Owning a business is not necessarily entrepreneurship

Photo Credit Flickr.com https://www.flickr.com/photos/wlscience/2143293439/
Photo Credit Flickr.com

I am about three days into Peter Drucker’s book, Innovation and Entrepreneurship. It’s a good read provided you skip the introduction that consists almost entirely of understated 1984 prophesy’s about the future of the tech space.

Drucker approaches entrepreneurship as a science centered on confronting new frontiers rather than establishing a new businesses or owning a business. The argument is that a person starting a new hamburger stand where there is a market need for a hamburger stand is not an entrepreneur. The entrepreneur would open a beatnik hamburger bar that plays old movies instead of sports in a part of town that already has hamburger stands, coffee shops and sports bars.

He goes so far as to make the point that companies like DuPont, 3M and Apple (I added Apple to his list) have proven that well established companies can be entrepreneurial. Whenever a person, partnership or company takes a risk by forging into a new frontier, entrepreneurship has taken place.The key difference between entrepreneurship and starting/owning a business is the existence and viability of the frontier. All entrepreneurs innovate, but not all innovative moves are entrepreneurial. The latter being the false syllogism referred to in the title of this post.

Returning to the hamburger stand analogy, opening a hamburger stand in a neighborhood where the people want a hamburger stand may be innovative in the sense that it takes risk and capital. However, it is not truly innovative because there is no real frontier to conquer. This is especially true in the world of franchising.

Creating a better mousetrap is not necessarily innovative because the world is fully aware of the market and need for a better mousetrap. The entrepreneur will instead find a way to rid a space of mice without the use of any trap at all, or better yet, he/she will find a new use for the abundance of mice.

Drucker’s definition of entrepreneurship does not claim to be superior to owning a franchise or starting a hamburger stand, it just differentiates it from these activities for the purpose of analysis. A profitable venture is exciting and risky no matter what product or service is offers. In the end, every form of business offers unique challenges.

It’s important to understand the difference though because taking advice on entrepreneurship when operating a franchise may actually create more problems than opportunities.

Nobody wants to go into a Subway and see that there’s no Spicy Italian, or that the Spicy Italian contains roast beef instead of pepperoni. Franchises work because, instead of forging into a new frontier, they eliminate the frontier altogether by using a proven product and model. And that’s not a bad thing – it’s just not entrepreneurship.

This post was originally posted on my LinkedIn page.

Leave a Comment

Creative Commons Attribution 3.0 United States
This work by adamc is licensed under a Creative Commons Attribution 3.0 United States.