The Difference Between Entrepreneur and Executive

There is an unwritten rule in business that once a company goes public, the original founders must be ousted. The myth: entrepreneurs are great for getting a company started, but not so great when Wall Street is looking over their shoulder. Part of this thinking is that founders of companies are mavericks, passionate doers with a vision, nontraditional in their approach to management and outspoken - the kind of rabble rousing that makes investors uneasy. (What is rabble rousing anyway?)

Passionate in their approach, some are seen as little more than televangelists who work their corporate gospel for all it's worth, but when confronted with real management challenges, their methodologies are revealed to be a house of cards.

To put it mildly, this is a gross generalization and highly inaccurate.

Case in point, Steve Jobs was an entrepreneur with a vision - created the greatest user-friendly computer in the world and took a byte (pun intended) out of IBM's market dominance. Passionate and visionary, Jobs had in his corner Steve Wozniak to handle the structure of Apple. Before these guys, working on a computer required extensive knowledge of code just to do a simple task. Many a computer science major looked down at those who couldn't understand the basics of a computer. Then Apple came along and changed all that posturing by inventing a user-friendly computer that required no code, no programming knowledge, just plug and play. With their visually intuitive interface, Apple redefined what working on a computer meant. They changed the computer business forever by creating computers for the rest of us.

So, it wasn't a mystery why Mac became the computer of choice for graphic designers - with it's focus on the graphical user interface and out of the box ease of operation, an Apple computer could be used by anyone. Before the Macintosh, all typesetting at ad agencies and design firms had to be sent out to a type house to be set into those neat rows you see in magazines and newspapers. You never knew what the type would look like until it came back. One wrong calculation could ruin a piece. Calculating typefaces was a science only doled out to designers with a propensity for math. With applications like Pagemaker and WYSIWYG (what you see is what you get) interfacing, Apple ruined independent typesetting companies overnight. Now all typesetting could be done in house from your desktop and changes could be made instantaneously. Apple was the David that slew Goliath and Apple buyers began to take on a cult-like obsession.

But all was not well at Apple. Jobs' direction for the company seemed at odds with CEO John Sculley. A power struggle ensued and the board of directors sided with Sculley - Jobs was forced out, and the press had a field day. To an outsider it made no sense. To a seasoned businessperson, it wasn't soon enough. The founder whose ideology was what brought the company to its current stage of profitability and notoriety was seen as a hindrance to the next phase of success. The myth of the entrepreneur, unable to take the company forward, prevailed.

At first, the executive team took Apple down a road where it had never been before, and profits were the proof that all was working. Time would tell, however, that a new CEO, several years of lack luster sales, and a low stock price are enough to make even the most seasoned board of directors realize they may have made a mistake. The Macintosh started to look like an IBM clone. Just another computer.

For obvious reasons, Jobs was asked back in 97 and the Apple brand began to make a comeback. The entrepreneurial spirit returned and Apple stopped making products that looked like grey boxes and started putting the ergonomic designs back into their industrial design. Lessons learned from Jobs' NEXT computer system were integrated into the new PowerMac lines, and the iMac brought the Apple brand back to profitability. This was an entrepreneur with executive and strategic execution.

Jobs brought the passion back to Apple. The myth of the entrepreneur had been broken. And let's not forget Jobs' investment in Pixar Studios before it was acquired by Disney. So much for the myth of the entrepreneur not understanding real business.

Conversely, executives who arose through the ranks of Wharton, Yale or Harvard learned the ropes of hard work and numbers crunching, eventually landing a key leadership position after quite a bit of seasoning, are just as valid. Many a business needs this style of management to operate and with over 50 million businesses in the United States, I'd say the majority of them operate under this management structure.

Just look at the number of law, accounting and engineering firms that must have serious systems in place to operate. This isn't just a happy accident, it's tried and true business 101. Many times executives are brought in to clean up the huge mess created by a founder who didn't know any better.

