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The Entrepreneurial Business 175

whom one can work as partners. But this presupposes that the entire
company is imbued with the entrepreneurial spirit, that it wants inno-
vation and is reaching out for it, considering it both a necessity and an
opportunity. It presupposes that the entire organization has been made
“greedy for new things.”
2. Innovative efforts that take the existing business out of its own
field are rarely successful. Innovation had better not be “diversifica-
tion.” Whatever the benefits of diversification, it does not mix with
entrepreneurship and innovation. The new is always sufficiently dif-
ficult not to attempt it in an area one does not understand. An exist-
ing business innovates where it has expertise, whether knowledge of
market or knowledge of technology. Anything new will predictably
get into trouble, and then one has to know the business.
Diversification itself rarely works unless it, too, is built on common-
ality with the existing business, whether commonality of the market
or commonality of the technology. Even then, as I have discussed
elsewhere,* diversification has its problems. But if one adds to the
difficulties and demands of diversification the difficulties and
demands of entrepreneurship, the result is predictable disaster. So one
innovates only where one understands.
3. Finally, it is almost always futile to avoid making one’s own
business entrepreneurial by “buying in,” that is, by acquiring small
entrepreneurial ventures. Acquisitions rarely work unless the com-
pany that does the acquiring is willing and able within a fairly short
time to furnish management to the acquisition. The managers that
have come with the acquired company rarely stay around very
long. If they were owners, they have now become wealthy; if they
were professional managers, they are likely to stay around only if
given much bigger opportunities in the new, acquiring company.
So, within a year or two, the acquirer has to furnish management
to run the business that has been bought. This is particularly true
when a non-entrepreneurial company buys an entrepreneurial one.
The management people in the new acquired venture soon find that
they cannot work with the people in their new parent company, and
vice versa. I myself know of no case where “buying in” has
worked.
A business that wants to be able to innovate, wants to have a chance
to succeed and prosper in a time of rapid change, has to build entre-

*In Management: Tasks, Responsibilities, Practices, especially Chapters 56 & 57