Why are entrepreneurs better at reset moments?
Reset moments are rich in opportunity and scarce in certainty. At such times, entrepreneurs thrive while corporates struggle to take meaningful action. This is down to advantages inherent in the entrepreneurial approach.
However, that entrepreneurial approach is not limited to start-ups and new ventures. Corporates can not only learn to successfully apply many of the principles but can use them to access powerful advantages that start-ups don't have.
This article briefly summarises the differences, overviews why the entrepreneurial approach succeeds and gives some starting points for corporates to adapt.
Reset moments
A "reset moment" is a moment of dramatic change and uncertainty, precipitated by a crisis, like the one we are experiencing now during the long exit period from the coronavirus pandemic. During such times the world responds to changes in the status quo forced by the crisis, adapts to new innovations that have arisen in response and slowly settles back into a new normal.
Some of the changes are immediate and obvious, others take years to emerge as a consequence of slow-moving chain reactions.
Entrepreneurs and corporates approach problems in fundamentally different ways
It is of course an over-simplification to divide the world neatly into corporate and entrepreneurship camps, but it is a useful distinction all the same. Numerous characteristics of the entrepreneurial approach contrast with the traditional large business one.
Of the differences, two are vital in the context of reset moments.
Entrepreneurs are (generally) opportunity-seeking and improvisers
Opportunity seeking is a mindset oriented to the future potential of a new idea, that is not dependent on backward looking proof of the idea
As improvisers, entrepreneurs act quickly using the assets and networks they already have and combining them in new ways (bricolage in the academic literature)
Indeed, those existing resources are not just a quick route to execution, but the vital stimulus to the creative process. What could I achieve if I combined X and Y and sold it in partnership with Z?
Corporates are (generally) advantage-seeking and planners
Advantage seeking is preoccupied with questions of long term differentiation, positioning in customers' eyes vs competitors and relative cost positions
It's fundamentally relative, making trade-offs and triangulating between competitors and customer segments
Ends are determined first, the means required determined next, and finally a plan developed to marshal the resources and execute
Figure 1: Differences in the corporate and entrepreneur approaches
Why does the entrepreneur's approach work better at reset moments?
Reset moments are rich in opportunity and scarce in certainty.
The corporate–advantage-seeking–approach struggles when the world and customers are changing rapidly, as it attempts to prove in advance the validity of ideas using data that is now out of date or perceived to be unreliable.
Depending heavily on demonstrated practices, past results, market segmentations, value maps, competitor matrices etc, decision-making grinds to a halt as in the input data and assumptions loses their obvious validity
Further, the inherently relative nature to questions of advantage vs competitors and position in the eyes of customers greatly increases when both the competitors and customers are moving rapidly as well
Energetic attempts to solve with new research serves only to reveal the uncertainty and pace of change and creates a deepening hole of "paralysis by analysis"
Even when a decision is made, the planning approach slows action further as resources are marshalled from scratch.
The entrepreneurial–opportunity-seeking–approach faces no such obstacles, as it acts willingly on a lightly-held hypothesis about the future and validates quickly in the real (changed) world.
1. The creative identification of an opportunity and a credible scratch model of commercial potential is sufficient to trigger action
2. Working from existing resources and contacts, it is quick and low cost (relative to the sector) to mobilise a first version of the product or service
3. Real life testing quickly reveals if the opportunity is real or not
How can corporates tap into entrepreneurial methods to create value?
Despite the label, the entrepreneurial approach is not just for start-ups or founder-led companies. (The corporate approach can be observed in some small businesses too, but that's a different story).
Large corporates can adopt elements of the entrepreneurial method successfully including:
1. Different approaches to project evaluation and resourcing
2. Rethinking innovation portfolio size and breadth
3. Working with highly creative domain experts
4. Adopting more rigorous approaches to finding and experimenting with existing resources
The last point is where corporates have a tremendous head start. The existing and frequently overlooked resources (including expertise, people, customers, suppliers, retailers and partners) can be both a rich source of creative ideas when systematically considered in new combinations, and an executional head-start, supporting much more rapid mobilisation and prototyping.
Ask yourself:
· How would existing resources be used to build a business if we started again tomorrow?
· What new business models could be possible if we changed our relationship with a supplier / customer / partner?
· Are we routinely connecting people from different functional areas to discuss capabilities and pain-points experienced?
Reset moments are rich in opportunity and scarce in certainty, and it’s no different this time. However, by learning from the lessons of the past and adopting parts of the entrepreneurial approach, corporates don’t need to find themselves left behind.
OneLeap works with some of the world's largest blue chips on challenges of innovation and value creation. Our unique approach includes highly successful entrepreneurs on our project teams to not only bring a new surge of creativity and energy, but to role model entrepreneurial behaviour and drive lasting change.
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