What makes an entrepreneur?

Man with the business world in his hand

Professor Mike Wright shares his thoughts on what makes a successful entrepreneur

What makes an entrepreneur?

We report an engaging conversation with Professor Mike Wright about what defines an entrepreneur, his own story and business lessons from EasyJet Founder Sir Stelios Haji-loannou and Kylie Minogue.

Professor Mike Wright is Professor of Entrepreneurship at Imperial College Business School and the Founder and Director of the Centre for Management Buy-Out Research, the first centre to be established that is devoted to the study of private equity and buyouts. The Centre monitors and analyses management buy-outs, with and without private equity investment, in a comprehensive and objective way. This private equity research group is regarded as the pre-eminent provider of private equity statistics for Europe and is supported by Equistone Partners Europe (formerly Barclays Private Equity) and Ernst & Young. Professor Wright has also written extensively about habitual entrepreneurs and academic entrepreneurs and has been ranked #1 worldwide for publications in academic entrepreneurship.

What skills do you need to be an entrepreneur?
Imagination. You need to try and find something that someone has not thought of before: a new way of doing something, a product that fills the gap – things that become obvious when they are pointed out afterwards. Until this happens, they’re not noticed.
To be an entrepreneur, you need be to be stubborn and tenacious. You might point out something that you think the world needs. But because it’s a big change, no one has thought about it, and it’s difficult to get people to accept.

What has been your most entrepreneurial project?
When I started the Centre for Management Buy-Out Research, it was entrepreneurial. Management buy-out was a new phenomenon. When I was 28 years old, my professor said I was wasting my academic career on it. Thirty years later, I’m still researching in this area. Later on, he realised his error and became a fellow director for a while.

How do you fit your own definition of entrepreneurship?
When I first had the idea, I was faced with the decision, do I abandon it as unrealistic, or am I really on to something? Am I going to pursue this?
One of the things shared by a lot of entrepreneurs is the feeling that there is something there. They are not sure what it is. It takes time to tease out, see the potential and decide it’s something worth pursuing.
Before I started the Management Buy-Out Research Centre, there was no information to say that there was a market or trend for it. But I sensed there was something there. I had to make the leap from observing a gap to defining an opportunity that I felt was worthwhile to work on.

Has your idea turned out the way you expected?
I never thought that the Centre for Management Buy-Out Research would last as long as it has or be as big. In fact, it turned out to be very rewarding in many ways. It’s sustained my research career, generated £3 million of research income and led to my promotion to Professor of Financial Studies at Nottingham University where I was before joining Imperial last year. It has sustained a research centre for 28 years so far. We have developed advice on the role and impact of private equity and management buy-outs for the Government, the Bank of England, European Venture Capital Association, the US Government Accountability Office and the Organisation for Economic Cooperation and Development. In particular, we have been able to provide systematic, robust evidence on the effects of management buy-outs on employment, employee relations, firm survival and failure, the use of debt to fund these buy-outs, and their productivity in an area that has been highly controversial in recent years.

As you know, two respected economists, Joseph Schumpeter and Israel Kirzner, saw the opportunities exploited by entrepreneurs in different ways.  Schumpeter believed that entrepreneurism is about creating an opportunity. Kirzner believed that entrepreneurs stumble upon an opportunity that was waiting to be discovered. Where do you sit in this debate?
I think it’s a bit of both, though I’m closer to creation than discovery. If there is no market, you have to create it. But I’d say that the greatest challenge is in how to exploit an opportunity. We see vast numbers of new ventures created but very few display much growth.

I understand that the entrepreneurship training within MBAs is highly valued by prospective employers. Why is this?
Corporations can be entrepreneurial. Richard Branson was entrepreneurial in his first venture. And, within Virgin, he is still creating new activities. A family firm can also see new opportunities. An entrepreneurial venture doesn’t need to involve a completely new product or enter a new market, and it certainly isn’t restricted to an entirely new start-up. It can simply be that you radically change the way things are done. For instance, you could change the way you distribute a product. EasyJet and RyanAir were entrepreneurial as they created a new way of running airlines and buying tickets.

What is the entrepreneurism story behind EasyJet?
They created a new way of running airlines. EasyJet Founder Stelios Haji-loannou encouraged passengers to ‘cut out the travel agent’. EasyJet began operations in 1995 by taking customer bookings over the phone and then expanded into online bookings in 1998. I mentioned this in my book ‘Entrepreneurship: perspectives and cases’ along with the business story illustrated by Kylie Minogue.

What business tactics does Kylie Minogue use?
Minogue concentrates on high-margin jobs, such as tours, as ticket sales offer much greater revenue than album sales, and premium events, such as a VIP concert to open a hotel in Dubai. Minogue buffers her finances from the unpredictability of celebrity income by diversifying her brands into other areas, such as perfume, homeware, clothing and books. She also continually taps into new markets, from her days as an actor, to those of a singer, pop diva and, more recently, a fashion icon. She’s also expanded geographically into the Middle East and toured in the US.

I hear you have another book on the horizon. Can you tell us about this?
I’ve drafted a short book, ‘Entrepreneurship: a very short introduction’ with Professor Paul Westhead, Chair in Entrepreneurship at Durham University. We’re hoping to publish in the Summer. This book is aimed at general readers who have an interest in entrepreneurship. It’s not about how to start a business but aims to explain what entrepreneurship is, what entrepreneurs do and how they do it. With so much emphasis being place on the role of entrepreneurship to revive the economy, we thought it was important to bring understanding to a wider audience. We shall be investigating the contribution of entrepreneurs in more depth over the next few years through the newly created Entrepreneurship Research Centre, funded by the ESRC, BIS, the Technology Strategy Board (TSB) and the British Bankers Association (BBA).

By Cher Thornhill