How Entrepreneurs Discover Market Opportunities Through DissatisfactionTags The Entrepreneur
Ludwig von Mises eloquently wrote in Bureaucracy (1944), “...thus the capitalist system of production is an economic democracy in which every penny gives a right to vote. The consumers are the sovereign people. The capitalist, the entrepreneurs, and the farmers are the people’s mandatories.” Entrepreneurs are sensitive to consumer dissatisfaction, seek to create new products and/or services to satisfy consumers, and use capital to bring their ideas to market. Consumers then vote their satisfaction of the product or service by their spending.
Entrepreneurs attempt to solve problems, add value, or make things more efficient. As Israel Kirzner put it, every penny rewards entrepreneurs for their alertness to discovery, creativity, and boldness. Throughout their daily — sometimes mundane — routine, entrepreneurs have a choice: identify entrepreneurial opportunities or miss them. The difference between the two is the attention they put on customer dissatisfaction to discover new or reconfigured products or services that provide more customer satisfaction.
Alertness to entrepreneurial opportunities calls for a particular set of attributes. According to Kirzner, they are boldness, aggressiveness, and creativity. For points are provided for those that want to use dissatisfaction to discover market opportunities to create new ideas.
According to Mises, entrepreneurs bear the uncertainty of profit and loss. So, ideas are not enough. Capital must be obtained to bring new products and services to the marketplace. As Murray Rothbard suggested, “entrepreneurial ideas without money are mere parlor games until the money is obtained and committed to projects.” Capital brings ideas to fruition.
If viewed entrepreneurially, dissatisfaction can be an inexpensive and timely lesson for the existing and/or future entrepreneur. By identifying dissatisfaction, entrepreneurs learn what others did wrong or what is out of date and replace current products or services with those that create more satisfaction or value to the consumer’s experience.
The most entrepreneurial leaders in business are the ones closing the customer dissatisfaction gap. They are alert to opportunities and are willing to put capital into ideas faster than their competitors or cooperators. As the saying goes, “time waits for no one.” This is especially true when it comes to the changing dynamics of market, where idea creation and execution is constrained by the timing of consumer taste, preferences, and value scales. Peter Klein pointed out that entrepreneurial opportunity can mean creating a new firm, starting a new business arrangement, or developing a new method of production. Remember, business owners and investor are customers too.
So, if your recently purchased product does not solve your problem, think about ways to solve that problem. If your recent service experience is not up to your perception and expectations, ascertain new service opportunities — discover and fill the gap in the market. Somebody thought of the idea of Netflix! And Amazon was conceived by dissatisfied, entrepreneurial leaders.
The entrepreneurs who founded Netflix were alert, found the capital to purse their creative ideas, and brought the idea to market for all those movie lovers! Someone thought, “There has to be better and more cost effective way to add value to consumers.” Why didn’t you think of Netflix or Amazon? As Kirzner put it, if you are alert to the market, the opportunity is generally right under your nose! Maybe some folks did think of a concept like Netflix. The difference was their idea did have the requisite boldness, aggressiveness, and capital. Or, they were not truly dissatisfied.
Ultimately, there is no one factor that is in itself sufficient to bring about entrepreneurial change. A variety of factors must be present. But when they are present, our daily lives are often revolutionized:
- Be alert to the mundane and to dissatisfaction from disappointing experiences or products. Ideas will then emerge. Golden opportunities exist under your nose, yet to be discovered.
- Embrace your dissatisfaction and let that be a starting point for your next entrepreneurial pursuit. If you are dissatisfied, so is someone else.
- Engage in the competitive market, which may lead to developing novel products or recombining existing products and services that enable greater efficiency for consumers.
- Invest capital into your entrepreneurial project so that it can reach the marketplace. Investors look for projects to invest in, especially when it is the right time.