Insights from CompanyCrafters #1

How You Can Benefit from Entrepreneurial Thinking

This article is part of a series that explores how established organizations – corporations, research institutions, even nonprofits – can apply entrepreneurial thinking to become more innovative and successful.

It's fair to observe that many big, established organizations tend not to think or act in a very entrepreneurial way.  Of course, those of you who manage large organizations (or hold their stock in your portfolio) are probably thinking, "Yes, and it's a good thing that executives don't behave like crazy entrepreneurs."  After all, managers of established enterprises are accountable to their shareholders, customers and employees first and foremost to successfully maintain and operate the going concern – and only secondarily to grow it and improve on it. 

Hippocrates' famous dictum to physicians applies equally well to big-company executives: "First, do no harm."

But, fully accepting the corporation’s first priority of protecting and maintaining what they already have, there is some useful wisdom demonstrated by the behavior of entrepreneurs – wisdom that can be successfully applied to large organizations.  Not only can such entrepreneurial thinking help you in running your existing businesses, but it can also be applied to creating and launching new businesses or market initiatives under the corporate umbrella.   

So, for the next issues of Insights from CompanyCrafters, we'll enumerate ideas on how you can work smarter and more effectively by emulating entrepreneurs.  We call these “The Seven Principles of Entrepreneurship”:

• Ski with your knees bent.
• Refine the skill of falling down.
• Get comfortable with "close enough."
• Be happy with a "conditional yes."
• Remember that business model innovation is often as important as tech innovation.
• Think small.
• Strive to understand and mitigate risk.

Let's examine these principles in detail:

Ski with your knees bent. 
For those of you who enjoy downhill skiing, you know that one of the first principles of survival is to keep you knees bent and flexible and your center of gravity low.  This style enables you to successfully adjust to change – on the slope, in surface conditions or with obstacles or other skiers – and still successfully achieve your goal of gracefully traversing the hill.  Conversely, skiing with locked knees, a rigid posture and a fixed gaze is a formula for disaster. 

It's too easy, when working in an established organization, to develop a certain rigidity in how one approaches decision-making and day-to-day operations.  Most times, you can get away with it, standing upright, knees locked, eyes trained straight ahead.  Why?  Because established businesses necessarily develop standard operating procedures, and oftentimes little changes day-to-day.  The rigidity can creep up on you.  Sameness and predictability are comforting, and it's human nature to embrace and standardize behavior that succeeded in the past. 

By contrast, entrepreneurship is, metaphorically, a bit like skiing moguls (big, scary, unpredictable bumps)… blindfolded.  If you're an entrepreneur, you have to keep your knees bent.  You have to stay loose.  You know full well that things will change, probably dramatically, and that you'll experience dramatic shocks; you just don't know exactly what those shocks will be, where they'll come from or when they'll occur. 

Keeping loose and with a low center of gravity helps business managers absorb change and keep the business on its feet.  Entrepreneurs have always operated this way as a matter of course.  And this sort of flexibility and adjustability can be a crucial advantage for corporate executives as well, whether in accommodating change in existing markets of tackling new business initiatives.   

Refine the skill of falling down.
To continue the skiing metaphor, one of the first things a ski instructor teaches novices is how to fall down.  Why?  Because it's an inevitable part of the sport, and it's the primary way of getting hurt, but good skiers fall gracefully and bounce back quickly.

Similarly, successful entrepreneurship requires getting comfortable with the idea of falling down repeatedly and springing back up each time.  Startup business is all about expecting, gracefully accommodating and learning from failure.  After all, even with the best-thought-through venture, it's reasonable to expect that fifty percent of the original business plan will prove to be wrong.  Worse yet, you won't know which 50 percent until you get into it – until you point your skis down the hill and go.

Understanding this phenomenon is why venture investors often prefer to invest in entrepreneurs who've experienced failure.  It's also why many startups prefer to hire, as key managers, individuals who have experienced the good and the bad of a previous startup or two.  A previous fall or two is not considered a scarlet letter of failure on a person's career, but rather an indication of maturity and a willingness to take calculated risks.

For established organizations to successfully grow through innovation, they'll be delving into less certain and more ambiguous environments.  Therefore, they need to take more calculated risks without being paralyzed by fear of failure.  They need to refine the skill of falling down.

Get comfortable with "close enough."
The vast majority of corporate innovations never see the light of day because they're "killed in committee."  Why do so many die that way?  Because innovative new ventures and business initiatives almost always have too many unknowns for many people's comfort, and the powers that be in established companies – often groups or committees – possess the negative power to say "No" based on that uncertainty.  Just as, in the old days, IT executives knew they'd never get fired by buying IBM, with corporate innovation, it's nearly always a safer bet to say "No" to something new. 

Meanwhile, successful entrepreneurship – or corporate venturing and new-business-development – requires operating in a highly uncertain, ambiguous environment.  It's a bit like trying to solve an algebraic equation with seven variables and six unknowns.  Technically, it can't be done, so the "correct" answer is, "We can't do it."  The equation can't be solved without taking intelligent guesses and trying out different combinations based on inadequate information, approximations and instinct. 

But the perfect is often the enemy of the good.  Remember, in entrepreneurship: The best decision is the perfect decision (which you'll never have sufficient information or time to divine).  The next best decision is "close enough" and move – you can always adjust course as you go (i.e., ski with your knees bent).  And the worst decision of all is to continue to study, or form a committee (which so often translates to the "safe no," and therefore doing nothing). 

The entrepreneurial approach accepts "close enough":  Roll up your sleeves and work with customers from the start.  Get something in customers' hands, even if it's not finished.  Experiment, and don't be afraid to adjust, occasionally fall down and get back up.  Do it, try it, fix it… and repeat.

See the next Insights from CompanyCrafters, where we take a closer look at the last four principles of "The Seven Principles of Entrepreneurship."