Posts Tagged organization development journal

Reclaiming the Entrepreneurial Spirit

I read an article in Bloomberg Business Week about Andrew Mason. Mason is the headwaiter at a Japanese restaurant in Chicago’s Wicker Park. However, the job is Mason’s part-time evening job as by day he is the chief executive officer and founder of Groupon. What struck me reading the article is that Mason has matured from his playful childlike demeanor, which allowed him to develop the Groupon concept. Mason has become a more seasoned entrepreneur trying to hold on to what he started and run it in a more businesslike manner (Etter & MacMillan, 2012).

Although investors and analysts have challenged Mason’s running of Groupon, he has kept a lock on what he created. Mason wants to improve Groupon without giving it away to suitors offering him large amounts of money to buy the company. Mason turned down an offer by Google to buy the company, which would have allowed Mason to cash out. Mason turned down the offer despite problems it has had with profitability and holding up share value.  Mason admitted the company has had problems with its operating system and commented, “we have to get good at this” (Etter & MacMillan, 2012, p. 50)

Meanwhile, executives at Groupon have noted the level of seriousness has notched up and the company now employs more lawyers and accountants. Groupon has even purchased other companies and has set up a location in the Silicon Valley in California.  Despite his critics lashing out at him, Mason wants to preserve control over the company he started and claims he is in the business for more than just the money.  Mason said his company wants to solve a business problem, which is his main motivation (Etter & MacMillan, 2012).

Although Mason may have much to learn, he has the entrepreneurial spirit to perfect and hold on to what he started.  Mason still has a vision and he wants to cement it instead of giving it away to someone else.  Mason still studies the disconnect in the operating system as maitre d’ of his part-time job at the Japanese restaurant and has learned from the experience. Even though Mason has learned from his experience, he realizes still has much to learn.

Only time will tell if Groupon can get to the next level, but I admire Mason for his stick-to-itiveness. I believe Mason has the characteristics of a genuine entrepreneur as he loves what he does and wants to perfect it. Money is not his only motivation and his quest for perfection overshadows any thirst to get rich quick. Mason continues to learn from his experience and enjoys every minute of it. Mason does not fear failure, but looks it straight in the eye. I believe more entrepreneurs need to reclaim the entrepreneurial spirit.

What is your take on reclaiming the entrepreneurial spirit? I want to hear from you. If you want to develop the entrepreneurial spirit I suggest learning more about how you can starting now. Learn more.


Etter, L. and MacMillan, D. (2012, July 16-22). Groupon tries to ‘Get Good’ at growing up. Bloomberg Businessweek.


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Have You Had A Frontal Lobotomy Yet?

Often I hear the advice the way to improve products and services is to keep all the costs involved to a minimum. Although keeping costs low is a good way to achieve enough of a margin to make a product or service viable, cost cutting can create other problems. For example, the product or service can have less value to the customer or consumer and cause them to select other more desirable products and services. In short, cutting all costs indiscriminately often is counterproductive.

Just yesterday I listened to a video interview of Steve Jobs and he embraced the idea the main goal is to produce products that customers want and need. Jobs commented that when he came back to Apple when it had experienced financial difficulty many of the corporate managers had a hard time understanding the idea of creating value customers want and need. The approach of Apple corporate managers focused more on cost cutting and less on creating value.

Jobs highlighted the idea that one-size-fits-all approaches do not work as well as more reasoned approaches that consider what customers want and need. Jobs said his philosophy to the turnaround of Apple came from thinking like a small company. Jobs found many good people still existed in the company even after he left. What made these people stay is their belief in the product despite the push by management to cut costs at every chance.

Creative people need space to create value and can substitute parts instead of cutting costs at every opportunity. Jobs explained Apple created the I-pod using substitution instead of cost cutting at every turn. Substitution allows creative people to consider consumers needs and wants instead of putting out a product that has less value to them. Job’s philosophy to work like a small company relies on the communications between company employees and consumers unlike big companies focusing strictly on product margins.

My advice is not to let anyone tell you to leave your brains at the door. Cost cutting is desirable when used correctly, but can also have adverse effects. Think of customers and consumers first before demanding cost cuts. Cost cutting is not an end-all solution. Have you had a frontal lobotomy yet? What does your company tell you?

I want to hear your comments. If you want some other ideas I encourage you to get help now. Learn more.

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Credit Unions: An Alternative to Community Bank Financing of Small Business Loans

I read a blog post today about how banks have started to lend to small business again. Considering the bad treatment banks have given their customers I wonder how they will treat small businesses after cutting off lines of credit and other lending to them during the financial crisis. I suggest considering the credit union as an alternative to a bank for small business lending. Personally, I like getting treated as a person instead of as a commodity and credit unions have many advantages. I just opened an account with a credit union and I found the I received much better treatment and the credit union valued not just my business, but me as a person.

I remember an SBA loan I had with a small bank that a larger bank later took over. For several years the bank and I had a good relationship. One day I received a notice the larger bank had bought the bank and the new bank no longer wanted SBA loans as part of its business. The new management made it difficult to preserve the good relationship by charging new fees for everything imaginable. A few years into the recent financial crisis I saw this bank on a list of the banks the Fed had shut down.

