Each Monday I post the next section of my 2001 book, which was originally called (by the publisher) Hoover’s Vision but which I have now retitled The Art of Enterprise.  I have posted over half of it already; click on the “Monday” column to see all the prior sections.  The entire book can be downloaded as a PDF for $10 at https://garyhoover.dpdcart.com.

39 The Right Stuff: What it Takes to Succeed

“Work is love made visible.” –Kahlil Gibran.

We’re nearing the end of our journey together. We began with ideas about how to see things in new ways — even to see things that others do not see at all. We looked at how to seek those new visions in the past, in the future, in your own neighborhood and around the globe. We’ve considered the importance of defining a purpose, of crafting a vision that is clear, consistent, unique, and – above all else – focused on serving others. All of these are ideas are vital in the building of successful enterprises – no matter the field, no matter how big or how small.

But what is your role in all this? How do the participants in the building of a successful enterprise feel about themselves and the world around them? When we study those who have done it, do we notice any patterns? What attitudes and values are shared by the people who build great enterprises?

Let me begin to answer these questions with another story.

Passion and Profit

It was the late 1980s. I stared at the newspaper story and shook my head. Yet another giant toy superstore chain had bitten the dust.

First, a little background. From the time I first decided that retailing was the business arena that most interested me until I targeted bookselling in particular, I studied the retail industry with much of my time and energy. I was getting paid to do this research, first as a stock analyst on Wall Street, then as a department store buyer and planner. But the real reason for my studies was my own desire to understand what separated successful retailers from the many failures.

During this period – the late 1970s – perhaps the most successful US retailer was Toys R Us. Founded by Charles Lazarus, Toys R Us was the first superstore. In city after city, Toys held an unprecedented market share, selling as much as 50% of all the toys. It was the kind of market share that Sears or Wal-Mart could only lust after. The reason for this success was simple. Toys R Us offered a never-before-seen selection of toys at the lowest prices ever. As a result, customers were enriched. In fact, everyone who got near Toys was enriched. As Toys converted the business from a two-month Christmas market into a year-round business, toy manufacturers were enriched. Every employee of Toys received stock options, so workers were enriched. And of course, thousands of Toys R Us stockholders, from the investor next door to the largest institution, were enriched.

Obviously, I borrowed many lessons from Toys when I created BOOKSTOP. However, as I continued to follow Toys R Us in the 1980s, another chapter in the story unfolded. In that era, about a dozen clones were created – companies whose backers had looked at Toys and decided they could create a similar business. Their names ranged from Child World to Lionel Play World. However, the success these clones hoped for proved elusive. In fact, every single one of these firms is gone today, most of them bankrupt.

This was a puzzlement to me. How could one company be so outrageously successful, while all these clones were failing?

In some industries, you might assume that Toys had some trade secret, some patented recipe for success. But there are few secrets in retailing. Every store is an open book (a fact I greatly appreciated when doing my research into the industry). If you want to know what a store pays its employees, just ask for a job application. If you want to know where they buy their merchandise, just look at the labels. If you want to know their pricing strategy, just look in the newspaper or on the store shelves.

In truth, the Toys clones had done a great job of following the leader. They had the same aisle widths, the same Barbie Doll section, the same Nintendo section, the same cash register set-up. They were excellent clones! So what was the difference between the one company that succeeded and all the others that failed? Was it magic?

As I studied Toys and its unsuccessful copycats, I discovered an intriguing difference. Charles Lazarus and the people who worked for him had two things at the forefront of their minds: (1) We love toys; and (2) We love customers. I was struck by the unabated passion for toys and for toy customers that everyone connected with the company seemed to share. When a retail chain honors its “Store Manager of the Year,” the prize is usually a resort vacation or a cruise. However, at the peak of Toys’ success, their best people were rewarded with a trip to the giant New York Toy Fair, where they were had the opportunity to walk the aisles of a huge trade show, spending night and day learning more about toys. The toy business wasn’t work for these peoples – it was pure joy.

By contrast, the people who ran the failed clones also had two key things in mind: (1) Copy Toys R Us; and (2) Get rich. As good at Xeroxing as the clone companies were, none of them succeeded the way Toys had done, because none of them had the burning passion for the business and for the customers that was the cornerstone of Toys R Us.

There’s an important underlying truth here. While people may give effort toward the goal of easy riches, ultimately they will not work the long hours, put in the strenuous work, or think the innovative thoughts that are required to succeed in today’s competitive world if wealth is the only objective. It is easy to believe that clever management techniques, technological innovations, or cutting the right deals will make your enterprise great. All those are secondary. Passion is at the heart of every great enterprise.   

