Babson Entrepreneur Professor: Taking No Risk Is Biggest Risk Of All

Dr. Julian Lange, one of the foremost authorities on entrepreneurship in the country, spoke with CRN Editor News Steven Burke about the entrepreneurial traits that allow companies to succeed in the rapidly changing technology market.

Lange is not only the Craig R. Benson Professor of Entrepreneurship & Public Policy at Babson College, but a successful entrepreneur himself, having worked as president and CEO of Software Arts alongside the the inventor of the personal computer spreadsheet, Dan Bricklin, and VisiCalc spreadhsheet co-developer Robert Frankston in the early days of the PC industry.

Lange has worked with a wide range of companies from startups to Fortune 500 firms on how to drive entrepreneurial skills throughout an organization. He has also written extensively on entrepreneurship and the challenges and opportunities posed by the Internet and is the author of "Entrepreneurs and The Internet." Lange spoke with CRN after delivering a keynote at the Fast Growth Awards event earlier this month.

Where do you see the biggest mistakes being made by companies that were once entrepreneurial and have forgotten to apply those same instincts to move ahead?

Sometimes over time people forget to follow that maxim -- if it ain't broke, break it -- because they have been successful. They rely on some of the things that have made them successful and they can continue doing that and become somewhat shy of taking the risks that they need to take.

NEXT: It's Good To Make Mistakes

As you move to another level and the world is changing around you, you have to constantly take risks. In the technology environment, you have to take major risks. What I tell companies and executives that I work with is: The biggest risk of all is not taking the risk. The world is not going to stand still.

If you are not constantly trying to innovate and do better, many companies are going to get ahead of you. There isn't an option to stand still even if you want to. Most people don't want to stand still, but they are lulled into a false sense of security and are unwilling to take risks.

Talk about how important it is to motivate your team to take risks.

It is crucially important that companies motivate their people to take risks. You have to be willing to let your people make mistakes. You have to ask: 'How many mistakes have I made today? How many mistakes has the team made today?' It is good if people are making mistakes.

If you are not making mistakes, it means you are not trying new things. You aren't trying to constantly innovate. That's why it's important to establish a culture in the company where mistakes are OK as long as people learn from their mistakes. It is a good indicator that people are trying new things.

NEXT: Walk In The Customer's Shoes

You talked about Apple CEO Steve Jobs and his ability to truly delight customers. What separates an entrepreneur like that from the rest of the pack?

It's his attention to detail and the insistence on excellence. The lack of compromising on things that are truly important to the customer. In a sense it is understanding what the customer wants before the customer even knows what the customer wants. Of course, Steve Jobs is an extraordinarily talented person. But people like him who truly delight customers really have spent a lot of time understanding customers, understanding the culture of customers, and what customers really want.

Entrepreneurs like Steve have walked miles and miles and thousands of miles in the customer's shoes. That is more than simply having focus groups. It is getting to know customers really, really well, spending time with them and understanding their needs, their pain, their delights. That is the way you can truly delight the customer.

Talk about how often you go out and consult with companies and find they are really not spending time with customers in the business trenches?

That is something I see all the time when I work with companies. There are many distractions in the workplace. You have meetings and the daily give and take of running a business can eat up all your time. How many of us at the beginning of the day have a list only to find that when we get to the end of the day that we haven't accomplished much on the list because so many other things intervened?

NEXT: In Times Of Great Change

What I tell my clients and the executives and MBA students that I teach is to clear your calendar and go out and spend time with your customers on a day-to-day basis. There are so many things that can get in the way and you might say, 'I'll do it next week, or next month or next year.' But it is absolutely crucial that people keep in mind that it is customers first and foremost that create and nurture your reason for being.

The technology industry changes faster than the weather. In times of change it is even more crucial that you get out there to understand what the customer needs and what needs to be changed.

Is it getting harder to be an entrepreneur given the pace of change, particularly in the technology business?

It has always been hard to be an entrepreneur. But it is also a great joy to be an entrepreneur.

The fact that there is rapid change in technology creates opportunities as well as challenges. What it means is that a young entrepreneur or an entrepreneurial company can see a better way of doing things, can better understand customers' needs and anticipate where the market is going and can very quickly stake out a position in a market and grow. In some ways, it is easier for an entrepreneur in times of great change. There are challenges created by fast growth and changing markets but also tremendous opportunities.

NEXT: How To Act On Your Vision

Talk about some of the key characteristics of entrepreneurs.

There has been a lot of research done on that, but one of the things that I have noted in working with businesses for many, many years is that having a clear vision of the business and its value proposition is crucial. That means people have got to take some time to step back and look at overall trends and directions -- not just what is happening this week or next month.

You have to take a step back and look at the underlying trends and ask: 'How can I shape what is happening and capitalize on it?' So having a clear vision of the business and its value proposition is the first crucial step. And then being able to articulate that vision is equally important. It is no good if you understand it and you can't act on it. One of the ways of acting on it is to explain it clearly to people so that they understand it. An effective leader shows the people in his company what they need to do to act on the vision. Business being business you also have to clearly understand the cash flow and economics of the business because at the end of the day in order to have survivability and sustainability you have to create the cash flow that will enable you to achieve your vision.

Talk about how important it is that entrepreneurs are passionate.

