1 Simple Rule: Entry Decisions Are Complex, so Time Them Right

Choose the right time for entry.

The timing of market entry is important for all entrepreneurs. If you enter early, you may enjoy a first-mover advantage that helps you learn ahead of competitors and secure access to important customers or suppliers. On the downside, however, you may be prone to make many mistakes because you can’t learn from the experience of others already in the market. If you enter late, learning from others in the market can help reduce your development costs and risks. However, those ahead may make securing critical resources and customer access difficult. Consider these pros and cons of being first when timing your entry.

Assess your resources when considering entry.

Entrepreneurs tend to enter the market earlier when they possess specific resources. When considering entry, evaluate the value potential customers will see in your product, how well your technology works, and how much others support your business. If these resources are developed well, you are closer to entering the market. In particular, these resources support entry when you have a considerable lead time compared to your competitors.

Build a strong team for entry.

Once you have decided that the time is ripe to enter the market, your venture needs to perform several different and complex activities, including ramping up production, establishing and maintaining customer relationships, and building distribution channels. To address all these issues, ensure you have a strong and large enough team with the necessary capabilities. You won’t be able to oversee all these tasks yourself.

Be aware that your passion can trigger (too) early entry.

Entrepreneurs experiencing harmonious passion feel joy and energy when working on their ventures. When your passionate efforts lead to the possibility of entry coming up on the horizon, you may be tempted to enter as soon as possible. While early entry can be an advantage, make sure that your passion does not prevent you from allocating enough time to develop the resources needed for entry.

Consider that your life outside your venture may impact your entry decision.

Although, as a passionate entrepreneur, you may spend much of your time working on your venture, experiences outside of your venture can still impact how you make your entry decision. Positive life experiences can create positive emotions. If you are highly excited about such experiences, this excitement can further enhance the danger that your passion will speed up entry—perhaps too much. Be aware that this danger is extreme when your passion is obsessive—that is, when you feel you must work on your venture to be socially accepted and/or to have self-worth. Make sure you control your emotions from venture-external experiences when making your entry decision.

2 Simple Rule: If You Think You Do Not Have Implicit Biases, You Are Probably Wrong (We All Do), so Set Up Procedures to Circumvent Them

Be open to the idea that you have implicit biases.

In one study of men and women venture capitalists, these investors (regardless of their gender) asked women entrepreneurs questions about avoiding losses and men entrepreneurs questions about growing their businesses.Footnote 1 Unsurprisingly, men entrepreneurs were more likely to receive funding than women entrepreneurs despite the same venture quality. The venture capitalists were unaware of how gender drove their questions. It makes you think we may also be unaware of our implicit biases. Assume that it is at least possible that you have implicit biases and do something about them.

Develop and use systematic procedures to overcome implicit biases.

You can overcome implicit biases in several ways. You can ask the same questions to applicants (i.e., employees, suppliers, or potential investees). Work out what questions you will ask, and then you can engage the interviewees in the same “fair” way. You can also create checklists to make sure you consider each attribute of interest rather than forming a global impression of an individual. A global impression is likely to be more influenced by implicit biases. Further, you can involve multiple respondents to highlight the appropriateness of your evaluations. However, remember the example of the venture capitalists above—multiple respondents can have the same implicit biases. The point is to try to make the process by which you make decisions more explicit, enabling you to be more deliberate in your decision-making and, therefore, less reliant on intuition. Implicit biases can have more of an impact when you make intuitive decisions. However, just because you use a more deliberate decision-making process does not mean that you are bias-free.

Allocate sufficient time to make crucial decisions.

By giving you and your team more time to decide, you can implement the above systematic procedures and put less pressure on relying on intuition to make a quick decision. The more you deliberate a decision, the more you can reduce implicit biases.

Use blind auditions to avoid implicit biases.

Think about how you can make your process blind to irrelevant features of performing the job task well. This could be, for example, taking the names and addresses off resumes to focus on people’s achievements while remaining blind to their gender, ethnicity, and socioeconomic status.

Update your initial categories to reduce implicit biases.

People use stereotypes of individuals they meet for the first time to categorize them and make initial decisions about them. Such first impressions are natural. However, it is essential that as you gain more information, you invest the time and energy necessary to update your categorizations and evaluations of individuals. Categorizing people is not a problem, but failing to update these categories can be a problem.

3 Simple Rule: Reduce Your Overconfidence in Making Predictions

Make multiple estimates to reduce your overconfidence.

Rather than making one estimate, make two and take the average of the two. This approach can improve the accuracy of your estimates and open your mind to more than one possibility.

Use premortems to reduce overconfidence.

Premortems are thinking about all the things that could go wrong in your future course of action. Thinking about the things that could go wrong helps reduce your overconfidence and can prepare you to respond to these possibilities if they occur.

Take an outsider’s perspective to reduce overconfidence.

