The competency for entrepreneurship:

Entrepreneurship is the act of being entrepreneurial. It is a behaviour shown by starting a new business, introducing a new product or process, or an innovation. It almost always involves acting with insufficient information in a risky environment. The competencies are different to administration competencies. The Grey Worldwide/Sweeny Research Eye on Australia surveys attitudes within Australia to entrepreneurs. In 2005 97% of their respondents say they admire people who go out and start a business. Australia has 97% of its business, small businesses. In this report more than 80% agree it is good to be an entrepreneur. In 1990 this was the opposite when entrepreneur meant rogue. Hacker was once a compliment and is now a security threat.

There are different types of entrepreneurs.

Independence

High Low

Independent Entrepreneur High creativity/innovation	Corporate Entrepreneur High creativity/innovation
Owner Manager Low creativity/innovation	Corporate Manager Low creativity/innovation

Decision autonomy and financial risk

Are entrepreneurs a breed apart? A look at the evidence Journal of General Management 15, p32-40

Ginsberg and Buchholz 1989

The skills which are needed should be adjusted for the type of entrepreneur.

There are many articles on the skills needed to become a successful entrepreneur. These skills seem to be a never-ending checklist. This report will separate these skills into competencies.

Definition

There is no one definition of entrepreneurship. The best definition seems to be the quality needed to start and grow a business. The following questions focuses on the goals of entrepreneurship; which ideas have the strength to create a profitable business; how to form and motivate the team and how to grow the business?

Competencies needed for Entrepreneurship

The above pyramid based on the ASTD Competency Model has three levels; foundation with the cluster of skills grouped into competencies; focus on the business objectives of corporate and independent entrepreneurs and at the top the goal- entrepreneurship. The goal could also be achieved by the two other foundation competencies.

Competencies are the description of desired performance traits in people. In the 1970s David McClelland analysed employees and defined competencies as the traits which led to superior job performance. The power of competencies is therefore to focus on those specific performance traits which are the keys to success. The area of success is important.

For the goal of entrepreneurship there are three foundation set of skills; Being Enterprising; Business Development and Business Management. The Commonwealth Youth Programme 1991 identified these three categories.

Scope of the competencies

There were two scoping papers looking at these traits. The first was in 1991 was the Commonwealth Youth Programme report. The second in July 2003 was the Youth Entrepreneurship: Scoping Paper.

The articles below, reference these reports and not only list these skills but further explains their strengths and weaknesses.

“4.2. Skills training

There is no simple recipe for business development and the skills and attitudes of

enterprise to help young men and women cope with change and uncertainty.

The skills of enterprise refer to a person’s ability to:

n assess one’s strength and ability;

n seek information and advice;

n make decisions;

n plan one’s time and energy;

n carry through an agreed responsibility;

n communicate and negotiate;

n deal with people in power and authority;

n solve problems, resolve conflict;

n evaluate one’s performance; and

n cope with stress and tension.

When seen from the skill perspective, business development is more concerned with

the ability of a young woman or man to address the challenges that face them, than to

follow a step-by-step guide. Different enterprising behaviours and skills are required in

different situations. The Commonwealth Youth Programme (1991) has summarized these

in three categories.

The first is being enterprising, where a young man or woman sees and

responds to an opportunity. Being enterprising in this way requires the skills of:

n self-assessment and awareness – to be able to identify personal strengths and

weaknesses;

n problem solving – to be able to examine and assess problems, and identify solutions;

n investigation of opportunity – to be able to ask questions, assess and analyse results;

n seek information and advice from others – to gain from the perspective or knowledge

of others, including older people;

n communication – to communicate with people of all ages and at different levels of

power and authority;

n monitor performance – to be able to assess progress and make changes where

necessary; as well as;

n planning and using time.

The second is business development skills – where a young woman or man takes

steps to investigate a business idea. This requires skills for:

n searching for opportunities for business;

n research and analysis – to be sure about the size of the market;

n decision making – to choose the best path based on the information that has been

collected;

n planning – to set targets and determine a time frame;

n motivating oneself and others – to keep going and build commitment; and

n influencing others – whether they be customers, family, suppliers, or the bank.

The third category identified by the CYP is business management skills – where a

young man or woman gets a business going and manages it successfully. Being

enterprising in this way requires the skills of:

n planning;

n financial management – to budget, control stock and keep financial records;

n marketing and selling – to promote the business and its products or services to

potential customers;

n managing people – to ensure that employees are working as a team contributing fully;

and

n monitoring and evaluating progress – to identify areas for improvement.

A review of a wide range of enterprise-training programmes shows that best practice

in training young women and men in entrepreneurship and business management means

training should be designed around researched and known needs and the requirements of

the particular industry, group or market segment. They should also be interactive –

allowing students to question, discuss and work with the information you are providing.

Effective training programmes promote experiential learning by allowing students to

learn by doing, building their knowledge through experience, and building upon

participants’ knowledge base – moving from the known to the unknown. They should be

flexible in structure, timing and materials used so that they respond to the needs and

capabilities of the group. Training should be linked to the broader community – its

resources, networks, markets and social structure – and should be delivered at an

appropriate level, e.g., in language understandable to a young person. An integrated

approach will make each component relevant to the complete process of managing a

business. For example, training should be relevant to the needs and interests of trainees and

focused on improving skills and competencies rather than providing certificates. Finally,

good training should be arranged in sections or small “bites” and should encourage

ownership of learning by ensuring participants remain active in the programme. It should

be practical, providing know-how rather than theoretical content.

