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Science of Entrepreneurialism

Posted: September 7th, 2011 | Author: | Filed under: Cankler Science News | Tags: , , , , , , , , , | Comments Off on Science of Entrepreneurialism

Outwardly it may seem that two vocations couldn’t be further apart. Throughout my life I’ve known a heap of really smart people, people with really high IQ’s that excelled in school, that went on to become intellectually impressive. I’ve also met and worked with a lot of extremely successful entrepreneurs. Entrepreneurs worth 7, 8 and even 9 figures. Intriguingly, the two groups are pretty much mutually exclusive. With one exception, SCIENTISTS. Why? ::::

The answer isn’t a huge stretch, ask yourself what it takes to be a successful entrepreneur, the answer is risk. Entrepreneurs have a lust for risk . We must draw a distinction here, your average businessman is not an entrepreneur! To become successful as an entrepreneur, you must take risks. You must get out of your comfort zone and try things that might not work. Being an entrepreneur has nothing to do with running a business that has a simply defined existence, it has everything to do with maximizing what is possible, then stretching that boundary. An entrepreneur is accustomed to rejection and failure, it’s an inherent part of success.

An entrepreneur is a business owner who makes money through risk and initiative, a person who is willing to help launch a new venture or enterprise and accept full responsibility for the outcome. The ethos was first defined by the 17th century Irish-French economist Richard Cantillon, author of Essai sur la Nature du Commerce en Général – Essay on the Nature of Trade in General.  Jean-Baptiste Say, a French economist, is believed to have coined the word “entrepreneur” in the 19th century – he defined an entrepreneur as “one who undertakes an enterprise, especially a contractor, acting as intermediatory between capital and labour”. A broader definition by Say: “The entrepreneur shifts economic resources out of lower and into higher productivity and greater yield.  He is well known for Say’s Law summarized as:

    • “Aggregate supply creates its own aggregate demand”
    • “Supply creates its own demand”
    • “Supply constitutes its own demand”
    • “If you build it, they will come”

So where do scientsist fit into this equation? Consider: Lab life and research has taught most scientists to disregard their natural fear of failure, scientists must by the nature of research be exceptional team leaders. Most importantly though is a scientists ability to find the unobvious, the ability to root out every possibility and dexterously find a path to success, as if that path was always an axiom. Sound familiar?

Steve Blank has a brilliant piece – and pitch – in Nature. Blank gives the elegant example of Fairchild Semiconductor, “the first silicon-chip company in what would become the entrepreneurial sprawl that is Silicon Valley, was founded in 1957 by researchers: three physicists, a metallurgist, a physical chemist and a trio of engineers — electrical, industrial and mechanical. Unnoticed by those in mainstream commerce, scientists turned out to be great capitalists. For scientists do not fear failure. Silicon Valley took the approach that failure is an inevitable consequence of experimentation. Fairchild’s founders built a company in which, when you hit a wall, you backed up and tried a different path.” Surely the essence of Entrepreneurialism has just been eloquently described by Blank.

Blank is part of a National Science Foundation – NSF – project that is hoping to shift science back into it’s righteously held seat at the helm of clever business. The NSF has announced a new initiative called the Innovation Corps, who’s aim it is to take the most promising research projects in US university laboratories and turn them into start-ups. The Innovation Corps project will train scientists for business by teaching them a process that gets them back to the roots of Silicon Valley, by embracing experimentation, learning and discovery. The NSF plans to give US$50,000 each in seed funds to up to 100 science and engineering research projects each year, which it will select on the basis of the best science with the best potential for commercial success.

This is a serious call for researchers to take the next step, your world needs you! I realise that sounds entirely tongue-in-cheek, it isn’t! This is exactly the innovation science requires to assist in resolving a backward slide that not only the U.S.A is facing, but indeed the entire world.  In a world hungry for innovation, who better than our most clever could we call upon – ok, that was tugging at the heart strings a little hard. Mr blank puts it a little more succinctly,”Common wisdom assumes that to become entrepreneurs, scientists and engineers must know about business. Instead, the Innovation Corps will teach them to approach business start-ups as research projects that they can solve through familiar scientific methods”

Check Mr Blank’s Stanford blog posts at http://stvp.stanford.edu/blog/?p=4055 and the blog in it’s entirety at http://stvp.stanford.edu/blog/

From Stanford Universitys Blog: “The combination of Venture Capital and technology entrepreneurship is one of the great business inventions of the last 50 years. It provides private funds for untested and unproven technology and entrepreneurs. While most of these investments fail, the returns for the ones that win are so great they make up for the failures. The cultural tolerance for failure and experimentation, and a financial structure which balanced risk, return and obscene returns, allowed this system flourish in technology clusters in United States, particularly in Silicon Valley.”

“Yet this system isn’t perfect. From the point of view of scientists and engineers in a university lab, too often entrepreneurship in all its VC-driven glory – income statements, balance sheets, business plans, revenue models, 5-year forecasts, etc. – seems like another planet. There didn’t seem to be much in common between the Scientific Method and starting a company. And this has been a barrier to commercializing the best of our science research.”

Posted by STEVE BLANK  JULY 28, 2011 at:  http://stvp.stanford.edu/blog/?p=4055

source: nature
source: stanford university
source: steve blank

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