Lessons from the Entrepreneur (Part 1 of 3)
One of the best ways to create higher values is to simply think like an entrepreneur. If we can think like an entrepreneur, we can find numerous ways of changing how we manage and create wealth within an organization. Over the next three articles, I will summarize several concepts that I believe are paramount to creating higher values. All of these concepts come from thinking like an entrepreneur. Lesson 1 (which follows) will introduce some basic concepts. Lesson 2 will explore characteristics of the entrepreneur and Lesson 3 will outline the entrepreneurial culture.
One simple lesson we can all learn from the entrepreneur is how to manage risk. Entrepreneur's think in terms of stages or increments. They never commit large resources up-front, working within a single stage. The traditional manager, on the other hand, is given a budget to complete a project and he or she will force an outcome no matter what new facts may emerge during the life cycle of a project. Compare this approach to the entrepreneur who never takes such huge risks. Entrepreneurs manage risk by making decisions incrementally and they move forward very cautiously, moving to the next stage only if a specific event or action has occurred. This approach allows the entrepreneur to better control risk as opposed to the traditional manager who takes on major risk. By not wasting valuable resources, entrepreneurs not only manage risk better, but they preserve and protect value. They also have better control over the final outcome of projects.
Another key lesson from the entrepreneur is a never-ending search for new opportunities. Entrepreneurs enjoy experimenting with new ideas, seeking out new areas to exploit. Contrast this to the traditional manager who avoids experimentation, focusing on his or her career within the organization and not thinking outside the traditional box. Entrepreneurs live for new opportunities whereas traditional managers follow a sequential pattern of procedures that conforms to the corporate culture. A strong emphasis on learning is usually at the center of finding new opportunities. Entrepreneurs seem to listen and learn much better than anyone else and as a result, they can see an opportunity much easier than the rest of us. Therefore, a major commitment to learning is at the center of identifying new opportunities to exploit.
A third lesson we can learn from the entrepreneur is that execution is more important then the idea itself. Many organizations are searching for new ideas as a way of creating higher values. New ideas are hard to come by and they rarely result in the creation of value. Value comes from the ability to execute. Entrepreneurs seem to have an uncanny ability for executing an idea and turning something redundant into a great business. For example, something as simple as coffee all of a sudden becomes Starbucks, an international chain of coffee shops. It's not the product or service that creates value, it is all of the intangibles associated with the product or service that seems to attract customers and creates value. Entrepreneurs understand this concept and they know how to execute an idea much better than the traditional manager. Keep in mind that over 70% of all new ventures come from existing ideas, not new ideas. Execution is how entrepreneurs create value.
In conclusion, we have learned three important concepts from the entrepreneur:
1. Thinking in stages or increments is a value-creating approach to risk management.
2. Allowing experimentation to take place is paramount to value creation. This requires a very strong commitment to continuous learning; otherwise you will have difficulty identifying new opportunities.
3. Existing ideas are much more important than new ideas when it comes to creating value. The challenge is to transform an existing idea into something that is new to the marketplace; i.e. execution.
In our next lesson, we will learn some of the basic characteristics behind the entrepreneur.
Written by: Matt H. Evans, CPA, CMA, CFM | Email: email@example.com | Phone: 1-877-807-8756
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