SAGINAW – As a serial entrepreneur, a recipient of the Deloitte & Touche Entrepreneur of the Year Award, and now working as the Dow Entrepreneur in Residence at Saginaw Valley State University, I have frequently been asked to explain what produces exceptional entrepreneurship. Today, this question takes on vital importance as we collectively seek new means of enhancing economic growth in mid-Michigan.
Answering this question has become more difficult as interest in entrepreneurship has exploded. The same desire for entrepreneurship we seek in Saginaw is being sought in Singapore, Sacramento and Saigon. Business schools around the world are embracing entrepreneurship and new courses and programs abound. Yet, it is surprising how little consensus exists on just what it is we?re trying to foster.
My answer has traditionally been quite simple. Entrepreneurship is having a ?fire in the belly?. The problem with this explanation is apparent. Those who are real entrepreneurs all know instinctively the precise meaning of this ?fire? while everybody else gives me blank stares and, I assume, begins thinking about abdominal cramps or ulcers as they imagine what it?s like to be a real entrepreneur. It?s now clear that my ?fire in the belly? definition lacks practical value in helping us embrace strategies of expanded entrepreneurship in the region.
To give a more precise explanation of entrepreneurship, I?ve adapted a more practical explanation. When we say we want to embrace and enhance entrepreneurship, I think the focus should be on the rapid realization of a positive economic outcome. While that?s still pretty abstract, it goes beyond the fire and tries to address what?s burning.
While trying to develop an understanding of entrepreneurship amongst those who don?t understand the ?fire?, a second and equally important aspect of entrepreneurship comes into the discussion. Is entrepreneurship just for starting new businesses, or does it have something to do with renewal and revitalization that could have value for existing enterprises? Clearly, there is something very important being lost in some of today?s popularization if we limit the discussion to only new businesses. Rapid realization of economically important outcomes can occur in a Federal government department, in GM, in a hospital or a school district. All are in vital need of radical transformations and entrepreneurship.
While there has been a large body of literature that addresses how to accelerate change in large companies, it?s important to realize that the fundamental forces and issues are the same for all. The same forces that drive change in the auto industry drive changes in our hospitals and schools. The forces rebuilding our world today are global competition and the internet. These forces are the forces of change, but change is not new to economics.
The forces are usually thought of as the marketplace, what Adam Smith called the ?invisible hand?. Smith?s Wealth of Nations , published in 1776, to this day serves as the capitalist?s declaration of independence. It validates the importance of free choice by consumers. These choices are reflected in what is bought and sold in the markets throughout the world. The economic outcome of the entrepreneur is the free and willing acceptance of their work by the market. The important point is that it applies to every aspect of our economy. Entrepreneurship isn?t just for start-ups and small businesses.
So what causes the fire in the belly? What drives new entrepreneurs? How do teach and inspire others to be creative, to invent and to grow? How do we drive constructive change in our economy, in our community, in our companies?
I don?t think great athletes, musicians or actors do it for the money. Rather, they love what they?re doing. The same is true for entrepreneurs. While entertainers play for applause, entrepreneurs play for acceptance. The acceptance of the market is reflected in dollar votes. It involves money being spent on the output of the entrepreneur?s work effort. It means the customer buys what we offer. That?s success but it?s not for the money ? it?s for the acceptance of our work-product. It?s the recognition of value for what we do. It?s the market?s applause. I?ve never met a successful entrepreneur who did it for the money rather than the acceptance and endorsement the money reflected. Profits are the markets standing ovation. When, as CEO of a public company, I could report beating the analysts? expectations, our stock went up, but the thrill was not the stock price per say, it was the felling of a standing ovation.
So the fire is a desire to succeed in the eyes of the market, not the eyes of the boss. It is not to be the most popular team player but to score. Success requires teamwork, but the point is the focus, which, for the entrepreneur, is the burning desire to win in the market and not just around the office.
The news of successful growth in our region is often summarized by reports of major new investments in facilities and infrastructure. This is only a starting point. The rapid realization of sales, of cash flow from customers, is very different than landing successive rounds of loans, venture capital or investments in a company. Getting money to spend on the business from investors is the easy part compared to getting money from customers. Selling a promise or a vision to the investor is different than selling the product or service to the customer. The former can be enhanced by hype, exaggerations or simply having the right connections, while the latter requires every aspect of the company to work constructively to a common outcome defined by the customer.
The customer is always the most demanding judge of your work efforts. They have to give up real money and all of the opportunities that they could have spent elsewhere to buy your offerings. That?s the hardest test in the world and that?s what every employer in the state must address.
The test, to win with the customer, to generate cash flow from customers applies to us all. Hospitals, schools, churches as well as our largest corporations must past the test. Every job in every enterprise, public or private, health care or automotive, in the end, relies on that job being supported by a willing customer. The start-up entrepreneur is so close to this linkage to the customer that they can?t take their eyes off it. It?s vital that we all understand our roles as entrepreneurs. We all must assist in forcing the changes demanded, not by the boss in management, but by the absolute boss, the global customer.
While entrepreneurism is most often associated with starting a new business, it is not only about start-ups. That?s the point of rapid realization of an economic solution. Clearly the small start-up has a short fuse. They don?t have other options. The restaurant needs customers immediately. The private practitioner, consultant or artist needs customers immediately, or they go hungry. However, these same pressures apply to our schools or hospitals today. The organizations must find new economically viable solutions and respond rapidly to the new world order too. They need to stay focused on the outcomes. Cash flow from customers means programs that voters endorse, patients elect or that pay for themselves.
Together, we are all embarking on a new campaign to enhance the regional economy, to find ways to create and sustain better jobs in the region and higher quality of life. More jobs bring with them a larger tax base for our schools and police force. Higher paying jobs bring more support of our public institutions. Economic success is a community goal and to this end we should all embrace a campaign for increased entrepreneurship ? a campaign for rapid realization of economic outcomes.
This column was written by Kenneth Kousky,
