Entrepreneurship with a safety Net
Entrepreneurship is hard – lets face it. If you are a “stand alone” entrepreneur you need a lot of stuff – that maybe you don’t have ready-at-hand. In some cases, you can practice your entrepreneurship inside a big company. It’s not as bad as you might think.
Here are seven reasons why you might thrive in a large corporation rather than “going it alone” along with seven concessions you need to make to leverage the tremendous resources a company has to offer to someone with an entrepreneurial spirit – but who doesn’t want to take the full risk.
- Maturity of Process. Many have come before you. Large corporations, partly because they are large corporations and have been in business long enough to grow to be large corporations, have institutional knowledge on how to do things. “Smart” companies learn from their mistakes and continually integrate these lessons learned back into the process. So, “they” ( the process ) knows how to do things. And, over time, it just gets better. They know how to bring new products and services to market – at least they understand the process – battle hardened.
- Market Research. You need to “make what you can sell’ not “sell what you make” and you need to understand the industry, the market opportunity, market trends, market size, and the competitive landscape. Large corporations have teams of people who do nothing but market research and competitive analysis. These folks talk to industry analysts – they know what’s going on and they publish this information internally continually.
- Sales Interlock. The VP of Sales and Marketing is going to have to sign off on your sales forecast and their ability of sell the product or service according to your multi-year forecast. Sales interlock is a good thing.
- Many Mentors. In a large corporation of 100,000+ people, someone, and in many cases, many people, know what you need to know to make your product or service successful. Large corporations are huge resource pools for ideas and idea validation. They are on your side. They want to see the company and you (and themselves) successful.
- Capital. Need a million dollars seed capital to get going? In a large corporation, $1MM is not a problem – if you have a good business case. Or at least, getting funding is easier than pitching to investors and/or VC’s (venture capitalists). Expect that the funding will be “gated” at strategic points along the product/service development cycle and you have to deliver what you say you will deliver reviewed by various governance boards along the way.
- Take a Wild Ride. Own it. Live it. Love it – through a highly scrutinized product/service build, to sell and delivery of the product or service into revenue generation . “The journey is the reward.”
- Walk Away and Do It Again (sometimes).
The concessions you will likely have to make in exchage for this wealth of corporate resources and knowlege:
- Be prepared to “follow the process” and mostly, without deviation.
- You need to make what the company can sell in the context of current strategic initiatives of the corporation. So the choice of products and services will be bounded. The market opportunity and the particular corporate competencies will decide what you build.
- You better be good at writing a solid defensible business case and presenting/defending this to various stakeholders and governance boards. You’ll need to show a good/better ROI against other projects in the company that are competing for limited capital. You need a solid concept, market research, positioning, competitive analysis, product strategy & roadmap, costing and pricing model, marketing plan, sales forecast along with a full set of pro forma financial statement. You don’t need to do it all yourself but you need to be able to work and collaborate with many parts of the organization and perhaps external alliance partners. You own it.
- Everything you do will be scrutinized. Another good thing – in a way – keeps you on track.
- No concession here. You have $1MM for your venture. You will be carefully watched.
- Can be stressful. “Adversity builds character”. Expect to be challenged trying to penetrate a sometimes huge impenetrable bureaucratic organization – yours. But, you will make many friends along the way, which will only help you the next time around.
- Not for everyone. You can’t fall in love with your products and services. Your job is done. It’s now someone elses responsibility to market, sell, and support your product or service. Now give back, what did you learn? Improve the process with lessons learned. Shampoo, rinse, repeat.
Entrepreneurs with safety nets are sometimes called “Product Managers”.
Here’s a pretty good job description. Does it fit you?
If so, then maybe you can be an “entrepreneur with a safety net”
Job Title: Product Manager
Job Type: Full-time
Team: Product Management
You gotta be a lotta things in this role. Among the things you’ll do as our Product Manager
- Own it, Sparky. Be responsible for the entire Product Management cycle of one of our products. You’ve got to own it, no excuses.
- Know what’s going on from a new technology perspective and how it impacts your product. We’re looking for someone who likes to tinker with new technology and dream about how it can be used in our products. If you don’t like to tinker and try new things from a tech standpoint, this gig probably isn’t a fit for you.
- Be an expert in the industry your product serves. Granted, we haven’t told you which product it is yet, so you’ll probably need a history of becoming an expert in an industry through curiosity, drive and experimentation, right? Right.
- Serve as the voice of the customer in decisions made regarding future products – what do they want and need? You tell us.
