Entrepreneurial Book Preview

Entrepreneurship Theory and Practice

Chapter One: The Challenge Facing the World

(Sample Chapter shortened here)

Most thinking people can recall a Eureka moment when they found a solution to some long-standing problem that had been keeping them awake at night. This book owes its birth to just such a moment in my life. I had been struggling for years to try to solve a mystery. How do entrepreneurs start, grow and revitalise businesses successfully? If we knew the secret of their success we could help many more to thrive and grow and create the wealth and jobs desperately needed in most countries which are struggling today.

As someone who had made a life-time career out of studying and advising new companies, it was a question that bothered me when I published my book 'In the Company of Heroes' in 1999. But it bothers me much more now in the wake of the global economic crisis and the onset of the worst recession since the 1930s.

Most governments around the world have pinned their hopes on a self-correcting recovery. Cut back on government spending and the market will itself come up with the new jobs we need. I really hope it works out, but in the meantime unemployment has soared - particularly youth unemployment - and society has been paying the cost in terms of social unrest and rioting.

So could there be an alternative? I am not thinking of a model in which the state picks winners and pumps in subsidy to encourage them to grow - that's been tried before and it ended in dismal failure. No, my suggestion, based on 30 years of working with new companies, is to tap into the hidden resources of entrepreneurial spirit and let it work its magic.

Hold on, I hear you say. That sounds just what the British government has been advocating, twisting the arms of the banks to pump money into the small businesses in the hope of seeing the miracle begin.

Believe me, that won't work. For pumping money into ill-prepared small business will achieve virtually nothing. In my experience, what new businesses require if they're to succeed is not a soft bank loan but an ability to spot a good business idea (what I call a superior opportunity) based on solving their customers' problems. You will find plenty of examples in this book of what I mean.

But superior opportunities are not in themselves enough. Businesses that want to grow also need leadership and vision. That comes invariably from the entrepreneur. Without this key resource small companies can never become serious employers. At the moment there's a log jam in precisely this part of the 'growing a business' model. To make the point you only need look at the latest figures on small business. In Europe, for example, there are at present approximately 20 million small businesses. Sounds impressive, but 90 percent of them employ 10 or fewer people. The vast majority stay small until their owners put them quietly to bed.

If we are to have an expanding economy based on companies with the capacity for continual growth - you'll find examples of such companies in this book - there is a pressing need to find the entrepreneurs with the skills to guide the new businesses through those rough early years.

If we can release the log jam and get the businesses flowing strongly in the right direction the sky is the limit because our research suggests that as many as 15 percent of the population have the necessary aptitude and skills, while only 2 per cent ever make use of them. This is a waste of talent, both for the individuals and society as a whole.

So how can we increase the supply of entrepreneurs?

I believe it requires two steps. The first is to unlock the 'skills locker' of the successful entrepreneurs, skills that are often kept hidden in the mind of the founding entrepreneur, safely guarded by a coded lock. We need to crack this code if we are ever to achieve expansion.

The second step is to train people how to be entrepreneurs. It's often argued that entrepreneurs are born not bred. But my research and my experience of working with would-be entrepreneurs has proved this not to be the case. I have shown, using my methods, that entrepreneurial behaviour and skills can be successfully developed. There is no reason why entrepreneurial colleges could not be established in Britain, elsewhere in Europe and even around the world - following the approaches I have devised in collaboration with existing entrepreneurs. This is the first spin-off from my successful cracking of the entrepreneurial code.

In Britain, very little useful research has been conducted with regard to the entrepreneurial mind. Until recently all we could say was that while no two entrepreneurs were alike, they shared certain distinct traits. Again, you will understand when you read the varied accounts of our selected entrepreneurs.

Entrepreneurs tend to be obsessive and highly focused people. They are hard-wired to spot business opportunities that others overlook. While they often become very rich, it is not a love of money that motivates them but the challenge of bringing a product or a service successfully to the marketplace. Most important of all is the vision and the charisma they bring to bear on the job in hand, inspiring loyalty and trust with the people they work with.

But years of being involved with entrepreneurs has taught me something else. They are not very good at explaining to others just why they have made a decision one way rather than another. Driven forward by a vision, a compelling vision, they often find it difficult to convey exactly how they go about turning this vision into reality. At times they seem to be deliberately holding back critical information from people who really ought to be in the loop.

I have observed this inexplicable shortcoming for ten years or more. To me it appeared there was a barrier between the entrepreneur and lesser mortals - one that could be crossed only by people who had access to the secret code. I came to think that only cracking the code would allow me to understand what went on in the mind of the entrepreneur. But how could it be cracked?

I wrestled with this dilemma for several years until I met an American expert in the developing science of working with high-performing people. This was Wyatt Woodsmall, a man famous as the coach of the US High Diving Team in successive Olympic Games. His speciality was to break down the human psyche, teach athletes how to get themselves ready for action by moving into 'The Zone' and establishing a winning mindset. He coached the team, whose most celebrated hero was Greg Louganis. In two Olympics he brought home a haul of four Olympic Golds. Wyatt's skills of coaching people to maximise their talents are legendary.

He was recruited to coach the American military elite on how to improve their performance in various fields.

When I met Wyatt in his home in Washington DC, he and I got along famously. He assured me he could devise a programme that would help us to understand the performance of entrepreneurs. He could train them to think in new ways, he would make them world beaters.

I flew him over from Washington DC to work in tandem with me and a group of volunteer entrepreneurs from Yorkshire. Once he had conducted his analysis, he could add new observations that altered entirely my understanding of how entrepreneurs think.

He told us that they were, almost without exception, people who had had very negative experiences in childhood or adolescence, but the bad experiences were often tempered by a good one. (I thought at the time "That's me.") However, it was his final revelation that really struck home. Entrepreneurs, he concluded, were creative and innovative people, whereas many human beings are procedural and process oriented.

What did that mean exactly? He explained that procedural people were by nature logical, analytical, and fond of engaging in long discussions. Innovators, on the other hand, were good at synthesis, creativity and intuitive thinking, but had a very short attention span. The distinction made a huge contribution to my views on how to get the best out of entrepreneurs. The artificial barrier between me and the entrepreneurs began to be broken down. The code was beginning to be cracked.

In short, it is enough to say that we now understand much better how entrepreneurs start, grow and revitalise successful businesses. We can identify those with natural talent using a newly devised test, and help those less gifted to significantly improve their performance and that of their business.

This effort to show how people with the right traits could be identified and developed has not yet become the norm in countries where entrepreneurs are in short supply - including not just the whole of Europe but the rest of the world. Am I fantasising when I imagine that the processes described in this book could form the basis of a new industrial revolution, one with a kinder and more inclusive face?

I defined entrepreneurship in my book 'In the Company of Heroes' as 'people who create value often from practically nothing'. Value creation can come from starting a business, growing it or even revitalising it. Value can also be created in large companies and public sector bodies by innovating and doing things more efficiently and effectively. It can also come from identifying and developing high performing people within organisations.

You will meet people in this book who have been entrepreneurial in all four situations. They clearly show that the Entrecode can add value at any stage in a business' life and, as I will demonstrate, in any national context. Over the past 20 years I have researched and worked with over 500 entrepreneurs around the world. They helped me crack the entrepreneurial code. In this book you will meet a representative sample. But these are not 'case studies' as presented in most business books. They are real life human stories of sheer guts, passion and determination.

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