Executive Behaviors for Entrepreneur Success
In May of 2002, the first edition of The Wiglaf Journal was launched, marking the inauguration of our entrepreneurial activity. Coincidently, May 2002 also was marked by the publishing of Walter Kuemmerle’s “A Test for the Fainthearted” in Harvard Business Review, discussing attributes of successful entrepreneurs. In the two years since we began navigating the waters of entrepreneurship, we have found Prof. Kuemmerle’s ideas true and perhaps even understated.
Prof. Kuemmerle found that entrepreneurs are required to exhibit behaviors that Fortune 500 executives rarely would. These behaviors can be encapsulated into 5 distinct categories: Stretch the Rules, Accept Powerful Enemies, Patience to Develop the Business, Seek Closure, and Be Profoundly Opportunistic. What follows is an explanation of these behaviors and a first hand account of their validity.
Stretch the Rules
Entrepreneurs find that they are forced to stretch the rules to establish their business, but not break them. Rule stretching most commonly appears in the stories entrepreneurs use to describe their businesses. For instance, when searching for employees, entrepreneurs may promote the position as an “opportunity in a fast growing and established enterprise” although the growth may be the dream of the founder and the enterprise may have been established only weeks prior. Alternatively, when selling to customers, entrepreneurs may describe their experience in the industry when the business is relatively new, and company growth rates are expressed in percentage terms with much of it projections. Fred Smith, founder of FedEx, participated in stretching the rules as well when he used creative financing to save his business in 1973. Mr. Smith found himself in court and was reminded that he can stretch the rules, but not break them.
Such subterfuge is unappealing to many. Fortune 500 executives rarely have to resort to such tactics and can rely upon their brand to initiate desired relationships. When founding this company, I thought that our credentials and experiences would be sufficient and the truth would speak for itself. Unfortunately, I was dissuaded by reality. Not that we have had to make misstatements of fact, but we have participated in the game of spin. For instance, we often spin discussion on the size of our audience into discussions of the executive roles and commitment level of our readers. The spin is useful in securing executive interviews for articles as well as in gaining press passes to attend interesting conferences. Although we have refrained from using “shared-copy” numbers to inflate our readership, most similarly sized competitors do not.
Accept Powerful Enemies
When establishing a business, entrepreneurs are between a rock and a hard place with respect to enemies. The hard place of entrepreneurship comes from the market requirement to get in someone’s way. New companies must provide a product or service that customers perceive as a must have. Once an entrepreneur has something that customers must have and establishes customer relationships, competitors will begin to treat that entrepreneur as an enemy. At that moment, the rock of entrepreneurship arises and competitive enemies pounce on the budding entrepreneurial company. When starting a business, almost all other businesses are more powerful, and some are very powerful. Many will perceive the upstart entrepreneur as a potential enemy. Creating a business between a rock and a hard place is part of entrepreneurship. Entrepreneurs must be prepared to have powerful enemies in their pursuit of success.
While we tried to carve out a niche and avoid competitors, such competitive enemies struck The Wiglaf Journal early in our publishing. We quickly found one competitor picturing our editor in a negative light while another attempted to discredit him. After two years, the story unfolds to a different tune fortunately. Both of these competitors have become friendly and one has even reversed an earlier judgment to offer praise for our work. While entrepreneurs may create powerful enemies, they should also hold the door open to convert them into friendly competitors.
Patience to Develop the Business
Kmart and Wal-Mart initiated business in roughly the same time period. In their beginnings, Kmart’s strategy called for quick growth while Wal-Mart stuck with a single store in Bentonville, AR. Sam Walton of Wal-Mart took the time to develop his knowledge of the business. Today, Wal-Mart is highly profitable and growing while Kmart is recovering from bankruptcy. Entrepreneurs need patience to develop their business and market understanding.
The value of patience isn’t limited to low-tech industries. Divine, Webvan, govWorks.com, and Pets.com all failed spectacularly despite the gobs of investor cash thrown at them. Even Amazon.com didn’t show a profitable quarter for a long time. Meanwhile, Lodestar developed a solid business through 25 years of effort and JDS Group continues to focus on the Midwest as their primary target market after 10 years.
When founding Wiglaf, one of the partners expected fivefold growth each year for the first few years while the other counseled patience. Time demonstrated that patience was the right course of action. Importantly, during our business’s development time we uncovered the value readers place on the journal as an information source. Discovering our market’s desires led to the creation of a new line of business to support our efforts.
Entrepreneurs are forced to seek closure on questions in quick time. Often, they are forced to make decisions in unfamiliar territory, with limited information, and with potentially catastrophic results. They are forced to make these decisions under rushed conditions because there are so many decisions to be made. One entrepreneur stated that they had to make over 150 key decisions before they were ready for business. The need to close questions forces entrepreneurs to trust their gut over making measured choices.
Seeking closure expands to the revenue side of entrepreneurship. Successful entrepreneurs know how to sell. In pursuit of a good client, they will go the extra distance to close the sale. If a prospect looks unlikely to purchase, they will confirm the suspicion, end the pursuit, and yet hold the door open for a change of mind in the future.
Because Wiglaf was founded by two experienced salespeople, we instinctively saw the value in closing sales. As business strategists though, we found closing decisions to be initially uncomfortable. Entrepreneurship taught us the skills of raising questions, making decisions, and yet holding the decision open to revisions.
Be Profoundly Opportunistic
The prime directive of an entrepreneurial business is to stay open. In pursuing this goal, successful entrepreneurs will do whatever it takes. This translates into a profoundly opportunistic approach to business even for businesses with an overarching strategy. Planning and strategy are valuable as means for taking action in the battlefield, but on the battlefield the strategy will change.
Entrepreneurs will value market engagement in and of itself. Through market engagement, entrepreneurs will discover unmet market needs to fulfill that others may have overlooked. Discovering these needs and fulfilling them are the basis for forming a successful business. SPL WorldGroup was initially established as an IT systems consulting firm before discovering itself as a CIS product firm. Likewise, Tantalus initially provided RF engineering services before discovering its value proposition as an AMR provider.
Profound opportunism required the largest shift in thinking within The Wiglaf Journal. For the editor as a strategist, it was natural to weigh the possibilities and attempt to position the company appropriately. Time has dissuaded him from this philosophy for the current stage of business development. For instance, at a recent national pricing conference the editor of the journal came in contact with the Manager of the Pricing Practice of Boston Consulting Group. She sat on the sidelines to explore the conference’s strategic value to Boston Consulting Group while the editor of The Wiglaf Journal jumped at the opportunity to present and took the stage even though the business value of presenting was far from clear.
The changes in attitude from being a corporate team member to being an entrepreneur are significant. Perhaps it is these attitude changes that lead many investors to believe that executives from GE and other Fortune 500 companies will fail at their first new business but succeed at their second. The good part is that the findings of Prof. Kuemmerle and the stories above imply that executives can change their attitudes and resulting behavior. Entrepreneurship may be difficult, but success is possible.
1. Kuemmerle, Walter. “A Test for the Fainthearted.” Harvard Business Review (May 2002): 122-127.