Momofuku Ando's Credo on the Opportunity That Paves the Way for Further Opportunities - Essay Example

Introduction When economists and entrepreneurship scholars disagree on the proportion of failures, they agree on ‘most firms fail’ (Sarasvathy & Menon, n.d.) Why in this case would an entrepreneur ever start a firm especially if he was a serial entrepreneur who has experienced several failures? Entrepreneurs are supposed to be risk loving and entrepreneurship can take different forms. An entrepreneur is a person who emerges and is willing to take risks amidst uncertainty to start a new business. An entrepreneur is one who is able to identify opportunities and organize resources with the intention of attaining profit and growth. Entrepreneurial attitude can be measured in terms of achievement, innovation, personal control, self esteem, and opportunity recognition (Lindsay, 2005). Lindsay further clarifies that innovation includes recognizing and acting upon business activities in new and unique ways. Achievement can be associated with business start-up and growth results, while self-esteem includes self-confidence. Personal control involves individual perceptions of control and influence over business affairs. Creativity is one of the key characteristics of entrepreneurial and part of the innovation process. Momofuku Ando, initially an unsuccessful businessman, was one such entrepreneur who made a break through while watching his wife deep-fry vegetables (Hall, 2007). Ando has dabbled unsuccessfully in business ventures ranging from salt to prefab houses (Beech, 2006). He had been experimenting with a newfangled idea for packaged ramen noodles. While watching his wife he hit upon the idea that fried noodles would turn hard yet be porous enough and soften immediately when dipped in boiling water. This opportunity recognition not only made Ando into a noodle king but also created a multi-billion dollar market for instant noodles. Considered as a classic invention, instant noodles was a gift which saved people hard labor of grinding and chopping for hours to get food ready. This paper will examine the life and work of this entrepreneur analyzing the major factors that contributed to his success. Life and history of Momofuku Ando Creativity and innovation is what marked the growth of this entrepreneur. Moved by the death due to starvation in Japan following the World War II, he was inspired to produce a cheap and convenient food (Katayama, 1988). The construction workers with ten minutes between shifts and the salarymen hunched over their desks at midnight needed something, cheap, and fast and filling (Beech 2006). This led to the invention of the instant noodles in 1950s. Apart from Japan, this time-saving convenience was soon accepted all over the world. As an entrepreneur, Ando had determination of steel and even successive failures did not discourage him. Life for Ando had been a mess before this when he started his career by selling dress fabrics following in the footsteps of his grandfather. He also attempted to sell engine parts, prefabricated houses, magic lantern projectors and socks (The Economist, 2007). When he tried to launch a scholarship scheme for poor students, he landed in jail for tax evasion. When he was accused of selling goods on the black market, and was put behind bars, he refused to sign a cooked-up confession. When his assets were confiscated after accusations of tax evasion by US occupation forces and the tax officials, he sued the government (Hall). It was after he had presided over a credit association which went bankrupt, that he invented the ramen noodles. Ando used to experiment with noodles day and night in a shed in his back garden. When his instant noodles were first launched in 1958 in yellow cellophane bags, they were laughed at but by the end of the first year Ando had sold 13m bags and had attracted dozen competitors. This was the stepping stone after which he never looked back. Initially they were called the deep fried pasta. In 1971, Ando introduced noodles in heat-proof polystyrene cups. In no time, the Japanese voted their instant noodles as their most important 20th century invention. Ando’s philosophy in life was conveyed in these three sayings - Peace will come when people have food. Eating wisely will enhance beauty and health. The creation of food will serve society (The Economist, 2007). The snack in a Styrofoam cup revolutionized eating habits worldwide while creating a new market. This was the time when the fast food segment and ready-to-serve meals were catching on. Cup noodles are not only a staple on college campuses, it has also fed thousands of victims of natural disasters from Tsunami (2004) to Katrina (2005). In 2005, 85.7 billion packs of instant noodles were consumed worldwide (Beech). In 2005, Ando even