Why Entrepreneurs Fail to Reach Their Strategic Objectives
Entrepreneurship is based on innovative ideas and strategies which help organizations to create new products and services. The exact nature of the entrepreneurial process may vary in these different settings, as will the problems faced and the solutions required, but economically innovative acts that create value for individuals and society can still take place. It is the act and its outcome, not the environment nor the setting, that is the essence of entrepreneurship. The main causes of failure involve unclear objectives and inadequate strategic aims of the company, unclear market segmentation and over-optimistic projections. Many entrepreneurs do not take into account that not all products and services introduced by entrepreneurial behaviour would be characterized by the market structure of emerging industries. A large majority are so characterized. Consequently, it is important to note Michael Porter’s observation that for this type of industry, there is often an absence of infrastructure. The result creates not only further entrepreneurial opportunities but also potentially serious limitations if not properly understood and dealt with appropriately. Admittedly, the issue is complex.
The clear implication of this proposed interface is that successful entrepreneurial behaviour must incorporate a wide range of marketing concepts. These concepts are centred around the principle of information that links this behaviour with the market. To the extent that these concepts are ignored or violated, the probability of unsuccessful innovation rises. To ignore these concepts and move directly to tools puts entrepreneurial behaviour at risk because correct concepts are the guide to the selection and deployment of the correct tools. In the marketing and entrepreneurship fields, the term opportunity is frequently used but rarely defined. It seems to include, for example, the entry of new markets, the introduction of new products, or the start of new independent businesses.
The case studies of such giants as Apple Corporation and Ford shows that unclear strategic objectors lead to entrepreneur failure. Apple Corporation fails with many of its products (including the Newton) because of inadequate market position and lack o market analysis. First of all, from a marketing and entrepreneurship perspective, an opportunity must be defined as having sustainable profit potential beyond pure windfall profits and “one-shot” deals. Second, an opportunity must be defined as a market position, that is, a field of activity in which a company is competitive beyond the short run and able to reap a profit. A market position can be viewed both from its value context and from the perspective of competition. A market position is supported by a combination of resources, and obviously, a market position is only sustainable if the underlying resource combination is competitive. From the perspective of strategic marketing, competition is normally seen as the domain of business strategy, that is, at the product/market (industry) level, because direct competition takes place at this level. Ford Corporation fails with its Edsel: Ford’s Fabulous ’57 considered as the car of the century.
The company did not take into account that environmental changes play an important role in the creation of opportunities, and profound knowledge and learning influence the perception of opportunities as desirable. By strategic thinking, managers mean the intuitive ability to understand the dynamics of market structures, competition, customer needs, timing, synergies, and the like. It is an ability to proceed with tentative, incomplete information, always leaving one’s options as open as possible, waiting for the right moment. Formal strategic planning (with its emphasis on the analysis) was only used in two of the case companies and only in the later stages in the life cycle as a matter of setting priorities and securing coordination. Formal strategic planning has been strongly criticized in the literature. Each of the propositions is in themselves important, but it is when they work together that they are most powerful. Entrepreneurial behaviour in itself will not be enough. That is, behaving entrepreneurially in the way managers have described is not a universal formula for identifying opportunities.