This guest post is by Rupert Merson, an adjunct associate professor of strategic and international management and entrepreneurship at London Business School. His next book, “A Guide to Managing Growth,” will be published by The Economist next year.
We all remember the kid who sold sweets to his friends on the school playground. Although it’s difficult to generalize, entrepreneurs do seem to share some traits. But is that enough to say that entrepreneurship is more about your DNA than MBA?
Harvard Business School Professor W.A. Sahlman defines entrepreneurship as “the relentless pursuit of opportunity without regard to tangible resources currently controlled.” Translated into everyday speech, Sahlman’s terminology means that entrepreneurs are those who will say, “I haven’t got the money, the people or the materials you might expect of someone looking to put together a new business — but I’m determined to do it anyway.”
Likewise, there’s something common in entrepreneurs’ attitude toward risk. Experimental evidence suggests that most individuals will rather take a risk to avoid a loss than realize a gain. In other words, most individuals are more likely to worry about last year’s mistake than next year’s opportunity. Entrepreneurs seem to be different. They take risks and capitalize on opportunity — a bit of gambling one might say.
So what are some other common traits that entrepreneurs possess? They look forward rather than backward and they don’t dwell on last year’s disaster. From this perspective, it’s no surprise that entrepreneurs and accountants often struggle to understand each other. Far from being inclined to look forward, accountants are typically trained for years to create complex financial reports that describe the past and are often out of date even before they are published.
But entrepreneurs are not defined by what they are, but by what they do, which is often a product of circumstance. Many businesses have been born when their founders were “let go” in the recession. Under other conditions, many entrepreneurs might not have made the decision on their own. According to Dane Stangler in a report for the Kauffman Foundation, ”good things do grow out of recessions. Hundreds of thousands of individuals do not wait for others to ease their economic pain — they create jobs for themselves and others.”
And in many cases, the recession has spurred entrepreneurs to “take the bull by the horns,” starting up ventures that have thrived well beyond the tough market. For instance, a recent Cambridge University study suggested that high-tech firms were more successful if started in tough times. Looking for further support of this? Cambridge high-tech businesses founded in the recession of the 1990s enjoyed consistently better survival rates than those started in the boom years that followed. Indeed, boom times aren’t necessarily hot-beds of opportunity. In the few years leading up to 2008, when people earned more money from their houses than their salaries, it seemed that businesses in the financial sector could spirit profit out of thin air — into which much of it then disappeared along with the financial products from which they were derived.
So back to the age-old question — are entrepreneurs born or made? At London Business School, we believe that, though some individuals will take to it more naturally than others, entrepreneurial skills can at the very least be much improved in the classroom. Not surprisingly, many of our MBA students come to us after successful careers in big companies. But we know that a significant proportion of them will go on to found successful businesses. And we know for sure that it’s not additional genes they have picked up in the classroom, but new skills and understanding.
As we begin to see new companies emerge from the current down economy, what do you think?
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Good post – thank you! I am of the thought that entrepreneurs are born, absolutely. I do however, think you can harness skills and be mentored to become a "form" of an entrepreneur. True entrepreneurs are miserable beings tormented by the predictability of life until that find their passion, their purpose. For some that comes right out of the gate and for others they wander aimlessly until they follow their "yellow brick road". It's a journey like no other and vastly different than those who are molded to be an entrepreneur. I have no formal schooling (something I certainly don't pride myself on, nor beat myself up over) and know that no school of higher education could have ever taught or prepared me to be an entrepreneur like that last decade of my life has delivered to me. I don't know that you can be "taught" tenacity and perseverance, especially if you have a degree to fall back on "just in case".
cont… In some form I used to be envious of those more polished and groomed and wished that had been me. However, I now chuckle because I just think, "boy, ‘fasten your seatbelts’ …" I think it's because after all the falls, bumps and bruises, I’m just plain tougher. I'm also incredibly thankful, even as I still have such a road ahead of me. I did recently hear something very obvious, yet very profound to end with … “there’s a difference between simply working for yourself and being an entrepreneur” – I love this because I don’t think people really think about that and how true that is. Do people understand and grasp the difference. Again, many thanks! With kindness, Elena
Good post – thank you! I am of the thought that entrepreneurs are born, absolutely. I do however, think you can harness skills and be mentored to become a "form" of an entrepreneur. True entrepreneurs are miserable beings tormented by the predictability of life until that find their passion, their purpose. For some that comes right out of the gate and for others they wander aimlessly until they follow their "yellow brick road". It's a journey like no other and vastly different than those who are molded to be an entrepreneur. I have no formal schooling (something I certainly don't pride myself on, nor beat myself up over) and know that no school of higher education could have ever taught or prepared me to be an entrepreneur like that last decade of my life has delivered to me. I don't know that you can be "taught" tenacity and perseverance, especially if you have a degree to fall back on "just in case".
cont …
In some form I used to be envious of those more polished and groomed and wished that had been me. However, I now chuckle because I just think, "boy, ‘fasten your seatbelts’ …" I think it's because after all the falls, bumps and bruises, I’m just plain tougher. I'm also incredibly thankful, even as I still have such a road ahead of me. I did recently hear something very obvious, yet very profound to end with … “there’s a difference between simply working for yourself and being an entrepreneur” – I love this because I don’t think people really think about that and how true that is. Do people understand and grasp the difference. Again, many thanks! With kindness, Elena
Interesting question! My spontenous answer would be born and made.
What makes us the one we are? What makes us make the choice we do?
Opportunities or personality? Probably both. But…some seem to create opportunity
were others do not se it.
Take it a step furteher. How do we define an entrepreneur? Start a business or build a successful
company like IKEA, Hewlett Packard or Google.
I think "Entrepreneur" is a wide definition which can´t be analyzed without first defining what we are talking about.
Now I understand why my accountant thinks I'm crazy to start my own cookie business. <a href="http://Www.toutesweets.com” target=”_blank”>Www.toutesweets.com.
As an entrepreneur for more years than I am willing to admit….and as a business coach who helps other start and grow their business, I have learned something very valuable. That is a major difference in being a small business owner and being an entrepreneur.Too often we confuse the two. When I approach a prospect as a consultant coach, I must figure out which one that prospect is because the approach is very different. Value is created differently because their goals are not always the same. I am not speaking about the differences in their business but in the differences in their approach to growth and stability. The original creator of IKEA, HP or any others mentioned may have been more of an entrepreneur but I can almost guarantee you the current people running the business are not. To be successful as a consultant, coach or trainer, you better know the difference.
I think one is born with the dreaded disease, entrepreneuritis. I know I have it, and there is no cure. It is much more than the lure of riches. I knew I had the sickness in grade school; cartoon strips, games for pay, etc. Now I know why all these startups and dreams were for one reason. I am embarking on the greatest concept I ever dreamed of: DMS, drug monitoring slystems to save thousands of lives a year. see my blog. http://weblog.jerrypriceauthor.com
Entrepreneurs are born mostly; some may evolve if they live around entrepreneurs. Entrepreneurs are dreamers and it sometimes takes a lot of work, passion and dedication to follow a dream. The difference between a born entrepreneur and a wanna-be entrepreneur is that the the first recovers from a mistake while the latter gives up. Keep your dream alive – no matter what. Find the right people to support your dream and let time bring forth the fruits of your labour.
I need more of your tips on enterprenuer development,in other to develop my self,if others are born with it i want to learn it to be self-reliance.Thanks a million.