One of my favorite case studies of exemplary reorganizing is Harley Davidson. AMF drove the Harley name into the ground back in the 70s by firing employees and streamlining production to such a degree that Harley Davidson became the laughing stock of the motorcycle industry. In an effort to push for greater and greater profits, AMF forgot to make a superior product. It didn't take long for Japanese imports of better quality to flood the American market.

In 1981, AMF sold Harley to a group of investors led by Vaughn Beals and Willie G. Davidson (yes, grandson of co-founder William A. Davidson) for $80 million. In order to get back their market share and keep Japanese imports at bay, Harley Davidson worked closely with The US International Trade Commission, requesting they impose a 45% tariff on imported bikes over 700cc's. This was a temporary measure specifically designed to protect Harley and raise the price of Japanese imports. It was the helping hand that kept the competition at bay.

Next step was for quality to increase while keeping costs low. In Japan after WWII, W. Edwards Deming created a productivity model using a simple method of only ordering inventory when needed. Before his methods, companies usually kept large amounts of product in warehouses. It was costly to store, heat and/or cool and costly to insure. And if inventory prices fell, you were stuck with overpriced goods. Assembly could be at such a loss that a company could go out of business.

Deming was the father of Just In Time manufacturing and for good reason - he single handedly helped Japan rebuild after WWII. JIT focused on ordering inventory only when needed but, more importantly, gave workers on the assembly plant floor control over product quality, even the authority to shut down the line if a part or finished product didn't meet their standards. Quality over quantity.

Harley's executive management deliberately returned to what made their company famous - the macho "retro" appeal of the machines, building motorcycles that deliberately adopted the look and feel of their earlier cycles with customer-requested customizations. Components like brakes, front forks, shocks, carburetors, electrical parts and wheels were outsourced from foreign manufacturers and quality increased, technical improvements were made, and buyers slowly returned.

With JIT methodologies and a return to quality, Harley Davidson's reputation began to grow into the premium brand it is today. They even went so far as to get The US International Trade Commission to lift the previously levied tariffs. Because people were still buying Japanese imported cycles at a premium, once the tariffs were lifted, the price stayed the same, and allowed Harley to charge an even higher premium.

Today's Harley brands encompass the traditional bikes such as the Fat Boy, and female biker focused brands like the Sportster, and the Cafe Racer inspired V-Rod with it's retro look. Solid management brought Harley Davidson back from the edge of oblivian.

But what can we learn from both styles of management? First, let's define the two positions. The dictionary defines the entrepreneur as "one who organizes a business undertaking, assuming the risk for the sake of the profit." This individual many times takes on all the roles within a company until profits and/or investors allow for staffing.

And an executive is defined as "one who administers or manages matters of business of a corporation." In other words, the executive oversees the structure and the day-to-day operations for the board, the owners, or investors. Compensation may be in the form of perks, stock options, or bonuses.

Either way it appears as if the entrepreneur is working for him or herself and the executive is working for the investors.

So what can entrepreneurs learn from executives and what can executives learn from entrepreneurs?
Entrepreneurs must understand that their business(es) should run without them. Systems and structure must be executed by management and each member of an enterprise should know his/her role. When venture capitalists and bankers invest in a new start-up, it is the first thing they look for - business structure. The passionate nature of the founder may get them to the table, but it is true day-to-day business management they look for. Look at Ray Kroc, founder of McDonalds. He created tight methods for creating every product on the menu. In a business where profit margins are very tight, Kroc showed investors that his structure assured profits, whether he was there or not.


Executives, on the other hand, should take a page from the entrepreneur by looking beyond the numbers and going with their gut. When Mazda introduced the Miata, all the marketing data out there said nothing about a little convertible sports car. It was the last thing on the American consumers' mind. But Mazda did the unthinkable - they put passion back into driving with a fun and affordable roadster that brought back the days of British MG Midgets and weekends in the country.

