Big Business Vs. the Entrepreneur : Corporate America Loves the Image, Not the Reality
The worship of the entrepreneurial spirit has reached a religious fervor in corporate America. Books about entrepreneurs are passed through executive suites like Bibles; board chairmen spout entrepreneurial aphorisms and assign senior talent to head new ventures in an effort to infuse their staid corpocracy with the atmosphere of risk-and-reward. Several business magazines have declared this to be the “decade of the entrepreneur.”
But when General Motors, the biggest of U.S. corporations, got hold of H. Ross Perot, an honest-to-goodness rags-to-riches entrepreneur, it could tolerate him for only two years. This week GM’s chairman, Roger B. Smith, found it more convenient to try to shut Perot up with about $700 million rather than continue to listen to his controversial ideas about reorganizing and improving the weakening business position of GM.
It is a staggering sum for a company to pay to keep its chairman’s feathers from being ruffled further by the pesky Perot. But it becomes all the more staggering when one considers that it represents about $200 million more than the entire U.S. venture-capital industry spent seeding thousands of new entrepreneurial ventures last year to pursue promising technologies of the future. History surely will show that GM would have been far wiser to accommodate itself to Perot’s quirky genius, and invest its $700 million in its future, than to defend Chairman Smith’s ego.
The crumbling marriage between Perot’s maverick, entrepreneurial Electronic Data Systems and tradition-bound General Motors is not an isolated case. Across the American horizon big business is cheating on its professed love affair with entrepreneurs. It is cheating, too, on its commitment to “intrapreneurship”--the somewhat paler in-house imitation of the outside entrepreneurial world.
IBM recently divested itself of its novel internal venture into retail computer stores, admitting defeat at dealing with the public on a one-to-one basis. Sears, Roebuck & Co. six weeks ago unceremoniously dumped its world-trade unit, an import-export subsidiary, giving up its intrapreneurial dream of building a Japanese-style global trading company after losing the first $60 million. Merrill Lynch & Co., Inc., pulled up stakes from its once-heady “financial supermarket” strategy in October, selling off its real-estate businesses. CBS, Inc., has just pulled the plug on its involvement in Trintex, a home videotext venture that once had board-room eyes gazing longingly at projected rapid growth. Even Pillsbury’s acquisition of Haagen-Dazs ice cream seems to be going sour.
Some entrepreneurs, meanwhile, have revealed their potential to be wonderful visionaries but woeful managers of expansion and growth. Steven Jobs, the personification of the new American business dream, was ousted from Apple Computer, Inc., in a soap opera that left few serious business minds sympathetic to the company’s co-founder and former Wunderkind of Silicon Valley. People Express Airlines, Inc., one of the most visible entrepreneurial ventures of the 1970s, recently flew into financial disaster. Its entrepreneurial cousin, Federal Express, stumbled into an easily foreseen fiasco with its ZapMail service, which finally was closed down two months ago after losing $300 million.
The common thread here is the fundamental clash of cultures between the entrepreneur’s world and the environment of a large, established business--a clash that has been neatly concealed in the rush to endorse the elixir of entrepreneurship. Players on both sides frequently see only the positive aspect of the other, and not the problems. Companies like GM dream that they can revive their flagging fortunes with Perot’s adrenaline, forgetting that they also must put up with his independent mind. Entrepreneurs like Jobs want their companies to grow big and rich while remaining the simple innovative hubs that they were when they were small and poor.
In Perot’s case, however, GM wasn’t just dealing with a visionary who couldn’t cope with the complexities of a large organization. At Electronic Data Systems, Perot proved that he could continue to thrive the larger the organization became. The GM-Perot conflict hinged on the essential difference between big business and entrepreneurship: Perot wanted to revolutionize the company while Smith wanted to subject it to gradual reforms. Smith’s brand of reform involved changing, sometimes boldly, the way the company did business. But the corporate culture and thought processes appear to have evolved less rapidly, and that’s what Perot objected to. Shaking up vested interests makes entrepreneurs nice folk heroes and interesting people, but it doesn’t win them a lot of friends in the high places being shaken up.
Perot proably is right philosophically and Smith probably is wrong, but big business in America--as represented by GM, the biggest of them all--loves the image , not the reality, of the entrepreneur.
