Entrepreneurship involves searching for a viable
business model for an idea or IP. As discussed
in previous posts, this startup search process is iterative and requires us to
make and test assumptions, learn from mistakes, and refine or pivot quickly en
route to a viable business model. Eric
Ries, author of The Lean Startup, has pointed out
that the only way to win is to learn faster than anyone else.
So how do we lead this search process to learn and
adapt better and faster than our competitors?
It requires a lean startup mindset and tool set along with the right
skill set. As I pointed out in my previous post, entrepreneurs seldom are lone
geniuses who have all the answers.
Instead, they have to be effective innovation leaders who connect,
engage and collaborate with others who have strength and expertise in areas
they don’t. The MIT Leadership Center has identified four capabilities that distinguish the best
leaders from the rest, especially in situations of uncertainty. And entrepreneurship is, by definition, a
process of translating uncertainty and initial assumptions into vision, clarity,
and a path forward. Let’s briefly explore the MIT Four Capabilities Model and it’s
relevance to innovation leadership.
by Deborah Ancona.
First,
note that all four capabilities are characterized as being verbs. This suggests they are not actions per se, but
rather a state of being. In an uncertain
world, leaders must constantly BE relating, sensemaking, visioning,
and inventing. Let’s briefly
explore each of these four capabilities and their critical role in
entrepreneurship.
The first critical capability is RELATING. This involves identifying key stakeholders
and developing inclusive, credible and trusting connections to understand each
others’ purposes, interests and concerns and find common ground. If a
stakeholder perceives that you are unaware or disrespectful of his or her
purposes, concerns and circumstances, he or she will consider you a
threat. He or she will likely avoid,
resist, and undermine any perceived threat.
This creates waste. By contrast,
when someone perceives that you are aware and respectful of his or her
purposes, concerns, and circumstances, he or she will join you in
conversation. He or she will share
information, co-invent solutions, and move into action. This creates value.
To be successful, entrepreneurs must relate early and
often with target customers to understand the job(s) the customers are trying
to get done and their current pains and desired gains. Because there often are multiple “buying
influences” that can make or break the sale of a product or service,
entrepreneurs must relate to each of these stakeholders and search for common
ground as well as understand potential “show stopper” issues that could
sabotage success of a venture.
Additional stakeholders may include technical experts, regulatory
officials, investors, and development team members. Entrepreneurs must relate with each of these
stakeholders effectively to (1) find common ground, (2) sustain trust, and (3)
gain commitment versus mere compliance or resistance. This is why Steve Blank reminds us often to “get out of the
building” and talk to customers. Additionally,
we need to connect early and often with all other critical stakeholders to
sustain learning and commitment. Without
committed stakeholders even brilliant ideas are dead on arrival.
In the process of relating with key stakeholders,
entrepreneurs are constantly SENSEMAKING—learning about needs, desires,
concerns, constraints, legal requirements and other factors that will make or
break the success of a venture.
Sensemaking can be broken down into the five
discovery skills identified as "The Innovator's DNA" in research by Jeff Dyer, Hal Gergerson,
and Clay Christensen:
Observing, networking, questioning, associating, and
experimenting. It is through relating
iteratively with key stakeholders and making sense of their sometimes
conflicting purposes, interests and concerns that the entrepreneur is able to
learn and adapt—identify patterns and common ground, connect important dots, test
assumptions, and pivot as needed. This
learning and adapting is the key to success in the search for a viable business
model.
As a result of relating and sensemaking with key
stakeholders, entrepreneurs are able to translate their initial vision of the
idea and the business model into a shared vision that is credible and
compelling to all critical stakeholders. This iterative process of VISIONING
adapts the initial vision into a validated shared vision or “product-market
fit”—a value proposition that resonates with each critical customer segment and
buying influence based on a validated set of functional, social and/or
emotional benefits it delivers.
Through the iterative process of relating,
sensemaking, and visioning, the entrepreneur is able to start INVENTING
a validated business model and path forward.
Some new ventures are relatively straightforward to implement once the
business model has been defined and needed resources have been obtained. Others, like medical and healthcare
technologies that require clinical trials and regulatory approval have a more
complex and lengthy path to success. In
all cases, however, entrepreneurs must invent a business model and a path
forward while learning and adapting along the way.
Leading yourself and your key stakeholders along the
path from idea to impact—while you are continuously reinventing the path--is
fraught with trials and tribulations, fits and starts, and a myriad of
emotions.
Almost none of us can “go it alone” and come out a
winner. By BEING a leader who is
constantly relating, sensesmaking, visioning and inventing, the odds of winning
are significantly improved.