Each year, I speak to a group of high school juniors who are interested in entrepreneurship. One time, a young man came up to me after my talk and said, “I love poetry. But my parents and guidance counselor say I have to make a living, so I am going to study accounting instead. Am I doing the right thing?”

I told him – I wonder whether his parents ever forgave me – that we had plenty of accountants who do not love accounting. If he loved accounting, go for it. But if not, then he should go with his heart. You don’t know what might happen to you as a poet – poet Maya Angelou has made millions of dollars.

One of the greatest tragedies in our world is all the people who hate their work, or merely tolerate it. If you don’t love what you do, you’ll never go the extra mile, work the extra hour, dream up the new idea. If you are doing something you love, if you have your heart in it, at least you have a chance to excel. 

Passion intersects our lives at many points. Sometimes it touches us at a fundamental decision point, like the one faced by the young poet-accountant. Sometimes it affects the most detailed level of carrying out our vision. I have mentioned the rise of nostalgia in our lives – our sense of history coupled with our individual interests. This is the force behind much of eBay’s success. People have made a veritable industry out of Coca-Cola collectibles. After many years of natural growth outside the company, Coca-Cola itself has gotten behind this development by operating a museum, now one of Atlanta’s most-visited tourist sights. Nike, Warner Brothers, Disney, and others try to make the most of their logo, their history, and their fundamental association with our culture. Even software companies which have trouble selling their software can’t restrain themselves from offering sweatshirts and coffee mugs.

So it was with great interest that I walked into the McDonald’s in New York’s Times Square a couple of years ago and spotted a display case offering “McDonald’s merchandise.” There are few companies in America with a greater attachment to us and our culture. All those happy meals, all those promotions, those golden arches – this is the most natural of opportunities. Especially here in Times Square, which has become “the Valley of the Brands,” with big signs and big stores for some of the most prominent brands in the world. But, in the right business at the right time in the right place, how does McDonald’s approach the opportunity? They have this small unattended glass case of logo merchandise. No one is there and it is not even clear how you go about buying the stuff. It is a long way from the cash register. It is gathering dust. The odds are that this effort went down in the corporate memory as “we tried it and it didn’t work.” But the real issue here was that their heart was not in it. This was an afterthought, not a vision. Not even a small vision. No one cared.

At BOOKSTOP, our lives were centered on making more books available to more people. We tried to venture into software and video when those categories first appeared. Although (in my humble opinion) we were great retailers, we failed in both of those experiments. Why? Our hearts were just not in it.

Whether planning the course of your life or the merchandise displays in your corner store, whether thinking about how to sell magazine subscriptions or how to manufacture computers, there is always a place – a winning place – for passion. Without passion, without heart, all the analysis and study in the world is for naught.

I mentioned earlier my penchant for visiting bus stations, including the one in Brisbane, Australia. When I got all the way up to the third floor of that station, where the long (long, long) distance busses came and went, I stopped in my tracks. There, patiently awaiting his bus was a lone man, his pile of luggage, and his seeing eye dog. Every time I hear someone say they can’t travel because they don’t have the time, money, or ability, I think about that man. If you want to do it badly enough, nothing can stop you. With passion, all things are possible.

Persistence for the Long Journey

“Knowing trees, I understand the meaning of patience. Knowing grass, I can appreciate persistence.” – Hal Borland

From passion flows many other qualities, all of which can give extra oomph to our enterprise and increase its chance of success. The first of these is persistence, the endurance to continue the journey. For building any enterprise is indeed a journey, often a long one.

Imagine being a college student in Boston. One summer, you and three friends decide to drive to LA. Everyone is gung ho and excited. You stock up on road maps and pack the car with clothes and CDs and sodas and snacks. Heather has her travel pillow, Joe has his favorite trail mix, Jack has his headache pills. The four of you set off with high hopes and excitement.

But when you get to Buffalo, Jack says, “This has been fun, I’m tired, let’s go back now.” He grabs the next plane back to Boston. You keep going. When you get to Cleveland, Heather says, “I really just wanted to go to LA to see the art at the Getty. There’s a show at the Cleveland Museum that will do, let’s stop here.” She stays in Cleveland, you keep going. Joe throws up outside Toledo, you blow out a tire just west of Chicago, you lock the keys in the car at the Denny’s in Denver. You run out of money, you run out of time, you and Joe are constantly squabbling.
            There are a million reasons to turn back. They are obvious, clear, and indisputable. There is only one reason to go on – because you want to get to LA. And only with that kind of single-minded dedication will you ever make it.

