Born or Made?

entrepreneurruns Are leaders born or made? Are disciples born or made? Are entrepreneurs born or made? Regardless of your industry, you’ve probably wondered about this question.

My thoughts below were inspired by  the article,  Are Entrepreneurs Born or Made?

Part of the difficulty we have answering this question is the mystique that surrounds the word “entrepreneur”.

“An entrepreneur is an individual who organizes and operates a business or businesses, taking on financial risk to do so. It’s first known usage, by economist Richard Cantillon, was in 1723. Today, an entrepreneur is defined as someone having the qualities of leadership and, additionally, is an innovator of ideas regarding manufacturing, delivery, or service needs (or any combination of these).”  Wikipedia

In other words, an entrepreneur is a business person. So, let’s ask this question, “Are business people born or made?”

Somehow this seems less controversial.  Sure, some people may naturally prefer  the structure of working for someone else while others may prefer the freedom of working for themselves. But, when we substitute “entrepreneur” with “business person” the mystique diminishes.

I began to wonder how many small businesses there are in the United States and visited the Small Business Administration site and discovered that …

  • The 23 million small businesses in America account for 54% of all U.S. sales.
  • Small businesses provide 55% of all jobs and 66% of all net new jobs since the 1970s.
  • The 600,000 plus franchised small businesses in the U.S. account for 40% of all retail sales and provide jobs for some 8 million people.
  • The small business sector in America occupies 30-50% of all commercial space, an estimated 20-34 billion square feet.

“Furthermore,” the SBA website added, “the small business sector is growing rapidly. While corporate America has been “downsizing”, the rate of small business “start-ups” has grown, and the rate for small business failures has declined.”

  • The number of small businesses in the United States has increased 49% since 1982.
  • Since 1990, as big business eliminated 4 million jobs, small businesses added 8 million new jobs.

Whether entrepreneurs are born or made,  their importance in economic development seems pretty clear.  To those of us who work with leadership development and entrepreneurship,  the question,  “are business people (aka entrepreneurs) born or made?”,  is similar to the question,  “Are leaders born or made?”  My own take is that “history” (i.e. the social conditions that exist) gives rise to leaders.  So an important part of our task  is to develop people of character because we never know who “history” will tap on the shoulder.  And, as the SBA website suggests, when it comes to starting or running a small business, many people will get “tapped”.

poorentrepreneur2

Recent research seems to indicate that there are genetic traits that may give some an advantage in leadership and entrepreneurship.  That’s not really news.  We all know “the type” that sells, gets things done, perseveres, and takes risk.  But we also know that environment and opportunity and human choice are also important elements in who can start or run a business.

Next time you drive down the road count the number of small local businesses you see.  You’ll count hundreds,  if not thousands,  of stores and shops of all kinds.  If you’re in a city you may even see street vendors — signs of the informal market economy–  around you.  Ask yourself,  were the people who started these business born or made to start them?

There is a spectrum between pure nature,  nurture,  and pure human choice.  Not every businessperson is an extreme risk taker – a genetic freak of nature. They are usually your ordinary human who finds a need and fills it in such a way that makes them and their customers happier than the alternatives.

What do you think?

 

What is the relationship of Social Enterprise to Poverty and Charity?

What is the relationship of social enterprise and poverty? Or charity?

Within the IMN we have been chatting about business models.   Rightly so,  business concerns itself with the “bottom line”.   If there is no profit,  there is no business.  Profit is good and so are the businesses that make a profit with offerings that maintain or enhance human life.  Without profit-making business, goods, services,  jobs all go away.

In recent years there has been a lot of attention given to “social” enterprise and social entrepreneurship.  The result has been the creation of a “double bottom line” consciousness.  A decade or so ago when I first heard about this concept,  it was referred to as a “triple bottom line” referring to revenues (gross profit),  net profit,  and social benefit.

The emerging “double bottom line” consciousness concerns itself with both profit and social benefit.   Research suggests that, all things being equal,  consumers would prefer to do business with a company that contributes to the social good.

Of course, there’s a huge difference between what people say they would do and what they actually do. The greed of the average consumer would drive a socially conscious business bankrupt. Times of change are always tempestuous times. The goal is for all business to be conscious of the social impact of their business and for consumers to stop passing the blame for the world’s ills to the corporations.

Tom’s shoes,  which employs a one-for-one business model,  is a popular example of a social enterprise.  For every shoe they sell,  they give a pair away to a poor person somewhere in the developing world.  They make a profit and help better the world.  That’s the theory and intention.

Our hesitation about this model is that,  while it is good-hearted,  it may actually hurt the poor.  For one,  giving shoes to the poor may undercut local shoe makers.  What indigenous shoemaker could compete in a marketplace flooded with free shoes imported from the United States?

poor shoemaker

Another hesitation is that,  while this model “gives a man a fish to eat”,  it doesn’t teach him “how to fish for himself”.   Charity of this sort can create a dependency which hinders the potential economic and entrepreneurial development of nations and families. To it’s credit, TOMS Shoes is also rethinking it’s own strategy.  Give TOMS Shoes credit — and continue to buy their shoes– because credit is due.

At present we’re tweaking TOMS one-for-one business model.  What if,  rather than giving product away for every product sold, we were to give a grant or a “micro-loan” to an entrepreneur in the developing world?   Soon,  through the creativity network called VOXTROPOLIS,  we’re going to release what we call the “MissionT” or the “EnterpriseT”.   For every “EnterpriseT” we sell, buyers will be investing in an indigenous entrepreneur and a locally run business that benefits that local economy.

In time we’ll add more products and we’ll tweak the business model when it doesn’t produce both bottom lines — profit and real social benefit.

Coming soon: Social Enterprise and Sustainability

What do you think?