April 18
Who are the most important contributors to our society? Scientists? Doctors? Politicians? Inventors? Business Leaders? Parents? Does the question even make any sense?
Jim Clifton and Sangeeta Bharadwaj Badal think so. Not only is the question important for them – even crucial – but they also offer an answer, one they share with us in Entrepreneurial StrengthsFinders.
They begin with a rhetorical question: Do we want to enjoy a satisfying, fulfilling future? Of course we do! Yet we are facing so many almost insurmountable problems, they insist that unless we make critical changes, our future is seriously imperiled. They believe our most important problems are economic ones, and it is urgent that we find ways to confront them. Otherwise, the chances are good that we will be worse off tomorrow than we are today.
A bright and happy future for us all can only be assured if we can find ways of ensuring a constantly expanding economy, one that will create more jobs and grow the GNP. No surprise here. But this premise has implications in deciding who are the most important contributors to our future well-being as a society. While artists, scientists, military leaders politicians, educators, doctors, and parents are all important and are nice to have around, Clifton and Badal suggest that they are not the creators of wealth, and so are not high on the list of those who can make the most important contributions in the future.
So, who is high on the list?
Drilling down into the assumption that continual economic growth is the key to the future, one would expect Clifton and Badal to identify the titans of Big Business as the most important people for the future – The Warren Buffets, the Tim Cooks, or the Jamie Dimons of the World of Business. Wrong, say Clifton and Badal, wrong, wrong, wrong! The most important people for the future of America, and by extension for the world, are entrepreneurs: Those intrepid, restless, risk-takers who start with an idea and through persistent effort and sacrifice turn it into a thriving business. “Only Entrepreneurs Can Save America and The World,” they proclaim.
Why Entrepreneurs?
It is often reported that there are 26 million businesses in America. Actually, there are only slightly more than 6 million. Twenty million are inactive businesses that have no employees, customers, sales or profits. Of those that actually produce and sell something, 3.8 million have four or fewer employees, one million have five to nine employees, and 600,000 have 10 to 19 employees. By a huge margin, most of the businesses in America – 5.4 million – are small businesses that employ fewer than 20 people.
Furthermore, all businesses start small! They all begin with someone having an innovative idea for a product or service. But having a new idea means little. We all have new ideas – and most of them disappear without a trace. What is central to all progress everywhere is that someone takes that new idea and does something with it.
It is the entrepreneurs who make things happen. They don’t let their good ideas fade away. They dig in and find ways to turn them into something useful and, through endless work and sacrifice, may even make enough money to survive. Successful entrepreneurs start things: new companies and businesses. They create things: taking new ideas, they transform them into useful products and services that meet people’s needs, and so are able to create new jobs. And it is the jobs that entrepreneurs create that strengthen the economy and make possible productive lives for others.
Trouble in Entrepreneur Land
If it is on entrepreneurs that we must depend in order to create a future of economic security and growth that makes everything else possible, then the news is not good. Trouble is brewing. In The Illusions of Entrepreneurship, Scott Shane reports the following:
- Twenty percent of those who say they are launching a new business never actually start anything;
- Only 33 percent of those who start a new business get it up and running within seven years;
- Fifty percent of all new start-up businesses fail within five years;
- The new venture failure rate grows to 70 percent over a ten-year period.
The news is equally bleak from another perspective. Clifton and Badal point with alarm to a gap between the annual births and deaths of small businesses. According to the U. S. Census Bureau, 400,000 new companies are born each year while 470,000 die! While the optimists cry “The economy is coming back,” Clifton see it differently: “Let’s get one thing clear,” writes Clifton in a chapter of Entrepreneurial StrengthsFinder, “This economy is never coming back unless we reverse the birth and death trends of American businesses.” He continues:
I don’t want so sound like a doomsayer but when small and medium business are dying faster than they’re being born, so is free enterprise. And when free enterprise dies, America dies with it.Clifton’s description of the problem is clear: How are we to go about reversing “the birth and death trends of American businesses?”