Most enterprises begin with one person starting out alone. You are the only believer. Eventually you find someone who will listen to you and who comes to see the same vision. That person becomes your partner, your investor, or your first employee. Now there are two of you. In time, there are three, then ten, then one hundred. Eventually, if you are persistent enough and dedicated enough, the whole world sees the vision.

It’s a long march. You start out uncertain of your ability to generate any sales. In time, you make some sales, but you’re not sure you can make any profits. Then you make some profits, but you’re unsure of your ability to sustain them. You start out with nothing but unanswered questions. Then you proceed to answer them, one by one.

The hurdles are enormous. The experts will tell you it can’t be done:

¨       “You can’t be open long hours in a travel agency.”

¨       “You can’t carry a huge selection and charge deep discount prices in a bookstore.”

¨       “You can’t run a hotel on 24-hour pricing.”

¨       “You can’t give away free newspapers on an airplane.”

¨       “You can’t appeal to in-town residents in a hotel.”

¨       “You can’t have a drive-through prescription window.”

¨       “You can’t create an online bookselling operation from scratch.”

Accomplishing anything worth accomplishing takes enormous endurance. As of the end of 1998, Wayne Newton had given 26,000 live performances in Las Vegas. He’d also made 142 albums. Let’s not even talk about the TV appearances and concert tours. No matter what you think of his music, you have to admire his energy.

When Steve Case took AOL public in the early 90s, he had been working at it for seven years, and his own stock was worth less than one million dollars. Most people would have given up long before that. Lots of folks thought AOL would perish, that its business model wasn’t working.

Years later, Steve Case might have been the only guy on earth who wasn’t shocked when his company acquired Time Warner.

Overcoming obstacles is one of the most common patterns you see in the building of great enterprises. When Carnival Cruise Lines first started, the company couldn’t afford a new ship — so they bought an old, slow, beat-up one. Their cruises took longer than the competition to get to the same places, so they added discos and such to keep the passengers entertained. From that make-lemonades-out-of-lemons start, Carnival reinvented and reinvigorated the cruise industry, and today it holds a market share in excess of 50%.

Energy

Another quality that entrepreneurs have in common – and one of the first things you notice if you spend much time with them – is their high energy level. This is an intense group of people. Yet their styles of intensity vary greatly. I remember sitting at dinner with a group of members of the Young Entrepreneurs Organization. One of them talked on and on about his gorgeous house, his sporty car, and his many business accomplishments. Everyone nodded politely; if you know a lot of entrepreneurs, you know a lot of people who wear their egos on their sleeves. But at the same dinner there was another fellow who never said a peep. My curiosity got the better of me, so when we stood up to leave the restaurant, I introduced myself and inquired as to his involvement in YEO. The shy fellow quietly told me that he had sold his first company for $6 million and was now building a second enterprise, a nonprofit dedicated to helping the less fortunate.

I can assure you that anyone who accomplishes things like this may appear shy, but he has a fire burning inside . . . a fire just as hot as the fire inside a person whose heat can be felt from fifty yards away. Some people just have their engines set on high, and entrepreneurs are among them.

Self-Confidence

I run into plenty of people who are timid, lacking self-confidence – but not successful entrepreneurs. Many parents tell their kids, “You can do anything you put your mind to.” The entrepreneurs are the kids who believed them.

Entrepreneurial self-confidence isn’t a simple quality. It refers to a combination of courage, optimism, self-esteem, and self-reliance. One reason most entrepreneurs rarely use consultants is that they trust themselves. As a result, they sometimes err, but the smartest among them are usually quick to know when they are wrong and correct their mistakes.

I said that entrepreneurial self-confidence includes optimism. While entrepreneurs hold a wide variety of views about the future of society in general, they must be hopeful about themselves, their own organizations, and their industry. Pessimists usually don’t build anything. Why invest in a bleak future? Entrepreneurial optimists are not blind to the problems around them, but they see them as opportunities.

You might think that most business leaders would have high self-confidence. They often appear self-confident on the surface. But look at these common traps of thinking that people fall into every day:

“We don’t have enough money to achieve our dream—we need a partner with deep pockets.”

