In my new book, Worthless, Impossible, and Stupid: How Contrarian Entrepreneurs Create and Capture Extraordinary Value, I argue that entrepreneurship is the contrarian creation and capture of extraordinary value. This thesis is, I admit, a bold one that is intended to provoke new thinking about entrepreneurship, a phenomenon that, for better or worse, has become a buzzword.
Entrepreneurship is not just anything, and I have concluded that there are very few kinds, perhaps only one. And, there is significant practical value in terms of education, policy, and practice to be gained from defining entrepreneurship in specific, even narrow terms. Making entrepreneurship overly broad weakens its power as a construct, and thus its social and economic impacts are lessened.
In Worthless, Impossible, and Stupid, I argue as systematically as I can that this extraordinary (more than the market would expect) value creation and capture are necessary and sufficient characteristics for something to be considered entrepreneurship. This definition also implies that entrepreneurship:
- Is not the sole province of startups, many experts’ declarations notwithstanding. Entrepreneurship can be manifested in acquisitions, family business takeoffs, corporate spinouts, recapitalizations. As well as some startups.
- Is not necessarily innovative, and can be manifested in real estate development, trade, commodities, generic pharmaceuticals, and copycat businesses. Frequently, it is implied that the “best” entrepreneurship is innovative and even technology-driven. Not necessarily.
- Is not manifested in the large majority of owner-employed ventures, who more often than not disparage risk taking and the concomitant potential for extraordinary gains.
- Is mostly about economic value creation. Not always, but the inclusion of “corporate” and “social” as types of entrepreneurship is problematic and there is pragmatic value in keeping economically driven entrepreneurship distinct. I think that “social innovation” and corporate innovation” are more appropriate terms. I realize that this suggestion might be particularly controversial given the popularity of courses in entrepreneurship derivatives.
Moreover, given this definition, it is IMPOSSIBLE to know a priori if an act will create extraordinary economic value or not. At the heart of extraordinary value creation is betting against the market, bucking the trends, and developing businesses in areas that everyone else ignores or, frequently, devalues. In short, entrepreneurship is characterized by growing ventures that everyone else thinks—even the smartest among us—are worthless, impossible, or stupid.
We can and should have evidence-driven discussions and debates about this definition and its implications. But, suspend judgment for now, if you will, and imagine some of the implications for entrepreneurship educators and how entrepreneurship should be taught.
- Blanket prescriptions or teaching of methods of entrepreneurship are of very limited usefulness, and should be eschewed, specifically because it is the “role” of the entrepreneur to show that conventional “wisdom” is not wise. This is just one of the problems of the “discovery” of lean startup, for example—once it becomes accepted and the crowd of aspirants is dieting, it is the real entrepreneur who will show that a “fat startup”—can be just as, or even more value creating. Entrepreneurs see and actualize opportunity where others see scrap. Discarding “fat startups” might just be creating valuable “scrap” for the true entrepreneur.
- Much more useful are examples which push students’ conceptual boundaries to show, not what is likely, but what is possible. Such examples are essential in helping students break the molds that keep them from “extraordinary.” I was astounded when students in my HBS class, International Entrepreneurship, started queuing up from about midsemester to tell me how inspiring, and surprising, these cases were (many of them are in Worthless, Impossible and Stupid). So use a broad range of rich examples.
- Nevertheless, always qualify students’ takeaways from these case discussions with the caveat: Even though this seems to have worked for this entrepreneur, don’t conclude that if you do the same thing you will have the same outcome, or that if you go about growing your venture differently, that it won’t be even more successful.
- There is no substitute for practice in a relatively safe environment (school!) to accelerate, at least to some extent, development of the entrepreneurs’ sixth sense. I am pleased to see that numerous business schools are adopting (sometimes unknowingly) Babson’s pioneering pedagogy of first year students being required to set up their own ventures.
- But, most importantly perhaps is to teach students that entrepreneurship requires kind of a brash humility. Brash in the sense that without exaggerated self-confidence, it is impossible to imagine that betting “against the market” is the only way to create extraordinary value. And, humble in the sense that there are always new ways to do that.
The famous economist Schumpeter is known for his term, “creative destruction,” but I think his conceptualizing reached a pinnacle in a little known article discovered in 1993, 60 years after he wrote it, simply titled, “Development.” In it, Schumpeter equates economic development, of which he sees entrepreneurship as the driver, with a process that he claims is fundamentally unpredictable, occurring in a “… crack, jerk, or a leap … not … reachable by adaptation in small steps.” Entrepreneurship is unpredictable and is driven by the “… fundamental impossibility of extrapolating trends … The triad, ‘indeterminacy, novelty, leap’ remains unconquerable.”
Two decades later, Schumpeter addressed the annual gathering of the world’s leading contemporary economists: “Without committing ourselves either to hero worship or to its hardly less absurd opposite, we have got to realize that, since the emergence of exceptional individuals does not lend itself to scientific generalization, that there is an element that … seriously limits our ability to forecast the future.”