Following industry wide Twitter buzz over the CEO of Ephlux at Oracle Open World 2013, I sought out the revered technopreneur Ali Nasim for a chat on Entrepreneurship and Innovation.
Laila Rehman: What is entrepreneurship?
Ali Nasim: Its the ability to create a company where there was none before and its done by a team, not an individual as some would have you believe. I see two distinct types of entrepreneurship, the first being SMEs that serve a local market, like family businesses that are geographically distributed to where the population is and are fundamentally driven. The second kind of entrepreneurship is the innovation driven enterprises (IDEs) which are looking to export and reach the global market or super regional markets. They have a sustainable competitive advantage that allows them to do that. These are truly ‘new to the world’ type of products and offerings that create high growth opportunities. Of course, the risk with IDEs is much higher than SMEs, that’s a given. But the benefits are much higher. SMEs tend to remain as they are in size and are unable to shift beyond their role in the economy.
LR: What are the key differences you see between the two?
AN: Each requires a different skill set and cadence. The time to get things going in SMEs is less compared to an IDE, for which takes a longer time to get off the ground. But when the IDE takes off, there is exponential growth whereas in SMEs the growth is linear. SMEs require less investment of course while IDEs require investment at launch & growth stages, including stages of innovation introduction. So I would say the key differences between the two is the matter of risk & reward, and we at Ephlux are focused on being an IDE – to create the predominance of jobs and contribute growth.
LR: The WSJ’s Leslie Kwoh wrote an article last year that called innovation one of the most overused words in the English language right now. Why do you think that is and what does the word mean to you?
AN: It’s overused because every company that isn’t innovating wants to appear to be part of the hip and young trend that has captured the world. But for me, innovation has to create value, something that creates positive value whether it increases profits or aids in social development. Innovation for me is something like seamless integration with social applications and enterprises services like JD Edwards. So by that stretch, innovation equals invention plus commercialization. So the companies overusing this term consider it to be associated with something they aspire towards but are not necessarily able to reach because innovation as an invention has no value. There are countless patents that have not been commercialized and are sitting hidden away in some office files. I believe ideas are cheap, its the implementation that’s expensive and really hard. Invention and technology are nice “haves” but they need to be commercialized to create value. The commercialization aspect of this equation must be greater that zero.
LR: By that logic, which company – local or international – do you consider to be innovative?
AN: Without a doubt, that would be Apple, but keep in mind that none of their products were created by them, but they were the ones that commercialized them for instance the Macintosh was created by Xerox Park. Google today is an advertising company which created this multi-billion dollar juggernaut. But the idea or invention that made them an advertising company actually came from Bill Gross at Overture and they were the ones that commercialized it.
LR: Why the gap between invention and commercialization?
AN: Mindsets matter, I mean, there is no shortage of ideas, the question is whether there are enough entrepreneurs to commercialize those ideas. In Pakistan, someone tried to replicate the idea of Facebook with Millat Facebook, and failed miserably due to an inability to commercialize. The plagiarizer ended up requesting donations from the public to maintain his copycat site. He even attempted a tirade of excuses for his lack of ability, so that gives you an idea of the mindset of those incapable of commercializing an idea.
LR: Are there any costs associated with forgoing an innovation mindset?
AN: Plenty, and asking the shareholders, suppliers & employees of Lehman Brothers, RIM, Kodak, SEARS and IBM (to name a few) can give a reasonably strong impression of what that means exactly. Nestle has been revived on other parts of its business but they lost core business units like instant coffee which are now completely gone. The US Postal Service used to be referred to as “job for life” and today its just not the case, no guesses why. Every company must continue to innovate – to learn, unlearn and relearn – from across the world and organization.
LR: But the people in organizations have different markets and frameworks to operate in, wouldn’t it be hard to continuously think of this as a disruptive process?
AN: You raise a good point, and its worth pointing out that disruption oriented innovation is the most preferred or sought categories of the three, the other two being lateral and incremental. Within this, the types of innovation can be business model oriented, positioning or perception oriented, technical, process oriented and social innovation. Incremental innovation about making an existing product better like the iPhone’s.
LR: The age old question – can it be taught or is it inert?
AN: Depends on the institution but it can be taught. Most of the universities in Pakistan and all over the world focus on creating employees and pencil pushers, I went to IBA and was encouraged to think far out of the box and aspire for more. My family & parents were also a great support system for the tough times, so merely being taught the mindset isn’t always enough, you need a system around you to facilitate the process. My 50+ employees around the world have played an enormously positive role in my personal development, I learn more from them than they do from me. To answer your question – yes it can – but not everyone can teach it, especially not those who have never ventured outside their comfort zones.
LR: Funding is often an issue in this area, what would you suggest to aspiring entrepreneurs?
AN: Well, Pakistan has quite a few incubators cropping up like DotZero, SEED IC, Plan9 and Cloud9 Start-ups to name a few, and its best to approach them instead of outright funding simply because of the additional value of mentor-ship offered by renowned industry players. I would also recommend the ambitious future leaders to pitch their ideas at KITE, Faizan Laghari’s Mini Ventures or to Adam Dawood’s DYL Ventures for connections, mentor-ship, funding and office space.
About the author: Laila Rehman is a coordinator with the Family Education Services Foundation for projects in Karachi.