Because small business financing sources have evaporated during the global recession, small business should consider using credit unions. Credit union unlike small banks are cooperative nonprofit organizations. As nonprofit organizations credit unions have an exemption from tax resulting in lower costs allowing them more latitude in making loans. Credit unions also enjoy  lower costs from volunteer labor and employer sponsorship giving them the ability to offer lower rates. Besides offering small business loans, credit unions also offer other products like credit cards and car loans (Feinberg & Rahman, 2006).

The trend is for large banks to buy smaller banks especially in larger markets. This trend has resulted in less lending to small businesses causing a need for alternative funding sources like credit unions to service small businesses. Consolidating small banks has created less of an interest in small business lending. The lack of interest stems from the difficulty large banks have dealing with soft data, the more hierarchical bank’s need for more approvals, and lower credit supplies by the larger organization (Ely & Robinson, 2009).

Oriz-Molina and Penas (2008) found one way to mitigate opaque risk from small business is to shorten loan terms to watch the progress of small businesses. The more conventional approach is to want greater collateral over a longer term. Credit unions also have the ability to gain a better understanding of owners’ personal wealth. Although credit unions can focus on better addressing opaque risks using these approaches, larger banks often rely on credit scoring to approve small business loans to achieve a competitive advantage (Immergluck & Smith, 2003).

Despite the ability of larger banks to gain a competitive advantage in lending to small business, credit unions are closer to small business customers and able to forge better relations. Large banks have shown poor behavior in recent years making them less attractive than more personal, smaller thrift institutions. For example, banks have added new fees and restricted lending to only the strongest small businesses. Improved relations with small businesses promotes long-term relations despite shorter lending terms.

Consolidating small community banks into larger banks has caused banks to become less personal and more selective. Credit unions fill a social gap in the market because of consolidation of these community banks and the cost advantage they have from the nonprofit status. Credit unions can expand from solely personal to more commercial lending to fill this gap.

What sources have you considered for your business in achieving financing? Are credit unions part of the mix? Do you want to know more about the value of commercial lending by credit unions? Find out more about how you can benefit.


Ely, D. P., & Robinson, K. J. (2009). Credit unions and small business lending. Journal of Financial Services Research, 35(1), 53-80. doi: 10.1007/s10693-008-0038-3

 Feinberg, R. M., & Rahman, A. F. M. A. (2006). Are credit unions just small banks? Determinants of loan rates in local consumer lending markets Eastern Economic Journal, 32(4), 647-659. doi: 1241333261; 35361511; 11879; EEJ; INNNEEJ0000065491

 Immergluck, D., & Smith, G. (2003). How changes in small business lending affect firms in low- and moderate-income neighborhoods. Journal of Developmental Entrepreneurship, 8(2), 153-175. doi: 502848551; 8351081; 38473; DVEN; INODDVEN0000469300

Ortiz-Molina, H., & Penas, M. F. (2008). Lending to small businesses: the role of loan maturity in addressing information problems. Small Business Economics, 30(4), 361-383. doi: 10.1007/s11187-007-9053-2


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Another Episode from my Marathon Experience: The Triathlon

In another post I related my marathon experience to starting a new business. Let me tell you about the next episode related to my running experience. One of the people I met while training for the marathon included an avid triathlete. I started running with Bill who ran much faster than me, but liked shorter distances and preferred the challenge of the triathlon. Bill excelled most in biking, but ran fast at shorter distances. Bill often finished in the top three of his age group. Bill motivated me to buy a bike and learn how to swim. Soon after, I started training for my first triathlon. Unlike Bill, I found biking the hardest to learn and I had a fear of the water inhibiting me from learning to swim.

The triathlon taught me how to take on new tasks similar to learning new tasks involved in starting a business. Someone starting a new business has to learn new tasks all the time. The founder of a new business often fears new tasks just as I feared learning how to swim. Yet, as I jumped in the pool every day and started to swim laps, I started to enjoy swimming because it provided solitude and relaxation in the water without the pounding of running. I found this similar to a new business owner because sometimes a new business owner has to step back in solitude and reflect on what he or she wants to do. The founder of a new business continually seeks new ways to make the business fit and productive. Imagine having the resources to learn new tasks to avoid fear and learn new tasks.

Learning to bike created new challenges a as I learned to stay with the pack by drafting. I found bikers stayed close together in a pack to preserve energy and keep pace with other bikers. I also found this strategy is not without risk. I learned quickly if one biker went down, many would go down and when bikers go down together they are in great danger of injury. I also learned the best bikers pick themselves back up and continue the race despite their injuries. Good bikers learn from other bikers in the pack about preventing the danger and sticking with the pack. Experienced bikers work as a team to prevent mass wipe outs and hang together in unison.

Savvy entrepreneurs are much like the biker because they continually scan what other people in their business do. Entrepreneurs learn to keep pace and stay together to reach their goals, but sometimes take a spill and have to pick themselves back up and move forward. Risk is inherent in entrepreneurship and a business owner has to accept failure as a path to success. The savvy entrepreneur learns from mistakes and shares with allies to prevent further wipeouts. Think about having the resources of a team to avoid mistakes by working as a team.

When race day finally came I became nervous and had doubts about completing the race. When the gun went off I plunged into the water and began to flail away as people swam over me and bumped into me. I kept lunging forward and noticed the cold water had taken my breath away unlike the pleasing temperature I became accustomed to at the pool. I began hyperventilating and thought I would drown, but I kept stroking away and moving forward. I finally reached a turnaround buoy and caught my breath even though I had no safety outlet as I did in the pool. I started feeling good and could see the shore coming within reach. I realized I would make it to shore and still many people had struggled behind me.

