The 11 words that changed everything

“Entrepreneurship is the pursuit of opportunity beyond the resources currently controlled.”

— Howard H. Stevenson, Harvard Business School

Over 30 years ago, with just 11 words, Harvard University professor Howard Stevenson fundamentally transformed the concept of entrepreneurship.

At one time considered solely the domain of individuals who began businesses to maximize self-interest and thrived on risk, Stevenson changed the entire concept of entrepreneurship into a way of thinking by defining it as a mindset, set of behaviors, and belief system — one anchored in the pursuit of opportunity rather than constrained by readily available resources.

Described as the “Lion of Entrepreneurship” by Forbes and “the entrepreneur of the entrepreneurs” by Steve Jobs’ mentor, Arthur Rock, Stevenson, perhaps more than any other single person, led the creation of the discipline of Entrepreneurial Thinking.

What is Entrepreneurial Thinking ?

Entrepreneurial Thinking is a concept to change the behavior of individuals and organizations.

It is a mindset, outlook, and specific set of behaviors that can be applied to established organizations, adopted by leaders, and embraced by individuals at all stages of their careers. Entrepreneurial Thinking is as relevant—in many ways, more relevant—for ensconced organizations as it is for early-stage ones.

Its premise draws upon the behavior that was at one time thought to be demonstrated exclusively by those starting a business and stipulates that this behavior in fact represents a way of approaching the world, a problem, an organization, or one’s own life that comprises Entrepreneurial Thinking.

Whereas one or more element below is commonly adopted and often heralded as the key to innovation or change, the totality of the below 9 tenants—together—represent the concept of Entrepreneurial Thinking.

The Entrepreneurial Thinking challenge for leaders?
How to proactively disrupt things proactively rather than reacting to circumstances that force you to.

The 9 Tenets

The 9 tenets that define Entrepreneurial Thinking have been defined and developed by 40 years of research by Stevenson, the collaboration between Stevenson and Sinoway over more than a decade, and consultations with extraordinary entrepreneurial thinkers. They—together—represent an actionable playbook by which Entrepreneurial Thinking can be put into action to achieve meaningful outcomes.

Start with Opportunity, Not Available Resources

The foundation of Entrepreneurial Thinking is the pursuit of opportunities as they are identified and considered achievable regardless of resource constraints.

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Entrepreneurial Thinking is a prescriptive approach for individuals and organizations to proactively transform their behavior. It is “opportunity-centric,” which means that behavior is driven by a constant examination of “what might be” without the constraints of considering the resources controlled.

Whereas traditional management practice begins with trying to maximize the performance of the resources controlled—”how do we best perform within our human, capital, and structural constraints?”—the Entrepreneurial Thinking approach emphasizes “what could be possible” in any function or by any individual—the creation of new products, ideas, collaborations, markets– and then strives to secure the resources to enable compelling opportunities to be pursued.

Traditional thinking:
What can I do to maximize performance with what exists?
Entrepreneurial Thinking:
What are new opportunities I should pursue? — and I’ll find the resources to do so.

Rethink How Leaders Lead

Entrepreneurial Thinking entails a fundamental shift in the role of the leader, which is to build and manage a network of contributors from which he or she derives knowledge and support.

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The Entrepreneurial Leader manages not a hierarchy with power concentrated at the top following his or her direction to achieve a specific plan but a web of resources that, together, provide the skills to succeed as a group.

This leader’s role is to help the organization juggle multiple priorities simultaneously—maximize current performance, drive transformation, innovate—as opposed to trying to balance them with equal attention, which is an impossible exercise. The word balance connotates a stable state, with careful attention to staying on a plateau. The Entrepreneurial Thinking leader recognizes the ball being juggled that is the most important priority is the one that is falling. The question is whether the falling ball is made of rubber and will bounce—or made of crystal and could shatter.

Traditional thinking:
Those in positions of authority set the plan and manage others to hit it.

Entrepreneurial Thinking:
The Leader’s role is to lean in to priorities being juggled opportunities or risks exist most.

Begin with The Budget

Entrepreneurial Thinking entails completely rethinking the way organizations create and manage budgets to reflect today’s pace of change and the fluidity of opportunity and risk.

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Entrepreneurial Thinking entails the belief that we can’t predict the future–and that leaders and organizations need to remain agile to respond to opportunities as they are identified and challenges as they arise. The budgeting process for many well-established organizations doesn’t reflect the reality of today’s environment and limits flexibility, creativity, and performance.

A budget-cycle of 12 – 16 months is typical for many organizations, a fact that impacts opportunistic hiring “because it wasn’t budgeted” or the ability to easily shift resources to capitalize on opportunities. How many good ideas are turned down because the resources were not in the budget that was submitted and approved so long ago that it was in a totally different environment?

Traditional thinking:
Budgeting occurs in long cycles by committees and expenditures are dictated by “what was in the budget” from a time period so long ago that it’s irrelevant.

Entrepreneurial Thinking:
Shorter, more flexible budgeting takes into account opportunistic hiring, investment, and strategic opportunities unforeseen when the budget was created.

Initiate Change

Entrepreneurial Thinking entails a commitment to continuous improvement and proactive change so imbedded in the culture that it is constant.

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Entrepreneurial Thinking entails proactively facilitating continuous and organization-wide change. It advocates, among other things, moving high-performing individuals in well-established organizational units out of them to other areas of the company at what many would consider the peak of their effectiveness.

Why cause such a disruption?

