Why learning is important to entrepreneurial success

Business success can rely heavily on the ability to learn from experiences and apply those lessons. A key emphasis of the MBA is the individual’s ability scrutinise and reflect on their own personal learning, practices and actions.

The following is an adapted abstract from an assignment which I had to cut due to word length. Cope, 2011 was the main source for the below and a really excellent source of information on entrepreneurial learning.

Why is learning so important to business success?

Entrepreneurship and the growth process is essentially a stop-start process characterised by our own learning skills and the situations we find ourselves in. The ability of entrepreneurs to maximise knowledge as a result of experiencing these learning events will determine how successful their firm eventually becomes (Deakins & Freel, 1998, p. 153).

it is through learning that entrepreneurs develop and grow, and have the potential to become more “capable” business owners

(Rae & Carswell, 2000).

Through the Open University’s MBA programme, we are encouraged to reflect and scrutinise our own thinking and practised. this reflective learning is especially difficult as adults who have our own personal understanding of the world resulting from our own experiences – essentially we are a slave to our own histories. However good we are at making sense of our experiences, we all have to start with what we have been given and operate within horizons set by ways of seeing and understanding that we have acquired through prior learning (Mezirow, 1991, p. 1).

Our styles of learning are not only shaped by this specific understanding of our own experiences, it is also influenced by the specific situation that we find ourselves . It is important to recognize the unique range of experiences, skills, and abilities that shape the “learning task” of every prospective entrepreneur once they enter into the new venture creation process (Cope, 2005, p. 379).

Appreciating that the past, present, and future all impact on the entrepreneurial learning process, factors such as the environment within which the business operates, the nature of the business such as staff, culture, and growth, will all impact on the learning challenge.

Cope (2005) argues that: “it is vital to view each entrepreneur’s learning task as dynamic, contextual, and cumulative”. Cope draws from Minniti and Bygrave’s (2001) assertion that “entrepreneurs learn by updating a subjective stock of knowledge accumulated on the basis of past experiences” (p. 5). Our ability to learn from experience and update and change this ‘subjective learning stock’ is an important skill that will allow us to become better business owners.

What do we learn about?

In applying entrepreneurial learning, Cope provides five elements that which we learn about from our experiences of entrepreneurism:

  • Learning about oneself: understanding one’s strengths and weaknesses; one’s changing role within the business; personal and family needs; personal development; personal interests and motivations.
  • Learning about the business: strengths and weaknesses, opportunities and threats; internal business needs; requirements for growth; areas for development; understanding and facilitating one’s staff; future direction.
  • Learning about the environment and entrepreneurial networks: Learning how to manage relationships with existing and potential customers, suppliers, and competitors. Appreciating and maximizing the relationship with advisory agencies and support services, ie. the bank, the accountant.
  • Learning about small business management: Learning how to run and control the business, important procedures and systems such as recruiting, salary and reward structures, and financial monitoring.
  • Learning about the nature and management of relationships: internal and external relationships. Is an integral part of all four elements above.

Cope, 2005, p.380

How do entrepreneurs learn?

Learning by doing

Unsurprisingly, there are a number of studies, such as by Rae & Carswell (2000, 2001), Cope & Watts (2000), Smilor (1997), Deakins & Freel (1998;), and Young & Sexton (1997) that show that entrepreneurs are inclined to learn by doing. Entrepreneurs are action-oriented and disposed to learning through the application and experience, trial and error, problem solving, and discovery.

This is also seen an expected part of being an entrepreneur, and perhaps and important part of the culture and personality of the entrepreneur. Dalley and Hamilton (2000, p.55) emphasises that:

“It seems accepted that there are no shortcuts in the learning process, that surviving various ‘trials by fire’ is almost a rite of passage, and that there can never be any substitute for experience”

Trying, getting it wrong, getting it right, dealing with situations as they arise, winning and failing are underlying cultural expectations of being an entrepreneur. According to Gibb (1997), the small business learning  environment is focused on “learning from peers; learning by doing; learning from feedback from customers and suppliers; learning by copying; learning by experiment; learning by problem solving and opportunity taking; and learning from making mistakes” (1997, p. 19).

It is the acts of confronting and overcoming challenges and problems which can be rich sources of learning (Daudelin, 1996; Kleiner & Roth, 1997).

