How does one go about starting up projects in today’s unpredictable environment—in an era in which information overload renders an objective and decisive analysis an impossibility, in a point in history where economic unease stifles companies’ willingness to invest in frontier innovation? We have spent years’ worth of effort toward studying career entrepreneurs and the reasoning behind their capacity to generate new products, services, and business models where outmoded and ineffective methods of analysis, forecasting, modeling, planning, and allocating.
Some of the most intriguing and groundbreaking research is that of Saras D. Sarasvathy, an associate professor of business dministration of the University of Virginia’s Darden School of Business, whose in-depth study follows 27 career entrepreneurs, revealing numerous commonalities in behavior between them. For example, instead of setting out with a goal already formulated, the ntrepreneurs stayed vigilant for opportunities that would emerge. Instead of focusing on optimizing returns, they committed more energy toward determining acceptable personal loss. And finally, instead of searching for perfect solutions, they were searching for solutions that work.
In short, successful entrepreneurs don’t simply have a different mindset, but rather they act immediately and often without regard for analysis. In other words, they don’t rely on predicted outcomes—they create them.
Reasonably, this technique should not apply only to entrepreneurs with careers outside of traditional organizations. We believe that any manager can, and should, use the same approach when confronted with the unknown. The process requires only a few steps in reasoning, and is a low-risk approach to launching new projects. These steps include:
Action, taking an informed step towards your goal
Learn, evaluating the outcome thus far
Build, repeat the previous steps until you’ve reached your goal and evaluate in terms of whether you can or should change your previous course of action.
We understand that acting before analysis—learning through experience rather than prediction—can be unpredictable and often messy, and of course, in opposition with most organizations’ strategies. However, many small steps is proven to reduce risk in the long-term, making this strategy ideal for launching fledgling initiatives—a necessity for both companies trying to stay competitive and enterprising employees seeking fulfillment in their work.
Research indicates that entrepreneurs predict, plan, and model only when necessary. In 2008, a survey suggested that only 12% of the company founders of the Inc. 500 underwent formal market research prior to launching. Nonetheless, they didn’t succeed via reckless leaps of faith, either. These successful entrepreneurs all tended to operate through small, easy, inexpensive steps that follow a certain strategy—a safe, low-risk approach. The strategy is, as adapted for managers within organizations:
- Use the means at hand—successful entrepreneurs gather resources prior to acting upon a new venture. The initial, exploratory steps are informed by personal skills, background, and expertise, as well as any useful resources provided by personal and professional contacts at little to no cost.
- Stay within acceptable loss—the act-learn-build action steps collectively are inherently low-risk, but not entirely risk-free. So, designate beforehand how much time and money is an acceptable amount of loss in the case of failure. Additionally, factor in the cost of passing up other work opportunities for the sake of the project, as well as the impact it will have on you and your firm’s professional reputation. Verify that everything at risk could be lost without significant consequent.
- Secure only the commitments necessary for the next step—in this process, you will encounter four types of people: those who want to see the project’s success, those willing to aid in the project’s success, those that will passively allow the project’s success, and those that wish to stymy the project’s success. Don’t put effort into convincing the latter two to buy-in. Instead of asking yourself how to get everyone committed to the project, ask yourself the least amount of commitment necessary.
- Enlist only volunteers—If you’re moving forward, invest only in “make it happen” and “help it happen” people. Those that will make it happen should be comprised only of volunteers that share your objectives. Ensure they are committed to the project’s process. Individuals will enlist when you prove you yourself are engaged with your work, are transparent, and have shown a collaborative spirit.
- Identify your step as a business imperative, and ensure it will generate quick results—This will create a sense of quick momentum, and win over “help it happen” people (particularly, your employer). Prove that even the first step has vital consequences, and build from there. If your employer feels the proposed step exceeds acceptable loss, suggest a smaller step.
- Manage expectations—don’t promise too great of outcomes, or make any big announcements at the time of launching. Suggest that you are only take an exploratory step to generate evidence that will inform the next one.
- Build momentum—as far as building action, career entrepreneurs have several successful tendencies: they act quickly upon positive results (in other words, if a step succeeds, they immediately execute the next according to our rules); they embrace negative results, obstacles, and disappointments as an impetus to alter a product, service, business, or objective before too many resources have been invested; they know when and how to use predictive analysis, even though most of their learning is through action. As you require increasing numbers of organizational resources, you must predict and plan when possible, using evidence you have and will continue to generate through action. Finally, savvy entrepreneurs know when to cut their losses: when their initiative is impossible, or when the risk of falling beyond acceptable loss is too high.
The act-learn-build strategy should be used employees from traditional workspaces, as well as entrepreneurs—it requires just one smart step. Managers can encourage entrepreneurial thinking by challenging team members to apply the aforementioned strategy to current projects, and draw attention and support to the results. Share these results with other leaders within the company, and encourage their support as well, keeping in mind that opportunity costs should never exceed the organization’s acceptable loss.
About the Author: Sergeo is a published playwright and film producer who writes about filmmaking at Edictive, the film production application.