What Entrepreneurs Need to Survive

Workers need several factors to come together when they launch businesses in order to pay the bills.

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Spend a considerable amount of time brainstorming and outlining your ideas before you write your law school personal statement.
Spend a considerable amount of time brainstorming and outlining your ideas before you write your law school personal statement.

More and more people are being forced to think like certain immigrant small business owners, who start their own businesses to survive when traditional jobs are inaccessible to them.

Existing organizations often become moribund as they struggle to keep up with the rapid pace of change in our economies, technologies and societies. Established companies reduce headcount and struggle along on life support; others carry the seeds of their own destruction within them, having failed to renew the sources of their success.

In a previous post, "How to Get a Job in a Changing Global Economy,"  I commented on the implications this has for today's job seekers, who must now take a page from the book of the entrepreneur. As valuable as doing so can be, however, an increasing proportion of us will effectively need to become entrepreneurs, whether within existing companies or outside of them.

When you're an employee, you just need to do your job. The established company already does something people are willing to pay it to do. It has a business model, customers, a reputation, organizational structure, access to capital and a host of required components the average employee never needs to think about. When you get a job, you typically plug into a solution someone else has devised, tested and made commercially viable.

[See a collection of political cartoons on the economy.]

When you are an entrepreneur, by contrast, you must build a solution of your own, under all the pressures of the competitive marketplace. This requires a distinctive set of skills – skills that can be hard to come by in an education system designed to reward doing what you've been assigned to do. To have a reasonable chance of succeeding at starting your own business depends not only on learning these distinctive skills, but also on engaging with and understanding the surrounding ecosystem.

My partners and I work with product and software designers, programmers and chemical engineers, clean tech visionaries and media junkies – those who dream of changing industries and those who wish something in their world just worked differently. We work with them to refine solutions of their own, test the realities of the marketplace, and get the buy-in of others. When they first begin to master the nuts and bolts of what it means to start and grow a venture, these individuals change radically. They transform themselves from people equipped to plug into something someone else has made to people prepared to build the vehicle and set the course.

This feels exciting at first, but even if you get the nuts and bolts right, the fact is that in the majority of cases, creating your own solution is incredibly hard. That's why many of the most resourceful entrepreneurs rely on operating in a fertile environment. 

Extraordinary resourcefulness and tenacity on the part of the entrepreneur are requisite, to be sure. But to increase their chances of success from wild to reasonable, the founders and owners of viable organizations depend upon well-developed ecosystems – in which the right connections can be made and qualified resources can be accessed.

[See a collection of political cartoons on the budget and deficit.]

This is the reason ethnic networks and the access to key inputs they provide play such an important role for many immigrant small business owners. These business owners depend upon their communities for access to skills and logistics, for relationships with buyers and suppliers and for the up-front money they use to buy their materials, develop their services and open their establishments. 

If you become an entrepreneur in order to survive, then you aren't in it to gamble. Your tolerance for risk is different from that of those who can afford to experiment with the confidence that they will recover financially and career-wise. If entrepreneurship is to be a career path for a broader group, rather than a game for high-stakes gamblers and privileged sons, then we must make sure ventures have access to critical assets in their ecosystems.

My partners and I implore innovators and entrepreneurs to line up seven factors beyond themselves when they start their ventures. We give them a management framework called CAPTURE to help them do this. This framework instructs them to identify sources of:

  1. Cash & capital
  2. Access to markets
  3. Pipeline of innovation
  4. Team: talent, training, tools and trust
  5. Users: base to learn from
  6. Relationships: with partners, vendors, investors
  7. Economics: for making money and supporting growth
  8. [>See a collection of political cartoons on immigration.]

    For every Facebook, there are a thousand failed attempts. We tend not to remember their names. If more than just the most fortunate startups and small businesses are to be successful, these CAPTURE elements must be available within the economic ecosystems in which they operate. This requires that we learn to transform the ecosystems themselves.

    Globally, from Beijing to Detroit, there's a burgeoning movement both to learn from leading global models and to refine new ones to address specific local needs. We're very much in the process of learning which approaches are most effective for seeding, nurturing and attempting to catalyze the growth of innovation ecosystems.  

    In order to learn from and improve upon leading global models and best practices, my partners and I have convened a "summit" this week in New York City, of leading global thinkers and practitioners focused on how to transform innovation ecosystems. (To learn more, please see www.uschinainnovation.com).

    The summit aims to illuminate the core problem of transforming the way in which we prepare entrepreneurs. Its premise is that we need to give innovators a better shot. With this in mind, we seek to transform the way universities enable entrepreneurs to harness the resources they need for success.  

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    With a focus on the U.S. and China, we're examining cases in which universities have successfully moved from the old method of teaching students how to paint by numbers to new strategies for directly engaging key actors in the ecosystem – from startups and groups of investors to industry gatekeepers and customers with unmet needs.

    But we're not stopping with what has shown some success to date. Even our most successful models are inadequate to address changing needs, whether for potable water and clean energy to support a fast growing population, or for the communications and transportation infrastructure required to enable more global prosperity.

    To equip students across disciplines to create their own solutions, much more is required than merely the odd innovation project or a new course in entrepreneurship. Our very idea of the university, along with the incentives and structures that govern it, must change. This is obligatory if we are to prepare students to engage their ecosystems successfully. It is requisite if they are to learn to build their own solutions and enterprises and make these commercially viable.

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    We need to create a dialogue around what works best. Not only must we adapt leading models and best practices to the resources, culture, and conditions of each locale, but we also need to improve upon our leading models, lest these models fall behind or simply fail to realize their full potential. 

    To achieve this transformation involves avoiding the twin errors of over-engineering the growth of the ecosystem on the one hand, and of leaving entrepreneurs to flail around in a vacuum on the other. Too much central planning tends to distort markets and skew incentives for innovators and entrepreneurs. On the flip side, a lack of investment in developing ecosystems can make it perilously difficult for entrepreneurs to navigate the fragile early stages of growth, and can dis-incentivize entrepreneurship in the first place.

    One thing is for sure: we must make a major change in how our education prepares students if coming generations are to be equipped to create their own solutions in the face of global change. This may well be a matter of survival for them.

    Alejandro Crawford is a senior consultant at Acceleration Group. He teaches innovation, growth and digital strategy at NYU's Polytechnic Institute and Baruch's Zicklin School of Business. He graduated from the Tuck School of Business in 2003.

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