The Miata made them look like geniuses. Had they anticipated some sort of market trend? The fact is they did nothing of the kind. Mazda took a chance that paid off big time. They put excitement back into driving. Period. Consumers buy because there is a an emotional reason to buy. Numbers crunching doesn't reveal passion.

The balance between the entrepreneur vs. executive methodologies is a simple paradigm - it is right-brained thinking versus left-brain thinking. To truly take over the business world, one must integrate both. Look at the leaders you admire best. If you look closely, you will see that they operate from both a sense of passion for what they do while balancing systems, as well as integrate a structure that operates during their absence.

Jack Welch is a prime example of someone who balances the two sides of entrepreneur and executive. He was the very outspoken CEO of General Electric for over 40 years. Passionate and strict, he became a mini-celebrity appearing on The Tonight Show with Jay Leno many times. He kept the bread and butter parts of GE (large turbines, electrical engines, stuff the consumers never see) robust, while balancing the consumer products (televisions, refrigerators, washing machines, etc.) with their financial services divisions. He truly played both roles.

Now that he has retired he is a well sought out speaker for obvious reasons - he knows how to run a business from both sides.

Look at Lee Iacocca, former President Bill Clinton, John Johnson, Mary Kay-Ash, Donald Trump, Malcolm Forbes, Warren Buffet, Tony Robbins, Hilary Clinton, HP's former CEO Carly Fiorina, etc. All are reflections of balance between an entrepreneur's spirit and a corporate executive's strategy. The balance between passion and discipline is what drives all of them.

As Wolfgang Amadeus Mozart once said, "Neither a lofty degree of intelligence nor imagination nor both together go to the making of genius. Love, love, love, that is the soul of genius."

The funny part is one of Mozart's sons, Franz Xaver Wolfgang, was rumored to be a better, more disciplined musician than his father, but Xaver shyness only allowed him to focus on conducting - his back to the audience. Having to work in the shadow of his famous father was too hard and despite touring extensively, he faded into history. And there it is again - the passion of an entrepreneur and the logic of the executive.

The balance between the two seems to be the road less traveled, but it has the greatest rewards. In closing, my expertise in this field is extensive, so all I can recommend is that if you are an entrepreneur, learn to build structure and if you are an executive, find what is passionate about your company and reveal it. The results will astound.

Thank you for reading,

Brad

Brad Szollose is the author of Liquid Leadership: From Woodstock to Wikipedia – Multigenerational Management Ideas That Are Changing The Way We Run Things

BTW: When Mac users talk about their computers, iPods and iPhones they usually use words like "I love my Mac." Strong words for an inanimate object, but that is Apple's target audience. They have an emotional attachment for Apple products. Most entrepreneurs dream of creating that kind of customer loyalty. How do you turn loyal advocates into cult-like zealots? Ask Steve Jobs and Guy Kawasaki. They, in my book, are the masters. Know your audience and you'll know their passions.

Also, Apple breaks the mold as a business. They are one of the few consumer products manufacturers who also provide content. That's like a television manufacturer providing the shows as well. But unlike SONY, who does just that, Apple's profit margin percentages as a ratio of sales to manufacturing are much more lucrative. One of the best verticle models I've seen.

This article and my blogs, articles and designs etc...are created on a MacBook Pro, with a 17-inch screen and YES, I love my Mac.

Also, I am not a fan of over analyses especially when it comes to basic human nature. Entrepreneurs shoot from the hip and executives strategize. One builds start-ups, the latter maintains and builds equity. What is there to analyze?

