Questioning Conventional Enterprise Wisdom


Over recent years many people have become involved in enterprise: policy makers trying to promote it, researchers trying to explore it, trainers trying to teach it and practitioners trying to realise it. But, in doing this, have they have acquired an understanding about enterprise from colleagues, from business schools and/or from the literature about it which, to use a phrase popularised by Galbraith, amounts to the ‘conventional wisdom’.

‘Numerous factors contribute to the acceptability of ideas. … Because familiarity is such an important test of acceptability, the acceptable ideas have great stability. …. I shall refer to these ideas henceforth as the conventional wisdom.’ 1

A conventional wisdom?

If so, what is this conventional wisdom which has evolved about enterprise? It is not identified and recorded as such but, based on observations from experience, from noting queries and problems arising, and from the identification of possible thinking behind those issues and queries, could it be explained as a set of assumptions such as the following?

  • That enterprise is sub-set of business and that all organisations categorised as business (and being in the private sector) are presumed to have a lot in common. So small businesses are to a considerable extent treated as small big businesses and all enterprise has often been viewed from a big business perspective. Consequently other assumptions follow from that, such as:
  • Milton Friedman once declared that ‘the social responsibility of a business is to increase its profits. So one of the things that businesses share is the primary aim of maximising profit and anything labelled as a business wants to do that and therefore wants to grow.
  • There is a deterministic view that, with appropriate effort, businesses can reliably research and forecast things like markets, customer reactions and sales growth. This has the consequences that forecasting and planning are the proper way to proceed and ‘failure’ is stigmatised because it should be avoided by proper preparation. Therefore, if you are starting a business, the essential key action is to prepare a business plan. 
  • That businesses behave rationally and business decisions are therefore objective and logical. Therefore social influence has little or no impact and social capital is not relevant and so is rarely considered in business advice and teaching. Also, to increase rates of business start-up and growth, policy efforts usually seek to reduce barriers and/or increase support – as if people wanted to do it be were constrained by such external barriers.

But which is questionable

We might like to think that such understanding is the product of rigorous testing following the scientific method but Sir Karl Popper suggested that the development of knowledge often proceeds instead ‘by unjustified (and unjustifiable) anticipations, by guesses, by tentative solutions to our problems [and] by conjectures’, and he notes that, unless they are questioned, ‘erroneous beliefs may have an astonishing power to survive’ – as medical history shows.’ Therefore we might actually expect that to be the case with our enterprise understanding. Indeed, because problems have been found with some of its dogmas and because policy apparently based on it does not work, there are reasons for suspecting that this conventional wisdom may be erroneous.

Although there are reasons for thinking that the suggested assumptions could have been made and there is evidence that they were made – there are also reasons for thinking that each of them is misleading if not simply wrong. Thus there is a case for supposing that this conventional enterprise wisdom is based on a foundation of interlinked but false assumptions. Nevertheless, without realising it, have many people absorbed much of this way of thinking – because that is what happens with conventional wisdom? However, if we can see it for what it is and free ourselves from its constraints, then we might better understand what is actually going on.

Some implications

What, for instance, might be the implications for digital business? Here are four suggestions:

