A case for quality in enterprise development - Tshikululu Serious Enterprise Development workshop 2010


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Presented during Tshikululu's first Serious Enterprise Development workshop, which took place on 6 October 2010. Allon Raiz (CEO, Raizcorp) says that the quality of enterprise development programmes is paramount.

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A case for quality in enterprise development - Tshikululu Serious Enterprise Development workshop 2010

  1. 1. A Case for Quality in Enterprise Development By Allon Raiz Copyright Raizcorp (Pty) Ltd
  2. 2. TWO LIVES A B • Private Education • Private Education • Tertiary Education • Tertiary Education • Starts Working in Family • Starts Working in Family Business at 22 Business at 22 • Leaves family business @ • Family business goes 24 An emotionally invested Mentor 26 insolvent @ • Starts own business @ 25 • Starts own business @ 27 • Business Fails • Business Fails • Starts new business @ 27 • Becomes a struggling and sells it. insurance broker • Builds large business, sells • Still battling at 43 it. Builds another Copyright Raizcorp (Pty) Ltd
  3. 3. TWO LIVES C D • Born in Alex • Born in Alex • Schooled in Alex • Schooled in Alex • Father is a poor plumber • No Father, mother is a based in Alex domestic worker • Dream is to become a travel • Dream is to run a beauty agent parlour/hair parlour • Gets bursary to the USA • Finds a NVC programme • Fait intervenes An emotionally Starts own parlour • invested Mentor • Builds her father’s plumbing • Business fails within first business (Millionairess) year • Educates her brother and • Working in a bakery as a sister at private school Copyright Raizcorp (Pty) Ltd teller
  4. 4. What do they have in Common? • A • They were “selected” based on their “blue heart” • Someone believed in them • They were surrounded with a team • They were now part of a “community” • C • They now employ 10’s of people • They are now doing the same for others (virtuous cycle) Copyright Raizcorp (Pty) Ltd
  5. 5. Entrepreneurial Questions? • If I have an idea, does that make me an entrepreneur? • If I have been a survivalist hawker for 8 years, am I an entrepreneur? • If I have never started or run a business before, am I the ideal entrepreneurial mentor? • If I have great academic qualifications, and no experience running or starting a business, am I the ideal mentor? • If I have 30 years experience but no people skills, am I the ideal mentor? • Do I need the same type of mentoring for my finance issues and my self doubt issues? • As an Entrepreneur, which do you pay first; the tax man or the landlord? Copyright Raizcorp (Pty) Ltd
  6. 6. Not Selecting the Entrepreneurs Correctly/at all Some Learning is causes for Not selecting not practical low levels the Mentors enough of impact in correctly ED Providing low- touch support Copyright Raizcorp (Pty) Ltd
  7. 7. Challenge 1 We are not Selecting the Entrepreneurs correctly/at all Copyright Raizcorp (Pty) Ltd
  8. 8. The Challenge with the current ED Approach Is a hawker an entrepreneur? Not Everyone is an Entrepreneur Only 4 -7% (GEM Report 2006/7/8/9) Not every Entrepreneur is Successful 96% of businesses will fail in 10 years Not every Business is Growth Business Self Employed Vs Growth Entrepreneurial Copyright Raizcorp (Pty) Ltd
  9. 9. Challenge 2 We are not Selecting the Mentors correctly Copyright Raizcorp (Pty) Ltd
  10. 10. The Challenge with the current ED Approach Not every person with experience can communicate well and shift people The are often paid by the hour. Many are ex corporate without entrepreneurial experience. Is an old professor a good mentor? Not every academic can communicate well and shift people They often cannot relate to the practical application of knowledge Not every academic with experience can communicate well and shift people Copyright Raizcorp (Pty) Ltd
  11. 11. Challenge 3 Entrepreneurship is a complex endeavor requiring multiple types of inputs (high-touch) Copyright Raizcorp (Pty) Ltd
  12. 12. The Challenge with the current ED Approach Becoming an entrepreneur cannot be taught in a classroom alone. The combination of classroom learning, in-business learning and in- mentoring increases uptake by a staggering 80%. Entrepreneurship is as much about learning business skills as it is about learning personal skills. A single dimension approach to ED cannot work The dynamic nature of the entrepreneurial challenge means that different inputs will be required at different times. Copyright Raizcorp (Pty) Ltd Is an old professor a good mentor?
  13. 13. Challenge 4 Entrepreneurship cannot be effectively taught in an academic format only, it must be practical and experiential Copyright Raizcorp (Pty) Ltd
  14. 14. The Challenge with the current ED Approach Studies have found that entrepreneurial training that uses the business plan as the foundation does not work Schwartz (2006) states that entrepreneurship curriculum reform is more a matter of educating teachers rather than students Schwartz - the development of entrepreneurship education is closely tied to the teacher’s own learning process Copyright Raizcorp (Pty) Ltd
