An Analysis of the Learning Processes of Successful Entrepreneurs

• 1. An Analysis of the Learning Processes of Successful Entrepreneurs by Brian K. Chupp Dr. Robert Sullivan, Committee Chairman Dr. Sonny Ariss, Committee Member Dr. Clint Longenecker, Committee Member Dr. Robert Schultz, Committee Member

2. Overview of my study

• Overview:

• • Small Business/Entrepreneurial ventures account for:

• • • 75% of new jobs in the last decade

• • • 70% of economic growth

• • • 99% of all employers

• • High rate of failure:

• • • 33% within first 2 yrs

• • • 50within 4 yrs

• • • 60% within 6 yrs

• • One reason for failure is that entrepreneurs fail to learn new KSAs as their organization grew

• Problem Statement:

• • There has been little research reported concerning how entrepreneurs learn and develop as their organizations grow and mature

• Purpose:

• • To explore the learning and development challenges experienced by entrepreneurs in the various phases of organizational growth

• • To explore how entrepreneurs recognize the need to learn and develop plans to address the challenges

3. Overview of my study Continued

• • Research Questions

• • • What are the most significant learning and development challenges entrepreneurs experience at each of the various phases of organizational growth (start-up, growth, maturity, and decline)?

• • • What specific knowledge/skills are most important to entrepreneurs success at each of the various phases?

• • • What are the most valuable learning tools for entrepreneurs?Who/What helped?

• • • How do entrepreneurs recognize the need for learning?

• • • What advice can entrepreneurs offer fellow entrepreneurs about what and how to learn during the various phases?

• • Significance of my Study

• • • Given the large number of entrepreneurial ventures that fail, and the desire to encourage more entrepreneurial activity, an examination of entrepreneurial learning through actual experiences may provide insight into the successes and failures of these organizations

• • • Once learning and development challenges, along with corresponding knowledge and skills, are identified, then learning solutions can be developed and offered to help entrepreneurs acquire them.

4. Literature Review

• Entrepreneurship

• • Definition of entrepreneur: An individual who, independently or together with a partner or founding team, establishes and manages a business with the principle objective ofprofit and growth, demonstrates innovative behavior, and employs strategic management practices.

• Entrepreneurial Learning

• • Overcoming opportunities and problems are identified as fundamental to how entrepreneurs learn; while, major setbacks and sporadic critical learning events have been shown to be catalysts for this learning.

• Organizational Life Cycle

• • Current thinking appears to have moved from the view of a fixed linear sequence of growth stages to a view of an iterative growth process.

• • The growth process is a response to the management of key transition points; where crisis or issues can occur at different points and can recur throughout the life of the organization.

• Human Performance Technology

• • The goal of any HPT intervention is that individuals have or obtain the knowledge, skills, motivation, and environmental supports to do their job effectively and efficiently.

5. Research Methodology

• Descriptive Ethnography

• • Focus is on developing a thorough understanding of the experiences of a specific population

• • What is important to the researcher is how participants understand their world and how they create and share meaning about their experiences.

• Purposeful Sample

• • 9 local entrepreneurs who have between 7 and 28 years of entrepreneurial experience

• Data Collection

• • 1 face-to-face interview and 1 follow-up phone interview

• Data Analysis

• • Trustworthiness

• • Content Analysis

6. 1. Intra-personal 2. Financials 4. ManagingPeople Stressors at Start-up Stressors after Start-up Confidence Costs of starting/running a business Funding sources Help from others Performance management Employee relations Recruiting talent Research Question #1: What are the most significant learning and development challenges experienced during the various phases of organizational growth? The right fitHard Work and Effort Positive cash flow 3. BusinessPlanning &Execution Formatting options Developing a business plan Execution of business plan Modifying the business plan 10 Themes 7. 5. Work Responsibility & Delegation 6. Building infra-structure 8. Product & Service Development Both feet in Delegating tasks Complex processes Establishing the relationship Behaviors can go from helpful to being a hindrance Customer base Research Question #1 continued Product/Service Complex structures Maintaining the relationship 7. CustomerConnectivity Before start-up After start-up Quality Out of control quickly 10. Diversification 9. ManagingGrowth 10 Themes 8. 1. Business When to start or exit Research Question #2: What specific knowledge/skills are most important to entrepreneurs' success at each of the various phases? 2. Customer 3. People 4. Financial 5. Product/Service Development 6. Personal Customer service Communication Recruiting Legal Human Resources Vision/Mission Find expertise Timing of adding resources Sales Negotiations Customer Needs Marketing Hiring Setting expectations Developing people Reward Communication Accounting Cash flow Receivables Banking Expense Control Passion Resourcefulness Priority Mgmt Knowledge of Industry Engineering R & D Computer Remaining Positive Honesty w/ oneself Persistence Pricing Supplier Relationship Benchmarking 9. 1. Network of peopleInforma l Research Question #3: What are the most valuablelearning tools for entrepreneurs?Who/What helped? 3. Formal & Informal education 4. Prior Experience 5. Purchasing Knowledge & Skills Customers Universities Like-minded Mentors Investors/Partners Professional Staff Leadership positions Committees R & D Staying active in their field On-line classes Conferences & Seminars Internet Books/Magazine Industry Previous ventures Military Management Accountant Human Resources Product/Service Attorney 2. On-going experience 10. 9 Intrinsically Motivated FactorsResearch Question #4: How do entrepreneurs recognize the need for learning? 7 Extrinsically Motivated Factors2.As confidence builds, they start focusing long term 6.Once they put their ego aside, they start to recognize the gaps 5.Intuition tells them that they need to do something 4.When entrepreneurs just dont love what they are doing anymore 3.Entrepreneurs utilize prior experience to determine gaps 1.As time goes by, entrepreneurs realize that they cant get everything done 8.They use the fear of failure 7.They are no longer satisfied with their present situation and want to move the organization along 9.They utilize mental exercises, such as introspection, contemplation, and planning 4.While in conversations with others, they identify gaps from what they cognitively do and do not understand 3.They ask for advice and listen to others 2.They research or gather intelligence to determine gaps 1.Cant provide to their customers what they want 7.Recognition is done out of necessity, in order to survive personally and professionally 6.They compare themselves and their organizations with their competitors 5.Other people tell them, such as staff, board of directors, or customers 11. 9 Pieces of Advice Research Question #5: What advice can entrepreneurs offer fellow entrepreneurs about what and how to learn during the various phases? 1.Effort(Just run!) 2.Listen(Seek the counsel of wise people) 3.Financial(Cash is king) 4.Planning and Execution(Theres a differencebetween a wish and a dream) 5.Diversify(Diversity is key) 7.Mistakes(Were all going to make mistakes) 6.Sales(sales is everything) 9.Self-Efficacy(Be honest with yourself,understand that you dont know everything) 8 .Basics(You have to start with the basics ofproduct development and customer service 12. Major Findings from Study

