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Neal Thornberry, a professor of management at Babson College in Babson Park, Mass., has observed the impact that entrepreneurship has had on management for over 10 years. As the director of Babson's Entrepreneurial Strategies for Innovation and Growth program, he has worked with executives and businesspeople both in the U.S. and abroad. In his newest book Lead Like an Entrepreneur: Keeping the Entrepreneurial Spirit Alive within the Corporation, he demonstrates how it is possible to use the qualities of an entrepreneur—for instance, risk-taking and being innovative—inside large corporations.
Recently, Thornberry spoke with BusinessWeek.com staff writer Stacy Perman about defining the entrepreneurial spirit and maintaining it even as one's company grows. Edited excerpts of their conversation follow:
How would you describe or can you describe what the entrepreneurial spirit is? I think it's a certain mindset. Add to that an emotion that focuses on discovery to try and find something new, and if you see it, to build a business out of it. Most people I know desire to start something, but most of them…are not in it for money. They are in it to create a business and put their name on it and years later say, "I built that."
There are other elements, too…There is an issue of rebelliousness and a little bit of "I can show you." They like it when people say no. They want to prove they can do it anyway.
Many contend that you either are an entrepreneur or you are not, that you can't learn to be one. Do you agree with this assessment? I used to believe that, but I had an experience with a 56-year-old German engineer [that changed my mind]. I was teaching a course on entrepreneurship, trying to teach managers in big companies to be entrepreneurs. He worked for Siemens (SI). During eight months, we identified opportunities, developed them, and in the third phase, they were [supposed] to get senior management to offer resources to go after them. [In the beginning] he wasn't cooperative and we gave up on him. We never thought that he'd be an entrepreneur. But he was one of the few guys who ended up later creating a job. If I thought that entrepreneurs were born, he'd never [have] evidenced that behavior—and there were high potentials in the course that did nothing.
I don't agree with the pundits that say you are born or not born. Look at Ray Kroc, he founded McDonald's (MCD) at 50. He was a salesman—nobody would have ever thought of him as an entrepreneur.
The secret is to find something that you have a passion for.
In your book, you talk about how big companies can maintain the entrepreneurial spirit. But what happens when this gets lost in the process as a company grows? A couple of things happen. Oftentimes, the founding entrepreneur departs as the company grows, either by design or default. Professional managers are brought in and they bring in more organization and functional structure. Pretty soon as the company grows, those become impediments for opportunity to develop. You can almost guarantee [that] as they get bigger, they lose the entrepreneurial spirit. And then they bring in financial measures that stop people from being risk takers. They want a return on investment; these things interfere with entrepreneurship. As the company develops, you lose people and put processes in place that inhibit the entrepreneurial spirit and thinking. The big challenge is how to go back to the roots. You can't go back to being a startup, but you need to counterbalance bureaucracy with something different.
What would be an example of a company that has done so? Procter & Gamble (PG) is on the top of my list. IDEO has a corporate entrepreneur. He looks for outside innovation and inside capabilities and puts deals together to create new businesses. Intel (INTC) usually picks some bright young managers with an entrepreneurial tendency and puts them in charge of new businesses and sees if they can do it.
And I'd put IBM (IBM) in that category as well. They realized they couldn't run every business on the same horizon. A startup can't be measured the same way as a mature business. They knew also that they needed different types of people to run different businesses.
What lessons can be gleaned for small businesses that all begin in the entrepreneurial mold but also in time must grow and expand? A small business that has dealt with this well is IDG [International Data Group], the people who spawned all the Dummies books. What the founder did, because he knew a company was always in danger of losing its entrepreneurial spirit, was they only had 19 corporate staffers for 14,000 employees. The one thing that kills entrepreneurialism is so many checks and controls [because] it creates a ton of bureaucracy. He realized he had to keep the corporation small or it becomes a kingdom.
What can a business do to keep that spirit alive? Number one, as more professional people come in, big companies develop structure, [so] look for the occasional rebellious person who argues or is not afraid of the boss. It's important to have a few around, although those are the ones who are usually sacked. Look for the oddball person with a different point of view.
The second thing that I recommend is to be aware of kingdom-builders. They start out helping the organization to function, but in the end, they end up hurting it by creating too many rules and regulations.
Perman is a staff writer for BusinessWeek.com in New York
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