The RM210 million allocated for the Readiness Assessment Programme and RM3 billion for the Industry Digitalisation Transformation Fund in the 2019 Budget are much welcome. It will encourage the adoption of Fourth Industrial Revolution (4IR)-related technologies and significantly improve productivity and boost competitiveness of businesses. The move will signal the emergence of a new breed of entrepreneurs who can steer Malaysia to new heights in the era of 4IR.
4IR stresses building virtual reality technology without using much manpower, and this will impact many aspects of life. It could be a new form of colonisation if entrepreneurs, especially the youths, fail to manage it. 4IR is marked with, among others, the emergence of supercomputers, artificial intelligence robots, unmanned vehicles, genetic modification and advancement of neurotechnology that enables man to further optimise the function of the brain.
4IR is a new form of disruptive technology that threatens current businesses and companies. History dictates that previous industrial revolutions have victimised business establishments, including big organisations. According to recent reports and research from 4IR journals and books, about 90 per cent of new ventures have closed down in a span of three years because of low entrepreneurial competency, lack of experience, capital inadequacies and poor risk management.
Entrepreneurship and economic development are closely related. The country’s economic development, among others, depends on humans that chase after economic opportunities along with the ability to exploit the production factors.
A person has to be “entrepreneurially” oriented with innovative and proactive capability, and also willing to take risks through ventures to build up the economy. Therefore, an entrepreneur is regarded as a modifier that will not let the economic system be left in a frozen state.
From the micro point of view, entrepreneurship can help increase the quality of life with new discoveries that can produce improved innovations. These innovations will widen the scope of choice for consumers. Thus entrepreneurship is able to increase the possibility of obtaining income for a person, as well as for an organisation.
From the macro point of view, entrepreneurship is able to integrate and effectively utilise the resources to contribute to the increase of national productivity. Consequently, entrepreneurship helps in a more just mode of the income distribution.
From the social point of view, entrepreneurship benefits through the return of some portion of income to the country through voluntary and mandatory corporate social responsibilities.
However, the ability and success of an entrepreneur depends on the competency of the entrepreneur. Hence, more entrepreneurship programmes must be established in higher education institutions. Although millions of ringgit has been spent, business graduates still lack entrepreneurial competency.
Entrepreneurial competency is one’s ability to perform entrepreneurship functions effectively. The underlying characteristics are generic and specific knowledge, motives, traits, self-images, social roles and skills which result in venture birth, survival and growth.
Specifically, entrepreneurs’ experience, training, education, family background and other demographic variables are considered factors that influence entrepreneurial competency.
Competency or self-esteem is different from skills. Competency exists from the influence of life values, attitude and drive or internal insistence of a person to commit to his duties to achieve results. Skills are measured from academic excellence or based on good work results.
Entrepreneurial competency must be grounded in three dimensions — innovative values, pro-activeness and risk taking. If one wishes to venture into this field, he should learn these dimensions. The values one practices affect his cognitive process and contents, and also affect the process of decision-making.
Let’s say a person obtains RM5,000 extra from his venture. What will he do with the money?
An incompetent person will spend the money on unnecessary things, which are liabilities — they dry up our pocket without any returns. But an “entrepreneurial competent” person will put the money to good use by investing in profitable ventures. An incompetent person will also be at risk of get-rich-quick, pyramid or Ponzi schemes. These are often promoted as entrepreneurial ventures or digital-based businesses.
Beware! Such schemes are not business ventures — someone will always lose money in the end. An entrepreneur needs to invest his hard-earned money in order to be competitive in the field. He must be able to identify and assess or evaluate a potential business venture.
The trade-off between risk and return is related to every investment decision that is made. One will always face the risk of loss on each trade decision, but he will gain if he can manage the risk. Fundamentally, the more risks taken, the higher the returns. On the other hand, there is also the risk of higher losses.
Risk management is a systematic process to identify and evaluate risks that can possibly be faced by an individual or an organisation. He must be able to choose and implement risk management techniques that are most suitable to reduce the impact of the loss.
Oswald Timothy Edward
Faculty of Business and Management,
Universiti Teknologi MARA (UiTM) Johor