The journalist Henry Hazlitt started his widely read Economics In One Lesson with the claim that “Economics is haunted by more fallacies than any other study known to man.” This may indeed be true, but entrepreneurship should be a close second.
A common but erroneous belief about entrepreneurship is that success is a property of the entrepreneurial idea itself. Sometimes described as an “opportunity” that was out there waiting to be discovered and exploited, all it took for the successful entrepreneur was to come up with the “right” idea at the right time. Henry Ford’s success wasn’t just the automobile, but the idea of an affordable automobile. Walmart is the result of Sam Walton having the idea of a low-cost retail store. The success of Sears was based on Richard W. Sears’ idea of using a catalog combined with shipping instead of physical stores. Mark Zuckerberg’s Facebook was the idea of putting the common student photo directory online to make it searchable. And so on.
Many of my students majoring in entrepreneurship suffer from believing in this myth: that it is the idea that makes the business and their success. Consequently, they seek that one great idea that will make them rich and successful. And when they find it, they therefore want to keep their idea secret and not tell anyone about it before launching the business.
In stark contrast, practically all experienced entrepreneurs have the opposite view. Instead of keeping their ideas secret, they test their ideas in practice as soon and as often as they can. What matters is how the rubber hits the road, not the idea of a tire, so to speak. Experienced entrepreneurs seek feedback, not secrecy. Investors similarly put their money not on those amazing ideas that will “automagically” bring in the big bucks, but because they invest in the the person’s or team’s ability to build a successful business.
Certainly, a good idea helps. But it is not what makes a successful business.
As students learn in class, and entrepreneurs are forced to learn in practice, it is a common and often necessary entrepreneurial practice to pivot. Pivoting means “fundamentally changing the strategic direction or core aspects of a business.” If it is so common for entrepreneurs to change course mid-journey, then the great idea they supposedly pursued must not have been a sure thing. Rather, the outcome was uncertain.
In fact, entrepreneurship is often defined as uncertainty-bearing for the simple reason that the value of what is created can only be known after the fact. The expectation of value created is what justifies the entrepreneur’s decisions — including the strategy and costs of production. Experienced entrepreneurs include intended customers early in the start-up process and seek feedback.
This also suggests the oft-repeated truth in entrepreneurs’ and investors’ circles: that execution is king. The idea, core to the entrepreneurship myth, is in reality of very little import if the execution — how the product is positioned, presented, and provided — is not good enough. Similarly, an old and not even exciting idea that is executed as a unique and better positioning, presentation, and provision can be golden. It is not the thing that is sold that matters, but the totality of the customer experience. Or, simply put, the value in the customer’s eyes.
In other words, it often makes sense to not be the first mover but rather learn from the mistakes made by previous attempts — and instead find a better and more valuable positioning. Just like Pfizer had the idea for, and even developed the first-generation, but failed the entrepreneurial endeavor to create Ozempic, the success stories above — Ford, Walton, Sears, and Zuckerberg — excelled in their execution. Neither one of them was first or discovered an original grand idea for entrepreneurship. But all of them took product or business ideas that already existed and made them significantly better.
As these examples also show, the entrepreneurs not only built from what already existed but they also did not succeed with the idea as it was originally conceived. Instead, they responded to feedback, learned from the market, and repositioned their offering — the value proposition — to be of as great value as possible to the intended customers. They pivoted, recognized their mistakes and failures, and tried again — using what they had learned.
The myth is therefore the very opposite of real entrepreneurship. It is not the idea that makes a business or even an innovation. The idea is not unimportant, but what matters first and foremost is to be of service to customers. Because they are the ones who decide the value of what the entrepreneur has created.
Entrepreneurship is rooted in humility rather than power; it’s about being of service to others rather than attempting to shape the world according to one’s own views.
The sooner we realize this true nature of entrepreneurship, the better we can understand the driving forces of market economies and the nature of our prosperity.
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