The Missing Piece
If it is true that it is the entrepreneurs who “can save America and the world,” and yet most of them are unable to get their small businesses off the ground and into profitability, than clearly we have a serious problem. It isn’t that we lack people with an entrepreneurial spirit; it is that most of them are unprepared for what they are getting into. They seem not to be aware of what they must know and do in order to become successful entrepreneurs. As we shall see, researchers agree that all successful entrepreneurs must acquire and master a specific combination of knowledge, skills, attitudes and values. And what does the right combination of “knowledge, skill, attitude and values” consist of? It is the ability to find and manage successfully an endless array of problems, some small, some huge, many tame, but most wicked.
It Really Is About Problems
Entrepreneurship, like all other organized activities, is primarily a process of finding and successfully managing an unending series of problems What this means in practical terms is that almost everything that new entrepreneurs, as well as experienced ones, must deal with can be best described as a problem. And there is more: Almost everything that entrepreneurs have accomplished in the past began as a problem, one that they were able to deal with. Clearly, in order to be successful, entrepreneurs must be exceptionally good with problems. And since most either never get started, or, once started, fail, it is difficult to avoid the conclusion that most of them are not even “moderately” good with problems. Most of the failures of small business start-ups – at least 470,000 each year – can be explained as failures to manage successfully the many problems of making entrepreneurship a successful endeavor.
More “Wickedness” For Entrepreneurs Than For Others?
All people who run things – businesses large and small, communities, nations, families, athletic teams, military units, courts, theaters, universities – face endless arrays of problems, and while many are tame, most of them are wicked. But those who have an entrepreneurial bent, those who couple a good idea with a strong desire to make something of it, face at least three complicating factors that make their challenges more difficult than for others:
First, since they have a burning desire to make something of what is a new idea, they have no choice but to enter Terra Incognita, an unexplored land with unknown combinations of opportunities, obstacles and hazards. There are no maps to consult, there are no landmarks nor mile markers which they can use to orient themselves. They have no choice but to move forward and deal with whatever they discover.
Second, most of their previous experience has limited value in this new and unknown land. They must literally start from square one and try to understand what is happening and what should be done. They must make sense of what seems to be senseless, create order out of confusion. “What’s going on here?” they say again and again, “And what should I do now?”
And finally, they they will inevitably face these problems with little support. People who work in established organizations and who face difficult problems are able to count on many resources. Such organizations have vast amounts of explicit and implicit knowledge about what has worked and what hasn’t. As a result of contending with many problems over many years, all successful organizations have in place a number of potential “solutions”: traditions, “best practices,” policies, norms, and rules, both formal and informal, written and unwritten. While it is true that quite a few of these organizational “answers and solutions” may be obsolete, irrelevant, or even counterproductive, many are not, and if located and applied successfully, they can provide valuable assistance. Within the structures of established organizations, perhaps the most important benefit is that there are other people to talk to: People who have “been there, seen that, and done that,” and are often available for questions and conversations – and for suggesting things that could be tried.
On the other hand, entrepreneurs face their problems essentially alone. Almost every situation they face is new; every potential problem is unfamiliar; and almost every decision is one that is they have never made before. And when they turn around and look for someone who can offer suggestions and recommendations, no one is there.
What Entrepreneurs Should Do
What is it that successful entrepreneurs do? Clifton and Badal report research in Entrepreneurial StrengthsFinder that identifies distinctive behaviors which separate successful from unsuccessful entrepreneurs:
- They were more likely to clearly articulate the competitive advantage of their companies to their clients;
- They were more likely to make decisions about pricing and product or service developments with their customers in mind;
- They spent a great deal of time planning for growth and aligning employee responsibilities with company goals;
- They were more likely to align employees’ strengths with their roles, thus maximizing employee engagement and increasing individual performance.
Among the essential traits, skills and attitudes needed in order to be successful, they list
- Confidence;
- Creativity;
- Delegator;
- Determination;
- Relationship-Builder;
- Risk-Taker.
