UVA Darden Professor Saras Sarasvathy is on a mission to revolutionize entrepreneurship education. Beginning almost 20 years ago with groundbreaking research into the cognitive processes of seasoned entrepreneurs, she has sought to dispel the myth that entrepreneurs are born, not made. Through her work, she has identified a distinct logic that underlies entrepreneurial behavior. She dubbed it “effectuation.”
One of effectuation’s central tenets, the Bird-in-Hand principle, is that entrepreneurs create value with what’s available to them at the moment, however limited their resources. One entrepreneur inspired by this idea is Kwabena Obiri Yeboah from Ghana, who shared his founding story at the fifth international conference on effectuation, which convened in the spring 2018 at Darden in Charlottesville, Virginia.
Knowing Your Means at Hand
Yeboah and his friend Peter Anowie have always been fascinated with the ideal of the American dream. “We often talked about doing something together,” said Yeboah, “but we didn’t know whether we should go into manufacturing or start some other business.”
Later, as a business student at Leipzig University in Germany, Yeboah came across Sarasvathy’s principles of effectuation, which completely changed his mindset. Instead of searching for the right venture to launch, Yeboah focused on his bird-in-hand: who he was, what he knew and whom he knew. “At first,” said Yeboah, “the only resource I had was my friend Peter and the trust we had, but trust is a very important ingredient if you want to start a company.”
The Bird-in-Hand Principle helped Yeboah identify other resources that were available in his community in Takoradi. Despite being known as Ghana’s Oil City, Takoradi had a significant unemployment problem. “To work on an oil rig,” said Yeboah, “you have to have the right skills, and many people in Ghana can’t pay for training. They are desperate to find a job.”
Peter happened to know an unemployed shoemaker. “Our first bird-in-hand was trust,” said Yeboah, “and a shoemaker, who didn’t have a job. It was easy to bring him onboard, and he recruited two more young men. And many people in our community needed shoes.”
That sparked an idea: Yeboah and Anowie were going to make and sell affordable shoes. Said Yeboah, “Even though we had no experience in the shoe market, we brought in the business side of the venture that the shoemaker didn’t have.”
Brand Building and First Customers
Having studied marketing, Yeboah and Anowie knew how to build a brand. They called their fledgling venture KolikoWear, after Koliko, their high school’s mascot. “The name resonated with the people in the community,” said Yeboah. “Everybody wants to wear what they feel connected to.”
He was right. “We looked for people who didn’t have shoes in our neighborhood,” said Yeboah. “We said, we can make you shoes. They started coming, so we asked, ‘How do we sustain this?’”
First, the two friends needed a place to set up shop. Yeboah knew that his uncle had a spare room in Takoradi. To the young entrepreneurs, the room was a valuable resource; to the uncle, it was an affordable loss, and he agreed to let them use it.
Experimentation and Co-Creation
To make affordable shoes, finding inexpensive materials was critical. Again, Yeboah and Anowie focused on what was available. Ghana is flooded with second-hand jeans from the West, which are often too big for the Ghanaians and sometimes end up in landfills. Old car tires are also plentiful, and the founders decided they’d be great for shoe soles. Gradually, they started using upcycled and recycled materials to cut costs while minimizing their carbon footprint.
After experimenting with old jeans and testing the market, Yeboah and Anowie discovered that the shoes made of denim and rubber were in high demand. They started to offer potential customers an option to make shoes from old leather; those who brought their old belts, for example, would get a discount. At the request of local women, who’d bring them scraps of fabric from a dressmaker, the founders started to incorporate that fabric into the shoe design.
Said Yeboah, “We were using all those approaches to sustain ourselves in the shoemaking market, because we didn’t know that market. We were experimenting with the resources that were available to us.”
Even though the shoes were made from recycled materials, the entrepreneurs made sure they were fashionable. “The people we hired,” said Yeboah, “had some creativity, but they also came from the hood. So, our first customers were the people around us. They’d come, buy our shoes and tell their friends, so we didn’t have to do any advertising.”
Refining the Idea
As demand grew, the founders needed more hands on deck, but they couldn’t afford to pay them. So they started offering apprenticeship to those who wanted to learn how to make shoes. “We said, we’ll take you in, if you believe in our principles. And whatever profit we make, we’ll give you pocket money. The training was free, but the philosophy was to expand.”
Gradually, the ideas around the shoemaking business started to coalesce. “We didn’t want to be an NGO, waiting for the donor money,” said Yeboah. “We wanted to build a social business, a green business, which makes a profit but also teaches young people the skills and the art of entrepreneurship.”
After one year, KolikoWear is profitable. Its founders not only practice effectuation, but they also teach it to empower their employees. “We show them,” said Yeboah, “that no matter how little you have, you can turn that into a big mountain if you co-create with others.”
Kwabena Obiri Yeboah is an effectual entrepreneur and a Ph.D. candidate doing research at the International SEPT Program at Leipzig University in Germany. Like many participants of the effectuation conference, he seamlessly blends effectuation research, practice and teaching.
This article was developed with the support of Darden’s Batten Institute for Entrepreneurship and Innovation, at which Gosia Glinska is associate director.