Along with the major trait of independence, vision is a projection of an entrepreneur’s mind where s/he breathes life into an opportunity
A general definition of an entrepreneur is a person who identifies “opportunities” in an environment that have the potential to generate wealth by making profits. These could be situations where an entrepreneur establishes new products, services, resources or procedures, which can be sold at a higher price than their cost of production.
So, if entrepreneurship is taking advantage of any potential profit-making opportunity, then why is everyone not an entrepreneur? Keeping the external factors constant, the reason lies in the variation of individual characteristics and personal motivational factors. Even though it may be very easy to talk about identifying opportunities and pursuing them to make profits, in actuality opportunities can be very subjective.
Opportunities may not be cognizable to most people; and in many situations, perceived as risky. Thus, how people perceive different opportunities and their willingness and abilities to pursue them have a crucial impact on any entrepreneurial journey. Therefore, in this context, we can say that entrepreneurship is an extremely personal journey, of people’s ability to recognise opportunities, envision opportunities and pursue them by taking risks.
Let us take an example of vision. Vision is nothing but a projection of an entrepreneur’s mind where he breathes life into an opportunity, giving his interpretation of how to exploit the same. Make no mistake that all visions are accurate. Many times, entrepreneurs make judgment errors in valuing an opportunity. The opportunity may not be worthy or may not be valuable in its existing form.
Risk and return generally have a linear relationship. This means that if one takes a higher risk, his return can be potentially higher. While taking risks for a future higher gain can be safely predicted in an established business, it may not be as straightforward in entrepreneurship. Many times, entrepreneurs start new companies in already existing markets, where industry dynamics and risk-return relationships are known. But there are several cases where entrepreneurs find new industries to start their companies. Such entrepreneurs are willing to take risks, handle the fear of the unknown and cope with the lack of surety of desired outcomes.
Let us take an example of the biotechnology industry. The future of this revolutionary industry, when in its nascent stages in the 1970s, was at best unpredictable. ‘Research & development’, ‘venture capital’, and ‘technology transfer’ were some terms given to the world by this industry. Since, most of the time, in biotechnology, the product was a bio-organism, there was no clarity about product patents. Over the years, things started falling into place, including the patent rules. Keeping external factors like high capital requirements aside, the ability of an individual to work in an ambiguous and risky environment is to be noted.
In 1973, Cohen and Boyer discovered recombinant DNA technology, which jump-started the biotechnology industry. While Cohen collaborated with venture capitalist Swanson and created Genentech, Boyer remained in academia. Here again, human factors kick in and these entrepreneurs with higher optimism and greater tolerance for risk, contribute to the variation in risk-tolerance behaviour across the entrepreneurs’ pool. So, an individual’s ability to not get discouraged in the face of low success and willingness to progress despite these odds is also crucial for an entrepreneurial journey.
Surprisingly, research shows that individuals with high tolerance to ambiguity find unpredictability appealing instead of frightening. The wheels of the entrepreneurial journey also run on the higher achievement needs of entrepreneurs. Since many entrepreneurs have a greater requirement to show achievements, they generally involve themselves in activities that entail greater individual skills and a hands-on approach.
Their actions are result-oriented, they seek clear feedback on performance. This individual character is known to be a strong differentiator between an entrepreneur and an employee. Overall, all these above-mentioned individual entrepreneurial characteristics can be summed up into one major trait of independence. Entrepreneurs’ desire to be independent in taking control of their own lives, judgements and responsibilities; be it pursuing opportunities that may not be visible to others or being responsible for their outcomes, plays an ever-important role.
(The writer is an educator)