Dr. Terry Noel on the Virtuous Entrepreneur [video interview transcript]

Interview conducted at Rockford University by Stephen Hicks and sponsored by the Center for Ethics and Entrepreneurship.

Hicks: I am Stephen Hicks. Our guest today is Professor Terry Noel, who teaches Entrepreneurship and Management at Illinois State. He is here today at Rockford College speaking on the theme of the virtuous entrepreneur. Interesting title, but your broader context is the newer entrepreneurial economy that we live in and that you think is accelerating, particularly for younger people. What do you mean by this new and accelerating entrepreneurial economy?

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Noel: Well, I think we’ve seen a change in the last 30 years certainly. In about 1980, we started to see a big shift in the economy from one which was driven largely by Fortune 500 companies. In 1980, about one in five people were employed by a Fortune 500 company. Now, a little less than 20 years later, in about 1998, that had dropped to one in fourteen.

Hicks: I’ve seen that number, yes.

Noel: And so we really became more of a small business and entrepreneurship economy than a large-company economy. Now, since 1998, we’ve had many more changes. The pace of change has really accelerated, because, if you recall, the Internet was really established as a commercially viable entity only in 1994, in January. When we take that shift that was already happening and then add a radical transformation of how information is handled and who has access to it, we start to see a great deal of turmoil in the economy. So I think that we will continue, in some cases, to see large companies, but by and large I think we are going to see an economy where we have more startups dealing with new technological issues. And we are going to see such rapid change that the idea of a large organization staying in place for decades, I think, is going to become more rare.

Hicks: And this is going to impact younger people. Fewer of them will be working in organizations that are traditional large corporations. They will be working in smaller organizations, or more entrepreneurial organizations, and many more of them will become entrepreneurs. And so that means a different set of character traits are going to be more important for younger people, and this takes us to the virtue part of your talk. Now, before you plunge into entrepreneurial virtues per se, you made a distinction between positive ethics and negative ethics. Say something about that.

Noel: Well, usually when we talk about ethics in the context of business, we are largely talking about refraining from certain types of behaviors. Don’t cook the books. Don’t misrepresent your product. Don’t sell things under false pretenses or things that are dangerous.

Hicks: Okay, so they’re all don’ts.

And there is nothing wrong with that, it’s just that that’s really only one half of the view of business ethics. I think it’s important also to recognize that there are positive virtues. I would put on the list things like, say, courage, the ability to try something new. If we are going to live in an economy where new ideas and innovation are kind of the mainstay of growth, then it requires people who are willing to take a chance and to do something brave. Ethics is not simply about refraining from doing damage to other people or lying to them in various ways but actually doing positive and creating value in the world. Then, we need to shift ethics away from simply not doing to a focus on the positive.

Noel: Oh, I think so, absolutely.

Hicks: Right, and then you connected that to the entrepreneurship discussion, because, if we are to be more entrepreneurial or outright entrepreneurs, then what are the character traits that go into being an entrepreneur or being entrepreneurial? Now, you have mentioned being courageous, being creative, and so forth. What other key virtues do you think are critical to success?

Noel: I think the one I would put at the very top of the list is independence of mind. I think that, in order for someone to succeed as an entrepreneur, he or she has to be willing to trust that his or her convictions are sound. That doesn’t mean you get it right every time, and doesn’t mean being mule-headed about things. It just means having the confidence to think that I am in the minority on this idea, and I am okay with that. And I can survive in that kind of climate. And that is not a virtue that we talk about a lot. Much of virtue it seems to me is founded in a sense on conformity. So, I think independence of mind hits the top of the list.

Hicks: Okay, closely related would be creativity of mind. You mentioned that a little earlier.

Noel: I think creativity is with some qualifications. I think creativity is often emphasized in entrepreneurial ventures, and that is good. And because almost, by definition, an entrepreneurial venture is creative in the sense that it kind of disrupts normal routines. But, creativity can be overrated. Very often, successful businesses we know are not those that are necessarily radically creative, but they often put an interesting tweak or twist on an existing idea. So, I think creativity makes a difference but not for its own sake.

Hicks: This distinction between incremental innovation or incremental creation vs. disruptive innovation and so on.

Noel: And both can be valuable.

Hicks: Fair enough. And then you mentioned courage. So, what else would be high in your list of traits?

Noel: I think resilience absolutely has to be near the top of the list. Because the simple fact of the matter is most entrepreneurs fail; they just fail marvelously. Failure is a virtue but not if we fail for reasons of being careless or not doing our homework or not paying attention to reality. But, sometimes we can do our homework, do all the right things and still fail. I think probably the biggest factor that separates successful entrepreneurs from those who die on the vine is that they just decide they will do it, no matter what. Now, they may have to change their approach to an idea,millenial-entrepreneurs but they have to be resilient enough to get up, dust themselves off, and go at it again.

Hicks: All right, so that’s four so far. Five is a nice rounded number. So, one more.

