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Entrepreneurship unmasked Who is the real entrepreneur and what makes him tick? Dr Y. Y. Wong, founder of the WyWy Group of companies, talks about entrepreneurship in the old and new economies. Dr. Y.Y. Wong Founder and Chairman, Wywy Group Chairman, PBEC Singapore The Straits Times, Wednesday, August 9, 2000 WE DO NOT LEARN FROM HISTORY, we are compelled to relive it. The reputation of business has seriously eroded through the centuries. Even the Greeks viewed business disparagingly. Greek mythology has it that Hermes, the god of commerce, is also the god of thieves. Historically, the Chinese and Japanese ranked merchants very lowly. Till recently, even in America the word "entrepreneur" was a dirty word. Entrepreneurs were synonymous with entremanures. As late as 1981 Harvard Professor Rosabeth Kanter was advised not to use the word "entrepreneurial" at an IBM meeting. Entrepreneurship is an extremely complex and intricate subject to discuss as many people have an emotional opinion on the subject, especially those unable to define it. I will share my view culled from some 30 years of business practice. First, what is entrepreneurial thinking? Business, I am progressively convinced, is about "wholling" the parts and righting the wrongs. Thinking across boundaries is the ultimate entrepreneurial act. Blurring the boundaries and challenging the categories permit new possibilities to emerge. Just like turning a kaleidoscope to see the endless patterns that can be created from the same set of fragments. My own definition is that entrepreneurship is the enthusiastic thrust to constantly innovate and passionately implement purposeful ideas for extraordinary gains. There are a number of intelligence typical of an entrepreneurial leader. First, they are gifted to tell effective stories. Second, they have strong interpersonal skills. They are able to empathise and inspire others. Third, they have a good sense of themselves. They subject themselves to rigorous self-examination and improvements. Fourth, they have the ability to address existential questions that help others see their goals and garner a sense of purpose. Chicken rice versus Mcdonald's But who is the real entrepreneur? The confusion begins with the misconstrued notion that an economist is like an entrepreneur. In practice, economists are more like seismologists. They are able to tell with complete certainty that an earthquake is imminent but they cannot tell if it is 10 seconds or 10 years away. Whereas for entrepreneurs, timing is everything. Many great fortunes are created during economic earthquake conditions. Entrepreneurship is a deceptively simple subject to discuss. Even scholars are unable to agree on the origins of the term. Peter Drucker wrote that the term entrepreneurship was coined by a French economist J B Say in 1800. But it has also been credited to Richard Cantillion in the mid-eighteenth century. More recently, I found an even earlier reference to entrepreneurs made in 1297 by Sir William Wallace on Scottish entrepreneurs. But what is indisputable is that since its introduction, the definitions of entrepreneurship have progressively emerged in different and conflicting ways. An entrepreneur is often defined as anyone starting a new, small business. But not every small business is entrepreneurial. Starting a chicken rice stall does not make someone an entrepreneur. The person may wager on his customers' continued zest for the dish but the endeavour did not create a new enjoyment, a consumer trend, nor a revolution in management. However, if he is able to innovate radical management concepts by creating new markets and new customer satisfactions like Kentucky Fried Chicken, Starbucks, or McDonald's; that is entrepreneurship. Other examples of entrepreneurship are Swatch, Nike, CNN, Dell and Global Crossing. Nicholas Hayek, Phil Knight, Ted Turner, Michael Dell and Gary Winnick did not invent anything. Watches, shoes, news broadcast, PCs, telephone switches, have been around for a long time. But by applying new management ideas, these exceptional leaders revolutionised their businesses to achieve quantum gains. Common e-myths There are many common myths about entrepreneurs. First is that their biggest motivation is money. Entrepreneurs are not driven by greed, nor are they obsessed by money. The driving ambition of an entrepreneur is to realise his vision. The world's richest man Bill Gates ascribed his drive for overachieving not to money, but the fear of failure. In Virgin empire founder Richard Branson's autobiography, his old friend Hamish Dewer remarked: "Richard is a compulsive winner. Money is not his motivation. He could cope fine without it." If entrepreneurs did it for the money, it would be difficult to