Entrepreneurs also have their doubts when first starting out, but successful ones keep moving forward toward their goals. A business founder also takes his licks and recovers despite unfamiliar conditions. Sometime the entrepreneur feels like he is drowning, but catches a second wind by moving toward the goal. Successful entrepreneurs struggle just like the triathlete, but keeps the goal in sight and moves toward it. Imagine training diligently for an event like the triathlon and not finishing. Not finishing is not a choice for the entrepreneur. With a good coach the entrepreneur can find the encouragement to keep moving toward the finish line.

Upon finishing the swimming leg, I ran toward my bike and found my biking gear and prepared to mount my bike. The transition entailed finding my gear in a sea of athletes, bikes, and gear. I had to change and put on my socks and shoes after drying myself off with a towel. I watched others with more experience than myself who had the transition down to a science and minimized the time to launch into the biking leg of the race. Although I did not do too bad, I learned how to become more efficient by making the transition more of a process. I learned experienced triathletes practice the transition just like they do the three main legs of the race.

The transition taught me I can improve with experience just as an entrepreneur improves with experience. A small business also becomes more efficient the more process-oriented it can become. The entrepreneur learns how to become more efficient just like the triathlete in the transition phase. Consider how the entrepreneur can improve having someone with experience showing him or her the way instead of learning on the fly.

Once I began the biking leg I realized the pack of bikers I had to draft on had shrunk because instead of starting together, bikers began at different times following the swimming leg. I found I had to work harder to find enough bikers on which to draft and not let go. In some places I peddled by myself without a pack. I had no idea how to use what I learned in training.

An entrepreneur also faces uncertainties when conditions change unexpectedly. Just as the triathlete faces the lack of a pack on which to draft, the entrepreneur experiences unknown conditions through which to navigate by taking action. The entrepreneur at times feels alone without any support. The entrepreneur must work harder to find a solution just like the triathlete does without a pack. Imagine how the entrepreneur can improve by having some experience with change and how to adapt to it. Good entrepreneurs must learn to manage change just like a new triathlete.

As I approached the final leg I faced another transition from the bike to the run. The transition mainly entailed dismounting the bike and changing shoes. Again, I found experienced triathletes practiced the transition to cut down their time. The experienced triathlete made the transition so smooth it took very little time. Zaleski (2011) found entrepreneurs with experience have a competitive advantage.

The entrepreneur has to learn every facet of a business and gets better with practice, just like the seasoned triathlete. Entrepreneurs make running the business smooth through developing the right processes and checking them for problems. Although the triathlete measures the transition with time, the entrepreneur uses specific metrics to measure efficiency of different processes to develop a good working model. Blanchflower (2004) found entrepreneurs improve the chance of success by having a higher educational level. However, one does not need a traditional education to learn what the entrepreneur needs to succeed. Entrepreneurs learn on the fly.

As I started the run, I reaffirmed the running leg is my strength because I already had experience as a runner. I settled into a nice rhythm and looked for other runners to pace. Again, I found the field of runners much more spread out because of not starting all at once. However, I did find many people running on empty I could easily pass. I gained speed as I approached the finish because a 10-kilometer (6.2 miles) running leg is much shorter than a 26-mile marathon. I had the long-distance conditioning in my favor. Whatever time I lost in the swim and bike, I made up for in the run. I finished in a good time, but still could improve by learning from my experience.

The entrepreneur is similar to the triathlete because both gain from experience and learn along the way. Both the entrepreneur and the triathlete learn to pace themselves and deal with unknown conditions. Action is critical to both the entrepreneur’s and triathlete’s success, and both strive to achieve fitness.

Do you have the tenacity of the entrepreneur? Act now if you do and learn more.


Blanchflower, D. G. (2004). Self-Employment: More may not be better. (10286). National Bureau of Economic Research. Retrieved from

Zaleski, P. A. (2011). Start-ups and external equity: The role of entrepreneurial experience. Business Economics, 46(1), 43-50. doi:


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Balancing Linear and Nonlinear Thinking in an Entrepreneurial Setting

Imagine how entrepreneurs differ in their thinking from people running larger businesses. Linear thinking means a person thinks sequentially. Nonlinear thinking is different because no order exists in how a person thinks. I remember a situation I had highlighting the difference in these ways of thinking. Entrepreneurs embrace a more balanced approach employing both linear and nonlinear thinking skills.

To explain, I remember when I went to residency training for my doctoral work when an professor placed us in teams for a project. I had one member of my team with a military background. Although I found my previous experience with military people positive, I had a different experience with this particular person.

In my experience as an educator I taught several classes at Edwards Air Force Base in Southern California and always found the people in my classes ready and willing to learn. I believe the military training these people received made them disciplined and develop good study habits. I found military students usually completed and turned their work in on time.

The gentleman in my residency class, who I shall call Mr. Roboto, gave me a different experience. Although Mr. Roboto eagerly wanted to take on the project, he quickly assumed the leadership, and dictated terms of the project. The suggestions from other people on the team he quickly dismissed in favor of his own ideas. Reflecting on this experience, I found this person’s approach highlighted linear thinking. Everything Mr. Roboto did expressed the “my way or the highway” approach and gave me a new appreciation of military thinking.

