Entrepreneurs: invest your time wisely

For many years a colleague had a poster on his wall that declared, “The most important thing is to make the most important thing the most important thing”. I loved and often quoted that quote, as much for its tautological tendencies as for its meaning. 

It was only when I started working with entrepreneurial scientists (those hoping to commercialise their technology) and then MBA students (those with the next big idea) that I began to realise the truth bundled so poetically within these words.  Many entrepreneurs waste so much precious resource on things that are heroic and worthy but add very little value to their business. They have lots to show after a year but really nothing of any ‘value’.  Often it’s more of the same – coders carry on coding, scientists do more science, marketers develop better sites, engineers build and planners plan.

My favourite definition of an entrepreneur is, ‘one who pursues opportunity without regard to the resources currently controlled’. For a new business the only resource truly ‘controlled’ is the founder’s time and very limited cash. The question then becomes how to invest (as opposed to spend) that time in a way that creates the greatest value for the business – how to optimise  ‘bang per buck’.

There are loads of authors out there peddling proprietary potions. For some it’s all about business planning – the ‘canvas’ being the latest manifestation. For others the panacea is the ‘prototype’ and a ‘minimum viable product’. Or, a burst of intense stakeholder engagement resulting in swivels and pivots. Could it be about team-building?  Or, storytelling (the successor to the pitch)? Or, those first dozen users?

I dislike these dogmas. None of them are wrong. But none are universally right either. The poison is in the dose and – given that opportunities come with such different improbabilities and leaps of faith – what’s good for one is useless (and given the opportunity cost, often harmful) for another. 

I talk to dozens of aspiring entrepreneurs each month.  Many of them have read the books and emerged bewildered by the smorgasbord of mutually exclusive – but plausible – advice.  Somehow they must be elevated to a higher plane – so that they can figure out what’s really important for their putative venture. And then – and only then – decide which tools (aka authors) are fit for purpose.

There are two approaches that I have found to be particularly useful.

Approach one:  re-frame your idea as a hypothesis

The first is to treat all opportunities as hypotheses and then use the ‘scientific method’ (well-designed experimentation and observation) to try to falsify the hypothesis as quickly and efficiently as possible. This all sounds a bit gloomy but it’s far better than the alternative which is to fish for confirmatory evidence. And as any scientist knows, a well-designed experiment often results in huge insights and is often the fastest route to a much better, ‘Plan B’ hypothesis.

Approach two:  focus on dependencies and vulnerabilities

The second leads on from the first. I encourage entrepreneurs to think through what, and who they’re dependent on for the success (what must go right) and the source of their major vulnerabilities (what mustn’t go wrong).  The dependency side of the equation is particularly useful for planning experiments because they tell you who, or what, to interrogate and what behaviour, reaction, or deal you need for your venture to thrive.

I find that this ‘intelligence’ results in two things. First, it gives a good sense of why others won’t engage with you now. Maybe there are fundamental flaws in your product, in which case how much better it is to fail fast and fail cheap. But more likely you will uncover the things that you must do to prove them wrong or change their minds – to crystallise out perceived risk.

This is where the books come back in. Maybe a user doesn’t believe your idea will ‘work’ – in which case build a prototype. Maybe an investor doesn’t believe that users will engage – in which case build a MVP. Maybe no-one believes in your ability to work with others (more likely with lonesome scientists than gregarious MBAs) – in which case mitigate ‘team’ risk by building one. Perhaps there’s widespread incredulity at your costs and timescales – in which case, write a plan. Maybe the product requires a huge behaviour change – in which case get your product into the hands of (a dozen) opinion-leading sceptics.

I love books on entrepreneurship. Each adds to the entrepreneur’s toolbox.  But remember that they are simply tools. Our real job as educators is to help them to learn which tool is best for the job (of adding value by stripping out risk) and to be masters of them all, thereby equipping them to know what’s the most important thing and to make it so.

---

Jeff Skinner is Executive Director of the Deloitte Institute of Innovation and Entrepreneurship at London Business School and awarded eleven founders on 6 November 2014.  The winners have all been accepted onto the LBS Incubator Programme.