Entrepreneurial Apprenticeships

In many succession situations, founders are extremely interested in ensuring the

continuation of the firm that they have created. They do not just want a sale that only
has financial benefits, although they are very interested in receiving those benefits. They
are also concerned that a strategic sale, to a competitor for example, will result in the
destruction of the unique value that they have spent their life creating, as it gets merged
into another entity.

So when no entrepreneurs can be found that are ready, willing and able to buy the
business outright and maintain its independence and success, what is there to do?

Apprenticeship offers an answer. Unlike typical transfers or sales of the business, which
involves a financial transaction and an immediate exchange of ownership, this
arrangement would involve the selection of an apprentice. The goal would be for the
apprentice to learn all aspects of the business and develop their entrepreneurial skills
(which may require outside coaching) over a 3 to 5 year period, in anticipation of
purchasing the business at the end of their apprenticeship.

Entrepreneurial apprenticeships can be applied in other ways as well. Apprentices can

be utilized by existing entrepreneurs to pursue specific untapped opportunities in their
business that neither they nor any of their people have the time or the skill to develop.
Of course, an apprenticeship situation requires the entrepreneur to take an active role in
leading the apprentice through the start-up process as well as in developing their skill.

Apple > HP

Microsoft > IBM

Metcalfe's Law
1) The community value of a network grows as the square of the number of
its users increase

2) By increasing market, demand is also inceases and it depends on

number of users i.e easy paisa, ATM etc

Metcalfe's Law is often cited as an explanation for the rapid growth of

the Internet (or perhaps more especially for the World Wide Web on
the Internet). Together, with Moore's Law about the rate at which
computer power is accelerating, Metcalfe's Law can be used to
explain the rising wave of information technology that we are riding
into the 21st century.

Total value of a network to its users grows as the square of the total
number of its users. Thus, the ratio of value to cost of adding one
more network user grows disproportionately as the network grows
larger. Also called law of telecosm, it was proposed by Robert C.
Metcalfe, co-inventor of the Ethernet.

'Moore's Law'(1965-2012)
Computer power is doubled in every 18 months, we cannot grow in
infinite time.

Moore's law refers to an observation made by Intel co-founder

Gordon Moore in 1965. He noticed that the number of transistors per
square inch on integrated circuits had doubled every year since their
invention.
 Moore's law predicts that this trend will continue into the foreseeable
future. Although the pace has slowed, the number of transistors per
square inch has since doubled approximately every 18 months. This
is used as the current definition of Moore's law.

ROOTS law

The cost of technology increases every 4 years

CORPORATE Entrepreneurship.

Corporate Entrepreneurship is a process used to develop new businesses,

products, services or processes inside of an existing organization to create
value and generate new revenue growth through entrepreneurial thought
and action.
 Corporate entrepreneurship sets the context for innovation and growth. It
provides a systems view of the resources, processes and environment that
are needed to support, motivate and engage the organization in
entrepreneurial thinking and action. .

Organizations with strong entrepreneurial orientations statistically perform

better. They achieve higher levels of productivity, innovation, growth and
financial returns.
Although business growth is the overall end game, corporate
entrepreneurship is difficult to achieve. It challenges traditional
organizational practices. Many of the things needed to support the core
business are just the opposite of what you need to do to build a new
business.
There is no perfect way to implement corporate entrepreneurship. There
are however three components that enable corporate entrepreneurship;
people, process and place.
People leaders that possess a core set of action oriented
competencies and behaviors
Process systems and processes that support entrepreneurial
thinking and action
Place an environment conducive to entrepreneurship, learning and
growth
It is well known that internal champions (mavericks) can be effective in
bringing new ideas to market. It is well researched that having the right
processes can help facilitate entrepreneurship. It is well documented that
creating an entrepreneurial culture can direct organizational behavior
toward more entrepreneurial pursuits. But..
What is less understood is that all three of these elements are needed for
corporate entrepreneurship to be successful and sustainable over time.
 The goal of corporate entrepreneurship is to build capabilities that enable
organizations to accelerate new business growth.
i.e google, telenor

'Window Of Opportunity'
A window of opportunity is a short time period during which an otherwise
unattainable opportunity exists. After the window of opportunity closes, the
opportunity ceases to exist. Since good deals on real estate, business
offers, etc. do not exist forever, the window of opportunity is the ideal time
to act.

What is a Social Entrepreneur?

Social entrepreneurs drive social innovation and transformation in various fields

including education, health, environment and enterprise development. They pursue
poverty alleviation goals with entrepreneurial zeal, business methods and the courage to
innovate and overcome traditional practices. A social entrepreneur, similar to a business
entrepreneur, builds strong and sustainable organizations, which are either set up as
not-for-profits or companies.

