Wednesday, April 19, 2006

Becoming more entrepreneurial

I've heard managers in large organizations wish their organizations were more entrepreneurial. Those of you who have expressed or heard that sentiment might enjoy reading a bit about what that might mean.

Saras Sarasvathy, Associate Professor of Business Administration at the Darden School of Business of the University of Virginia, has developed a theory of effectuation to describe how entrepreneurs think. In essence, entrepreneurs take who they are, what they know, and who they know and then consider what results they can achieve from that combination, while normal business ("MBA") practice defines goals, builds on goals with an understanding of the market and the resources of the company, and creates plans to act in their markets.

There's a fundamental difference in the two, exemplified by another complaint I've heard in large companies that they should stop doing "ready, fire, aim," while that seems to be the mantra of the entrepreneur.

In the effectuationists' bias for action, I hear echoes of action learning or action research, that approach which combines effecting change and learning how to effect change in a common, iterative process.

If you or your company thinks they want more of an entrepreneurial spirit, read articles describing effectuation, consider whether that's what you really want, and, if it is, get started. (One might suggest that real entrepreneurs wouldn't spend the time doing research about being entrepreneurial—they'd just get started—but I think it's quite reasonable and helpful to inject new ideas into our thinking even as we take action.)

Oh, and I might encourage you to think about ways to capture what you're learning along the way so you can improve as you go.


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