introduced a vacuum packed instant noodle specially designed for Japanese astronaut Soichi Noguchi to consume during the US space shuttle Discovery. Ando’s Osaka based company, Nissin opened its first overseas venture in California in 1970 (Hevesi, 2007). Besides Japan, it has plants in Hong Kong, Indonesia, India, Brazil, Mexico, Peru, Singapore, China, the Philippines, Thailand, Hungary and Germany as well as in Lancaster, Pa. Nissin remains one of the world’s biggest instant-noodle makers, its market share has shrunk to less than 10% as new competitors catering to local tastes have entered the market (Hall). The success of instant noodles lies in the sharp marketing instincts of Ando. His company was ahead of rivals for long years even though the market was commoditized with new brands and flavors. Nissin now produces 16 flavors of in Top Ramen and Cup Noodles including six varieties of chicken, beef, shrimp, vegetable and spicy chili (Hevesi, 2007). According to the Nissin website, "aggregate worldwide sales of Cup Noodle brand reached 25 billion servings" in 2006 (Chicagoist, 2007). To help the instant noodle industry evolve, Ando founded the Instant Food Industry Association (IFIA) to ensure fair practices and quality product (Nissinfoods, 2006). He even insisted on dates of packaging. He has even endowed a fund for annual awards for contribution to better food culture through the development of unique and innovative food products. His company Nissin Food even arranges a variety of food and sports related activities through the Ando Foundation to encourage the healthy development of young people, as the futures rests with them. Educational facilities are obliged under law to help children experience nature. Ando Foundation provides sponsorships for children to go camping all over Japan. Thus, as an entrepreneur Ando has shown responsible and ethical business practices. A late bloomer, Ando resigned from the company’s chairmanship at the age of 95. He died at the age of 96 of heart attack and is survived by his wife and two sons, and a daughter. Opportunity Recognition (OR) and innovation Not all ideas are opportunities (Singh, Hills & Lumpkin, 1999) and it is essential to recognize the right opportunity. Research also suggests that entrepreneurs must have experience in the industry prior to starting their own business but Ando has demonstrated that that superior research and innovation can be achieved even without magnificent facilities (Nissinfoods, 2006). What are required are clear objectives, originality and an indomitable spirit. Singh et al further clarify that entrepreneurs without prior experience or even those who have experienced failures, are highly alert to opportunities and they have higher levels of self-efficacy. Opportunity is a set of circumstances leading to the choice or rejection of options. An opportunity is not merely a choice; it is a special category of choice. One opportunity opens the way for additional opportunities as the improved conditions contain seed for further improvement. It leads to more options and more opportunities. A choice that does not permit seeking the goals is not considered an opportunity, says Morris (2005). If choices or their outcomes lead to reputation for shoddy products, violations of trust or dishonest business dealings, it does not lead to future opportunity. A problem, challenge, threat, adversity, dissatisfaction or an obstacle create an opportunity. Opportunities may be present everywhere but they may not always be apparent. When an opportunity is offered, there is limited time to act. Recognizing and acting on an opportunity requires sacrifice. It could lead to exchange in terms of additional effort, ignoring other goals, exhausting resources in terms of assets or time, or acceding to restrictions placed on actions. If opportunities are pursued, failure could be a possibility. To act on opportunities, there must be a catalyst which prompts an individual to view the problem in a new light. Catalysts also help to recognize new options reevaluate existing options or revisit previously discarded options but catalysts are not opportunities. Various factors alter how problems are evaluated. If one does not recognize or act on an opportunity, it may lead to regret. Turning the idea into an opportunity usually takes some time before the entrepreneur founds his firm. During the time gap, initial ideas tend to get modified. Thus ideas and opportunities are different constructs and different activities take place at different times within the opportunity recognition process, contend Singh et al. As far as Ando is concerned, after the World War II he recognized the need of the society and acted instantly on it. Entrepreneurs compared to non-entrepreneurs have distinct cognition, which amounts to more effective use of