As a seasoned entrepreneur, I had a hard time dealing with Mr. Roboto because he dictated and never listened to anyone else on the team unless they agreed with him. Entrepreneurs often have more nonlinear thinking skills and thrive in a team setting, but Mr. Roboto put himself at the top of the chain of command and did not accept ideas from other team members. I found the approach Mr. Roboto took stifled creativity and more in line with the approach taken by a larger business.

In my studies, I found a better balance between linear and nonlinear skills is more desirable in my area of focus on entrepreneurship. Groves, Vance, and Choi (2011) found entrepreneurs have a greater balance between linear and nonlinear critical thinking skills and more education contributes to improving the balance.

My experience highlights some of the differences in how entrepreneurs think, organize a culture conducive to creativity, and lead. Entrepreneurs normally reject command and control settings and value more flexible organic settings. Mintzberg (1980) described entrepreneurs favoring adhocracy. Adhocracy relies on mutual adjustment in a decentralized, lively setting seeking harmonization. Masood, Dani, Burns, and Backhouse (2006) explained leadership in an adhocracy as visionary, innovative, and risk-oriented. Entrepreneurs collaborate and guide workers using continuous feedback loops.

A hierarchy culture stresses more formal setting and policies guiding what workers do. The hierarchy culture focuses on stability, predictability, and efficiency. Formal rules and policies are the glue holding the organization together (Masood et al., 2006). Mr. Roboto embodied the hierarchy culture, which clashed with the adhocracy culture I worked in as an entrepreneur. Mr. Roboto relied on command and control and avoidance of risk.  No wonder I had such a difficult time in this group.

Entrepreneurs balance linear and nonlinear thinking and a good education helps the entrepreneur employ the right thinking to the proper problem. Entrepreneurs avoid all or nothing thinking and value collaborating with a team. Are you a linear thinker or do you have what it takes to balance linear thinking with nonlinear thinking? Please  leave a comment. Learn more.


Groves, K., Vance, C., & Choi, D. (2011). Examining entrepreneurial cognition: An occupational analysis of balanced linear and nonlinear thinking and entrepreneurship success. Journal of Small Business Management, 49(3), 438-466. doi: 10.2307/259034.1999-08070-001 10.2307/259034 10.1287/orsc.9.5.543.

Masood, S., Dani, S., Burns, N., & Backhouse, C. (2006). Transformational leadership and organizational culture: The situational strength perspective. Proceedings of the Institution of Mechanical Engineers — Part B — Engineering Manufacture, 220(6), 941-949. doi: 10.1243/09544054JEM499

Mintzberg, H. (1980). Structure in 5’s: A synthesis of the research organization design Management Science, 26(3), 322-341. doi: 0825-1909/80/2603/0323^1.25


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Starting a Business is Like Running a Marathon

I started running late in life when two of the guys at worked challenged me to run a mile with them. I worked at a large hospital at the time and worked and often socialized with two guys. One managed patient accounts and the other was a consultant from Andersen Consulting (now Accenture). At the time, I was overweight and wanted to lose some weight. The challenge we made with one another stipulated that whoever quits has to buy whoever keeps running dinner. Guess what? I am the guy who did not quit and I went on to become fanatical about my running. The other guys treated me to a free dinner.

Good entrepreneurs are like runners because they do not quit. I used to tell myself, “one foot in front of the other.” Entrepreneurs should tell themselves something similar like take it a step at a time, but whatever you do, do not quit. Similarly, an entrepreneur should take an active interest in the business he creates. The entrepreneur should also give himself small rewards along the way like the free dinner I received from my work associates.

Okay, so after this first episode I continued to run. I started running about three miles about three times a week through my neighborhood, but then the fall came. Another friend of mine wanted to join a new health club so we could play racquetball. I went to the club and signed up with him to play racquetball, but we started our routine doing a workout. I noticed the club had an indoor running track and next time I brought my running gear so I could run a little first before playing racquetball.

Next time we visited the club, I started running first before our game. I met some nice people on the track who encouraged me to run the Chicago Marathon with them. My racquetball friend did not like running and our racquetball games quickly stopped, but running with my new friends continued.

Starting a business is like running because you develop and nurture new relationships. After our runs we would go upstairs to the bar and have a few beers and have a good time. We forged a strong relationship with each other. We talked about our plans for the marathon. Starting a business is similar to planning to run a marathon because a business founder plans his business and develops strong relationships in forming those plans. A business founder does not exist on an island, but collaborates with those he trusts. A good business depends on good relationships.

As the date of the marathon approached, we trained together encouraging one another. We trained inside and out depending on the weather. We continued encouraging one another on our runs and discussed different strategies to take to complete the marathon and run a good time. A few of my friends fell to injuries, but most of us went on to the marathon.

A new business is similar because some relationships will stop and others will continue depending on who is the fittest. The camaraderie continues as the goal comes into sight. The new business founder has to keep his goals in front of him just like a person wanting to complete the marathon. The new business founder continues to forge relationships with the fittest of his relationships.

The day of the marathon finally arrived and the weather was perfect. I started out slow to pace myself. I learned from running with my friends I am an endurance runner, but not too fast. However, my friends pushed me to improve my time. Running a new business is similar to the marathon because business associates push you to do better and recognize your abilities.

During the marathon I built speed as the race progressed and I loved the cheering crowd’s encouragement. As the I approached the twenty mile mark, runners started to hit the wall and drop from the race, but I continued to press on. Running a new business is like running a marathon because some people hit the wall, while others press on to the finish. Customer encouragement helps the new business put the final goal in sight. A new business needs customer feedback to stay on course and complete the race.

