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.ENTREPRENEURS WORK HARD
TO AVOID RISK

Robert H. Kent, Ph.D., CMC

The common but incorrect definition of an entrepreneur is someone who starts his or her own new and small business. But being an entrepreneur isn't synonymous with running or even starting a small business. The concept of an entrepreneur, dating back to the French economist J. B. Say who coined the term around 1800, is one who exploits change as an opportunity for a different business or a different service.

Entrepreneurs are not necessarily, or even usually, inventors. They are innovators, which is different. Entrepreneurs are more often the ones who see the potential of an invention and then successfully create a new market and a new enterprise to serve the new customers. Successful innovation, rather than invention, is the tool of the entrepreneur.

Doing it successfully is, I believe, a key concept. Edison was the consummate inventor but a poor entrepreneur. He so totally mismanaged the businesses he started that he had to be removed from every one of them to save them!

How long before an entrepreneur is a proven case? That's hard to say -- 5 years or more? -- but surely not the "Whiz Kid" who explodes on the market with the new gizmo or novel service and then disappears just as fast, and at times having used someone else's "risk" capital.

Strong, effective management is a necessity for any entrepreneur. Contrary to the conventional wisdom, innovation is not natural, creative or spontaneous. It is calculated, hard work. Innovation in entrepreneurial organizations such as IBM, 3M, Bell Laboratories, and Proctor & Gamble is a very systematic purposeful activity.

Peter Drucker says that entrepreneurism is perceived to be risky mainly because so few so-called entrepreneurs know what they are doing. He writes that to a great extent, innovation and entrepreneurism is a management issue and that the management skills for innovation can be learned.

Surprisingly, entrepreneurs commonly see their innovative ventures as less risky than businesses which work hard to perpetuate the status quo. Being on the "leading edge" isn't high risk to real entrepreneurs. They see the opportunity that others can't as a chance to succeed with limited risk.