Entrepreneur as Leader

Posted by Orrin Woodward on May 22, 2013

An entrepreneur must be a leader. Why? Because he or she must build and lead teams of people to accomplish the task, satisfy the customer, and do so at a price that leaves profit for the team members. In other words, ineffective leaders soon prove to be ineffective entrepreneurs because the customer isn’t satisfied nor the teams paid well. Nonetheless, many would-be entrepreneurs start business while ignoring the importance of leadership to the health of their enterprise.

Entrepreneurs should enter into markets where they feel they can satisfy the customers better than their competitors. For instance, Jack Welch, in his early days, was called “Neutron Jack” because he refused to be in a business sector where he couldn’t improve to either #1 or #2. His philosophy of business led him to get out of markets where he couldn’t be the best, and move into markets where he could be the best, thus maximizing profits for the company and ensuring employment for the workers. Incidentally, few seem to understand that only a profitable company can maintain its workers. Since profit is the life-blood of any business, when a company is losing money, it’s similar to a patient losing blood. In both instances, death results if the bleeding isn’t checked.

Accordingly, leaders are constantly studying the vital signs of their business, ensuring the business is not bleeding to death. In fact, leaders must be PDCA champions, constantly making adjustment in the areas where it can have the most impact. They don’t just change things to make change, however. Instead, they listen, study, and analyze until they determine which area of change could have the biggest impact on the bottom line. Then they do something unheard of in our modern world, namely, take massive action to drive the team and business forward.

Whenever I study a business, the first question I ask is: Who is the leader? If an effective leader is in charge, he can overcome lack of capital, lack of resources, and still beat competitors who have plenty of both. Why? Because leaders constantly are developing innovative ways to solve problems while managers focus on the same methods that worked before. I love the saying: If it isn’t broke, then break it and make it better.

When my co-founders and I started LIFE Leadership, we did so with little funds or resources, but we had a superbly talented leadership team. I knew that the leadership team would quickly build the leadership products that could compete with any leadership team anywhere. Interestingly, over the last 18 months LIFE Leadership has become a $50 million dollar conglomerate through building the highest quality personal development products in the industry.

For example, anyone serious about being an entrepreneur ought to purchase and apply the principles from the Mental Fitness Challenge personal development program. The 13 Resolutions are found in my All-Time Top 100 Leadership book RESOLVED: 13 Resolutions for LIFE. If applied daily, they will radically change the leadership capabilities of any hungry student. In fact, I have hundreds of emails from satisfied customers who did just that.

In summary, if the reader wants to be a successful entrepreneur, then he must be a successful leader. Building a company without building one’s leadership is a fools way to launch a company. For no company will rise higher than the leadership within the company. America needs leaders to create the LeaderShift! What part will the reader play? Here is another segment of the article on the role of entrepreneurs.

Sincerely,

Orrin Woodward

Entrepreneur as exceptional leader

Hans Karl Emil von Mangoldt (1824-1868) developed the notion that entrepreneurial profit is the rent of ability. He divided entrepreneurial income into three parts: (1) a premium on uninsured risks; (2) entrepreneur interest and wages, including only payments for special forms of capital or productive effort that did not admit of exploitation by anyone other than the owner; and (3) entrepreneurial rents or payments for differential abilities or assets not held by anyone else. The first part is a return on risk taking; the second part from capital use and production effort, and the third part from ability or asset specificity. Alfred Marshall (1842-1924) carried forward Mangoldt’s notion of rent-of-ability by adding the element of leadership to “entrepreneurial” responsibilities. Marshall’s entrepreneurs “must be a natural leader of men who can choose assistants wisely but also exercise a general control over everything and preserve order and unity in the main plan of business. In fulfilling this organizational function, the entrepreneur must always be “on the lookout for methods that promise to be more effective in proportion to their cost than methods currently in use”. Marshall noted that not everyone had the innate ability to perform this entrepreneurial role as these abilities are so great that very few persons can exhibit all of them in a very high degree. Accordingly, he termed the entrepreneurial rents specifically as a “quasi-rent”, which is a return for exceptional natural abilities, which are not made by human effort, and enable the entrepreneur to obtain a surplus income over what ordinary persons could expect for similar exertions following similar investments of capital and labour in their education and start in life.

This entry was posted on May 22, 2013 at 8:38 am and is filed under Leadership/Personal Development. You can follow any responses to this entry through the RSS 2.0 feed. Both comments and pings are currently closed.