Noel: You know, I am going to put one on the list that I’ve just being thinking about recently. And so, I think compassion. One has to remember what the real root of entrepreneurial activity is. And that is, I want to achieve something for myself, and that is noble motive. It may be to satisfy a drive to create something beautiful or useful, and we can do that, say, as an artist or as a performer and not really think in a business context. When we are entrepreneurs, though, we are creating a value that can be enjoyed by other people for which we receive an honest trade in exchange. Value for value exchange. Without some type of compassion, that is, the sense of understanding what other people need and how to make their lives better, it’s very hard to be a successful entrepreneur. So, compassion not in the sense that we usually think of it in just charitable causes and things like that. But being able to understand and empathize with people and how to make their lives better.

Hicks: So, it’s not necessarily understanding what people themselves think they want or just doing your market research and being tuned, but being able to understand and feel for how people could live.

Noel: Yeah, I think Steve Jobs is a great example. Because, at the time, if you had asked me and most other people do you need a computer in your home?

Hicks: This being in the 1970s or earlier, actually?

Noel: We’d have looked at you like “What?” But Steve Jobs recognized what we needed and what the world needed before any of us did. Now, interestingly, and this is why I think there is no contradiction between self-interest and the service of others entrepreneurially. Steve Jobs has a marvelous quote in which he says: “We didn’t create this for everybody else. We created this for us. We wanted to create the neatest computer that had ever been invented.” Now, you think about that. He is saying outright we didn’t do it for everybody else, yet millions benefited. So, I think sometimes we have a convoluted view of what is good for us and what is good for others.

Hicks: The win/win is natural and normal if you are an entrepreneurial value creator.

Noel: Absolutely.

Hicks: Not to put words in your mouth.

Noel: No, no. That’s a very good way of putting it, in fact.

Hicks: Now, this list of traits takes us to the issue of why some people, and it seems to be a minority, are successful as entrepreneurs. Other people fail as entrepreneurs, but a lot of people also just aren’t interested in it or are frightened by entrepreneurship. Are entrepreneurs made or are they born? From your talk, I got the impression that you think that they are made or that at least we can train ourselves to become more entrepreneurial. So, how does one do that?

Noel: Well, I think the first thing we need to remember is we view holding a job for our adult working lives as the norm. When, in reality, about 100 years ago and before, that was not the norm at all. More than half of people were employed in their own businesses. We had shopkeepers and artisans and so forth. And then, as we learned of the value of large organizations, efficiencies of scale, and things like that, we came to have lots of people that found it a better life for themselves to have the predictability and security of a job. There is nothing wrong with that. I think we are probably seeing the end of that era for reasons we talked about a moment ago. And that means that, as we have less of our working lives dictated by an organization and the goals of management and owners, we have to make up our own minds of what we want to do and the value that we want to create. And that’s a bit different. That’s not a set of virtues about fitting in to the corporate climate, but it’s developing virtues like independence of thought and courage.

Hicks: Does it mean a shift in parenting styles, a shift in education, lower education, higher education?

Noel: Heaven love them, our parents. What do our parents want for us? So we have kids and what do we want? We don’t want them to experience all the pain that we experienced. Now, we may say we want you to go out, be adventurous. and do these things and be true to yourself. But, in reality, we remember all the lumps and bruises we took, and we think for heaven’s sake, I hope they don’t have to go through that. And I think sometimes, unconsciously, we encourage our kids to be too safe. We encourage them to get a good job with benefits, and then older entrepreneurwe don’t have to worry that they won’t be able to pay the bills. Instead of teaching them to go out and try micro-businesses, to encourage them to go out and take fifty dollars, invest in something, go resell something, see if you can make some money. Or instead of getting that part-time job while you are going to school and getting paid minimum wage, why don’t you start a micro-business that will support you through college? I think we don’t tend to do that quite enough. So I think parenting does have a lot to do with it.

Hicks: For people who are older adults, and who want to cultivate entrepreneurism in themselves, what kind of advice do you have for them?

Noel: Well, a couple of things. One is you’ve probably already, without realizing it, developed a lot of the virtues that are necessary for being an entrepreneur. Because most people, in their adult working lives, have faced situations where they’ve had to be courageous and, maybe even to a certain extent in certain companies, innovative. I think the biggest thing, if I were to encourage adult entrepreneurs, say, people that are near retirement age but they are worried they won’t be able to live well through retirement, is to develop just some fundamental business skills, things like, you know, basic accounting skills, basic marketing skills. I am not talking about going back and getting a college business degree but just developing those skills. As far as the virtues, I think you just have to take assessment of what your experiences have been like. If you have been in a company that encouraged innovation and risk-taking, it’s probably pretty natural.

Hicks: So, just build on those consciously.

Noel: Build on those. If you’ve been in an environment that has been very staid and very predictable, you have to be honest about that and ask yourself, are there areas in my life where I have been innovative and been a risk-taker, and how can I parlay that into an entrepreneurial venture?

Hicks: All right, so ongoing character training for oneself.

Noel: Exactly, a little step at a time.

Hicks: Whatever age level.

Noel: Exactly.

Hicks: Thanks for being with us today.

Noel: Thank you for having me.

[The video interview with Terry Noel follows.]

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