Every week I talk to people about Entrepreneurship and what it is all about. Being Swedish of origin and interested in politics it’s quite interesting to follow the Sweden debate about the need for Entrepreneurship and needs for a more Entrepreneur-friendly Eco-system, like the one they have in the UK and US and many other countries in the world (there was a good discussion at the Swedish-US Entrepreneurial Forum the other week, more info on the Enbou blog), but I think many people get it all mixed up.

I think starting a new business (or actually keeping an established business competative) you need three things, or at least two of them.

Three cornors of a new business

Innovation
Innovation is not Entrepreneurship, it is about being passionate about creating a inventions or ways of doing things, innovation is a quite wide term, so in general I try to divide innovation into things that require some research and development, maybe can be patented. I would include things such as a very clever algorithm for computing relevance of information, but not a spectacular design or a clever packaging or positioning of a product.

Ideas
To successfully launch a new business you need new ideas, they do not have to be innovations, most successful business are not built upon innovations but new ideas.
Ideas include new ways of looking at the market, new ways to apply an innovation (get to a market segment that was a non-consumer of that product, and maybe changing/packaging the innovation for that market), a very attractive design that nobody else thought about before, or just clever business processes that produce higher quality products.
For example, I would not call Apple an innovations company in general, but a very successful idea company, that take commodity hardware components and build them into a really nice design and package. Apple have done tremendous innovations in the past, but most of the revenues and success today are not based on innovations per see, but on the ideas they use to package and make commodity hardware and phenomenons attractive to target group, such as with iPod, iTunes, which is very clever indeed. In my opinion idea companies are often more interesting (but not always).

Entrepreneurship
So what is entrepreneurship all about them?

  • Being brave, and boldly step out of the comfort zone.
  • Being attentive, listen to people, the market, what works and what not, what are you good at and what not.
  • Lot’s of passion, you got to love what you do! And you got to belief in the idea or innovation that drives your business.
  • Like to change things, being in to rattle the chain and make life uncomfortable for the established companies certainly helps.
  • Personal leadership.
  • Getting the idea/innovation out there.

It’s all about making it all happen, there are many good innovations that never reach their potential market, there are even more ideas that are never realized and many of them are very good. It’s all about execution and making it happen, and that is what Entrepreneurship is all about; seeing a potential to do something, make a change and making it happen.

Building a company takes…
Good Entrepreneurship, good ideas, good innovations (the two first is a must, the third not as needed as most believe), sometimes these things comes in three, sometimes in two, and for most people you will only have one of these, so find other people that complement your own drivers and abilities. If you have an excellent innovation and you are an excellent innovator, make sure you build a team around you that adds the other two aspects.

Established business often lack…
When a business have become well established and found it’s core market and starts to make money (especially if it’s based on an innovation), it starts to focus on improving quality, building sales and post-sales (support & service) organizations to be an attractive supplier for it’s customers. If they do it all right they will be very successful, but many will at the same time be on their downfall. They replace Entrepreneurship with “management”, which is much less prone to change and adopting to an constantly evolving and changing market (excellent reading up on this is of course the Innovators dilemma by Clayton Christensson, more info here), which I will try to elaborate on in a future blog post.

1 reply
  1. Nicolai Wadstrom
    Nicolai Wadstrom says:

    Christian Rudolf (www.disruptive.nu) posted this comment (that I think he was referring to this post):

    ———————————————————————————
    I agree on most of the content of this post but I also feel it misses one important factor, the customer!

    The entrepenour has to be very customer orientated to be able to build his service/product. Primarily with customer money, not his own or VC money!

    I belive it could be very harmfoul for a company to get funding on the idealevel. In many cases this is just a wast of money. When you have a customer, you do not just get to send invoices. You get very valuable information on how the customer thinks, acts and the market. This infomation is cruicial and I belive a necessity to get any furhter funding! A market survey is just not good enough!

    ——————————————————————————————

    And yes I agree, the customer is the most important thing, if you do not add value to someone, you should not exist as a Business. So no disagreement there. So I did not leave it out,but maybe I take this for granted, because with out that, there is no Business. And for me this is part of the Entrepreneurship.

    I have written about this in previous blog posts. But I would like to rephrase it into you must add value to someone, and get them to use it. The one you add value for might not be the one paying for it, by expanding it a bit you can find new ideas about revenue models that works for your particular service or product (see Google, their primary users which get a major value out of their services, are not their customers, but their customers get a major value out of their users).

    And I repeatedly tell Entrepreneurs that just need some funding to “do it all”, that you need customers/users and get their feedback to figure out what really works and what they like and are willing to pay for, before that it’s just projections estimates and assumptions.

    And do not entirely agree with it being harmful with funding at the Idea stage, not for experienced Entrepreneurs (by which I mean ones that have been around for some ups and downs, you have to have crashed….), but for new Entrepreneurs with a new idea I would agree.

    But I will take your feedback and try to elaborate a bit more on the role of the customer in early stage companies, as it is very often to little focus on this (especially with Swedish Entrepreneurs).

    Reply

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