Entrepreneurial Thinking Made Easy
By: Archbridge Institute
Tags: Economics, Entrepreneurship, Entrepreneur, Business, Psychology

Photo by Danielle MacInnes on Unsplash

By: Gary Hoover

Virtually every survey of the public shows that people love the idea of entrepreneurship. But how many really understand it?

I have spent the last fifty-seven years studying business, especially startups and entrepreneurs. I founded several companies, was the first Entrepreneur-in-Residence at the University of Texas at Austin’s McCombs Business School, and mentor thousands of entrepreneurs around the world.

My most important conclusion is that entrepreneurial thinking is not just about business or about startups. I wish universities viewed entrepreneurship as a discipline in itself rather than relegating it to the business school.

The people and groups who found museums, hospitals, and universities are often true entrepreneurs. Many artists, authors, musicians, and bloggers are entrepreneurial. Even some government agencies have proven to be entrepreneurial in their approach. Most of those people have never taken a business class.

What really matters is having an entrepreneurial mindset, which is a way of thinking and of seeing the world. Every organization can become more entrepreneurial. (I even had a rabbi and a minister take my course in entrepreneurial thinking!)

Most people have a bit of the entrepreneur in them and a bit of the bureaucrat, a mix. They are part of a spectrum. Out in the “long tails” at the end of the distribution curve are those who are almost purely entrepreneurial and those who are “born bureaucrats.”

Likewise, most organizations have a bit of both in them. Startups in the for-profit world are usually highly entrepreneurial. As companies grow and age, they tend to become more bureaucratic as policies, procedures, and processes are enacted. Non-profit enterprises tend to be more bureaucratic and government entities the most bureaucratic. There is great diversity in people and organizations; these attributes vary over time and often depend on the circumstances.

These observations are reflected in this diagram showing a normal distribution curve, with the spectrum at the bottom:

Characteristics of Entrepreneurs and Entrepreneurial Thinking

So what are the attributes of entrepreneurial thinking, and how do they differ from the “corporate” or bureaucratic mindset?

The characteristics and differences are many. The presence and importance of each varies by individual and by organization. I have listed the most common and most critical in the following paragraphs. Not included are those attributes which any successful individual has, whether an entrepreneurial thinker or not: hard work, persistence, dedication, energy, and all that.

Dissatisfaction with the way things are. Many big organizations spend tremendous time, energy, and money defending the status quo. They have created thousands of jobs, opened stores or factories, control valuable trademarks and patents, and so on. They have a heavy responsibility on their shoulders to not risk losing what they have, to “defend their fortress.” Entrepreneurs are the ones attacking that fortress. Going back in history, they included Microsoft and Apple vs. IBM, Toyota and Tesla vs. General Motors, Walmart vs. Sears, and now Amazon vs. Walmart.

Another way of thinking about this is the difference between how entrepreneurs view the use of resources compared with how more mature, established organizations view their resources.

One of the most famous definitions of entrepreneurship was created by Harvard Business School Professor Howard Stevenson, who said, “entrepreneurship is the pursuit of opportunity beyond resources controlled.” Which seems a slightly confusing way of saying that big corporations first think in terms of what they already have. What are our capital resources, skills, talents, factories or stores, trademarks, etc.? How can we use what we already have to prosper? Whereas a pure entrepreneur starts with nothing except what is in their heads. They think about what they need that they do not have: money, talented people, patents, stores, distribution channels, or whatever is needed to achieve their goals. Then they develop a plan to learn, acquire, hire, or rent what they need. The entrepreneurial and corporate mindsets begin from different starting points.

A corollary to this is that successful entrepreneurs have almost total confidence that they can get what they need. That they can hire the right people, find the right lawyers and accountants, learn every aspect of the business or find someone who has that knowledge, and convince investors to invest, workers to work, and customers to buy.

Entrepreneurial thinkers always believe there is a better way to do things. They are never satisfied.

Closely tied to this belief are a sense of purpose and an eye for seen and unseen opportunities.

In bureaucratic organizations, one finds many people who wonder why they are doing what they are doing, who think their job is “busy work,” who do not see a purpose to what they do every day. You should never find those things happening in a truly entrepreneurial organization.

The greatest entrepreneurs had or have a vision, a purpose, a mission. At levels great and small, they want to change the world. And they have a plan for doing so. Rocking the boat and taking on outdated rules and policies are part of the entrepreneurial process. Doing things because “that is the way we have always done them” gets you nowhere with an entrepreneur. Study how Elon Musk has created SpaceX, overcoming almost everything the experts at NASA “knew.”

Because they so deeply believe in their mission, entrepreneurs take risks. But they are not gamblers as is commonly believed, at least not in the classical sense of a casino or horse track gambler.

