The word “entrepreneur” stems from French, meaning “between-taker” or “go between.” But “entrepreneur” can often conjure up a heroic image – a lone-rider charging forth with world-changing ideas, risking it all and winning over the masses with rock star status. But, academic director and economic sociologist at Oxford University Marc Ventresca argues, our ideas of what entrepreneurs are and do are often misguided. Instead, he says, we should be referring to them as “system builders” (while he also admits the unsexiness of the term).
Here are Ventresca’s reasons for why we’re getting today’s ideas behind the word entrepreneur all wrong…
The System Builder – connecting problems that need solutions
“System builder” has a long lineage… I take it from the work of Thomas Hughes who wrote a book called “Networks of Power” about the late 19th century building of large-scale electricity grid systems… We went from gas light or no light to widespread production and access to electricity – first for part of the day, and then ultimately for the whole day…
The insight from his work about these people and what they did prompted him to coin the term “system builder” because they weren’t just being entrepreneurs, it involved re-architecting an entire sector… It involved creating new sources of capital, working with regulators, working with incumbent industries and solving problems you never imagined needed to be solved. It also involved persuading a lot of people to adopt electricity – first on large-scale public buildings and then for residential usage.
So system builders are these people who both have a vision but also implemented it in complex ways that involve pulling apart what exists, reusing that, re-purposing what is already in place.
Entrepreneurship isn’t always “high risk, high reward”
In finance, they’ve given us a language of risk and reward that is appealing, particularly for people in the Anglo-American tradition… That idea of “high risk, high reward” – where you’ve got to risk a lot to gain a lot – has become a very powerful framework linked to questions of risk management and questions of how we allocate capital.
There’s a very rich world, that the finance sector has built and evaluated, that closely ties the amount of risk involved with the cost of capital with interest rates and lots of different measures. So, that reality of risk and reward is important, but it’s been wrongly brought to the language of entrepreneurial activity.
Entrepreneurs are seen as these titans who run enormous risks, who fail, and when they succeed harbour remarkable opportunities… But when you study entrepreneurs, talk to entrepreneurs and look at what they do – they’re much more likely to be people who are solving problems and some very local, specific problems.
The entrepreneur has been hooked to the idea of high risk, high reward when in reality they actually do more mundane things and solve mundane problems in interesting, unique and thoughtful ways. I think that risk-reward story drives out recognition of how everyday the activities of entrepreneurs can be.
Ideally, entrepreneurs address a need, and are solving a problem in a value chain of a community or a country or an industry, and that’s a very different image than one of a heroic individual who is motivated by “high risk, high reward”. I think that there are certainly some people who fit that category but I think that they are an enormous minority within this scope of those who are actually entrepreneurs.
Entrepreneurs aren’t a simple solution to unemployment
The word entrepreneur has become generalised into policy as a solution whenever there are employment problems or governments unwilling to examine the kinds of macroeconomic forces driving labour markets.
It’s used whenever governments don’t know what to do with labour markets, for example – they tend to turn and say “we need more entrepreneurs”… You see this all over the world today.
We need to be skeptical of that usage of the word, because as we know – entrepreneurship involves individual activity and eventually coordinated and cooperative activity. There’s a whole elaborate vision of that which I think is at odds with the actual evidence of who entrepreneurs are and how entrepreneurial activities happen.
Stop being an entrepreneur when your company needs a manager
Managers in general look at the big picture, narrow it down and get more precise and specific, and follow through with a solution. But entrepreneurs start wide and stay wide and get wider, so they’re constantly scanning, seeing opportunities, they’re remaking plans because something comes along and there’s resources and they find a new partner.
So there are two really different types of imagery – one in the classical enlightenment sense where you start with a big problem and then carefully work away at that problem until you get to a single solution (traditional managerial thinking).
And then entrepreneurial characters, who start wide, explore, experiment, see other things, go back a step and re-think a few things. So with entrepreneurs – there’s a much more fluid, expanding mental model.
One of the biggest problems of entrepreneurs is that they don’t know how to manage the companies they found. They are pushed out by venture capitalists or they keep trying to be entrepreneurs in an organisation that needs them to be leaders and managers.
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