Part 3 of The Entrepreneur In Time: Taking Risks Brings Chaos Into Order

by / ⠀Entrepreneurship / September 25, 2013

This article is the third in the series “The Entrepreneur in Time” which is exploring some of the basic assumptions about entrepreneurs from the emergence of entrepreneurship in capitalist business writings up until the present day. I embarked on this topic to discover if the character of the entrepreneur has always been the same, or if the idea has developed over time. One hundred years ago it was said that entrepreneurship was the only way to escape your class. I’d say this still holds true today. I hope readers find some pearls of wisdom from these stuffy old tomes!

“Innovation is… based on the systematic, organized ‘leap into the unknown.’ Its aim is to give us new power for action through a new capacity to see, a new vision. Its tools are scientific; but its process is of the imagination, its methods the organization of ignorance rather than that of known facts.”

Drucker is one of the few authors recommended by both academics and the business world alike. His seminal works included “The Practise of Management” and “The Landmarks of Tomorrow”. If you can get around the paragraphs of panic about Russia’s communism taking over the world, and the fear of nuclear war, there are some clear pieces of wisdom that contribute hugely to what we understand about productivity and work today. I extracted two of his major themes – innovation and knowledge – because that is the core of what being an entrepreneur is.

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Early thoughts on entrepreneurship: chaos and knowledge

“It is a new view of man’s role in the universe; he creates order by taking risks.”

Peter Drucker was another early observer of the fallacy of long-term planning. Long-term planning, popular with businesses, public services and government was weak. The future is unpredictable. The idea that planning eliminates risk was (and still is to a large extent) a delusion.

Drucker took the standpoint that society in the fifties was changing from progress to innovation. He understood innovation as a way to control inevitable change. Change is a norm, so we should not be so afraid of it. Innovation organizes chaos and knowledge, and maximises their potential. The difference from the past (where innovations were on-the-spot – flukes so to say), is that now (1950s) innovation can make novel insights systematic. Perhaps he was referring to the increased access to diverse knowledge that would make bright ideas more commonplace. Later on in the 1990s, Henry Mintzberg would argue that making innovations “the norm” was an oxymoron. I have to agree with him!

An important observation that Drucker made was that innovation shapes economies, politics, and society. It affects our possibilities, how we view things and challenges what is “set out” for us. Because of this daunting effect, entrepreneurs must take ethical responsibility for what they create, and think about what is it that they destroy with that creation. Should we feel bad for the music stores that have shut down because online shopping took over? Should we always be prepared for the carpet to be pulled from under our feet?

Education – formal and informal – is crucial to be able to recognise opportunity

Controlling these changes requires knowledge from a good education. Drucker coined the phrase “knowledge worker” – as in, a person whose livelihood is based on trading what they know as opposed to manual labour. In the 50s, higher education was truly beginning to spread. The spread of education indicated the feasibility of a service economy rather than a goods economy. Productivity was thus linked to knowledge work. There would never be too many educated people as far as Drucker is concerned, as educated people should be the primary valued asset of a developed country. Highly-educated people should be considered one of the most important resources to an economy and a society.

Modern success story: Linda Singh

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Someone who certainly didn’t follow the formula was Linda Singh, who is not only an army general for the USA but is also a managing director at Accenture. She slept on the streets as she worked at a pretzel stand before taking the step into the army which changed everything for her. Singh couldn’t afford to pay for her SAT tests back then. Now she has two masters degrees.

Despondent outlook: no room for everyone at the top

But higher education meant to Drucker that there would be less people willing to do the physical labour necessary. Drucker proposed that the expectations gained from a high level of education must be able to be satisfied across organizations, as the top level jobs of each individual’s desire are simply not available. This is why he said that leadership and organizing ability is what would be winning factors in the future.

He made a sad observation that so far (1950s) we had not learned how to make man better, but had exponentially been able to make man worse. This is understandable since he lived through WW2 and wrote this book during the Cold War with the real possibility of nuclear war hanging over him. Knowledge and power could become our greatest enemies, he thought, as well as our greatest assets. I personally think this is still true – we saw how Spiderman struggled with the same lesson! Ethics and responsibility are very much intertwined with innovating, because of the risks involved – can your creation be used for bad deeds? Will it destroy someone else’s way of life? Will it evolve into something you didn’t expect?

Drucker also referred to the issue of “mass ignorance” –i.e. that many people cannot know many things very well. The accidental combination of two pieces of knowledge into something destructive gave him great worry, which is why he emphasised leadership, ethics and morality so much. Again this was in an era where nuclear war could have happened. But somehow his tales of caution against some innovative ideas ring true for what we decide to do with our knowledge. Are entrepreneurs driven by personal gain or the common good?

 “Nature provides against the risks of life by multiplicity and competition.”

This to me is a great way of arguing for encouraging start-up ecosystems. More start-ups mean a more “natural” state of affairs: the best win, and the weak and the flawed are evolved out of the system. The clever and the strong get a pass. What is needed and wanted remains. But can our ability of higher learning supersede or natural instincts when it comes to what we are willing to do to achieve our goals?

Andrea Francis is the PR and research evangelist for Twoodo, the ultimate “one box to rule them all” online productivity tool. She is into events, marketing and PR with tech startups in Europe. Andy likes getting things done and makes an awesome homemade hamburger.

About The Author

Matt Wilson

Matt Wilson is Co-Founder of Under30Experiences, a travel company for young people ages 21-35. He is the original Co-founder of Under30CEO (Acquired 2016). Matt is the Host of the Live Different Podcast and has 50+ Five Star iTunes Ratings on Health, Fitness, Business and Travel. He brings a unique, uncensored approach to his interviews and writing. His work is published on, Forbes, Inc. Magazine, Huffington Post, Reuters, and many others. Matt hosts yoga and fitness retreats in his free time and buys all his food from an organic farm in the jungle of Costa Rica where he lives. He is a shareholder of the Green Bay Packers.