“Entrepreneur” has many etymological explanations, most of them wrong. We know that the term was already in use during the 18th century, but “entrepreneurship” waited until after World War I to come into being.
According to Peter Drucker, the French economist J.B. Say, writing around 1800, defined the “entrepreneur” as someone who “shifts economic resources out of an area of lower and into an area of higher productivity and greater yield.” In modern parlance, by contrast, “entrepreneur” often refers simply to someone who has started his or her own business.
Drucker rejected the common description of the entrepreneur as someone who has launched an enterprise and considered Say’s characterization to be closer to the mark. But he also placed some additional requirements on the concept.
Real entrepreneurship, Drucker wrote, is a practice of “purposeful innovation,” one that should be “normal, steady and continuous” in “our organizations, our economy, our society.” It is as appropriate to government and the nonprofit sector as it is to business. The entrepreneur is someone who is always seeking change, creating it and exploiting it.
Seen in this light, the true entrepreneur is a rare breed. Rarer still are those entrepreneurs who manage to change basic assumptions about the role that their sector can play in the world, leaving people ever after influenced by their vision and their work.
With so many great minds descending on Nov. 17 and 18 upon the city where Peter Drucker was born 107 years ago—you can sign up for the live stream here—we thought it fitting to look back in history at some of these grandest of entrepreneurs, men and women who set an example of how to integrate entrepreneurship into life.
Here are the stories of three of them—one from each sector.
JOSEPH WHITWORTH: METTLE MEETS METAL
“Absolute truth is confessedly unobtainable,” Joseph Whitworth told the British Association for the Advancement of Science in Glasgow in 1840. “But it is certain that progress hitherto falls far short of this practical limit.”
Pursuing the practical limit of measurement and workmanship—and pushing hard against it—eventually made Whitworth rich and influential, with 48 patents to his name. It also made him the quintessential entrepreneur.
In 1833, just shy of 30, Whitworth returned to Manchester and went into business for himself, establishing a shop that bore the sign “Joseph Whitworth, tool maker from London.” Within a year, he employed more than a dozen millwright fitters and machinists, plus a clerk. A year later, Whitworth secured a patent for cutting screws; in the subsequent five years, he obtained nine more patents, most having to do with “turning, boring and planing.”
English industry was now growing with incredible speed, but in Whitworth’s view what stood in the way of mass production was a lack of precision and standardization. “The very soul of manufacture is repetition,” he pointed out, and for repetition to be effective you had to “reduce the number of sizes.”
One of the simplest and frustrating obstacles to this was the lack of a standard screw. Whitworth began to collect every variety of screw in England, and, averaging their pitch and depth, produced a paper in 1841 proposing a universal screw thread. This went into countrywide use—“British Standard Whitworth”—by 1858.
He also presented a paper imploring his fellow engineers to adopt a decimal system in measurement, rather than something based on eighths, and Whitworth’s “thou,” referring to thousandth of an inch, became the industry norm.
By 1853, when England went to war in the Crimea, Whitworth employed more than 350 people and had grown wealthy. The outbreak of hostilities inspired Whitworth to try something new. He invented a rifle.
The one he devised used a six-sided bore and required less gunpowder than other firearms, even as it achieved greater penetration. To Whitworth’s frustration, the British government chose to go with a different gun, but France became an enthusiastic purchaser of the rifle known as “the Whitworth,” as did the U.S. Confederacy, which found its precision invaluable for sniper use.
Consistently, Whitworth’s career illustrated Drucker’s dictum that “innovation and entrepreneurship are not ‘root and branch’ but ‘one step at a time,’ a product here, a policy there, a public service yonder.”
Thus it was that Whitworth’s foray into gun manufacturing caused him to become interested in metal quality. Steel was just coming into use for firearms, but impurities or air pockets in the metal could cause guns to malfunction or, in the worst cases, even explode. To address this, Whitworth devised a system of hydraulic compression that pressed down on the molten metal and expelled all gases. This he likewise patented, and, by 1880, when Whitworth was in his late 70s, he had established a large new plant that employed more than 1,000 people.
The very soul of manufacture is repetition.
People like Whitworth “are enterprising, imaginative and confident in their own judgment,” says Mark Casson, a scholar of entrepreneurship at the University of Reading. “They like tackling problems.”
The solutions reached by the most important among them not only delight their customers but go so far as to reshape the world.
To this end, by the time Whitworth died in 1887 at age 83, the “good enough” standards that had long characterized British engineering and manufacturing had become a thing of the past.
