Musings on Entrepreneurship and Innovation
Monday, June 28, 2004
The Value of Peer Networks for Micropreneurs
In this week's newsletter, The National Dialogue on Entrepreneurship references a study of the value of "Master Mind" peer networks to micropreneurs (PDF).
Master Mind is a phrase coined by Andrew Carnegie to explain his secrets of entrepreneurial success. In application, a Master Mind forum is typically composed of 5 to 7 entrepreneurs who meet once a month for one to two hours in person and/or over the phone to discuss their businesses, challenges, achievements, and ideas.
The authors of the study found that micropreneurs who have participated in a Master Mind forum perceive three major benefits:
- Peer feedback on business problems
- Fresh perspectives on new business ideas
- Emotional support
The authors noted in their conclusion, "More than 80% of the interviewees claimed that involvement in a Master Mind group strong contributed to their business success."
The authors' findings are certainly consistent with my experience as a facilitator of such groups over the last few years.
Given the above, as well as other research that supports the hypothesis that focused social networks are beneficial to entrepreneurs, the authors expressed surprise that more micropreneurs didn't participate in Master Mind groups:
Perhaps the most surprising statistic of the study was that more than half (52.6%) of survey respondents reported that they have never taken part in a Master Mind or similar type of network.
I, on the other hand, was floored that nearly 50% had participated in a Master Mind group! Don't get me wrong - I'm convinced that such groups can convey valuable social capital for all kinds of entrepreneurs. However, I've identified two key reasons why the many entrepreneurs choose not to participate (even though most, it turns out, identify the prospective value of participation fairly accurately).
As my recent interview of Inc. 500 entrepreneur Andrew Field underscored, entrepreneurs' search for sources of expertise - in the form of an individual advisor or a peer group - is often driven by the perceived need to solve immediate problems. The logistical constraints and diverse makeup of Master Mind groups mean that peer feedback is typically more valuable for longer-term strategic issues than for shorter-term tactical problems. I think this is why "lack of time" is given as the primary reason for not participating in a Master Mind group. Entrepreneurs are so busy solving today's problem, it is difficult for them to value a forum for thinking more broadly about tomorrow's problems and opportunities.
Second, even for those who do participate in Master Mind forums, the value of such forums waxes and wanes over time as a function of the experienced rate of change. In periods of little change, peer groups serve largely a social function. That's not to say that's unimportant, as evidenced by the study's conclusions above. However, entrepreneurs often have more than one purely social outlet that can substitute for the Master Mind groiup. When the pace of change picks up, however, the value of vicarious learning increases, as does the value of the Master Mind group. (As Field puts it, the ability to learn from others' bruises increases.)
Too often, the conversation among entrepreneurial support organizations (ESOs) turns to a false dichotomy: whether informal networks or formal networks such as Master Mind groups are more valuable. Clearly, there is room for - and demand for - both potential mechanisms for cultivating and leveraging social capital. Respective value is, ultimately, a function of individual context and timing.