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The Entrepreneurial Business 161

cant, a breakthrough in basic research, which years later may lead to an
effective cure for certain cancers, or a new formulation that enables
patients to administer an old but effective medication themselves instead
of having to visit a physician or a hospital three times a week? It is impos-
sible to decide. Equally, a company must choose between a new way to
service customers, which enables the company to retain an important
account it would otherwise have lost, and a new product, which gives the
company leadership in markets that, while still small, may within a few
years become big and important ones. These are judgments rather than
measurements. But they are not arbitrary; they are not even subjective.
And they are quite rigorous even though not capable of quantification.
Above all, they do what a “measurement” is meant to enable us to do: to
take purposeful action based on knowledge rather than on opinion or
guesswork.
The most important question for the typical business in this review
is probably: Have we gained innovative leadership, or at least main-
tained it? Leadership does not necessarily equate with size. It means
to be accepted as the leader, recognized as the standard-setter; above
all, it means having the freedom to lead rather than being obliged to
follow. This is the acid test of successful entrepreneurship in the
existing business.

V

STRUCTURES

Policies, practices, and measurements make possible entrepreneur-
ship and innovation. They remove or reduce possible impediments.
They create the proper attitude and provide the proper tools. But inno-
vation is done by people. And people work within a structure.
For the existing business to be capable of innovation, it has to cre-
ate a structure that allows people to be entrepreneurial. It has to
devise relationships that center on entrepreneurship. It has to make
sure that its rewards and incentives, its compensation, personnel deci-
sions, and policies, all reward the right entrepreneurial behavior and
do not penalize it.
1. This means, first, that the entrepreneurial, the new, has to be
organized separately from the old and existing. Whenever we have
tried to make an existing unit the carrier of the entrepreneurial project,