Here's some "lite" reading on the subject:

iCon Steve Jobs: The Greatest Second Act in the History of Business
by Jeffrey S. Young & William L. Simon
http://www.amazon.com/iCon-Steve-Jobs-Greatest-Business/dp/0471787841/ref=pd_bbs_sr_1?ie=UTF8&s=books&qid=1198022923&sr=8-1

The Cult of Mac by Leander Kahney
http://www.amazon.com/Cult-Mac-Paperback-Leander-Kahney/dp/1593271220/ref=pd_bbs_9?ie=UTF8&s=books&qid=1198022923&sr=8-9

Original article source: http://EzineArticles.com/?expert=Brad_Szollose

Creativity is King

After turning a modest sum into a few million I realized that a close friend of mine had to have a system to explain her über success. When I pressed her to reveal the secret, she astounded me with something I always knew was there, but never awakened to. It was as if she bestowed wisdom on me with the touch of a magic wand.

“So, what’s your secret, Val?”
“Well, first I look for who’s the leader in their industry.”
“Yea.”
Everybody does that. Come on, spill the beans.
Like everyone else, I wanted enlightenment NOW!!!
“Then I look at the seasoning of the management team.”
Val plodded on, completely unaware of the dialogue
in my head.
“And?” This was basic investing advice.
I was getting impatient.
“Creativity.”
“What?” You gotta be kidding me?
“I look at who’s got the most creative products.
Then I invest.”

It made me stop in my tracks. Here was a woman who ran the largest data base in the country, had multiple degrees mainly in mathematics and computer science, and it all boils down to creativity? Was it that simple? Had she cracked the DaVinci Code for the investor? I went home that night analyzing which companies stood out in the marketplace and which one’s bombed miserably. She was right; it was creativity that separated the good from the great – both in management, training and product.


Look at the last 20 big-ticket purchases you’ve made. Unless you were raised during the Great Depression like my father, you probably chose those items because they were cool, innovative or well designed. Not because they were the cheapest. What kind of car did you buy last? Chances are, despite what consumer reports said, you boiled it down to three choices and made the decision after a test drive. The car, minivan or luxury car that won out was the one that gave you the most innovation for the dollar. You “felt” it was a sound decision. 

Once again, we don’t buy things, we buy experiences. Consumers believe the thing they purchase will provide a better life. Remember the old ad agency argument? Nobody needs a drill. They need a hole so they can hang a picture. All they need is to hang up a picture. The drill gets them there. Period. What about your house? Unless you are into fixer uppers, or built your dream house, I would guess you bought something that stood out. Or how about the last gadget you bought. Was it sleek and cool? Did it make you the envy of your friends? We buy groceries on a budget, but when it comes to enriching our lives, we spend a little extra.

Good, creative design stirs us at our emotional core.

Henry Dreyfus was America’s father of industrial design. When companies like AT&T approached him to design their products, he wasn’t reinventing the phone but rather analyzed how we use it. Remember the first Trim-line phone with the dial in the handset? Thank Henry Dreyfus and his team for that little innovation. He figured out how we used products and then delivered an industrial design the made the product work seamlessly into our world while inspiring us to buy it.

Great design does that. His work was so ahead of its time that many of his standards are being used today. Ever wonder why a stop sign in Europe has the same shape and color as one in Aruba or Canada? The International Symbol Library was Dreyfus’ opus.

The science of design and creativity starts with usability analysis. It takes months to look at how a product is used, what the consumer hates, loves or wishes of the product. Where does it sit in the buyer’s mind versus where it sits on the shelf? What is it about the competition that they love? What would be the innovation that sets the company apart? There is a structure to great design. It doesn’t just happen because some guy named Claudio stands up and declares his love for plastic. It is strategic and methodical, and it can take years before a product hits the market. Look at the Gillette Fusion: $750 million and 3 years for research & development and industrial design before it wound up on store display racks. Now that’s product analysis!

Executives and entrepreneurs need to remember that if you want to step up your company to the next level, look no further than what you offer the consumer. Is it the most innovative, most creative product available to set you miles apart from the competition? Are your systems capable of bringing your customer a truly customized experience? If the answer is no, (be honest) then you need to get your creative team back to the drawing board. 