• Research Question #1

• Finding #1: Organizational growth does not follow a linear path

• Finding #2: Focus early and often on Interpersonal Challenges

• Research Question #2

• Finding #3: Knowledge/Skills needed can help or hinder entrepreneurs

• Research Question #3

• Finding #4: Multiple Sources of Help

• Finding #5: Learning tools need to be Just-In-Time vs. Pre-prescribed

• Finding #6: Learning tools for early learning challenges tend to be moreformal and defined

• Finding #7: Entrepreneurs learn through experiencenot just professional

• experiences, but personal ones as well

13. Major Findings from Study continued

• Research Question #4

• Finding #8: Entrepreneurs often seek help initially, but hesitate to do so

• once their organization is up and running

• Finding #9: Entrepreneurs have a series of planned process checks built

• into their plan

• Finding#10: Feedback is a critical vehicle for recognizing the need to learn

• Research Question #5

• Finding #11: Diversify

• Finding #12: Not only do entrepreneurs outgrow processes and

• procedures, they can also outgrow their advisors as well

• Finding #13:Irony of skill set and length of time to recover a mistake

• Finding #14: Entrepreneurs must be honest with themselves

14. Recommendations

• For Entrepreneurs

• Surround yourself with a network of people.This network includes professionals (attorney, accountant, banker, etc), peers (to bounce ideas off of and vent), customers (they will really tell you how you are doing), and staff (feedback in terms of strengths and weaknesses).Remember, that as your organization grows and matures, you might have to change who is in your network.

• Schedule regular organizational health check-ups.Just like getting regular check-ups for our physical health, entrepreneurs need to do it for their organizational health

• You need more than the functional knowledge/skills on running a business.You also need to know how to recognize the need to learn something new and seek out the resources to help you with acquiring the new information.

• There is a lot of help out there for you.Many of them are relatively inexpensive or even free.Dont let pride get in your way of asking for help.

• Find leadership opportunities in other companies or even in non-profit organizations.You can observe how others operate.Dont reinvent the wheel.

• Be ready for sporadic and repeatable periods of growth, stability, and decline.Make sure you have a plan for each of these periods.

• Dont forget to take care of yourself.You will be spending a lot of time and effort in building your organization.Take time to relax and re-energize.

• For Learning Solution Providers

• Colleges/Universities need to offer courses on how to recognize the need to learn and how to find the necessary learning.

• Dont get caught up in trying to identifying knowledge/skills for each phase in the organizational growth process.Identify the various challenges (tipping points) and develop learning solutions for them.

• Academic institutions and local business development institutions (SCORE, Center for Family Business, Chamber of Commerce) should develop partnerships so that entrepreneurs can utilize learning solutions from a formal program (2-4 year program) and/or just-in-time solutions (when the entrepreneur needs the solution).

• Academic institutions should add simulations, internships, mentoring programs, and other hands-on sections to the regular classroom courses

15. Recommendations continued

• For Lending Institutions

• Lenders (banks, venture capitalists, etc) should consider setting up a process that mandates entrepreneurs seek formal assistance through-out their relationship.Not only at start-up, but through-out the length of the loan.

• Administer assessments or courses that focus on typical knowledge/skills necessary to be successful.

• Mandate regular organizational health check-ups.These check-ups should not be solely focused on finances.

• For Future Research

• Replicate this study with a larger number of participants.Target a sample size of 20-30 entrepreneurs.From this, identify variables/constructs pertaining to the following:

• • Learning and development challenges

• • Knowledge/Skills

• • Learning tools

• • Means of recognition

• From these variables, develop an instrument (questionnaire or survey) and send to hundreds/thousands of entrepreneurs so that statistical analysis can be completed.

• Conduct a longitudinal study with a group of beginning entrepreneurs.Half of the group would have graduated from a traditional entrepreneurial education program, while the other half would not.

• If many entrepreneurs learn through actual experience, then a study needs to investigate the extent individuals can prepare for entrepreneurship and learn the necessary knowledge/skills prior to start-up?