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How Entrepreneurial Thinking Can Save Your Business

July 12, 2016

Businesses fail. Research indicates that over 50% of new firms fail within 5 years, and 75% are gone in 10. So what is different about the firms that survive?  They are successful in recreating themselves, in continuing to engage entrepreneurial thinking on an equal footing with strategy.

Due to a shortage of resources, customers, networks, credibility, track record, etc., early-stage businesses must be entrepreneurial and innovative. But as companies grow and become more stable, they tend to lose their entrepreneurial roots, particularly as they gain access to resources, credibility, customers, and so on. They become staid in their thinking.

Ironically, established firms are the ones that are best positioned to be entrepreneurial—to exploit new ideas—because they have the resources to do so.  Therefore, to achieve longevity, they must bust the chains of staid thinking.  They must relearn how to act like entrepreneurs, encouraging people to find ideas that can lead to new opportunities.

Where do great ideas come from?  

Many people believe that there are creative people, and then there are the rest of us. Nonsense. There are certainly some people who are more creative than the norm, but if we want firms to develop and exploit entrepreneurial opportunities, the first step is recognizing that opportunities are not the exclusive domain of a few creative people. Opportunities come from everyday people, and management needs to use proven systems and processes to support opportunity development.

Imagine being a municipal transportation planner in a room of municipal managers. Constituents are complaining of poorly sequenced traffic lights. The councilor recounts the following phone call: “I will not wait for another red light at Home Road when there is absolutely no traffic going through on the crossroad that has the green light. Why can’t your engineers and planners sequence the lights so I won’t be inconvenienced? I want someone’s head and I want the lights fixed once and for all.”

In the boardroom, frustration sets in.  The politician is concerned about losing votes. The planner says that people should be encouraged to take public transit to save the environment. The engineer says that if further studies are completed, he could more accurately estimate traffic loadings and install timers to shift the sequencing every hour, or for that matter, every 10 minutes. The budget officer says she can allocate the money, but that would cause a deficit, which means that there would need an increase in taxes, at which point the politician barks out, “No way! I am not losing my job because of tax increases!”

In the silence of frustration, an aide says, “Wouldn’t it be great if the traffic could tell the lights when to turn green?” Everyone laughs.

But then the engineer says, “I never thought of that problem. We could look into building advanced indicators that recognize when vehicles are approaching the intersection.” Presto, the seeds of an opportunity are born. This discussion could then lead to the development of electronic indicators placed into the pavement, which in fact is what is now commonly used.

While just a fictitious story, I am hoping you can see the potential of putting together a group of people who would not normally consider themselves to be “creative,” but who, working together, can achieve a shift that presents the problem in a new light, introducing the potential for a new opportunity. A critical shifting point in this dialogue is reframing the problem as an automated, customized solution versus a standardized solution that is driven by pre-assumed sequencing.

Sadly, interdisciplinary meetings and discussions such as this do not occur in all organizations.

To create an entrepreneurial organization, I propose a framework for entrepreneurial thinking to engage:

  • Opportunity identification
  • A supportive entrepreneurial organizational culture
  • An ability to fulfill entrepreneurial initiatives

These three elements match the flow for a specific entrepreneurial action (which starts with an opportunity/idea, is nurtured within a supportive entrepreneurial culture, and implemented through an entrepreneurial process). From a long-term perspective, corporations need to first establish and nurture an entrepreneurial culture, be open to opportunities when they come, and, finally, develop those opportunities to be enacted in the marketplace.

 

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About The Author

JIM DEWALD is the author of ACHIEVING LONGEVITY: How Great Firms Prosper Through Entrepreneurial Thinking. He is the dean of the University of Calgary’s Haskayne School of Business and an associate professor in strategy and entrepreneurship. Prior to entering academe, he was active in the Calgary business community as the CEO of two major real estate development companies and a leading local engineering consulting practice, and president of a tech-based international real estate brokerage company.

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