As I approached the finish I saw many struggling to continue. Some stopped or walked as they headed to the finish. I felt good as my training paid off and I decided to pass as many people as I could. I surged to the finish picking off as many competitors as possible and I could finally see the time clock at the finish. I knew I had beat my goal and a good feeling it was.

Starting a new business is like running a marathon because training pays off and allows an entrepreneur to surpass the competition. The goal of the entrepreneur becomes clearer as the founder approaches the finish line and it feels good to beat the goal.

As I crossed the finish, a few of my faster friends greeted me and I waited with them to see the others of us who finished. One by one I greeted the rest of my friends as they completed their journey. Running a business is like running a marathon because the encouragement continues throughout the journey. The camaraderie continues as those who make it have cause to celebrate.

Are you ready to run the marathon and start your own business? Learn more.


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How a Turnaround is Like Founding a New Company

Once I took a position as the chief financial officer of an organization with a history of over 100 years. The institution in its early years thrived because of its location bordering a city nearly the size of Chicago with a booming coal mining industry. The location bordered on the one of the Great Lakes cutting off half the circumference of the target market.

Eventually, the coal mining industry declined and the city bordering the organization dwindled in population because of lack of other industry in the area. Recreation supplied the next biggest industry in the area because of ideal conditions for snowmobiling, cross-country skiing, and other winter sports. In the summer, the area provided ideal conditions for hunting and fishing. These industries failed to provide enough jobs and opportunities to keep the city alive.

The organization I worked for had its numbers drop by nearly 70% because the organization depended on people within a hundred mile radius of it. When I arrived I found the finances in a shambles and an accumulated deficit resulting in a negative net worth. At first, this condition alarmed me, but I knew I had a calling to turn this ship around.

A turnaround of this magnitude is like starting a new business because it needs a radical transformation. Fortunately, the executive team committed to a radical transformation of finding a new model for the organization that would turn around the organization and create positive cash flows. Weekly we explored new ideas and acted on cutting drains on the organization’s cash flows. In this way, the turnaround is more difficult than starting a new business because a new business does not have to deal with getting rid of existing programs causing a drain on cash flows.

The result of these efforts balanced the organization’s budget and identified new programs capable of producing positive cash flows. When I did my doctoral research I discovered that many companies that go public have accumulated deficits of the same magnitude and about 70% of them eventually fail. This revelation surprised me and I thought about how many companies can use the same help a turnaround expert provides. Big and small companies have similar failure rates. ‘

Although the cause is different, the need to identify a working model is the same. Without transforming an organization by finding a working model that produces positive results any organization will subject itself to failure. This revelation also caused me to think about the benefits of going public versus remaining private. Often, companies go public far before they rightfully should and prematurely remove the founder whose role it is to find a working model.

Public companies start to create more bureaucratic settings, while the organization needs to stay nimble enough to allow the working model to develop and meet consumer needs. Bureaucratization adds costs and reduces flexibility to adapt to make the model work. I believe many companies act too fast to go public because they believe it provides a safety net for raising capital. I believe a slower more deliberate growth may benefit many companies and allow the founders to keep their company and learn how to manage it instead of getting shown the door.  Founders work hard and if they are serious should hold on to their creation and learn how to improve it.

I believe other consultants place too much emphasis on getting big too fast. Companies might do well to slow down and grow organically than fall prey to seeking the safety net of a public company. Slowing down allows the founder to start to see the forest from the trees and build a sustainable model without risking the founder’s position.  

My company works to build organic growth by building on gaining the experience and education needed to grow organically. I believe a serious entrepreneur has an attachment to his or her creation and needs a different focus to preserve an identity with the company the founder creates.

What is your goal in founding a company? Would you prefer to stay involved in the company you create or do you want to exit and put the company in someone else’s hands? Please leave a comment to let me know your view.

If you are serious about preserving your identity with the company you want to create I urge you to try the services of my company by signing on now.


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Dr. Phil’s Fables of Entrepreneurship: Part I

The Falcon and the Pitcher

A falcon exhausted with thirst flew with glee to an abandoned pitcher hoping to find water. When the falcon reached the pitcher, it found so little water that it’s beak could not reach it. The falcon frantically tried everything to reach the water, but its efforts were in vain. Finally, the falcon took a collection of stones and dropped them into the pitcher one at a time bringing the water into its reach.

Moral of the story: Persistence is the mother of invention. Never give up.

The Owl and the Rodent

An owl in great need of food saw a rodent asleep in the grass and flew down and grasped him. Bewildered, the rodent turned and bit the owl a mortal wound. In agony, the owl exclaimed, “Oh unhappy me! I found what I thought a happy windfall only to find the source of my own destruction. ”

Moral of the story: Do not underestimate competition from the entrepreneur as it may prove the source of your “creative destruction.”

The Boasting Traveler

A man traveling in foreign lands liked to boast upon return to his native country about historic feats he had performed in the places he visited. The man exclaimed, while traveling at Rhodes, he had leaped a distance no other man could leap and had witnesses who could attest to his achievement. A bystander interrupted and said, “Good man no need for witnesses. Suppose this is Rhodes. Aust leap for us.”

Moral of the story: If you can’t see it, you can’t believe it! Success starts with vision.

