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THE VIRTUAL SUPPORT CENTRE AS BASIS FOR STIMULATING GROWTH IN A DEVELOPING COUNTRY
Prof. G.J.P. Maas International Chair in Entrepreneurship1 Tel: 082 374 2651 Fax: +27 41 504 3859 E-mail:
[email protected] Private Bag X6011 Port Elizabeth South Africa 6000
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The International Chair in Entrepreneurship is a joint project between Rhodes University and Port Elizabeth Technikon in South Africa and the University of Limerick in Ireland.
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SUMMARY
Entrepreneurial education and research activities should manifest into visible activities in order to act as motivation for further similar activities. However, in order to support a struggling economy the focus cannot only be on startups but also on the support of growing initiatives. One way of achieving above is to establish virtual support centres. In a developing economy one cannot afford the luxuries of newly build innovation centres and techno parks, which are capital intensive. In this regard, existing facilities must be used more optimally. Therefore, the emphasis is on virtual support centres. In order to gain experience in the application of such a system, the biotechnology sector was selected as basis for experimentation due to its involvement in world-class markets and the utilisation of cutting edge technology and knowledge.
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INTRODUCTION
The fast changing environment in South Africa and the rest of the world is a fact. At this stage, South Africa finds itself in position 42 from a total of 47 countries regarding world competitiveness (The IMD World Competitive Scoreboard, 1999). The danger is that South Africa can slide further back and can then easily be regarded as a waste land, and therefore not receive adequate attention from international investors. Solutions must be found to stop this trend and support actions that can help this country to grow and prosper to its fullest potential. However, in a fast changing environment South Africa cannot just play catch-up with the rest of the world. If it is serious of becoming a true and recognised player in a world context, strategies must be pursued that will allow South Africa to leap frog into the bracket of leading nations in the world. This process will have positive spin-off effects to the national environment – something that South Africa urgently needs.
Various strategies can be formulated to support accelerated growth and development. One way of achieving that is to ensure that strategies are in line with current realities as well as future expectations – nationally as well as internationally. It is therefore necessary to have a holistic view when planning nationally. Fox and Maas (1997:8) who state that no country can exist in isolation support this. For this reason, rapid change cannot be regarded as
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typically South African. Therefore, international trends act as basis from which sustainable strategies must be formulated. In this regard, Johnson (1995:13) identifies the following critical international trends: •
The ability to think globally but act locally (referring to glocalness).
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Organisations will become leaner, meaner and flatter in order to respond quickly to changes in the environment.
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There will be no jobs for life. The pressure will be on individuals to ensure employability.
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Everything must and will be customers focussed.
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Knowledge is the key to future success – thus the emphasis on knowledge workers.
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Continuous learning will be essential to ensure a flexible paradigm that is needed to continuously identify new ideas, to adapt to the new rules of competing.
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Sharply define boundaries for organisations and industries will not exist.
The above trends are also supported by the well-known trends of Naisbitt (in Kreitner, 1989:96-97), namely a shift away from an industrial society to an information society, from forced technology to high tech/high touch, from national to international economies, from short term to long term, from centralisation to decentralisation, from institutional to self help, from representative democracy to participative democracy, from hierargies to networks, and from either/or to multiple options. In order to survive in such an environment, success is determined by the ability to process and apply information and state of the art knowledge.
The above trends can be regarded as a manifestation of the dynamic environment in which change has a discontinuous nature. It can therefore be argued that a special approach is necessary for such an environment. An approach must therefore be found to make sure that sustainable growth and development can be achieved. In this regard, entrepreneurship is accepted as one of the instruments able to generate prosperity in a rapidly changing environment (Timmons, 1999:4; Garavan, Cinnéidre, Fleming, 1997:11; Kuratko and Hodgetts, 1995:7). In this regard it is therefore safe to assume that an entrepreneur can be regarded as a person who can add value, or in the definition of Maas and Fox (1997:10) a person who can identify opportunities and use them to their own and the internal and external environments’ benefit. These entrepreneurs, however, are also influenced by dynamic and discontinuous changes in the environment. Staying ahead in such an environment become more expensive with
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increasing focus on innovation. Jones-Evans, Klofsten, Andersson and Pandya (1999:47) add to the above that “…competitiveness in the global economy will depend on technological or innovation-based strengths, such as the ability to apply new technology, to develop new products, to access new markets successfully, to incorporate best practices in the management of enterprise, and to develop skill levels across the full spectrum of the labour force”.