Michael J. Glauser, Executive Director of the Center for Entrepreneurial Excellence at Utah State University in Logan, Utah, comes at this question in a different way. Having interviewed several hundred business founders, Glauser, in Entrepreneurial Leadership: What Successful Entrepreneurs Teach Us About Building Thriving Businesses, was able to identify the leadership attributes and activities that led to success. The most important “differences that made a difference” were:
- Adequate planning to take advantage of opportunities;
- Finding partners, including “Building a Brain Trust,” and “Building Powerful Teams;”
- High levels of performance consisting of “Working with Zealous Tenacity”, and “Creating More With Less;”
- Purpose, which includes “Giving Distinguished Service,” and “Serving a Broader Purpose.”
Mostly Wicked Problems
According to these findings, intrepid entrepreneurs must be able to articulate clearly the advantages of their products or services, make good decisions, be effective planners, set company goals and align employee responsibilities with these goals, define employee roles and then align them with employee strengths in order to increase engagement and effective performance, express confidence, take risks, be creative, practice effective delegation and build good relationships.
Also on the agenda should be “Building Powerful Teams,” “Working with Zealous Tenacity”, and “Serving a Broader Purpose.”
What do all of these behaviors and attitudes have in common? First, they are all problems to be addressed, and second, all of them are wicked. It is interesting, and perhaps important, that the problems identified by these researchers that “make a difference” are not tame problems but wicked. And yet there is no doubt that many of the problems that entrepreneurs must work on are tame. Perhaps, as one astute observer put it, “Tame problems abound, but wicked problems confound!”
What makes the problems identified by the researchers wicked and not tame is that first, there is not just one way to be successful at any one of them, but many ways. Next, in order to learn how to do them all and then do them in the right way at the right times, one is required to Figure It Out. There are no recipes to fall back on, no answers in the back of a book to turn to, no previous solutions that others were able to make work, no experts to provide specific answers. For example, no one is entirely sure how to go about “building a powerful team.” All that can be done is, first learn as much as possible about teams and how they work, then get people together, and go to work. And then learn from the many mistakes that will follow. And even with good intentions and persistent effort, there is no guarantee of success.
And finally, the necessary abilities and skills for effective entrepreneurship are wicked because the task of mastering them is never finished. Even if an entrepreneur is able to “build a powerful team,” the entrepreneur cannot consider it finally done and move on. The challenge of building powerful work teams is never over, but must be returned to repeatedly; the same is true of all of the other recommended attributes. As the Nike Ad proclaims, “There is no finish line!”
The Bottom Line
The meta-challenge for entrepreneurs everywhere is to be knowledgeable about and competent in attacking a constantly changing set of wicked problems. Is this important? Jim Clifton and Sangeeta Badal argue “Only Entrepreneurs Can Save America and the World.” If this is true, there is important work to be done before “Saving America and the World” salvation can be even partially realized. Given that entrepreneurship is by definition a process of finding and solving problems, the best way to remedy the gap between the 400,000 new businesses that are started each year and the 470,000 that fail – clearly a losing equation – is to reframe the real work of the entrepreneur: Yes, it does consists of starting new businesses that survive and flourish, but that will only happen when one learns to be good at tackling one problem after another, most of which are wicked.
For those who choose to become entrepreneurs, the best way forward is to begin with a clear understanding that the principle work that lies ahead is working with an endless flow of problems: Some will be financial; others will be finding and keeping the right people; others will be finding ways to please their customers; and others will have to do with product quality. And while all are different, they all fall into the same category: Problems-That-Must Be-Addressed. Gaining knowledge and skills in dealing with problems – especially wicked ones – is the missing piece in the puzzle of why of all those who begin an entrepreneurial journey, so many fail along the way.
This may be old news to successful entrepreneurs. The entrepreneurial way of working – taking action, making mistakes, reflecting on mistakes, learning better ways, finding new resources, then more action, more mistakes, and so on – is in its essence a problem solving approach, one that experienced and successful entrepreneurs must be good at. Otherwise, they would have been among those who didn’t make it.
What may be most helpful for experienced entrepreneurs is to learn that their continual struggle has a name -“So, these problems are wicked!” – and that there is information available to help them learn how to be even more successful in working with them.
And for those who have just discovered their Big Idea and are beginning the difficult process of turning their dream into a small business that works, understanding more accurately the nature of what they are facing may not only help then get on a right path, but stay on it as well.