The common perception of an entrepreneur is that he is a risk taker. But Prof Manimala has a different view.

He is a Professor of Organizational Behaviour at the  Indian Institute of Management, Bangalore ( IIMB ). Has done a lot of work on Entrepreneurship and Innovation. Especially on the way entrepreneurs take decisions. His doctoral thesis on the "Managerial Heuristics of Pioneering-Innovative Entrepreneurs" has been widely acclaimed by the community of researchers both within and outside the country.

Excerpts from Dr. Mathew J Manimala's  Talk.

Entrepreneurship can probably be called appropriately the Science of muddling through - Entrepreneurs probably learn like that. Let me share my experience as a student, while working with a professor who was training probationary Entrepreneurs. At that time the ruling theory was McClelland's theory of single motivation, originally proposed by a Schychologist called Henry Murray. An entrepreneur or an achievement oriented person, sets his own targets and excels at that, looks at other targets in similar fields and excels at that also, and lastly takes moderate risks.

One of the games in this training session was called the Ringtone game, A pole is placed and 10 rings are given to each participant, the participant can choose his own distance, but the objective is to put maximum no of rings through the pole. Going too near is not at all challenging, going too far is not realistic and too risky. Out of the 17 participants, almost every one chose moderate distances. There was one person, he went very close and put all the rings on the pole, he had the maximum score, but the trainer did not approve of that. Everyone asked him, why you did it, he was unable to explain. After 5 years, I went to meet the professor, who had taken the training session, and found that out of 17 people who attended the training only 3 had started business out of whom 2 had failed, the gentleman who had thrown the rings from very close was the only successful business man. I met this person and asked him why he had stood so close to the pole; he said "Entrepreneurs don't take unnecessary risks", which was insightful for me. He gave a very simple explanation, he said I was supposed to maximize the numbers and I was given the choice to choose the distance, then why should I jeopardize my chances by standing far away?

It is a general perception is that Entrepreneur is a risk taker. When I started reading the autobiographies of Entrepreneurs,  I realized that, an entrepreneur is a risk manager. It is shown that professionals take much more risk; they do so because the resources do not belong to them.

Entrepreneurs are interested in certain projects, and they like to pursue them. Let us say, I'm interested in ivory, if it is legal to take it from the source you will see me fighting with an elephant to get it. Since ivory is intrinsically attached to an elephant, I'm forced to take it from an elephant, so I become a risk taker. But if it is available easily elsewhere I will take it from there.

Let's take an example, while watching a circus, we may feel that it is very risky. A trapeze artist may seem to be taking maximum risk. I recently read in a newspaper article that there were 835 deaths on the streets of Bangalore city the number of people who were hurt in accidents are probably much higher. Objectively speaking, circus is less risky than driving on the streets of Bangalore, but we don't mind taking the car out on the road, that is because of our prior experience of driving on the road without major catastrophe. Hence it is the difference in the perception of risk rather than the attitude towards it.

Why do Entrepreneurs think differently? It may be because of their background, traits, experience etc. Evaluation of risk may be dependent on your frequency. Opportunities which you think is good may not be good for me. When I was a student, my father passed away and I did not have sufficient money to buy all the text books required for my studies, so I used to go to the British Library.  Everybody would think not being able to buy the text books is a disadvantage, but this worked to my advantage, my notes became the hot property in the class. The professor would ask me to give lectures. The collective gain that happened was that, in that year there were 2 first classes and I got a rank!! 

Having an educational degree is not a prerequisite to start a venture. The best Opportunities identification happens on the field. Likewise, unless you have the experience of being in a business, you may not qualify to start the business.

There are three benefits of having experience. Entrepreneur needs to have a father figure, who provides the basic grooming required, and these are available in the corporate organization.

Second point is the initial capital, 68% of the entrepreneurs fund their own ventures initially. The risk perception will be different.  

Third thing is what is called Social Capital or the network which you build as you work, which is essential to start a venture on your own.

He was speaking at a Panel Discussion organized by Businessgyan and TASMAC on the topic ‘What makes Entrepreneurs Tick?'.

Compiled by Ms. Mangal D Karnad for Businessgyan

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