It's not easy to be an entrepreneur. You not only have to understand the present market's needs and wants, you also have to be able to look into the future.
Peter Drucker, who practically invented the philosophy of management, believed a manager must constantly ask, "What will our business be?" He said the answer depends on four things.
1. What's the market potential and the market trend? You have to be able to predict the size of the market five and ten years from now --- and the factors that will influence the market then.
2. What changes in the market structure lie ahead? What changes in values or taste? How will the economy affect the business?
3. What innovations will change the customer's wants, or create new wants, or change her concept of worth?
4. What wants and needs does the customer have that won't be satisfied by your product or any other that exists today?
Although these things are difficult, or even impossible, to predict, you have to be on the lookout for clues. Professor Drucker would say you should organize your operation for constant innovation.
The passenger railroads in this country were never really prepared for changes in people's views of transportation. In fact, they never considered themselves in the transportation business. They were in the railroad business, and when they could've added airline service, well, that wasn't their business.
What value does American Apparel add today? How did the Gap miss their opportunity to buy Lululemon?
Being a little bit removed from the fray sometimes helps. Lululemon is Canadian, and they saw yoga as too big to miss. Now they, too, have to innovate fast to keep from being passed over.
"Babies don't belong in the living room," cautioned Drucker, "they belong in the nursery." Innovations not only have to be born, they have to be carefully and constantly nurtured, and when necessary, reborn. The entrepreneurship course I teach is adventurous, full of twists and turns as students grapple with the present and the future. A few ideas are abandoned along the way. The surviving ideas change.
And, of course, once you're allowed in the living room, you have to know how to behave.