The 4 Steps to a Start-Up
- Opportunity recognition
- Resource acquisition
- Venture creation
- Organization expansion and growth
America Needs Entrepreneurship, Not Just Innovation
That’s the point of a helpful interview in the Gallup Management journal with Jim Clifton, author of the The Coming Jobs War
The United States has no shortage of great ideas and innovations. What the country most needs right now are highly motivated entrepreneurs who can turn those ideas into great businesses — and thus create millions of new jobs.
China fills needs; Steve Jobs created needs. Nobody knew they needed an iPhone.
So says Gallup Chairman Jim Clifton in his book, The Coming Jobs War. Clifton is worried because America and much of the rest of the world are trying to boost innovation while entrepreneurs — living, breathing, job-creating engines — are neglected.
Clifton’s book draws from Gallup’s extensive analysis of U.S. and worldwide poll data, macroeconomic data on job creation, and trends in world economics. That analysis has uncovered astonishing and sometimes discomfiting facts. But a central finding of the book is that the will of the world has changed.
People used to desire love, money, food, shelter, safety, peace, and freedom more than anything else. Now, however, what everyone in the world wants is a good job. And as Clifton discusses below, by concentrating on innovators and neglecting entrepreneurs, we may be making it harder to create the jobs the world wants and needs.
An excellent point: innovation is critical, but not enough. More than innovation, we need entrepreneurs who create the businesses, non-profits, and ministries of tomorrow.
For entrepreneurs — which I think is most helpfully defined as those who start things – and those interested in improving their entrepreneurial skills, few resources are more helpful than Guy Kawasaki’s The Art of the Start: The Time-Tested, Battle-Hardened Guide for Anyone Starting Anything
What is an Entrepreneur?
I love this quote from Godin:
An entrepreneur is an artist of sorts, throwing herself into impossible situations and seeking out problems that require heart and guts to solve.
How Successful Entrepreneurs Act – It’s Not What You Think
“Successful entrepreneurs realize that in a world where you can’t predict the future, what do you do? Act. If you can’t predict the future, create it. Creation-oriented action. There is an academic, real correlation between entrepreneurs and this belief; that is, studies show this is how most entrepreneurs think.
“Indiana Jones is actually a good example here. He’s thrust into the dark. Can’t see. What does he do? You ask: What do I have on me? Where are my feet? Not going to jump around. I’ll take a small step. OK, does it feel like I can take another step? Oh, on my belt I have a flashlight. Maybe that can help me a bit. You, playing Indiana Jones, know exactly how to get out of a dark hole. And these are exactly the rules you need to understand to take entrepreneurial action.
“In the face of unknowability, what does rational behavior look like? Action. You can’t think your way into an unknowable future, so your only way forward is to act. How? Take small steps–not big leaps. Small steps. [Prior point: It is a myth that entrepreneurs are inclined to take huge risks; they are inclined to minimize risk.] Take a small step with what you have in hand. Limit the risk with each step. Then build off what you actually find from taking that step, whether good or bad, and would be nice to have some friends and resources standing by to help.
“Successful entrepreneurs also start with things they care about. The question is not where do you find opportunity, but what is it you would like to do? We start with you. Entrepreneurs are always doing what they want to do, or think will get them what they want. In the face of unknowability, taking any other action is simply foolish. So, given who you are and what you want, what step should you take? Sometimes you might see someone else with an idea, and partner up. 50% of entrepreneur partnerships in their study started simply because the people liked each other — not even a big idea. This works.
“Now we get to the part where the bankers and financial experts in the room will be deeply offended. They have all developed ways to measure risk. We live in a world of affordable loss. To put more numbers on that just makes things more depressing and doesn’t work. How do you decide what to do? Well, how badly do you want to do it. Then you act. Then you bring some other people along. Willow Creek is a good example here actually — take a look at what they’ve been doing.
“Now, what keeps people from doing this? First, they get completely caught up about what they’re trying to do. So how about not worrying about that, but instead thinking about what you’ll do next. Stop worrying about what you want to do, and instead worry about what you should do next. [Sounds familiar -- what's best next!] Second, people fear failure. They think ‘we can’t fail.’ We’ve been educated to believe that failure is a dirty word. That when people fail, we send them away and they disappear. ‘If you fail you go to the desert and don’t come back.’ But in reality, if you take a step and it doesn’t turn out how you expected, quite likely you just learned something that nobody else knows. So for those uncomfortable with calling it failure, call it ‘an exercise in learning what nobody else knows.’”
