2007.09.24: September 24, 2007: Headlines: COS - Iran: Business: Entrepreneurship: Journal of Business Strategy: Iran RPCV Larry Farrell has personally taught entrepreneurship to more individuals, organizations, and governments than any person in the world

Peace Corps Online: Directory: Iran: Peace Corps Iran : Peace Corps Iran: Newest Stories: 2007.09.24: September 24, 2007: Headlines: COS - Iran: Business: Entrepreneurship: Journal of Business Strategy: Iran RPCV Larry Farrell has personally taught entrepreneurship to more individuals, organizations, and governments than any person in the world

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Iran RPCV Larry Farrell has personally taught entrepreneurship to more individuals, organizations, and governments than any person in the world

Iran RPCV Larry Farrell has personally taught entrepreneurship to more individuals, organizations, and governments than any person in the world

When I was just out of undergraduate school I went into the American Peace Corps. They sent me to the Middle East and that was a great two-year experience. That opened my eyes to the world. Entrepreneurship, in my view, is one of the most generic things in the world. The actual practice of entrepreneurship is almost culture-free. Different countries have different rates of entrepreneurship because there are some differences in terms of how people perceive it as a career but once you get into it, an entrepreneur in Hong Kong, an entrepreneur in San Paulo, Brazil, and an entrepreneur in Silicon Valley, basically have to do the same thing to succeed. In that sense it is like a worldwide technology.

Iran RPCV Larry Farrell has personally taught entrepreneurship to more individuals, organizations, and governments than any person in the world

Bringing "The Entreprenurial Practices Way" to Big Companies

an Interview with Larry Farrell

"The management rules--and the fads--that we learn in business schools come from studying big companies, most of which are already past their prime and in decline."

Larry C Farrell

Larry Farrell has personally taught entrepreneurship to more individuals, organizations, and governments than any person in the world. Today, with affiliates in Asia, Europe, Latin America and Africa, nearly one million participants in 40 countries, across seven languages, have attended the company's programs. Farrell's three books on entrepreneurship--Searching for the Spirit Of Enterprise, The Entrepreneurial Age, and Getting Entrepreneurial!--have received critical acclaim and have been translated into several languages. Farrell also writes a regular column - "Entrepreneuring" - for Across The Board, the magazine of The Conference Board in New York. Farrell took time out to talk to the Journal of Business Strategy about bringing an entrepreneurial focus to big, bulky companies.

What resonates most about your message in your training programs worldwide?

The first light bulb that goes on with corporate clients is in the first thirty minutes when we cover the life cycle of all companies. We claim there are four stages to a company's life cycle: start up, high growth, decline and survival. So all companies go through this life cycle, which usually takes about 50 years. We say that on the left hand side of this life cycle are the start up and high growth phases which may take 10-30 years. This is where the entrepreneurial practices are most dominant. As the company gets bigger and bigger, and older and older, the original entrepreneurial team retires. And entrepreneurs never replace themselves with entrepreneurs; they replace themselves with professional managers. So, what you end up with is a thirty-year-old company with 5,000 employees, run by a bunch of MBA professional managers. The entrepreneurial spirit, which got the company going in the first place--and created all the growth-- is completely dead. It's a growing bureaucracy and things begin to go downhill. This is the right hand side of the life cycle which we've labeled the decline and survival phases.

The life cycle clearly illustrates the two ways to lead a company. First, there is "the entrepreneurial practices way;" and on the other side, there is "the managerial way." The management rules--and the fad--that we learn in business schools come from studying big companies, most of which are already past their prime and in decline. Even so, those ideas get locked in as the way to manage any business. But we are careful to say that you cannot run a big company with just a kind of crazy entrepreneurial passion. You also need to have managers, people who can keep things disciplined, and so on.

So the question to the company is not whether you need managers, because of course you do. But as Steve Jobs says, managing is the easy part; growing is the hard part. So the point I pose to the managers is, "I am assuming that all of you in this room are pretty good managers. You probably have MBAs, probably read a lot of books, have been to a thousand training courses on management, and there are some basic principles for good management, and we all know that. But the important question to companies today is not "how to manage the business" but rather "how to grow the business." And this is the job of the entrepreneur. So what are the basic principles for creating high growth? Are there basic entrepreneurial principles you can learn and use?" And that always gets their attention!

What should be the balance between the entrepreneurial and management focus?

My contention is that most large companies are about 95 percent managerial and 5 percent entrepreneurial. One of my favorite entrepreneurs in Hong Kong is Victor Fung, of Lee & Fung Company. Victor Fung is an interesting guy. Although he now runs the family company, he was a Harvard business school professor earlier on in his career who decided to give up academia and go back to Hong Kong and run the family business. He says that in his opinion the breakdown ought to be 80 percent entrepreneurial and 20 percent managerial. And I think that is probably about right. But we say to our corporate clients, let's at least aim for a 50/50 balance between entrepreneurial, high growth practices and management practices--because that's probably attainable and it sounds reasonable to them.

Jimmy Pattison, of Vancouver, is the sole owner of a company that employs 22,000 people in a variety of industries and does $3 billion a year in business all over the world. What can you teach an entrepreneurial billionaire?

Jimmy Pattison is a classic example of what I strongly believe in--that the great entrepreneurs of the world do not come from business schools. The essential knowledge is not business knowledge; the essential knowledge is in knowing a lot about a product or a technology and then being able to commercialize it. In Pattison's case--and I think he would say this--he would be the last person in the world to get a business degree somewhere. He doesn't see that as the essential starting point of entrepreneurship.

