What Is The Genesis Of A Good Idea?
Note about context: Although the fundamental principles cited in the text are intended to be valid for any Industry/Market I have written this article referring principally to the SAAS Industry.
This morning I added another small brick on the little wall — I think is a Lego wall… — I am “probably” building with my neurons.
In the last days some winds were passing through my brain whispering to me that the normal process any bootstrapping entrepreneur has been passing through has — most probably — something radically wrong at the inception.
Usually we start with an idea because we think our idea is a brilliant one! and then we do some research, we collect information ( we do a market research…) and if we are happy with what we have discovered then we pass to execution, we make it real, or at least we try to…
Statistics are clearly sentencing that, no matter how good we are, within 3 years from the incorporation of the company 92% of start-ups fail. Of those who failed 74% was due to premature scaling. [cit. from :http://bit.ly/1Hs0sKB ]
Considering there are no reasons to believe the above percentage is becoming lower in the future — instead because entrepreneurship is now a trendy thing and the number of new start-ups every year is growing much more than how much the market is expanding (world market) — then to know what is really making a difference can be crucial to the success of a new venture.
Other delirious whistling winds from the east were telling me “Do you remember what Saras D. Sarasvathy is saying in the Means principle?”
If you don’t know anything about the five principle of Sarasvathy well, here there is a short explanation:
“All entrepreneurs begin with three categories of means:
(1) Who they are — their traits, tastes and abilities;
(2) What they know — their education, training, expertise, and experience; and,
(3) Whom they know — their social and professional networks.
Using these means, the entrepreneurs begin to imagine and implement possible effects that can be created with them. Most often, they start very small with the means that are closest at hand, and move almost directly into action without elaborate planning. Unlike causal reasoning that comes to life through careful planning and subsequent execution, effectual reasoning lives and breathes execution.
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An example of effectual reasoning would involve a chef who is not given a menu in advance, and is escorted to a strange kitchen where he or she has to explore the cupboards for unspecified ingredients and cook a meal with them. While both causal and effectual reasoning call for domain-specific skills and training, effectual reasoning demands something more — imagination, spontaneity, risk-taking, and salesmanship.” [Source:“What makes entrepreneurs entrepreneurial?” Saras D. Sarasvathy Associate Professor The Darden Graduate School of Business Administration University of Virginia — link http://bit.ly/1eXZy0G ]
Here a precious presentation also talking about lean start-up, agile and the inversion of market analysis typical of the effectuation reasoning:
These very simple but illuminating concepts were all bouncing inside my skull while I was listening Tristan Kromer from Grasshopperherder.com in this video talking about one of the more underestimated aspect of the lean methodology. Please watch the following 60 seconds video:
[ original source 5 min 12 sec length @ http://bit.ly/1M7cCig ]
Continuing the free associations arising from the Agile methodology, in the following video Tom Conrad CTO of Pandora.com is explaining how important is for him to keep the production of software in “agile mode”:
The infographic below has also helped me to better visualize these concepts:
So the scenario is now depicting a situation where an entrepreneur shaped by “effectual reasoning” doesn’t need any important initial investment to act. And during the entrepreneurial initial activities ( and most probably even after) Agile and Lean methodology can control all the creative sparks generated by the entrepreneur treating any new initiative as an assumptions to be tested.
My neurons are now pushed to believe that everything could spin much better in an anti-clockwise fashion. The most counterintuitive path for an MBA student seems to be the most natural one for an effectual entrepreneur.
The genesis of a promising idea — if still at this point we want to call it “idea” instead of “the result of a process” — is to gush from a familiar or well-known activity capable of providing a realistic foundation to the forthcoming business project.
An interesting view on the tornado of winds created by Agile — Lean — Effectuation altogether is described in a Prezi presentation by David Chang @DavidFernandoC : http://bit.ly/1CD3IWN
I invite anyone who has something interesting to add to contribute and bring the discussion alive and forward. I am curious to know your opinion.
