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Entrepreneurial Strategy: how to navigate the new pandemic and digital normal

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Entrepreneurship arises from the recognition of an explicit or hidden problem, often from exogenous shocks. But an entrepreneurial mindset is not enough: it needs an overall strategy, a framework and the tools to navigate this new pandemic and digital normal. In the end, it is a process based on a scientific and experimental approach.

 

Antonio Ghezzi, Associate Professor of Strategy & Marketing, Hi-tech Startups and Digital Business Innovation
School of Management Politecnico di Milano

 

Entrepreneurship is commonly defined as a constant search for new business opportunities.

What’s an opportunity? Opportunities can arise when exogenous shocks reveal competitive imperfections which leave some space open for intervention and action. They might also happen when resources and competencies, owned by you or some else, appear or acquire a new value (such as when they are recombined to deliver a new solution or when old problems are resolved in new ways). Sometimes, opportunities are created by visionary minds who challenge common assumptions or who see a light in the darkness.

How do you take advantage of an opportunity once it is discovered or created?

Taking advantage of an opportunity involves creating new organisations. These may be traditional new ventures or more highly innovative start-ups, which build viable business models around the business opportunities. Entrepreneurs must formulate an entrepreneurial strategy, by: defining their vision, mission and purpose; creatively analysing industries, looking within and outside traditional market boundaries using a Blue Ocean Strategy or using a lean start approach by designing innovative business models and validating them on the market by acquiring customer feedback through experimentation.

These are the main entrepreneurial steps, which make it a restless force that challenges and creates traditional industries, and constitutes the major growth thrust in mature economies like Italy’s.

What is the relationship between today’s mega trends and exogenous conditions and entrepreneurship? How do the “new normal”, born of a fast-spreading pandemic and a growing digitalisation trend, affect entrepreneurial action? And can entrepreneurial action help overcome current threats?

Entrepreneurship is born and naturally thrives in uncertain market conditions and turbulence. New ventures and start-ups either emerge from discontinuities or create them, through disruptive initiatives and business models. You need an entrepreneurial mindset when sailing troubled waters.

Entrepreneurship is about turning threats into opportunities. As a common saying goes, in entrepreneurship everything starts with “pain” which is the recognition of an explicit or hidden problem, that the entrepreneurial team strives to solve in an original and effective or efficient way. This is something we clearly experienced when investigating start-up responses to the COVID-19 crisis. Not only did several start-ups perform interesting pivots of their business models to restore viability, but others were created to help overcome the crisis.

Entrepreneurship constantly looks to design and bundle new tools into compelling value propositions that can rapidly scale. This is the case with digital technologies, which display a strategic and entrepreneurial side beyond their technological dimension and should be seen as enablers for new products, services, business models and whole industries.

Embracing an entrepreneurial mindset to catalyse entrepreneurial action and make it practical within an overall entrepreneurial strategy provides the framework and tools to navigate the new pandemic and digital normal. This applies to start-ups and innovative projects inside well-established organisations, where “intrapreneurial” endeavours are needed for business renewal.

At Politecnico di Milano’s School of Management, our close ties with the Italian and international startup ecosystem allow us to design theoretically sound as well as practice-oriented research, and convey its main takeaways into an enriching and action-learning teaching experience.

This theory-teaching-practice virtuous loop allowed us to address a key point often puzzling would-be entrepreneurs: entrepreneurship can be taught and learnt.

Entrepreneurship is not only about individual creativity and passion: it’s a process based on and sustained by an experimental and quasi-scientific approach that can be framed and transferred.

Will learning this process result in a bulletproof recipe for undisputable success? For sure it won’t. But whenever going through the famous – or better, infamous – startup’s Valley of Death, with failure rates as high as 90%, be knowledgeable of the right models and approaches will definitely come in handy.

 

The future of business schools between innovation and entrepreneurship

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International business schools are competing in a situation which is undergoing a profound and rapid transformation. The need for increasingly specialised managerial training, competition from new players and building a more inclusive and sustainable future, requires a rethink of operating and business models.
What are the transformations required for greater entrepreneurship and innovative capacity of business schools?

 

Federico Frattini, Dean MIP-Graduate School of Business, Politecnico di Milano

 

International business schools are competing in a situation which is undergoing a profound and rapid transformation. This requires a thorough rethink of business schools’ “standard” business and operating models.

Some of the trends that have recently emerged are the shift in demand for managerial training from “general management” programmes to “specialist” programmes, and stronger competition in the management training market owing to the entry of new players. Consulting and executive search companies are expanding their service to include training for the development of human capital. New “edtech” players are entering the training market, and global technology giants (e.g. Microsoft, Google, Amazon) and increasingly seeing the training world as a possible new frontier to sustain their growth.
The demand for life-long learning services is growing rapidly, due to the fast obsolescence of skills that are learned in “standard” management training courses. Extra-curricular activities and what we call “campus life” are becoming increasingly important in students’ choices. Finally, there is a “crisis” of academic institutions’ social value as they swiftly lose reputation, especially in the eyes of the younger generations.

In addition to these transformations, there are others that have been profoundly accelerated by the consequences of the Coronavirus health emergency. Business schools need to redefine their purpose and clarify their contribution toward building a more inclusive and sustainable future. But they cannot delay the start of a deep digitisation of their processes, teaching methods and approaches.