Deducing from above, entrepreneurs need to develop products and services without the benefit of extrapolating. They must be brave enough to leapfrog into the future.
In this regard, Rabbior (in Kent, 1990:57) labelled
entrepreneurs “creative destructors” – they create new things while destroying old, unworkable things. In this unique environment, entrepreneurs simply cannot be trained along traditional methods.
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THE BIOTECHNOLOGY SECTOR
To develop entrepreneurship is not a simple and singular system but comprises several sub-systems that must be complementary and contextually appropriate. All these sub-systems must be in equilibrium to create a culture of sustainable entrepreneurship. These sub-systems include:
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A sound understanding of the environment.
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An understanding of entrepreneurial processes.
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Skills, behaviours and attitudes that put entrepreneurs on the cutting edge of knowledge, technology and application.
Another sub-system that may play an important role is the sector in which the entrepreneur operates. Questions that can be asked are:
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Whether this sector is a growth sector?
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Whether this sector is globally competitive?
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It can be argued that entrepreneurship can only fulfil its role of growth and development if the primary focus is on high potential sectors. In this way the economy can grow and develop to such a level where secondary but equally important focus can be on lower potential sectors, which can play a very critical role in supporting higher-order entrepreneurial ventures. If the emphasis is only on start-ups and neglecting support for growing ventures, the economy cannot be energised to live up to its full potential. Due to its high population growth South Africa needs to grow at least 5.5% a year to maintain existing wealth levels – the forecast for 2000 is 3%! Success stories in the growth phase should also be made more visible to act as motivation. This is supported by Schumpeter (Roberts, 1991:38) who states that “the greater the number of people who have already successfully founded new businesses, the less difficult it becomes to act as an entrepreneur does.”
Taking above in consideration, the biotechnology sector in South Africa represents a high potential growth sector. The problem, however, is that while the scientific research process is producing world class ideas, there is little if any follow through from the research process to commercialisation. Therefore, the entrepreneurial process is not functioning optimally. In order to stimulate biotechnology entrepreneurs, students and academic scientists must be trained and stimulated to produce and commercialise world-class ideas. These ideas must have the potential to lead to high growth firms which can act as energiser for the economy. One way of ensuring that is to refocus on the importance of venture teams. In this regard, Roberts (1991:346) indicates that co-founded organisations perform better than sole founders do. Students should therefore be trained to create and manage such venture teams.
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THE ROLE OF HIGHER EDUCATION
What then is the role of higher education in developing biotechnology entrepreneurs? In this regard O’Meara (1997:1) summarised it as follows: “The relationship between academia and business today is far removed from this traditional view, with the academics role having changed form one of teacher to doer. This view is based upon the belief that we are now part of the new knowledge based economy.
We have left the industrial age for the
information age where the resources necessary for success are knowledge and the ability to process information. This coupled with the reduction in government funding for third level research and the requirement of an industry
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partner to obtain some EU grants, has prompted academic institutions to develop programmes that establish supportive linkages between industry and academia.”
The above is equally relevant to the South African situation who also experiences a declining budget support from government and pressure to be more real time and real life orientated. Higher education in South Africa, as a major source of developing the leaders of the future, is challenged to refocus its research and training activities to produce people with skills, vision and drive which are appropriate to generating socio-economic growth and development.
In order not to confuse the academic and commercial sectors, O’Meara (1997:11-13) suggests that a mechanism should be developed that will make a distinction between university objectives and commercial activities. These mechanisms include:
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The university where the product leaves it in the form of a prototype at the proof of principle stage.