Learning from the situation

Entrepreneurship and the growth process is essentially non-linear and discontinuous. It is a process that is characterised by significant and critical learning events. The specific situation and contextualisation of the events through which we learn also affect how we learn about them.

Cope (2005) identifies four situational learning contexts, each creates an opportunity to learn and develop:

Four types of Entrepreneurial Learning (derived from Cope, 2005)

Four types of Entrepreneurial Learning (derived from Cope, 2005)

Routinised learning

This is essentially learning through repetition and experimentation. It increases the entrepreneurs confidence in carrying out certain actions and in updating the stock of knowledge.

Minniti and Bygrave (2001) point out, “learning is a process involving repetition and experimentation that increases the entrepreneur’s confidence in certain actions and improves the content of his stock of knowledge” (p. 7).

It is essentially the everyday learning we get when doing any job. We become more proficient and doing the everyday things, seeing improvements and learning how to deal with the repetitive, sometimes mundane situations that we encounter. That’s not to say this isn’t important, some of of the most important lessons we learn we gather from the simple day to day experiences and trial and error.

Learning from crisis

Learning from crisis is both incredibly effective, but also tremendously hard on the individual. It is dynamic and powerful. itIt forces us to unlearn and reassess our own understanding and can have profound, and sometimes traumatic effects. Learning of this type originates from the shocks and jolts of crisis situations which transform our experiences into knowledge, challenge our pre-existing view of the environment around us.

“Any major challenge to an established perspective can result in a transformation. These challenges are painful; they often call into question deeply held personal values and threaten our very sense of self”

Mezirow, 1991, p. 168

Fischer (1999) highlights that “a particular event can have both positive and negative impacts. For example, the loss of a key customer might reduce sales revenue in the short term, but if the firm can learn from this experience, it may result in better long-term performance through reduced dependency and/or improved service quality” (p. 31).

Fiol and Lyles (1985) assert some kind of “crisis” is a prerequisite for “higher-level” learning and that crises are necessary for unlearning what we already know and re-adapting our understanding (p. 808).

As Mezirow (1991) states that this process involves profound changes in self, changes in cognitive, emotional, somatic, and unconscious dimensions”(pp. 161, 177). It challenges us in a number of ways and can be traumatic and stressful for the entrepreneur (Cope, 2001). This can result in considerable emotional fallout that challenges the individual’s perceptions of himself or herself.

Often in crisis situations, the focus of attention is on the stress developed from them. However, by focusing on the stressful nature of these events, we overlook the potential learning involved when a manager is forced to face a difficult situation and identify and reassess their own weaknesses (McCauley, 1986; in Snell, 1992, p. 17). Snell (1992) further argues that acknowledgement that personal development and total control are incompatible (p. 18), in order to fully learn at a higher level, we must be prepared for the knocks and challenges that come our way.

Reflective learning

Reflection 2

“For an experience to become meaningful, people have to think about it, reflect upon it”

Jarvis, 1987, p. 168

In contradicting the earliest statement, entrepreneurs need to be not just doers. Learning from these unexpected events provides the greatest stimulus for learning through thought and reflection (Jarvis, 1987).

“Mistakes are potent tools for learning, in part, because individuals often feel so brittle about making them. As a result, they will be more likely to reflect on the mistake to determine its causes and to prevent its repetition” (Marsick and Watkins, 1990, p. 13).

Learning through the cycle of action and reflection

“We all learn through experience by thinking through past events, seeking ideas that make sense of the event and help us find new ways of behaving in similar situations in the future.”

(McGill & Beaty, 1995, p. 21)

Reflecting on past events is an essential link between past action and more effective future action. The harder the decisions we make, i.e. during crisis situations discussed above, the more difficult the process of reflecting becomes.

Reflective learning can also be difficult for entrepreneurs who have very little time to review experiences and actions. Schön (1993) asks questions on the impact of industry environment on the ability of the entrepreneur to learn from past lessons, creating or denying the space to think and reflect, and especially since we have already identified as entrepreneurs as ‘doers’ Rae & Carswell (2000, 2001) and therefore are less likely to learn through reflection.

The importance of feedback and learning is also indicative of the reflective learning process. Holman, Paclica and Thorpe, (1997, p.143) argue that learning is a social process of reflection that has its origins in relationships with others – we learn much more about ourselves through the lens of others. This affective and social learning is a responsive, rhetorical and argumentative process.