  1. Appropriate Goals.  Do we need a more appropriate, realistic (and sustainable) perception of business objectives? Indeed, can the world afford everlasting growth? An enterprise, it has been suggested, is ‘a goal realisation device’. So what actually is the goal for those engaged in digital business: is it just to make more money (and will it do that) or is it to self-actualise by following an interest, by achieving something new and/or doing it well?
  2. Facing Uncertainty.  Henry Mintzberg points out that ‘it would be well to bear in mind the disarmingly simple point that ‘the future does not exist; [so] how could there be knowledge about something non-existent?’ Therefore, rather than putting a lot of emphasis on trying to reduce uncertainty by researching, forecasting and planning on that basis – and rejecting the idea of ‘trial and error’ because errors and failure are the consequence of poor preparation and so should not happen – we should accept that the future is uncertain and prepare accordingly. Digital businesses are concerned with new fields of endeavour and should reject determinism and instead see new ventures, not as journeys which can be pre-planned, but as examples of exploration and prospecting unexplored territory to find and benefit from what is in it. Therefore they should accept that the process often called ‘trial and error’ is the best (the only?) way to develop new products which work well and they should also embrace the thinking behind concepts such as ‘lean start, ‘effectuation and ‘antifragility’.
  3. Using Social Capital.  Has business thinking followed the traditional economic assumption that humans always act logically to maximise benefits? Have we therefore ignored the strength and impact of social influence? Is that why we do not have a better recognition of the importance of social connections and how to build and use social capital – and why there is so little literature and teaching about it? Yet social connections (social capital) can be very useful in business: for instance for getting information, for building trust and mutual obligations and for encouraging acceptable norms of behaviour.
  4. Being Enterprising.  Would it help to have a better impression of that it means to be enterprising? Because it has been assumed that enterprise has been a subset of business, has it been encouraged by teaching business start-up? But the Oxford Handy Dictionary defines enterprise as ‘undertaking, esp. bold or difficult one; readiness to engage in such undertakings; enterprising, showing courage or imaginativeness’ and Gibb has suggested  that the associated concept of entrepreneurship involves ‘ways of doing things; ways of seeing things; ways of feeling things; ways of communicating things; and ways of learning things’ These are not explanations which limit it just to business – and they need more skills that just the usual components of business start-up training. Might enterprise be helped by knowing how to analyse a situation, how to see something from different perspectives and how to explore while recognising opportunities but minimising risk. But these skills are not yet well investigated.
Biography
Simon has a long and distinguished career in formulating and analysing enterprise policy in Northern Ireland. In 1984 He joined the Local Enterprise  Development Unit (the Northern Ireland government’s small business support agency). This was the first initiative to develop enterprise policy in Northern Ireland, as before the 1970s there had not been a significant recognition of, or focus on, enterprise and small business. Thus it is notable that Simon was centrally involved in formulating enterprise policy in Northern Ireland from the outset at a time when the agency was expanding its activities. This was not an easy task given the turbulent environment of the Troubles. Over three decades, his expertise was sought by, for instance, the Policy Evaluation and Review Team (PERT) of the Department of Economic Development (DED) in pursuing policy initiatives in entrepreneurship. He was influential in developing schemes such as Eureka (1986), Pathfinder Enterprise (1987), Community Business (now referred to as social enterprise), Enterprising Northern Ireland (1988) and successive policies. He left the agency in 1993 and, since then he has conducted reviews and appraisals of various government, enterprise agency and enterprise education initiatives (as well as providing assistance to universities and further education colleges on initiatives such as the Northern Ireland Centre for Entrepreneurship and the Connected programmes). As an enterprise facilitator/consultant he has undertaken projects in Russia, Ukraine, Mozambique,
Bulgaria, Turkey and Romania. More recently, he was consulted in the development of an Enterprise Strategy by the Department of Enterprise, Trade and investment (DETI). From his central involvement in formulating enterprise policy in Northern Ireland for almost four decades, Simon’s knowledge and understanding of the subject is quite unique.

[1] John Kenneth Galbraith, The Affluent Society, first published in USA 1958 (London: Penguin: 4th edition 1991)

[2] Milton Friedman, The social responsibility of a business is to increase its profits’, The New York Times Magazine, 13 September 1970

[3] Sir Karl Popper, Conjectures and Refutations. London: Routledge, 5th Edn 1989)

[4] L. Hunter, speaking at a University of Ulster seminar on ‘Developing a strategy and vision for social entrepreneurship’, Coleraine, 10 Sep 2007

[5] Henry Mintzberg, The Rise and Fall of Strategic Planning, (Hemel Hempstead: Prentice Hall. 1994)

[6] Simon Bridge and Cecilia Hegarty, Beyond the Business Plan – 10 Principles for New Venture Explorers, (Basingstoke: Palgrave Macmillan, 2013)

[7] Tim Harford, Adapt: Why success always starts with failure, (London: Little, Brown, 2011)

[8] Eric Ries, The Lean Startup, (London: Portfolio Penguin, 2011)

[9] Saras Sarasvathy, Effectuation: Elements of Entrepreneurial Experience, (Cheltenham: Edward Elgar, 2008)

[10] Nassim Nicholas Taleb, Antifragile: Things that gain from disorder, (London: Penguin, 2013)

[11] Simon Bridge, ‘Can social contact help enterprise – and is that social capital?’, Piccola Impressa, 2019 No.3, 2019

[12] Oxford Handy Dictionary, (Oxford: Oxford University Press, 1986)

[13] Allan Gibb, ‘SME Policy, Academic Research and the Growth of Ignorance, Mythical Concepts, Myths, Assumptions, Rituals and Confusions’ International Small Business Journal, Vol. 18/3, 2000

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