What makes a great entrepreneur? Is running a successful business a skill you’re born with, or is it one you can learn? Over the course of three columns, Your Business guest contributors Michael Wade and Mark Arnason will attempt to answer those questions. Here is part one:
Are great entrepreneurs born or are they built?
It’s a critical question for any aspiring owner who wants to start a business.
The process theoretically goes something like this: An entrepreneur has a brilliant idea, writes a business plan, gets start-up funding, puts together a team, creates a product or service, and sells out to a Fortune 500 firm. It sounds logical, but reality paints a different picture.
Let’s start with the brilliant idea. There are many stories floating around about entrepreneurs whose empires were sparked by blinding insights that occurred during some mundane activity, like waiting for a bus or taking a shower. We call this the myth of the epiphany, and the truth usually differs from the myth.
Most great ideas start out extremely rough and half-baked, and they are only chiselled into greatness over time. Howard Schultz’s flash of insight was to bring Italian coffee bistros to the United States, but in his original concept, customers stood or perched on stools (there were no chairs), listened to opera music, and were served by baristas wearing bow-ties – certainly not what a customer would expect to experience in today’s Starbucks.
Jeff Bezos had a good idea -- selling books online -- but his real insight was turning his store into a global marketplace for other people to sell their goods, even when they competed with Amazon.com’s products.
Ideas are important but they are not pivotal. We have conducted many brainstorming sessions in our classes, and the results have been intriguing. Teams of students and executives consistently come up with more than 100 start-up ideas in five or 10 minutes. Some of the ideas are absurd, but at least a dozen really good ones are generated each time we run the exercise. Ideas, as they say, are cheap.
Most great entrepreneurial ventures begin with a problem, which could be an unmet need, a bottleneck in a process, or an inconvenience. The idea is simply a solution for how to solve the problem. MIT professor Eric von Hippel found that more new profitable lines of business came from customer complaints than from research and development departments.
A recent study by Duke University Professor Vivek Wadhwa examined scores of personal and professional characteristics of successful entrepreneurs and found one common element: a university education. It didn’t seem to matter what degree was awarded, or what school it came from.
Another study, by IMD professor Stuart Read and colleagues, suggested it is more important to look at how successful entrepreneurs behave (what they do) than to look at their characteristics (who they are).
According to this research, conducted at the Switzerland-based business school, successful entrepreneurs consistently follow four basic principles:
