Entrepreneurial Firms And Their VUCA Readiness
How often do we spread our wings on entrepreneurial firms? Since the COVID-19 pandemic began, start-ups are in discussions, but do we ponder what happens to these start-ups, as they age? What are they called? How do you define them? How do you categorise them? Let us discover!
Entrepreneurship is a broad umbrella that encompasses entrepreneurs and entrepreneurial firms. It can be said that entrepreneurs and entrepreneurial firms are the result or by-products of the entrepreneurship process. Entrepreneurship uncovers markets for new products and services, which results in the formation of entrepreneurial firms. The three terms are organized in a hierarchy because firms are founded by individuals who are often referred to as entrepreneurs, and entrepreneurship is embodied in firms, making them entrepreneurial by definition.
The Genesis
Entrepreneurship is theorised as a judgemental decision-making process that is undertaken in volatile, uncertain, complex, and ambiguous market situations by individuals termed as entrepreneurs. These incumbent entrepreneurs have the aim of earning a profit, undertaking risks and anticipating future market conditions by creating, organizing, and reorganizing entrepreneurial firms, while combining heterogeneous assets and resources to satisfy consumer wants. These firms are initially "start-ups," which are, by definition, human establishments designated to craft a new product or service under the conditions of extreme uncertainty. The start-ups, after finding an apt business model and a suitable market fit, graduate to becoming an entrepreneurial firm. Every entrepreneurial firm is initially a start-up, but every start-up may or may not become an entrepreneurial firm as entrepreneurial firms are defined as those that routinely attempt innovation and are willing to take on the risks that come with it. Entrepreneurial firms place a strong emphasis on production, and their ultimate goal is the commercialization of new and innovative ideas and products. Not every start-up may exhibit the strategic behaviour as mentioned.
VUCA, what it means?
In today’s context, "VUCA" has become the standard narrative of the modern business environment. Today’s business environment is fast-paced and characterized by rapidly changing elements, where the future is prepared, not forecasted. Entrepreneurial firms have to consistently and proactively scan the volatile, uncertain, complex, and ambiguous (VUCA) situations in order to future-proof their relevance. The term "VUCA" is an acronym for volatility, uncertainty, complexity, and ambiguity. It found its origin in military science during the scenario of the "cold war," when the American army faced a multilateral global environment, as the situation was far away from equilibrium and stability. This acronym VUCA has become the new normal.
For quite some time, India has been home to different entrepreneurial firms thanks to the start-up conducive ecosystem. Paytm, Bookmyshow, and Urban Company have flourished as entrepreneurial firms and have raised numerous rounds of funding, generated wealth, and helped the economy of the country grow. Would this all have been possible if these entrepreneurial firms were not VUCA ready? The answer certainly is "NO!"
The Entrepreneurial Firms
Information technology, innovation curve and consumerism, are the three prominent waves undergone by the Indian start-up ecosystem. Start-ups that were able to thrive through these waves are the unicorns of today, and many have joined the list of failed start-ups. When Bookmyshow was punched by the dotcom bust in 2008, Ashish Hemarajini, the founder of Bookmyshow, encountered the volatile turmoil by fostering a vision. The enterprise worked on building the non-existent ecosystem and infrastructure around the ticketing industry and built customer penetration thereon. The situation was uncertain with respect to whether the business would survive in the long run given the turbulent business environment. Ashish encountered uncertainty with understanding the circumstantial nuances. The enterprise worked on developing white label internet services and automating movie theatres.
In November 2016, Indian government abruptly announced the demonetization of all 500 and 1000 rupee notes in the Indian market, to take effect within 24 hours, marking the business environment with volatility and uncertainty. The following day, Vijay Shekhar Sharma, the founder of Paytm, published full-page advertisements on the newspaper's front page with the tagline "ATM nahi, Paytm karo!". Many say, Paytm was lucky to have the opportunity, but Paytm was already well on its way before the unexpected demonetization arrived. Paytm already had the product and the sales infrastructure in place. It took a great deal of effort to scale up, but the groundwork had already been laid in the beginning. It was the innovative approach, visionary attitude, and understanding of the chaotic environment that made Paytm go big, even in the averse situation of demonetization.
Urban Company is a start-up that connects online users with offline professionals through its match making algorithm by employing artificial intelligence and technology. The focal point of Urban Company is its consumers. The enterprise in 2014 eyed the hyperlocal home service industry and found it gigantic and fragmented. The Urban Company eyed the major opportunity and gained the first mover advantage in the industry. The hyperlocal home service industry was filled with complexities as it operated on already established local trade lines and encountered pushback from Indian consumers who were used to patronizing the well-known unorganized sector and were wary of trying something new. In addition, there was a requirement to curate products and services that were in accordance with the desires and acceptability of Indian customers. The founders stressed that they were not attempting to displace the existing local trade, but rather were attempting to create a cohesive platform by bringing in service providers who were already in the field under the banner of Urban Company. As a result, Urban Company was able to securely weather the hyperlocal bubble crash and demonstrate its value to the end consumers.
A business environment characterized by VUCA components is the new normal. Enterprises that are VUCA ready will find it easier to sail through the turbulent and chaotic business environment. COVID 19 has taught firms that they need to be learning, relearning, and unlearning in order to thrive and survive. All existing and upcoming enterprise should inculcate VUCA readiness as a quintessential portion of their managerial paradigm.
