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Nature or nurture? Decoding the DNA of the entrepreneur - Entrepreneurial leaders are made, not born - EY - Global

Nature or nurture? Decoding the DNA of the entrepreneurEntrepreneurial leaders are made, not born

How can major corporates keep hold of intrapreneurs?

Intrapreneurs are often glad to have the technical and marketing infrastructure of a large company at their disposal — but the key to success is ensuring that they stay with you and do not form their own businesses, taking their ideas and innovative team members with them.

A classic case of an intrapreneurship effort that didn’t work out is that of the founders of Adobe Systems, John Warnock and Charles Gescheke. They believed that their new product ideas were not encouraged by their former employer and left in the 1980s to form their own business. Today Adobe has annual revenues of more than US$3b.

It is therefore vitally important not only to make room for intrapreneurs in major corporates, but also to provide them with incentives to stay, including a well-defined career path.

Companies that employ scientists often use “technical ladders” to allow technical people to do what they did best while enabling scientists with managerial ambitions to take on administrative roles. Ron Pierantozzi, an adjunct lecturer at The Wharton School and principal at Cameron and Associates LLP, an innovation consulting firm in Philadelphia, argues that companies should do something similar for innovators.

Rewards can be an effective way to go: 3M offers intrapreneurs rewards for marketing excellence for reaching US$2m in new product sales in the US or US$4m worldwide and another award for technical innovation.

Recipients are regarded as “corporate scientists.” In addition, intrapreneurs can join technological or R&D forums where membership is a source of pride because it is by invitation only. (Igniting innovation: how hot companies fuel growth from within, Ernst & Young, November 2010.)

– There is no entrepreneurship gene

– Most entrepreneurial leaders start at a young age

– More than half of entrepreneurial leaders are "transitioned" (from employees)

Summary: Despite decades of academic research into the subject, there is still little agreement over the precise definition of entrepreneurship. Entrepreneurial leaders are described as risk-takers, innovators, bold opportunists or restless agents of change. Some have even argued that entrepreneurial leaders are born with a unique set of characteristics that set them apart.

In reality, there is no single entrepreneurship gene. But there are traits and experiences that make it more likely that an individual will choose the path of entrepreneurship and, crucially, succeed over the long term.

The set of management behaviors that characterize many entrepreneurial leaders lies along a spectrum, which includes factors such as a willingness to take risks and seize opportunities, and an openness to change. Successful entrepreneurial leaders will often fall toward one end of that spectrum in at least one of those factors, but they will also draw upon a variety of other life experiences to create the finished product.

Entrepreneurial leaders may be made rather than born, but a large majority of the most successful embarked on their first ventures at a young age. Among a survey of 685 leading entrepreneurial leaders conducted for this report, more than half started their first company before the age of 30.

Age at first startup

Age at first startup

Chart 1: What was your age when you started your first venture?

Despite starting at a relatively young age, most entrepreneurial leaders do not launch straight into their ventures from higher education. More than half of the entrepreneurial leaders in the survey describe themselves as “transitioned” — meaning that they had some experience outside of the world of entrepreneurship before launching their ventures.

Although there are notable examples of entrepreneurial leaders who left college to form hugely successful businesses, such as Bill Gates of Microsoft or Mark Zuckerberg of Facebook, these are very much in the minority. Among our survey respondents, some form of business experience is a vital foundation that increases the chances of future entrepreneurial success.

Always the boss or left the boss

Always the boss or left the boss

Chart 2: Did you transition into being an entrepreneurial leader, or have you always been an entrepreneurial leader?

Corporate experience attributed to entrepreneurial success

One such example is Khudusela Pitje, the Johannesburg-based founder of New Gx Capital, a South Africa-based private equity partnership specializing in telecommunications, utilities and infrastructure investments. “I was brought up in an entrepreneurial family, but I became a chartered accountant and then a banker,” says Mr. Pitje. “That technical capability does give you an edge. My education and corporate experience definitely helped me.”

Many survey respondents cite experience in a corporate environment as an important training ground. When asked to rank the factors that contributed to their ventures’ success in order of importance, respondents were most likely to select “experience as an employee” as having the greatest impact. And if experience is the best education, the classroom is not far behind. Higher education was ranked the number one factor by almost one-third of respondents, just behind employee experience.

Over time, however, corporate experience and progression through the ranks can reduce the chances that would-be entrepreneurial leaders strike out on their own. As they climb the corporate ranks and take on greater personal responsibilities, perhaps with a family to support, the perceived risk of abandoning the security of a salaried corporate position grows.

“Clearly entrepreneurs are better off if they have some prior experience,” says Arnaud VaissiĆ©, chairman and CEO of International SOS, the world’s largest international medical and security services company. “But at the same time, the more you wait, the more you have to lose.”

The challenge of finding the right time to make the transition is one that resonates with Yulisianne Sulistiyawati, founder of PT Pazia Pillar Mercycom, an IT company based in Indonesia. Prior to forming her company, Ms. Sulistiyawati spent 15 years working in the IT industry.

“When I became an entrepreneur for the first time, it was a big decision because I was already in the comfort zone of having had a professional career,” she explains. “Many professionals find it difficult to become entrepreneurial leaders because they think they are risking too much. But the experience that professionals gain early in their career is vital and cannot be bought.”

Despite the need to make timely decisions about career direction, a long-term focus is vital for successful entrepreneurial leaders. “You need to make decisions at least for the next 5 to 10 years and be brave about planning for your future,” says Veijo Hukkanen, founder of V Hukkanen Oy, a fish processing company based in Finland.

Success factors ranked number one

Success factors ranked number one

Chart 3: What specific forms of education or sources of learning provided you with the skills needed to build successful businesses?

 How can major corporates keep intrapreneurs?

How can major corporates keep hold of their intrapreneurs?

Intrapreneurs are often glad to have the technical and marketing infrastructure of a large company at their disposal — but the key to success is ensuring that they stay with you and do not form their own businesses, taking their ideas and innovative team members with them.

A classic case of an intrapreneurship effort that didn’t work out is that of the founders of Adobe Systems, John Warnock and Charles Gescheke. They believed that their new product ideas were not encouraged by their former employer and left in the 1980s to form their own business. Today Adobe has annual revenues of more than US$3b.

It is therefore vitally important not only to make room for intrapreneurs in major corporates, but also to provide them with incentives to stay, including a well-defined career path.

Companies that employ scientists often use “technical ladders” to allow technical people to do what they did best while enabling scientists with managerial ambitions to take on administrative roles. Ron Pierantozzi, an adjunct lecturer at The Wharton School and principal at Cameron and Associates LLP, an innovation consulting firm in Philadelphia, argues that companies should do something similar for innovators.

Rewards can be an effective way to go: 3M offers intrapreneurs rewards for marketing excellence for reaching US$2m in new product sales in the US or US$4m worldwide and another award for technical innovation.

Recipients are regarded as “corporate scientists.” In addition, intrapreneurs can join technological or R&D forums where membership is a source of pride because it is by invitation only. (Igniting innovation: how hot companies fuel growth from within, Ernst & Young, November 2010.)


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