I think Pattison likes a the "what-do-entrepreneurs-actually-do-on-the-job" kind of training. He is interested in having me come to keep his own entrepreneurial spirit alive across his senior management team. What I have learned in general, and this does not necessarily apply to Jimmy, is that entrepreneurs don't always make the best teachers. Good entrepreneurs are a bit like great athletes, who often don't make great coaches. They are sometimes not very conscious of what they do. It does seem to them to come naturally. Then they try to convey that and they get quite frustrated. I think Jimmy likes someone like me to fill a niche there to help communicate down to his troops, who are professional managers rather than entrepreneurs. How do you keep the entrepreneurial spirit and flame alive that he possesses? I think that sometimes he feels that an outside expert may be more useful in that role rather than him continually saying the same thing.

If you look at what he Jimmy Pattison does day in and day out, or any great entrepreneur for that matter, managers can in fact emulate it. They can emulate his tremendous sense of urgency about things, what we call in our books "high-speed innovation." They can learn and copy his absolute focus on customers and products. He is one of my heroes in the sense that he is all practical--the "nuts and bolts" of business--and I doubt that he would say that an MBA is very essential to becoming an entrepreneur.

What and where are the markets for your services?

Our first market is the corporations of the world: the IBMs, the Coca Colas, the Jimmy Pattison Groups, to teach their managers to become more entrepreneurial in their job. The real goal is to help our clients create higher growth, entrepreneurial style. That market is well established for us --some 22 years now--and it is 70 to 80 percent of our business and probably always will be.

Our second market is training new, individual entrepreneurs around the world. We got into this market primarily because governments with funded economic development projects came to us and asked us to help them create "a more entrepreneurial economy." For example I was just in Belfast, Northern Ireland where we provide the training piece of a very large effort by the UK government to create more entrepreneurs, more jobs, more new businesses. We have done such projects in Malaysia, Brazil, New York City, for the UN, etc. These are exciting projects because we are helping people change their lives and their family's economic future. - as well as doing good for entire countries and states.

In these projects we tell both the governments and the individual participants that entrepreneurial training is just one part of what's really required to be an entrepreneur. We've learned that the most important factors are:

1) You need to be operating in an entrepreneur-friendly culture. This means that the entire culture from government regulations to family support systems have to be in place.

2) It does take a bit of money, not a lot in 90% of the cases, but modest sources of start-up and secondary money have to be available.

3) It takes a bit of knowledge. By far the most important knowledge is how to make a product or provide a service that the world wants to buy.

Very recently we've entered a new market for us, what you could call the school and university market I suppose. We've been asked to teach basic entrepreneurship to non-business students at some great universities such as Cal Tech in Pasadena, CA and the University of Amsterdam, as well as advise at others like Oklahoma City University on the development of a "practical, non academic" entrepreneurship center.

With all our clients: corporations, governments, and individuals, we teach the same high-growth practices of the world's great entrepreneurs. We don't teach theories and we don't make any of it up. We simply teach the proven lessons of people like Soichiro Honda, Walt Disney, Sam Walton, Steve Jobs and Richard Branson.

What books do you think offer good insights for entrepreneurs?

Peter Drucker's books are still worth reading. The great thing about Drucker is that while he is "the father of modern management," he is smart enough and clever enough to understand that bigger is rarely better. He actually told me after we had both spoken at a Business Week conference several years ago in Taiwan, "Bigger is better turned out to be another 20th century myth and your life cycle idea explains why. It's gotten so bad that I won't even do consulting for large companies anymore. You can give them the best advice in the world and they can't implement it. In most industries the small to mid-sized companies are superior to the giant companies." Drucker's one of those guys who's big enough so he can say, "Hey, we have to re-incorporate entrepreneurship since big businesses have become bureaucracies, not enterprises." So naturally I like him for saying all that!

How did you become international in your outlook?

When I was just out of undergraduate school I went into the American Peace Corps. They sent me to the Middle East and that was a great two-year experience. That opened my eyes to the world. Then at American Express in New York I was VP of Marketing for an international division and did a lot of overseas work. Later I was President of Kepner-Tregoe, Inc. in Princeton, NJ, which had offices in 20 different countries so I traveled all the time. And since I founded The Farrell Company 22 years ago to research and teach entrepreneurship, we've become totally dedicated to doing business globally. We have Affiliate offices in twenty countries and teach in seven languages.

I decided that in addition to studying the early, entrepreneurial phase of companies, I would also make sure that my examples were roughly one-third European, one-third American and one-third Asian, with a smattering of South American examples thrown in. I also decided to write my books with that kind of research and worldwide vision.

What about the transportability of entrepreneurship?

Entrepreneurship, in my view, is one of the most generic things in the world. The actual practice of entrepreneurship is almost culture-free. Different countries have different rates of entrepreneurship because there are some differences in terms of how people perceive it as a career but once you get into it, an entrepreneur in Hong Kong, an entrepreneur in San Paulo, Brazil, and an entrepreneur in Silicon Valley, basically have to do the same thing to succeed. In that sense it is like a worldwide technology.

###

Interview conducted in December, 2005 by Rick Goossen, Executive Editor.

� 2005 Journal of Business Strategy, from American Graduate School of Management



Links to Related Topics (Tags):

Headlines: September, 2007; Peace Corps Iran; Directory of Iran RPCVs; Messages and Announcements for Iran RPCVs; Business; Entrepreneurship





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Story Source: Journal of Business Strategy

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