The Entrepreneur as Practitioner/Philosopher

The divide between philosophy and action has continually widened for centuries. Particularly in the 20th century, when people began to believe that education for most people was applied skills training, and only the most theoretically inclined were encouraged to study ideas. Even for those who chose to study philosophy, their education was intended to prepare them for a subset of academic careers. The value of education was reduced to its utility. Bureaucrats were able to look at skills that people used in their jobs and extrapolate that if people wanted to be useful, they should learn these skills. However, they failed to recognize the amount of innovation that came about from a correct understanding of the world rather than simply raw technical capability. People with solely philosophical backgrounds and motivations are not often inspired to act in the creative arena of life. People with extremely practical educations are well prepared to fit into someone else’s clearly defined set of requirements as an employee. However, those with practical usefulness and philosophical rigor are well positioned for entrepreneurship. The ability to understand human nature and the underlying mechanisms of reality allow them to question existing structures to create truly disruptive businesses. Even when an entrepreneur doesn’t study philosophy, they must deconstruct reality beyond what is immediately observable. A philosopher with just enough skill and drive to be dangerous can be one of the most effective entrepreneurs.

Israel Kirzner described the core task of the entrepreneur as alertness. While alertness is a prerequisite, alertness paired with the ability to see the world rightly will always be better than alertness with a malformed perception. Looking for arbitrage opportunities in the market requires synthesizing large amounts of information to create hypotheticals. If an entrepreneur cannot see the ways in which society and the businesses within it are predictably wrong, they will be destined to repeat the mistakes of those who came before them. Being able to separate what has happened from what could happen is not a skill that can be taught through traditional applied methods of business. There are elements of it that are made easier through understanding of financial modeling and economics, but all of that must be a tool at the hands of one who can see deeply through a philosophical lens.

Reality is constantly shifting, and to systematize entrepreneurship is to deny this reality. The current model of institutional entrepreneurship is biased towards businesses that look like what has come before. Venture capitalists do not want to see something that works in a fundamentally new way. People who optimize existing tech tools, or forms of customer relationship management will receive far more funding than someone who has a radically new way of doing things. A philosophically minded entrepreneur has the ability to see whether their business will add value, even when it does not look like other businesses that already exist. It takes discipline and theoretical grounding to stand firm against a whole business class that has been educated to do things a certain way without the ability to step outside of that framework. Entrepreneurs with an understanding of philosophy will be inherently more prepared to deal with the constant fluctuations of time than people who see the development of the world as a linear progress story.

Those who study philosophy well will be motivated to act and use their knowledge in the world. They will be prepared better than pure practitioners who have learned only in methods of acting rather than understanding why to act or how their action fits into the world. The education system needs to recognize this tension and create structures that promote the creation of well-rounded humans who can simultaneously act effectively within businesses and understand the world well enough to create them. Until this happens, businesses will keep trying different versions of the same things, even if those have been exhausted of their ability to add value. While learning applied to business skills will continue to be valuable, an understanding of the underlying truth of the world will align those skills with their highest value, both in job selection and innovation. Not every business can be built on what people already know they want, and an understanding of human nature lets truly new businesses be built with far more confidence than those who can only model on things that have already happened. Those in academia drift further from reality as those in business revert to the mean of what is observable. Only a deep understanding of philosophy can bridge this gap and allow for true creativity to flourish.

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