The Entrepreneurial Mindset written by Rita Gunther McGrath and Ian MacMillan is one of the best resources available for organizational entrepreneurial strategy. While the book was written ten years ago in 2000, it still defines the methods for success for fast competitors who “move on ideas that others overlook and who confidently act while others dither.”
One of the authors’ key points for success is to “keep the focus on learning.”
“Ensure that team members practice the discipline of discovery-driven planning. Document assumptions and test them before making major investments. Systematically redirect your project as you convert assumptions into knowledge. In particular, learn from surprises as well as mistakes. A surprise is what occurs when you do better than expected. Even so, you did something wrong! Often the results won’t be analyzed, because it was positive. But because surprises stem from incorrect assumptions, you need to check out those assumptions to make sure that you continue to be surprised.”
Converting assumptions into knowledge is one of the most important determinants for success–whether it be a radical new market start-up or a product line extension–for any new venture. And the first step in this process is to actually write down all your assumptions. Getting these assumptions or hypotheses down on paper is essential because you’ll be referring to them, testing them, and updating them throughout the process. These assumptions can be on a myriad of factors that can affect the success (or failure) of your entrepreneurial venture, but most likely they fall into these six categories:
- Customer challenges
- Distribution and pricing
- Demand creation
- Market type
Just about the only way to test these assumptions and convert them into knowledge is to get out of the office and speak to the market. Talk to customers (current or assumed). Find out what their challenges are. Find out what they might be willing to pay for a solution that solves their challenges. Don’t just target the users or decision makers, also find out who the influencers are, who the recommenders are, and who the real economic buyers are. In many cases, the economic buyers are different from either the users and decision makers. And one more thing, find out who the saboteurs are-the individuals and groups who have become comfortable with the status quo and would be most threatened with your new product, solution or entrepreneurial venture.
Here’s the takeaway: Testing your assumptions and converting them into knowledge is an essential first step in getting any new venture started. Spend time formulating these assumptions; write them down; test them and then modify them. Continue to repeat until the feedback loop tells you otherwise.
Patrick Lefler is the founder of The Spruance Group – a management consultancy that helps growing companies grow faster. He is a former Marine Corps officer; a graduate of both Annapolis and The Wharton School, and has over twenty years of industry expertise.