Entrepreneurship And A State Of Mind

Not everyone is an entrepreneur, but everyone can suspend suspicion and appreciate an entrepreneurial frame of mind. After all, it’s what propels societies forward.

To be an entrepreneur is to embrace a state of mind. That includes the startups that are discussed breathlessly in the media. However, entrepreneurship is about much more than just this clutch of (financial) unicorns capturing the imagination at any given moment.

Consider the etymology of “entrepreneur.” The term has been around since the 1700s, coming from the French entreprendre, to undertake a task. In the last few decades, it has been associated with Silicon Valley ventures, spreading variously to China, India, Israel, etc. A ‘Google Books’ search shows the use of ‘entrepreneur’ rises in the West over the past few decades, and in China, also rises sharply starting a few decades later, though the latter numbers should be taken with more than the usual pinch of salt (given translation difficulties).

Anyone with historical sensibility will know that entrepreneurship was hardy through the centuries. Joseph Schumpeter wrote his Theory of Economic Development in 1911 where he celebrates the entrepreneur. Entrepreneurs thrived during the time of the Mauryas, and in Medici Florence, and elsewhere. The last century of Chinese development is littered with entrepreneurial successes, transcending regimes and surviving turbulence, from the statesman philanthropist Zhang Jian and the Dasheng Textile Company in 1895, to Liu Hongsheng, the “King of Matches,” and the China Match Company in 1930, to Lu Guanqiu, the Zhejiang peasant who founded – incredibly, during the peak of the Cultural Revolution in 1970s – the now multi-billion dollar global automotive parts Wanxiang Group.

Nor is entrepreneurship limited to startups. My co-authored book Leadership to Last (Penguin India) profiles iconic entrepreneurs from South Asia and beyond who have built systems of multi-generational entrepreneurship. Who is to say that we shouldn’t call any policymaker an entrepreneur if she displays a creative, risk-taking bent of mind, set on achieving a societal goal more cleverly? The idea of conditional cash transfers, social welfare programmes where the state transfers money based on some conditions being met (e.g. school attendance by children, or timely vaccination), is an inspired policy idea whose conceptualisation and implementation was nothing if not an act of entrepreneurship.

In a course I’ve co-taught at Harvard College for over a decade, Contemporary Developing Countries: Entrepreneurial Solutions to Intractable Problems – and in an online version on edX taken by three quarter of a million students, Entrepreneurship in Emerging Economies – I develop this notion of entrepreneurialism as a state of mind, and explore its practical implications.

Without pretending to be comprehensive, here are three characteristics of this state of mind that I’d say are almost necessary and nearly sufficient conditions.

First, an entrepreneur must be open to varied insights, especially from those who think differently from oneself. But how, practically, to do this? In my course, I ask students to think like a scientist, like an artist, and like a planner. To caricature, the scientist thinks of hypothesis and refutation, of concrete data algorithmically; the artist puts himself in the shoes of others because he understands that the same data might be interpreted differently by different individuals, and that this perspective unfetters the imagination; the planner takes a bird’s-eye view to consider the system wide implications of choices. Would-be entrepreneurs can use these different starting points to mix-and-match ideas, as has been done through the ages. Thomas Edison’s lightbulb was born around 1880 from just such a recombination, of a gas lamp and from experimentation with varied materials with differing incandescence to create the bulb filament.

Second, an entrepreneur embraces judicious risk-taking. A colleague once said this to me – no sensible entrepreneur takes undue risk. We don’t wake up in the morning and ask, ‘What risk am I going to take today?’ Without calibrated risk, it’s impossible to advance the status quo, almost by definition.

Third, good – and I daresay successful – entrepreneurship is cognizant of societal value. The creation of Gavi, the Geneva-based World Vaccine Alliance, was an act of consummate entrepreneurship, organisational and financial creativity, that has resulted in almost a billion children getting vaccinated around the world. Gavi is a non-profit, but even in cases of for-profit entrepreneurship, it’s important to separate out notions of value-created versus the part of that value that’s captured by the entrepreneur. For example, a Bangalore-based company I co-founded, Chaipoint, provides clean hygienic tea (chai) to the masses, but by employing over a thousand youth, generates value for society beyond that resulting from the chai’s consumption.

Rather than embrace such a mindset, we sometimes bias our thoughts in less productive directions. For example, vast sections of society have a suspicion of money. It’s clichéd but

important to reiterate that money is a human-devised tool to accomplish societal allocation and redistribution of resources, not an end in itself. Naïveté aside, I like getting compensated as much as anyone, but that’s not the end-all-be-all of the creative journey one embarks upon as an entrepreneur.

Another unconstructive starting point is a deep suspicion of the state. It’s worth recalling that the state has been remarkably entrepreneurial itself in many instances – I’d point to China from the 1980s until at least pre-Covid (the jury is out going forward) – or has at least facilitated entrepreneurship (by underwriting a portion of financial risk, or by investing in basic research that provides the base layer atop which private individuals innovate).

Not everyone is an entrepreneur, but everyone can suspend suspicion and appreciate an entrepreneurial frame of mind. After all, it’s what propels societies forward.

*The author is Jorge Paulo Lemann Professor at HBS and the director of the Harvard’s Lakshmi Mittal & Family South Asia Institute.