Influenced by the thinking of investors and investment bankers, many would-be entrepreneurs get caught in the trap of equating money with the power to effect change. There are plenty of cases where deep pockets accomplished nothing. Giants IBM and Sears joined to form the ill-fated Internet portal Prodigy, while the undercapitalized outsider with passion and vision on its side – AOL – struggled and won. In 1970, Sears had a lot deeper pockets than Wal-Mart. No more.

Yes, there are times when you need money to do the right thing and to accomplish your goals. And when necessary, the entrepreneur finds the money. But for every such example, there are a dozen cases where people were needlessly frightened away from pursuing their goals by the deep-pockets myth.

“The big competitors will steal our ideas and demolish us.”

This argument is just as familiar as the deep-pockets myth – and just as frequently wrong. Did Hilton demolish Holiday Inn? Did Howard Johnson destroy McDonald’s? Did Waldenbooks crush BOOKSTOP? The fear of entrenched competitors is often overblown.

So is the fear that some other business person will steal your idea. Many would-be entrepreneurs have their lawyers create NDAs – Non-Disclosure Agreements – they insist on having signed before they’ll talk about their ideas. In reality, no real entrepreneur wants to steal someone else’s idea – they have way too many ideas of their own.

I’m far from being the world’s most prolific entrepreneur, but I’ve kept a list of promising business ideas ever since I was a teenager. At the moment it contains about seventy active ideas. The last thing I need is another new idea for my list. A real entrepreneur would no more want to borrow your idea that he would your underwear.

“Everyone says my idea is silly – maybe they’re right.”

This is just pouring gasoline on the entrepreneur’s fire. Proving the doubters wrong is one of the most powerful motivators of the entrepreneurial spirit. Nevertheless, I have many times heard people say, “I want to create a business idea so that when people hear it, they all say, ‘of course that will work, what a great idea, I wish I had thought of that.’” If your idea is that straightforward, maybe it is too simple, maybe it is too easy to copy. When you study most of the true breakthrough ideas, you usually find that people’s response was not like that. It was “what a stupid idea, it will never work.” This is how the movie studios felt about sound in the movies, this is how the railroads felt about airlines, this is how B. Dalton felt about BOOKSTOP. 

Robert Galvin of Motorola said that every great idea at his company started out as a minority position, originated by a person on the edge, often laughed at. The originator had to be thick-skinned and persistent to be heard. That’s the way entrepreneurship works.

And centuries ago Italian Renaissance thinker Machiavelli said, “ … and it ought to be remembered that there is nothing more difficult to bring to hand, more perilous to conduct, or more uncertain in its success, than to take the lead in the introduction of a new order of things. Because the innovator has for enemies all those who have done well under the old conditions and lukewarm defenders in those who may do well under the new.”

“We’ve got to move fast—the window of opportunity will soon be closing.”

Once in a while, this is true. Back in the 1920s, when AT&T tried to sell the movie studios on the use of sound, Warner Brothers woke up a year before everyone else. Starting with The Jazz Singer (1927), they made hay with the new technology, and were transformed from a secondary studio into one of the biggest, a position they retain to this day. But for every instance in which there really is a rapidly-closing window of opportunity, there are hundreds of imagined windows. Three years ago, friends were telling me, “If you want to start an Internet company, do it this year before all the spaces are taken.” The truth is that many of the leading Internet companies of 2010 have yet to be founded.

We hear much about the so-called first-mover advantage. But history shows that being best is more important than being first. If you can be first and best, like Federal Express or Home Depot, great. But Microsoft, Wal-Mart, and IBM often have been followers – really excellent, and very profitable, followers.

“We need the right team—a group that has done it before.”

Recently I was sitting amongst a group of bright young MBA’s who had gathered to talk about current trends in venture capital. One of the brightest remarked, “You can usually tell which venture ideas are going to work and which ones won’t. It’s the management team. If a company is run by a group of talented executives who have created a successful business before, you know they can do it.”

In contrast, just a few months later, I heard that one of the biggest VC firms had decided never to back second-time entrepreneurs – because so many had failed them. They had come to believe that someone who has done it once before often assumes – incorrectly – that he (or she) can do it again without much effort. (By the way, this firm does back third-timers. They figure that, when an entrepreneur goes back to the well for the third time, he’s beyond any such delusions).

The bottom line is that what matters isn’t how many times you’ve done it, it’s how badly you want to do it. Alfred Sloan had never built an auto company before he created GM. Bill Gates never had a real job before he founded Microsoft. Starting Dell Computer was Michael Dell’s first real job, too. Fred Smith’s experience in the airline business (before launching FedEx) was as tiny as Ted Turner’s in broadcasting. And many of these entrepreneurs got very little big-time venture capital backing in the early stages.

