This one word summarises everything that makes up the entrepreneurial mindset, according to Per Bylund. He writes in his article How to Think Like a Successful Entrepreneur, “Successful entrepreneurs rely on a value-dominant logic: They place the end value of their efforts first and direct their efforts to maximize value.”
Many people have described the components that make up the entrepreneurial mindset, but the bottom line is that entrepreneurs are driven by providing value.
Per Bylund believes the value-centric business model, or Austrian business model, has 4 core components that give us insight into the mind of a successful entrepreneur.
1. Entrepreneurs understand a product only has value when it is consumed or used by the customer.
That means value is created by the customer and it is subjective. Bylund writes, “a popular book on business models makes this statement: there is something about some firms that makes them more profitable than their rivals. In the framework of the ABM, we would say: there is something about some customers’ desired experiences that makes facilitating them more profitable than other customers’ desired experiences.”
Understanding that you, the entrepreneur, play no part in creating value is a big mind-shift. To think like an entrepreneur, you have to focus on your customer and create your product based on what they consider valuable.
2. Entrepreneurs understand their job is to facilitate value for the customer.
Daniella Kwayu, co-founder and CEO of Phema Agri in Tanzania won the GoGettaz Agripreneur Prize in 2020 because her company facilitates value on both sides of the agri-finance scale. Phema Agri is a digital agriculture platform connecting investors looking to grow their money with smallholder farmers looking for working capital solutions.
Phema Agri provides value for smallholder farmers with training, market-linkages and working capital investment to run their farms. For investors the value lies in removing uncertainty because they can invest their money in de-risked and vetted farmers who share their profits once the harvest is sold.
By facilitating value for both investors and farmers Daniela has built a business with the customers’ desires firmly in mind.
3. Entrepreneurs understand that they only have a business if their customers exchange value for their offering.
Bylund says, “The customer is weighing the benefits they subjectively perceive against the costs.” Only when they perceive that your offering has real value to them will they give you money for it.
GoGettaz Finalist, Piwai Chikasa of drone crop spraying company ACG says, “On the field, we have deployed our drone crop spraying technology across the country to protect over 15,000 tonnes of food, including cases of emergency where farmers had no other alternative to rapidly respond to pest infestations. … The technology speaks for itself, and farmers are equally embracing the solution.”
In Piwai’s case, protecting food, especially in rapid response, has real value to farmers. They weigh up whether the protected crops they can sell in market will bring in more money than the cost the drone spraying service. Since they answer is “Yes, most definitely,” they are willing to exchange some of that value for the service.
4. Entrepreneurs understand that value changes constantly.
Entrepreneurs improve their products or pivot their businesses to adapt to changes in the market.
In 2020 Moses Katala won GoGettaz with his Rwandan waste-to-value company, MagoFarm. They tackle rising costs of animal feeds and the increasing demand for sustainable, eco-friendly and nutrient rich protein ingredients by breeding black soldier fly larvae on food waste.
When COVID-19 changed the market, Moses used Magofarm’s relationships and position in the livestock industry to launch Mobivet. This initiative to support livestock farmers in Rwanda provides value to Magofarm clients by providing remote veterinary services and expert advice via mobile phones.
By expanding the services and the perceived value they offer to their clients, their business can stay relevant and top-of-mind though challenging times.
How do you think about value? Do you have an entrepreneurial mindset that puts value first?
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