Passion is among the most important things that an entrepreneur needs to have, that pure passion for the business and delighting the customer. That is what motivates you to go the extra mile, get through the tough times and delight the customers. If you are truly passionate, your customers and your team will see that. And that, more than anything else, can really create the culture that is going to help you achieve your vision.

NEXT: There At The Founding Of An Industry

You worked as president and CEO of Software Arts alongside Dan Bricklin and Bob Frankston, who co-developed the original VisiCalc spreadsheet. Talk about the entrepreneurial spark that burned bright at that company which, in effect, created the personal computer business software market.

It was a very exciting time. I worked with Dan Bricklin and Bob Frankston, who created the VisiCalc spreadsheet, and many others on the team. One of the things that made it possible is the very creative and very passionate people that cared very much about what they were doing. We all cared about our customers, about bringing something to the world that would help customers. It was something that we thought was useful and would fill a need in the market.

It was an amazing opportunity to be present at the founding of an industry and understand that something really big and important and exciting was happening. If you think about that time it was mainframe and minicomputers that everyone talked about and people thought that PCs were toys. In the very early days, PCs didn't have a whole lot of power. The key thing is that we realized that it wouldn't take too long for the chips to be very powerful. The PC was also a new paradigm with a visual interface with direct interaction with the user. I remember at one point giving a talk to the CEOs of tennis equipment manufacturing companies on high inflation and after illustrating some of the numbers on VisiCalc they all crowded around wanting to know how they could buy VisiCalc and how they could get a personal computer.

Many of them hadn't seen a personal computer before. That again was connecting with the customer need, the real pain point. A lot of those customers saw the power of it and part of that power was a visual interface that allowed the user to enter the data and see it change before their eyes. That was a huge innovation.

It was very exciting to be at the founding of an industry. No one thought it was going to grow so big, so fast. We thought it was going to be big, but all the estimates of how big were eventually exceeded.

NEXT: Step Back, Look At Yourself In The Mirror

You work with a lot of companies. Talk about how important is it that companies step back and do some self-reflection on whether they are being entrepreneurial and give an example of how that benefits a company.

I worked with a very successful company where the CEO had built the company from scratch to a very significant size and he wanted to take a step back to look at where the company was now and where it should be going in the future. One of the things that we found out from some of the data and interviews with people from a workshop for the company was that a lot of people felt that the CEO was a micromanager. They liked the CEO very much but they felt that he intruded too much into decision-making. He said, 'That isn't true. I have no problem delegating decisions as long as people make good decisions.' We talked about that a little more and found out that a good decision was a decision that he would make. That isn't exactly delegation.

That turned out to be a great benefit to the company. The CEO resisted initially but as he saw what the feedback was, he was very responsive. He realized that in order to grow to the next level he really needed to rely on the people that he did trust. He had to show them that he trusted them and allow them to make mistakes.

Talk about how important it is to allow people to make mistakes.

That is really important. If people are going to be penalized for making mistakes with terrible adverse consequences they are not going to take risks. If they don't take risks in a time of great change then the company is going to be left behind by others willing to take the risk.

NEXT: Have A Real (Not Electronic) Conversation

People will always make mistakes. If you are human you are going to make mistakes from time to time. But the key thing is to try new things and learn from the mistakes that you make and keeping moving forward.

Another thing you need to do is get the team together periodically so everyone talks to one another. It is difficult in this day and age when everyone is communicating electronically with BlackBerries and iPhones and text messages and podcasts. All these things are great. But a lot of times you are never in the same room with your team for even a short amount of time. The conversations that people can begin to have with some facilitation around some of the important issues allow you to rediscover some of the other people in the company. It makes it much easier to work together going forward.

You've worked with hundreds of companies over the years. Is it easier for someone from outside the company to see the warts?

I think so. It's easier for someone from outside the company to crystallize what is happening. When you do that you don't come in with the attitude that you know everything. What you want to do is understand the company and get the people in the company talking and devoting their creative power on the issues that are crucially important. A lot of times it takes someone from outside the company not involved in day-to-day to help a company go to the next level.That is why sometimes it is important to get executives together from different companies and different industries to talk about issues so you get different perspectives. The advantage of having someone from outside who has the experience of working with a number of companies is it gives you some perspective.

The key element that makes you successful is to have the executives and managers in the company grappling with these problems and thinking proactively about the issues. You raise the issues, create the frameworks and initiate, encourage and facilitate a dialogue among the people working day to day in the company who have been the visionaries to help them move to the next level.

NEXT: Sync Ideas Into Opportunities

What is your message to CEOs who are not stepping back and asking whether they are still an entrepreneurial company?

Everyone has to decide for him or herself what their priorities are at any particular point in time. But I think if you look at the history of many companies over the years and how quickly the technology environment is changing, there is nothing more important that a CEO can do to keep the vision, communicate that vision and shape that vision than stepping back and getting some perspective. You need to sync ideas into opportunities. And even when successful CEOs and companies have identified what the opportunities are, those opportunities change frequently and the marketplace changes frequently so it is important to take a step back and think about the entrepreneur maxim -- if it ain't broke, break it. You have to be willing to take risks, try new things and constantly examine what has accounted for your success and apply it to new opportunities.