heuristics. Entrepreneurs have a way of enhancing the discovery of information (Pech & Cameron, 2006). Along with the heuristics, their individual beliefs also impact decision making. An entrepreneur has the ability and motivation to seek and recognize opportunities, which is what Ando possessed. Littunen (2000) states that during the start-up phase, the characteristics of an entrepreneur must include innovativeness and the will to act. Innovativity refers to the ability to produce solutions in new situations. The will to act must be supported by experience, training and the resources. Ando had experience as an entrepreneur but neither training nor resources. While these factors shape the values and beliefs of the entrepreneur, Ando had his own philosophy from which he drew strength. McClelland’s theory suggests that individuals who have a strong need to achieve are those who want to solve problems themselves. They set their own targets and strive to attain these targets. The goal of Ando was to provide a solution to the starving people who had to spend long hours in the line to get boiled noodles. Ando recognized the opportunity; he had the strength and resources to act on them. Opportunities are in relation to a particular problem. This opportunity was a response to the external factors and the need at that time. Conclusion Thus, Ando proved to be an entrepreneur with qualities of opportunity recognition amongst other qualities essential for an entrepreneur. The successive failures did not dishearten or discourage him. He drew lessons from each experience and stepped up to have global operations from an assuming entrepreneur. When Japan was faced with food shortages, Ando recognized the opportunity and used innovation and creativity to convert it into action. He constantly improvised as Morris says an opportunity paves the way for further opportunities. Initially he recognized the need that convenient noodles could feed the masses and then wanted instant noodles. He jumped from ‘Chicken Ramen’ to ‘cup noodles’ to ‘Space Ram’. His innovative skills and temperament enabled him to provide for solutions to the problems faced by the workers who had just ten minutes to spare between shifts. He neither had any training nor the resources but he as an entrepreneur he was alert to the external environment, which is why he could hit upon the idea when he saw his wife deep-frying vegetables. Between getting the opportunity and implementing it, he did not lose time and hence there were no changes in his plans. The timing of his venture proved to be just right as this was the time when life had become fast paced and people of all ages were seeking fast food or ready-to-eat meals. His marketing instincts and creative advertising contributed to his ventures. As an entrepreneur he fulfilled and discharged corporate social responsibilities as well. The Ando Foundation carries on philanthropic activities in encouraging youth and training then to face the challenges of the future. His philosophy which connected peace, society and food was interwoven with his entrepreneurial qualities to give the gift of instant noodles to this fast-paced world. References: Beech, H., (2006), Momofuku Ando, 02 March 2007 Chicagoist (2007), Momofuku Ando, Instant Ramen Inventor, Dead at 96, 02 April 2007 Hall, K., (2007), Remembering the Ramen King; Momofuku Andos innovative noodle soups built Nissin into a giant whose products have sustained low-budget eaters for decades, Business Week Online, British Council Journals Database. Thomson Gale. 2 Apr. 2007 Hevesi, D., (2007), Momofuku Ando, 96, Dies; Invented Instant Ramen, 02 April 2007 Katayama, H., (1988), The last noodle emperor, Forbes 141.n12 (May 30, 1988): 306(1). British Council Journals Database. Thomson Gale. 2 Apr. 2007 Lindsay, N. J., (2005), Toward A Cultural Model of Indigenous Entrepreneurial Attitude, Academy of Marketing Science Review volume 2005 no. 05 02 April 2007 Morris, D., (2005), A new tool for strategy analysis: the opportunity model, Journal of Business Strategy, Vol 26 No. 3 pp. 50-56 Nissinfoods (2006), Chairman Momofuku Ando: Father of an Industry, < http://www.nissinfoods.co.jp/english/inv/pdf/ar04_06.pdf> 02 April 2007 Pech, R. J., & Cameron, A., (2006), An entrepreneurial decision process model describing opportunity recognition, European Journal of Innovation Management Vol. 9 No. 1, 2006 pp. 61-78 Sarasvathy, S., & Menon, A., (n.d.), Failing Firms And Successful Entrepreneurs: Serial Entrepreneurship As A Temporal Portfolio, 02 April 2007 Singh, R. P., Hills, G. E., & Lumpkin, G. T., (1999), New Venture Ideas and Entrepreneurial Opportunities: Understanding the Process of Opportunity Recognition, 02 April 2007 The Economist (2007), Momofuku Ando, British Council Journals Database. Thomson Gale. 2 Apr. 2007 Read More