An outside perspective is critical to building the future of any business, big or small.
By Karl Stark and Bill Stewart |  @karlstark

As we built our business from a bedroom start-up to an Inc. 500 company, our priorities were creating a differentiated offer to our customers, building a world-class team, and managing cash flow to keep us afloat as the business grew.

The last thing on our minds was building an advisory board.

Advisory boards, we reasoned, was something that big, slow-growth companies have. We could get around to creating one after we took care of the more important business at hand.

We were wrong. Every company can benefit from a well-structured advisory board. External advisors bring networking opportunities and much-needed advice, but most importantly they bring something that is priceless to any successful business: an outside perspective.

One of our clients is a large, publicly-traded technology company, with a highly profitable business. They are no stranger to rapid growth, with revenues having risen from less than $100 million in 2002 to more than $1 billion last year. But guess what: they need an advisory board!

They have a business model that will be stable for years to come, but given the evolution of cloud computing, they also have some major opportunities for reinvention. As is true of many fast-growth companies, they are fraught with the innovator’s dilemma and have a strong incentive to stick close to their core business–a strategy that conflicts with the new paradigm and market opportunities offered by the cloud.

This is the problem when management teams that have incentives to maximize the core business are also expected to create a disruptive technology in a new space. For our client, winning in the cloud space will likely require strategic acquisitions and solid R&D investments. But to do this in a new paradigm, they need an outsider’s perspective. Specifically, they need a view that is removed from their core business.

A well-structured advisory board would provide this perspective. An advisory board can make critical contacts with CEOs of potential acquisitions and get real-time market knowledge of the start-ups that are currently working toward disrupting their core business. The right advisors will think about market transition as a start-up rather than an established company.

Our company is in the same boat. Seven years after founding the firm, we are finally getting around to building an advisory board. In fact, when we mentioned it to one client last week, he said, “I thought I was already a member of your advisory board.” That was a sign that we are behind the eight-ball. We need to move our company to the next plateau. And an advisory board will be critical to getting us there.

This classic 25-word definition pares entrepreneurship to its essence and explains why it's so hard. And so addictive.
By Eric Schurenberg |  @EricSchurenberg

 Now I've seen it, and it comes from Harvard Business School, of all places. It was conceived 37 years ago by HBS professor Howard Stevenson. I came across it in the bookBreakthrough Entrepreneurship (which I highly recommend) by entrepreneur and teacher Jon Burgstone and writer Bill Murphy, Jr. Of Stevenson’s definition, Burgstone says, “people often need to say it out loud 50 or 100 times before they really understand what it means.” Here it is:

 Entrepreneurship is the pursuit of opportunity without regard to resources currently controlled.

 I talked to Stevenson about his classic definition this weekend. Back in 1983, he told me, people tended to define entrepreneurship almost as a personality disorder, a kind of risk addiction. “But that didn’t fit the entrepreneurs I knew,” he said. “I never met an entrepreneur who got up in the morning saying ‘Where’s the most risk in today’s economy, and how can I get some? Most entrepreneurs I know are looking to lay risk off—on investors, partners, lenders, and anyone else.” As for personality, he said, “The entrepreneurs I know are all different types. They’re as likely to be wallflowers as to be the wild man of Borneo.”

 By focusing on entrepreneurship as a process, his definition opened the term to all kinds of people. Plus, it matched the one demographic fact HBS researchers already knew about entrepreneurs—they were more likely to start out poor than rich. “They see an opportunity and don’t feel constrained from pursuing it because they lack resources,” says Stevenson. “They’re used to making do without resources.”

 The perception of opportunity in the absence of resources helps explain much of what differentiates entrepreneurial leadership from that of corporate administrators: the emphasis on team rather than hierarchy, fast decisions rather than deliberation, and equity rather than cash compensation.

 What would you expect, asks Stevenson: When you don’t have the cash to boss people around, like in a corporation, you have to create a more horizontal organization. “You hire people who want what you have and not what you don’t have,” Stevenson says. In other words, entrepreneurs offer their team members a larger share of a vision for a future payoff, rather than a smaller share of the meager resources at hand. Opportunity is the only real resource you have.

 Or, as Burgstone puts it:

Every time you want to make any important decision, there are two possible courses of action. You can look at the array of choices that present themselves, pick the best available option and try to make it fit. Or, you can do what the true entrepreneur does: Figure out the best conceivable option and then make it available.

And that, folks, is what makes entrepreneurship so friggin' hard. And so friggin' necessary.

Eric Schurenberg

Eric Schurenberg is the editor of Inc.com. Before joining Inc, Eric was the editor-in-chief of CBS MoneyWatch.com and BNET.com and managing editor of Money Magazine. As a writer, he is a winner of a Loeb Award and a National Magazine Award. He is a regular commentator on Nightly Business Report on PBS.

Fascinating article from the New York Times about the mind of an entrepreneur.  "A thin line separates the temperament of a promising entrepreneur from a person who could use, as they say in psychiatry, a little help."  Absolutely true!  

Just Manic Enough: Seeking Perfect Entrepreneurs