OCTAVIA HILL: R-E-S-P-E-C-T, FIND OUT WHAT IT MEANS TO ME
With “social entrepreneurship” all the rage, more and more nonprofit organizations have been looking to combine, as one set of experts put it, “a social welfare model” with a “revenue generation model that guides . . . commercial activities.”
Yet as 21st century as this approach may sound, it’s well worth noting that Octavia Hill was on to the very same thing—more than 150 years ago.
Hill was born in Cambridgeshire into a comfortably upper-middle-class existence, but when she was still young, her father lost his money through bad decisions and suffered a nervous breakdown. After that, he ceased to be capable of making a living.
Before long, a more hidebound governor came into power. But Okubo was cautiously persistent in promoting reform. Gifted at office politics, and widely resented for it, Okubo employed tactics like seeking out chess lessons from a priest who was known for playing the game with the father of the new daimyo. Okubo would then use these sessions to confide in the priest, in the hopes—correct, as it turned out—that his chess teacher would prove a useful conduit to higher-ups.
Okubo kept rising in local government, finally ascending to one of the most prestigious and senior roles possible: direct advisor.
At this time, rebels in the provinces of Satsuma and Choshu were becoming leaders in a quiet movement to do away with the shogunate and transform Japan into a modernized nation-state. In 1868, they hatched a series of plots, unleashing a short but bloody burst of battles that left 3,500 dead.
It was then that Okubo and other rebels realized a long-cherished plan: to get the shogun to step down and cede all authority to Japan’s emperor. The decade that followed this event, much like the decade that had preceded it, has been much studied ever since.
If, as Drucker has written, the groundwork for entrepreneurial opportunities includes unexpected failures, new threats and changes in perception, then Japan had many such conditions to offer. In addressing them, “creative imitation” and “planned abandonment”—getting rid of systems that have become obsolete—were central.
Okubo spent the first few years following the restoration helping to set up a new government—often using measures that were flatly autocratic. One of the most dramatic early reforms was to do away with official class distinctions. Samurai, who had lived by decree as a mostly idle aristocracy of warriors, were now free to engage in commercial activities. Nobility could marry commoners. The outcast eta group was no longer to be designated as such.
Okubo also joined an extended mission abroad, visiting the United States and Europe, in an attempt to renegotiate treaties and learn more about Western administration. In Prussia, he met with Otto Von Bismarck, who advised that Japan rely for its security on strong self-defense and not on international law.
In 1873, Okubo became home minister, giving him control of local government appointments, and he oversaw the establishment of an agricultural school, the promotion of industrialization and construction of extensive infrastructure, including roads and bridges.
Okubo had a plan: to get the shogun to step down and cede all authority to Japan’s emperor.
In 1876, to widespread consternation, the government prohibited samurai from carrying two swords, a traditional badge of prestige. And in a policy that would further squeeze the erstwhile samurai class, Okubo helped to do away with much of its income, which had initially taken the form of rice tributes from peasants. First, the central state assumed the obligation, but, seeing how much it strained the treasury, Okubo proposed instead that the privileges be commuted into long-term government bonds paying 5% to 7% interest. This freed up much more funding for building up Japan’s military and infrastructure.
All of this became too much for some of the samurai, including, inconveniently, some of Okubo’s old friends and colleagues in Satsuma province, where a major rebellion broke out in 1877. As home minister, Okubo was forced to take a lead role in crushing the rebels, a conflict that left more than 6,000 dead.
If Okubo already had many enemies, he now had more. The following year, traveling on the road in a coach, he died as no one should: of assassination by beheading. Okubo’s killers, who took their own lives as well, had been motivated in part by desire for revenge for Satsuma and in part by hatred of Okubo’s highhanded rule.
Few historians would deny that Okubo took an authoritarian approach to governance, and after his death democratization picked up speed. But he had left his nation considerably strengthened and drastically changed, and he is widely considered to be one of the founders of modern Japan.
Despite the public sector’s reputation as a laggard when it comes to innovation, stories of successful entrepreneurship in government are not that hard to find. But success on the scale of what Japan enjoyed under Okubo is exceptional indeed. *
What will you do on Monday that’s different?
EXPLORE YOUR ‘AMBIDEXTERITY’
Gather your team and question how your organization could become more “ambidextrous”—that is, able to serve existing markets where efficiency is prized while also competing in new areas where experimentation is needed.
SEARCH FOR CHANGE
Survey everyone in your organization, from the front lines to the executive suite, and ask them, “What are the best opportunities that we are missing, and how could we exploit them?”