How entrepreneurs take the implausible and create opportunities

The most successful entrepreneurs take radical, seemingly implausible, ideas and highly tailor their business model to them. Companies should do the same - argues Professor Gerard George.

By Elliott White

Successful entrepreneurs take radical ideas that appear implausible and find ways to convert them into opportunities for value creation. While many fail to do this, a small percentage of entrepreneurs do create social and economic value. Professor Gerard George explained the common approaches of successful small and mid-sized companies during his recent Business School Inaugural Lecture.

The six-point recommendations begin by encouraging business people to appreciate the importance of good design, the organisation of a company's activities and a clear understanding of the types of transactions a company carries out to create value. This cluster of issues comprises an organisation's ‘business model', a concept developed and tested in academia and used by many businesses.
Professor George has found that entrepreneurial ventures, either in small firms or within larger corporations, work best when the organisation is moulded around the idea or market opportunity.

This counters the typical approach of trying to allocate new products or services to existing systems and organisational structures. Drawing from in-depth case studies of businesses operating in numerous and diverse markets - from stem cell exploitation to high-end motorcycle manufacturing - he finds that companies which tailor their structure to fit the business opportunity were more competitive than those that started with an existing structure and tried to retrofit the opportunity into it. To order an organisation around a potentially valuable idea requires the acceptance that business and market opportunities are not regular, predictable or homogenous. The diversity of each idea and the challenges it will entail warrant a highly tailored business model to suit the specific case.

 Professor George gave the example of a complex, highly-functional prosthetic arm featuring advanced robotics and sensors. While it falls into the category of new products in the prosthetic limb market its expense and complexity make it very different to a $20 knee replacement being launched in India. While in the same product category, each product and each market requires a radically different business model design to achieve commercial success.

Correctly marshalling a company's interrnal response to harmonising operations and objectives across a company's various units form the second two recommendations. While a perfect strategic fit is the goal, Professor George cautions that no system can be 100% united in all its activities and resources and so some conflict within the firm and its constituent parts is unavoidable. Businesses that succeed are those that create coherence among consistent activities, while recognising and accommodating the flaws in the market opportunities they pursue. This approach debunks the myth of perfect opportunities. Instead Professor George argues for coherence over strategic fit as the key driver of successful commercialisation.

Finally, the personality and style of the individual entrepreneur is relevant. The most succesful tend to be risk takers who are perpetually scan the horizon planning how to move to the next business opportunity. In this process of building bridges into the unknown, adept entrepreneurs will often encounter unexpected opportunities and are able to develop them into new ventures.

Professor George's work is incorporated into the School's taught programmes and executive education programmes. Watch the full lecture.

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About Professor Gerard George

Gerard George is Professor and Deputy Head of Innovation and Entrepreneurship and also serves as the Director of the Rajiv Gandhi Centre. Before joining Imperial, he held tenured positions at the London Business School and the University of Wisconsin-Madison. He was Innovation Fellow of the Advanced Institute of Management, ESRC. An award-winning researcher and teacher, he has published several articles in leading scholarly journals on the topics of resource constraints in entrepreneurial firms, value creation, and innovation in large and small organisations. He is actively engaged in guiding companies on technology venturing and international growth. He serves on the Strategy Board of the Energy Futures Lab and on many prestigious editorial boards including the Academy of Management Journal and Academy of Management Review.