Don’t believe me? Take a look at these companies:
SONY, WalMart, GUCCI, Jet Blue, Electronic Arts, Red Octane, Microsoft, Starbucks, Gillette, Chanel, Porsche, Nintendo, BOZE, Andersen Windows, Sumitomo, Amazon, etc… Every brand on this list is innovative, creative and the leader in their industry. They are also consistent with their innovations. Each has also taken the lead position away from a rival to such an extent that the competitor never caught up. The next time you want to decimate the competition, sit down with a creative director first. Tom Peters actually believes that designers should be invited to board meetings. Something about the right and left-brained thinking coming into balance.


To learn more about this balance check out my latest article at http://ezinearticles.com/?The-Difference-Between-Entrepreneur-And-Executive&id=888334

Notice how GE was not on the above list. General Electric is a strong company but a weak consumer brand. Let me explain: When was the last time you ran out and bought a GE television because it was the best? Or a GE dishwasher? How about their refrigerators? The point is, GE products sell, but they try to be everything to everybody. There is no clear position for their brand (at least amongst the retail consumer). And there is no innovation – their products are just like everyone else. In the turbine engine, B2B category, they are one of the leaders. Nevertheless, here in our world, GE suffers from a sort of Jack-of-All-Trades inertia. 

Specialization comes from brand focus. Brand focus leads to innovation. Innovation leads to creativity. Apple is a great example of creativity and consistent innovation. What makes Apple the great company it is today? It boils down to good design, cutting-edge technology and convenience. It’s as if Apple is anticipating what I’ll need. What makes them great is they keep doing it year after year. One innovation does not a mega brand make and Steve Jobs is well aware of that. Perhaps this is why Apple has the largest niche within the computer manufacturing industry.

Look at the iPhone. It not only answers the problem of too many devices to carry by converging email, phone calls and entertainment into a personalized PDA-styled device, but it also makes several generational leaps in technology touch screen access, a robust operating system, vertical to horizontal sensors, intuitive interfacing, large icons, data management, data accessibility and of course, sleek design. I love Apple. Most people who buy Apple products eventually say that. We have an emotional attachment that I will address in a moment.

Apple’s innovation forces the rest of the industry to change. Look at how many PC laptops have a 17-inch screen, a robust operating system, icon driven interfaces, CD readers and burners as standard installations, and basic multi-media cards. They are all being forced to follow Apple’s lead. Prices have followed as well. The cost of a Mac is very close to a similarly configured Dell. The gaming industry is also a major driver as well. People want their computing, entertainment and business interaction to be seamless and Apple, Microsoft and SONY know that. There is a wicked rumor going around that game console companies want all your home computing, entertainment, and house functions like lighting and heating to be happening from one box. But that, is somewhere in the future.

Leaps like the iPhone are very calculated. I know it seems like such an arcane reference, but hear me out. - when companies like Studebaker take leaps quicker than the consumer is ready, it can leave them bankrupt and removed from the history books. Studebaker made the first economy car, the Lark, back when people didn’t know that a decade later, gas prices would go through the roof. Too soon to market can create a flop and here’s my point - how many of you remember Studebaker? Not many. Yet it was one of the greatest American made car companies ever. Built well and managed well, they took leaps that the consumer wasn’t able to keep up with. They had no contingency plan for when their ideas might catch on. Hope is not a strategy. 

On the other hand, look at Netflix – the company took more than 10 years to become a household brand. It took the consumer all that time to adapt (as a whole) to a new way of getting movies. Shopping online also took 10 years to become the standard, as did the ubiquitous use of DVD technology. (My Dad has 2 DVD players. This is amazing to me!). Netflix had enough of a subscriber base comfortable enough with ecommerce to be early adopters. It allowed Netflix to grow slowly, strategically and economically. By the time Blockbuster discovered Netflix had outpaced them and became the leader, Blockbuster could never catch up (and they never will). Only the paranoid stay in the number one position forever and the Internet allows more innovative brands to destroy your leadership position.