Rather, entrepreneurs see risk differently. General Motors at first looked at electric cars and said, “We are not sure people will ever buy them.” For decades, they “played it safe.” They continued making big cars, but saved money by lowering their quality. Yet playing it safe was the most dangerous strategy of all, resulting in this formerly great company going bankrupt a few years ago. Elon Musk “knew” he was right with Tesla, that if given the chance, he could create a new future. In his mind, he was not taking a big chance. GM was the one taking a big chance.

In 1981, I was one of the youngest vice presidents at a big department store company. My mother was very concerned when I said I was quitting to start a bookstore chain. But I knew the department store industry inside out, and it was showing signs of aging. My seven years of research told me that the 1980s and 1990s would be a great time to build book superstores. Mom thought I was taking a huge risk; I thought sticking with the department stores was a bigger risk. Luckily for me, I was right.

In seeking and exploiting opportunities, entrepreneurial thinkers pursue both seen and unseen opportunities. For example, the need for a vaccine in a pandemic is obvious. The need for better transportation has been clear to most people at each stage of history.

On the other hand, even Henry Ford reputedly said that if he had given customers what they wanted, he would have made a faster horse. More extreme, did the world desperately need the theme park that sparkled in Walt Disney’s eye? Every successful amusement park operator in American told him he would fail without a roller coaster when Disneyland opened in 1955. He took the right chance.

How do entrepreneurs see these opportunities?

The great book The Innovator’s DNA by Dyer, Gregersen, and Christensen, clearly lays out several key habits of great entrepreneurs:

They learn through observation, a skill almost never taught in school. Entrepreneurial thinkers must deeply know and understand their potential customers in order to see those unseen opportunities, those gaps and vacancies in the marketplace. They are always watching people and how they behave, what interests and engages them, what does not. They are students of human behavior. They understand that demography, geography, history, psychology, and sociology are every bit as important as marketing and finance.

(The inclusion of history might surprise you, but the greatest of entrepreneurs know the origins of their industry, the histories of their competitors, and study the long-term trends that shape the future.)

“The further backward you look, the further forward you can see.” — Winston Churchill

“You can’t connect the dots looking forward; you can only connect them looking backwards” — Steve Jobs

They learn through experimentation. Many things can only be discovered by trying them to see if they work. Experimentation has risks, but entrepreneurs are willing to take those risks when pursuing their vision. Failure is only bad if you do not learn from it.

They learn from every source. Entrepreneurial thinkers have a driven curiosity. The talk to everyone in their industry, they study online, they read books and industry periodicals. They develop networks of people who can help them or teach them. They become experts at questioning, figuring out the right questions. They learn how to probe, how to truly listen.

These steps require one thing: independence of thought. Don’t believe experts, don’t believe teachers, don’t believe industry veterans, don’t believe that the old ways of doing things are the best, don’t even believe your friends and relatives. While you may come around to agree with some of the things you hear, you only do it after you have studied the information and data yourself and given it a great deal of thought. If you are uncomfortable being an eccentric or non-conformist, you probably cannot become a true, deep entrepreneur or entrepreneurial thinker.

The things that block other people’s thinking — obstacles, naysayers, fear, lack of resources — do not block the entrepreneurial mind.

“Visionary people are visionary partly because of the very great many things they don’t see.” — Berkeley Rice

Observing, experimenting, questioning, and independence of mind open the door to the most important single aspect of innovation and coming up with new ideas and solutions, what The Innovator’s DNA authors call “associating.”

Virtually all breakthroughs come from taking two things that everyone else sees every day and combining them in a new way. Combine taxicabs with the world of freelancers and you get Uber. Take that idea and combine it with Marriott and you get AirBnB. One of the most successful businesses my friends and I started was Bookstop, which combined the concepts behind Waldenbooks (then the nation’s biggest bookseller) and Toys R Us (also a huge success at the time with its big selections and low prices).

“Combinatory play seems to be the essential feature in productive thought” — Albert Einstein

“Creativity is just connecting things” — Steve Jobs

Entrepreneurs know that to achieve their vision, they must concentrate their energies, they must focus. I have seen so many bureaucratic organizations that list ten or twenty key goals each year. That really means they have no goals, or at least none or very few that they will achieve. While each component in an organization has its own micro-goals, the whole entrepreneurial organization shares an over-arching vision and a very short list of key goals at any given time.

This also implies that the best entrepreneurial leaders are also great communicators. They are continually telling their employees, their customers, their suppliers, their bankers, and their friends what they are up to and why. Their vision is crystal clear. Entrepreneurs are above all else salespeople — selling their ideas, their vision to the world.

I could go on at great length into more details and corollaries to these basic principles. But if you or your organization would like to become more entrepreneurial, these key concepts are a great place to start:

· Be curious, learn in every way possible

· Make up your own mind, think independently

· Distrust the status quo, never be satisfied

· Study and observe human behavior

· Experiment, test your ideas

· Be willing to say, “I do not know how but I can figure it out or find someone who can”

· Seek opportunities to make the world better, seen or unseen

· Always look for ways to combine old ideas into a new one

· Be focused on your purpose and able to communicate it effectively