15 Responses to “Entrepreneur as Leader”

Larry Pahl said

May 22, 2013 at 9:07 am
I was contemplating this concept yesterday, as I shared my business with others. Many people have no concept of leading others because they are so worried about their pocketbook. They jump from one thing to the next just hoping it will work and no one ever follows. Only those who get followers can ever have a successful business. In the book ” The Cashflow Quadrant” the second qualification for a mlm is to develop ppl. We have our hand on the very business to develop ourselves into competent and capable leaders
Farrah Sargent said

May 22, 2013 at 9:18 am
Wow! Thanks Orrin. I love this article because it gives me hope. I do not come from a background where I learned much about success, leadership or entrepreneurship. The group that you have put together and the principles in the RESOLVED book and others are teaching me that the keys to success are a skill set that you can acquire! Keep up the great work. We are listening. We are learning. We are no longer leading lives of quiet desperation! Thanks again.
Chad Waters said

May 22, 2013 at 10:26 am
Great Article Orrin!

I love the comparison of self employment to the art of leadership (coming from the S quadrant pre Life). You need to grow with your business whether with Life or any business, you can’t just add a new product line or team and think your ready to serve the new clientele.
I love the mention of the Mental Fitness Challenge as it excelled all the abilities I had and didn’t have. I’m currently trying to find that next vital piece comparable to the MFC to move on and help our teams better. Maybe the MFC again it woouldn’t hurt either way! Life product is so amazing!
Again great article Orrin and everyone need to improve anyywhere in Life to move on.

God Bless
Robby Palmer said

May 22, 2013 at 10:33 am
Great read Orrin. Once again… You’re parallels to traditional business owners runs true in my experience. It’s obvious, especially after the mental fitness challenge.
I wonder how one would reach the independent mind of mine, back before it was too late, so if I ever run into that guy, I can somehow reach him? 🙂 or just introduce him to a real business. Thanks Orrin Woodward!
Scott Morrison said

May 22, 2013 at 11:43 am
Thank you Orrin. Its an inside-out job! The material is truly life-changing. We’ve seen so many people change their own lives and begin to create a positive influence with others and that’s exactly how we will make a difference in the world. Thank you.
Don Schultz, Team VIP Phalanx said

May 22, 2013 at 2:15 pm
In “Launching A Leadership Revolution”, part of the definition of a leader is “one who is not content with the status quo”. That certainly fits the bill for an entrepreneur because they see needs before others and find a way to meet those needs. Along the way there will be many decisions to be made regarding resources of time, effort, money, production, etc. and those decisions will only be made well when proper-thinking principles are applied along with the PDCA process.

Orrin, great article tying the two facets together.
- Orrin Woodward said
  
  May 22, 2013 at 2:16 pm
  Don, excellent thoughts!
Elizabeth said

May 22, 2013 at 3:14 pm
This article emphasized for me the importance of PDCA. I recently heard one of our leaders say that the one thing he started to do, and gained much ground because of it, was a daily PDCA. We have incorporated that principle into our business and are seeing the benefits. Thank you for this added insight Orrin.
Elam Stoltzfus said

May 23, 2013 at 12:13 am
Awesome post!! I’m in the middle of reading (George Washington on Leadership by Richard Brookhiser) He was a great example of a Leader in action.
Randy Robson said

May 23, 2013 at 2:39 am
Great post!
CJ Calvert said

May 23, 2013 at 7:27 am
Great article Orrin. Perhaps if he saw the LIFE business, von Mangoldt might describe the 3 parts of his entrepreneurial income as 1. Guts, 2. Power Player, 3. The world-class books and cds LIFE offers.
Tim Marks said

May 23, 2013 at 8:37 am
Orrin
Spot on!!!
So many businesses fail because they lack leadership , not a good idea or product.
That’s why I love LIFE , we can offer solutions to the many companies that are lacking leadership training
Richard Kroll Jr. said

May 23, 2013 at 1:52 pm
Another GREAT article Orrin! I can’t help but remember seeing a lot of these leadership attributes while reading “Good to Great” and other books I’ve read from my LIFE Leadership subscriptions.

You and the other founders of LIFE Leadership not only embody these traits, but you also make them the backbone of your already successful conglomerate- something that benefits the rest of us! Thank you!!
SJ Barakony said

May 26, 2013 at 8:56 pm
von Mangoldt’s summation is very very interesting!

( continuing a theme – he’s another man whom I had never heard of until this post was shared )

Undoubtedly, there’s a clear correlation between leadership in its rightful form ( servant based ), entrepreneurship, and free enterprise.

Thank you as always, Orrin, for sharing with all of us, sir.
Tina Abernathy said

May 30, 2013 at 10:48 am
Once again, Thank you Orrin for your thoughts and willingness to share!

When Raymond and I entered this profession we had no idea what being a business owner truly meant. All I saw was “If this pays our cable bill…cool”. But what I found was a leadership train ready to help my God given engine fuel up and run. Leadership is certainly needed everywhere in our nation and we are proud to play our part in the Leadershift!!