No Free Lunch: Economics for A Fallen World

9 | P31W: Enter the Entrepreneur!

Entrepreneurial Attributes

We have reviewed entrepreneurial functions—what they do to enable the market process—and now it is time to think about how they do it. What are the attributes that make someone an entrepreneur? These attributes are also different than motivations. Some may be entrepreneurial solely to get rich, while others may just want to serve mankind. Altruism or greed can both be motivating factors for entrepreneurship, but they are not the attributes that will make an entrepreneur successful.

I’m reminded of this saying: there are three kinds of people in the world: those that make things happen, those that watch what happens, and those that say, “what just happened?” Entrepreneurs are clearly in the first category—they make things happen. For our discussion, I am also thinking about the characteristics of sustained entrepreneurship. One can imagine many “one hit wonders” that stumbled across one idea and were able to put it into place. Even those must have some subset of entrepreneurial attributes, for at least a period of time, but they may not merit significant study. For our analysis, I’m thinking of the late Steve Jobs of Apple Computer, or a Fred Smith of FedEx. We see this sustained entrepreneurship with the P31W, she was involved with a textile business for some period of time, and expanded that with the production of a vineyard. Always on the watch for opportunity, her alertness sustained her entrepreneurship.

One attribute we quickly see is that of creativity, which is exemplified in our problem solver or creative destroyer. Entrepreneurs are creative in their ability to think about problems. They study them for long periods of time, they brainstorm various ways to solve the problem, and they persevere. Some of them are geniuses and just immediately “get it.” But for most, it takes an intensive period of creative energy and devotion to solve the problem. Entrepreneurs may solve problems for several reasons: to make money, to just show that it can be done, or they think they have a better way for the world to operate. But they approach the problem creatively—in ways no one else has thought about. The creativity they use may be in how resources are combined, deciding what product should be produced, what the production process ought to look like, or even figuring out how a product can be used in a different way. You will often hear this type of thinking referred to as “out of the box” thinking, describing how entrepreneurs are able to think beyond what others do. The ways that entrepreneurs may creatively change the production process are almost endless; remember that all men are created in the image of God! Just as our God is creative, so, too, are those created in His image.

The fact that there are endless opportunities doesn’t mean there aren’t endless obstacles; therefore, entrepreneurs must persevere. They have to exercise diligence in pursuit of their objective. This is usually the result of sweat equity and long hours. This may be just long mental hours, but like all things, it has an opportunity cost. You and I may be thinking about this weekend’s football game, but the entrepreneur may be looking at yet another way to “skin the cat.” It took FedEx’s Fred Smith five years after graduation to implement his idea. Colonel Sanders didn’t develop the franchise part of KFC until 25 years after initially selling fried chicken; he persevered. Some environments are more hospitable to entrepreneurial activity; the quality of the institutions matters a great deal, and we’ll discuss that in chapter 10. But even the most favorable environment requires diligent perseverance.

One of the key entrepreneurial functions is risk bearing, so to some degree, entrepreneurs have to be willing to bear risk and be courageous, knowing that through their own strength and providential aid they can accomplish their objective. Therefore, these entrepreneurs have to be courageous; they cannot be afraid to fail. As the biblical example of David showed earlier, Christians especially should be courageous and willing to step out in faith, knowing that a sovereign God will fully support them (Proverbs 16:3) if we are acting according to His will (either in killing giants or making business decisions). Of course this confidence should not be that God is going to necessarily bless our decision exactly the way we hope; rather, we can be confident that if we are acting according to His will, He can use our actions for our benefit and His glory. The P31W could “smile at the future,” because she feared the Lord.

A certain amount of prescience is also required for entrepreneurship; the entrepreneur must be able to “see” the future market demand for his or her product or technique and see how others’ plans fit in with his or her own. Entrepreneurs may not have divine revelation like Joseph, but they must be better able than other competitors to imagine a future and ultimately shape that future. Absent divine revelation, human action is necessarily speculative because of the uncertainty of the future. We have a certain confidence in a means/ends framework where if we use a means (hammer and nail) to achieve a given end (secure two boards together), we will have an appropriate result. But if we expect that someone will want to purchase our carpentry creation, there is more uncertainty. If we want to expand our production for potential future increased demand, our uncertainty increases all the more. Our uncertainty increases because more individual plans have to “dovetail” with our own; the more plans that have to be consistent with one another, the more opportunity for our plans to deviate from our expectations. So while all action is speculative, a prescient entrepreneur is better able to think through and anticipate how every pertinent individual plan will fit within her own actions. In our earlier dating game example, Bobby may know that Matt is going away for the weekend. He therefore knows his opportunity to go on a date with Amelia is better than another weekend, and his “prescience” of her choices convinces him to ask her out this weekend. And she said…2 The P31W was able to anticipate the needs of commercial traders in her textile business; her prescience was rewarded with profit that was “good.”

All entrepreneurs must have control and responsibility for the actions they take. Who can be an entrepreneur with a great idea if he or she doesn’t have the authority to implement the plan? Can a janitor make a company-wide decision? Of course not. That doesn’t mean that janitors can’t be entrepreneurial, just that the scope of their entrepreneurial opportunities is significantly reduced (as compared to Apple Computer’s Steve Jobs or Fed Ex’s Fred Smith). Joseph was initially not in a position to implement his prescient vision from God, but Pharaoh quickly realized Joseph was blessed by God and gave him the authorities necessary to exercise control and assume responsibility.

These attributes certainly aren’t exhaustive; one can imagine a number of attributes that support entrepreneurship. However, these are certainly key attributes: creativity, diligence, perseverance, courage, prescience, and control. Other authors might want to include luck—but we know there is no luck with a sovereign, providential God. And even from a secular perspective, luck is when preparation meets opportunity. For the Christian, there is no such thing as luck and it is certainly not needed for entrepreneurship.

It would be tempting to say that entrepreneurship is a function of intellect, and clearly many of the entrepreneurs we see are bright people. But high intelligence is not necessarily a requirement. Rather, any person can use the attributes we described above to be an entrepreneur. So there are no excuses!

Endnotes:

  1. Yes! (I understand that inquiring minds want to know!)

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2 total remarks have been added

  1. Nathaniel Gilbert | Jun 15, 2016 01:51 am

    I agree that there should be caution exercised when inferring too much from a particular passage in the Bible. We don't know that exact methods that the P31W used. However, I think it is a valid point to assume she remained informed of market opportunities, including those within other markets.
  2. Bill Baerg | Sep 14, 2014 08:06 am

    Ranking: 5
    You have used Pretty Proverbial Patty as a model at the beginning and then you resort to guessing her qualities and her actual involvement in business. How exactly does anyone other than a magician turn a textile business into a vineyard and wine business? [We see this sustained entrepreneurship with the P31W, she was involved with a textile business for some period of time, and expanded that with the production of a vineyard. Always on the watch for opportunity, her alertness sustained her entrepreneurship.] I don't know if I can force myself to read anymore, I'll see what I feel like tomorrow but I think you should burn the book and start over by running a popcorn stand first and rethink what you are doing. I hope you haven't been teaching Economics, have you?