Just Start Take action Embrace uncertainty Create the future

1. Len Schlesinger Baker Foundation Professor Harvard Business School March 2014 Just StartTake actionEmbrace uncertaintyCreate the future

2. Continuum of “Predictability” Known Unknown Predictable Unpredictable

3. The Predictable

4. Google Maps, GPS Universe You always know the optimal thing to do • You’re never lost

5. Where are you now? and What result is wanted, needed and best? What are the various ways of achieving the result? What are the required resources and their costs Select the optimal path Assemble the required resources Execute the plan, and, if required, get back on track. • Inductive and deductive logic • Mathematical and analytic methods • Rules of thumb • Core logic of virtually all educational settings • Core logic of large organizations • Works great when the future can be extrapolated Prediction Logic What is the best logic in relatively “known” futureswhere things can be predicted based on the past?

6. Prediction Logic What logic works bestwhen things are very unpredictable?

7. t t YOU’RE IN A PITCH BLACK ROOM Discuss with 1 or 2 colleagues: What principles do you use to get out?

8. What would rational thinking and behavior look like in the face of unknowability? But, you can’t think your way into an unknowable future You either sit and think or you act… Therefore, the only logical thing is to ACT.

9. What would rational thinking and behavior look like in the face of unknowability? How to Act Smartly? • Learn Where are you? Do you want something else? What do you have at hand? Anyone who can help/rescue? Small steps. On firm ground. Take stock & learn. Build off what you actually find • Act • Build Therefore, the only logical thing is to ACT.

10. How well does Prediction work in the face of unknowability? • Learn What’s current reality - what is wanted, needed and best? How can you achieve that result? What resources are required? What’s the best path? Assemble the resources. Then, execute the plan and get back on track if you get off  • Act • Build You don’t know You can’t know What do you have at hand? Who can help? Small steps. Take stock & learn. Build off what you actually find

11. Popular Views of Entrepreneurs Closer to Truth Popular Perception High Appetite for risk Visionary Able to foresee the future Creative Self Confident Determined, controlling, decisive, egotistical… LOW Appetite for risk Often start with no sharp goal or vision Distrust predictions of the future Creates new businesses, but not necessarily original No more self confident than others Determined, controlling, decisive, egotistical… but not always

12. Behavior or thinking? Behavior & Actions Results Behavior looks idiosyncratic and contradictory

13. SarasSarasvathy, University of Virginia studied 30 “expert” entrepreneurs Entrepreneurial Thinking Started multiple enterprises ranging from $200Million to $6.5Billion How they thought about taking action

14. Behavior or thinking? Behavior & Actions Results Thinking Behavior & Actions Results Strong consistency in thinking that explains unconventional behavior.

15. Prediction • Learn • Contrasts with prediction • Favored by entrepreneurs 89% • Act • Build • Favors what is real and confirmable Taken together they form Entrepreneurial Thought and Action • Smart action trumps analysis • Use when the future cannot be predicted from the past Prediction and Act Learn BuildTwo Complementary Logics

16. the Context and Setting for Learn Act Build Uncertainty / Unknowability 16

17. Learn Act Build Entrepreneurs are always doing what they want, or something that will get them what they want. In the face of the unknown, it makes no sense to act unless you want to, whether you have to or not. DESIRE fuels… 17

18. DESIRE fuels… DESIRE Intriguing area, attractive partners Smart Steps Sufficient to get started What do you do next? Act quickly with means at hand Act Learn Build is based on current reality: who you know, what you know and anything else relevant Fully formed vision, robust plan Act quickly with means at hand Passion isn’t required Build on what you find ACT Pay only what you can afford toand want to – Acceptable Loss • Money & time • Reputation (professional & personal) • Opportunity cost Pay only what you can afford to and want to – Acceptable Loss ACT • Surprises are often good. Make them an asset • Befriend reality • With each action, reality changes Bring others along • Tangible sales and other assets • Other borrowed or bartered resources • Intangible assets (ambassadors, reputational capital) through enrollment Bring others along

19. Continuum of “Predictability” Known Unknown Predictable Unpredictable More logical to act Employing the tools of prediction doesn’t make sense and wastes time and resources

20. Continuum of “Predictability” Is it big enough to interest me? How do I get started with the means at hand? How do I make progress with a step-by-step acceptable expenditure of resources? How do I bring other people along and spread the risk? How do I build each next step of the reality I have created with the previous one?

