Based on global data, we know that early stage entrepreneurial activity creates disproportionate growth, as measured in job creation. However, these high-growth early-stage entrepreneurial organizations (commonly called startups) are rare. In 2011, high-growth entrepreneurs represented only 4% of the total entrepreneurs who responded to the Global Entrepreneurship Monitor (GEM) survey. However, the businesses they had founded created nearly 40% of the total jobs generated by all entrepreneurs who responded to the survey. Additionally, the future of early stage entrepreneurial organizations is uncertain. According to the U.S. Small Business Administration, about half of new businesses fail by year 5.
Mature companies and limited growth
In contrast to early stage entrepreneurial companies, established companies are not growth engines. In an analysis of the U.S. government dataset, Business Dynamics Statistics (BDS), the Kaufman Foundation reports some stark results for established companies. The Kaufman Foundation found that between 1977 and 2005, established companies resulted in a net job loss of over a million jobs each year. Mature companies are not creating growth. This should not be surprising as we read about decreasing corporate longevity all the time. Such is the bleak picture for established companies.
How do we better equip established companies to embrace characteristics of high-growth companies?
In light of this picture, how do we encourage established companies to embrace characteristics of high growth companies? And what can high-growth founders learn from established businesses? First, let’s look at some characteristics of high-growth organizations. Employees of early-stage entrepreneurial organizations have characteristics we can study. Employees and leaders in high-growth companies embrace flexibility. “Where stability and long-term planning were once the mark of a sound strategy, adaptability is the new competitive advantage.” And the ability to adapt can be developed.
The growth mindset
According to Carol Dweck:
“Individuals who believe their talents can be developed (through hard work, good strategies, and input from others) have a growth mindset. They tend to achieve more than those with a more fixed mindset (those who believe their talents are innate gifts). This is because they worry less about looking smart and they put more energy into learning. When entire companies embrace a growth mindset, their employees report feeling far more empowered and committed; they also receive far greater organizational support for collaboration and innovation”.
In a further indication of increased focus on understanding entrepreneurial activity inside established companies, the Global Entrepreneurship Monitor (GEM) has added a measure of Employee Entrepreneurial Activity (EEA) to their yearly global survey of entrepreneurial activity. Employee Entrepreneurial Activity (EEA) may be more commonly known as intrapreneurship. As we have both been working with entrepreneurs and intrapreneurs for many years, we became interested in the idea of creating an environment where the best characteristics of early-stage and established businesses could be nurtured, with entrepreneurship as the driver. If we put early-stage founders in the same cohort as intrapreneurs, what can they learn from each other?
In Fall 2019, we are running a beta of our entrepreneurship bootcamp combining early stage entrepreneurs with intrapreneurs. Can we catalyze an entrepreneurial mindset in early-stage organizations as well as established businesses?
Meaghan Kennedy helps organizations make new things and design processes for sustained internal innovation. Trained in public health and industrial design, Meaghan strives for systematic social and economic impact at scale.
Isabelle Swiderski helps social entrepreneurs leverage design thinking and making to create or improve their ventures. She marries an MBA and an MA in Design to support work that changes lives.
Originally published at http://seven25.com.