  15. 15. Questions What happens when you take a shotgun approach to Enterprise Development? Out of 981 businesses who went on SETA New Venture Creation training for 12 months, how many businesses do you think succeeded? Copyright Raizcorp (Pty) Ltd
  16. 16. Copyright Raizcorp (Pty) Ltd
  17. 17. The Effects of a Shotgun – Non Selective approach to Enterprise Development • Failure rates are extremely high • Funds are effectively wasted • An already low self Esteem is impacted negatively • Black Listing by Banks etc • Debt Trap (increased overheads) Copyright Raizcorp (Pty) Ltd
  18. 18. Question If you took 31 mentors working in/for Government programmes and you made them do a basic* in-tray test to see if they could work out the profitability of a hypothetical company, what percentage would work it out? Copyright Raizcorp (Pty) Ltd
  19. 19. 6.5% Copyright Raizcorp (Pty) Ltd
  20. 20. Unpacking the Mentor Challenge a little more Copyright Raizcorp (Pty) Ltd
  21. 21. What’s actually going on most of the time Challenge 1 Challenge 2 You are my private teacher All I want is your network Copyright Raizcorp (Pty) Ltd
  22. 22. How are we choosing them? Experience Academics Copyright Raizcorp (Pty) Ltd
  23. 23. A Case for Quality in Enterprise Development Copyright Raizcorp (Pty) Ltd
  24. 24. Question • How many $ Billionaires do you think that Harvard, Stanford and the University of Chicago have produced? »103 • Harvard – 62 • Stanford – 28 • UC - 13 Source – Business Standard Sept 2010 Copyright Raizcorp (Pty) Ltd
  25. 25. What do these 3 Universities have in common? • One of the highest level of student selection in the world • One of the best Faculties in the world • One of the best and most comprehensive teaching methods in the world • One of the best support infrastructure in the world Copyright Raizcorp (Pty) Ltd
  26. 26. What are the obstacles • Exclusive policies have historical connotations • Perceived to be more costly • Its hard to change • Its hard to be pioneering • There are other models that report success Copyright Raizcorp (Pty) Ltd
  27. 27. Raizcorp • Established in 2002 • For-Profit Model (Not a for-profit masquerading behind a not for profit) (We are Philosophically aligned) • Supports in excess of 200 businesses (800 business graduated) • Urban and Rural Models • Equity and Fee models • 6 current Prosperators 2010 • 3 new planned for 2011 • International expansion with IFC and others • Award winner locally and by the WEF • We have had many failures, but many more successes Copyright Raizcorp (Pty) Ltd
  28. 28. The Raizcorp Hypothetical Access to SELECTION Knowledge Access Access to to Markets Support Access to Finance Copyright Raizcorp (Pty) Ltd
  29. 29. The Move to Guiding Self Accrediting Mentoring Mentoring Coaching Guiding Currently being accredited by the British Gvt Copyright Raizcorp (Pty) Ltd
  30. 30. The Five Won’ts 1. We will not not select 2. We will not Train only 3. We will not Guide only 4. We will not Mentor 5. We will not provide funding (we leave that to the specialists) Copyright Raizcorp (Pty) Ltd
  32. 32. Filtering for Blue Heart 1. Expression of Interest 2. Interview 3. Test Rural Applicants writing test 4. 3 Audits 5. Interview 6. Due Diligence 7. Panel Interview 8. Contract Oupa Sekati presenting his business to the panel Copyright Raizcorp (Pty) Ltd
  33. 33. Copyright Raizcorp (Pty) Ltd
  34. 34. What Raizcorp provides Copyright Raizcorp (Pty) Ltd
  35. 35. Infrastructure Access to Support Copyright Raizcorp (Pty) Ltd
  36. 36. Personnel Access to Support Copyright Raizcorp (Pty) Ltd
  37. 37. Learning Access to Knowledge Copyright Raizcorp (Pty) Ltd
  38. 38. Learning Copyright Raizcorp (Pty) Ltd
  39. 39. Guiding Access Access to to Knowledge Support Copyright Raizcorp (Pty) Ltd
  40. 40. Copyright Raizcorp (Pty) Ltd
  41. 41. Copyright Raizcorp (Pty) Ltd
  42. 42. Sales Access to Internal Copyright Raizcorp (Pty) Ltd Linkages
  43. 43. Sales Copyright Raizcorp (Pty) Ltd
  44. 44. Magic Access to Support Copyright Raizcorp (Pty) Ltd
  45. 45. How are we choosing our Guides Experience Academics Empathy Copyright Raizcorp (Pty) Ltd
  46. 46. Creating the Metrics • Financials – Profitability – Growth % • Employees (With a view to self sustainability) • Cars • Clients • NAV • Products Copyright Raizcorp (Pty) Ltd
  47. 47. How do we measure lifecycle Raizcorp Entrepreneurial Lifecycle Measurements (RELMs) Sustainability Copyright Raizcorp (Pty) Ltd
  48. 48. The Categories Copyright Raizcorp (Pty) Ltd
  49. 49. Results • 1 in 20 applicants enters a Raizcorp programme on average • 36% will fall out or be asked to leave for non- compliance within 1st year (90% of the 36% in first 6 months) – These are replaced • >15% removed in year 2, and >5% in yr 3 • 95% of those that remain on the programme experience an average growth rate in excess of 20% per annum Copyright Raizcorp (Pty) Ltd
  50. 50. A new Era • Mediocrity is a thing of the past Copyright Raizcorp (Pty) Ltd
  51. 51. It takes courage to be excellent Copyright Raizcorp (Pty) Ltd
  52. 52. Questions www.raizcorp.com 011-5662000 === Copyright Raizcorp (Pty) Ltd