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Brain Circuits
5 key insights from necessity entrepreneurs
We tend to associate entrepreneurship with Silicon Valley startups and innovative tech companies. However, there is another entrepreneurial world that is born not from opportunity but from necessity, and it has much to teach us.
1. Trust as a strategic asset
Necessity entrepreneurs operate in conditions of extreme resource constraints, lack of formal employment opportunities or a social safety net, weak formal institutions, and economic hardship. Here, trust forms the foundation of business relationships. When formal contracts and institutions are weak, reputation and relationship building become crucial competitive advantages. Relationships matter for businesses of all sizes.
2. Adaptability and resilience
The ability to pivot quickly in response to political instability, infrastructure failures, or economic shocks is essential for the survival of necessity entrepreneurs. In an increasingly volatile trade and geopolitical environment, businesses can emulate this agility by developing responses to various scenarios as part of their risk- and crisis-management processes.
3. Resource optimization
Operating under extreme resource constraints forces necessity entrepreneurs to maximize value from minimal inputs. This “start-with-nothing-and-build-it-up” innovation mindset (“entrepreneurial bricolage”) can help larger organizations identify efficiency opportunities often overlooked in resource-rich environments where duplication and waste can go undetected.
4. Community at the core
Necessity entrepreneurs often succeed by meeting the needs of their families and communities, cultivating shared prosperity rather than extracting value from those they serve. This stakeholder-oriented approach offers insights for businesses seeking longer-term sustainability.
5. Knowledge transfer systems
The master-apprentice model exemplified by the Igbo apprenticeship system (sometimes referred to as an “informal MBA”) offers flexibility beyond traditional education. In this system, business owners (masters) take on apprentices for five to seven years, teaching them financial management, customer engagement, inventory control, and other craft and business skills, providing a powerful framework for developing talent and building organizational capability.
Questions for business leaders
- Where can we build more trust in our relationships with all stakeholders, including employers, management, board, shareholders, customers, and suppliers?
- How can we build greater agility and improve our risk- and crisis-management processes?
- Are there efficiency opportunities where duplication or waste is going undetected?
- Can we create non-financial wealth to benefit a particular stakeholder group or the wider community?
- What opportunities can we create for knowledge transfer?
Key learning
Necessity entrepreneurs offer valuable insights for business leaders seeking to navigate uncertainty in today’s complex global economy.
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