There’s another problem with the we-need-a-great-team myth. Most great teams follow the idea, not the other way around. I met one fellow who was certain he was going to start a great company. “What’s your business idea?” I asked.

“I don’t know yet,” he said, “But I’ve gathered the smartest group of people, and we work together like clockwork, so I know we can do anything.”

Unfortunately, the truth is that they won’t do anything without a shared vision that they really believe in. This dream team may find out the hard way that nothing can break up friendships faster than trying to build an enterprise together – except, they tell me, remodeling an old house together.

Another form of this myth is the widespread tendency to hire people based on their resumes alone rather than their hearts. Smart companies know better. A Nordstrom executive was asked, “How do you train your people to give such great service?” He answered, “We don’t. Their parents do.”

Of course, a resume can tell you a lot about a person, but no more than the look in his eye, the sincerity of her smile. Great companies are not built by hiring a bunch of warm bodies with the right skill sets. They are built by hiring people with the right skills and a passion for what they are doing.

“We’ve got to know the right people if we want to get ahead.”

Of course, this is the myth most favored among “the right people.” It’s true that, once in a while, some useless person makes it to the top because of their daddy’s friends, where they went to school, or the money they inherited. But these are not often the people who build lasting enterprises. How many powerful people did Michael Dell know when he began? How many of the right people did Sam Walton know?

True entrepreneurs understand that working with the best people is critically important, but they do what it takes to find them. Some are deep inside their own organizations, some are new hires right out of school, and some even are “the right people” – working for big established companies or Wall Street firms. It’s the connections you create – not the ones you are given – that are the most powerful.

“Let’s build a business that the venture capitalists and institutional investors will love.”

 If you can find me a venture capitalist who is looking for the same thing today that they were six months ago, I’d like to meet them. If you manage your business based on what Wall Street tells you, you are probably going down a dead-end street. Note that this is different from you telling Wall Street what to expect: those promises you must deliver on, unless you want to be spanked by the market and sent out behind the woodshed.

But using the theories of venture capitalists, Wall Street investors, or any other group of experts to guide your enterprise rarely works. It does not have a good track record. The experts are usually enamored of the last big thing, not the next big thing. They will ask, “If this is such a good idea, why hasn’t someone else done it?” They will say, “What other business can I look at to understand what you are doing? Who has proven this concept?” They might even say, “You don’t have enough money, you don’t have the right team, and the window is about to close.”

Don’t listen to them. Listen to yourself and listen to your customers.

Entrepreneurs believe the following:

·         We can do anything.

·         We can learn anything.

·         We can make this world a better place.

·         We can make a difference.

·         We can figure it out.

·         We can lick the toughest problem.

·         Few things if any are outside of our control.

·         No competitor scares us.

·         We will focus on what matters.

·         The world is getting better all the time.

·         Financial resources don’t matter.

·         Experts are of limited help.

·         People rise to challenges.

·         The current way of doing things may not be or probably is not the best way.

·         Everyone can be a winner.

·         Who you know doesn’t matter.

·         Background, looks, degrees don’t matter.

In my travels, I meet with many people who dream of starting their own enterprise. Once in a while, I meet someone who is timid, who says, I would love to do it but I don’t think I can. Well, they are right. For whatever silly reason they don’t think they can do it, they have made it true by thinking it. Most any excuse is adequate to stop the creation of a new business: not enough time, not enough money, not the right skills. Just as often as I meet people like this, I meet folks who say, “I want to start a business and I know I can do it.” They are equally right. I don’t have to ask about their time, money, or skills. All of these will of course be needed, but they are tools that will never be picked up unless you, in your heart, know that you can do it.

If you have this entrepreneurial self-confidence, you will be more decisive, more prepared to act.

Action Orientation

Any observer of both large corporations and entrepreneurial enterprises quickly notices one difference. In the time it takes a large company to research, debate, propose, approve, and launch a single new idea, an entrepreneurial organization has already dashed through the stages of, “Let’s give it a try. Whoops! That was a disaster! Let’s try this instead. Hey, that seemed to work. How can we do it better? Yes, it’s a hit! OK, what do we try next?”

