Stephen Billing’s Blog

I think the main thing that distinguishes entrepreneurship from management or other forms of organisation is that with entrepreneurship a person takes the risk of bringing into being about an idea in a business form.

Much thinking about entrepreneurship focuses on the originality of the idea, and there are certainly plenty of examples of inventors or people with original ideas who create successful businesses.

For example, I am quite excited about the guy who has invented a jet pack that allows personal flight and am looking forward to the Jetson-age type of travel this might allow – no more traffic jams! Please hurry up and get this idea commercially perfected so that I can easily fly into Wellington city for my day’s work. Although I am also imagining mid air crashes and a whole set of new airborne traffic regulations.

However, I don’t think entrepreneurial flair is actually so much about the originality of the idea as it is about a combination of the idea and the execution. Richard Branson is an example of someone who would be seen as an entrepreneur, but not necessarily an inventor of new ideas.

I think about my own business, for example. I am a management consultant, and I am certainly not the first management consultant to exist in the world. In fact, I owe a great debt to other management consultants who have gone before me and have created a tradition in which I walk that has generated a market for the services I offer. Nevertheless I definitely offer these services in my own unique way.

So, what is it that is entrepreneurial about all this? One aspect is not working for an employer – being your own boss, and, so to speak, probably gaining the hardest boss of all.

So there is no boss to set expectations, provide a performance appraisal or to assign you a pay rise. In this sense you are free from constraints set by "superiors". Of course you also have constraints placed on you by customers. Not only the need to find customers, but also the need to provide them with a better customer experience than they could get anywhere else. This leads to consideration of how much to charge – how much is your product or service worth? As an employee, it’s pretty easy. You are worth your salary. As an entrepreneur, you have to decide what your pricing should be. This is a factor of the value of the services you offer as perceived by your customers, how you differentiate them from others ("stand out from the crowd") and your own confidence about the value you offer.

So, entrepreneurship can be seen as primarily a marketing challenge – whether you have a new idea, or an existing idea that you are going to execute well, perhaps with a unique twist such as to a particular group of people or geographic area.

I think that entrepreneurship boils down to being prepared to learn how to become good at marketing a service or product that you deliver well, to a customer. Therefore you need to have passion to sustain you through the ups and downs of entrepreneurship, competence to provide a product or service effectively, and a market need you can meet, to ensure you have customers.

As a keen amateur tennis player, I have the desire (passion) to be a professional tennis player, but not the competence, nor the customers to pay me at my current level of proficiency. I have the market need (customers – there is apparently a shortage of tennis coaches at the moment) and skill to be a tennis coach, but not the passion (desire).

So you have to have all three – passion to sustain you through the ups and downs of establishing a business, skill to deliver a service, and a market need you can meet comprising customers who will pay you for a skill you are can sustain through your passion for it.

If you have passion, competence and a market need, you have the potential for a vocation, perhaps as an entrepreneur. If you have only one or two out of these three, then you have an avocation – a hobby or interest that will not be able to sustain an ongoing income.

That, to my mind, is the test.

I am grateful to Alan Weiss for the distinction between vocation and avocation.