JanBeckers.com

Certainly there is not the one “right” formula that will guarantee success as entrepreneur. But there are some important factors which will define a large part of the long term outcome as entrepreneur. For sure every entrepreneur has already his implicit understanding of these factors. But sometimes this intuitive feeling will be to unclear to help to make the right decisions. So I believe it is useful to have a simple, explicit model of the key drivers that will effect the outcome as entrepreneur.

First I`m going to describe the key drivers to give you a better understanding which aspects this factors include in my model. After that I give examples how all this drivers are connected among each other. Last I will put them into a little formula.

- Knowledge:

Entrepreneurial knowledge includes all kinds of information about technologies, markets, economies, leadership and everything else that is needed to found successful Start-ups. Depending on your role in a venture, the targeted market, etc. your knowledge will develop in different directions. To make the right decisions for your entrepreneurial career it is important to differentiate between specific knowledge and general knowledge. The worth of specific knowledge will decrease much in worth after starting a new venture in a different market. The worth of general knowledge (How to start a company…, How to negotiate…) will not decrease that much. One the other side general knowledge is less scarce and will therefore not be able to differentiate you.

- Talent

The factor “talent” includes in my model all (given or acquired) abilities to deal with the entrepreneurial challenges. That could e.g. be skills in communicating, opportunity recognition, negotiation or just raw intelligence.
- Motivation

Motivation describes the level of effort that you are willing to invest to reach your entrepreneurial goals.

- Network

The entrepreneurs network consists of all (strong or weak) ties to potential partners.

- Reputation

Reputation is the amount of track record, talent, trustworthiness and reliability that other (especially potential partners) attribute to you. This reputation may be anchored in your network, but can also be accessed by screening you within the Internet (Google) or other sources.

- (other) Resources e.g. money

Beyond your talent, network and knowledge there are also other resources like money or (potential) media power which ownership (or access without ownership) will have influence on your entrepreneurial success.

Certainly, not a single of this drivers will appear ”new”. To be useful the relationship between the factors has to be analyzed. If you think about the connections between the factors it comes clear that all factors are related very strong among each others. I will point this out by giving you some examples:

- Talent influences the amount and depth of knowledge that you will be able to acquire.

- A good reputation as smart, trust- and helpful entrepreneur will help to build and maintain your personal network.

- Reputation relies on your past success and integer behaviour as well as your ability to communicate that. Therefore it is correlated with your general motivation and talent (through your past success) as well as your talent to communicate this success and integer behaviour.

- The amount of knowledge that you acquire grows with the worth of your network.

- The more resources you have, the better you can leverage the other factors. If you are CEO of a company with small resources, your work (and outcome) will have less influence than if you are CEO of a company with large resources.
- People will refuse to give you access to sensitive knowledge if you don`t have a good reputation as trustworthy person. So knowledge and reputation are also connected.

To be continued…

It is obvious that the input factors are strongly connected among each others. A model could reflect that by multiplying the factors. For sure not all factors will have an equal impact on the outcome. The importance of the factors could be modeled by giving them different exponents which raise or lower the factors influence on the final outcome. Depending on the role that you take as entrepreneur the exponents (and so the relative importance of the factors) will vary.

 After all a basic formula for personal entrepreneurial success could look like the following:

A = constant term

talent,knowledge, motivation, network, reputation, other resources = factors (key drivers of the outcome)

X1,…X6 = exponents of the factors

entrepreneurial outcome = A * talent^X1 * knowledge^X2 * motivation^X3 * network^X4 * reputation^X5 * other resources^X6

So for what insights could this very simplified and theoretical stuff could be useful? The most important thing you can draw from this model is that you have to increase your level of input factors simultaneously to get the best possible outcome as entrepreneur. Don`t focus only on a few factors to work on. For example the best knowledge about markets is not much worth if you don`t have the network to get access to this markets. To realize your full personal potential as entrepreneur in the long term you have to estimate which importance the single factors have within your role as entrepreneur. After that you can put the optimal amount of effort in improving every factor. As a consequence this means you are working with a personal long-term strategy as entrepreneur instead of working only on the daily routine of your current venture.

 At the moment this model is really very basic and a lot of aspects could be added. So share your minds and add your viewpoints!

This entry was posted on Sunday, April 6th, 2008 at 12:54 am and is filed under Entrepreneurship. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.