Effective Venturing: The Difference Between Managerial and Entrepreneurial Thinking
As business professionals, regardless of industry sector, the main focus we all have is whether or not we will be successful. We ask ourselves questions like, “Is my idea good enough?” or “Am I creating the value that I need to in order be successful?” We have an end goal in mind and everything we do is aimed at achieving a predefined goal.
The goals that we have might be internally generated, such as “I want to have $1 million in savings by the time I am 35.” or externally derived, like your CEO saying, “I need your team to generate $5 million in revenue during the next fiscal year.”
When you already have the objective established, you have to accumulate and deploy resources to achieve the goal. That might mean hiring more people, gaining new investment into the firm, taking money from one area to spend in another, or creating a special project team to achieve a specific short term goal like a new product launch. This business mindset is “managerial thinking” or in academic parlance, “causal thinking.”
Entrepreneurs think about the world differently.
Generally, when entrepreneurs see the world around them, they view the world as “problems” that need solutions. That is not to say that entrepreneurs are pessimistic people, but instead they ask questions like, “How can we do this better?” or “Wouldn’t it be great if we could do it this way instead?” These questions are the seeds of innovation.
The “problems” that entrepreneurs see, are nothing more than opportunities. The “solutions” that an entrepreneur might imagine are the foundation of an idea that might develop into a business venture.
Entrepreneurial thinking means that resources (or means) must be evaluated first, which then feed into a result. In other words, there may be numerous possible outcomes for a set of resources or means that an entrepreneur has to work with.
Working within means, and utilizing available resources to create a venture has many benefits:
- The entrepreneur does not need to find investment
- The entrepreneur can take action — and not wait for the perfect opportunity to match the perfect resources
- May be easier to attract co-creative stakeholders who can shape goals, not just provide resources or money
- Decreases the cost of failure if the business venture does not succeed
- The entrepreneur is forced to be creative with resources and not all into a trap of being wasteful with money or time
Goals Have Hierarchy
An important point is that entrepreneurs can have goals. Effectual entrepreneurs should have ambitious goals. Working with available means is practical by nature, but it is important to understand that goals have hierarchies. Higher level goals like “I want to sell my company for $20 million in 5 years” do not tell the entrepreneur what they need to be doing on Day 1 that they open the business. Using a practical approach to starting a business allows the entrepreneur to take action now, and gradually build the business over time.
3 Questions Entrepreneurs Ask to Map Resources
1. Who am I?
2. What do I know?
3. Who do I know?
Mapping resources is a process that entrepreneurs should start with before even thinking about what type of business to start. A resource map can spark the entrepreneur’s imagination to develop even more ideas, or envision more potential outcomes.
If you would like to learn more about how to use entrepreneurial thinking in your current role, or if you want to start a new venture and need guidance to develop a resource map, WNB Strategy Advisors can help. Inquire at email@example.com
Sources: Effectual Entrepreneurship, 2nd Edition, Stuart Read, et al, 2017