The Ass and the Purchaser

A man wanting to purchase an ass agreed with its owner to try the animal before buying it. The man took the ass home and left it in the straw yard with his other asses. The ass joined another that was most idle and the biggest eater. When the man observed this behavior he took the ass back to its owner. The owner asked the man how in such a short time he could make such a decision to return the ass. The man answered,” I do not need a trial. I know the ass will be the same as the companion it selected.”

Moral of the story: Take care in selecting who you associate with.

The Boy and the Nettles

The boy was stung by a Nettle. The boy ran home and told his mother, saying,” Although it hurts me very much, I touched it gently.” The boy’s mother responded,” that is why it stung you. The next time you touch a Nettle, grasp it boldly, and it will be soft as silk in your hand and not in the least hurt you.”

Moral of the story: Use a full effort in everything you do.

The Ants and the Grasshopper

The ants spent a fine winter day drying grain from the summertime. A grasshopper, succumbing to famine, passed by and begged for some food. The ants asked,” why did you not gather up food in the summer?” The grasshopper responded,” I had not enough leisure. I spent the day singing.” The ants responded in derision, “If you’re foolish enough to sing all summer, you must dance supperless in winter.”

Moral of the story: You must plan today what you will need tomorrow. Never run out of cash, which is the lifeblood of the firm!

The Eagle and the Fox

An Eagle and a Fox formed an intimate friendship and decided to leave live near each other. The Eagle built her nest in the branches of a tall tree, while the Fox crept into the underwood and there produced her young. Not long after they had agreed upon this plan, the Eagle, being in want of provision for her young ones, swooped down while the Fox was out, seized upon one of the little cubs, and feast herself and her brood. The Fox on her return, discovered what had happened, but was less grieved for the death of her young than for her inability to avenge them. A just retribution, however, quickly fell upon the Eagle. While hovering near the altar, on which some villagers were sacrificing a goat, she suddenly seized a piece of flesh, and carried it, along with a burning cinder, to her nest. A strong breeze soon fanned the spark into a flame, and the eaglets, as yet unfledged and helpless, were roasted in their nest and drop down dead at the bottom of the tree. There, in sight of the Eagle, the Fox gobbled them up.

Moral of the story: Do unto others as you would have them do unto you. Treat others how you want to be treated.

Please leave a comment about the lessons learned from the fables.  Want to learn more?


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A Treatise on The Need for Social Entrepreneurship

Today I watched a video presentation by Steve Blank and the UCLA Anderson School of Management on different entrepreneurship types. Blank had many good ideas I agreed with about entrepreneurship. For example, Blank said when a founder finds a model that works, investors act quickly to take over and replace the founders because founding entrepreneurs’ role is to create value by finding new models. Investors look to manage successful models by recruiting corporate planners to maximize profits for owners and managers in these newfound wealth creating enterprises. Blank also claimed social entrepreneurship has no value because it creates no new wealth (LeanStartupCircleLA, 2011, October 16).

I take exception to this shortsighted view because I believe all enterprises should take some social responsibility. Further, sometimes, I believe social issues belong in social enterprises rather in commercial ones because social enterprises better serve consumers’ social needs and commercial businesses place more value on serving themselves. What is wrong with just earning a decent living instead of channeling all wealth to the elite? Can social entrepreneurs gain more value from satisfying more than their personal wealth and by serving society’s needs? If government fails to address social issues who should?

Different worldviews on social entrepreneurship.

Various worldviews exist about social entrepreneurship. One view comes from the protectors of social entrepreneurship, who believe in the effectiveness of social organizations. Another view comes from the doubters, who demand empirical proof of social entrepreneurs effectiveness  (Pärenson, 2011).

Trexler (2008) reasoned both people and business enterprises have hybrid needs consisting of both social and commercial parts. Trexler rationalized business managers encode the thinking burdensome laws in, “the DNA of our for-profit corporate entities, yet business leaders persist in reducing corporate identity to the material enrichment of its executives and shareholders” (p. 80).

Bull, Ridley-Duff, Foster, and Seanor (2010) argued the current social setting directs itself toward self-interest and eroding moral values. Bull et al. claimed social entrepreneurship has great value to look beyond existing missions and values and maximize ethical virtues.

Defining social entrepreneurship.

Pärenson (2011) found some scholars define social entrepreneurship as any action helping solve social issues, while others see social entrepreneurship only when it serves both a social cause and fulfills a commercial need. Pärenson found other definitions about social entrepreneurship strictly about nonprofit corporations, but most definitions view social entrepreneurship mainly focusing on social needs and less on commercial concerns.

Alvord, Brown, and Letts (2004) defined social entrepreneurship as providing sustainable solutions to great social problems using economic, political, and social means by applying market-based skills to the nonprofit area. Noruzi, Westover, and Rahimi (2010) defined the social entrepreneur as a person, group, or alliance seeking sustainable solutions through break-through changes and ideas in how business, governments, and nonprofit organizations should do business.

Who decides where an enterprise fits?

Should government, commercial enterprise, or society decide the best place to deal with social issues? Should corporate profit making behaviors eclipse social values? Traditionally, governments decided because people of the world organized governments to represent their interests, but with global markets companies aim to tear down the walls of governments. Who then deals with social issues?