Entrepreneurial Thinking entails a constant reassessment of a situation, including those that appear to be stable, in order to consistently bring new perspectives to them. The Entrepreneurial Thinker embraces the philosophy that “if you don’t disrupt it, it will soon break” – as opposed to the historical approach that if something is functioning well, let it continue to do so.

Traditional Thinking:
Innovation and transformation are initiated in response to a threat or change in the environment.

Entrepreneurial Thinking:
The act of change is virtuous on its own merits and the organizational culture is steeped in consistent change, always proactively disrupting itself regardless of a perceived threat or not.

Raise the Average Grade

Entrepreneurial Thinking emphasizes the importance of the human element of success in organizational transformation, innovation, and sustainability.

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Entrepreneurial Thinking advocates hiring for talent over almost any other factor in a manner articulated by Korn Ferry’s ACI Model, which states how some progressive organizations “hire capable people even if they don’t have a specific job for them—because the person is the work. And increasingly, there’s recognition that it’s the quality of the people in the organization that lead to success. Jobs are now not only being defined in terms of tasks and deliverables, but also competencies, expected attitudes, and potential.”

Entrepreneurial Thinkers are either improving or lowering the average quality of the people in an organization with each single addition, whether it be a C-suite executive or frontline worker. A+ players will not be threatened by the hiring of talent.

Traditional thinking:
Organizations must have “openings” to fill and the budgets to fill them – typically for specific tasks – before making a hire.

Entrepreneurial Thinking:
Identifying and securing extraordinary talent is more important for an organization than having a specific role for it.

Hire for Skills

Entrepreneurial Thinking entails hiring for skills over experience, talent over title, and potential over security.

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Entrepreneurial Thinking entails looking in the right place for the right person to fill human talent needs. Rather than explore a resume, meet the person. More important is the “exact experience” in the role available, pursue someone with extraordinary skill—whether he or she has “experience” in the precise position at a previous employer.

Whereas skills and opportunistic hiring is common in startups, it’s rarer in well-established organizations that often espouse a desire to attract top talent, a desire for change, and a commitment to entrepreneurial behavior without implementing hiring practices that support this behavior.

Someone with what appears to be completely unrelated experience – success in another industry for example—may have the precise skills needed to excel in the position being filled.

Traditional thinking:
It’s the perceived relevant experience and the resume that drive hiring decisions.

Entrepreneurial Thinking:
New thinking requires different types of experience and understanding. Pieces of paper and previous titles rarely tell accurate stories of future success potential.

Manage a Network

Entrepreneurial Thinking entails extracting the best answers from a network vs. a hierarchical model where answers are presumed to exist at the top.

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Entrepreneurial Thinking embraces the philosophy articulated by Steve Jobs who famously said, “I don’t hire great people to tell them what to do. I hire great people so they can tell me what to do.”

A network of the best talent in different functions will always provide better answers than a single individual who believes he or she can dictate “the right answer” in all areas.

The Entrepreneurial Leader has expertise in asking the right questions to the right parts of the organization to determine how, together, it can excel. Contrast this approach to the historic scenario, where the leader directs resources and the behavior of those that work for him or her.

Traditional thinking:
It’s top-down management, where management provides directives.

Entrepreneurial Thinking:
A network—employees, suppliers, partners, investors—provides input into direction and pursue it collaboratively. Effectively extracting the best answers from this network is most effective.

Pay for What’s Hard, Not What’s Large

Entrepreneurial Thinking inverts incentives to “pay for what’s hard over what happens to be large.”

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Entrepreneurial Thinking provides rewards—particularly in large, well-established organizations—to those who undertake “hard” responsibility as opposed to those who hold “large” pieces of responsibility.

Traditional management incentivizes individuals to control as much of the hierarch as they can. The control of people and resources typical equates to the accrual of power.

The accrual of power is perceived as proof of competence, which is what is rewarded in greater responsibility and compensation. The leader in the “bigger job with greater infrastructure, a larger team, and a more established track record” often has less direct influence on performance than the leader in a newer, smaller initiative with fewer resources but receives much greater compensation.

Traditional thinking:
The best talent strives for the “biggest jobs” with the greatest personal upside, but the smallest direct impact on performance.

Entrepreneurial Thinking:
Invert incentives so that those working on the hardest problems are compensated most appropriately, regardless of the “size” of the hierarch they manage, because their individual behavior has the largest impact.

Reward Performance, Not Results

Entrepreneurial Thinking Rewards Performance and Not Results.

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Entrepreneurial Thinkers recognize the role of luck in performance and strive to remove it when evaluating performance.

The Entrepreneurial Thinking approach:
Don’t reward results:
Results = Performance + Luck

Reward Performance:
Performance = Skill + Effort
Skill and effort are things everyone can control.

Luck plays a disproportionate role in performance and yet is a significant factor in what is rewarded.

Macro-economic issues? The state of a business inherited by a predecessor? Unforeseen issues that couldn’t have been controlled?

These are all issues that entail luck, which can’t be controlled by managers but directly impact performance – and, thus, are not an accurate measure of performance.

Traditional thinking:
Provide incentives that reward results, which is what is most highly valued.

Entrepreneurial Thinking:
Acknowledge the role of luck in life and discount for it; reward controllable factors like skill and effort and discount the uncontrollable factor of good or bad luck.

Entrepreneurial Thinking entails learning that there’s no expert ‘right’ answer; that you must do something about problems even if you lack information, resources, or power; and that in every situation lies opportunity. The Center for Entrepreneurial Thinking strives to promote its importance as essential to economic growth, an inspiration for managers in large corporations, and a breeding ground for new jobs.