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Sunday, 16 December 2018

Definition of Entrepreneurship by Prof. Howard Stevenson explained

   Definition of Entrepreneurship by Howard Stevenson

Howard H. Stevenson (21 June 1941): 

Prof. Howard H. Stevenson is credited with defining the working definition of 'Entrepreneurship' as 'the pursuit of opportunity beyond the resources you currently control'. He is the Sarofim-Rock Baker Foundation Professor Emeritus at Harvard University. He has written 8 books and 41 articles in his life so far. He is considered as 'Father of Entrepreneurship' at Harvard University because he is responsible for creating many Entrepreneurs from HBS, establishing the best Entrepreneur Cell in HBS, increasing faculties from 2 to 35 who work in the Subject of Entrepreneurship, academic contribution to the subject of Entrepreneurship and most importantly raising more than $600 million in Philanthropic support for Education of Students, Business, Science and Healthcare. Forbes Magazine described him as the 'Lion of Entrepreneurship' at Harvard in an Article in 2011. INC Magazine described Stevenson's definition as the 'best answer ever'. Let us discuss the definition of Entrepreneurship given by Prof. Howard Stevenson in detail.

Discussion on the definition of Entrepreneurship by Prof. Howard Stevenson: 

According to Stevenson "Entrepreneurship is the pursuit of opportunity beyond resources controlled." 

All the earlier definitions of Entrepreneurship were revolving around ' starting a new enterprise'. These definitions talked about the risk involved and innovation but the problem with these definitions was it didn't include 'Social Entrepreneurship' and only focussed on profit potentials. Entrepreneurship should not be limited only to Monetary value creation, it should also include societal, political even cultural value creation. So instead of defining entrepreneurship on the detailed process of Entrepreneurship or what entrepreneurs do, it was important to explain the Philosophy of Entrepreneurship. I feel Prof Howard Stevenson's definition give us exactly that. 

Prof. Howard Stevenson

Entrepreneurship is the pursuit of opportunity beyond resources. 

Pursuit: As per the Cambridge English Dictionary, pursuit means the act of trying to achieve a plan, activity or situation usually over a long period of time. With singular relentless focus entrepreneurs pursuit their entrepreneurial venture. 

Opportunity: Entrepreneurs don't wait for an opportunity, they create one. They find out the need gap and then create goods or services to fill that need gap. This brings the important traits in the picture that is - Entrepreneurs should have 'Creativity and Innovative thinking'. Entrepreneurs are always looking for an opportunity and when they get it they tap is immediately to gain first mover's advantage. This opportunity can be about the innovative new product, devising a new business model, creating a better and cheaper version of the existing product, or targeting the same product to new markets,  etc.  

Beyond Resources: These two words of the definition differentiates Entrepreneurs from Administrator. Administrator allocates the resources which he has to carry out the business of the enterprise while Entrepreneurs starts his work with whatever resources he has. He has this 'Risk Taking' capacity to create a new business in resources constraints. Many founders bootstrap, they borrow funds from family and friends to start their enterprise. They keep their expenses as low as possible. They rely more on their expertise, team and hard work and determination. They never control the resources which are required to make the company self-sustainable. They plow-in the profits in the business to grow it organically first and when it becomes self-sustainable they start looking for growth capital by showing the profit potentials of the company to investors. It is wrong to generalize Entrepreneurs as insane 'risk takers'. They do take moderate and calculated risks. These risks can be related to demand risk, technology risk, execution risk, and financial risk etc. 

This is how Howard Stevenson's definition of Entrepreneurship includes a summary of all the definitions previously used and all the definitions which will be devised in future. It is very deeply thought definition created from the long experience and expertise in this subject. This definition is universal and can be used for entrepreneurship in any sector. Harvard Business School teaches this definition of Entrepreneurship to its students and we all know the successful track record of HBS in creating and developing Entrepreneurs for America. 

- Deepak Doddamani,
Founder of Ashwamedh Foundation, Founder and CEO of Stocksbaazigar
(MMS, B.Tech, NET in Management, NCIAP, NCMP Level - 4) 

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