A social entrepreneur is a leader or pragmatic visionary who:

Achieves large scale, systemic and sustainable social change through a new
invention, a different approach, a more rigorous application of known technologies or
strategies, or a combination of these.

Focuses first and foremost on the social and/or ecological value creation and
tries to optimize the financial value creation.

Innovates by finding a new product, a new service, or a new approach to a social

problem.

Continuously refines and adapts approach in response to feedback.

 Combines the characteristics represented by Richard Branson and Mother
Teresa.

The Schwab Foundation employs the following criteria when looking for leading social
entrepreneurs: Innovation, Sustainability, Reach and social impact.

Social entrepreneurs share some come common traits including:

An unwavering belief in the innate capacity of all people to contribute

meaningfully to economic and social development

A driving passion to make that happen.

A practical but innovative stance to a social problem, often using market

principles and forces, coupled with dogged determination, that allows them to break
away from constraints imposed by ideology or field of discipline, and pushes them to
take risks that others wouldn't dare.

A zeal to measure and monitor their impact. Entrepreneurs have high standards,
particularly in relation to their own organizations efforts and in response to the
communities with which they engage. Data, both quantitative and qualitative, are their
key tools, guiding continuous feedback and improvement.

A healthy impatience. Social Entrepreneurs cannot sit back and wait for change
to happen they are the change drivers.

What is Social Entrepreneurship?

Social entrepreneurship is

About applying practical, innovative and sustainable approaches to benefit

society in general, with an emphasis on those who are marginalized and poor.

A term that captures a unique approach to economic and social problems, an

approach that cuts across sectors and disciplines grounded in certain values and
processes that are common to each social entrepreneur, independent of whether his/
her area of focus has been education, health, welfare reform, human rights, workers'
rights, environment, economic development, agriculture, etc., or whether the
organizations they set up are non-profit or for-profit entities.
 It is this approach that sets the social entrepreneur apart from the rest of the
crowd of well-meaning people and organizations who dedicate their lives to social
improvement.

About organizational models

Leveraged non-profit ventures

The entrepreneur sets up a non-profit organization to drive the adoption of an innovation

that addresses a market or government failure. In doing so, the entrepreneur engages a
cross section of society, including private and public organizations, to drive forward the
innovation through a multiplier effect. Leveraged non-profit ventures continuously
depend on outside philanthropic funding, but their longer term sustainability is often
enhanced given that the partners have a vested interest in the continuation of the
venture.

Electricity crisis in Pakistan

The Challenge

The blackouts (loadshedding) lasting for hours are the most ominous sign of the
energy crisis in Pakistan. The reason is simple: the demand for electricity in
Pakistan exceeds supply by 5,000 MW. At its worst, the shortfall could be as high
as 8,000 MW. The installed electricity generation capacity is around 22,000 MW.

It surprises me a great deal that energy experts in Pakistan define the shortfall as the
difference between the installed generation capacity and the actual production. This
approach erroneously assumes that the installed capacity is sufficient to meet the total
electricity demand in Pakistan. Given that a large segment of the population is not
even connected to the grid, their power needs are not being accounted for in the
stated shortfall. Furthermore, it is again erroneous to assume that those fortunate
ones connected to the grid will not consume more power (latent demand) if it were
available in addition to the installed capacity.
One wonders why Pakistan cannot generate sufficient electricity to meet the demand.
The answer to this simple question is rather complex.

Affordability:

First is the affordability challenge. Thanks to poor planning and governance, Pakistan
generates very expensive electricity. The cost per unit kilowatt-hour (kWh) of
generated electricity in Pakistan is around 14 cents (14 Rupees). Consumers, on
average, pay 11.50 Rupees per kWh. The systematic subsidy, which is almost 15 per
cent of the cost, adds up to billions in losses.

But this is not all. There are distribution and transmission losses, which in Pakistan is
a polite expression for theft. Across the country, 22 per cent of the generated
electricity is lost due to theft and some transmission losses.

Collection:

Collection is another challenge, where the distribution companies fail to collect

outstanding dues from consumers. The recovery rate ranges between 80 per cent to
90 per cent. Dr Musadik Malik, who holds a doctorate in Pharmacy and advises
Prime Minister Nawaz Sharif on energy, offers an analogy that I have adapted below.

Let us assume that Pakistan generates 100 units of electricity. The system loses 22
units to theft. Thus, only 78 units reach consumers. We further assume that the
distribution companies collect approximately 85 per cent of the amounts billed to
consumers. The system, therefore, recovers revenue for only 66 units of the 100
generated.

