Aki is a serial entrepreneur, startup scientist and co-founder, board member and advisor at Naava, a nature-inspired technology company.
Every day, new startups are born while others fail. Creating a new business might come across as a journey against the odds. How could it be possible to excel under uncertainty and significantly increase the probability of success?
A couple of months ago I wrote a Forbes article about how to kill the myth of entrepreneurship and follow the science. Creating a new business from scratch, especially in corporate settings, feels more like art than science. However, behind successful growth, there is a systematic process. What I’ve learned in my experience as a founder-CEO who’s done extensive research on entrepreneurship boils down to this: The underlooked key to success is understanding the difference between managerial and entrepreneurial thinking.
I believe managers and entrepreneurs differ drastically in adapting to uncertainty and scouting the untraveled paths. And the difference lies in their mindset.
A Manager’s Way Of Thinking
I find that managerial logic seeks how to adapt to future and external threats. It scouts best practices based on previous outcomes and relies on top-down market research. The way corporate managers think, according to Saras D. Sarasvathy, is through causation logic (registration required).
This is a viable way of thinking when you have the resources available for executing the plan. The challenge comes when you are creating something fundamentally new with no data to support the decisions. And when it comes to something innovative, this can be the case.
Amid the fear of failure, a person with a managerial mindset might prefer to do nothing if the results can’t be predicted rather than take action. I find that managers see failure as falling down, especially if and when someone sees it.
I dare to claim, people equipped with causation logic may not be ideal candidates to create a new business from scratch. This is not a species-specific environment for them—thinking like an entrepreneur and seeking the unknown. Instead, I believe managers excel once the business is already up and running—when it’s time to extract value.
An Entrepreneur’s Logic
I find that an entrepreneurial mindset is fueled by turning ideas into action and walking toward a vision. “Hey, this should exist,” is a typical phrase that can connect entrepreneurs universally. As Sarasvathy would put it, entrepreneurial thinking builds on effectuation logic. It’s not about predefining long-term goals and finding the means to reach them. Rather, it’s focusing on what resources you currently have and starting from there.
Without knowing the certain outcomes yet, it seems that entrepreneurs operate by focusing on the next steps that could be taken. It’s speed over accuracy and iterative by nature, not reverse engineering from next year’s P&L.
The way entrepreneurs might approach predicting the future is simply by creating it. External changes might not be seen as threats but as opportunities to search, explore and exploit. Entrepreneurs might not see failure as falling down but as not getting up again. Their motivation is intrinsic by nature.
People with an entrepreneurial mindset use pattern recognition and find connections between trends and customer behavior. But at the end of the day, they might not be able to pinpoint the decisions into solid data, but a gut feeling.
Harnessing Entrepreneurial Logic With An Entrepreneur In Residence
When a company is about to create a new solution or enter a new market, people with an entrepreneurial mindset can be of great value. Due to temporary need, companies can utilize the skill set of a seasoned entrepreneur with a temporary engagement by hiring an entrepreneur in residence (EIR).
They know “the art of the start.” For example, they might take action right away rather than plan for weeks. First, an EIR figures out what the actual problem is that the new solution strives to solve. Then they call through 15 customers to figure out what functions and features are genuinely needed among the end-users. Based on my experience doing these projects, those 15 calls can tell you more than a month’s worth of market research on what to do next.
You can hire a temporary entrepreneur to lead a project or you can hire a part-time team of seasoned entrepreneurs to solve innovation ramp-up problems. When hiring an entrepreneur-in-residence, you should look for someone with intrinsic motivation to create a new business and a skill set that reduces rookie mistakes. Preferably, search for someone who has built something similar for similar customers or with a similar business model. Keep in mind a candidate who will be passionate about the specific problem you’re trying to solve. And yes, one who shares your values.
Choosing an entrepreneur or EIRs may feel riskier than hiring an external consultant or someone who has been working in that organization, as entrepreneurs may be walking their own paths and are not usually candidates when thinking of a new hire. But I believe that is the secret to its efficiency. Leaders can take the time to help their teams understand that these entrepreneurs are specializing in creating something from nothing and that this can be an opportunity to learn something new or a different way of working.
Efficiency In New Business Creation
Building something from scratch is always unpredictable. Therefore a heuristic way of thinking, a passion for customer-oriented new solutions and an intrinsic need to achieve results under uncertainty are great drivers for creating successful new solutions.
Choosing an entrepreneur to lead your new business creation process can bring you results and clarity on what to do next. You can hire a part-time team of seasoned entrepreneurs to solve innovation ramp-up problems. They are fast to get from zero to one, saving you time, money and nerves.
This is because of the difference in the way of thinking: In the early days of a new business, find someone to ask the right questions rather than search for the right answers.
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Source : Forbes