this movement. Understanding the above implications, engaging young talents through their business models and rethinking how different departments within an organisation can capture value from this important trend are important to the long-term success of any global corporation.
A version of this blog was originally published on LinkedIn.Suggest a correction