I had my first encounter with the studies of Peter F. Drucker similarly to how I imagine most do, during business school.
There, at least one of Drucker’s quotes must have made it into every class I took whether it was accounting, operations, or marketing. A couple of my favorite include:
“The most important thing in communication is hearing what ISN’T said”
“Management is doing things right; leadership is doing the right things”
One more for good measure, and this maybe the most relevant to this post:
“The best way to predict the future is to create it”
However since finishing school I have not had much direct contact with the Dali Lama of management. Which is odd, and in hindsight a complete mistake, given that I have been working in and with startups for the better part of the last 3 years – the last year and a half since graduating from B-school.
That all changed a couple weeks ago when I stumbled upon this blog post on how to find rockstar marketers. In it the author points out another quote from Drucker:
“Business has only two functions – marketing and innovation”
Digital marketing is how I keep the lights on at home, and when I’m not in the office crafting ad campaigns I’m hard at work sorting through orders, talking to customers, and analyzing web traffic to build and grow the market for SkimKing, our pool cleaning robot. Think Roomba for your pool.
So marketing and innovation are close to my heart and I hope to use skills from both domains to put together a list of my own successful ventures over my lifetime.
Queue up Drucker and his classic, “Innovation and Entrepreneurship”. This 1986 commentary on business and society draws from much of Drucker’s work consulting with organizations large and small, for and non-profit, public and private, and is still completely relevant in 2016.
All 288 pages (or 9 hours if you’re listening) of content are filled with business lessons any entrepreneur or manager would benefit from knowing. But here are my 3 big take aways from “Innovation and Entrepreneurship”.
- Entrepreneurship is behavior, not personality
- Entrepreneurs shift resources from areas of low productivity to areas of higher productivity
- Entrepreneurship is only risky because those who call themselves entrepreneurs don’t know what they are doing
Before diving into each of the above points, let’s define entrepreneurship so that we are all playing on the same field. The following definition is a mix of Drucker’s, with my own (mostly influenced by Drucker) so feel free to lend your thoughts in the comments below.
Entrepreneurship and entrepreneurs are all about CHANGE, and making things better (more on that in take away #2). Entrepreneurs are those who recognize and proselytize change, a vision of the future that differs from today’s reality. They use less valuable resources to make a resource that is of higher value and utility – satisfying the user or customer’s needs.
With that, let’s jump in.
Entrepreneurship is behavior, not personality
Leadership and entrepreneurship often get compared to athletics as a set of traits one is either born with or without. Popular culture deifies those with enormous wealth, athletic or musical ability, attributing their outlier success to natural charisma, body makeup, and good looks.
Gary Vanyerchuck said in a recent interview with Entrepreneur, that if you weren’t selling anything before you were 15, you’re not a salesman. Implying that he credits his own entrepreneurial success to genetic predisposition.
“The first time I saw a flower, I’m like, ‘I’m gonna sell that.’ I wasn’t like, ‘That’s pretty.’ You know– that’s DNA,” says Vanyerchuck.
But Drucker was the man when it came to saying leadership and entrepreneurship are skillsets that can be learned with time and effort.
When I was studying Psychology at Florida State I took a class with the man known as “The Expert on Experts”, Dr. K. Anders Ericsson. If you are a Gladwell fan or a general student to entrepreneurship and mastery you have heard about Ericsson. His work studying experts from various fields – e.g., chess, music, tennis, medicine. – is the basis for the 10,000 hour rule. The idea that talent is overrated and with “deliberate practice” over a long enough time period, anyone can master a given skill or field.
Personally, I think there is a lot of both at play.
A recent Entrepreneur article mentions having a sense of control, tenacity, and the luck factor as necessities to being a successful entrepreneur. I do think these traits are required however I believe they can be learned through experience.
Like being 7 foot in basketball, it doesn’t hurt to have some genetic predisposition for analytical skills when you start a new venture. But with enough stick-to-itiveness and practice (possibly going through failed after failed startup) anyone can figure it out.
