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At the heart of the identity of a practical creator or innovator is a craftsman or woman. At the core of this person is their creativity aligned to a passion and a purpose. The full innovation process is an expression of their creativity from idea, through design and prototype to the tangible production of something that is useable by themselves or others for the purpose that it was created for. Every business offer is a creation by one or more people. Typically there is a full business team involved for successful new product development and business acquisitions. A modern term used to describe a business retained ‘entre-preneur’ is an ‘intra-preneur’.
As a director or leader of a sustainable business it is your responsibility to make sure that creativity and craftsmanship of profitable products and services is a continuous function within the business. Without it any business is unsustainable. Whilst the old adage ‘it is easier to develop something that already exists than to create something from scratch’ might be true, to be the leaders in any field a business needs to have organic growth as well as acquisitive growth. To be leaders in the field of organic growth, is to have the leaders in your business field working for you or with you.
The question is, do you create an environment that attracts and keeps the innovative leaders in the field with you? Why would they want to work in or with your business? What is in it for them? Why would they stay?
Long term debt versus long term creation
It is fair to say that analysing and assessing this issue is difficult whilst a business is still a going concern; different business philosophies abound. The assertion and principles here are simple and sound. If a business takes on debt and higher levels of gearing then it will need to run a short-term profit focused and performance business to pay off the debt. With the added mindset of scale and debt, there is often an over-reliance on a performance culture. Innovators are often not ‘at home’ in a predominantly performance culture and will leave. Consequently there will be little ‘intra-preneurship’. The consequence is that a product or service life-cycle crunch will be heading down the tracks. Such an organisation will need to be acquisitive to grow. When the statistics are that 80% - 90% of all acquisitions add no value whatsoever and when price earning ratios are high – the strategy of a business built on debt is a continuous process of debt and interest payments. A business started from natural innovation and entrepreneurship and maintained is consequently ‘debt free’ or ‘low debt’ and manages an environment which has the ‘intra-preneurs’ as the engine of their future.
The creative business environment
Assume that a business decides to run an intra-preneurial strategy. What are the problems and challenges?
Firstly a board must decide which part of the industry innovation process it wants to be in? Typically universities take on the role of pioneering research and development. The internet was born in a UK academic environment. Social Media was born in the American business schools. The original ideas were hatched whilst in academic environments. Businesses tend to work more from the application end of innovation; identification of customer needs, gaps in the market, society level of issues that need addressing. A business is looking for a specific pay-back on its innovative investment and needs to run a 5/10/25 year value add on innovations that reach market and produce a return. This ‘nursery’ level of business needs to be a business within a sustainable business and should be run as such. A sustainable business successfully runs a ‘business nursery’ for the long term. The intra-preneurs work in it, alongside it or on assignments from it. A sustainable business separates its ‘capital’ funded business and business phases from its ‘creative capitally' funded businesses and business phases. Financial investment creates ‘interest’, creative investment creates intellectual property or patents.
Reward for creativity
The narrow minded view that money is power kills the long term sustainability of any business. All shareholder businesses will end up breaking up like the Roman Empire. A fully thriving growing ‘seed’ business ceases on its path to long term independence, sustainability and vitality as soon as money becomes ‘the king’. Just as an idea has a useful life, so an investment has a useful life too. Neither the innovators nor the capitalists should necessarily ‘own’ a business; ownership, directorship, creativity and investment are four separate roles and four separate functions of a sustainable business. Each needs a reward for ‘its function’ as part of the whole. Many businesses take on investment when actually what they need is more time for a natural creative phase to mature. ‘Force ripening’ a business does not actually pay off. A director of a sustainable business needs to assess what the limiting factors in any situation are; typically these boil down to bottlenecks in creativity, capital, capacity or capability. Each resource should be rewarded for its part of the whole and none of them should become the dictator of the whole. In the Enrichyou programme on Business Innovation there are seven identified levels of effective creativity that add to business sustainability. Each has a different level of risk and reward and each needs its appropriate level of reward – some of which is short term and can be covered by salary and wages. Some is long term and can be covered by income or profit share.
A long term sustainable business does not rely on borrowing or making money ‘its king’. Without the sole reliance on ‘capital’ as the engine house a long term sustainable business must learn to innovate from within. To do that it must create the right environment to attract and retain ‘intra-preneurs’ and it must reward them for their true value to the long term creation of wealth and sustainability. Without a full commitment to the process of putting creativity at the heart of the sustainability strategy then there will be gaps in the creative process and then consequently gaps further down the line with the performance or delivery of profit. Directors of a Sustainable Business need to learn how to manage the long term cycles that come with the management of the creative process.
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