As I get ready to teach my spring semester entrepreneurship classes, I have been reviewing my lecture and case notes. The topic of “ham and egging” caught my eye and I thought it would be a good topic to write about.
Professors Amar Bhide of Columbia University and Howard Stevenson of Harvard Business School coined this term to refer to the need for entrepreneurs to convince different stakeholders - like investors and customers - to support their venture simultaneously. Because the entrepreneur’s venture won’t succeed if she can’t get both investors and customers on board, the entrepreneur needs to convince the customers that investors are committed and convince investors that customers are committed. Since both will often commit if they think the other has committed and neither will usually commit if they think that the other has not committed, Bhide and Stevenson explain “the ultimate ham and egging solution is for the entrepreneur to simultaneously convince each participant that everyone else is on board, or almost on board.”
Bhide and Stevenson acknowledge the ethical issues involved in ham and egging, saying “not all entrepreneurs … feel comfortable trying to [pull this off.]” But that brings me to the point of this post. Can entrepreneurs succeed if they are scrupulously honest all of the time?
If stakeholders will only buy in if other stakeholders buy in, entrepreneurs will be unable to attract any stakeholders to their ventures if they are completely forthright and tell their customers and investors that the other is not yet committed. Brutal honesty might preclude entrepreneurs from getting their ventures up-and-running.
On the other hand, the willingness to engage in “ham and egging” might set entrepreneurs down a slippery moral slope with no good stopping point. Therefore, it might be better if only those entrepreneurs who are scrupulously honest and catch a lucky break with stakeholders manage to get businesses going.
I don’t know that there’s a right answer here. Maybe the rest of you disagree.
Nevertheless, I think that it’s valuable to take what is usually discussed business school class and move it out into cyberspace to see what people think.
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Scott Shane is A. Malachi Mixon III, Professor of Entrepreneurial Studies at Case Western Reserve University. He is the author of nine books, including Fool’s Gold: The Truth Behind Angel Investing in America ; Illusions of Entrepreneurship: and The Costly Myths that Entrepreneurs, Investors, and Policy Makers Live By.