As Drucker put it,
“Entrepreneurship, then, is behavior rather than personality trait. And its foundation lies in concept and theory rather than in intuition.”
Entrepreneurs shift resources from areas of low productivity to areas of higher productivity
In “Innovation and Entrepreneurship”, Drucker states:
“Entrepreneurs, by definition, shift resources from areas of low productivity and yield to areas of higher productivity and yield.”
This is the making things better part of the earlier definition we set out.
Entrepreneurs make it possible to take oil trapped from within the earth and turn it into electricity for homes. What was once a substance (oils) that was mostly useful for body paint now lights our homes and gets us from point A to B.
Recently at work our internet connection went out for a few hours. In this moment it occurred to me how absolutely useless an internet marketer such as myself becomes when you remove the internet.
I was then overcome by the sudden curiosity of wondering how the heck anything was ever done before the internet and computers.
I am old enough to have had to hand write school assignments throughout most of my primary and secondary education. And I don’t even know how I accomplished that back then.
With the help of the combination of electricity, silicon, and various metals – all of which have little value in their individual raw form – to create computers, humans (a resource) are vastly more productive than ever before.
The productivity leaps in content publishing alone have revolutionized how we find, consume, and create information.
A book or article that would have taken hundreds of hours to print the copies needed for circulation now can be saved on a single 20 kilobyte file and distributed all around the world in only a few seconds.
The crazy thing is we are more or less the same humans as before computers, as before cars, factories, or even the written word. While we certainly continue to evolve and will do so until we kill ourselves, most of the traits that make us human have been around for more than 2 million years.
That entire time entrepreneurs have been taking ideas (an actually rather low value resource) and turning them into realities (the highly valuable resource we all desire!).
Entrepreneurship is only risky because those who call themselves entrepreneurs don’t know what they are doing
While successful entrepreneurs are well celebrated in our society and culture, before they hit their first million in sales or buy some ad time during the Super Bowl, most are viewed as pretty crazy by the mainstream.
This comes from the idea that entrepreneurship is risky business. No guaranteed vacations, health benefits, or 401ks. You aren’t even promised a paycheck necessarily. That kind of stuff scares most people and for good reason. It seems quite irresponsible to quit your job and start a Beanie Baby store when you have 3 kids and no money in the bank.
But Drucker would point out:
“Entrepreneurship is “risky” mainly because so few of the so-called entrepreneurs know what they are doing.”
This ties into the first point of how people often attribute entrepreneurial success to the personality traits and genetic predisposition an individual possesses. We think successful entrepreneurs have some direct connection to God, some set of mystical, Jedi powers only the chosen few can be blessed to be born with.
But remember the 10,000 hour rule. Good entrepreneurs are like good athletes, good chess players, and good doctors. They spend a lot of time and effort practicing and refining their craft.
And the idea that anyone can learn how to be a successful entrepreneur is a good one because I don’t care how many kids or how little money you have, if you are an employee or owner of a record store you need to find the next gig. Insert Drucker quote:
“There is the risk you cannot afford to take and there is the risk you cannot afford not to take.”
We all take risks every day, whether crossing the street or buying a taco. And employees take risks just like entrepreneurs.
They take the risk that their industry may be obsolete soon, that management is lying about how much cash is on hand, or whether the strategy passed down by the c-suite really takes into account the ever-changing market.
The point is budding entrepreneurs get a lot of weird looks for all the “risks” they take, but we all take risks, and to tie things into take away #1, we can all learn how to be better entrepreneurs and mitigate risk to success.
I have no idea where Drucker got the stats for this one, but:
“People who don’t take risks generally make about two big mistakes a year. People who do take risks generally make about two big mistakes a year.”
If you’re into startups, new products, economics, marketing and entrepreneurship I highly recommend Drucker’s work, “Innovation and Entrepreneurship”.
Above were the main points and lessons I took away from the book. I would love to hear your thoughts on whether entrepreneurs and leaders are born or made, examples of useless materials being made indispensable, and how risky you think being an entrepreneur is. Let’s continue the discussion in the comments below.
Here’s a few links to check out: