US vs UK Entrepreneurial Culture

There seems to be a number of reasons why the culture in the US is better established to harbor entrepreneurs than the UK. The three key points that keep coming up is the access to money, the reaction to failure and the established communities.

I have discussed the failure aspect previously, so won’t go into detail here, but the general perception of failure is dealt with in much more positive way in the US than in the UK. That isn’t to say that if you fail with a business venture in the UK, it’s the end of it, but it is a lot harder to win the confidence of future partners and investors in new ventures than it is in the US.

Funding is another big issue, where there is a lot more capital available and it’s generally easier to access in the states. Financing institutions such as venture capitalists and angel investors are also more established which helps more new businesses get off the ground quickly and with a greater starting capital than in the UK. This is changing however, and there are more angel groups created all the time in the UK, but they aren’t mature, and without the experience of similar groups in the US. The willingness to take chances in potentially riskier ventures is also more prevalent in the US, which broadens the opportunities for entrepreneurs to get their foot in the door.

Another aspect which I feel is different is the large scale and scope that people think about in the US. Where it’s rare to find new entrepreneurs in the UK with international ambitions, and large scale plans for the business, this is almost thought as a given with ventures, especially in areas such as Silicon Valley. Clearly there are plans in effect to try and change this situation with schemes such as the Kauffman Fellowship, and the prevalence of international trade advisors around the world. I just feel that more has to be done at the earlier stages in business, rather than the tendency to focus on larger established businesses.

Of course the UK isn’t by any means the worst place to start a business, with lots of support and guidance available both nationally through government initiatives through to local councils and universities starting to realize the importance of encouraging entrepreneurship. A lot is being done in various hubs around the country to foster some the same buzz that surround Silicon Valley, but it will take many years to reach a similar culture that can be found there, and in the US in general. The mix of thriving businesses, access to talented and willing workers and the business support network that are all key for such an area to succeed don’t happen overnight, and it will take a lot of effort, and patience to try and re-create the elements that are all so important elsewhere.

There are definitely opportunities to succeed, especially in the North East region in the UK where they are willing to put the necessary effort and investment in the area to make it a thriving place for companies to be. With institutions like the University of Teesside investing heavily in entrepreneurship, and trying to educate students and the local community about the value of new business to the area and the economy it is an exciting time to be an entrepreneur. I just feel it will take time and a lot of mistakes before they crack the right mix of elements necessary to create the right environment that will foster willing and successful entrepreneurs. I hope by putting to good use the lessons learnt over the last 5 months from some of the top thinkers and entrepreneurs in the US I will be able to take advantage of the situation emerging in the UK and even impart some of this knowledge to help making it the best place in the world to run a business.

Risk and Failure

The ability for a company or an entrepreneur to try out new ideas quickly can be key to their success. Even more of a factor is their ability to see at the earliest possible stage when their ideas are not going to succeed and abandon them with the minimal loss of time and money. This could be through analysis of the situation, or simply because the venture failed dramatically.

One of the advantages young companies have is the speed in which they can act, and bring new ideas to market, without the need for lengthy corporate analysis and countless review boards. Ideas can be generated in a morning, and testing by the afternoon to see whether they should move forward with a plan of action. It’s this quick turnaround that can be the difference between success and failure in today’s fast moving markets.

However the challenge comes when deciding which ideas to pursue, and how far to take them before either more resources are allocated, or the project is sidelined before it eats up too much money, or just looks like it’s not going to be as successful as necessary to make it worthwhile. The techniques that can be implemented in doing this, include bootstrapping the venture, outsourcing development work, small scale – holistic testing and keeping flexible in the face of changes; so generally everything that successful entrepreneurial companies do anyway.

What these policies encourage within a company is to try many new things, and test how well they work, or in many cases don’t work. By learning from failures the company is in a better position to go forward, learning from these lessons. If the company is able to do this using minimal time, money and other resources then even if the venture is a failure then they have been successful. This can give them huge advantage over large companies that don’t have the ability to do this, and must produce piles of extensive and expensive market validation, and consumer feedback before even contemplating going to market with a new product.

As Randy Komisar puts it, “Innovation is about taking risks to do things that haven’t been done before” and goes on to rightly describe that if you could understand which ventures were going to succeed before you did them, then there would be no need for innovative companies, as the giants of the world would simply be able to pick them first. As long as the business models (and share holders) of large companies aren’t able to put up with the amount of failure required for innovation then there is space for entrepreneurs to take the risks necessary for success.

How entrepreneurs deal with failure can go as deep as the cultural level, with areas such as US and China having a much more positive outlook on failure than other areas such as Western Europe and India. The ability to fail in business, even go as far as to plan to fail, is a key discerning factor for success in the fast moving business world of today. You only need to look at companies such as Google, Facebook to see how many times they stumbled to get to where they are today, whilst searching for the killer business models that has got them to where they are and it shows how important failure can be, but more importantly is the ability to adapt and learn from failure.