Ranked #1 in the World
Corporate leaders looking for guidance in the prolonged economic crisis should check their rearview mirrors for fast-approaching global entrepreneurs, Thunderbird Professor Robert Hisrich, Ph.D., said recently from his office at the Walker Center for Global Entrepreneurship. He said big corporations can learn important survival lessons from small startups that know how to seize opportunities, stretch resources and create value for everyone around them.
“The entrepreneurial community is the one that is going to bring the economy back,” Hisrich said. “They will make the greatest contribution in net employment and the greatest contribution in new products and services. It’s not going to be large corporations, which is where the government is spending money.”
Hisrich’s new book, “International Entrepreneurship: Starting, Developing, and Managing a Global Venture,” explores the mindset and habits of successful entrepreneurs all over the world. Here are five lessons that corporate leaders can learn from these innovators.
Think ethical
For starters, Hisrich said, entrepreneurs tend to be highly ethical. This includes an emphasis on treating people right and building relationships of trust. “Many corporate managers don’t deal with people correctly,” Hisrich said. “As a rule, entrepreneurs are sensitive to their suppliers, employees, investors and the larger community.”
Hisrich said successful entrepreneurs also keep honest financial records. He said his own companies that he has started as a global entrepreneur are “squeaky clean,” including two publicly traded companies that need to hit quarterly numbers to keep investors happy.
“There can be a tendency to slip when you’re trying to hit quarterly numbers,” he said. “You know an order is coming, but it’s not there at the end of the quarter. If you claim the order, you hit your numbers.”
Hisrich said his companies steer clear of the temptation. “There’s no question,” he said. “It’s not booked.”
Think lean and mean
Layoffs and other cutbacks have become common in the global recession, but people who think like entrepreneurs often avoid these necessities. “Entrepreneurs run lean and mean in good times and bad,” Hisrich said. “We have very little fat on our companies because we’re trying to grow them and make them into something.”
He said private equity firms and other investors who acquire entrepreneurial startups often struggle to find any overhead to trim because the organizations operate so efficiently.
“Many companies don’t run their organizations as tight as we do,” Hisrich said.
Think flexible
Entrepreneurs also adapt quickly to change. Hisrich said this often gives them the “first mover advantage,” which is why 60 percent to 70 percent of new products come from small-business entrepreneurs.
“We have less bureaucracy, fewer legal hurdles and fewer signoffs,” he said. “We can move much faster than larger corporations.”
He said this is a big advantage in today’s environment, when products have shortened life cycles and companies face hyper-competition as new markets open around the world.
Think creative
Large corporations have recognized for decades the value of innovation. Many of these organizations invest heavily in research and development. But Hisrich said they also tend to hinder the creative process with too much bureaucracy.
“Entrepreneurs are just more creative and innovative than larger companies,” Hisrich said. “Bureaucracy stamps out creativity.”
Think philanthropic
One final characteristic that sets entrepreneurs apart from many corporate managers is a consistent focus on philanthropy. “Entrepreneurs always give back,” Hisrich said. “They give their time and their money.”
He said entrepreneurs follow through on their philanthropic investments to make sure the money they donate produces maximum benefit.
Hisrich is quick to cite his center’s namesake, Texas entrepreneur Scott Walker, as an example of this type of philanthropy. Walker has pledged an $11 million endowment to the center, and he visits Thunderbird frequently to coach students and follow up on the center’s progress.
Business leaders who learn to think like entrepreneurs in these five ways will be the ones who come through the financial crisis in the best shape, Hisrich said. “The strong, solid companies are going to be stronger at the end of this,” he said. “The weaker ones will be gone.”
April 1st, 2009 at 10:57 pm
I might add that the lean and mean has gotten even leaner and meaner for entrepreneurs seeking funding. There’s a much greater bifurcation with angel investors on one end of the spectrum and private equity on the other end. With this funding slit, entrepreneurs are predominantly working with under $30 million (and often less than a few million) unless they’re aiming for a game-changing killer app which will cost upwards of $300 million. The ability to move to market fast, with successfully outsourced talent and very limited resources, is increasingly more critical to prove success or failure for these smaller entrepreneurial activities. For cash-starved companies interested in generating revenue quickly and cheaply, this would seem like a model to implement.
To add to the point about thinking creatively, innovators appear to have a keener sense of learning from an unfolding future as opposed to learning from the past. Otto Sharmer at MIT has done some fascinating work in this area with his Theory U. A great example of this is prototyping where designers are actually building out possibilities for future states instead of adding quick fixes to broken present states. Again, it would be prudent for organizations to look at innovation in light of their present situation and focus on the first steps to take based on the general direction they’re interested in moving.
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