Responding to these challenges requires a profound rethink of business schools’ business model. Some of the relevant changes that should be carefully considered by international business schools’ leadership include moving from “disciplinary” to “transversal” skills, including entrepreneurship, digital skills, sustainability, critical thinking. There needs to be a move from “separate from practice” training models to “hands-on” training based on a growing interaction with managerial and entrepreneurial practice. Undifferentiated approaches for training for “homogeneous populations of students” need to move to “customised” training, in a “one-to-one” perspective from “intermittent” and time-concentrated training to “on-demand” training, and continuously mixed with students’ professional activity and private life. We need to move from Face-to-face vs. digital training to “omnichannel” training models. The focus on the production of knowledge through research and its transfer through a portfolio of training products must change to the research and integration of knowledge available outside the business school boundaries (for example availability of high-quality training content on MOOCs – Massive Online Open Courses platforms).

These transformations have a scope and potential impact that clash with the “bureaucratic” culture of business schools, their consensus-building processes, and governance mechanisms that require time to approve decisions fail to meet the above conditions. It is essential for international business schools’ leadership to promote a transformation of organisational culture, processes, staff skills, and organisational structures for greater entrepreneurship and innovative capacity. This means borrowing the management solutions and approaches which business schools teach and applying them to their management models. For example, to manage “radical” innovation projects, which require profound changes to established routines and operating models (e.g. the launch of distance learning platforms, or life-long learning services enabled by digital technologies), many business schools are creating spin-offs to place these projects in a more agile and entrepreneurial organisational background. Many business schools are creating positions among their Chief Innovation Officer (CIO) staff to promote a process of continuous digital innovation and transformation of operations and training. Coopetition models in business schools are becoming widespread. These aim at reaching a higher critical mass and sharing the risks and costs that radical innovation projects entail (such as the development of innovative Learning Management Systems).

Many of these transformations will take time to manifest in the world of business schools, but they will be fundamental to sustain their competitiveness over time and ensure their survival.

Being entrepreneurial in a high-tech world

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We talk with Andrea Sianesi, Executive Chairman PoliHub, Innovation District and Startup Accelerator Politecnico di Milano
Professor of Logistics and Production Systems Management, School of Management

 

Andrea, you are in charge of an incubator, so you embrace new business ideas which are still in development. What characteristics does a good entrepreneur have at this moment in history?

Firstly courage. This is the same answer I would have given before the Covid-19 crisis. Entrepreneurial initiative is a leap into the void and committing resources and time to develop ideas requires a cool head.
In addition to courage, I believe correcting one’s mistakes and make the most of the “obstacles” along the way is fundamental.

There is a need to have technical and technological knowledge about your enterprise. The entrepreneur who goes through PoliHub, has a solid technological expertise, but lacks business world knowledge. Entrepreneurs must be open to partnerships with other people who can bring complementary skills to the company, such as the ability to develop the market, or knowledge of the regulatory framework.
One must always be willing to get help.

PoliHub is a university incubator: why does the university need it?

The university ecosystem is a fundamental asset for those who want to do business. At Politecnico di Milano, we guarantee access to the business school, POLI.design and Cefriel innovation hubs, thousands of professors and researchers, laboratories covering engineering disciplines, and which are fundamental for transforming an idea into a product.

We are not just a place that hosts start-ups, we are unique compared to other incubators. In deep tech start-ups, it is necessary to carry out experimental activities in laboratories that are only found in universities, and there are companies that, following technological developments in different sectors, have detached some of their departments to join us. This allows them to work and interact with start-ups and have the same ease of access to the entire hub.

This makes the difference and the figures confirm it. Let me give you an example: Politecnico di Milano’s PoliHub, together with the Technology Transfer Office (TTO), manages the “Switch To Product” competition every year. This programme enhances the market value of innovative solutions, new technologies and business ideas suggested by students and graduates (up to three years after graduation), researchers, alumni and professors of Politecnico di Milano, offering financial resources and consulting services to support the development of innovation projects through technological validation and entrepreneurial acceleration. This year we saw a 20 per cent increase in applications. This is an incredibly significant growth, which gives us hope for an increase in new successful companies.

Covid-19 has turned the tables and changed boundaries and business ecosystems, with short or long-term effects, what have you noticed about this situation?

Recently we feared that the pandemic could wipe out the start-up world as they were unable to access forms of subsidy available to other business and professional categories. The problem is real: start-ups today find themselves in greater difficulty than companies that are already well established, but for the moment the system is holding up and showing encouraging signs.

An unexpected effect has been an increase in demand to access incubation services. There is a strong demand to enter the business world, perhaps due to the realisation that it is necessary to know how to get back into the game, even for those who have a well-established career, creating new income opportunities where job stability is lacking.

The demand increase for services comes not only from potential start-ups, but established companies, who decide to relocate to smaller and leaner offices located next to centres of excellence. This new trend is perhaps facilitated by the spread of smart working, which makes it easier to manage small offices than larger ones.

You are describing a scenario with different opportunities on the horizon. What are Polihub’s future plans?

The challenge for us is to find resources that can accompany the start-ups from the idea, and the university, with its resources related to European projects and grants, funds and investors willing to support them throughout their growth phase.

I like to picture the process as crossing a valley. Start-ups need a “bridge” between the two phases that allows them to have the necessary resources to make their idea interesting for investors.
For the idea to be interesting it needs to prove that it is solid and technically verified and has a target market.

Often the technical tests already require considerable investment and are lengthy. We are committed to making this “bridge” effective, and as short as possible, compared to the objectives.

Our future project is to find institutional investors and venture capital, but with a wide-ranging international approach and not just a domestic exposure for our start-ups.
We think with an international logic, not only financially, but using every asset made available by the global network of incubators of excellence.

We are certain that pooling these capabilities will enable us to make a real difference.