Hines and Thorpe (1995) argue the importance of business and personal relationships as a complex network of “learning agents”, encouraging learning through interaction and communication, whereby these networks form “learning systems” (Mäkinen, 2002).

In fact, simple interactions with customers, suppliers and stakeholders all contribute to the learning system (Boussouara and Deakins, p. 221, 1999), and domestic partners in supporting reflection and acting as a “sounding board” is also another important and often overlooked link in the learning network (Cope, 2001).

Generative Learning

“Generative” learning as the ability to extrapolate and “bring forward” one’s learning from critical events to new situations, incidents, and experiences.”

Cope, 2005, p.386.

Essentially, generative learning is recognising how different experiences and lessons are related, and being able to apply passed lessons to to new situations. It is generalising the lessons learnt to fit different situations. This may seem a little obvious, but this is a higher-order skill; these events are different and unrelated, yet the lessons learnt from previous experiences can be applied.

Generative learning allows for more effective action, as well as more effective action in a broader range of new situations (McGill & Warner Weil, 1989).

This can be done through “explicit” learning and action – whereby a lesson is identified, captured and applied to another situation, or “implicit” – where the learning is subconscious yet the subject adapts according to the experiences in new situations (Young and Sexton, 1997).

I’m sure we’ve all encountered people who appear to stumble along, oblivious to the lessons of the past, continuously making the same mistakes, repeating them again and again. This is a good example of those who fail to learn through generative (or apparently any other) learning (Kleiner and Roth, p.172, 1997).

“Individuals can incorrectly learn, and they can correctly learn that which is incorrect”

Huber, 1991, p. 89

Applying learning from one situation to another can also have negative effects, and can decrease an entrepreneur’s effectiveness. Lengthy experience can be counterproductive to entrepreneurial effectiveness (Reuber & Fischer, 1999), as entrepreneurs attempt to over exploit actions that generate initially desirable outcomes, thereby bringing forward learning that is false (Minniti & Bygrave, 2001).

References

Boussouara, M. & Deakins, D. (1999). Market-based learning, entrepreneurship and the high technology small firm. International Journal of Entrepreneurial Behaviour and Research, 5(4), 204–223.

Cope, J. (2001). The entrepreneurial experience: Towards a dynamic learning perspective of entrepreneurship. Unpublished Ph.D. thesis, University of Lancaster.

Cope, 2005, Toward a Dynamic Learning Perspective of Entrepreneurship, Entrepreneuriship Theory and & Practice, Blackwell Publishing, p.373-397

Deakins, D. & Freel, M. (1998). Entrepreneurial learning and the growth process in SMEs. The Learning Organisation, 5(3), 144–155.

Fiol, C.M. & Lyles, M.A. (1985). Organisational learning. Academy of Management Review, 10(4), 803–813

Holman, D., Pavlica, K., & Thorpe, R. (1997). Rethinking Kolb’s theory of experiential learning in management education. Management Learning, 28(2), 135–148

Huber, G.P. (1991). Organisational learning: The contributing processes and the literatures. Organisation Science, 2(1), 88–115.

Jarvis, P. (1987b). Meaningful and meaningless experience: Towards an analysis of learning from life. Adult Education Quarterly, 37(3), 164–172.

Mäkinen, H. (2002). Intra-firm and inter-firm learning in the context of start-up companies. International Journal of Entrepreneurship and Innovation, 3(1), 35–43

Marsick, V.J. & Watkins, K.E. (1990). Informal and incidental learning in the workplace. London: Routledge

McGill, I. & Beaty, L. (1995). Action learning. London: Kogan Page.

Mezirow, J. (1991). Transformative dimensions of adult learning. San Francisco: Jossey-Bass.

Minniti, M. & Bygrave, W. (2001). A dynamic model of entrepreneurial learning. Entrepreneurship Theory and Practice, 25(3), 5–16.

Rae, D. & Carswell, M. (2000). Using a life-story approach in researching entrepreneurial learning: The development of a conceptual model and its implications in the design of learning experiences. Education and Training, 42(4/5), 220–227.

Schön, D.A. (1983). The reflective practitioner: How professionals think in action. New York: Basic Books

Sexton, D.L., Upton, N.B., Wacholtz, L.E., & McDougall, P.P. (1997). Learning needs of growth-oriented entrepreneurs. Journal of Business Venturing, 12(1), 1–8

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