Soros (1998) argued autocratic governments find it easier to amass capital, but their power causes corruption and ignores the glue holding the shared values of society together. Soros explained the weaknesses of global capitalism emanating from uneven benefit distribution, unstable financial systems, threats to competition by monopolies and oligopolies, the unclear and confusing role of governments, and the lack of social unity. Without government is the social landscape falling to autocratic interests of big companies? What say should people have about their values?

When does “creative destruction” begin and creativity die?

Without the voice of consumers represented by government the place to deal with social issues best comes from entrepreneurs close to the customer. If monopolies and oligopolies make it difficult for entrepreneurs so they cannot compete who is responsible for creating new and improved products and services to fill the gaps needed by consumers?

Pichler (2010) explained entrepreneurs act as the villain to market economies by averting market tendencies in accord with what Elliot (1983) viewed as Schumpeter’s theory of creating new combinations. Without such new combinations economic conditions become static and fail to foster conditions ripe for creativity. Entrepreneurship drives creativity and when crowded out by monopolies and oligopolies exposes the economic conditions leading to “creative destruction.”

Society needs entrepreneurs to drive creativity and fill gaps exposed by monopolies and oligopolies that fail to consider social needs. Monopolies and oligopolies foster preserving the wealth of the elite with little consideration for social needs. Without entrepreneurship creativity dies and leaves a hole in market for needs direly needed by consumers.

Global markets and unfilled social gaps in the market.

Where do issues like education, healthcare, housing, and alternative energy fall in global markets? Are these not social issues? Should the private companies strictly deal with such issues or should society deal with these issues as social issues. Are such issues best dealt with by government or nonprofit organizations? Does one size fit all?

I do not believe all these issues rightfully belong with private companies because they are beyond the control of the consumer who needs some help. For example, should everyone who wants an education have the opportunity to get one or should education depend solely on those who can afford to pay for a good education?

I would also argue putting such issues in the private companies makes the cost rise and reduces the efficiency of the market in delivering such services to members of the public. Although private enterprises like to espouse their efficiency, sometimes markets become less efficient with the profit incentive. Costs rise because merchants involved add their markups on top of all the ingredients in the product or service causing costs to spiral. In government and nonprofit enterprises companies put less focus raising prices and more focus on buying efficiently. Molina-Martinez and Martinez-Fernandex (2010) and Zhang and Fung (2006) argued social entrepreneurs contribute to improved economic performance, and Granovetter (1992) made the case that social entrepreneurs outperform nonsocial entrepreneurs.

Should society distribute social services to the highest bidder or do all people have a right to certain basic services? Who decides where best to deal with basic social needs? Do the people have a say in a global market that has torn down the walls of government or have we digressed to “the survival of the fittest?”

Deregulation and its effect on social needs.

Loss of government funding from deregulation places more demands for meeting social needs on entrepreneurs (Gliedt & Parker, 2007). Entrepreneurs need better conditions to deal with emerging social needs, but monopolies and oligopolies with notable political influence detract from making conditions more favorable for social entrepreneurs. Social enterprises now face dwindling support from donations and public funds (Craig, Taylor, & Parkes, 2004).

Without government playing a role, social entrepreneurs have a responsibility to deal with social needs, but need improved conditions to do so. Foster (2010) argued for a mixed economy because markets are not perfect and the inability of big companies to deal with certain issues. Foster called for needed government policies to deal with promoting entrepreneurship. These policies include a commitment to education and training, public guarantees of financing for entrepreneurs, public support for research and development in emerging industries, and regulatory changes promoting entrepreneurship through networking. How can conditions improve to provide better conditions for social entrepreneurs without government intervention?

Examples of some of the unmet needs.

Alternative energy, housing, healthcare, and education offer examples of issues social entrepreneurs can play a part in. Green energy focuses on environment problems besides solely profit-making ambitions, but threaten conventional energy source providers with competition (Gliedt & Parker, 2007). Does threatening conventional energy source providers offer enough reason not to develop energy alternatives? What happens when shortages exist in conventional sources? Should society just accept paying more? How does society deal with environmental issues like global warming?

Society can apply the same thinking to housing, healthcare, and education. Are these not at least in some part social issues needing solutions encompassing more than profit-making? Do social entrepreneurs have value in solving these problems?

We would like to hear more from you about what you think? Please leave a comment or let us know if you would like to learn more.


Alvord, S. H., Brown, L. D., & Letts, C. W. (2004). Social entrepreneurship and societal transformation: An exploratory study. Journal of Applied Behavioral Science, 40(3), 260-282. doi: 10.1177/0021886304266847

Bull, M., Ridley-Duff, R., Foster, D., & Seanor, P. (2010). Conceptualising ethical capital in social enterprise. Social Enterprise Journal, 6(3), 250-264. doi: 10.1108/17508611011088832

Craig, G., Taylor, M., & Parkes, T. (2004). Protest or partnership? The voluntary and community sectors in the policy process. Social Policy & Administration, 38(3), 221-239. doi: 10.1111/j.1467-9515.2004.00387.x

Elliott, J. E. (1983). Schumpeter and the theory of capitalist economic development. Journal of Economic Behaviour and Organisation, 4(4), 277-308. doi: 10.1016/0167-2681(83)90012-4

Foster, J. (2010). Productivity, creative destruction and innovation policy: Some implications from the Australian experience. [Article]. Innovation: Management, Policy & Practice, 12(3), 355-368. doi: 10.5172/impp.12.3.355

Gliedt, T., & Parker, P. (2007). Green community entrepreneurship: creative destruction in the social economy. International Journal of Social Economics, 34(8), 538-553. doi: 10.1108/03068290710763053

Granovetter, M. S. (1992). Problems of explanation in economic sociology. In N. Nohria & R. G. Eccles (Eds.), Networks and organizations: Structure, form, and action (pp. 29-56). Boston, MA: Harvard Business School Press.

