Why be an Entrepreneur in the first place?

Are all entrepreneurs similar? Do all create value? Are all of them risk friendly? Is it correct to assume that all entrepreneurs are ambitious? Or innovative? Some of the answers may lie in understanding the starting context - why someone entered business.

Ravi Kiran
Updated: May 2, 2013 08:40:09 AM UTC

We live in times that celebrate entrepreneurship. Faced with a slowdown, underemployment and the need to create more jobs, entrepreneurship is seen as a saviour for our society and economy. We laud entrepreneurial communities and make heroes out of serial entrepreneurs. Even Governments try to get some glory by trying to be entrepreneur and small business friendly. Anyone who starts or runs a business is referred to as an entrepreneur and entrepreneurs are generally assumed to be risk friendly, ambitious, innovative and job creators. All good really. In general.

The ground reality is a bit different, though, at least in Middle India.

That reality hit us, when, about a year ago, during a visit we made to Guwahati in Assam, a local entrepreneur urged us to change the name of our company. The word ‘ambition’ in Friends of Ambition, he said, communicates ‘greed’, and greed is never a good thing, whether in life or in business. Less than logical or serious as this may sound to some of us, there was nothing frivolous or illogical in the voice of that entrepreneur, when he made that particular recommendation.  As we travelled, we would at times hear this argument as we as sometimes the opposite. Some entrepreneurs would talk of ambition as a social responsibility.

Are all entrepreneurs similar? Do all create value? Are all risk friendly? Do all entrepreneurs need to be supported with social and economic resources? Is it correct to assume that all entrepreneurs are ambitious? Or innovative?

We started looking for existing studies on the nature of entrepreneurship. Guess what we found? Nothing. Nothing deep anyway.

We found powerful reference books such as the Oxford History of Indian Business and many related books by Professor Dwijendra Tripathi, Dr Gita Piramal’s Business Maharajas and Business Legends, many on ‘how to turn entrepreneur’ or ‘what entrepreneurial mistakes to avoid’ and many anecdotal stories of famous entrepreneurial persons, but nothing that helped us understand different types of entrepreneurship and different entrepreneurial behaviours.

After dozens of trips to Middle India, hundreds of conversations with different types of entrepreneurs, I believe a few specific thinking frameworks are emerging to classify entrepreneurial behaviour. It’s a fascinating study and it’s still continuing.

So why does ambition in business vary from one entrepreneur to another? Why do some people want to change the world, while some are quite content to just fend for themselves? Why are some entrepreneurs in a hurry while others seem to have great patience? Why does the risk profile of entrepreneurs vary? Has it something to do with geography? Or ethnicity? Or education? Or is it, as some say, in the genes?

One framework, perhaps the simplest of the three, that seems to explain a good part [may not be all] of entrepreneurial behaviour is based on why people start their own enterprise. This starting context can often explain their risk friendliness, ambition levels, orientation, value system, people approach and many other traits. Naturally, since behaviour and approach of the entrepreneur defines the way a business would be built, the slope of the business’ growth curve, its people and social orientation, its focus on productivity and many other dimensions of the enterprise could perhaps be explained, if we understand entrepreneurial behaviour well.

Let’s call this framework the Compulsion-Volition-Presumption, or CVP framework.

Entrepreneurship by Compulsion: I meet many entrepreneurs who say, quite matter-of-factly, that they started a business, because they had no other choice.

This is quite interesting. It may mean someone finished formal education, got a degree, but could not find suitable employment, despite having the aptitude to learn and pick up skills. At other times, not very uncommon for some sections of our society, an individual was faced with so much adversity thrust on him at an early age, that he could not complete formal education and had to start something on his own to support his family.  Some other people, even after getting their formal degree, are just not employable. Even others start a business, often quite late in life, to supplement their family income.

You can see some dominant behavioural threads in people who are thus compelled to turn entrepreneur. They usually have a lot of patience, are hardworking, believe in Destiny, and have a well-developed value system. Depending on the intensity of the adversity they had to face before turning entrepreneur, compulsion becomes their adopted decision making style.

This encourages many of them to develop a low risk-friendliness, in the fear of ‘losing everything’. They often can talk of the need for taking ‘calculated risk’ and ‘considered decision’ in business. Many become dependent on others – family, friends, employees – in taking even simple decisions; it’s their way of mitigating the impact of the risk of taking any decision at all.

