Entrepreneurship : Faculty Insights: What is the Entrepreneurial Mindset?

Faculty Insights: What is the Entrepreneurial Mindset?

Glenn Hubbard Dean and Russell L. Carson Professor of Finance and Economics	SEIZING OPPORTUNITIES, CAPTURING VALUE Definitions of entrepreneurship abound — innovation, risk taking or even a desire to strike out on one’s own. Classical economists and renewed contemporary scholarship point to something more encompassing — putting pieces of an idea or business model together in a new and valuable way. Such an activity can be revolutionary (like a new software system) or evolutionary (like an improved way of doing a line of business). But entrepreneurial activity shares identifying, capturing and valuing opportunity. In that sense, entrepreneurship can be part of business education — it is possible to study in a rigorous way successful identification, capture and valuation of opportunity. But, more than that, entrepreneurship must be part of a meaningful business education. To tie together one’s skills to identify and capture opportunity lies at the heart of the success of business leaders in small and large organizations alike.
Amar Bhidé Lawrence D. Glaubinger Professor of Business	A DIVERSE ENTREPRENEURIAL ECOSYSTEM Entrepreneurship — which we can think of as the purposive effort to change the status quo — is a pervasive feature of modern economic life. Without it, individuals, businesses and ultimately societies face stagnation and decline. So virtually everyone has to play an entrepreneurial role. But modern societies are also marked by a high degree of specialization of this role. For instance, the individual entrepreneur has a comparative advantage in undertaking projects that are small and uncertain, whereas the large firms thrive through the exploitation of large-scale opportunities. Large companies need foresight and good plans, whereas the individual relies on opportunistic adaptation. Moreover, the two forms of entrepreneurship complement rather than compete with each other. Understanding the various roles these two forms can play in particular situations is an especially important element in the growth and development of emerging economies.
Toby Stuart Arthur J. Samberg Professor of Business and Academic Director of the Eugene M. Lang Center for Entrepreneurship	ENTREPRENEURIAL NETWORKS Ideas for new businesses are common. Indeed, universities like Columbia are hotbeds for the development of novel ideas of diverse types. What distinguishes great entrepreneurs from others is twofold. First is the ability to discriminate between just a great idea and a truly meaningful business opportunity. We call this opportunity recognition. The second distinguishing factor is the ability to mobilize resources to pursue attractive opportunities. The quality of the social networks of nascent entrepreneurs is a key determining factor of their ability to mobilize resources. At Columbia Business School, we help our students to understand what kinds of networks facilitate entrepreneurial activity. In addition, through the diverse activities of our Lang Center for Entrepreneurship and the encouragement of our faculty and alumni, we endow our students with the seeds of a professional network that will facilitate their lifelong pursuit of entrepreneurial opportunities.
Rita McGrath Associate Professor of Management	THE ENTREPRENEURIAL COMPANY Successful entrepreneurial companies are adept at practices that allow organizations to identify and exploit new opportunities on an ongoing basis. Leaders deploy differential management — using disciplines that are appropriate for uncertain circumstances rather than force-fit innovative ideas into the same practices they use for the ongoing business. They use discovery-driven approaches to planning, budgeting and resource deployment rather than conventional planning. They appropriately resource both the core businesses of today and their options for the future. They see new businesses as “real” options — the purchase of a right to play in the future without a fixed commitment today. They stop projects and learn from them rather than allow failing commitments to escalate. Innovation is a day-to-day fixture high on the agenda — item 1, 2 or 3 — and is the responsibility of every member of the enterprise.
Murray Low Associate Professor of Management	OWNERSHIP AND RISK MANAGEMENT Entrepreneurship has two critical components: taking ownership and managing risk. It is about taking responsibility to make things happen while managing the risks associated with change and uncertainty. The past 15 years have seen significant advancements in our understanding of the technology of entrepreneurship and of how to create value under conditions of great uncertainty. When asked if these skills can be taught, I respond by making the comparison with an opera singer. To make it to the Met you need intrinsic talent, but you’ll never get there without training and discipline. That’s what business school can do for entrepreneurs. And the good news is that there are a lot more openings for entrepreneurs than there are for opera singers. Every organization, new or old, for-profit or not-for-profit, needs entrepreneurial leadership to secure its future.
