Hence, we have asked ourselves: What does it take to be a successful entrepreneur. Why are some successful while most others fail. And how can we increase the chances of becoming successful entrepreneurs?
Fortunately enough, scientists have already done quite a lot of research on this. One concept that stands out is what we call The Entrepreneurial Method (by Professor Saras Sarasvathi). It describes a logic of thinking that is commonly used by some of the most successful entrepreneurs to build their ventures. We will look at it in more detail below.
The Entrepreneuiral Method mainly consists of five effectual principles. As mentioned before, they represent a logic of thinking that some of the most expert entrepreneurs use to build their ventures. By observing a large number of entrepreneurs and ventures over time and across different industries, the team around Sarasvathi has come up with the following principles that can help entrepreneurs advance their ventures.
- Start with your means: If you are trying to build a new venture you should start with your available means. That is, you have to ask yourself: who are you, what do you know and whom do you know. Once you have answered these questions, you can start to imagine different possibilities and outcomes that originate from your means. It is important to not just focus on one specific goal, but to be open for new possibilities and opportunities.
- Focus on affordable loss: To limit your downside risk, define your affordable loss. Especially in early stages of your venture it is much more reasonable to limit the downside potential rather than to focus on possible returns and pursue a risky all-or-nothing strategy. However, always define your affordable loss in advance to protect yourself from potential cognitive biases during the project.
- Form partnerships: Working together with interested stakeholders reduces uncertainty. Partnerships can help you create new markets together with people who have a complementary skill set to yours, which significantly reduces your own risk. Plus, it is generally more fun to work with others instead of trying to do it all by yourself.
- Leverage contingencies: If life gives you lemons, make lemonade. Seemingly bad surprises and unexpected turns are not always bad, try to see them as new opportunities. Maybe you just found another way that does not work. These experiences can be more valuable than you might think. In fact, many of the most successful ventures were the result of another failed project or a coincidence.
- Control the future: Focus on activities that lie within your control. If you spend too much time worrying about what might or could happen to your venture, you give up control. Concentrate your efforts on what you can influence to reach your goals one at a time. In other words, if you control the future you do not have to predict it.
In a Nutshell
For more information, visit: http://www.effectuation.org/