Wednesday, January 15, 2014
Measuring entrepreneurial success: Research lends support to those starting new business ventures
Popular advice for entrepreneurs often equates success to money, but for Mark Simon, a researcher and professor teaching Oakland University students the skills of successful entrepreneurship, his research shows otherwise.
“We know for a fact that the major reason why an entrepreneur starts a venture is not to achieve greater economic success. While it is a reason, it is not the main reason,” says Simon, professor, management and entrepreneurship for OU’s School of Business Administration.
Before now, most research looked at what does it take to achieve economic success. While a base amount of financial success is important, amassing great wealth is often not the most important goal for entrepreneurs. Simon notes that things like gaining freedom and flexibility, doing activities you like, pursuing a passion, not working for someone else, and controlling risk can be far more important.
“Almost no one is looking at what it takes to achieve these other goals,” says Simon. “The degree to which different strategies and different kinds of ventures achieve that is something we still know very little about. This is what I have currently started researching and plan to continue.”
In addition to research into what helps entrepreneurs achieve their financial and lifestyle goals, Simon is also looking into a newer method of entrepreneurship. Through his own and the research of others, he has found that there is little or no correlation between success a and time spent developing a lengthy business plan.
“It used to be, and to an extent it still is, that writing a detailed business plan of how to execute an idea was the first step in any business venture. There is really a growing movement away from this,” says Simon.
Instead, getting real market feedback and testing assumptions prior to having the process fully fleshed out is a far more practical way to determine whether or not an idea will succeed.
As one line of his research, Simon and his colleague, OU marketing professor John Kim, have been analyzing data from hundreds of entrepreneurial ventures accumulated and posted
to various websites.
“People who have been pursuing this method talk about what they have encountered and what changes they made to their idea or model. What we are doing is seeing what patterns help people progress the furthest,” says Simon, who began teaching at OU in 1996.
Simon’s research also looks into entrepreneurial decision making and what, if any, are common personality traits. His work indicates that entrepreneurs share very few personality traits. Their desire to begin a new venture is not due to willingness to take risks, but that they view making decisions as less risky.
“They make decisions differently than others and are often overconfident in their judgments. This allows them to proceed where others don’t. Later, hopefully, they make needed adjustments along the way,” says Simon, who studied at Babson College, one of the first colleges to offer entrepreneurship as a concentration, before earning a master’s and Ph.D. at Georgia State University.
His research studies have resulted in dozens of papers in multiple publications, including Academy of Management Journal, Entrepreneurship: Theory and Practice, New England
Journal of Entrepreneurship, Journal of Small Business Management, and Journal of Business Venturing.
In 2011, Simon parlayed much of his research and life experience as an entrepreneur into a book, The Balanced Entrepreneur: Finding and perfecting ideas to generate financing, freedom, fun and fortune (Entrepreneurial Life Publications).
“I love playing with ideas, and also relaying those ideas to others. That is why I made the transition from a practitioner of entrepreneurship to teaching entrepreneurship,” says Simon, who started an import company and an adventure trip business, and managed a health club prior to his academic achievements.
This fall, OU will add non-business students with existing business students who are taking the entrepreneurship minor, which Simon notes will bring another set of skills and ideas to the classroom. The program will also expand to include a course in corporate entrepreneurship.
“We are going deeper and developing a core competence and also gaining a wider audience,” he says. “It is a very exciting time.”
By Alice Rhein
Featured in the Fall 2013 issue of OU Research Magazine