- Control your product roadmap and scope based on a detailed understanding of needs, requirements and uh, yeah, resources. That’s the forced choice/technical project management part of the role. Sounds fun, right? Help us figure out which two of three things we want – good, fast or cheap (and we always want good). You’re welcome.
- You’ve got to be able to talk to the geeks. You’ll work with an engineering counterpart to define product release requirements, and work with marketing communications to define the go-to-market strategy, helping them understand the product positioning, key benefits, and target customer. That means you need to speak two languages in addition to your own.
- Preach it! We’d like you to be an evangelist for your product. Not like Jimmy Swaggert preaching, but more like Seth Godin preaching. Over time, we’d like people to think about you when they think about your product. That’s how visible and active we’d like you to be.
What You’ll Be Responsible For…
We just told you above… But if you’d like some more official sounding corporate speak, these bullets are for you:
- Communicate product strategy, plans and roadmaps.
- Specify market requirements for current and future products by conducting market research supported by on-going visits to customers and non-customers.
- Validate target markets through customer interviews and market research.
- Conduct competitive analysis to determine product features and pricing. Translate customer feedback and market trends into clearly defined phased releases.
- Develop and implement a company-wide go-to-market plan, working with all departments to execute.
- Perform ongoing analysis and propose necessary actions to ensure continued marketability of the product line.
- Work with product marketing to define initiatives to create demand within key market verticals and horizontal markets including print media, trade shows, direct marketing, web marketing, and product trainings.
- Provide input to marketing staff to ensure they are able to generate high quality sales aids such as product guides, press releases and web content.
It feels great to peel off a couple of “go-to-markets”, “key market verticals” and “clearly defined phased releases”, doesn’t it? Make that three languages you need to speak in addition to your own. First person to use “validate” and “marketability” in a meeting gets the last Diet Mountain Dew from our fridge.
IBM Three Horizons of Growth – Business Case from Harvard Business School
Read about a few things that went wrong
From Tuck School of Business at Dartmouth
Learning From Corporate Mistakes: The Rise and Fall of Iridium
A couple (among thousands) of articles recounting the story of Webvan and why it failed
Success and Failure of Pure-Play Organizations: Webvan versus Peapod, a Comparative Analysis
A Tangled Webvan
Some general literature on the subject of success/failure of entrpreneurs
Small Business Promoting Success Prventing Failure –
Key Reasons Why Small Businesses Fail by Titus – IIB Business Support Americas
Planning Against Business Failure – U of Tennessee
Small Business Success – A review of the Literature – Athens State College
Still think you have what it takes to go “stand-alone” ? Then read carefully this advice
Advice for Prospective Entrepreneurs
by Paul J. Magelli, Sr. For individuals who want to be entrepreneurs, the most important element to learn is “industry analysis and competitive intelligence.” The very term sometimes terrifies the prospective entrepreneur—particularly if s/he has not had post-secondary courses in new business development.
While reviewing business plans, visiting new enterprises, or in speaking to organizations on the subject of becoming a successful entrepreneur, I am repeatedly reminded that prospective entrepreneurs have never heard of these concepts. Sure, they talk about marketing and competition, but their comprehension of the concepts is limited.
However, with the advent of the Internet and the availability of electronic databases, the quality and the depth of information is nothing short of incredible. Therefore, with minimal effort or training, it is possible to access information critical to the development of a creditable business plan. In my experience, the weakest part of most business plans is the marketing plan.
Those who do not agree with this assertion are those who maintain, “The firm failed because it had weak financials.” Weak financials are typically derived from inadequate market data. Poor market data is a result of feeble competitive intelligence, failing to accurately determine the firm’s real market share, not establishing a clear market niche, and improper product pricing–given all of the companion elements. Entrepreneurs, who are able to calculate and calibrate market share and price, can accurately project revenue.
Students continually ask, “What is the Golden Rule of Entrepreneurship?” This, for me, is the toughest, if not impossible, of all questions. There are occasions when I would ignore the question. Predictably, there is a host of answers. My consistent response is that there must be a demonstrable need for the product and/or service in the marketplace. And Jack Stack would add (and insist), “Does it have sizzle?” From this follows: Is the product and/or service distinctive? Is it potentially an industry-wide solution? Can it be sustained over time? What is the half-life of the initial product and/or service? Persistence and success in the marketplace must meet these criteria. If the product and/or service are unable to do so, then, it is very unlikely that the new firm is going to be a long-term success—at least in the minds of potential investors.
The second most important criterion (although many argue that this is the most important) is whether or not the company has the kind of leadership that can attract the resources – intellectual, financial, physical – it needs to produce a product or service that fulfills real marketplace demand.