Solving big problems:
- Baby steps
- Small wins
Multiple simultaneous ventures.
With action trumping everything, you get more at bats in the same elapsed time. And greater aggregate number of ventures for society as a whole, taking us all on a journey towards solutions.
Recommended for Those Starting Anything
The Art of the Start: The Time-Tested, Battle-Hardened Guide for Anyone Starting Anything by Guy Kawasaki.
Are Management and Entrepreneurship at Odds?
Sometimes there is a tendency to think that managers are slow and controlled, and entrepreneurs are exciting and progressive. The manager thus hinders the entrepreneur and makes everything boring.
And this can happen. But that is bad management. And in the same way that bad management makes things too controlled, bad entrepreneurship makes things unsustainable. We need both good management and good entrepreneurship. And entrepreneurship is a key component of the managerial task.
Here’s how Peter Drucker puts it:
One important advance in the discipline and practice of management is that both now embrace entrepreneurship and innovation. A sham fight these days pits “management” against “entrepreneurship” as adversaries, if not as mutually exclusive.
That’s like saying that the fingering hand and the bow hand of the violinist are “adversaries” or “mutually exclusive.” Both are always needed and at the same time.
Any existing organization, whether a business, a church, a labor union, or a hospital, goes down fast if it does not innovate. Conversely, any new organization, whether a business, a church, a labor union, or a hospital, collapses if it does not manage.
Not to innovate is the single largest reason for the decline of existing organizations. Not to know how to manage is the single largest reason for the failure of new ventures. (The Essential Drucker, p 8.)
The Unusual Origins of 15 Innovative Companies
A good article over at BNet. They note:
Entrepreneurs worry too much about what they’re going to develop, make, or market. What’s more important is that they make, develop or market something. The odds that they end up making it big doing something different are apparently pretty high.Here are 15 companies that became famous, not for what they started doing, but for something that came later. Sure, they may be related, but the point is still valid: better to get started on something; innovative people find a way.
This jibes with Jim Collins’ research in Built to Last: Successful Habits of Visionary Companies. They argue against “the myth of the single great idea.” In other words, great companies are often not the result of an initial great idea that propels them to success. What makes them great is that the product becomes the vehicle for the company, not the other way around.
Advice For Those Starting Anything
Read Guy Kawasaki’s The Art of the Start: The Time-Tested, Battle-Hardened Guide for Anyone Starting Anything.
Whether you are starting a business, non-profit, division within your company, or church plant; or if you are launching a new product or service within your company, this book will be worth your time and help improve your chance of getting off the ground well.
I regard it as one of those extra-useful books because, when reading it, I felt like I was reading about a lot of my own mistakes. That was a humbling experience — especially because it actually took a second read for the lights to really come on.
So maybe read it twice.
Advice to Startups: How to Build Companies that Matter
Eric Ries has a great article on how to build companies that matter, based on a model that he calls the lean startup.
The way for the lean startup approach has been paved by recent technological innovations such as web 2.0 and has been made even more relevant by the current economic crisis.
Here’s the intro:
We’re living in a time of renewed possibility for startups. Major trends – from the pain of the economic crisis to the disruption of web 2.0 – are breaking the old models and paving the way for a new breed of company. I call it the Lean Startup.
The Lean Startup is a disciplined approach to building companies that matter. It’s designed to dramatically reduce the risk associated with bringing a new product to market by building the company from the ground up for rapid iteration and learning. It requires dramatically less capital than older models, and can find profitability sooner. Most importantly, it breaks down the artificial dichotomy between pursuing the company’s vision and creating profitable value. Instead, it harnesses the power of the market in support of the company’s long-term mission.
Tim O’Reilly has recently been advocating that as an industry we focus on building stuff that matters. In response, I want to try and present a way of building startups that can realize that dream. In particular, he as articulated three principles:
(1) Work on something that matters to you more than money, (2) Create more value than you capture, and (3) Take the long view.
Ries then goes on to present an approach for startups that builds on those principles.
About Matt Perman
Follower of Christ. Husband of one, father of three. Former director of strategy at Desiring God. This blog exists to help equip Christians in good works, because that's what productivity is really about.
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