What makes entrepreneurs entrepreneurial?

Very interesting article by prof. Saras D. Sarasvathy introduces and explains the concept of “effectual thinking” as a special property of entrepreneurial mindset which affects entrepreneurs’ decision-making process and the way they address problems and overcome challenges. Unlike causal thinking, the effectual thinking assumes set of given means rather than a specific goal to aim. Entrepreneurs are to act in an uncertain environment with plans to be made and re-made on the go rather than strategically articulated for a distant future like classic business schools teach to do.

In my opinion, many aspects of “effectual” thinking introduced by prof. Saras D. Sarasvathy very much reflect design thinking principles. Design thinking proposes a set of strategies to be used during the process of designing. As Wikipedia suggests, this approach can be also used to resolve issues outside professional design practice. Entrepreneurs, consciously or not, are using design thinking in their domain.

According to the design thinking, no “brilliant mind” is needed for a good idea but a creative and human-centered process. Similarly to that, many entrepreneurs cannot explain what is so special about them to achieve the success. In many cases, their answers to the question can be shortened to “I just did it”. However, if to analyze the strategies they are applying and way they form their social networks, we can find a lot of attributes of design thinking in all the aspects of an entrepreneurial experience.

Applying design thinking, it is good to use a cycle of solving problems which starts from empathizing, is followed by ideation and making a prototype with the next testing and implementing. (Brown, 2008) As prof. Saras D. Sarasvathy pointed out, successful entrepreneurs tend to start from their familiar domain which matches emphasizing the problem. However, in many cases, with the following interaction, the solution or even the area may change completely.

Prototyping and early releases are very much encouraged by the design thinking. It requires special strength to stop the improving process and release. Besides the obvious advantage of meeting its users, early prototype ensures that its creators will more likely provide changes according to the gotten feedback. If the release happens later and in a more polished way, the creators probably have the final vision of their product. This would make it harder for them to accept feedback or to find innovative solutions to the problems which such feedback addresses. In the same way, successful entrepreneurs introduce their products and services as soon as possible, sometimes even before they are ready. It is also possible because entrepreneurs feel the need to act in uncertainty by the appeared information, with plans to be made and remade to reflect the changing environment. Often happens that such a strategy leads to the result never possible to achieve if using casual practices. Similar to designers, entrepreneurs experience the “a-ha moments” never possible to be planned in the classical business approach.

Basics of effectual reasoning are that we do not need to predict the future in order to control it. Acting by this principle may face psychological issues as many people do not find it comfortable. Unlike them, entrepreneurs follow this strategy and act according to the new information. Even though it looks like taking risks, in many cases it is self-controlled iterative problem-solving process exactly as design thinking suggests.

However, the try-and-test approach can lead to a failure. But thanks to iterative nature of this process and early releases, such failures occur earlier and at low levels of investment, which makes them affordable. Besides, failure as other unexpected stuff becomes a part of an entrepreneurial experience and transforms unpredicted into utterly mundane is the special domain of entrepreneur’s expertise. Matching this to design thinking paradigm, we must admit that entrepreneurs demonstrate growth mindset which makes failures not so frightening because they are the possibilities to learn and sometimes look as the necessary part of the road to the success. (Edmondson, 2011)

Successful entrepreneurs tend to win even when they fail also because of their ways to interact with people. While acting, entrepreneurs form a social network and strategic connections. In entrepreneurial experience, strategic partnership is one of the keys to the success. For example, often happens, that it opens the doors to the already taken markets which analytical market researches suggest not to enter.

To be able to establish such partnership with the right people, entrepreneurs need to behave according to “giving culture” principles. Being givers, they are oriented to their own success but also help others along the road. These win-win strategies help them to overcome their current challenge as well as form useful network of strategic connections and domain for future iterations and new projects. (Grant, 2013)

As communication and networking are the major parts of the entrepreneurial experience, for entrepreneurs one of the most important things to do is to surround themselves with right people and lead them. A leader in this sense and according to the design thinking is not a manager but a champion of engagement. In practice, a leader contributes to vision and strategy as well as makes sure that collaboration happens. Entrepreneurs lead people providing them with emotional ownership in the goals and objectives. Similarly to how entrepreneurs form their market environment, they grow the right people. (Paasonen, 2017)

By the end of the day, as designers, entrepreneurs solve the problems and determining the future. No wonder, that the methods and principles both use to achieve success are basically the same.

References

Sarasvathy S. D., 2008. What makes entrepreneurs entrepreneurial?
http://www.effectuation.org/sites/default/files/research_papers/what-makes-entrepreneurs-entrepreneurial-sarasvathy_0.pdf

Brown T., 2008 .Design Thinking

Edmondson A. C., 2011. Strategies for learning from failure
https://hbr.org/2011/04/strategies-for-learning-from-failure

Grant A., 2013. Give and Take

Paasonen J., 2017. Design Leader’s Cookbook
https://www.slideshare.net/JuhoPaasonen/design-leaders-cookbook-building-highperforming-and-happy-creative-teams