Developing Your Entrepreneurial Muscle
Successful entrepreneurs fascinate Americans. We follow them on social media and watch their exploits unfold on cable news. They are the rock stars of the twenty-first century, combining the allure of manifest destiny and instant gratification.
This idea of the entrepreneur ticks a lot of subconscious boxes for us, which is probably why we think of Elon Musk or Mark Zuckerberg as aspirational models. But are they typical entrepreneurs? Does their experience provide a sustainable roadmap you can follow on your own journey?
To answer questions like these, JumpbyDesign episode 11 went to one of the leading experts in entrepreneurship, Derek Lidow.
Lidow is an author and entrepreneur who left the private sector in 2011 to become the James Wei Visiting Professor in Entrepreneurship at Princeton University’s Keller Center. He was CEO and founder of iSuppli and CEO of International Rectifier, which was purchased by Infineon Technologies, the German semiconductor giant, in 2015. He is the author of two books, Startup Leadership: How Savvy Entrepreneurs Turn Their Ideas Into Successful Enterprises and Building on Bedrock: What Sam Walton, Walt Disney, and Other Great Self-Made Entrepreneurs Can Teach Us About Building Valuable Companies.
Entrepreneurship Is a Teachable Skill
According to Lidow, there are five essential entrepreneurship qualities: self-awareness; relationship building; monetizing others; leading change; and enterprise basics. Each of these is skill-based, and therefore teachable. He points out that he would not be teaching were it not possible to impart these skills to would-be entrepreneurs in an academic setting.
The risk of being in academia, of course, is one does not necessarily use and develop the first two muscles, self-awareness and relationship building. School rewards us for individual achievements, and graduates tend to view themselves as smarter and more competent than everyone around them. Lidow points out that, after graduating with a Ph.D. in physics at the age of 22, he was initially too egotistical to learn from those around him who had more experience.
It took time for him to recognize what he now believes is the true definition of entrepreneurial leadership: “Produce more value as a team than you can do alone.” His goal as a teacher is to impart this lesson so that his own students don’t waste valuable time.
Two Entrepreneurial Mindsets for Success
The entrepreneurs Americans revere tend to follow what Lidow calls “the Silicon Valley” mindset. This species of entrepreneur strives to create value first, using venture capital funds to launch an idea, with the hope that profitability will follow. Because successful companies that follow this model tend to get the most press, they seem to dominate the business world. However, as Lidow notes, only 1,400 new companies get venture capital each year, out of the 600,000 that are formed.
Why so few? You not only need an amazing idea for a product or service; you must also have the ability to make investors want to give you money. Easier said than done.
Fortunately, there is another way for entrepreneurs to build successful enterprises. Lidow calls this “the bedrock mindset,” and this concept forms the basis of his new book, Building on Bedrock. It’s how the most successful entrepreneur in the world today, Sam Walton, built his company from a single drugstore to a global enterprise that has made more millionaires than any other company while, at the same time, his family continues to hold a controlling share in Walmart stock.
Bedrock entrepreneurs work by establishing a business that can achieve profitability quickly, the exact opposite of the Silicon Valley model. They then funnel profits back into the business in order to grow it. Value comes with company growth; it is not an essential selling feature.
A Tip for Building Your Entrepreneurial Muscle
Perhaps what is hurting most young — and some even not so young — would-be entrepreneurs is a lack of focus. Many entrepreneurs focus on maintaining a certain lifestyle rather than sacrificing and streamlining all their extra funds to the growth and development of their company.
Check out an essay Lidow published in the Harvard Business Review, “A Better Way to Set Strategic Priorities,” to provide a way around this dilemma. Although he wrote it with a company leader in mind, it is equally applicable to a fledgling entrepreneur attempting to grow their business.
Lidow advises against rank ordering lists, instead recommending that you prioritize tasks into three categories: critical, important, and desired. “Once you have identified critical, important, and desirable projects,” Lidow points out, “you can begin to identify appropriate objectives, resources, and time for each [of them].” Knowing the difference between what is important and what is merely desirable is key to this model for strategic planning because resources allocated to desirable projects can be shifted to fund critical ones without hurting the enterprise as a whole.
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