LeanStartupCircleLA (Producer). (2011, October 16). Steve Blank on customer development: The second decade. Retrieved from

Molina-Morales, F. X., & Martínez-Fernández, M. T. (2010). Social networks: Effects of social capital on firm innovation. Journal of Small Business Management, 48(2), 258-279. doi: 10.2307/2393553

Noruzi, M. R., Westover, J. H., & Rahimi, G. R. (2010). An Exploration of Social Entrepreneurship in the Entrepreneurship Era. Asian Social Science, 6(6), 3-10.

Pärenson, T. (2011). The criteria for a solid impact evaluation in social entrepreneurship. Society and Business Review, 6(1), 39-48. doi: 10.1108/17465681111105823

Pichler, J. H. (2010). Innovation and creative destruction: At the centennial of Schumpeter’s theory and Its dialectics. Nase Gospodarstvo/Our Economy, 56(5-6), 52-58. doi:

Soros, G. (1998). Toward a global open society. The Atlantic Online, 281(1), 20-32. Retrieved from

Trexler, J. (2008). Social Entrepreneurship as an Algorithm: Is Social Enterprise Sustainable? Emergence : Complexity and Organization, 10(3), 65-85. doi: 10.1207/s15327000em0101_2

Zhang, Q., & Hung-Gay, F. (2006). China’s social capital and financial performance of private enterprises. Journal of Small Business and Enterprise Development, 13(2), 198-207. doi: 10.1108/14626000610665908


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Small Business: Divide and Conquer

In this election year the country has seen the political parties jockeying for votes of small business, but whether either party represents the needs of small business is questionable. Ide (2009) showed that small businesses account for 99.7% of businesses in the United States and 50.7% of employees in 2004.

Although small business should have significant  political power, the parties are lukewarm about  supporting important interests of small business. Each party encourages some of the interests of small business, but neither party makes a strong case for small business.  As Young (2008) suggested, policymakers since the New Deal have taken the strategy to fragment small business interests.

Each party has a script it follows to divide and conquer small business, but what if small business unites? Small business by the sheer numbers should have a more powerful influence on policymakers than big business.

Baumol, Litan, and Schramm (2007) listed several political issues benefiting small businesses. Bankruptcy protects tops the list because the cost of failing is too high. Big business benefits by Chapter 11 reorganizations. Although Chapter 11 is affordable for big business, this provision of the bankruptcy law is costly for entrepreneurs. The stigma attached to bankruptcy penalizes small business, but rewards big business. The notion big businesses can clean up their act, but entrepreneurs have little value to the economy is a bad idea. Why can big businesses make mistakes, but not entrepreneurs?

The next item on the list is access to finance. Joseph Schumpeter (1911) explained the importance of banks in making financing available to small business to spur innovation and drive economic growth. The role of financial markets is to channel savings to investors wanting to earn higher returns. Banks today are not lending and policy makers have done little to help small business find the funds they need. Lending to innovators drives economic growth and job creation. Large companies have access to capital through the capital markets. Why not lend to small business?

Baumol et al. (2007) argued small businesses need rewards for engaging in productive entrepreneurship that innovates and finds ways to make and deliver products better than those existing. For example, small businesses should find it easier to protect intellectual property and pay lower taxes. Small business should have an equal ability to enforce contracts as big businesses enjoy. Unfortunately, existing law favors big business and the cost of protection is too heavy for small business.

Another item on the list is antimonopoly regulation. The policymakers in recent years have ignored antitrust laws and made it easy for big business to crowd out small business. Savino (2009) explained how Supreme Court Chief Justice Louis Brandeis championed efficiency in business by enforcing antitrust legislation in the late 1920s and 1930s. Capitalism relies on equal opportunity for small business to compete.

A final item on the list is to support innovations resulting from inventions coming out of university research and development efforts. Making patent protection easier would benefit these efforts and federal funding can help, but policymakers are overzealous about austerity measures (Baumol et al., 2007).

Unlike others willing to accept current conditions for small business, I believe the time has come for small businesses to come together and foster a small business agenda. I want to see the United States return to the prominence it once achieved as the hub of small business creation.

Please leave a comment on what you think is important for small business. I am interested in knowing your thoughts. What should be part of small businesses political agenda?

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Baumol, W. J., Litan, R. E., & Schramm, C. J. (2007). Good capitalism, bad capitalism and economics of growth and prosperity. New Haven, Conn. and London: Yale University Press.

Ide, T. (2009). How to rectify unfair trade practices and to establish appropriate supply chains and better business culture under the global market economy. Pacific Economic Review, 14(5), 612-621. doi: 10.1111/j.1468-0106.2009.00475.x

Savino, D. (2009). Louis D. Brandeis and his role promoting scientific management as a progressive movement. Journal of Management History, 15(1), 38-49. doi: 10.1108/17511340910921772

Schumpeter, J. A. (1911). Theory of economic development. Cambridge, MA: Harvard University Press.

Young, M. (2008). The political roots of small business identity. Polity, 40(4), 436. doi: 10.1057/pol.2008.20


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