How to Think Like Successful Entrepreneurs

How to Think Like Successful Entrepreneurs How to Think Like Successful Entrepreneurs How to Think Like Successful Entrepreneurs A. Schlesinger and Charles F. Kiefer with Paul B. Brown Excerpted from Just Start: Take Action, Embrace Uncertainty, Create the Future.Copyright 2012 Harvard Business School Publishing Corporation. All rights reserved. When people write about entrepreneurs they invariably focus on their behavior: what Howard Schultz or Michael Dell did in building their companies. If you take that approach, you probably would conclude that every single entrepreneur is unique, so there is little to be learned from studying them; you would have to be Howard Schultz to start Starbucks and Michael Dell to start Dell. Enter our friend Saras D. Sarasvathy, professor at the University of Virginias Darden School of Business. (We are huge fans of Sarasvathys work.) How Successful Entrepreneurs Think Early in her work, she made a fascinating discovery, one that ran counter to the conventional wisdom. Sarasvathy studied serial entrepreneurs, people who have started two or more companies successfully. But instead of looking at the behavior of entrepreneurs which is indeed unique Sarasvathy focused on how they think. There she found amazing similarities in how they reasoned, approached obstacles, and took advantage of opportunities. Yes, of course, there were variations. But the basic approach, as she understood it, was always the same. In the face of an unknown future, entrepreneurs act. More specifically, they: 1.Take a small, smart step forward; 2. Pause to see what they learned by doing so; and 3.Build that learning into what they do next. This process of act, learn, build, as we came to think about it, repeats until entrepreneurs are happy with the result, or they decide that they dont want to (or cant afford to) continue. Prediction Versus Creaction When we set out to see if the way serial entrepreneurs think would work for everyone, we werent looking to replace Prediction. There were two reasons we werent. Prediction works really well when the future can realistically be expected to be similar to the past, and since we are advocating smart steps, it certainly isnt smart to discard something that works well in a specific situation. Sarasvathys research shows that entrepreneurs continue to use Prediction effectively in the situations where it works well, that is, in the places where it is logical to assume that the future will be a lot like what has come before. So, we were not looking to replace Prediction. Rather, we wanted to know whether the logic entrepreneurs employ when they face the unknown we came to think of it as Creaction would work for everyone else when the future is essentially unknowable. In other words, we wanted to know if Creaction could be used to complement Prediction in everyday situations that we frequently find ourselves in (Can I convince the town to add a bicycle lane downtown? Will anyone buy what I have to sell, if I start a company? Would I be happy chucking it all to join the Peace Corps?) We found that the entrepreneurial logic works in business and potentially elsewhere. You can use this way of thinking to complement the kind of reasoning you have already been taught an additional way of thinking that can help you deal with high levels of uncertainty no matter what kind of situation you face. Three Steps to Creaction What exactly is Creaction? Well, to start, it is based on acting and creating evidence, as contrasted with thinking and analysis. Heres one way to think about that pivotal difference. A dancer dances. Substituting thinking for dancing doesnt work. If all you do is think, you end up just thinking about dancing. There is nothing to show for that thought. Thinking is often a part of creating, but without action, nothing is created. This is true for even very intellectual, cerebral fields. For a task to be considered creating, you must publish, teach, or whatever. Daydreaming by itself is not creating. How does Creaction play out in practice? How does it help us deal with uncertainty? The process has three parts, which repeat until you have reached your goal or decide you no longer want to. 1.Desire. Find or think of something you want. You dont need a lot of passion; you only need sufficient desire to get started. (I really want to start a restaurant, but I havent a clue if I will ever be able to open one.) 2. Take a smart step as quickly as you can. As you will see, a smart step has its own three-part logic as well. Act quickly with the means at hand i.e. what you know, who you know, and anything else thats available. (I know a great chef, and if I beg all my family and friends to back me, I might have enough money to open a place.) Stay within your acceptable loss. Make sure the cost of that smart step (in terms of time, money, reputation, and so on) is never more than you are willing to lose should things not work out. Bring others along to acquire more resources; spread the risk, and confirm the quality of your idea. 3. Build on what you have learned from taking that step. Every time you act, reality changes. In other words, when facing the unknown, act your way into the future that you desire; dont think your way into it. Thinking does not change reality, nor does it necessarily lead to any learning. Author Bios: Leonard A. Schlesinger is the twelfth president of Babson College, widely recognized as the worlds leading educational institution for entrepreneurship. He formerly served as vice chairman and chief operating officer of Limited Brands. Charles F. Kieffer is president of Innovation Associates and a regular advisor to global companies on leveraging the human side of their enterprises. Paul B. Brown is a long-time contributor to the New York Times and a former writer and editor for Businessweek, Financial World, Forbes and Inc.