In the quad of the Bodleian library in Oxford is a series of old lecture rooms, each door labelled above with the name of the subjects taught there. Titles such as Moral Philosophy and Divinity are unsurprising, but not so the juxtaposition of Astronomy and Rhetoric. What have they to do with each other and what have they to do with entrepreneurialism? I shall attempt to explain that one association is ancient and the other brand new.
In the ancient world there were seven liberal arts in which education was framed and recommended. These were grammar, logic and rhetoric (the lower trivium, so called) and arithmetic, geometry, music and astronomy (the higher quadrivium). Rhetoric was the ability to persuade and influence through communication: the output of analytical thought made possible by the accurate use of language (grammar) and the analytical ability of logic. It is astonishing how much was understood in the ancient world about astronomy, though it is tempting to conjecture that a great deal of astronomy may have had to depend upon rhetoric to persuade others of their findings in the absence of data gathering facilities such as Jodrell Bank and the Hubble Telescope.
So Astronomy and Rhetoric were perhaps linked in the classical liberal arts but this still leaves open the question of the connection with entrepreneurs. Here, I have to claim a certain provocative license! I am frequently troubled by the spectacle of such TV programmes as Dragon’s Den where entrepreneurs have to demonstrate that they have already thought of everything in order to receive help from the Dragons. Similarly, there are stories of spectacular potential investments turned down by venture capitalists (VCs) because of the absence of evidence and paucity of a business case. So, I have been trying to fathom how best to describe the approach taken by most entrepreneurs to business start-ups in novel fields where evidence of potential is slim to non-existent.
The example of AirBnB is becoming legendary. In 2008, Brian Chesky was looking for $150,000 for a 10% stake in the company to help it grow. Seven VCs turned down the opportunity, two did not even reply to the offer. Ten years later, that 10% would now be worth in excess of $2.5Bn. So why did the offer not succeed in raising the funds? A definitive answer would require a conversation with the fund managers approached but it is easy to see that the thought of airbeds on the floors of spare rooms was a difficult sell. The idea made little sense and the evidence that it had worked elsewhere was non-existent. This is the case with all really new ideas: there is no evidence to reassure an investor.
Entrepreneurs have an idea, enthusiasm and conviction that it will work. Many have fierce determination and drive linked to a huge capacity for hard work. Yet many do not succeed and for predictable reasons. Investors wish to know that an idea can be made profitable, repeatable and scalable. Can it be protected from others who might copy the idea: is it defensible? All these basic questions can be answered with analytical thought and the persuasive application of logic into a convincing argument. This is rhetoric. Successful entrepreneurs also bring, according to Jurek Sikorski, Executive Director of the Henley Centre for Entrepreneurship, an empirical approach to trialling, proving and refining their ideas over many iterations so that, where it is possible, hard evidence can be gathered.
But where does the creative spark originate? This is much harder to identify. Where does creativity come from? This question has perplexed psychologists, myself included, for years. There is often an unconventional approach that results in a creative possibility and thus it is, by definition, rare. A distortion, a wild guess, a courageous experiment, an accidental occurrence: all can spark an innovative thought or a novel suggestion. Pure deductive logic will seldom cut it, since if it could, others are likely to have thought of it too. There has to be something of the knight’s move on the chess board behind a creative spark: a detour, twist or even a random element involved to burst out of incrementalism into a radical departure from convention.
Investment decisions are all too frequently conservatively made. Investors seek evidence and business cases for reassurance. They seek data-based projections rather than possibilities and plans rather than aspirations and all for good reason whether or not the funds they are investing are their own or other people’s. But, in truth, the entrepreneur with a genuinely creative and novel idea may be unable to supply what they seek. Their projections are based on assumptions and extrapolations where the basis may prove to be spurious or simply wrong.
So what I am getting at is this: entrepreneurs need a keen understanding of the basics of business to ensure they do not make huge errors in formulating a plan. But this has to be twinned with a smattering of metaphorical astronomy and keenly developed rhetoric. How else will they shoot for the stars and still persuade others to come along with them? And if this seems somewhat far-fetched, leadership has always been about vision and creating alignment. This is still true for entrepreneurs in the 21st century.
Dr David Pendleton
Professor in Leadership, The Henley Centre for Leadership