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.
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.
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).
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.