Business as art
Fact: Entrepreneurship is an irrational pursuit. Founding a company – much less one that could ‘change the world’ – entails insane amounts of risk, ridiculously low chances of success and zero work-life balance.
But here’s the thing: the value of risk-taking is incalculable, because illogical ideas are how society achieves progress.
Every great entrepreneur, from the late Steve Jobs to Richard Branson, made decisions that seemed crazy to the rest of us. Entrepreneurs are wired to think differently and to see things most people don’t, which allows them to act on gut instinct. Or does it?
Steve Blank, professor of entrepreneurship and pioneer of the Lean LaunchPad, believes that a good chunk of what people call gut instinct is really a mesh of experience and a data-driven way of thinking. “Entrepreneurial brains are like full-time pattern recognisers,” he explains.
“There is a lot of hard thinking and information processing that goes on subconsciously before there’s a pattern match.”
Of course, that doesn’t mean they always get it right. Blank says 90% of entrepreneurial ventures fall prey to “noise and hallucination,” but the impact of the remaining 10% is so valuable that it warrants setting up an environment in which more entrepreneurs can thrive.
Business as science
Not so fast, says Kay-Yut Chen, principal scientist at Hewlett-Packard Laboratories. When it comes to starting a business, he proposes taking a more methodical approach.
Trusting your gut sounds great, says Chen, but if entrepreneurs are indeed irrational, their instincts can lead them astray. Chen’s proposal: more science. If the underlying objective is for entrepreneurs to drive progress in society, then it’s important to tweak and test the system to get better results, faster.
The prevailing view among behavioural economists like Chen is that if people understood their mental limitations as well as their physical ones, they could design products and companies more efficiently.
Applying more analytics to entrepreneurship isn’t expensive, but Chen concedes that entrepreneurs have limited resources and attention spans. Still, entrepreneurs could benefit from being a bit more cautious. After all, gut instinct may be a survival trait, but so is prudence — and the latter doesn’t have a 90% failure rate.