WORTHLESS, IMPOSSIBLE AND STUPID

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ESSAY

WORTHLESS, IMPOSSIBLE AND STUPID

BY DANIEL ISENBERG

By Arjen Hemelaar           Page 1   04-08-13

FOR DISCUSSION PURPOSE: CALL TO TEAM COACHES

I propose to start working at team academy with the following definition on entrepreneurship: ENTREPRENEURS ARE CONTRARIAN VALUE CREATORS WHO PERCEIVE, CREATE AND CAPTURE EXTRAORDINARY VALUE (BY DANIEL ISENBERG).

Author.

Daniel Isenberg is a Professor of Management Practice at Babson Global where he established the Babson Entrepreneurship Ecosystem Project (BEEP). He has published several seminal articles in the Harvard Business Review, including the April 2011 “Entrepreneurs and the Cult of Failure”and the June 2010 “How to Start an Entrepreneurial Revolution,”that was published as the “Big Idea” feature article. Isenberg has taught at Harvard, Columbia, Insead, Reykjavik, Theseus, and the Technion, and has been an entrepreneur and venture capitalist. Isenberg speaks and consults frequently on global entrepreneurship and blogs regularly for Huffington Post, Forbes and The Economist.

Background

In March Berta Lazaro wrote a piece ‘What is an entrepreneur’. I like to quote it here:

“What is an Entrepreneur?” This has been the question raised by some us in the last module of TMIberia. Here I upload an aswer of some   reknown panelist & entrepreneurs in the “Entrepreneur Week” in New York City 2009. And drop some of the quotes in the video:

“They do what they want to do; All different types and personalities; Make something HAPPEN!; Make something out of nothing; Relentless; Making social change; See a vision; Don’t have the fear of failure; Tremendous Optimism & Energy; You have the sense of what you need to achieve and you go out and find the way to make it work and build it; NEVER GIVE UP, THEY DON´T STOP…. EVER!

These are certainly great qualifications, but can we come closer to a real and powerful definition? Daniel Isenberg gives an answer to those questions, which is worth considering.

For me the most important learnings are:

–        A powerful definition on entrepreneurship

–        Great examples

–        The issue of money, is it part or not

–        The issue of passion, what is the importance…?

Several definitions of entrepreneurship

Three definitions from the book:

  1. The spark of recognition that an asset can be deployed more profitably, and previously unrecognized value is revealed, Israel Kirzner, Austrian School;
  2. The pursuit of opportunity beyond the resources currently under control, Harvard Business School;
  3.  “Any attempt at new business or new venture creation, such as self-.‐employment, a new business organization, or the expansion of an existing business, by an individual, a team of individuals, or an established business” GEM project
  4. Entrepreneurship = adversity + human capital
  5. 5.     Entrepreneurs are contrarian value creators who perceive, create and capture extraordinary value, Daniel Isenberg.

For me the first 2 may right but rather abstract and, for me, therefor difficult to work with. The definition of mister Isenberg however I find it outstanding and very useful. However also in this definition there are some issues to contemplate.

They see economic value where others see heaps of nothing. And they see business opportunities where others see only dead ends.

There are plenty of striking examples of this: Mo Ibrahim, the founder of Celtel, saw the possibility of bringing mobile phones to sub-Saharan Africa when telecoms giants saw only penniless peasants and logistical nightmares. On a trip to Tobago Sean Dimin and his father Michael observed that fishermen were leaving tonnes of fish to rot, so they created a

company, Sea to Table, to get the surplus fish to New York restaurants. As a student at Harvard Business School, Will Dean noticed that social media were irrigating a fashion for extreme sports. So he established a company, Tough Mudder, that charges people to subject themselves to pain and humiliation.

Mr Isenberg emphasizes that successful contrarians also need the self-confidence to defy conventional wisdom (Mr Dean’s professors told him that he was crazy) and the determination to overcome obstacles (it took the Dimins two years to get the fishermen to change their habits). Indeed, some of the best entrepreneurs are distinguished more by their ability to achieve the impossible than by the originality of their thinking. TCS is

essentially a Pakistani version of FedEx. But to get it going, Khalid Awan had to overcome “insuperable” problems such as striking deals with the gangs that control the haulage industry and sweet-talking the politicians who can shut a new company at the drop of a hat.

Contrarian

Contrarian is an interesting notion. It fits very well with the view of Team Academy. At the same time as the entrepreneur sees something nobody yet sees, we as team coaches, should be very careful in sharing our opinion on the business plan of the entrepreneur.

Isenberg calls this ‘the opportunity illusion’; there is no low hanging fruit. It is the entrepreneur who perceives an opportunity where nobody else does.

Isenberg on adversity

Isenberg writes a great deal on adversity. His main point is that as other people see the idea of the entrepreneur as worthless, impossible and stupid, nobody wants to cooperate. Than as the first success shows other parties in the market try to stop the entrepreneur, etc. etc. , basically Isenberg sais there is no such thing as a free ride. Every and each entrepreneur will have to fight and to endure hardship before he can reap his rewards.

Isenberg on money

Isenberg claims: ‘we can only to be entrepreneurship by its results. …… one reason is that the catch is one way of distinguishing between the exercise of folly and the creation of value.’

He beliefs results can only be expressed in money where entrepreneurship is concerned. Take Ghandi at the opposite extreme. You would not call him an entrepreneur would you? Although he was a contrarian value creator who perceived, created and captured extraordinary value. Not money though, but maybe happiness or equality or piece was what he brought.

At Team Academy we find the money issue a tough nut to crack. We set a target of €1500, for the first year, which our students at TAN mostly did not achieve. That may be for good reason, because value does not show immediately. However I do not address it clearly as part of the equation.

Isenberg on passion

Isenberg rather sees entrepreneurs with no passion than with passion. He says: an entrepreneur needs a clear eye. Passion blinds and leads us to take bad decisions. Instead, he argues, entrepreneurs have ‘special information, skills or assets that can address uniquely, a current or anticipated gap in the market.’ Therefor to Isenberg entrepreneurs are  ‘objective extraordinary value creators’.

For me, I only partly agree. I do not belief in the rational mind, which early economists work with. I live by the quote of Nietzsche ‘he who has a why to live for can bear almost any how’. If you call that passion I do not know, however there obviously is more to it than money. And yes I fully agree that an entrepreneur should not only have a dream but also an objective and razor sharp eye.

What entrepreneurs need not be

Entrepreneurs, mister Isenberg claims, do not need to be:

–        young (less than half is under 35)

–        innovative, take the TCS or Mexican Cinemax example,

–        Experts.

As log as the entrepreneur is able to perceive, create and capture value, there is no need to be an expert, innovative or young.

Conclusion

This book gives great examples on entrepreneurship. The definition mister Isenberg proposes is radical and in some points may be too extreme. For example in the definition of Isenberg, opening a flower shop is not entrepreneurship. Changing the market for flowers that is what he calls entrepreneurship.  (by the way Utrecht Center of Entrepreneurship supports this view)

That means much of what our students do is not entrepreneurial. It is doing business. There is nothing wrong with that. Still what is so powerful of the definition of mister Isenberg is that it will challenge our students to raise the bar and start thinking big.

Exactly because his definition is so aspirational I propose we should use it at Team Academy.

Not covered in this essay:

–        Attitudes of entrepreneurs,

–        Where next generation entrepreneurs differ from current entrepreneurs

–        The entrepreneurship ecosystem (chapter 7, page 125)

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