On Entrepreneurship, at the End of the Year

Andrei Kelemen
CEO @ Cluj IT Cluster

By the courtesy of Ovidiu (Matan, of course), I was invited to deliver a presentation on IT DAYS 2014. As I did not manage to go through everything during the time allotted to my presentation, the writing of this article gives me the opportunity to complete my presentation. This is what I wanted to say by all means!

Entrepreneurship can no longer put technology aside nowadays, no matter the domain. We can imagine any business activity you like and, without much effort, we can attach a technological function to serve that activity. Moreover, technology has become in time a differentiating element, which can ensure the competitive advantage necessary to success. Nowadays, we register an unprecedented acceleration of the rhythm of socio-economic progress. Most of the people believe progress will continue to be a linear one, but it is no longer like that. The technological progress or the one favoured by technology is now an exponential one. For illustration, we have chosen a single example, but it is conclusive for its impact on everything: the project of deciphering the human genome took 20 years, during the first 15 years of the project, only a small part of the genome was deciphered (less than a third), the big progress was made during the last five years, only due to the technological advance. What had seemed a failure, turned into a great success. The presence of technology does not guarantee this success, but it seems to become an ingredient of “the salt in your food” type (if you know the story). And since we are talking about food, is there an infallible recipe to guarantee our success among the people at our table? In other words, can we follow a certain strategy, which applied step by step should lead us to the desired clients’ satisfaction?

An obvious answer is NO, otherwise we would all be millionaires and we would release products and/or services in conferences broadcast all over the world. Afterwards, we would set up foundations to help those who haven’t put the “recipe” into practice. And then what? I will not answer directly to the question, but I will ask at least two other. Here they are:

Which are the other personal ingredients a (successful) entrepreneur needs? What about the societal ones?

In the following lines, I will try to answer these questions:

The entrepreneurial spirit is what pushes us to initiate activities on our own, to make profit out of them, to get personal benefits and, possibly, group benefits. Entrepreneurship, namely the immediate effect of the entrepreneurial spirit, is perceived by many as the main factor for the world’s progress, and business – the blood within the global organism which continued to circulate even during the critical world conflicts. There are plenty of examples where the enemies (ideological or even in an armed conflict) continued their business relations. I have chosen but two, as they are most representative:

• USA and Germany, during the second world war (a famous example is Ford, with his factory in Germany, who, at a given moment, used French war prisoners as workforce!).
• Germany and USSR (Russia) during the cold war (USSR supplied the Federal Republic of Germany with gas, continuously; FRG built and maintained the major plants for the exploitation of the Russian gas). FRG has never suffered from cold, whereas the German Democratic Republic, theoretically an ideological ally of the USSR, has!

Assuming risks is an essential personal trait, without which entrepreneurship is not possible. The way in which we are aware of the risk determines the course of our actions. It affects our personal life, our professional life and our interaction with society, in general. Basically, the way in which we understand to take a risk upon ourselves is a personal feature, which can be, of course, also trained by education. However, its existence does not guarantee our success in business.

What is, in fact, the entrepreneurial spirit? Is it the same thing with the entrepreneurial culture? Let’s begin first with the etymology of the word “entrepreneur”. The origin of the word is French and it used to designate a person who was between two workplaces, namely an unemployed! It is interesting how a word referring to a person who had no job has come to mean, nowadays, a person who offers jobs. The entrepreneurial spirit is defined in the field of study as the integration, in variable proportions, of some individual characteristics, including without fail:

• Risk assuming, which I have already mentioned
• Unicity, which is not the same with
• Creativity
• Adaptability
• Knowledge of the business domain
• The wish to exploit the existing potential and
• Self-destruction – namely, in most of the cases, if other people are not put in charge with the initiated business (for management, growth, etc.), its creator, out of the powerful wish to engage in a new creation, will destroy the existing one.

Entrepreneurial culture is an assembly of tangible and intangible societal characteristics which favor the manifestation, or to put it differently, the materialization of the entrepreneurial spirit. In respect to the tangible or physical features, things are rather simple – namely we are talking here about the infrastructure, in particular, which can consist of ways of access, utilities, ground etc… The intangible ones are historically represented by:

• the legal frame
• education / training
• individual mentality
• and society, focusing on two components – failure acceptance and trust

Next, we will make an inventory of these tangible and intangible features. This inventory will begin with those characteristics we do NOT have, to conclude with those we DO have, remaining thus in the positive area of things.

• There is no national policy regarding the entrepreneurial education, meaning there are no systematic programs, of a wide scope or on a long term, with results, to encourage private initiative.
• We have no history, nor favorable memories (how many successful Romanian companies do you know to have a long history behind?)
• We do not accept failure as something natural, as a step in learning; failure is strongly blamed by the family members, friends and society in general.
• We do not have the tradition of mentorship, meaning that the people who have succeeded in business are not preoccupied to leave more than some material cumulations behind; this can be explained also by the fact that those who have succeeded haven’t always applied the cleanest methods of doing business and they wish this thing to remain unknown.
• We do not have the custom of association, of partnership.
• We do not have the capacity to introduce innovation / creativity in what we are doing, even though we say we are “inventive”. I will give you an ordinary example, of the same culinary area I started this article with. Let’s take a few ingredients: flour, cheese, basil, tomatoes. All of them present also in the harvest and farms of our ancestors. But who has invented the most widespread kind of food in the world, pizza? You know the answer. And the list can surely go on.

However, what is it that we DO have?

A possible answer would be the following:

• Emergent economy, which means a lot of opportunities.
• A growing body of those who wish to begin a business on their own, but still far from the most efficient economies (world’s 42nd place and Europe’s 25th, according to Global Entrepreneurship Index).
• A direct connection with international information media and exposure to traditional entrepreneurial cultures, and in this respect, Cluj IT is in a very good position.
• A young population (the average age is lower than in most of the European countries) that assimilates and quickly embraces the latest technologies or innovations. I have heard, in the context of the recent presidential elections, of the “facebook party”!
• We must agree that the initiative / entrepreneurial spirit is no longer sufficient. Maybe it was enough 20 years ago. But nowadays, a certain degree of sophistication is necessary, which means: — market research; — knowledge of the domain (the higher the degree of business sophistication, the deeper the knowledge should be), — request creation / cultivation through marketing strategies suitable to the customer’s / client’s profile. This means knowing it – that’s where knowledge of other domains is necessary, besides the knowledge of the business, one should also know sociology, psychology. — work, dedication, — competitional environment (competition is good!)
• capital (preferably, that of others, not because it is better to spend other people’s money, but because this is how you prove that others, too, trust in what you are doing.)

But it is important to have an environment where our business can develop naturally. This environment is, in fact, the entrepreneurial culture.

How can we accelerate the formation or consolidation of the entrepreneurial culture? A part of the answer is represented by the clusters or the poles of competitiveness (“pole de competitivite” for the francophone people among you). The clusters are chain valuable structures of an industry, having an economical function and they perform a strategic alignment on areas of common interest. This thing is possible since, from a certain level up, competition among companies (especially IMMs) no longer exists. Economists have called this phenomenon “co-opetition” (cooperative competition). Clusters, according to the definitions that brought the Nobel prize for economy, 20 years ago (see prof. dr. Michael Porter, as well as the very interesting federal politics of the USA of sustaining the clusterization – www.clustermapping.us), have a function of promoting the development of the ecosystem. Among the advantages of the development of the ecosystem, I would like to mention:

• the possibility of introducing some new, innovating elements of constant actuation of the economic growth;
• the increase of competition which leads to the increase of competitivity;
• the propagation of prosperity through the wide-spreading of successful business model(s).

We need innovative ecosystems, meaning those ecosystems where there is entrepreneurship capacity, but also social capacity (the capacity to generate innovation and to assimilate its effects). And Cluj is very well positioned from this point of view for technological business domains, since:

• there is a young population, with a high capacity of absorption/ adoption;
• there are highly rated universities on the national, but also international level, which attract talents
• Ex. UMF – over 1000 French students, and the trend is growing, inclusively for other universities (even USAMV is beginning to have foreign students);
• there is a nascent chain-reacting amount which requires a different kind of development, one that is based on real competition, but, at the same time, with the desire of social growth on a scale.

In other words, there are good premises for us and the next generations to create the history of Romanian entrepreneurship.

Happy new year and a good entrepreneurial year to those who wish it!