‘Hey! think like an entrepreneur’
By Syed Md Enamul Kabir
We often hear people saying in business meetings, ‘hey! think like an entrepreneur’ and what underlies this statement is enthusiasm for as well as misconceptions about entrepreneurship. One misconception, for example, is entrepreneurship is concerned solely with venture creation. Another common misconception is considering entrepreneurship as an ‘either-or’ phenomenon without comprehending the varying nature of entrepreneurship.
This paper explores the nature of entrepreneurship with an aim to debunk the common misconceptions about entrepreneurship and also explores the behavioral and attitudinal components of entrepreneurship to shed light on what ‘think like an entrepreneur’ means.
Entrepreneurship and underlying behaviors and attitudes
Howard H. Stevenson’s, a Harvard professor on Entrepreneurship, portrayal of entrepreneurship is a good starting point to understand entrepreneurship and the underlying behaviors and attitudes. He defined entrepreneurship as ‘the pursuit of opportunity without regard to resources currently controlled’ (Stevenson, 1983, p. 3). Stevenson’s entrepreneurs are driven by opportunities rather than by resources controlled and hence constantly scan the environment for untapped opportunities; they not necessarily always break new grounds, they also create opportunities by combining old ideas in new ways; they commit themselves quickly to materialize the opportunities and don’t hesitate to pull back from their commitment quickly as well if things don’t go in expected direction; they commit resources in multi stages and minimum resources in each stage; there often rent, not own, resources required to pursue the opportunities, which gives them much needed strategic flexibility; and they prefer flat informal organizational structure because they need to coordinate resources that they often do not control or own and flexibility is more important than stability at the initial stage of a venture (Stevenson, 1983). Stevenson’s description highlights various behavioral and attitudinal components of entrepreneurship, e.g. opportunity-driven, fast on feet in grabbing the emerging opportunities, willingness to take risk, experimentation with new ideas, invest in small scale for risk reduction and focus on resource coordination with a flexible structure. Stevenson’s description also debunks the misconception that entrepreneurship is solely associated with venture creation.
Morris et al. (1994) argued that there are three dimensions underlying the behavioral and attitudinal components of entrepreneurship: innovativeness, proactiveness and risk-taking; and an endeavor can be regarded as entrepreneurial if it involves some amount of innovativeness, proactiveness and risk-taking. This description is useful in that it dispels the notion that there is a clear demarcation line between entrepreneurial activities and non-entrepreneurial activities and supports the notion that entrepreneurship can happen in varying degrees. From this perspective, introducing a new product to cater to a customer need better is an entrepreneurial undertaking because it involves innovativeness, proactiveness and risk-taking.
Morris et al.’s (1994) input-process-output model of entrepreneurship is also a useful way to understand the nature of entrepreneurship. The following diagram is a modified version of Morris et al.’s (1994) input-process-output model.
This model shows that a new venture is only one outcome of entrepreneurship and other outcomes are also possible. Hence, entrepreneurship is not necessarily be associated only with venture creation and entrepreneurship can also happen in firms of all sizes and forms.
Both Stevenson’s (1983) and Morris et al.’s (1994) descriptions of entrepreneurship give a good understanding of behavioral and attitudinal components of entrepreneurship, but these descriptions do not explain why entrepreneurs in general are good at identifying novel business opportunities in the first place.
Dyer et al. (2008) in their study found that innovative entrepreneurs were different from executives on four behaviors and they argued that these behaviors probably explain why innovative entrepreneurs were successful in identifying or creating novel ideas for businesses. The four behaviors are:
- Questioning
- Observing
- Experimenting
- Idea networking
Innovative entrepreneurs frequently ask questions, particularly those challenging the status quo and engage themselves in active observation of consumers; they also experiment with new ideas and mingle with people from diverse backgrounds (Dyer et al., 2008). Dyer et al. (2008) posited that these behaviors trigger cognitive processes (associational thinking) that generate novel ideas, which is illustrated below.
Some of these behaviors and attitudes have also been recognized by academics and consultants (e.g. Peter F. Drucker in his 1994 HBR article, The Theory of the Business; Martin Reeves and Mike Deimler in their 2011 HBR article, Adaptability: The New Competitive Advantage) as useful for organizations to attain and sustain competitive advantage and prevent the business models from getting obsolete. Expounding on this, anyway, is outside the scope of this paper.
Concluding remarks
Entrepreneurship is neither concerned with only venture creation nor is it a ‘either-or’ phenomenon. These misconceptions are dangerous in that they may prevent organizations and individuals from utilizing the power of entrepreneurial process. Executives should focus on understanding the behaviors and attitudes underlying the entrepreneurial process and creating an environment where those behaviors and attitudes are encouraged and rewarded.
References
Dyer, J. H., Gregersen, H. B. and Christensen, C. M. 2008. Entrepreneur behaviors, opportunity recognition, and the origins of innovative ventures. Strategic Entrepreneurship Journal. 2, pp. 317-338.
Morris, M. H., Lewis, P.S. and Sexton, D.L. 1994.Reconceptualizing Entrepreneurship: An Input-Output Perspective. SAM Advanced Management Journal. 59(1), pp.21-31.
Stevenson, H.H. 1983. A Perspective on Entrepreneurship. Boston: Harvard Business School Publishing.
About the author
Syed Md Enamul Kabir MBA, FCA is the Managing Partner of ESS & Partners.
The opinion expressed in this paper is of author’s personal one and is for general information purpose only. It should not be used as a substitute for consultation with professional advisors.