in The Myth series

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The original transcript of the dialogue between Me (M) and the Experienced One (E).

M:

Don’t you think this is perhaps the most cool career choice that is getting the highest number of validation right across every social media platforms?

E:

Going by the number of advocates for this career choice, it is indeed the coolest thing to do.

M:

Then it becomes all the more important that you please help us in dispelling few of the common myths associated with this career choice.

E:

Before peeling the multiple layers of myths associated with entrepreneurship, let me first share with you the most basic definition of an Entrepreneur.

An entrepreneur is a person who is willing and able to convert a new idea or invention into a successful innovation: “Creative destruction”: Schumpeter (1950).

M:

True, even I have heard a lot about technological Disruption paving way for various entrepreneurial opportunities.

E:

Entrepreneurs are generally perceived to be born with some unique set of talents.

We often hear that it’s in their DNA.

Whereas the truth is a good number of people who become entrepreneurs never planned to be. Only a minuscule number do have the advantage of entrepreneurial lineage.

Although there are correlations between certain types of behaviour or psychological traits and entrepreneurship, it seems that there are in fact as many successful entrepreneurs who have managed to learn these skills and acquire these attributes as there are the ones who are “born” with them.

And we know that some of the most significant personality traits associated with entrepreneurship such as “self-efficacy” can be learned.

M:

Ok, even if we assume that many of the so called entrepreneurial skills and attributes can be learned, but don’t you think that Successful entrepreneurs are the ones who are blessed to come up with the most creative, original ideas for their businesses?

E:

It depends on what you mean by “creative” and “original.” According to some studies, anywhere from 70% – 90% of the ideas for a new business come from an entrepreneur’s previous employment or existing business contacts.

In other words, the more experience you get working for someone else, there is more likelihood of you coming up with an idea for a new business.

M:

So you mean to say that working experience is sufficient to provide a fertile ground to generate productive ideas.

E:

There is no doubt that it does provide a fecund ground but Value innovation is the cornerstone of being an exceptional entrepreneur. These set of people instead of focusing on beating the competition, focuses on making the competition irrelevant by creating a leap in value for buyers and their company, thereby opening up new and uncontested market space.

Value innovation places equal emphasis on value and innovation. Value without innovation tends to focus on value creation on an incremental scale, something that improves value but is not sufficient to make you stand out in the marketplace.

Innovation without value tends to be technology-driven, market pioneering, or futuristic, often shooting beyond what buyers are ready to accept and pay for.

In this sense, it is important to distinguish between value innovation as opposed to technology innovation and market pioneering.

Value innovation occurs only when companies align innovation with utility, price, and cost positions. If they fail to anchor innovation with value in this way, technology innovators and market pioneers often lay the eggs that other companies hatch.

M:

There is this common perception that if you are into any kind of innovation then you need the backing of venture capitalist. Could you please throw some light on this?

E:

Venture capitalists are a good place to go for start-up money but only if you are a young computer or biotech company. Computer hardware and software, semiconductors, communication, and biotechnology account for 81 percent of all venture capital dollars. VCs only fund about 3,000 companies per year and only about one quarter of those companies are in the seed or start-up stage. In fact, the odds that a start-up company will get VC money are about one in 4,000: quite an odd to beat.

M:

And what about the financial success stories of entrepreneurs?

E:

Sorry, this is another myth. Entrepreneurship creates a lot of wealth, but it is very unevenly distributed. The typical profit of an owner-managed business is $39,000 per year. Only the top ten percent of entrepreneurs earn more money than employees. And the typical entrepreneur earns less money than he otherwise would have earned working for someone else.

M:

So how do we ensure that we end up in the top 5% of the entrepreneurial community?

E:

No you can’t ensure for sure.

However what you can do is keep looking for opportunities to connect the existing dots.

Novo Nordisk, the Danish insulin producing company is a case in point.

Historically, the insulin industry, like most of the pharmaceutical industry, focused its attention on the key influencers: doctors.

Novo Nordisk, however, saw that it could break away from the competition by shifting the industry’s long-standing focus on doctors to the users—patients themselves.

In focusing on patients, Novo Nordisk found that insulin, which was supplied to diabetes patients in vials, presented significant challenges in administering.

This led Novo Nordisk to come up with NovoPen, the first user-friendly insulin delivery solution, designed to remove the hassle and embarrassment of administering insulin.

M:

So can it be said for sure that entrepreneurs are happier than those who work for other people?

E:

It largely depends upon what measure you are looking at, don’t forget that entrepreneurs’ work more hours than those working for someone else. And in fact more often than not they tend to make less money than their counterparts who are employed at managerial level.

But having said that, it’s the lot of self-employed people who report higher job satisfaction: 62.5% versus 45.9%.

M:

Why?

E:

Autonomy, purpose, flexibility, mastery, big impact and greater control are some of the common reasons why  people in general derive greater happiness from being an entrepreneur.


References:

The illusions of entrepreneurship

Blue Ocean strategy

Innovation and entrepreneurship


Let me know your thoughts, I’d love to hear them ! ?

Have an amazing weekend.

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