I met a fellow who had been a senior officer at Tandy Corporation (parent of Radio Shack) when it was still run by founder Charles Tandy, one of the greats of American retailing. Tandy died in his 50s, shocking the company. But this fellow told me that the first five years after Tandy’s death were the most productive in the company’s history. While he was alive, he wanted to try too many things, too fast – no one could keep up with him. But after he died, they finally had a chance to carry out his ideas. Unfortunately, five years later, the company began to falter – because no one had come up with any new ideas since “the old man” had died!

Passionate, visionary, driven people never want to sit around. They want to do things, to learn, to experiment. Failure is an expected part of the process. Rather than sitting around waiting for or planning the giant effort, they are willing to move ahead step by small step, making constant progress. The only thing they can’t stand is inaction.

Resourcefulness, Creativity, and Risk-Taking

The entrepreneurial spirit is capable of creating great things out of nothing. Stories about entrepreneurs who created companies starting with nothing but $2,500 and a credit card are part of the common lore. But you may not realize that being well-funded, fat and happy, is not only not required by the entrepreneur, but can in many cases be harmful.

I met a would-be entrepreneur who told me, “I’ve been a very successful residential realtor all my life, but now I think that the future lies with lower-cost distribution systems. So here’s my idea: I want to open a ‘home store’ where buyers and sellers can get together more easily and cheaply than through traditional realty.”

“Not a bad idea,” I commented. “So when are you quitting your old business so you can pioneer the new?”

“Oh, no,” he replied, “I’m going to keep the old business going in case the new one doesn’t work.” As soon as he said that, I knew that the new venture would probably fail.

If you hope to scale Mt. Everest, you don’t practice on a fake rock wall with a safety net. Like any other muscle, entrepreneurial self-confidence must be exercised in order to grow strong. Only taking on real challenges, with all their inherent risks – including failure – is sufficient.

Being backed by investors with deep pockets can be as much of a problem as a benefit. Here in Austin, a group of experienced retail executives raised several million dollars to build an exciting new store. They leased the store and began to spend on construction. But something was wrong in their projections, and they ran out of money before they got their doors open. The result: over five million dollars down the drain! Ironically, if they had started out with a million dollars – and spent it as frugally as if they had half that amount – they might be thriving today.

Australian movie director Scott Hicks tells about the benefits of learning to make movies on small budgets. During his days running a shoestring film operation, he learned to conserve resources, to plan shots with care so as to get the best take quickly, to build drama through character development rather than relying on costly special effects. Later, when he got big budgets, he knew how to make pictures that looked as if they had even bigger budgets.

A corollary of resourcefulness is creativity. I sometimes meet successful entrepreneurs who say “I am not very creative.” Their ad agents laugh at their efforts when they try to come up with a clever or artistic campaign. But then these same people tell me, “I found out that if I walked through the floor of the plant and gave the best employee of the day the next day off, it really paid off. And over here, we figured out how to save a few thousand bucks by sharing the floor-polishing machine with the company next door. And we built this special rack so we could knock twenty minutes off our order processing time.” That’s the kind of creativity I’m talking about.

In making every decision, from deciding what to pay someone, to how to handle customer service, to what kind of telephone system to install, the true entrepreneur is always thinking, “There must be a better way to do this.” This kind of hard-working, everyday creativity pervades the successful entrepreneurial enterprise.

People talk about how entrepreneurs are great risk-takers. Maybe so. But most of the risks that entrepreneurs take are small risks – trying a new way to lay out the cash register area or creating a website which shows competitors’ prices as well as your own. When entrepreneurs take big risks – the risks of startup or bet-the-company risks – most entrepreneurs are as risk-averse as anyone else. The only difference is that they assess risk differently.

For example, when I decided to leave the May Company to found BOOKSTOP, my parents’ first reaction was, “But, Gary, you’re doing so well, why take the risk?” I responded by saying, “Have you read the headlines lately? Do you know many corporate staff execs are getting fired or laid off these days? There’s risk in either path.”

Sometimes the greatest risk lies in not taking one. The true entrepreneur remembers this truth and is prepared to act on it.

Individuality

"Distrust any enterprise that requires new clothes." –Henry David Thoreau.

Maybe Thoreau was talking about real clothes, but I doubt it. I think he was talking about the need to remain true to yourself rather than donning a false front.

Entrepreneurs are, above all else, true to themselves. And they are as individually unique as any group of people you could meet.

