The Entrepreneurs Dilemma
People often ask me how did I become an entrepreneur? The answer lies in the first 23 years of my career working for Multi-nationals and their subsidiaries. An important role for a key employee in these types of organisations is to be continually adding value for the organisation as a whole, and for the specific business unit you work for. This means you have to be what is called an intrapreneur (An internal entrepreneur).
Ten years ago I jumped out of the corporate world to become an entrepreneur to build businesses that I have an equity stake in. My motivations were both self-realization and monetary in doing this. Over the last 11 years I have successfully created and been involved with a small number of technology companies as a founder and CEO which have had successful exits. I have also been involved with as an added value investor in several others, some of which did not succeed as intended. It has been a rewarding roller coaster of highs and lows, with great learning. Over my career I have been an advisor, coach, mentor, trainer, director etc. to many other organisations, start up, growth and turn around and have worked with private and state agencies that promote enterprise and economic development. After my most recent exit and lock-in period I decided to jump back into the entrepreneurial world again and today I have active involvement with 4 technology companies and continue to be actively involved with promoting and supporting other new ventures, through several channels such as Enterprise Ireland as an example and IBM Smart-Camp as another. All this is by way of scene setting for introducing “The entrepreneur’s dilemma”.
“The entrepreneurs Dilemma”
The key hypothesis is; that it’s difficult for entrepreneurs to know: What is the right thing to be doing? , what is the right way to do it? at a particular point in the entrepreneurial cycle. A critical success factor for a start-up organisation or for that matter an evolving and maturing business is, that in the context of their business and effective use of limited available resources is, that they are always doing the right thing, the right way at the right time. We all know that start up failure rates are extremely high, even the professional investors such as venture capitalists build in this situation into their business models, expecting many investments to fail to deliver on expectations, but a small number to be very successful. There is a good study on failures carried out study by Harvard Business school which quantifies the statistics.
There is a vast array of tools and information available to entrepreneurs, but how do they know where to access these and which are the right ones to use at any point in the entrepreneurial cycle. At the end of the day it comes down to the individual entrepreneur’s knowledge and experience.
We need to facilitate entrepreneurs from all different back grounds to be successful. If like me you served your apprenticeship in the Multi-nationals and completed several 3rd level qualifications you will have seen many of the tools, strategies and approaches and used some of them as a small fish in a large pond. This partly equips you for starting a business as an entrepreneur, but it is by no means adequate as small, resource constrained, innovative start-ups with novel product/services ideas have many different challenges in getting new propositions into the market place. On the other end of the spectrum you have both new and successful entrepreneurs who have had a different life experience, perhaps never worked for a large organisation, maybe always self –employed, perhaps have limited formal education, these have just as much chance of creating a successful entrepreneurial venture. For entrepreneurs coming from this end of the spectrum they also have gaps in their knowledge and experience all be it they differ from my own. There is a spectrum or continuum of knowledge and experience that entrepreneurs come from and up to now no guide or roadmap to help them focus on the right things, the right way, at the right time.
Can you elaborate and help me understand this dilemma?
Ok, The best way is to think firstly of the entrepreneurial cycle, or more accurately the business cycle from the idea to achieving success. I am outlining in very general terms a likely sequence leading to success. Remember there will be set backs along the way.
- Most businesses start with the idea or opportunity
- Some jump in at this stage and design/sell the product/service, most talk with contacts and do a bit of research.
- Once stage 2 is completed most entrepreneurs invest some time and/or cash to design and build the product or service and show it around.
- They may get lucky and sell one or more of the first version, often they sell nothing or give it away.
- Assuming there is a bit of traction, and the related learning, they may further refine the product or service and find more similarly profiled customers.
- Once there is some momentum they start to look at how they scale the business, how they will fund it, and often reach a level that they need more formality and more over-heads.
- All going well, the product/service line is growing with customers and revenues, as well as costs, expansion to new markets, new related products etc.
- Some will now be at a stage where diversification and growth by non-organic means is the order of the day, some will eventually go into decline because of complacency, or a shift in the market, technology or performance.
At every stage, entrepreneurs, leaders and managers have to consider and take some level of action on each of the following functions.
- The proposition
- R & D
- Management & Governance
The dilemma is what part of the functions above are important when you consider the context of the business and the stage of development above. For example How important is the Marketing strategy early in the development of the product and initial customers.
Entrepreneurs and leaders must make choices at every stage of the cycle as to what is important at that stage of the business evolution. They can try do everything, and perhaps do several badly or burn out, they can select what to focus on based on their experience, but what if they select the wrong things or the wrong way, they can use the tools and techniques available but which ones. The bottom line is that regardless of experience or knowledge there is no right answer, as each scenario is different, the risks of failure are increased as a result.
(The Business Advantage Model)™ – (BAM™ )was developed to help entrepreneurs and leaders make better decisions to do the right thing, the right way at the right time, thus reducing the risks and increasing the potential for sustainable success in the business. The BAM acts as a guide and roadmap for entrepreneurs and leaders. For more information on BAM, The Entrepreneurs Master class Series or to Register for Module 1 of the Entrepreneurs Master Class click links.