6 lessons entrepreneurs can teach us

6 lessons entrepreneurs can teach us

Systems, processes, and protocols help organisations standardise operations. Standardisation promotes efficiency and compliance and helps manage enterprise risk, but it can also introduce rigidity, limit information flow, and discourage creativity. To flourish in a business environment that is global, digital, and fast-paced, combining innovation and risk management is high on the executive agenda.

Entrepreneurs take on greater than normal financial risk to organise and operate a business, and successful entrepreneurs embody the ability to turn risks into long-term growth and sustained profitability.

Flat hierarchies, autonomous staff, open communication, and collaboration are considered key drivers of entrepreneurship. Risk management tools, techniques, and governance models offer controls to reveal blind spots and mitigate downside risk, but they can also identify areas of underinvestment and upside opportunities.

To counter rigidity, break down silos, and manage the risks that accompany innovation, businesses can learn these lessons from entrepreneurs:

Remain open to change. Entrepreneurial companies are often small. Employees tend to wear multiple hats. Open communication, collaboration, and crowdsourcing solutions are key.

At KeyInsite, a research and consultancy company that employs about 20 in the US and up to 150 in India, employees from finance, sales, and marketing are routinely asked to tackle problems by brainstorming ideas, mapping out processes, and sketching competing solutions on whiteboards, said Pratibha Vuppuluri, KeyInsite’s CEO and founder. “We’re constantly in a huddle position, and no solution is a bad one.”

Digital surveys, email challenges, and company-wide votes on proposals are tools to keep employees engaged in disparate locations. When corporate leaders accept the crowdsourced ideas and act on them, employees feel they matter, Vuppuluri said.

Reduce bureaucracy. Entrepreneurial companies offer employees clearly defined areas for experimentation that may end in failure. The risks of an experimental zone are controlled, managed, and measured – for example, by ring-fencing budgets for early-stage research and development projects, which financially separates assets of a company without necessarily creating a separate entity.

Technology can also reduce bureaucracy and risk. Kelly Mattarocci Sanchez, CPA, CGMA, consulted for large public companies before she was the CFO of a US for-profit, private higher education institution with 25 employees for four years. She’s a big believer in technology, especially when it works cohesively with legacy systems and is scalable through future updates. Digitising documentation, for example, simplifies tasks performed by the finance function and reduces errors, especially when all employees in the company can attach documents to create an extensive database, Sanchez said.

Become more agile in adjusting to customer expectations. Software can harness customer data from multiple channels and analyse the data to pick up on changes in demand. Risk-scenario analysis can test the vulnerabilities and opportunities of launching a product that targets a change in customer demand.

Extensive use of data analytics does not automatically prevent the emergence of silos in which sharing and cross-functional use of customer data among, for example, marketing, business development, and corporate strategy is limited. Finance teams tend to focus on compliance in their data analysis, not on changing customer demands – a focus that favours looking back rather than looking ahead. At entrepreneurial companies, finance is more likely to hear about customer problems and demands from the executive suite.

Encourage risk-taking. Managers can invest tremendous time and effort in starting new projects. Once the project is up and running, failure is hard to digest, and recovery from a lost opportunity tends to be slow. To be more entrepreneurial, a company can redefine its risk appetite by determining which risks are acceptable based on potential returns. It can create a safe environment for experiments and provide rules, parameters, and measurements to guide investments. To avoid missing out on opportunities once the enterprise risk management process is implemented, finance and risk management should work together closely.

Travelport Locomote, an Australian tech company that offers a business travel platform, encourages employees to take risks and learn from mistakes in a digital sandbox. The company, which employs about 50 people, allows employees to recruit teams and gives them two days off work to simulate their ideas in the digital sandbox. Results of each team’s efforts are then presented and evaluated, said Travelport Locomote’s CFO Pip Spibey, ACMA, CGMA.

Be more imaginative. A company culture that focuses too closely on the bottom line may not have much appetite for creativity and may have a potentially wasteful innovation process. Changing that culture is difficult and requires leadership and constant effort. It has to be undertaken and communicated by executive management.

Once ingrained in the corporate philosophy, innovation and risk-taking become easier and more accepted by stakeholders inside and outside the company.

Wrays, an intellectual property law firm with about 70 employees in Australia, decided to try something new as part of a rapid expansion that more than doubled the number of partners from six to 13 in four years. To quickly establish a presence in a new geographic market, Wrays took an innovative approach which led to creation of senior positions that were compensated on commission rather than with salaries, coupled with the more traditional approach of lateral hires and a local acquisition. This setup helped recruit top talent who brought marquee clients along, said Wrays CFO Robert Pierce, ACMA, CGMA.

To further business development and continue to attract the most promising clients, Wrays produces a podcast series that helps staff identify and interview innovative companies, a print publication that shows off the firm’s expertise, and a quarterly internal newsletter that aims to drive home the corporate culture across three dispersed office locations.

“We work hard to practise what we’re preaching to clients,” Pierce said.

Put a premium on speed. Entrepreneurs are hungry for results. Unencumbered by multiple layers of management and bureaucracy that slow innovation, they place a premium on speed.

To replicate the entrepreneurial speed but control risks and costs, KeyInsite’s Vuppuluri relies on agile exercises in which new products are tested quickly in small roll-out campaigns. Each campaign has key performance indicators, but its small size limits costs and risks, she said.

Anil Kshatriya, ACMA, CGMA, is an assistant professor of finance and accounting at the Institute of Management Technology in Nagpur, India. Sabine Vollmer ( is a CGMA Magazine senior editor.