I opened this book by talking about enterprise as an art form. Like artists, entrepreneurs are highly individualistic. If you held a big party and invited the greatest artists of all time, you would have all sorts of strange characters – bohemians, rebels, loners, romantics, dreamers, even one fellow with a missing ear. When you get a big group of entrepreneurs together, it is the same – the only thing they’ll have in common is the label “entrepreneur.”

What are some of the ways in which entrepreneurs differ?

Personal goals. First, they differ in their underlying goals.

¨       Some are out to build a great business to pass along to their children.

¨       Some are out to prove the naysayers wrong.

¨       Some are out for the pure joy of building something.

¨       Some just enjoy the excitement of non-stop action and challenge.

¨       Some want to build a nice little business that fits a local niche.

¨       Some dream of creating one global empire after another.

¨       Some want to work at one goal for the rest of their lives.

¨       Some want to build a business for a few years, then move on to the next thing.

Level of innovation. Another key way in which entrepreneurs differ is whether or not they are innovating at the edge. In this regard, I group entrepreneurs into three categories:

¨       Those who invent a whole new thing – Ted Turner with CNN, Fred Smith with Federal Express, Charles Lazarus with Toys R Us, Raymond Loewy with industrial design, Edward Bernays with public relations, Charles Schwab with discount brokerage.

¨       Those who take an existing idea from one field and copy it in another – me when I took Lazarus’ invention of the superstore and applied it to books; NASCAR’s Bill France when he took the idea of organized auto racing and applied it to stock cars; Commerce Bank’s adaptation of chain retail methods to banking; the creators of the Travel Channel, the Weather Channel, and the Comedy Channel when they took the idea of the subject-specific cable network and applied it to new subjects.

¨       Those who take an existing idea and perfect it, the way Sam Walton perfected the idea of the discount department store, the way Pizza Hut founder Frank Carney perfected the pizza chain idea, the way Toyota went way beyond GM and Ford in the efficiency and accuracy of its production techniques.

Vision. Finally, every entrepreneur is unique in his or her breadth of vision. Of course, every successful entrepreneur has some special vision of the future. But that vision can be broad or narrow. If your vision is a golf ball that flies farther, that might make you a million dollars. But if your vision leads to revolutionizing the whole game of golf, that might make you a hundred million dollars.

Some envision the Weather Channel; some envision the whole evolution of cable and wireless entertainment. Some envision a better produce stand; some envision ways to feed the world. The breadth of your vision depends especially on how good you are at exploration and how well-developed and broad your curiosity is.

I do not really believe that some people are visionaries and others are not. We all have the potential to see the future, whether it be a small part or a great part. And I believe that, by using the techniques described in the first part of this book, anyone can enhance their ability to see things that others do not.

Paradoxically, vision is in itself blinding. Berkeley Rice said, “Visionary people are visionary partly because of the great many things they don’t see.” That is, most true visionaries are so obsessed with their own vision that often they can see little else. This is a mixed blessing. The visionary can ignore obstacles that would daunt a lesser man, but he can also discount or disregard the visions of others that are in fact as valid as his own. Henry Ford, clearly a visionary in his own field, thought jazz was silly. It’s very common for entrepreneurs to think their fellow entrepreneurs are just as crazy as everyone else does.

Entrepreneurial Leadership

Passion and vision combine to give the entrepreneur strength and self-confidence. But how does this entrepreneurial passion translate to the rest of the organization? How does it reach every nook and cranny?

The answer, of course, is leadership.

I recently spoke to a group of the top executives of a major company. The fellow in charge talked about what it was like when he was first appointed president. He said that nothing in his experience as a VP or even senior VP had really prepared him for the job. He had made his mark in marketing, so at first he put his energies there. Then he realized he’d better pay more attention to finance. Then it seemed that human resources was where he needed to focus. It took him a while before he realized that, as CEO, he was really in charge of two crucial things: strategy and culture.

Look back over this book and think about the huge range of things we have talked about. In a sense, they can all be boiled down to strategy and culture.

Having studied hundreds of entrepreneurs, I have to say that some are great managers, some are lousy. The lousy ones who succeed either learn to be better managers or surround themselves with great ones. A common mistake made by those who fail is trying to do it all themselves. They think they can do it best or fastest – and this is often true – but as a result, no one else in their enterprise learns how to do it.

In a way, they’re like overly protective parents. At every step, the kids hear, “Don’t touch the stove, watch where you walk, how can I help you?” When they finally leave the nest, they may be helpless. But if kids are raised with some leeway to learn for themselves – and to make a few mistakes – they are more likely to be able to adapt and survive in the real world.

