Can entrepreneurs avoid No Mans Land
Are today’s entrepreneurs in a cultural and economic “No Man’s Land”?
By that description, academic researchers are taking a magnifying class to the entrepreneurial class, and what they’re finding – outside of two key industries – is that demand for new business startups is actually waning.
Now, a new Business Innovation Factory at Babson College study called“Elements of the Entrepreneur Experience” says that conventional descriptions of who entrepreneurs are and what they seek to do isn’t meshing well in an economy where both consumers and capital investment firms are tossing nickels around like manhole covers.
It’s an “all-talk and no action environment” for entrepreneurs, says the Babson report, and that means business startup owners in most industries have a tough time getting any traction (on a variety of fronts) in launching a new business.
This, from the study:
The rhetoric is out there—(but) our economic future depends on entrepreneurship—and we can’t get there with the current national narrative.
Within the current story, entrepreneurship is viewed as central to just a few advanced markets such as technology and health care; is confined to known places of activity such as university labs, incubators or Silicon Valley; is so narrowly defined that only a few are recognized as entrepreneurs; is largely absent from our education and work force development systems; and relies on well-trodden 20th century support environments, platforms, and tools.
The problem lies more with venture funding firms than with businesses and consumers, the report says. In forever chasing those entrepreneurial grand slams the authors describe, investors overlook – and don’t usually fund – companies that have the potential to earn a few million dollars. That’s certainly not Google territory, but it’s still a good return on investment – if only venture investors would notice.
More from the study:
The dominant entrepreneurship narrative is still the lone individual with the brilliant idea who, against tremendous odds, makes it big; the home run at the bottom of the ninth. The founder myth focuses on and bestows celebrity status on a relatively small set of highly successful, rich, predominantly male, technology-focused entrepreneurs.
This narrative permeates and has come to define much of the entrepreneurial culture in the United States. For instance, the VC funding model, which defined the funding landscape for many years, is built around the search for high-growth home-runs, the proverbial “next Google.” A similar attitude guides current incubator and accelerator models, which focus almost exclusively on fast, high-growth companies to the exclusion of others. However, the majority of entrepreneurs fall outside this narrative. As one entrepreneur put it, “There is nothing wrong with a $10 million company.” Yet, relatively few actually embrace this fact.
Interestingly, the Babson study says that entrepreneurs contribute to their own muddled message by not being either interested or even able to describe themselves in classic business startup owner terms. In fact, many entrepreneurs don’t even call themselves “entrepreneurs”. Most new business owners better align themselves with the “path” entrepreneurs take, but they can do without the labels, as described below.
Turns out for many, identifying as an entrepreneur is less important than identifying with the entrepreneurship path. It’s critical that people see the creation of their own opportunities as a viable and attainable possibility for themselves.
One conclusion that Babson researchers did draw was that classic entrepreneurism almost always means dealing with failure – a fact that business startup owners just don’t want to acknowledge.
“We found that entrepreneurship is just a series of failures,” said Heidi Neck, an associate professor of entrepreneurship and director of Babson’s Entrepreneur Experience Lab. “You need to prepare for failure, you need to tolerate failure and you need to learn from failure,” she said. “Maybe we need to start talking about it as intentional iteration.”
Whatever you want to call it, entrepreneurs increasingly find themselves on the precipice. With both demand and funding down for what entrepreneurs have to offer, failure seems baked into the pie – that’s a given in this economy.
But as we emerge from it, business owners will have to clarify who they are, what they offer, and figure out how to deal with failure – and those are givens in any economy.