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.
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.
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.
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.”
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.”