“In your steadfast love you led the people whom you redeemed; you guided them by your strength to your holy abode” – Exodus 15:13
On the international scene, around the regional setting and in our local surroundings, policy makers are very focused on economic growth. Indeed, any country should want to cultivate a smart partnership between its public and private sectors to feed, provide better clothing and shelter, and supply education and healthcare services, among other things, to its populace, in order to improve living standards. Economic growth, that allows these things to occur would be good, so it is necessary but it certainly is not sufficient. The social partners need to be judged not only on whether their economies are growing, but they also need to address environmental concerns so that the planet is protected and engender policies to ensure that its people are spiritually attuned and happy.
Today we shall focus on economic growth and recognise that it can only take place one successful enterprise after another. Undeniably, it is the amalgam of successful enterprises that contributes to economic growth. Therefore, the spotlight must be on the enterprise. Without the passion, persistence, perseverance and pain of entrepreneurs, who manage these enterprises on the journey to sustained success, we cannot reasonably expect to enjoy any reasonable level of socio-economic well being.
Daily reports from all across the globe would suggest that we are on the verge of an entrepreneurial revolution. The new world of work must encourage and foster the entrepreneurial mindset. The inventors among us need to learn how to use their imagination to dream up new ideas as well as challenge assumptions and belief systems. The innovators among us need to think outside of the box, break through traditional thinking and create innovative products and services. The entrepreneurs among us must undertake a commercial risk for profit, they must be the change agents of society, they must identify a problem and want to find a way to solve it. They must take action to better our communities. It is very early in the days of Cloud (Internet) computing but we are seeing the early signs of transformation. Cloud computing will fuel the entrepreneurial revolution.
Amidst all this talk about an entrepreneurial revolution are the devastating global statistics which reveal, for example, that the failure rate of a 1992 cohort of new single-establishment businesses trends from 55% after five years to 71% after 10 years. These data come from a special tabulation by the Bureau of the Census produced for the Office of Advocacy of the U.S. Small Business Administration.
Yes, our entrepreneurs are taking a risk. Would it not be wonderful if we could systematically and significantly reduce this risk? The economic growth rate would increase, more entrepreneurs in the making would be tempted to embark on enterprise development, more money would be in circulation and existing businesses would generate greater profits, employment would increase, and government would have the opportunity to collect more taxes and provide greater services for the community in general.
My hypothesis is that the reason for this high rate of failure is that not enough attention is being paid to the management (planning, organising, staffing, leading and monitoring) of business systems (corporate governance, marketing, operations, human resource development and investment finance). The question is how do we diligently increase the attention paid to the management of business systems? Shepherding is the answer!
I was asked a few months ago to explain “shepherding” in one sentence. My response was “The Shepherding process reduces the risk of business failure of the enterprise by the diligent management of business systems and consequently may be regarded as a form of collateral to protect the financial investment in the enterprise”. Commercial banks, for example, have to be concerned about the risk associated with making a loan to an enterprise. If the risk is perceived to be small then they feel that their depositors’ money is protected to a greater extent that if the risk is perceived to be big. If the risk is small then this usually results in a lower interest rate to the borrower. Also, hard collateral is required to secure the loan.
If one believes that Shepherding reduces the rate of business failure, then the commercial banks may reduce the requirement for hard collateral and increase the requirement for shepherding, which could result in more business for the bank and a lower interest rate and reduced collateral from the borrower.
Shepherding was first introduced in a Barbados pilot project involving nine entrepreneurs in Barbados from 2009-2011with very pleasing growth results. The period of the pilot was not long enough, nor the number of entrepreneurs large enough nor the investment funding great enough to develop a meaning trend of success rate statistics. When the pilot ended due to the lack of investment funding, all nine enterprises responded positively to the shepherding process.
Shepherding has recently been introduced in Trinidad and in the just concluded Bank on Me TV Reality show in Barbados. Based on the qualitative feedback from the shepherds that were assigned to each enterprise and the enterprises themselves, indications are that the hypothesis that “shepherding reduces the risk of business failure” will be upheld. I repeat, the major constraint arising from these three initiatives is the continuing difficulty to access quick response investment capital for the enterprises.
In the last year, a ManOBiz Matrix™ shepherding (planning and monitoring) tool, including a ManOBiz dashboard, has been developed to facilitate turning concepts into commercial realities. This would have a positive impact on the rate of economic growth. Shepherding has a major role to play as the entrepreneurial revolution evolves.