Entrepreneurial success is difficult to define. There is no hard metric, as each venture has their own challenges and vicissitudes. We are proposing a balanced measure of success for entrepreneurial success termed “momentum” to assess the needed velocity for sustainable value creation. Momentum (unlike in Physics) can be generated in the venture through a focus on trustworthiness which is very critical for a new venture. It is a far cry from traditional measures like profits and revenues.
Entrepreneurship is a long journey where success needs to be understood from the traveller’s (entrepreneur/s) narrative – his motives, needs desires, concerns, and aspiration, as much as from the investors and other stakeholders’ point of view- in creating the needed momentum- required at every stage of entrepreneurship. Hence understanding the degree of entrepreneurial success requires infinite patience and empathy.
With a recent spurt of start-ups in almost every unthinkable domain, often with names unheard of before, one wonders where does the impetus to plunge into entrepreneurial ventures’ spring from. Belonging to a generation, where companies meant large organization (like that of Tatas, Birla’s, etc), birth of start-ups in quick succession, especially in the new age sectors, makes for an exciting study.
In a study recently instituted at SPJIMR, to identify the factors responsible for the success and failures of start-ups, it became essential for us, to begin with an understanding of what are the prime motives behind entrepreneurial ventures. Motives we believe is the first step towards gauging “momentum”. After speaking to a few randomly selected entrepreneurs (as a pilot), we arrived at the following factors that propel entrepreneurial success. We found the factors to be gender agnostic.
Entrepreneurial Intentions: Clarity on priorities of work and life and well-entrenched belief systems
Entrepreneurial intentions are defined as personal orientations which might lead to potential venture creations. Threads of these intentions pervaded each of our interactions with the entrepreneurs. On being asked what is the goal they wish to pursue, as an entrepreneur, one said “My goal is not a lavish life, but “having greater control over my life – in terms of the work that I will be doing”. “I like flexibility in the way I approach work”. Most entrepreneurs are clear that they would like to “explore” and not always “be told what to do”. “You can’t always be working for others. You need to build or do something of your own”. Entrepreneurs seamlessly focus on growth, bottom line and execution- the Tripod on which their belief systems rest.
Self – Efficacy: Ardent belief in one’s and the team’s capabilities and the ability to “Stay in the Game”.
Self-efficacy reflects confidence in the ability to exert control over one’s own motivation, behaviour, and social environment. Two related constructs that we may look at are persistence and perseverance which are needed to chase the entrepreneurial goal.
“I can easily spot opportunities. It stares on my face when I see one”, said an entrepreneur in an untouched domain. Reminiscing his childhood, another entrepreneur said “Although I had admission to a better school in 11th class, I chose to study in my previous school as I was convinced it was not the school but my own capabilities that would determine my performance”.
“In our team, each one brings in a different perspective and a unique strength. One knows how the banks operate, another brings in academic depth in algorithm, the third is good at managing the external interface. We also need inspirational motivation and inter-personal relationship orientation which one of the team members is able to provide”.
Most of the entrepreneurs in our sample were from India’s leading B- Schools, where the Talent Signal provided to them was one of being special and gifted. The ego and self – identity due to societal elevation – forms a part of the cultural and social dynamics that would be further explored in our main study.
Perceived Entrepreneurial Support: (PES) Internal and External validation of their belief systems by peers, mentors or experts.
Perceived Entrepreneurial Support is the degree to which entrepreneur believe that their contributions fulfils needs of scalability, impact, robust business model that would attract investors and gather followership and momentum
An entrepreneur sways between the continuum of self- doubt and self-assurance. Once he receives an external validation through an expert or a mentor it gives him/her reassurance and confidence to keep trying in anticipation of that silver lining in the cloud. This reassurance is like resuscitation and therefore mentorship in an entrepreneurial world assumes a whole new meaning that needs to be valued and well understood.
The family forms an important part of the eco-system. Parental encouragement is a great impetus, although parents have different styles in expressing their encouragement.
Team – Market Fit: Business model emanating from own experiences and pain points and built on customer experiences
In our study, we found that some founders rely on their own experiences to spot an opportunity while others build on the experiences of one or more co-founders. A women entrepreneur said that since the birthday cake she was taking home for her sister, melted in the gruelling traffic in Mumbai, she came up with an idea to start transportation services of perishable items. Another had great difficulty in securing admission to a tier 1 college, coming from tier 2 city, due to lack of adequate exposure. He founded a career coaching franchisee. The third one started a rural enterprise as one of the co-founder’s father is a farmer in the same state, that the venture has sprung up.
Collegiality amongst the co-founders.
Team spirit and trust amongst the founding members have to be of a different and high order. Each one is an owner and has to think and behave like one. One co-founder was of the view that “the day one of us, starts behaving like an employee, there are bound to be conflict”. Asked to reflect deeper, he said that each one has to work hard to build the company, therefore, if for some reason one is not productive during a phase, the other owners have to be understanding and tolerant. Else the venture can fall apart.
Collegiality develops on account of being in the trenches together- being a separate tribe with a new found identity.
Complementarity of Skills amongst the co-founders.
It’s like writing a collaborative research paper. Different members bring in different skill sets. In fact, founders gravitate to each other based on deep underlying principles and philosophies. There are both similarities and differences in their personality traits. Similarities are more in the value system and dissimilarities are in their functional skill sets and competencies. “We are three co-founders, whereas I focus on growth, one of my co-founders looks at the bottom line and the third beliefs in execution. We are a company in our selves”. “I was good at identifying problems in fintech, my cofounder was good at finding solutions”.
Critical Thinking Capability: Testing and Executing ideas to discover what works (Its’ never about ideas alone) and is about moving with the changing targets
All the entrepreneurs interviewed said that their business models underwent several rounds of iteration until they realized that it was ready to go to the market. There was consensus around the fact that entrepreneurship is not about coming out with an idea but testing the idea quickly to see whether it will work. Its not just about intuition and Gut, but about ones critical thinking capability. One entrepreneur who began with the idea for uberization of Tractors ended with Farms as a service- FAAS model, providing back to back solutions to farmers. Another entrepreneur said that “its about setting targets and quickly changing them as one comes along”
Psychological Safety of a fall – back option in case the venture fails
Psychological safety is a shared belief that the team is safe for interpersonal risk-taking. It can be defined as “being able to show and employ one’s self without fear of negative consequences of self-image, status or career” (Kahn 1990, p. 708). In psychologically safe teams, team members feel accepted and respected.
Entrepreneurs are aware that their business may or may not succeed. Having a safety net enables them to take the needed risk to stay ahead in the game. “Going back to our job is also an option”, said an entrepreneur.
The challenges and responses of Entrepreneurs at different stages in the start-up eco-system is different and therefore it is difficult to arrive at a common metric or a defined set of parameters. However our study found that there is sufficient evidence towards measuring “ momentum” , based on the intensity of these motives.
The author acknowledges inputs from Prof Vidhu Sekhar, Centre for Financial services and Prof Kaustav Majumdar, Incubation Centre and Start-ups.