Harborne “Gus” Stuart Associate Professor of Decision, Risk and Operations	A DUAL MINDSET Like the strategist and the negotiator, the entrepreneur maintains a dual mindset. With any strategic choice, the strategist considers the source of the potential profit. Will it come from the creation of new value? Or from the shifting of value away from competitors and others? Or from some combination of these two sources? Whatever the answer, the strategist keeps both sources in mind. The negotiator, in the middle of a deal, has a similar pair of questions in mind. Can the deal at hand be broadened — are there more opportunities to explore? Or should the negotiator push to close the deal now, as favorably as possible? Whatever the assessment, the negotiator keeps both questions in mind. These two views, the one of possibility and opportunity, the other of closure in the here and now, coexist in the business mindset. The strategist maintains the mindset at a macro level, the negotiator at a micro level. But the entrepreneur has this mindset at all levels. Part strategist, part negotiator and everything in between, the entrepreneur is always simultaneously in a world of opportunity and a world of here and now.
Kathryn Harrigan Henry R. Kravis Professor of Business Leadership	THE ENTREPRENEURSHIP CYCLE Entrepreneurship is the corporate “circle of life.” All of those large, multibusiness firms that we so admire once came from the seed capital of single-unit entities. They may have been formed from sweat equity and venture capital. Perhaps parent companies spun them off or partnered with other firms to create them when entrepreneurship was needed. The successful seeds thrived, expanded their market reach and added new products. The trick of their success was in reaching underserved customers and serving their needs extremely well. When the seedlings have grown into mature corporations and need pruning, entrepreneurs can take the pruned-off business units through a second cycle of corporate life by reinventing their purpose, finding new customers to serve or changing their business model to thrive once again.
Clifford Schorer Entrepreneur in Residence	ENTREPRENEURIAL INSPIRATION Entrepreneurship is not just a subject in the pure academic sense, with a compilation of analytical tools that forecast market acceptance or project financial performance. Entrepreneurship is also a state of mind. Above all, the entrepreneur needs to be inspired through a unique combination of self-confidence, the desire to control one’s destiny and a passion for pursuing ideas that create value. Inspiration gives them that innate resilience to navigate stumbling blocks and relentlessly persist and conquer. In essence, entrepreneurs are inspired iconoclasts dancing to the beat of their own drum. The entrepreneurial spectrum ranges from a street vendor hawking better falafel to the Fortune 500 CEO determined to reinvent an industry.
Donald Lehmann George E. Warren Professor of Business	ENTREPRENEURIAL MARKETING Marketing is inherently entrepreneurial, as it deals with identifying customer needs, designing product and services to meet them and then convincing customers to buy. In marketing, the term entrepreneurial applies to both managerial and consumer decisions. Mangers need skills to develop and implement new strategies, programs to meet the changing marketplace and methods to sell their ideas to others both within and outside the organization. Customers faced with new products have to make a decision about whether to alter the status quo and accept the risk that new product trial entails. New product development is the most obvious entrepreneurial activity in marketing, and it is critical to both start-up companies and large successful ones striving to survive and grow.
Matthew Rhodes-Kropf Associate Professor of Finance and Economics	ENTREPRENEURIAL FINANCE Whether you are trying to start a business or trying to invest in a start-up, the insights you need will come from understanding those on the other side of the transaction. Who invests in a start-up? Friends, family and fools. Who starts a business? Those insane enough to leave a well-paying job to take one with no salary. What does each side want? Clearly money is an important part of the equation, but it is not everything, or even the most important thing. The venture capitalist wants to raise another fund or to look good to the boss or investment committee or to look savvy in front of other VCs. The entrepreneur wants to impress his friends or future employers or to run a larger firm or retain control. Ultimately a deal gets done when fear is overpowered by greed. What those on both sides of the deal need to ask themselves is how they can create the environment that balances fear and greed and brings the right investors together with the right entrepreneur.
William Duggan Assistant Professor of Management	STRATEGIC INTUITION A key element of the entrepreneurial mindset is strategic intuition: the selective projection of past elements into the future in a new combination, with the personal commitment to follow through and work out the details along the way. Ordinary intuition is just a feeling, but strategic intuition comes from real knowledge and experience, brought together in a flash of insight to suit the situation. It’s the big “Aha!” — or a series of little ones — that shows you the way ahead. You recognize an opportunity by seeing parts of it that seem familiar, and your mind draws on what worked in the past for each part to cobble together your course of action. In this way, successful innovations are seldom truly novel but combine elements from your own experience or the experience of others that you acquire through learning. Strategic intuition helps you see and seize on opportunities of all kinds, in your next job and over a lifetime career.