explain the repeated exploits of Gates, Turner, and Branson. As Body Shop founder Anita Roderick put it: "No entrepreneur I know is motivated by money. It's the idea. See how far it goes." The second misconception is that entrepreneurs are high risk-takers. Taking risks to achieve goals is fundamental to all endeavours. Unlike those who are convinced that the surest way to avoid mistakes is to do nothing, entrepreneurs believe that the greatest risk is in not doing. However it is fallacious to believe that all successful entrepreneurs operate with a "gamble the home" mentality. True, entrepreneurs are daring, courageous and adventurous and they set mind-stretching goals. But those attributes do not necessarily make them high-risk takers. What is overlooked is that entrepreneurs are not betting on the apparent. They have the capacity to know the unknowable that allow them to take unnoticed shortcuts. As Aristotle Onassi once said: "The secret of business is to know something that nobody else knows." In the new knowledge-based economy, it is not what one knows but when one knows. The truth is that even though entrepreneurs deal with risks regularly, they rarely take risks with their own money. Risks are for hedging, apportioning and distribution. If at all, entrepreneurs only take insurance company-type risks and are only willing to lose money that do not impact their reserves. Investment legend Warren Buffet, the world's greatest risk-taker, said: "You leave yourself an enormous margin of safety. You build a bridge that 30,000-pound trucks can go across and then you drive 10,000-pound trucks across it. That is the way I like to cross bridges." Myth three is that all entrepreneurs are wealthy and successful. There are many more failures than imagined. Even old economy entrepreneurs were working against unfavourable odds. In the United States, less than one out of 100 inventors makes money. In East Asia, four out of five new businesses fail within the first two years. The Japanese has a saying sen mittsu, which means three successes for every 1,000 attempts. Recent research by Silicon Valley veteran John Neshiem found that the odds for high-tech start-ups are even more daunting. Only one in six million ideas eventually sees IPO listing. Venture capitalists fund only six out of every 1,000 business plans they see and about 60 per cent of those funded end up in bankruptcy. Good and bad news The biggest difference between old and new economy entrepreneurship is that speed is now a strategy, which means limited latitude for mistakes and less time for analysis. New economy entrepreneurs need nimbleness to cast out obsolete practices and reinvent new ones for changing circumstances. The days of planning for the right decisions are over. New opportunities for entrepreneurship will be driven by bandwidth, and the Internet will be the enabler. Professor Dave Farber, the US chief technologist of the Federal Communications Commission, said that the technological revolution has just begun. He predicted that in the next five to 10 years, fibre optics would offer profound changes. A strand of fibre has 220 waves, 80 gigabytes per wave. One fibre is equal to the total US power backbone structure. When we consider that each bundle of fibre has thousands of strands, it is unimaginable what that will do to society. Like the revolutionary change brought by oil to the industrial age, an explosion in bandwidth will soon accelerate the shift of commerce onto the Internet, offering unprecedented opportunities for entrepreneurs. That is the good news. The bad news is that greed has moved in to obfuscate entrepreneurship. With easy access to capital and less rigorous demands from the venture capital community, there is huge potential for long-term damage to start-ups. Companies like Intel, Apple, Oracle and Sun were inspired not by money, but by vision, passion and a desire to create happy customers. Sadly, passion is increasingly substituted for greed as entrepreneurship is crammed out by hubris and avarice. In any start-up today, it is not the ability to do extraordinary things but doing ordinary things extraordinarily well that decides whether it fails or succeeds. The little ordinary things are the real killers that entrepreneurs have to be careful with. Not the big violations, but the little compromises that gradually hurl them over the cliff. Still fresh in my mind is the story of an eager fan rushing up to maestro Paderewski saying: "I would give my life to play like you." The maestro answered: "I did." However talented entrepreneurs are, there is no substitute for hard work, discipline and long hours. Dr Y.Y. Wong is founder of the WyWy Group of companies and chairman of the Pacific Basin Economic Council, Singapore. The original article can be found here.