See: Private sector can help overcome energy crisis

Now comes the subsidy. Since it costs 14 cents to generate a unit of electricity, and the
average tariff charged is 11.5 cents, the system recovers revenue at full cost for a
mere 54 units.
Effectively, the total loss from transmission losses, theft, recovery, and subsidies
is 46 per cent. This leads us to the other self-inflicted financial wound, i.e., the
circular debt.

Circular debt:

Each year, it adds up to billions of dollars. Why, you may ask. According to the CIA
World Fact Book, Pakistan generated 94.65 billion kWh in 2011. Since it costs the
system 14 cents to generate a kWh of electricity and the real recovery rate is merely
54 per cent, the total annual circular debt is estimated at US$6 billion.

Some energy experts may argue that the circular debt is not that large. They may be
right. The amount of circular debt will be lower if less power is generated, losses due
to theft are lower, and the recovery rate is higher. However, even when transmission,
distribution, and theft losses are down to 10 per cent and the recovery rate rises to 95
per cent, the annual circular debt, owing to the subsidy, will still be around US$3.9
billion for 95 billion kWh.

The circular debt, therefore, is the amount the State fails to collect from
consumers and transfer it to the States oil-procuring agencies. This stops oil
shipments to independent power producers, who halt the production, but continue to
receive payments from the State for the installed capacity rather than for generated
electricity.

Why the subsidies?

We are told that the subsidies are required to protect the poor. This is partially true.
The complete truth is that the subsidies protect the profit margins of the very rich
involved in generating power at such expensive rates. Even in the South Asian
neighbourhood, Pakistan generates one of the most expensive electricity at 14 cents
per unit.

The high cost is a result of using petroleum or its derivatives for power generation.
Generating electricity with coal or gas is much cheaper. The real question to ask is
why Pakistani planners recommended oil-based power plants to independent power
producers, and at the same time committed to providing cheaper oil and buying
electricity at higher tariffs. Id submit that the circular debt is not an unexpected
development but an inevitable consequence of poor economic planning.

Coal and Gas to the rescue

Experts believe Pakistans energy crisis may have a solution in coal or gas. Thar coal
is being touted as the answer to Pakistans power crisis. Thars 175 billion tons of coal
reserves have given several authors in the book the hope for a long-lasting solution. I
admire their optimism.

However, in earlier writings for the Dawn, I had shown that when it comes to Thar,
we may be counting our chickens before they hatched. Only 2.7 out of the 175
billion tonnes of Thar coal are categorised as measured (proven) coal reserves.
The rest of the reserves (172 billion tonnes) fall under hypothetical
(undiscovered), inferred, and indicated category.

Other experts believe that despite there being a shortfall in Pakistan of two billion
cubic feet, natural gas offers the potential to generate electricity at affordable costs.
Also, almost 11 per cent of natural gas remains unaccounted for in Pakistan.

The recent agreement between Iran and Western powers opens the possibility to build
a gas pipeline to Iran and link it with India and China. The recent Chinese
announcement of $35 billion investment in power infrastructure in Pakistan has
earmarked loans for the Pak-Iran-China gas pipeline. Cheaper gas may mean
affordable electricity for Pakistan.

Source of fuel used in power generation.

Source: Kugelman, Michael. Pakistans Interminable Energy Crisis: Is there any way
out?. Woodrow Wilson International Center for Scholars. Washington, DC. 2015. Pp.
157.
What to do?

The Wilson Center publication offers advice on how to address the energy crisis in
Pakistan. The book highlights the need for better governance of the power sector and
the need to eliminate redundancy in regulatory authorities.

Improving governance in Pakistan is easier said than done. The challenge is a lack of
qualified personnel to regulate these complex entities. While experts are plenty in
Pakistan, qualified experts are in short supply. Individuals with training in energy
economics and infrastructure engineering are few, and even fewer in the public sector.
Without the desired human capital and presence of political will, it is unlikely
that governance will improve in the short-run.

Pakistans energy mix has to be altered to reflect the resource-constrained realities of

the nation. Pakistans reliance on expensive imported oil has worsened the energy
crisis. Unlike India and China, Pakistan generates very little power from coal. The call
to shift to coal and gas makes sense.

The book, however, does not mention nuclear as an option. Belgium, France,
Lithuania, and Slovakia, generate more than 50 per cent of their electricity from
nuclear. Some may argue that nuclear is not the cheapest alternative. Still, not having
any mention of nuclear in the book seemed odd to me, especially when Pakistan
already generates a fraction of its electricity from nuclear.

Experts strongly recommended the need to limit losses during transmission,

distribution, and because of theft. The switch to smart, temper-proof metres being
installed in Islamabad and Peshawar is a welcome development. MicroTech, a
Pakistani firm specialising in smart metres, is providing the technology to limit theft
in the system. At the same time, assistance from the US AID for smart metres to
monitor the national grid covering 9,000 feeders is a timely development to modernise
the command and control structure.

