Entrepreneurship according to HBR and myself
An entrepreneur has got the best and the worst job possible, at the same time. The entrepreneur needs to fit in so many different situations and do so many tasks in his first year of operation that it is virtually impossible to perform well in all of them. This is definitely supported throughout litterature on the topic. One of them I read just recently, which spurred me to this blog article where I mix my own experiences with comments to the article written in Harvard Business Review on Entrepreneurship (Harvard Business School Press, 1999).
In the article “The questions every entrepreneur must answer” in the above mentioned publication it is stated that there are three questions every entrepreneur must answer:
- Which are my goals? Define personal and business goals for sustainability and tolerance for risk.
- Do I have the right strategy? Is it clear? Strategies for profitability and growth potential.
- Can I execute the strategy? Do I have the needed resources and the organisational infrastructure and what will the founder’s role be in the future.
In the article a nice diagram is drawn to the reader with circles of the questions showing that it is OK to move from question 1 to question 2 if you may answer yes to question 1, and move to question 3 if you can answer question 2. If you say no to one of the questions you have to go back to the former questions and do it again, and you do that until you may answer yes to the questions.
I believe that the range and areas of questions and the areas covered in the article are relevant but way to few and vague to guide an entrepreneur to success.
In my opinion there are a couple of questions, some the same as above and some new, every entrepreneur must write down and answer on his whiteboard before taking off:
- Do I know what I am doing? Are there others that need to complement myself?
- Is my family consulted and have they given consent to me digging myself down into the dirt of being an entrepreneur?
- Which are my goals? Short term and long term? Personal and business goals? Do they fit in with the choirs of managing an entrepreneurial company?
- With whom do I want to work with and what kind of organisation do I want to build and work in?
- Am I capable and willing of letting others in to influence my idea and my company?
- What is the footprint I want to create for the future? Why am I doing this project?
- What are the stakes in starting this new business and what am I willing to risk to make it sustainable?
- Do I have the right strategy? Do I have a strategy? Do I know what a strategy is about?
- Can I execute on this “right” strategy?
- Am I willing to change and evolve in my own role?
- What does my exit strategy look like?
As you can see the questions that coincide with the questions from the article are a bit down in my own prioritization of the questions.
But these questions may be divided into two important sections. Tactical and strategical questions. My first couple of questions are really tactical and are put in the short term. Most of the strategical questions fall down in chronological priority. With this I mean that you can’t start by answering the strategical questions and set your sails, before having answered the tactical questions like “Is my family aware and in consent?” or “With whom shall I set sails with?”. If you don’t take care of the tactical questions first, your adventure may end in tragic results, both personally and professionally.
But setting strategies are very important. As soon as possible you should set your strategies, since they give you great guidance in all decision-making that will be needed in the future. An entrepreneur is being put in front of all types of questions that he or she never could dream of before taking off and the entrepreneur needs to be able to improvise a lot as well as taking a step back to revise what the strategies tell him. “Ventures based on a good strategy can survive confusion and poor leadership, but sophisticated control systems and organizational structures cannot compensate for an unsound strategy.” (Harvard Business Review on Entrepreneurship, Harvard Business School Press, 1999, p.10). Strategy statements must be easily understood and repeatedly communicated to let employees, investors, customers and partners to understand and support your business and targets.
With a clear and easily understandable strategy you have the means to attract competent employees as well as investors. If you are unable to show the path you’re on and the destination you are targeting, no one wants to make the trip with you.
One very important advise is to carefully choose your first employees and especially those who are to build the business with you, the management team. You need to be in the vicinity of each other, don’t spread the management team all over the country or worse over the continent, and being able to operate together day and night and give tough feedback as well as encouraging words to each other. Otherwise you will most probably fail.
After having secured the management team you need to find new people to hire. “Great ideas don’t guarantee great performance.” (Harvard Business Review on Entrepreneurship, Harvard Business School Press, 1999, p.17). The management team needs to be able to tackle certain types of problems, and they need to be able to do that being assured that the daily operations on the set strategy runs along. That cannot be done without the presence of capable employees. Don’t hire the first that comes knocking on the door. He or she must fit, if not perfectly at least almost perfectly with what your aim is set for. And concentrate on the personality, not the competence. You can always train an employee, but it is so much more difficult to change ones temperament and behaviour or to have to let them leave the company.
Be very careful when setting company culture. The right one will almost guarantee success. The wrong one will definitely guarantee failure.