Sunday, August 18, 2013
Why Good Entrepreneurs Are Like Scientists
You don't have to be a mad scientist to benefit from experiments (courtesy of Mashery)
There are three ways to create and launch a business or a product.
The strategic planners would draft a comprehensive business plan. This would include robust market research, foolproof technology, and detailed manpower and financial projections. It would attempt to answer all the questions of who, what, why, when, where, and how, and try to forecast 5,10 or even 15 years into the future.
The marketing strategy of such a plan would include a detailed picture of what the future customer would be like, right down to his/her age, sex, address, religious beliefs, hobbies, hair colour, and lifestyle preferences. Where possible, every conceivable product feature and customer need would be painstakingly brainstormed and crafted into the plan.
The gamblers, on the other hand, would throw caution to the winds and just go with their gut. Fans of Malcolm Gladwell's "Blink", they believe in "thin slicing" and would wing it as they go along.
Depending on where the winds blow, they would invest time, energy and money in what's hot, novel, or unique. Always evolving and always moving, these risk takers do not want to be committed to any fixed path. If possible, every single facet of their business is fluid and flexible. Nothing is sacred in their constant dance with the marketplace.
Finally, the empiricists would develop systems and processes that capture learning "on the fly". While they'd study the best practices and experiences of similar businesses, they also understand that the only way to gauge market sentiment is to bring a product to market.
Empiricists launch beta versions of a product and actively seek real-life customer feedback. They act on facts and data, not guesswork or gut feelings. Like scientists, they know the importance of testing a hypothesis with actual results in the laboratory of the marketplace.
While they can be as detailed and meticulous as the strategic planners, they also know that most forecasts fail. Products that are "good enough" but timely is preferred to perfection. The aim here is to propel one's product as quickly (and cheaply) to the market as possible, learn from mistakes (and successes), and modify accordingly.
Which method would work best?
In a stable and predictable environment, the strategic planners would probably come out tops. Familiar with the ins and outs of their trade, their projections and analyses could fall nicely into place.
However, in today's wildly variable business climate, it is nigh impossible to predict anything. The only way to ascertain if something works is to put it out into the market.
In this regard, empirical testing and experimentation probably works far better than detailed business planning.
By pushing a product or a business out to market early (while ensuring that adequate risk management measures are in place), one can learn quickly, adapt quickly and improve quickly. Making one's prototype cheaper and faster reduces investment risks. It also allows customer feedback to be incorporated into the next improved iteration of the product.
The next time you consider conceptualising, developing and launching a new product or business, consider embracing the tenets of empiricism. I assure you that it'll improve your chances of success on the road of entrepreneurship - or intrapreneurship.