Wednesday, April 29, 2009

The Innovator and the Manager

What is the difference between an entrepreneur and a manager?

The innovator, the person who creates new ideas or ways of dealing with old problems (in business the entrepreneur), is by his very nature a destabilizing force. He initiates a process of change he doesn’t fully understand, and whose consequences he is utterly incapable of foreseeing in their entirety.

Management institutionalizes a successful innovation, the discovery of the entrepreneur, and in so doing, gives it an efficient, orderly, and useful life. But ultimately, management is the deathwatch of any successful entrepreneurial idea. Management, lacking its own creative instinct, wants to keep the entrepreneurial idea revenue-producing for as long as possible, usually through three phases: initial success and rapid growth, market dominance and slower growth, contracting markets and obsolescence. It is during the last phase that management is most likely to turn to the political process to protect the entrepreneurial revenue, now unable to earn its keep in open competition with other ideas. Political intervention can stabilize obsolescent ideas for years, even decades. But that stability only makes the inevitable adjustment more painful, as more and more capital and labor is drawn into an industry that only appears healthy, but is in fact, doomed.

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