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December 8, 2004
Entrepreneurship Defined By Orientation As Opposed to Size
Topic: 1) General Management
Discussions with a number of dissatisfied folks that I know in the telcom space and within larger companies motivated me to write this entry. I debated whether I should include in the Early-Stage Ventures thread, but then I realized the angle I wanted to take was geared towards people in both small and large organizations.

To simplify the purposes of this discussion (and cutting a number of corners), there are two definitions:
1) Entrepreneurship Defined As A Small Business: starting or working for a company that is distinguished by limitations in size or age more than other attributes (< X people, < $Y in revenue, < $Z in valuation, < A years in age, etc.)
2) Entrepreneurship Defined As An Orientation: working and taking calculated risks to maximize the value of assets available as opposed to overprotecting assets and avoiding risks (trustee orientation/tendency).

Why is this important? If you believe in the Entrepreneurship Defined As An Orientation model, one should then look for entrepreneurial opportunities with whatever company you are working for (large or small). In larger companies, this may mean setting true personal goals with one's manager (as opposed to going through customary motions that may be required by the company's bureaucracy), communicating risks one wants to take (along with the calculated downsides and potential upsides), looking for opportunities to help people both within and outside of the organization, and not getting discouraged when things fail or when ideas get rejected. There's the old saying that "one needs to break a few eggs to make an omelet."

In any case, I think these are important things to consider. As cited by Harvard Business School (HBS) professor Dr. John P. Kotler in his book, "The New Rules" (1995) where he surveyed a portion of the HBS Class of '74, entrepreneurs and non-entrepreneurs are more alike than they are different. Dr. Kotler does cite four areas where the biggest exceptions bear out: independence, propensity to work hard, need for autonomy, and need for security. If find it interesting to note that biggest difference seemed to be in the area of security. For entrepreneurs, only 2% needed security where for non-entrepreneurs the figure was 18%. This is a 9X difference and should not be treated lightly by those in large companies looking for a change or regretting changes that they had not made to strike out on one's own.

The grass is not always greener on the other side. As an influential figure once said, "Judge me by my size do you? ... You should not." (Yoda, The Empire Strikes Back). The Force lies within and about you.

Steve Shu
Managing Director
S4 Management Group

Posted by sshu-s4 (c) S4 Management Group LLC at 9:42 PM CST
Updated: December 9, 2004 2:31 PM CST
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December 10, 2004 - 9:34 AM CST

Name: Suzanne Shu
Home Page:

Excellent point about entrepeneurship as a mental state versus an objective measure of a company's size & age. We see lots of large companies that are still described as "entrepeneurial". One of the cases I teach is class on Electronic Arts, the videogame maker behind Sims, Madden NFL, and other topselling games. They work in an incredibly uncertain business, where new titles can be massive flops or blockbusters. One of the core characteristics that makes them so successful is their ability to deal very well with such high levels of uncertainty (i.e., take risks, flops are ok). Part of how they do this is to use a "studio system" where game designers still have lots of creative freedom - again, an entrepeneurial culture. Note that this requires many of non-creative functions (sales & marketing, financial reporting, etc.) be centralized to allow that level of freedom. Unfortunately, this culture also pulls startup-like hours, with employees being asked to work 90 hour weeks.

Can all large companies get away with implenting this type of culture? I'd suggest that, like EA, an entrepeneurial mindset is most useful in industries with a lot of sudden change and uncertainty, and where creativity needs to be a core skill. And like any other strategy, it's essential that the organizational structure be adapted to support it.

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