We need more entrepreneurs and startups in America to restore our economy, one that was once the envy of the world. Entrepreneurs are people who own businesses. However, I know a lot of them that are not very entrepreneurial. Startups are new companies whose failure rate runs between 50 percent and 85 percent, depending on […]
We need more entrepreneurs and startups in America to restore our economy, one that was once the envy of the world. Entrepreneurs are people who own businesses. However, I know a lot of them that are not very entrepreneurial. Startups are new companies whose failure rate runs between 50 percent and 85 percent, depending on whose statistics you want to believe. Neither is the solution to our problems; what we need is more entrepreneurial leaders.
Entrepreneurial leadership is a special form of leadership that begins with the creative process often referred to as “being entrepreneurial.” This process is commonly described as taking financial risks in the hope of making a profit, or “being enterprising.”
Entrepreneurship, however, is much more than this; it is a process whose purpose is to generate new business. For the purposes of our discussion, business is defined as “products, services, and the organizations needed to deliver them.”
All organizations, regardless of type, need to provide products and services to grow and survive. Business is not only good for the economy; it is the engine that keeps it moving and growing. Entrepreneurs are — and always have been — the major generators of business; however, this need not be the case.
As a preliminary measure, the good entrepreneurial leader realizes that — contrary to what might be the prevailing business ethos — the art of generating new business is selfless, and not selfish. He or she understands that the business world should be a “you” world, not a “we” or “me” world. By that, I mean that good entrepreneurial leaders focus on the needs and wants of the consumer, knowing that by satisfying the consumer first, the “we” and “me” will benefit later.
I have found that entrepreneurial leadership is a process that can be taught and must be learned over time. Many of my students are successful entrepreneurial leaders. Entrepreneurial leadership is not, as many people seem to believe, just the ability to form an organization. Entrepreneurial leadership is much more than creating startups. It is a process whose purpose is generating new business. The process involves recognizing an opportunity to pursue and forming a team and an organization to deliver it, keeping in mind that entrepreneurial leaders are the driving force behind generating new business.
This process isn’t confined to privately owned companies, publicly traded companies, or nonprofits. It’s certainly not confined to businesses just starting out either. Entrepreneurial leadership is vital to all forms of organizations at all stages of their development. It is even essential and possible in government — contrary to popular opinion. Entrepreneurial leaders are the driving force behind generating new business, and all organizations need new business to sustain themselves and grow.
The beginning
The entrepreneurial process begins with recognizing an opportunity, which is the chance to create a product, service, or organization and successfully bring it to market. Recognizing an opportunity can happen in the “startup” stage, or in the midst of a well-established company or organization. The most critical thing an entrepreneurial leader must know how to do is distinguish an opportunity worth pursuing. Pursuing ideas that are not real opportunities is a sure path to failure.
In the grocery industry in the 1990s, 30,000 new products were introduced each year. Considering that supermarkets carried only 25,000 items each, the success rate of new products was less than 1 percent. Yet at Adirondack Beverages, where I was CEO, our new product success rate exceeded 90 percent. How did we accomplish this?
The answer lies in my five-step “Opportunity Model,” which I developed after many years of working in the highly competitive grocery industry. With my team’s help, I tested, implemented, and improved a model that I have used throughout my career as a successful entrepreneurial leader.
The five steps of my “Opportunity Model” are:
1. Identify a commercially viable problem
The problem you identify must be ready to be solved, and the solution to the problem must be commercially viable. In other words, there must be a large enough demand for a solution if the product or service is to be commercially feasible.
2. Create a product or service that has a strong competitive and comparative advantage
Your product or service must be unique, in that it must be positioned as better in some way then existing products and services. Securing effective distribution channels, as well as creating awareness for your product or service, is also essential to achieving a competitive and comparative advantage.
3. Ensure that your product or service is sustainable through patents, trademarks, first-mover advantage, and continuous improvement
Successfully launching your product or service is a great first step, but long-term success is dependent on protecting your intellectual capital with patents or trademarks, or both. Staying ahead of your competitors also means continuously improving your product or service.
4. Secure your product or service’s profitability
Due to initial startup costs, very few products or services are profitable when they’re first introduced. Yet survival and success are dependent on taking in more than you pay out. Profits are for a company what a salary is to an employee.
5. Build an effective team
While nearly all new products or services begin with a sole individual’s idea, they seldom get off the ground without a team. That team should include the entrepreneurial leader, as well as team members with complementary skills.
Knowing how to generate new business, however, is never enough. Doing it demands the ability to lead. Persuading your people to buy into the opportunity, cooperate willingly, and make the opportunity real and successful requires professional and personal leadership.
Angelo Mastrangelo, Ph.D., is an entrepreneur, professor, and author of “Entreprenurial Leadership: A Practical Guide to Generating New Business.” In 2001, he began teaching leadership and entrepreneurship at Binghamton University. In 2007 he was named as one of the top entrepreneurship professors in the U.S. by Fortune Small Business. To learn more about Mastrangelo or contact him, visit: http://www.profmastrangelo.com