Of all the entrepreneurial characteristics I most frequently hear about is “passion,” but passion can be a two-edged sword. I believe that you can have too much passion and become blinded or disillusioned when problems emerge. I have observed entrepreneurs, who, come hell or high water, moved forward with an idea just because it was a lifelong dream.
While unbridled enthusiasm is essential, I prefer entrepreneurs who demonstrate integrity, resilience, a strong assessment of the market, and the ability to motivate and collaborate within and outside of the firm. An important prerequisite skill is that the entrepreneur has the ability to wisely and dispassionately analyze ideas or technology – the ability to be harsh if necessary. The entrepreneur must have strong communication skills given the range of individuals that s/he interacts with, including the ability to accept both positive commentary as well as criticism.
Another important leadership characteristic is the ability to be comfortable with risk. I do not mean foolish, uncalculated risk taking but rather the ability to deal with ambiguity and anxiety in an unflappable manner. It is also important to adapt quickly under the pressure of a fickle and rapidly changing marketplace, and in the midst of others imbued with a sense of urgency.
To be successful, the entrepreneur must be adaptable, flexible and resilient. Entrepreneurs have a tendency to fall in love with their idea and are unwilling to read signals from the marketplace that urge them to adjust and modify. Another tenet is whether or not the firm is willing to make mid-course corrections and modifications – whether in product, personnel, price or location, among others. I have observed that the firm becomes so entrenched or enamored with the launch team, of agreements that have been struck with customers or employees, of product line and the like, that it as a minimum becomes entrenched and, as an extreme, paralyzed. Once this has occurred, the firm is unable to effect essential changes in its modus operandi. The most sensitive area of these, in my experience, has been with personnel.
From my perspective, if there are personnel issues, then, a fair amount of dispassionate analysis and action is appropriate, particularly as it relates to the firm’s leadership team. Too frequently, the founder is over-managing and is unable to delegate responsibility and authority and unwilling to consider turning the reins to new leadership who is able to move the firm to its next level of growth.
Entrepreneurs, to use a term, are like gnats. They are relatively hard to keep track of – they consistently flit about. And when the flitting begins, their attention is diverted, their energy is diffused, and effectiveness is diminished. This, to me, accounts for an observation that they tire of the venture and want to move on to the next idea, the next venture. In my experience, one of two situations typically existed. The former – the entrepreneur is anxious to move on to the next venture but has not planned for management transition and the other – it is time for the founder to move on but no one in the firm or among the investors wants to deliver the message.
The latter is especially true in the case of technology start-ups. Good technologists do not necessarily make good CEOs. However, the intellectual property that underpins the new firm is the property of the technologist and s/he will not hand the IP over to someone else’s leadership. One of the golden rules, then, emerges – determine precisely when it is essential to sever the relationship and to move on, so that second stage leadership can be brought to the firm.
Another rule is for the entrepreneur not to fall in love with his/her own idea. I have never met a technologist or an entrepreneur who did not think that his/her technology or ideas was the end-all of end-alls. I believe the assessor must be harsh about it. It is almost a certainty that one will run the risk of offending someone because they are embryonically connected to the technology or to the idea. However, the wise adviser will be dispassionate and will advise them to fall out of love with whatever it is they are proposing or doing because the marketplace will not absorb it.
With all of these demands, the entrepreneur having opted for this lifestyle, nonetheless, must maintain a sense of balance and style – balance to provide time for private reflection and contemplation and time for personal needs like friends, family and fantasy. I disagree with those who insist it must be either/or. It is possible to partake, manage and experience all of life’s opportunities.
The entrepreneur who can contemplate, consider, embrace and adapt most assuredly will optimize the possibilities of success and achieve a soul-feeding life experience, especially, if s/he does so while ensuring the financial, moral and intellectual integrity of the firm.
Does this appear to be overwhelming, hardly achievable or realistic? I don’t think so. It’s the very least that we should expect of those who conduct America’s business.
Paul J. Magelli, Sr., is the director of the Office for Strategic Business Initiatives, MBA Program University of Illinois at Urbana-Champaign and has held the post since 1996. He has held several positions as a Dean, including, Assistant Dean of Students, University of Illinois at Urbana-Champaign, 1958-1965, Assistant Dean, College of Liberal Arts & Sciences, University of Illinois at Urbana-Champaign, 1966-1968, Associate Dean, College of Liberal Arts & Sciences, University of Illinois at Urbana-Champaign and Associate Director, Midwest Universities Consortium for International Activities (MUCIA), 1966-1969, and Fairmount College of Liberal Arts & Sciences, Wichita State University, Wichita, KS 1969-1983.