What do Uber, Tesla Motors, and Amazon all have in common?
They have been ranked as some of the most entrepreneurial companies to work for.
Yet, companies cannot behave entrepreneurial if their culture, policies, and practices do not support "employee entrepreneurs" or reflect the realities of what being "entrepreneurial" actually entails.
So, if your company is trying to become more entrepreneurial, it is critical to keep in mind these 5 realities.
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When companies come to us and say, "we want to create a more entrepreneurial culture", I get excited.
Becoming entrepreneurial, although it can require significant effort, means that a company is ready to cast off the constraints that have previously defined its business results and embrace its true potential.
But, what does it mean to be "entrepreneurial"?
The definition I hold to and communicate to our clients is a very simple one.
To behave in an entrepreneurial way means to achieve a desired result by creating something new where nothing previously existed.
This can mean anything from the creation of a new product or service to finding new ways to use existing products or services or even the creation of entirely new markets.
However, as I tell our clients, this can only be accomplished if their individual employees are viewed as entrepreneurs.
And this requires the acceptance of a few simple realities.
REALITY #1: ALL EMPLOYEES ARE ENTREPRENEURS
The first reality companies must realize is that their employees are already entrepreneurs.
Think of employer-employee relationship.
A person has a need to earn income. Yet, when first starting their career, they don't yet have the means to accomplish this.
So they search around for a customer who is willing to pay them for their skills, knowledge, and service. These customers are what we call "employers".
They find potential customers (a.k.a. employers) who are seeking a service provider (in the form of a new employee) to meet their existing needs.
It is then up to the individual to pitch or sell what they are offering so that the customer believes that their needs will best be met by the combination of skills, knowledge, and service presented.
When the customer decides to buy what the person is selling, they enter into a contract whereby the customer pays for the services of the individual.
At any time during this relationship, should the customer or the individual find their needs are not being met, they can both choose to exit the relationship.
This is the nature of the employer-employee relationship but could also describe the relationship between a customer and an Uber driver or a consultant and their client.
This implies that an employer changing how they view their employees isn't as big a leap as they may first think.
REALITY #2: ENTREPRENEURS REQUIRE GUIDANCE, NOT CONSTRAINTS
When we first begin working with companies to adopt a more entrepreneurial culture, we often find their existing culture has actually and unintentionally constrained the performance of employees.
To illustrate what I mean, I will use an anecdote that we often refer to in our seminars involving a child and a roast.
"One day a child sees his mother preparing a roast to go into the oven for dinner. His mother carefully cuts both ends of the roast off and places it in the pan. The child, curious, asks his mother why she did this. His mother thinks about it and says, "because that is the way you are supposed to do it...it is the way I was taught by your grandmother...so if you want to know why, go ask her. So the child goes into the next room and asks the same question to his grandmother. She considers the question and provides a similar answer as his mother gave...that cutting off the ends is the correct way and the way it has always been done. Pressing his grandmother further, she grows flustered and tells the child to go ask his great-grandmother. So, he finds his great-grandmother and asks her why the ends are cut off the roast. The great-grandmother thoughtfully answer the boy, "because when I was growing up, we were very poor and only had one pan. When we cooked a roast it was often too big for that pan and so we had to cut the ends off for it to fit."
Existing company cultures often reflect how things have always been done. This can limit the creativity and inventiveness of employees if new ways are dismissed simply for being new.
To become more entrepreneurial, employers must let go of the old ways that constrain employees and, instead, rely on defined corporate values, a clear vision for the future, and clearly articulated goals to guide their creativity down the right path without restricting it.
REALITY #3: HR CAN BE AN OBSTACLE TO EMPLOYEE ENTREPRENEURS
Entrepreneurial employees must regularly embracing the unusual, unconventional, and (sometimes) even the unlikely.
This means that to succeed, they must essentially throw out the rule book and venture into uncharted territory.
This scares the hell out of many HR professionals who are, commonly, very conservative and structured in there practices.
What we have seen more than a few times is HR attempting to gauge this unconventional employee performance with long-standing traditional approaches.
In traditional employee appraisal processes, individual employee outcomes are measured rather than employee output, which is more a measure of effort.
Under this traditional approach, if an employee wants to receive a positive appraisal they are likely to sacrifice innovation and creativity in order to get the job done.
This runs counter to an entrepreneurial culture, which is based on a foundation of trial and error. This means a single successful outcome may only result from extensive output.
When creating an entrepreneurial culture, new approaches to appraising performance must take into account employee creativity and behaviour, in addition to outcomes.
REALITY #4: ENTREPRENEURIAL ACTIVITY REQUIRES MISTAKES
Thomas Edison reportedly failed 10,000 times when attempting to create a working light bulb. This means he made 10,000 mistakes.
Now, consider where we would be if he was condemned for these mistakes and had not persisted.
When creating or doing something new, making mistakes is a fact of life. Never has the former been accomplished without the latter.
Therefore, when adopting an entrepreneurial culture and treating employees as entrepreneurs there can be no inherent fear of errors and mistakes. Employees must be free to try and fail if they are to ultimately try and succeed.
This can be one of the biggest challenges for management teams transitioning to this new culture. Many in management continue to expect perfect results from an imperfect process.
Only when management fully accepts, and even celebrates, the presence of mistakes will employee entrepreneurs trust they are safe to take the risks necessary to innovate.
REALITY #5: CUSTOMER PREFERENCES AND MARKETS ARE NOT STABLE
If customer needs and preferences never changed there would be no opportunity to gain an advantage by behaving in an entrepreneurial way.
Most businesses, however, acknowledge that their markets are unstable and that they are constantly changing and evolving.
Entrepreneurial companies are perfectly suited for these environments, but only if their culture reflects a high degree of flexibility and willingness to change direction.
Just as not all relationships between people are meant to last forever, neither are a company's relationships with its ideas, beliefs, and work.
Often this means that a company must be willing to walk away from previously established perspectives, existing practices, and sometimes even projects they have already invested significant money in.
Entrepreneurial companies, and their employees, must always be willing to change direction and take a new approach.
More and more companies are recognizing that their ability to be entrepreneurial is going to determine whether they thrive or die.
For a traditional business to become entrepreneurial, they must be willing to change their culture and the treatment of their employees.
Doing so is not easy, and can be extremely uncomfortable, but any company can accomplish this if they can except five key realities.
Treating individual employees as entrepreneurs, removing constraints to creativity, updating internal practices, celebrating mistakes, and always being ready to walk away and change direction are critical pillars of an entrepreneurial culture.