Apple respects the intelligence of their audience, and the logo shows it. There is a subtle tongue and cheek humor about the Apple logo. The very first Apple logo used an image of Sir Isaac Newton and the moment when the apple struck his head to give divine insight. I wonder what Robert Langdon (Dan Brown’s main character in Angels and Demons and the wildly popular Da Vinci Code and The Lost Symbol), would say about the current Apple logo with the distinctive bite missing? The same bite from the apple in the Garden of Eden. The original tale was from Akkadian texts in Sumeria – a fairy tale for children about the gods who created the human race. A thousand years later it was written down as fact by the Levites and later integrated into The Book of Genesis. Similar stories with similar tones on how the human race acquired some serious technology. The implication is that we are getting secrets from a higher authority! 

The Apple logo is a subtle piece of symbolism genius. It seems as if I’ve digressed, but creativity is actually a very structured discipline that requires multiple channels of arcane and common knowledge. Apple respects our intelligence and sense of humor.

Steve Jobs seems to be our generations’ Prometheus. Creativity trickles through every aspect of the organization and it shows – from their products to their brand. Hey, maybe the iPod won’t change lives, but many of Apples’ products have. I look forward to the next 20 years of innovation, creativity and leadership from the Apple brand.

Cutting costs may make you profitable, but it won’t make you an industry leader. Today’s brands are all on a precarious edge because more and more people have migrated their shopping habits to the Internet. For a brand to stay on top, the executive team must ask themselves how the new technologies are changing their business and what they need to do to stay on top. Moreover, most importantly, act on that analysis. Tower Records failed to realize the Internet was changing the how and where people buy music. It drove them out of business. Their mega stores disappeared overnight. I wonder how Virgin Records’ Mega Stores are holding up? So the next time you want to take your company to the next level, start with creativity. 

There is a balance to all this; check out my other article on the leadership side of innovation at http://ezinearticles.com/?The-Difference-Between-Entrepreneur-And-Executive&id=888334
Stay creative and strategic first and you remain the leader. One of these days I plan to write an article on symbolism and the importance of a start-ups brand. Stay posted for future Blogs.

Thanks for reading,

Brad Szollose

May I recommend?
Tom Peters Essentials – Design by Tom Peters
http://www.amazon.com/Design-Tom-Peters-Essentials/dp/0756610540/ref=pd_bbs_sr_4?ie=UTF8&s=books&qid=1198345089&sr=8-4

The Cult of Mac by Leander Kahney
http://www.amazon.com/Cult-Mac-Paperback-Leander-Kahney/dp/1593271220/ref=pd_bbs_sr_1?ie=UTF8&s=books&qid=1198345482&sr=1-1

*My favorite book:
Henry Dreyfuss, Industrial Designer: The Man in the Brown Suit by Russell Flinchum
http://www.amazon.com/Henry-Dreyfuss-Industrial-Designer-Brown/dp/0847820106/ref=sr_1_14?ie=UTF8&s=books&qid=1198345194&sr=8-14

The History of Studebaker
http://www.amazon.com/Henry-Dreyfuss-Industrial-Designer-Brown/dp/0847820106/ref=sr_1_14?ie=UTF8&s=books&qid=1198345194&sr=8-14

Or the Studebaker Museum
http://www.studebakermuseum.org/
My father owned a 1951 4-door bullet nosed Studebaker until 1977, so I kind of have a fondness for them. He and my grandfather were the only owners when it was driven off the lot in 1951. It still ran like a dream in 1977. Like I said, Studebaker was ahead of their time. Now they seem to be lost in history.

The Da Vinci Code by Dan Brown
http://www.amazon.com/Da-Vinci-Code-Dan-Brown/dp/1400079179/ref=pd_bbs_sr_1?ie=UTF8&s=books&qid=1198345616&sr=1-1