Entrepreneurship is not a recent phenomenon. Since the time we were nomadic hunter-gatherers, human progress has been synonymous with entrepreneurship—the often accidental, sometimes deliberate process of discovering and delivering a positive change of scale to the status quo. When we discovered that we could sow seeds and cultivate crops rather than forage around, we realized that it was possible to settle down into colonies, villages, towns and civilizations. A relatively simple idea completely changed our lives and the course of humanity. Such was also the case with the invention of the steam engine, which led to railroads and the concomitant economic growth of the industrial revolution, or the invention of the printing press, which in its age democratized knowledge.
Through most of history until today, even the cleverest innovations have taken decades to make an impact on our lives, and have continued to make an impact for decades at a stretch. Take the telephone, for example, in the early part of the 20th century. Due to its obvious benefits, the use of telephones gradually spread, and around 60 years after its introduction, more than 80% of US households had a telephone. With the advent of the assembly line in car manufacturing, the use of automobiles became more affordable and prevalent, and around 50 years after its introduction, more than 80% of US households owned a car. Air travel, which only took off after World War II, reached an adoption rate of 80% in around 40 years.
On the other hand, some of the more recent innovations—e-commerce, smartphones and ride-sharing, to name a few—have not taken many years to make a deep impact on our lives. Within 20 years of its founding, Amazon reached a market capitalization equal to that of its old-economy rival Walmart. In the five years that followed, Amazon added to its market capitalization the equivalent of one Walmart each year, and is today worth three times as much as Walmart. As of April 2007, there were zero Apple iPhones in the world; 10 years later, there were 728 million iPhones in use. Until 2009, we still had to hail cabs in most cities. Today, nearly 100 million people use Uber every month. However, the lifespan of these innovations is also declining. Remember Farmville, which attracted one million Facebook users within four days of its launch?
These recent data points indicate a broader trend—that our lives are set to change faster, and more often, in the years to come. This puts entrepreneurship in fast- forward mode. Companies may succeed faster, but will fail more frequently, and remain successful for shorter periods of time. Multiple life-changing ideas coming together will also cause upheaval. Take for example, driverless cars and ride-sharing. The former is blurring the boundaries between automobile making companies and technology companies; the latter is separating the car buyer from the car user, and changing the nature of use. A ride-sharing company is arguably doing the right thing by spending its resources on building a strong database of millions of drivers. But this database will be of no use to it in the age of driverless cars. The rules of the game, and the shape of the playfield itself are constantly changing, after the game has begun.
So what will it take to be a successful entrepreneur in the coming decades? First, adaptability is the key. Successful companies, even in past decades, have had to pivot their business models once or twice before they ultimately succeeded. Companies in the coming decades must be prepared to pivot multiple times, quickly, and in anticipation of the right set of new rules. Their business models need to be asset-light, and their investment strategy must be nimble, so that they may adapt.
Second, entrepreneurs have always had to overcome the fear of failure. In fact, research shows that communities where failure is acceptable tend to show greater levels of innovation. In the coming decades, entrepreneurs will need to go beyond overcoming the fear of failure, to developing comfort with regular failure, and becoming resilient enough to stand up after every fall.
Third, entrepreneurs must build their products and offerings keeping in mind a global audience. Except perhaps for China, the online world is a single inter-connected and complex marketplace. Capital flows are increasingly global, too. For example, proceeds from a large exit from an online business in China are funding the expansion of the online marketplace in India. The flow of capital and ideas is no longer just West to East, it has become a two-way street.
Finally, business and personal ethics, both at the individual level and the organization level, are being challenged in new ways. While wealth creation is often one result of the process of entrepreneurship, it is not the purpose of entrepreneurship. Entrepreneurs need to learn to stay focused on the broader purpose of catalysing human progress, and not get swayed by up-rounds and down-rounds and stock prices.
To use a cricket analogy, the game of entrepreneurship has veritably entered the T20 mode; the days of five-day-long Test matches are over. Players need to adapt suitably to the new rules, equipment and playgrounds. Adaptability, resilience, global outlook, purpose and ethics are the way of the future.
Kapil Viswanathan is vice-chairman of Krea University