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The innovation centre where the academic becomes familiar with the commercial side of the process.
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The outside world (e.g. science parks and techno parks) where the product is further developed and the business structured.
Above mechanism results in certain places (e.g. University of Limerick) in different buildings i.e. the university, the innovation centre and techno park. This, however, can be an expensive system for the South African education sector because of, inter alia, declining budget support, distances from major markets and the scattering of higher education institutions. A further burden is the already high demand on scarce resources for various issues such as education in general, health and security. In this regard scarce resources also refer to scarcity of expertise because of the brain drain in South Africa.
Due to above, it can be argued that a less expensive but equally successful approach must be developed for the South African situation. Such a process can be the structuring of virtual support centres. In this situation virtual means that producers of ideas stay in one location, but access and share manufacturing data in other locations (Kosiur, 1997:203). In reality it means that various institutions can participate in this system without appointing more people
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or developing new infrastructure and in the same time gain more knowledge, experience and entrepreneurial skills. A symbiotic relationship is formed in such a manner.
That again supports the entrepreneurial principle of
networking where the focus is on exploiting opportunities and not the control of resources. A high visibility and the dissemination of experiences from this project can add to the accelerated development of biotechnology entrepreneurs.
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OPERATIONALISING A VIRTUAL SUPPORT CENTRE
A process that can meet above requirements is outlined in figure 1.
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Universities/Technikons involved in the field of biotechnology should encourage student venture teams to produce world-class ideas. This can be done in the format of a competition, which allows for short-term gains. This can ensure that motivational levels will be maintained on a high level during an innovation process, which is spread over the longer term.
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A panel of international experts on the fields of biotechnology and entrepreneurship then select the best ideas. Arrangements regarding funding for these projects must then be finalised. To support this process sponsors who will be willing to participate in this must be identified well in advance. That will allow the panel to allocate a specific amount to a project. To support this process a potential budget was developed. The total budget can be divided into three major categories namely the prize money for the development of the various projects, general student development (e.g. training programs) and general administrative expenses (e.g. printing, travel and accommodation). The costs of this pilot project will be R2 200 850. The detailed activities and budget is attached.
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The selected student venture teams, who can represent different institutions, will participate in four structured follow-up sessions per year. During these sessions the focus will firstly be on the transfer of entrepreneurial skills to these students. Secondly, time will be devoted to in-depth debating regarding the progress of each project.
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Support from international experts in the fields of biotechnology and entrepreneurship is a necessity during the total process. That will allow students to solve problems timeously and to find better ways of progressing through the entrepreneurial process. This phase can be incorporated into the structured follow-up sessions.
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To ensure continuous communication, it will be expected that each participant will contribute actively on a chatline. This chat-line will be hosted by the web page of the International Chair in Entrepreneurship (ICE).
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The total process will be evaluated and feedback provided to universities/technikons. That will allow all participants to improve their participation and to ensure a sustainable commercial process over the longer term.
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Continuous participation in chatlines
Structured follow-up sessions
Universities Technikons
Ideas
Selection
Funding
Implementation
Support from international biotechnology and entrepreneurial experts
FEEDBACK
Figure 1: Virtual Support Centre
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In the start-up phase ICE will be the coordinating institution. It is foreseen that this role will eventually be a natural process of all institutions. The International Chair in Entrepreneurship (ICE) is a unique joint venture between business, government and higher education institutions. In this regard the De Beers Fund Educational Trust, Anglo Gold Fund Educational Trust, national research foundation, Port Elizabeth Technikon, Rhodes University and the University of Limerick in Ireland joined forces to stimulate socio-economic growth and development by supporting of creative entrepreneurial initiatives in disadvantaged regions. Therefore, the vision of ICE is to create a sustainable entrepreneurial culture in South Africa. Realising this vision can make a significant contribution to the stimulation of socio-economic growth and development in a world context; the successful development and implementation of entrepreneurial initiatives in economically disadvantaged regions; meeting the challenge of creating job opportunities; and uplifting the quality of life of the people of the Eastern Cape Province and beyond. In order to operationalise the vision, the primary focus of ICE will be on education, research and networking. Entrepreneurship, which is a philosophy rather than a discipline, should become part of all disciplines.
