Dr. Sarasvathy was researching serial entrepreneurs to assess and codify the domain expertise they represented. Among the principles she discovered was one she identified as “The Lemonade Principle” evoking the widespread classic notion, “when life gives you lemons, make lemonade’.
Entrepreneurs, business developers, and product marketers all use contingencies for their benefit when the market is unknown and unknowable. New ventures are often products of contingencies or serendipity. The very structure, goals, competencies, and culture of the venture are the residual sediment of human activity striving to fulfill their aspirations with the particular tools and in the particular location and time in which they live.
As Sarasvathy notes however, it is not the contingencies themselves, but how an entrepreneur leverages those contingencies that forms the difference. Their approach is in contrast to the traditional approach of managing for risks and minimizing the surprises.
When you are executing a plan with a clear objective, minimizing risk is relevant. However, when you are creating a new venture with an unpredictable and perhaps unknowable market, your solution logic is more about designing and constructing than deciding. In that context, serendipity becomes an asset.
As Sarasvathy recounts, in 1985 two days prior to a 4th of July weekend, Thomas Stemberg had recently lost his division manager job in a supermarket chain and was working on a business plan for a new chain when he ran out of printer ribbon for his Apple printer. He found that stationary stores had closed for the weekend and those that were open did not carry the ribbon.
Relating the episode years later to a CNN interviewer, he said he realized that small businesses could not purchase ribbons at the cost of large businesses and furthermore could often not purchase the product at all. That weekend he had no printer ribbon, but he had an idea for Staples.
While surprises are usually considered in terms of errors or failures, for the entrepreneur they are sources of opportunities or value creation.
The context of “constructing something” allows serendipity to be viewed as an asset, so it is incumbent upon the entrepreneur to adopt a “designer mindset” and seize upon contingencies in an actionable way.
Serendipity can help you build something better than the original plan if you are open to the nudge.