Even though the book was published before the heatwave in Karachi that killed over
1,200 people and exposed the inadequate performance of the citys privatised electric
supplier (K-Electric), experts were reluctant to call for an outright privatisation of
state-owned distribution companies.
A recent report by the regulator, NEPRA, revealed that K-Electric, despite its tall
claims of adding thousands more megawatts to its generation capacity, is limited to
carrying no more than 2,200 MW. Whats the point in expanding generation capacity,
but not being able to distribute the power?

Read: Analysis | K-Electric: Tripping on the exit

The States omnipresent intervening role in power politics in Pakistan hampers reform
in the energy sector. Even when K-Electric has been privatised, its establishment can
still not rationalise its workforce without intervention from the State. The lack of law
and order in Pakistan implies that any attempt to lay off surplus workers will likely
meet a hostile reaction, thus allowing the State to step in and pull rank.

Violence also ensues when tariffs are raised for electricity, natural gas, or gasoline.
The authors urge the government to raise tariffs for natural gas to the wholesale levels
in the UK, i.e., $8-10 per million British Thermal Units (BTU). At the same time, they
urge doubling the industrial tariff for natural gas to $10 per million BTU.

The motivation behind the call to raise tariffs is to curb the excessive consumption of
natural gas in Pakistan, which results from the inherent subsidy that keeps prices low.
Doubling tariffs will likely have political repercussions. It is hard to imagine any
incumbent government anywhere surviving such drastic increases in the price of
utilities.

There are, however, no shortcuts to an electrified future of Pakistan.

The authors mention the 900 MW solar power plant near Bahawalpur and the Gadani
6000 MW project as examples of new capacity being added to the system. Large
power plants will take anywhere between 5 to 10 years to come online. Improving
governance and curbing theft should not take that long.
Why is the price of oil falling?
Oil just like any other commodity is regulated by rules of demand and supply. But there is
one more particular non tangible that affects the price of oil- Expectations.

The demand for energy (read oil) in a particular country is very closely related to economic
activities in that country. Generally, these spikes in the winter in the northern hemisphere,
and during summers in countries which use air conditioning. Meanwhile the Supply can be
affected by weather (which prevents tankers loading) and by geopolitical upsets. OPECs
decisions shapes the Expectations factor: if it curbs supply sharply, it can send prices
spiking. This is where it all went wrong for oil producing nations other than
Saudi.

Why oil prices reduced so sharply?

The recent fall in the price of oil from $115 in June to less than $70 per barrel can be
attributed to 4 main reasons.

1. Demand is low due to weak economic activities in China and all over the world in general.

2. Political upsets and conflicts in Iraq and Libyatwo big oil producers with nearly 4m
barrels a day combinedhas not affected their output. The market is more or less sanguine
to changing politics or geopolitical risks. It is now, not something unexpected.
3. America has become the worlds largest oil producer. Thanks to the oilmen of North
Dakota and Texas. They have set about extracting oil from shale formations previously
considered un-viable through a relatively new technology-Fracking or Hydraulic fracturing.
Though it does not export crude oil, it now imports much less, creating a lot of spare
supply.

4. The Saudis have decided not to sacrifice their own market share to curb the falling prices
of oil. Seeing that the main benefits of such a restoration process would go to countries they
detest such as Iran and Russia. Also, its own oil costs very little (around $5-6 per barrel) to
get out of the ground. A meager amount when compared to high overhead costs of other oil
producing nations. Also they are playing a new game- let the price fall and put high-cost
producers out of business.

Effects:

1. American Frackers who have borrowed heavily on the expectation of continuing high
prices and who have already constructed more than 20000+ oil wells in the expectations of
high oil price are now in trouble.

2. The other western oil companies with high-cost projects involving drilling in deep water
or in the Arctic, or dealing with maturing and increasingly expensive fields.

3. Hard hit on regimes and nations who are dependent on a high oil price to pay for costly
foreign adventures and expensive social programmes. For instance, Russia and Iran. Russia
is already hit by Western sanctions following its meddling in Ukraine and Iran which is
paying to keep the Assad regime afloat in Syria. Nigeria has been forced to raise interest
rates and devalue the naira. Venezuela looks ever closer to defaulting on its debt.

4. Big importing countries euro zone, India, and Japan are enjoying especially big windfalls.
Since this money is likely to be spent rather than stashed in a sovereign-wealth fund, global
GDP should rise. The falling oil price will reduce already-low inflation still further, and so
may encourage central bankers towards looser monetary policy.

That's all folks!