Institutional Entrepreneur

Institutional Entrepreneur

Institutional Entrepreneur types are distinguished by their risk aversion. They are usually found in an investment bank, university, commercial bank—small business department, Small Business Development Center, or venture capital firm.

You are an excellent advisor and/or consultant, although your advice is most often colored by caution and the need to ensure that the status quo is not unduly disrupted. Your “entrepreneurial success script” is loaded with a set of highly analyzed cases where the venturing process got off track, complete with reasons why. For this reason, you are indispensable on deal review panels, venture boards of directors, etc. Where Institutional Entrepreneurs are in a position to make final venture decisions, they will likely be overly conservative.

Alone, then, they do little venturing. But when paired with certain other venture types which contain specific pairs of attributes, they augment and enhance any venture team. The first pair of attributes, ability and discernment is found in the following venture types: Intuitive Expert, Small Business Expert, Expert Entrepreneurs, and Institutional Entrepreneurs. The second pair, awareness of the "entrepreneurial success script" and eagerness, is found in these venture types: Lacking Business Resources, Expert Entrepreneur, Entrepreneur Apprentice, and In Over Their Head.

But as a typical Institutional Entrepreneur, it is unlikely that you will see the need to join and enhance a new venture team.

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Example of a famous Institutional Entrepreneur

John Francis “Jack” Welch, Jr. (born November 19, 1935) is an American businessman and author. He was Chairman and CEO of General Electric between 1981 and 2001. Welch’s net worth is estimated at 720 million US dollars. In 1980, the year before Welch became CEO, GE recorded revenues of roughly $26.8 billion. In 2000, the year before he left, revenues had increased to nearly $130 billion. When Jack Welch left GE, the company had gone from a market value of $14 billion to one of more than $410 billion, making it the most valuable and largest company in the world.

Welch joined General Electric in 1960 but after only a year he became frustrated with a number of things at the company, including its’ stodgy and inefficient bureaucracy. He decided to leave GE or another opportunity, but Reuben Gutoff, a young executive two levels higher than Welch, decided that the man was too valuable a resource for the company to lose. So Gutoff vowed to work to change the bureaucracy to create a small-company environment, and based on Gutoff’s commitment Welch stayed at GE. He moved up the ranks to become Senior Vice President in 1977, Vice Chairman in 1979, and GE’s youngest chairman and CEO in 1981. Welch adopted Motorola’s Six Sigma quality program in late 1995, and one of his goals was to always “get a small company spirit into a big company body.”

It seems clear that Welch exhibited the attributes of the Institutional Entrepreneur. He was driven by an understanding of what it would take to make a company like GE successful in a new the competitive markets in which it operated. With his keen business mind and the resources of GE at his disposal, he certainly had the ability to implement his vision. And he was a genius at implementing ways of motivating and measuring key behavior that kept GE growing and succeeding. Typical of the Institutional Entrepreneur, Welch was reluctant to venture out on his own, preferring to apply his entrepreneurial talent within the environment of a large organization.