ENTREPRENEURSHIP AND INNOVATION Entrepreneurship is the process in which a small business can be designed
ENTREPRENEURSHIP AND INNOVATION
Entrepreneurship is the process in which a small business can be designed, launched and running a new business, called Entrepreneurship. The person who creates the businesses is called Entrepreneur. Entrepreneur is derived from a French word “entreprendre” which means to undertake risk. As we know that if we want to run a business we need Business Driver. What is Business Driver? It is a condition or process and also a resource, necessary to run a continued successful business. A trade relations with company have to identify their business drivers and attempt maximum that are under their control. It is not necessary that business drivers are inside the company but they can be outside the company that cannot be influenced, like trade relation with other nations. An organization may become more complex, identifying their business drivers becomes more difficult. The term business driver has widely become a management buzzword to refer to any important part of a business. As we know that for large companies, creating new business is the challenge. For overcome these challenges business drivers are required. After years of downsizing and cost cutting, corporations have realized that they cannot get succeed. According to Case study “Atlassian”source: Hanson D, Hitt MA, Ireland RD, and Hoskisson RE, Strategic Management: Competitiveness and Globalization, 6th ed., 2017, Cengage: Stuart Schonell: wikipedia Atlassian Corporation Plc was founded in 2002 by Mike Cannon-Brookers and Scott Farquhar. Atlassian is a software company situated in Sydney, Australia. This Australian company known for its productivity and collaboration tools for businesses. Atlassian is known for their issue tracking application, Atlassian has more than 5 million active users, 51000 organization clients using its software products, eBay, NASA, Netflix, BMW, facebook, etc are some famous clients of Atlassian. This company was formed on a A$10000 credit card by entrepreneur Mike Cannon-Brookers and Scott Farquhar, they formed the company without any sales force, Farquhar and Cannon-Brookers have their believes that if customers like their product they will influence their friends and others to buy their products. This is reason for Atlassian grand success, with A$1 million in revenue in their first year of business, growing to A$14.9 million in 2005-06 when Farquhar and Cannon-Brookers were named the best entrepreneurs of the year in Australia by accounting giant Ernst & Young, the company’s revenue increases continuously by reaching A$319.5 million in 2015, 49% of their revenue had increase in 2014. The companies with highest growth rate is known as Xaas sector, which includes computing platforms, applications and infrastructure. The reason behind Atlassian, the philosophy of “no sales force” worked and spent 21% of revenue on selling products. Atlassian is not like a typical company like others but it has a happy work place as this company provide 1% of their profit each to all the co-workers and also donate money for child education. Atlassian is relied on the profits to fund expansion. Atlassian grown up slowly and deliberately, striking a careful balance between adapting to changes as they happen and strategy. In 2010, Farquhar and Cannon-Brookers spend millions from their pockets into local start-ups. Atlassian spent US$247.6 million on research and development from fiscal year 2013 to fiscal 2015. The company builds the products it need and buys the products it can. As we all know that there is contrary relationship between the strategies of private owner run companies and public companies. When companies start up for long term, but when they go public there are shareholder demands to consider. In 2015 Atlassian revenue was US$3.8 trillion, with this massive revenue pool this company rapidly reshaped. Rapid change in a company hallmark, customers are always ask for better services, lower price, best quality and more depth of inventory. Many legacy tech industries are re-examining the structure of their business to seek better financial performance. Legacy industries such as IBM, Hewlett Packard, Symantec and eBay are looked after new business model. They are split into more nimble structures that allow them to compete with start-ups and aggressive new players. In the tech industry in all circumstances, widening revenue streams is the only viable for long term survival. The Atlassian change the way to do business, also change the way of thinking. “This strategy has allowed us to build our brand with relatively low sales and marketing cost”. For two years in a row, Atlassian topped BRW’s best places to Work list. Technology is used as a way to break down staff barriers Atlassian’s internal communication channel. The company also has quarterly innovation companies grow they increase their management staff numbers. source: business dictionary:acceleraceblog As we know that Corporate Entrepreneurship plays a vital role to set up an industry. What is Corporate Entrepreneurship and Innovation and How does it work? As we know that entrepreneurship means to set up an industry but here we are talking about Corporate entrepreneurship refers to the development of new ideas and opportunities with large or established businesses, like as for Atlassian, Cannor-Brookers and Farquhar established the corporate entrepreneurship due to which the Atlassian is now counted one of the high rated companies in the world. Corporate entrepreneurship is crucial for large companies, that are traditionally averse to risk-taking to innovate driving leaders. In modern business, the business leader primary task is quite foster an environment which encourage the entrepreneurial thinking and readily takes place. To promote this innovation business leader motivated towards corporate entrepreneurship but there is more to an environment to corporate entrepreneurship than simply inciting inspiration. To get succeed in a business we need to face some challenges which are mentioned below:
• Deal flow is everything
• Strategic fit is rare
• No long term perspective
• Spending too much or too little
• Unclear KPI’s
source: business.tutplus.com Two risks inhibiting the potential performance within the organization. As for Atlassian the two core risk for their organization are
? Strategic Risk
? Financial Risk
As we all knows that to run a successful business we need a comprehensive, well thought-out business plan. But sometimes leader’s best-laid plan come to look outdated. This risk is called strategic risk, which means that a company’s strategy become less effective and the company may struggles to get the result.
Factors which are behind this risks are technological changes, powerful competitor, shifts in customer demand. The strategic risk is the risk in which a company’s strategy become less effective and the company start struggling to reach their goal. A classic example id Kodak, had favourable position in the film photography market, one of its own engineers invented a digital camera in 1975. Kodak thought that this digital camera got failed and kicked out the engineer from the company but later digital camera capture almost whole market and this is the drawback of Kodak.
As we all know that the Financial risk is the crucial risk, most categories of risks have financial impact, in terms of high cost and low revenue. A company is totally depends on their revenue but what if a company’s does not have enough revenue, financial risk refers to the money flowing in or out of a business, and probability of sudden financial lose. For example: if a company have significant financial risk, customer is unable to pay or delay the payment, then the business is in financial risk.
Another example: if a company already take a lot pf debt it also increases your financial risk, if a lot of the debt is left and suddenly the interest rate of 8% get increase up to 15%, this situation is called financial risk.
Financial risk basically increased when the business is internationally set up, if we take the example of California farm selling its product in Europe and when it make sale in France and Germany, and its revenue is in euros, and its UK sales comes in pounds. The exchange rates fluctuate and financial risk may increased.
But the Atlassian manages to overcome with these core risk and themselves succeed.
In the case study, it is thought that How Atlassian manage to get grand success and become world’s one of the leading software industries. The entrepreneur of the company that is Mike Cannon-Brookers and Scott Farquhar, without their entrepreneurship this software company cannot get succeed. They are against the ‘sale force’ they thought that if they satisfied their customer with their product then it influenced its friends and others to buy the product. This strategy called indirect adversitement. Cannon-Brookers and Farquhar always focused on their product and never advertised it. They also create friendly environment in the company and also give the 1% of their profit to all the workers and co-workers, they also donate money for the education. With their potential and innovative sense of humour they twice in a row become the best entrepreneur of year. No one ever thought that Atlassian total turnover is US$4.3 billions per annum. In the beginning year, Farquhar and Cannon-Brookers spend A$10 million from their pocket to continue their business.