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SUMMARY
Above is a unique project that will definitely be a first for South Africa. Not only is it unique but also has the potential to contribute to the growth and development of South Africa. It further can act as a wonderful opportunity to create a model for the development of virtual business centres in other SET-based programs. Therefore, it is recommended that this project be supported and implement as a matter of urgency. Lastly, the benefits of this project can be as follows:
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To highlight the importance of the biotechnology sector.
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To create a high tech entrepreneurial culture.
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To stimulate growth and development of the economy.
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To create a model that can be used by other disciplines in the South African and southern African region.
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REFERENCES Garavan, T.N., Ó Cinnéide, B. and Fleming, P. 1997. Entrepreneurship and business start-ups in Ireland – an overview. Dublin: Oak Tree Press. Johnson, M. 1995. Managing in the next millennium. Oxford: Butterworth-Heinemann. Jones-Evans, D., Klofsten, M., Andersson, E. and Pandya, D. 1999. Creating a bridge between university and industry in small European countries: the role of the industrial liaison office.
Research and Development
Management, 29(1), 47-56. Kent, C.A. 1990. Entrepreneurship education – current developments, future directions. London: Quorum Books. Kosiur, D. 1997. Understanding electronic commerce. Washington: Microsoft Press. Kreitner, R. 1989. Management. Boston: Houghton Mifflin Company. Kuratko, D.F. and Hodgetts, R.M. 1995. Entrepreneurship – a contemporary approach. 3ed. New York: The Dryden Press. Maas, G.J.P. and Fox, W. 1997. Entrepreneurship and public management. Juta & Co, Ltd. O’Meara, M. 1997. Campus Companies – an Irish perspective – with a specific focus on TCD and UL. A project been carried out in part fulfilment of the requirements for a Bachelor of Business Studies Degree at the University of Limerick. Roberts, E.B. 1991. Entrepreneurs in high technology: lessons from MIT and beyond. Oxford: Oxford University Press. Timmons, J.A. 1999. New venture creation – entrepreneurship for the 21st century. Boston: Irwin McGraw-Hill.
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DETAILED ACTIVITIES AND BUDGET
DETAIL
SCORE CARD
Discuss details of project and finalise approval
Approval
Finalise details regarding project
Finalised plan
Launch of project
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Launched project
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Brochures
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Entry forms
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Press releases
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Governing structure of project
Evaluating of proposals by national and international experts
Five best proposals
Entrepreneurial training for students who are accepted and
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finalising support for winners contractually
Entrepreneurial program
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Final arrangements and contracts with winners
First follow-up session between participants and
Follow-up session
biotechnology experts – 2 day session Second follow-up session between participants and
Follow-up session
biotechnology experts – 2 day session Third follow-up session between participants and
Follow-up session
biotechnology experts – 1 day session Fourth follow-up session between participants and
Follow-up session
biotechnology experts – 1 day session Final follow-up session between participants and
Follow-up session
biotechnology experts – 2 day session Finalising and review of project
Evaluation report
Finalising case studies for use by HEIs
Case studies
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BUDGET DETAIL UNIT COSTS NUMBER Accommodation Accommodation ICE Brochures Case study Development of prototypes Fax and tel. General Refreshments Stationary Training: entrepreneurship Travel and accom. Experts Travel: feedback Travel: ICE
350 350 5000 250 200000 50 100 100 100 2000 15000 2000 2000
210 21 1 30 10 10 10 210 10 10 2 7 10
TOTAL 73500 7350 5000 7500 2000000 500 1000 21000 1000 20000 30000 14000 20000 2200850