Some entrepreneurs I know complain that they can’t trust anyone; they moan about how hard it is to find good help. What will happen to the businesses they are trying to build if they get hit by a truck tomorrow? In building my businesses, I could sleep well at night only if I honestly believed that the business could continue successfully without me. This may be impossible at most startups, but the sooner you develop organizational depth, the better.

Leadership vs. management. Developing strong people through coaching and teaching is critical to success, yet many entrepreneurs fail in these areas. Superior managers are outstanding in these regards. This is one reason why both leadership and management are needed by any lasting enterprise.

One of the myths prevalent among venture capitalists is that it takes one kind of person to start a company and another to build it or run it. The implication is that the visionary and the manager are never united in the same package. The problem with this theory is that most of the really great innovative companies have been run by the founder until he died or retired. It’s true of Home Depot, Wal-Mart, Toys R Us, Microsoft, Dell, HP, Intel, Oracle, AOL, McDonald’s, Hilton, and many others. Admittedly, the person who combines entrepreneurial vision with management skills – the Bill Gates or the Michael Dell – is a rare bird. But not nearly so rare as venture capitalists seem to believe.

Management is a world of budgets, of hiring and firing, of deal-making, lawyers, and accountants. By contrast, leadership is a world of passion and of vision. Leadership is about seeing what needs to be done and having the courage to do it. Management is about knowing how to fit together the details to make the vision real.

An apt illustration of the difference between management and leadership comes from railroading. When you stand at a country railroad crossing and watch a freight train pass, it is hard not to be impressed by the miracle of railroading. A train longer than a mile, weighing millions of tons, glides by at 65 mph, with almost no friction. But if you study how trains really work, you find that this is not when the locomotives do their greatest work. For the very hardest part of any railroad journey is the first inch. Getting that multimillion-ton train to move off the dime is the most difficult task ever asked of a locomotive. And so it is with enterprise. The hardest task is to get people to change, to try new things, to have the courage to break out of the mold and move ahead.

The leader is the one who shows the way, who shines a light on the future so it is clear for all to see. From the leader’s passion the whole organization draws strength.

***

            I will leave you with one parting message. Perhaps it will help you maintain your fire, your burning passion. I have carried this thought with me for many years; it is the only quote that has always hung on my wall.

            If you have ever stood and admired Washington’s Union Station, New York’s Flatiron Building, or Chicago’s manicured lakefront park system, you owe what you see to visionary architect and planner Daniel H. Burnham. Here I (in parentheses) update his century-old comment for our changed world:

“Make no little plans. They have no magic to stir men’s blood and probably themselves will not be realized. Make big plans; aim high in hope and work, remembering that a noble, logical diagram once recorded will never die, but long after we are gone will be a living thing, asserting itself with ever-growing insistency. Remember that our sons and grandsons (and daughters and granddaughters) are going to do things that would stagger us. Let your watchword be order and your beacon beauty.”

Reading More About Entrepreneurship

Innovation and Entrepreneurship by Peter F. Drucker – still the best mind in the business. Try How to Think Like an Entrepreneur by Michael B. Shane; the other extreme – a practitioner rather than an academic viewpoint.  Great little book with lots of nuggets of wisdom. Two excellent textbooks are New Venture Creation: Entrepreneurship for the 21^st Century by Jeffry A. Timmons and Entrepreneurship: A Contemporary Approach by Donald F. Kuratko and Richard M. Hodgetts. Amar V. Bhide’s The Origin and Evolution of New Businesses is the best serious academic study of entrepreneurs and the causes of success and failure.

Reading More About Leadership

After Alfred P. Sloan’s book (My Years with General Motors), my favorites are Control Your Destiny or Someone Else Will: How Jack Welch Has Made General Electric the World’s Most Competitive Company by Noel M. Tichy and Stratford Sherman and Built to Last: Successful Habits of Visionary Companies by James C. Collins and Jerry I. Porras. Also recommended: John P. Kotter on What Leaders Really Do and Leading Change by John P. Kotter and On Becoming a Leader by Warren Bennis. Another good book to keep around is The Ultimate Business Library: 50 Books That Shaped Management Thinking by Stuart Crainer – this book does not take the place of reading those 50 books, but it sure is a heck of an index to them, allowing you to figure out which ones you should read in full. Finally, the psychologist Abraham Maslow is no longer with us, but his ideas about motivation live on in The Maslow Business Reader

Abraham H. Maslow, edited by Deborah C. Stephens.