Entrepreneurship. Different from what you think.
The common answer is “someone who starts a business.” This was also my answer 16 years ago when I first joined the Washburn Small Business Development Center specifically to work with entrepreneurs.
It is easy to assume that entrepreneurship is focused only on startups. After all, most of my students still identify Steve Jobs (Apple) as the poster child, although I hear the name Elon Musk (Tesla) more often each semester. The reality is that entrepreneurship is nowhere close to this exaggerated view of the “hero entrepreneur” the media has made both Jobs and Musk (and others) to be. I like to show my students the humble garage where Steve Jobs and Steve Wozniak first hung out—this is more telling.
What I have learned—and am still learning—is that entrepreneurship is about more than just starting a business. Most of my students are surprised that they could be an entrepreneur and never start a business in the traditional sense, that the principles of entrepreneurship apply to all work, self-employed or not, and that entrepreneurship is a pathway to solving our most pressing problems.
The truth is that entrepreneurs can be found anywhere but are still the exception. They can be found in our largest corporations, in our non-profit organizations, in our hospitals, and even in some corners of our government and universities. Entrepreneurs can be found managing our small businesses, which I continually remind my students, despite what they read about Elon Musk, represent 99.7% of all businesses.
WE FORGOT THAT WE ARE ALL ENTREPRENEURS
The Global Entrepreneurship Monitor, a global research study founded by Babson College and the London Business College, reports that 13 percent of the US adult population from 18 to 64 years old is involved in some type of entrepreneurial activity.
Why are entrepreneurs the exception and not the rule? Entrepreneurs are often mistakenly described as extreme risk takers, having an unusually high tolerance for ambiguity, or are simply far more passionate than everyone else. Risk, uncertainty and passion, in other words —crazy?
No wonder most students and adults lack entrepreneurial aspirations. My students who are reluctant about entrepreneurship often cite an unwillingness to take risks or uncertainty about their future (college debt certainly compounds this view). Passion is often interpreted with a dose of skepticism.
ENTREPRENEURS DON'T FIT THE MOLD
The stereotypes about entrepreneurs are not supported in practice. There is no evidence that entrepreneurs take more risks than anyone else. In truth, entrepreneurs, by and large, are the opposite of extreme. They are calculated, understand risk/reward, are adept at mitigating risk and proficient in calculating affordable loss.
Further, recent research suggests that entrepreneurs actually exhibit common patterns of thinking where the focus is on creating the future, not just living in it. This means creating new opportunities, accepting and learning from failure and building relationships. Defined as the theory of effectuation, it is the idea that the future is unpredictable but controllable.
While no one will discount the role passion plays in persistence, alone it is not enough. Opportunity, experience and execution all play a role. In sum, entrepreneurs aren’t crazy, they just look at the world differently; instinctually they seem to remember what most of us have forgotten. They see entrepreneurship as a mindset to identify opportunities, approach problems in a specific way, adapt to conditions and take control of personal goals.
A NEW APPROACH TO ENTREPRENEURSHIP
Elements of the traditional linear approach to entrepreneurship—think of idea, research idea, write a business plan, pitch idea, obtain financing, and go to market—still apply in the startup scenario. Financing is impossible to obtain without a written business plan. It is still the price of admission. Investors expect effective presentations with 10-slide pitch decks and proforma financials.
However, the traditional linear approach is fraying at its ends and middle. It matters less what the startup entrepreneur thinks; the problems and needs of the customer are what matters most. To learn what matters most, you have to be willing to talk to customers long before taking the first order. A strong value proposition is more interesting than a great idea.
While business planning is critical, the written business plan is not (it’s usually wrong anyway). Low cost experiments, building on what you learn, and small actions should precede significant financing. Success is often the marriage of the entrepreneur’s effectual force of will with the hard work of testing ideas and validating markets.
Henry Ford, who famously quipped, “If I had asked people what they wanted, they would have said faster horses,” spent more than two years experimenting before finishing his first vehicle, the Quadricycle. Built in a humble shed, Ford's Quadricycle sold for $200.
Outside of the startup context, the old ways of entrepreneurship are even less helpful. Planning and pitching are still important, but neither will help one develop the in-demand skills of opportunity recognition and innovation. This is where the practice of entrepreneurship has changed most, from a linear one-size-fits-all approach to new methods focused on business models and testing.
The good news is that the method approach to entrepreneurship is open to all types of entrepreneurs, including intrapreneurial employees and small business managers. The new approaches apply across all industries, from healthcare to higher education to government. Students (and adults) can benefit by learning to think and act like an entrepreneur, even if starting a business is not in the plans.
EMBRACE YOUR INNER ENTREPRENEUR
Entrepreneurship begins with a desire to improve things and a willingness to test new ideas. To do this well, one benefits from developing a growth mindset, customer empathy, a willingness to experiment, and thinking strategically about business models. This is where we all can start:
In a growth mindset, people believe that their abilities can be developed through dedication, effort and hard work. They see failure as an opportunity to improve and to learn from mistakes. The ability to spot opportunity, organize, and take action, i.e. having vision requires a growth mindset, which can be developed.
One practices the skill of empathy when they take the time to relate and understand the needs of others. For
the entrepreneur, this means connecting to prospective customers and stakeholders. The goal of the interaction is insight into unmet needs—what problem does my customer have that I can solve in a meaningful way?
Experimentation is best described as acting in order to learn: trying something, learning from the attempt, and building that learning into the next iteration. In the context of entrepreneurship, experimentation means taking action, such as getting out of the building and collecting real-world information to validate assumptions. Taken together, the skill of empathy and willingness to experiment form the basis of design thinking. Design thinking leads to real innovation.
A business model is a conceptual framework that describes how a company creates and delivers value.6 The Swiss business theorist Alexander Osterwalder created the business model canvas (BMC) in 2008, and it has changed fundamentally how entrepreneurs conduct the business planning process.7 The right side of the canvas is about creating value and the left side is about delivering that value as efficiently as possible. The business model canvas helps an entrepreneur find answers to their most important questions and, in doing so, define their competitive advantage. It is especially useful to existing business owners and managers— business models should evolve over time.
Whether we choose the startup path or not, we all can approach the world as entrepreneurs. Doing so creates tremendous value, not only for the customer, but also in the businesses in which we work, the organizations in which we serve and the places where we live. It is the good fight.