Entrepreneurship in the 21st century

Many definitions of entrepreneurship can be found in the literature describing business processes. The oldest definition of entrepreneurship, dating back to the 18th century, was taken to mean an economic term that described the process of taking the risk of buying at certain prices and selling at uncertain prices. Later, the term was expanded to include the concept of bringing together the factors of production. This definition led others to wonder if there was any unique business function or if it was simply a form of management. In more recent times, the concept of innovation was added to the definition of entrepreneurship. Innovation would flourish in many categories: process innovation, market innovation, product innovation, factor innovation, and organizational innovation. The most recent definitions have described entrepreneurship as the creation of new companies, while the entrepreneur is the founder.

Considerable effort has also been expended in trying to understand the psychological and sociological underpinnings of entrepreneurship. These studies have pointed out some common characteristics among entrepreneurs; Most entrepreneurs have a need for achievement, a perceived locus of control, an orientation toward intuitive rather than logical reasoning, and a propensity to take risks. Additionally, many have commented on the common, but not universal, thread of childhood deprivation, minority group membership, and early adolescence economic experiences as typifying the entrepreneur.

So, at first glance, we may have the beginnings of a definition of entrepreneurship. However, a detailed study of both the literature and actual examples of entrepreneurship tends to make a definition more difficult, if not impossible, to define accurately.

Consider, for example, the degree to which entrepreneurship is synonymous with taking risks, innovating, or even starting a business. Each of the terms described above focuses on some aspect of some entrepreneurs. If this is true, then the likes of IBM’s Thomas Watson or McDonald’s Ray Kroc will never qualify; Few scholars would seriously argue that these individuals were not entrepreneurs.

Although risk-taking is an important element of the entrepreneurial personality, many entrepreneurs have been successful in avoiding risk by looking to others to take that risk. As one extremely successful entrepreneur put it, “My idea of ​​risk and reward is that I get the reward and others take the risk.”

Creativity is also not usually a prerequisite for entrepreneurship. Many successful entrepreneurs have been good at copying others and somehow improve the idea; they will be remembered for innovating a part that was essential to the success of a product.

Many questions still arise about the psychological and social characteristics of entrepreneurs. How is it that successful and unsuccessful entrepreneurs can share commonly identified characteristics? Also, certain studies often show a decline in ‘entrepreneurship’ after a successful venture for the entrepreneur. This tends to refute the centrality of character or personality traits as a sufficient basis for defining entrepreneurship.

Thus, we are left with a range of factors and behaviors that characterize entrepreneurship in some individuals. All of the above tends to reinforce the view that it is difficult, if not impossible, to define what an entrepreneur is. The word itself can best be used in the past tense to describe a successful business person.

Measuring Entrepreneurship

As murky as the current finding on the entrepreneur is, there is still a powerful push, particularly among business development professionals, to measure entrepreneurship in some way. These measurement attempts can range from simple checklists to complex and detailed computer programs. The need for a definition and measurement of entrepreneurship is driven by the notion that it is the entrepreneur who is the agent of success in launching any business.

He or she is the person who sees the market opportunity and then has the motivation, drive, and ability to mobilize resources to meet the demand. The main characteristics of entrepreneurs that have been listed by many commentators include the following.

“Self-confident and versatile.

“Confident in the face of difficulties and discouraging circumstances.

” Innovative skills. Sees opportunities often invisible to others.

“Results oriented. Requires the drive that only comes from achieving the goals you have set for yourself.

“A risk taker. Often the successful entrepreneur displays an incremental approach to risk taking, exposing himself at each stage to only a limited and measured amount of personal risk and moving from stage to stage as each decision is tested.” .

“Total commitment. Hard work, energy and determination are essential elements in the entrepreneurial profile.

However, two caveats need to be attached to this partial list of entrepreneurial qualities.

First of all, selecting people for business development training through such a set of attitudes and skills is by no means a guarantee of business success.

Second, the entrepreneurial characteristics required to successfully launch a business are often not those required for a growing business. The situation becomes very different once it grows to any size, which makes the skill set a different organism. The role of the entrepreneur must change with the business as it develops and grows, but too often he or she is unable to make the transition.

Visionaries and Managers

In new and emerging businesses, the person starting the business is often an entrepreneur or visionary.

The visionary who starts a business with a new idea (to do something better or less expensive, to do it in a new way, or to fill a unique need) is often not primarily interested in making money. The visionary wants to do something that no one else has done because he can; it is interesting and exciting, and therefore fulfills a need. Once the business begins to have some success, the nature and processes change. Ultimately, this requires a different skill set than the person with the vision.

At this stage, the nascent company experiences its first set of challenges:

“How does the visionary entrepreneur transfer the skills and inspiration that made the small business successful into something bigger?

“How does the company deal with cash flow constraints?

“How do you get the legitimacy you need to be able to get into debt?

Often the visionary is not interested in these issues. Visionaries are notoriously poor at supervising staff, negotiating with investors, or training successors. Business now needs a professional management approach, which requires a different set of skills to manage and sustain growth than the skills needed to start a business and promote a vision.
The application of managerial skills allows the teenage company to continue to function well, but the company culture begins to change. The emphasis of management is structure, policies, procedures, and most importantly, profitability. Therefore, the business faces the following challenge: The mature company now requires a management or governance structure to create checks and balances and ensure that the management approach does not become too powerful and overwhelm the entrepreneurial spirit needed to create rapid growth. and access new markets.

Companies in emerging industries go through these three stages characterized by vision, management and governance. By becoming an institutionalized company with proper governance structures, the company faces a new set of challenges that are common to all industries:

“How does the company preserve its vision?

“How do you balance growth, risk and return?

“How do you establish a governance system that holds management accountable without undermining their independence and flexibility?

conclusion

This business development cycle described above is common among successful businesses. The cycle itself raises the question of what to focus on when trying to select a business idea for participation in a program like the TKMPK. The real danger for those involved in selection activities is that of selecting entrepreneurial qualities over managerial skills. Therefore, this can doom the company to uneven growth, poor management, and ultimately failure as the company fails to respond adequately to new market and business conditions. Another danger is trying to select people over ideas.

The focus of any predictive element in the selection process must therefore be on a balance between managerial and entrepreneurial qualities. And the main determining factor when selecting a participant for business management training must remain the business idea itself.