Strategy Design

September 15, 2015 By Don Springer Leave a Comment

Serendipity

“Never underestimate serendipity” said one expert serial entrepreneur being interviewed by Saras Sarasvathy, Darden School researcher.

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.

September 8, 2015 By Don Springer Leave a Comment

Evolving Constraints

Writer’s block can arise when staring at a blank page. Likewise for the business strategist, indecision can surface when facing a market of limitless possibilities. Rather than unbounded freedom, we need form to define the problem space of our work and we need problems to help formulate the work itself.

Constraints and obstacles can be assets to new ventures in that they facilitate and enhance design creativity. “Constraints shape and focus problems and provide clear challenges to overcome”, says Google’s Marissa Mayer, and thus constraints provide direction to our work.

Once you accept that constraints can actually improve your new product, initiative or business, can you identify all of the necessary business constraints at one time, prior to launch? New ventures and products are more about design and discovery than they are about executing a rigid comprehensive plan.

Over time, new constraints are continually revealed, highlighting appropriate problems at the appropriate time. For example, at the heart of agile software development is the segmentation of projects into small problems to be solved. The initial problems are derived from initial user needs. Minimal products with minimal features are then developed and released in a progressive manner, quickly and often. This allows frequent user feedback and product enhancements.

Traditionally, software is developed using a “waterfall” method where the “entire solution” is completely designed, detailed and planned prior to project initiation. Team members have their roles and tasks from the beginning of the development process to the end.

In contrast, agile projects reveal problems and constraints during each phase of software release and use. Small teams encounter new problems and learn as they progress, changing objectives, roles, and product features as needed. This progressive approach can be used for the development of new products and businesses of every kind.

To enter a market quickly, minimizing the cost of entry and ensuring success, it is important to let constraints direct and enhance your initiative or new business. While present markets are predictable to some extent, new markets and offerings are best discovered.

Constraints not only provide focus for creativity, they reveal the reality of markets progressively over time. Leveraging constraints, obstacles, and problems as they arise will enhance your adaptation to the dynamic business environment of today.

September 1, 2015 By Don Springer Leave a Comment

Enrollment

Expert serial entrepreneurs believe that the growth of a venture is limited only by the number of collaborators they could attract, not by the amount of money they could raise. This is what Saras Sarasvathy, Darden School of Business researcher, learned when interviewing expert serial entrepreneurs.

In fact, attracting people to your new business or new corporate initiative is paramount to successful growth. It is essentially enrolling self-selected people to the venture not to do something you want them to do, but offering them the opportunity to do something they want to do and feel that they can do it if they join your venture.

Attracting people to a cause has several advantages:

Confirmation of value – it is an inexpensive way to confirm that your business venture or corporate initiative is on the right track
More resources to tap – with limited funds for start-ups and limited budgets for new corporate ventures, enrollment of people brings resources that you could not “buy”
Spread the risk – the addition of resources reduces the resources one person or one department must contribute
More creativity – more participation provides new ideas

The last listed advantage actually provides a quantum leap in that stakeholders can actually change the design and direction during dynamic contribution.

As one of Sarasvathy’s elements for her “effectual logic”, a design approach to new ventures, she calls the enrollment of partners “quilting” and she contrasts it with building a puzzle.

With a puzzle, you have a clear picture of the objective and it is a question of finding the right pieces. In a new venture with a known market, it is a question of putting the right resources and positioning together quicker than your competitor.

However, when it is an unknown market with a new untested venture, the process is closer to quilting. As you enroll each new stakeholder, new resources and ideas are brought to bear on the venture such that it will most likely change, just as a quilt changes its pattern as more fabric is added by more quilters.

Enrollment is accomplished by inspiring people to be a part of something. While it has always been a key of leadership in galvanizing an organization, it is also becoming known as a key element in starting a new business or launching a new corporate initiative.

August 25, 2015 By Don Springer Leave a Comment

Embracing Uncertainty

Treating an uncertain world as though it is predictable can cause trouble for a new venture, new business, or new corporate initiative. One clear fact that emerges from both research and the history of entrepreneurial ventures is that it is impossible to assess with any certainty, prior to experience, whether a venture will be successful or not. Expert serial entrepreneurs approach the uncertainty by moving forward anyway. It is the way that they move forward that is instructive.

Contrary to simply “throwing things on the wall to see what sticks”, expert entrepreneurs move forward in small steps, managing the financial loss, attracting partners, and selling to customers until the venture “gains traction” and proves itself. This approach is getting a lot of press lately and it has been characterized as “effectual logic” by Saras Sarasvathy, the “lean start-up” approach by Steve Blank and Eric Ries, and “creaction” by Leonard Schlesinger and Charles Kiefer.

In their aptly titled book, Just Start, Schlesinger and Kiefer leverage the research of Saras Sarasvathy, research professor of the Darden School of Business, University of Virginia and recount an experiment at Babson College. They confirm Sarasvathy’s findings and further emphasize the beginning of a venture as a key element in launching a business or corporate initiative. For Schlesinger, it is a creative impulse with tension between what one envisions and current reality. In fact, the entrepreneur, the artist, the software engineer, and the writer all bring their businesses, paintings, games, and books into being in similar fashion. With a vision to guide you, you take small steps to “test the idea or market” correcting and perfecting as you gain new information.

Since as an entrepreneur, you are not simply executing a plan, the vision becomes altered over time as new data is gathered, new customer demands identified, and new partner resources added. For an entrepreneur or a corporate executive, it is an organic process that moves towards the creation of a new business or new product offering.

As Schlesinger and Kiefer propose, once you have a desire for a new venture, act quickly with the means at hand, assess the affordable loss, build on what you find, and bring other people along. That is the way entrepreneurs and business developers embrace uncertainty.