and Who is an
Entrepreneur ?
We often hear that so and so is an entrepreneur
who has started his or her own business. It is
also the case that when we hear the term
entrepreneur, we tend to associate it with a
person who has or is starting their own ventures
or in other words, striking it on their own . This
is indeed the case as the formal definition of
Entrepreneurship is that it is the process of
starting a business or an organization for profit
or for social needs . We have used the phrase for
profit or for social needs to delineate and
separate the commercial entrepreneurship from
social and charitable entrepreneurship. After
defining entrepreneurship, it is now time to define
who an entrepreneur is and what he or she does.
An entrepreneur is someone who develops a
business model, acquires the necessary
physical and human capital to start a new
venture, and operationalizes it and is
responsible for its success or failure . Note the
emphasis of the phrase responsible for success
or failure as the entrepreneur is distinct from the
professional manager in the sense that the
former either invests his or her own resources or
raises capital from external sources and thus
takes the blame for the failure as well as reaps
the rewards in case of success whereas the latter
or the professional manager does the job and
the work assigned to him or her for a monetary
consideration. In other words, the entrepreneur is
the risk taker and an innovator in addition to
being a creator of new enterprises whereas the
professional manager is simply the executor.
Attributes of Entrepreneurs
Moving to the skills and capabilities that an
entrepreneur needs to have, first and foremost,
he or she has to be an innovator who has a
game changing idea or a potentially new concept
that can succeed in the crowded marketplace.
Note that investors usually tend to invest in ideas
and concepts which they feel would generate
adequate returns for their capital and investments
and hence, the entrepreneur needs to have a truly
innovative idea for a new venture.
Leadership Qualities
Apart from this, the entrepreneur needs to have
excellent organizational and people management
skills as he or she has to build the organization
or the venture from scratch and has to bond with
his or her employees as well as vibe well with
the other stakeholders to ensure success of the
venture.
Further, the entrepreneur needs to be a leader
who can inspire his or her employees as well as
be a visionary and a person with a sense of
mission as it is important that the entrepreneur
motivates and drives the venture. This means
that leadership, values, team building skills, and
managerial abilities are the key skills and
attributes that an entrepreneur needs to have.
Creative Destruction and Entrepreneurship
We often hear the term creative destruction being
spoken about when talking about how some
companies fade away whereas others succeed as
well as maintain their leadership position in the
marketplace. Creative destruction refers to the
replacement of inferior products and companies
by more efficient, innovative, and creative ones
wherein the capitalist market based ecosystem
ensures that only the best and brightest survive
whereas others are blown away by the gales of
creative destruction . In other words,
entrepreneurs with game changing ideas and the
skills and attributes that are needed to succeed
ensure that their products, brands, and ventures
take market share away from existing companies
that are either not creating values or are simply
inefficient and stuck in a time warp wherein they
are unable to see the writing on the wall.
Therefore, this process of destroying the old and
the inefficient through newer and creative ideas is
referred to as creative destruction which is often
what the entrepreneur does when he or she
launches a new venture.
An Entrepreneur is a Risk Taker
We have discussed what entrepreneurship is and
the skills and attributes needed by entrepreneurs
along with how they engage and indulge in
creative destruction. This does not mean that all
entrepreneurs are successful as the fact that they
can become victims of creative destruction as
well as due to lack of the other traits means that
a majority of new ventures do not survive past
the one year mark of their existence. Now, when
ventures fail, the obvious question is who takes
the blame for the failure and whose money is
being lost. The answer is that the entrepreneur
puts his or her own money or raises capital from
angel investors and venture capitalists which
means in case the venture goes belly up, the
entrepreneur and the investors lose money. Note
that as mentioned earlier, the employees and the
professional managers lose their jobs and unless
they are partners in the venture, their money is
not at stake. Therefore, this means that the
entrepreneur is the risk taker in the venture which
means that the success or failure of the firm
reflects on the entrepreneur.
Some Famous Entrepreneurs
Given this basic introduction to entrepreneurship,
we can now turn to some famous examples of
entrepreneurs who have succeeded despite heavy
odds because they had game changing ideas and
more importantly, they also had the necessary
traits and skills that would make them legendary.
For instance, both the founder of Microsoft, Bill
Gates, and the late Steve Jobs, the founder of
Apple, were college dropouts though their
eventual success meant that they had not only
truly innovative ideas, but they were also ready to
strike it out for the longer term and hang on
when the going got tough. Even the founder of
Facebook, Mark Zuckerberg, as well as Google’s
Larry Paige and Sergey Brian can be considered
as truly revolutionary entrepreneurs. What all
these legends have in common is that they had
the vision and the sense of mission that they
were going to change the world and with hard
work, perseverance, and a nurturing ecosystem,
they were able to self actualizes themselves.
Entrepreneurship Needs a Nurturing Ecosystem
Finally, note the use of the term nurturing
ecosystem . This means that just as
entrepreneurs cannot succeed if they lack the
necessary attributes, they cannot succeed even
having them but living in an environment or a
country that does not encourage risk or tolerate
failure and more importantly, is unable to provide
them with the monetary and human capital
needed for success. This means that the United
States remains the preeminent country for
entrepreneurship as it has the ecosystem needed
for these entrepreneurs to succeed whereas in
many countries, it is often impossible or difficult
to find funding, work through red tape, and
ensure that the environmental factors do not
inhibit entrepreneurship.
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