Entrepreneurs

Just to eliminate confusion. The entrepreneur is sometimes defined today as someone who successfully organizes, manages, and assumes risk for a business or enterprise. That is a very broad group of people. An even bigger group are persons who try to do this. Entrepreneur magazine takes an even different view the magazine is about “everything to do with small business”.

My notion  of entrepreneurial behavior is  definitely not about persons who own or start a “small business”, or anyone trying to develop a business plan and find funding for a new business. These may be laudable things to do, they may be very socially and economically useful, and they may be skills/abilities teachable in the classroom. But, in my view these persons are not “entrepreneurs” in the way the term is used by economists and thought leaders. I follow the text, and the seminal works of Joseph Schumpeter, the famous harvard economist and god of capitalism and economic growth; according to him “entrepreneurs are innovators who use a process of shattering the status quo of the existing products and services, to set up new products, new services”. Not just persons who develop successful new businesses!!

My ex son in law developed a business plan, got external venture funding, and operated a successful restaurant in Sonoma. He was not an entrepreneur. Was he successful yes, did he find funding for a business plan, yes. Did he innovate–no. He is successful by imitating other products and services using a business model that is not really any different than 1000s of others. Is there a tweek here or there–sure. But he is following successful and established business practices, and successful product concepts. He isnt aiming to revolutionize the way people have dinner, or how one organizes the resources to give customers a new dining experience, or to achieve a far lower price point in some innovative way. He is not Ray Kroc, Joyce Chen, or even Julia Child.

Entrepreneurs are essential to capitalism, moving it forward. Persons starting new businesses are also essential for capitalism. But entrepreneurs are different. They are trying to be both successful and significant! Most fail. A very few become famous. They have visions about new markets, new ways of using resources to meet needs, concepts that fundamentally alter industries and the way business works. They are trying to innovate in fundamental ways, not just looking for a new niche market, not just trying to be a success in starting a new business.

And they are motivated not by economic success, but by a deep need for significance in altering the old way of doing things. They brought us “wireless”, air travel, hybrid seed, anesthesia supported surgery, the home mortgage, the automobile, the cotton-based textile industry, the drive in movie, and the fast food industry.

This economic concept of ‘entrepreneurism’ is narrower than current conventions that are essentially “starting a new business”.