Entrepreneurs & the Environment
Hopefully you’ve already read the Definition of a Nascent Entrepreneur and the Four Abiding Elements of Entrepreneurs and then Entrepreneurs and their R&K Strategies. The next step is to consider the effect of the entrepreneur’s environment.
Environment & Evolutionary Processes
Some concepts worth considering when you look at the entrepreneur’s ambiguous and changing environment are the effects of processes that find parallels within Evolutionary Theory. These are the forces of Variation, Selection and Retention set against a backdrop of the struggle for resources.
Environment & Variation
When you look at the entrepreneur’s ambiguous and changing environment there are recognisable signs of variation. These variations encompass any departure from routine or tradition. Variations can be either intentional or blind.
Intentional variations are those that the entrepreneur has purposefully brought to the environment – those variations that are controlled. For example, the marketing strategy is about understanding the environment and putting in place intentional variations that positively affect the new venture. In a simple example, it would be an intentional variation in the environment if the entrepreneur located a store inside a shopping mall or gained a short term financial loan.
Blind variations are the opposite – those that are out of the entrepreneur’s control. Examples are easy to come by… a downturn in the economy, a competitor moves into their niche competing directly on price or there might be a bonus windfall of a tax rebate that specifically affects players in the industry. Naturally, any form of variation poses challenges that require adaptation and flexibility – they can be either good or bad – and the successful entrepreneurs roll with the punches.
Environment & Internal / External Selection
At the same time the entrepreneur’s environment is under the influence of internal and external forces of selection.
Internal forces of selection create a pressure towards stability, conformity with norms and the maintaining of the current pecking order. While external forces of selection might be the poaching of talent by a competitor or the bankruptcy of a potential partner who extended themselves too far – leaving the entrepreneur vulnerable or strengthened.
Anybody who has worked in an organisation intuitively recognises the internal forces of selection at work in that company’s culture. This pressure can often lead to a dangerous homogeneity of ideas.
At the same time… external forces of selection in the wild equate to the car running over a possum on the highway. We intuitively understand these things and naming them simply helps to differentiate and explain what is happening in the entrepreneur’s environment with greater clarity.
Environment & Retention
The backdrop that these forces are set against is one of a battle for resources – talent, skills, finance, inputs and so forth. The control of resources are the life-blood of the entrepreneur’s new venture.
Within this context the forces of a retention mechanism are at work allowing entrepreneurs to repeat selected activities which have proven valuable or which have been perceived as beneficial. The behaviours and practices that provide competitive advantage and which are seen as best practice in an industry are retained and emulated… while those that fail to provide benefits are cast aside.
Similarly, when the entrepreneur creates new value through a product, service or process and it is seen as beneficial or providing competitive advantage then others in the industry will retain those practices. Therefore, this is an ongoing struggle of variation, selection and retention.
The concepts themselves are simple enough and are only mentioned so that the entrepreneur can observe and discuss the nature of their ambiguous environments. Understanding these concepts will make the entrepreneur a smarter business operator.
The Entrepreneurship 101 Series
Other installments in this short series on the definition and challenges of entrepreneurship are below. There is a special thankyou to Dr Colin Jones from the University of Tasmania for providing the underlying theoretical component that makes up the bulk of this series.
- Definition of a Nascent Entrepreneur
- Four Abiding Elements of Entrepreneurs
- Entrepreneurs and their R & K Strategies
- Entrepreneurs & the Environment
- Entrepreneurs & Gaining Legitimacy
- Entrepreneurship & Types of Selection
- Entrepreneurs & Occurrences of Environment
- Pulling Entrepreneurship Theory Together
