Objective
The word "Entrepreneur" conjures up many images. One may think about Bill Gates, Sam Walton, Elon Musk, Jeff Bezos, Mukesh Ambani, Sergey Brin, Jack Ma - and marvel about how they did it? One may think about an uncle or aunt or mom or dad and the family business they have been managing where you may have done an occasional internship. Or one may even think about that "entrepreneurial" friend who launched a venture during the highschool. Across these examples and others - one thing stands out. An entrepreneur is someone who finds a way to solve a problem by launching and running their own venture instead of working for someone else's business organization. Statistics vary but anecdotal evidence and reported statistics suggest that most adults work in a job for a living as opposed to launching, owning and running their own businesses. On this page, we will explore the fundamentals of what it means to become and be an entrepreneur.
Disclaimers
What is Entrepreneurship?
Entrepreneurship refers to the process of identifying, developing, and bringing a vision to life. This vision might be an innovative product, a new service, an improved way of doing business, or even a new organizational structure. Entrepreneurs see opportunities where others see problems. Entrepreneurs take calculated risks and take action to create and grow businesses, often in uncertain environments, with the goal of generating value—economic, social, or cultural.
The essential elements of entrepreneurship include:
- Opportunity Recognition: Spotting gaps or needs in the market to improve the status quo.
- Taking Initiative: Acting on an idea rather than waiting for someone else to act.
- Innovating: Developing unique solutions, whether through new products, processes, or business models.
- Managing Risk: Accepting financial, psychological, and social risks; balancing the potential for reward against the possibility of failure.
- Mobilizing Resources: Acquiring, marshaling and mobilizing capital, talent, and networks to bring a vision to life.
- Creating Value: Generating profit, jobs, or societal benefits; bringing something new or improved to customers, businesses, or society.
What is an Entrepreneurial Mindset?
There is much research and educational expertise today that argues that entrepreneurship - just like other disciplines (e.g. accounting, marketing) - can be taught and learned. Although one might agree with this perspective, many also argue that there are elements of an entrepreneurial mindset that may be innate or may be cultivated by individuals. We call this an entrepreneurial mindset (in addition to the entrepreneurship skillset, which can be learned). The Spirit and Skills image (Source: Ursache 2015) captures this well.
Elements of an entrepreneurial mindset include:
- Resilience: Bouncing back from failure.
- Like a captain of a ship who may need to weather rough seas.
- Proactiveness: Acting without waiting for permission.
- Like a captain of a ship who may decide to adjust the sails before the storm hits.
- Curiosity: A constant desire to learn and improve.
- Like a captain of a ship who may constantly watch the stars and horizon for direction or signs of trouble.
- Resourcefulness: Doing more with less.
- Like a captain of a ship who may use ropes, sails, and tools creatively to keep the ship afloat and moving forward.
- Vision: Seeing a future others might not yet see.
- Like a captain of a ship who may have a(n incomplete) map with a sense of purpose and vision for a destination.
Much scholarly research has tried to examine what constitutes an entrepreneurial mindset, how entrepreneurs exercise this mindset and how this exercise contributes to entrepreneurial success. The short list of characteristics above is intended to be a starting point.
References and Resources
- Generation Startup. 2016. On https://www.generationstartupthefilm.com/
- Ursache, M. 2015. The Future of Start-ups: Disciplined Entrepreneurship. Presentation. Available at https://www.slideshare.net/slideshow/disciplined-entrepreneurship-an-introduction/43881757
For most of us, it is tempting to think of the effort to pursue a start-up as similar to a class project that we can plan well, deal with deadlines, assign different tasks to team-members and complete by the end of the semester. However, as you might imagine - entrepreneurship where you build and grow a start-up can be strikingly different, in tone, planning, structure and pursuit. Here are some analogies that will help you think about your entrepreneurial journey.
Good Analogies (to understand the Entrepreneurial Journey)
- Entrepreneurship is like planting a tree in uncertain soil.
You plant a seed (idea) in soil (market), nurture it with care and resources, and hope it grows into something strong and sustainable. Success isn’t guaranteed, but preparation and care increase your chances. - Entrepreneurship is like navigating a ship in uncharted waters.
You have a destination (vision), a crew (team), and a ship (business model). You might face storms (market challenges), but your leadership and adaptability determine if you’ll reach your goal. - Entrepreneurship is like building an airplane while it’s already in the air.
Entrepreneurs often have to make critical decisions and adjustments while their business is already operating, with limited time and resources. - Entrepreneurship is like cooking a meal without a recipe.
You might not have a clear step-by-step plan, but with the right ingredients (resources, talent, and vision) and creativity, you can still create something delicious (a successful venture). - Entrepreneurship is like being an artist with a blank canvas.
Entrepreneurs start with an idea and use creativity, skills, and persistence to turn a blank canvas into something meaningful and valuable. - Entrepreneurship is like raising a dragon from an egg
It starts small, requires constant care, and can either grow into a majestic creature or burn everything down.
Not-So-Good Analogies (to think about the Entrepreneurial Journey)
- Entrepreneurship is like winning the lottery.