21. Continuum of “Predictability” Every ALB includes some Prediction Known Unknown Predictable Unpredictable At some point predictive tools require evidence to work As you learn, you can begin to Predict

22. Prediction • You need both • You employ them reflexively, like a second language • Consider using ALB even in predictable situations Derails the habit of prediction Action might be equally reliable, cheaper and faster Action changes reality, predicting doesn’t • Use both simultaneously • Learn • Act • Build

23. Where Serial Entrepreneurs Like to Play Everywhere Existing Market New Market Opportunities are largely found Manage (incremental) Adapt(evolutionary) ExistingProduct • 88% • Why? • No competition • Expensive Prediction tools are not required • They like to create opportunities • Act Learn Build is required. • In this quadrant • Action Trumps Everything Opportunities are largely made SuicideQuadrant Extend(evolutionary) Create(revolutionary) NewProduct • 12% unusual in their comfort and preference for this quadrant

24. Optimize Your Actions DESIRE Satisfy (desire) + Suffice (good enough, not necessarily optimal or “the best.”) Predictable Unpredictable You must Satisfice Optimization is impossible Optimization is possible Nobel Laureate Herbert Simon

25. DESIRE fuels… DESIRE Intriguing area, attractive partners Smart Steps Sufficient to get started Act quickly with means at hand Act Learn Build is based on current reality: who you know, what you know and anything else relevant Fully formed vision, robust plan Passion isn’t required Pay only what you can afford to and want to – Acceptable Loss

26. Expected Return Acceptable Loss Is it big enough to interest me? How big is the “prize”? • Pay to Play • What can I afford to lose? • What am I willing to lose? Specific Desire + Means at Hand + within Acceptable Loss ACT • Currency: • Time , money and other tangible resources • Reputation and social capital • Opportunity cost Cost to executethe plan PAYBACK $ x 75% = “Risk Adjusted Return” These are all knowablein the present moment Acceptable Loss removes all of the psychological and most of the actual risk Acceptable Loss

27. DESIRE Intriguing area, attractive partners Smart Steps Sufficient to get started Act quickly with means at hand Act Learn Build is based on current reality: who you know, what you know and anything else relevant Fully formed vision, robust plan Pay only what you can afford toand want to – Acceptable Loss • Money & time • Reputation (professional & personal) • Opportunity cost Bring others along

28. Thanks for joining me… • Tangible resources • Early Sales and Cash • Bartered and borrowed resources • Free help • Idle capacity • Intangible resources • Reputational capital • Relationships + Reduced load on entrepreneur’s assets Spreads the cost and therefore the risk for any one player Confirms your judgment Bring Others Along

29. DESIRE Intriguing area, attractive partners Smart Steps Sufficient to get started Act quickly with means at hand Act Learn Build is based on current reality: who you know, what you know and anything else relevant Fully formed vision, robust plan Act quickly with means at hand Build on what you find ACT Pay only what you can afford toand want to – Acceptable Loss • Money & time • Reputation (professional & personal) • Opportunity cost Pay only what you can afford to and want to – Acceptable Loss ACT Bring others along • Tangible sales and other assets • Other borrowed or bartered resources • Intangible assets (ambassadors, reputational capital) through enrollment Bring others along

30. In a predictable world, surprises are a problem… And you solve them when you can In the unpredictable world, you can’t know what you will find until you act. Transform problems and obstacles into assets Befriend reality and welcome surprises Build on What you Find

31. DESIRE Intriguing area, attractive partners Smart Steps Sufficient to get started What do you do next? Fully formed vision, robust plan Act quickly with means at hand Build on what you find Pay only what you can afford to and want to – Acceptable Loss ACT • Surprises are often good. Make them an asset • Befriend reality • With each action, reality changes Bring others along