Training companies have been developed in some countries to help young women

and men learn about business in a safe and practical way. Training companies provide an

environment for the young to plan, develop and operate their own companies under the

supervision and management of a support agency. A facilitator is required to work with a

group of young women and men to identify business ideas. Before the training companies

are set up, the young people make their choices in which company they want to participate

and take the leadership initiative, only after which they go out and look for more directors

or participants. Thus, the companies may involve only two participants as the “founding

directors”. In order to promote and introduce enterprise learning and training programmes,

youth organizations are required to divert from conventional support activities to create

new environments for learning. The organization has to become enterprising itself and run

the programmes as “businesses”. This requires a high degree of flexibility and creativity on

the side of the organization’s management and staff. It is wrong to think that a young man

or woman with no exposure to business life and situations would be able to plan and run a

business after a conventional business-training course. In such courses, the participant

learns theoretical skills, but not the attitudes and abilities required to undertake the risk of

running a business. The business plan, produced at the end of the course may look good on

paper but has not been put to the test. Also, a business plan may not necessarily suit the

abilities and talents of the individual course participant. Thus, training companies provide

a hands-on learning environment.”

Skills Working Paper No. 1

InFocus Programme on Skills, Knowledge and Employability

Enterprise-based youth employment

policies, strategies and programmes

Initiatives for the development of enterprise action and strategies

Simon White and Peter Kenyon 1991

Target group for the competencies

YOUTH ENTREPRENEURSHIP SCOPING PAPER

DEPARTMENT OF FAMILY AND COMMUNITY SERVICES

p62

Chigunta (2000) highlights the fact that young entrepreneurs at different stages have different needs, which has further implications for policy and the design of youth enterprise promotion programs. Three different stages of youth entrepreneurship are identified:

Pre-entrepreneurs: This is the formative stage that appears to serve as a probationary

period. The majority of youth in this group have a very low level of proprietary

participation in the small enterprise sector. They are often in transition from the

security of the home or education to the work place. This period tends to be a period

of experimentation, before young people attempt to set themselves up in business.

Youth in this stage are generally aged 15 to 19 years.

Budding entrepreneurs: This is identified as the growth stage. It comprises people

who are likely to have gained some experience, skills and capital to enable them to run

their own enterprises. Youth are generally in the 20 to 24 year old age group.

Emergent entrepreneurs: This group has a higher level of maturity than youth in the

earlier stages. They are likely to have accumulated vital experience in business or other

areas of life. They are more likely to run viable enterprises than younger people. Young

people in this stage are most likely to be 25-29 years of age.

It is the view of Chigunta (2002) that those in earlier stages face a different set of problems and have a different set of needs from youth in later stages who are trying to do the same thing, highlighting the need to recognise the capabilities of youth at different stages and to deliver carefully targeted programs. Youth in the earlier stages may need special attention to address their needs, and again, counsellors and advisors may need to be specially trained to deal with this younger age group with skill and sensitivity. In contrast, it may be more appropriate to refer those in the later stage of entrepreneurship to general enterprise support agencies.

DEPARTMENT OF FAMILY AND COMMUNITY SERVICES

July 2003

Project number 2819

YOUTH

ENTREPRENEURSHIP:

SCOPING PAPER

Target group

Budding entrepreneurs and Emergent entrepreneurs in Business Development.

Confirm this research

There are various training authorities which administer the Australian Business Framework. The relevant section for this competency is the Industry Skills Council entitled Innovation and Business Skills Australia (IBSA)

Competency requirements

The website Forest4trees.biz is constructed to provide competency for the Business Development area to this target group. The competency has to cover the following skills:

n searching for opportunities for business;

n research and analysis – to be sure about the size of the market;

n decision making – to choose the best path based on the information that has been collected;

n planning – to set targets and determine a time frame;

n motivating oneself and others – to keep going and build commitment; and

n influencing others – whether they be customers, family, suppliers, or the bank.

The Business Development competency is split into four areas; ideas, creativity, foresight and innovation. Ideas and creativity covers searching for opportunities for business, research and analysis of the market and market planning. Foresight and innovation cover the decision making, motivating oneself and influencing others. There are overlaps with some of the market planning tools being used in presentations to influence investors. Mental models which are part of systems thinking can easily motivate people sometimes into what is termed a market bubble such as the period before the dotcom crash. This competency should be treated in a holistic manner.

IDEAS	FORESIGHT
CREATIVITY	INNOVATION

Document competency requirements

Ideas

The idea generation and screening techniques are starting points for any new venture.

Creativity

The use of one or more creative techniques expands the thinking.

Foresight

The systems thinking approach is used to understand the business plan. From the connection of the parts of the business plan a vision of the future customers emerges. The business plan is the document which captures the idea, explains the window of opportunity and motivates the stakeholders into action. In the Change Masters Rosabeth Moss Kanter (New York Simon and Schuster 1983 p354-55) identified the skills of an entrepreneur as power and persuasion, problem solving, team participation management and how to change organizations. These entrepreneurs need interpersonal/team work skills to create an influence over the workplace. This foresight gives a leadership role as a visionary.

Innovation

“Invention is a flower, innovation is the weed”. Bob Metcalfe (Internet guru) November 1999 MIT Technology Review. It is not the invention but the rate of adoption of the innovation which is important. The “weed” spreads and gains hold of the environment. There are five characteristics that would determine success or failure of an innovation according to Everett Rogers (Diffusion of Innovations The Free Press 1995). They are relative advantage, compatibility, complexity, trialability and observability. These characteristics along with others form a proposition to the early adopter. It is the early adopter’s perception which is critical to success. If an early adopter perceives that the innovation is worthwhile, he or she will buy it. An understanding of the adoption curve for innovation is the basis of this area.

Validate competencies

A pilot test with a small group of stakeholders was arranged. One was an emergent entrepreneur who had completed a Diploma of E-Business. This covered business planning.