Why it doesn’t work: Success in entrepreneurship isn’t based on random chance but rather strategic planning, hard work, and resilience. - Entrepreneurship is like following a treasure map.
Why it doesn’t work: Unlike a map with a clear destination, entrepreneurship rarely has a predictable path. There’s no ‘X marks the spot.’ - Entrepreneurship is like a sprint race.
Why it doesn’t work: Entrepreneurship is more like a marathon—it’s about endurance, not short bursts of speed. - Entrepreneurship is like climbing a ladder.
Why it doesn’t work: The path to success isn’t linear or predictable; it’s often messy, with ups, downs, and detours. - Entrepreneurship is like assembling IKEA furniture.
Why it doesn’t work: Entrepreneurship does not come with step-by-step instructions. The process is far more ambiguous and creative. - Entrepreneurship is like baking cookies
They always turn out great if you follow the recipe. (In reality, every startup has a different recipe, and some ingredients might be missing entirely.)
Many Paths to Entrepreneurship
One may become and be entrepreneurial in many different ways. Some of the well-described paths include:
- As a Founder
- Starting a Small to Medium Business: Opening a small shop, café, or local service business.
- Founding a Scalable Innovation-driven Start-up: Building a tech startup with the aim of rapid growth and significant market impact.
- Social Entrepreneurship: Creating enterprises aimed at solving social or environmental problems.
- As Employee Number Four
- Joining a Founder: Bringing your functional specialization as an early employee.
- Within an Existing Company
- Corporate Entrepreneurship: Innovating processes, models and structures within an established company.
- Extending a Prior Business
- Family Business Entrepreneurship: Extending, diversifying or innovating within a family-owned business.
- Creative and Professional Expertise
- Freelancing & Solo-preneurship: Launching and running a one-person (or small) enterprise, often in creative or professional fields.
- Entrepreneurship through Acquisition
- Acquiring an existing business to improve, grow and sometimes, transform it.
Of these, the path described as "Founding a Scalable Innovation-driven Start-up" is the most interesting - and often the focus of entrepreneurship efforts for start-ups that grow into unicorns (with valuations of $1b and more) with a global footprint and scalable operations tied to digital platforms (such as Facebook, Amazon and others). See also IDE vs. SME on this page (in a separate tab).
- If you are interested in "Entrepreneurship through Acquisition," look for this elsewhere in this knowledge-base.
- If you are interested in "Social Entrepreneurship," connect with the Bentley Service Learning and Civic Engagement Center.
Innovation-driven Enterprise (IDE)
The pathway we have described as "Founding a Scalable Innovation-driven Start-up" (see the Pathways tab) is often elaborated as Innovation-Driven Enterprises (IDE). Innovation-Driven Entrepreneurship (IDE) refers to the creation and growth of businesses that are built around novel products, services, processes, or technologies. These enterprises are characterized by their ability to scale rapidly, serve large (often global) markets, and create substantial economic and social impact. IDEs typically leverage technological or business model innovation as a core part of their value proposition.
Key Characteristics
Here are some of the essential, key characteristics that make a start-up an IDE:
- Innovation-Centric: The business is built around a new idea, product, service, or technology.
- Scalability: The business model is designed for rapid and large-scale growth.
- Global Market Orientation: IDEs target large markets, often at a national or global level.
- High-Risk, High-Reward: They require significant investment upfront and carry higher risks but offer high returns.
- Attractive to Investors: IDEs often attract venture capital, angel investors, or strategic partnerships.
The Shape of an IDE (vs. an SME)
These two approaches to entrepreneurship are often presented with a sharp contrast. The figure below (drawn from the Keynote for MIT GSW by Bill Aulet in 2020) captures the essence.
An SME often has a local focus, requires less investment, and looks for linear growth that is likely to be capped. That means it has the potential to break even and make profits sooner as it follows a well-laid-out path similar to that followed by other SMEs in that industry (see examples below). In contrast, an IDE has global ambitions, requires significantly more investment, and has potential exponential, uncapped growth. That means it needs to spend a larger time period with large initial capital outlays before it can become profitable. However, it has a much larger upside potential after this initial negative cash flow period (see examples below). In the Pathways tab on this page, we describe these two alternatives as "Founding a Scalable Innovation-driven Start-up" (IDE) and "Starting a small to medium business" (SME)
Is this an IDE (or SME)?
| Yes, Definitely IDE! | No, Definitely SME! |
|---|---|
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Similarities and Differences (IDE vs SME)
| Criteria | IDE | SME |
|---|---|---|
| Focus | Innovation and disruption | Stability and steady growth |
| Market Orientation | Global | Local/Regional |
| Growth | Rapid and scalable | Incremental and steady |
| Risk | High | Moderate |
| Funding | Venture capital, angel investors | Bank loans, personal savings |
| Innovation | Core driver for the Start-up | Incremental improvements |
| Exit Strategy | IPO or acquisition | Family succession or business sale |
References and Resources
- References and resources being added
This page is a summary of important considerations and jump-off point for additional exploration, not a comprehensive reference.