Many such entrepreneurs are against adopting unethical means to grow their business, it’s ‘against their principles’. Even those who have adjusted that principle slightly, claim ‘I had to pay someone for a favour as a last resort’ and often atone for their ‘sin’ by turning very religious, and doing ‘business related pujas and havan’s regularly.

To many of their peers, entrepreneurs by compulsion often appear ‘not pragmatic’. If they do not ‘feel’ successful by the time their children enter the teenage years, they would want their children to attempt something else, including taking up employment, joining the bureaucracy or even becoming a qualified professional such as physician or an architect. In essence, they do not want their children to be ‘compelled’ to do anything.

Entrepreneurship by Volition: Some people turn entrepreneur despite having all the right educational qualifications and employment prospects. Some even leave perfectly secure jobs to start something of their own. These are people who choose to become an entrepreneur. We read about such people all the time –someone returns from overseas, or from a big city to his home town in Middle India, some leave a corporate job with a big title to start afresh, someone quits school or college and gets parents to agree to her adventure, some others do it despite parental resistance... the list goes on.

Ironically, when you talk to these people, the real die hard amongst them think and talk differently and actually claim that they had no choice but to hit the road on their own. You hear things such as: “My idea was so good that I didn’t want to waste another moment in school” or “I felt if I were to go to my paid job for too much longer, I would go crazy and die with my idea still inside me” or even “I just wanted to be my own boss. There’s so much I can do without the corporate politics!’

These are the people who talk endlessly about how the world must be ‘different’ or how ‘there is so much to be done’. Many of them talk of the ‘the fire within’. To an observer, they may appear to have made a choice, but to themselves, they really didn’t have one. They were consumed by something- an idea, a possibility, an opportunity. Most heroic adventures of entrepreneurship are written about people like these.

So do all entrepreneurs by volition turn out to be ruthless, maverick, hard driving, task oriented maniacs? Not really. I am sure there are shades of personalities amongst these. But in general, they happen to be highly inspirational and hard working to the point of breaking down, have very little patience for such ‘fancy notions’ as work-life balance, particularly in the early stages of the business. They often believe in God, but thank Him rather than ask something from Him. They are suspicious of many and trusting of a few. Most thrive on risk and are often described by peers as ‘punters’. They are frequently looking for ‘short-cuts’ and favour people who are ‘chalaak’. ‘Jugaad’ is something they cherish and accept as ‘the way to do business’. Their approach to expedience is no different and they would not mind greasing palms to get things done, because ‘who has the patience to get things done the right way?’

Interestingly, many of this type of entrepreneurs are not very people oriented and often turn out to be poor business managers. Their children learn the ‘tips and tricks’ quite early and may end up accepting business as their natural profession, particularly if the parent feels successful.

Entrepreneurship by Presumption: The third type belongs to what many us refer as FOB – Family Owned Business or FMB - Family Managed Business.

The Entrepreneur by Presumption is all around us, and perhaps constitutes the single largest group of successful business people. Family Managed Businesses are often built as going concerns to be handed over to the children, who would then grow it to a higher level. The child is expected to enter the business someday, when he is ready. Often, the child is prepared for that ‘someday’ by being encouraged to attend work whenever he has time.

The risk friendliness of this kind of entrepreneur is more complex to understand, as is the value system. Some tow the family line and do what has always been assumed to be right. Some others establish their own views and approaches and create very different businesses. As can be expected, the family works as a strong support system and that allows the entrepreneur to take larger risks. But there are also cases, where the individual becomes a rather reluctant entrepreneur and can destroy the value of the family business rather than build it further. Often the Entrepreneur by Presumption faces a strong family prejudice against any new adventure, particularly if the family business is small in size.

Naturally, while these three groups appear quite distinct, they may not be black and white typification of entrepreneurs and how their ambition is shaped. I am sure there are many grey areas and also there may be many sub types within each entrepreneurial type. Any society needs all three types and one is perhaps not superior to any other. There may be breakout and atypical behaviours within each group.

I am still meeting people, digging into their psyche, and learning.

What is your experience? Tell me about it.

P.S. Apologies in advance for using the masculine gender in general to refer to the entrepreneur.

The thoughts and opinions shared here are of the author.

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