Rather than considering your situation from your perspective of being fully embedded in it and your tasks, consider the perspective of an outsider—a detached but knowledgeable observer. What would an outsider think about your current situation, and how would they act? Such an approach helps provide a broader perspective, a more deliberate approach, and objectivity to the decision-making process.

Realize that more information is not always better.

Sometimes, more information merely confirms the information you already have. Indeed, this additional information may not improve your decision accuracy but can increase your confidence that you will make an accurate decision. In such a situation, you are particularly prone to increased overconfidence.

4 Simple Rule: While Slack is Nice, Necessity Can Be the Mother of Innovation

Use adversity to combine and use your resources for a different purpose.

Change your mindset from relying on slack resources for experimentation to a mindset of necessity. By thinking about necessity and resource constraints, you can engage in bricolage. Bricolage refers to using the resources you have at hand and combining and recombining them in unique ways to offer an innovative solution to the current problem you are trying to solve. Think MacGyver. People from India use the word jugaad. It is a lot like bricolage but emphasizes the iterative nature of the problem-solving process, which entails substantial trial and error. Jugaad also reflects the attitude of an innovator. You take on an assertive defiance, believing you can achieve success while being unwilling to take on other people’s constraints. You break the rules to pursue worthwhile goals.

Consider inclusion (broader stakeholders) when innovating and growing.

Entrepreneurs have moved beyond a primary focus on shareholders to think more broadly about stakeholders. The notion of inclusive growth or inclusive innovation takes this new focus one step further. Traditionally, you would think about your cost structure and the people you should target who can afford a price that will give your venture a sufficient profit. Instead, an inclusive approach involves considering who needs your products and services and what cost structure you need to implement to deliver value to all people, including the impoverished.

5 Simple Rule: When You Lack Information to Make Decisions, Turn to What You Have at Hand

Let your knowledge and resources guide your decisions.

When you enter a new market, gathering information to make crucial decisions can be challenging. Instead, turn inward. You can make decisions based on your knowledge and resources. Make an inventory of your resources and be creative to imagine different goals you can achieve with these resources. Then, pick the goal you like most. If you learn it is harder to reach than imagined, be flexible and switch to another goal. Ultimately, your venture may look different than you first imagined, but it may be stronger than you ever thought it could be.

Turn to others to enhance your available resources.

While everyone has more knowledge and resources than they typically are aware of, others can increase their resource bases. Indeed, your network is itself a valuable resource. By talking to others in your environment, you can validate your decisions and perhaps gain their support for and commitment to your venture, thus enhancing your available resource pool.

Consider your resources to limit your investments.

With little knowledge about your market and potential financial returns, making decisions based on your project’s or venture’s expectancy or net present value is hard. Instead of considering future revenues, turn to your resources to assess the maximum you are willing to lose when investing in your project or venture. Set this maximum regarding financials and the time and effort you will invest into a project or your venture. Pull the plug if you have invested this maximum amount of resources without the desired outcome.

Form partnerships.

As a small venture owner, you often have insufficient resources to beat your competitors to the punch. Therefore, consider allying with your enemies. You can share costs, equipment, and office space with other firms in your environment. You can also form distribution and marketing partnerships with large companies that have built these capabilities over the years. By forming partnerships, you can capitalize on resources, knowledge, and competencies you do not have in-house.

6 Simple Rule: If You Want to Capture Fleeting Opportunities, Then Speed up Your Decision-Making

Don’t seek less information; seek more, but make it real-time information.

Although skimping information to speed decision-making is tempting, your decision quality will suffer. To speed up decision-making, you need to use real-time information. Real-time information is information about your venture’s operations in the moment and about your venture’s external environment in the moment. This real-time information is raw and frequently changing, so it can be difficult to interpret. Rely on your intuition to notice and interpret signals of opportunities (or threats) from this real-time information.

Use meetings to generate real-time information.

Although some meetings may be a waste of time, good meetings can help speed up decision-making. Good meetings involve venture members who discuss real-time issues and problems. These discussions provide venture members with a big picture of the venture’s various operations at the current time. These meetings may also reveal how real-time information can be used to take entrepreneurial action.

Build multiple simultaneous alternatives to make choices.

While it might seem quicker to rate alternatives in order and then choose the one that is satisfactory and sufficient, this is not the best decision-making approach. It is better to generate multiple alternatives representing the range and scope of a particular decision and then rank those alternatives. This ranking is quicker than rating, generates greater confidence in the final decision, and identifies a Plan B.

Encourage task conflict to find the best solution.

In meetings discussing real-time information, it is essential to foster task conflict. Conflict over which tasks should be performed and how they should be performed generates information for and enables better decisions. You should give people a voice and actively listen to that voice, but as the decision-maker, you must ultimately make the decision. One scholar (Eisenhardt) calls this “consensus with qualification.” Discuss options within your team and try to reach consensus, but meetings cannot go on forever; ultimately, you have to decide. Venture members are likely to accept this approach so long as you allow them to express their opinions and you listen to those opinions even if you ultimately do not go in the direction they suggest.

Use intuition, perhaps through a counselor.

When dealing with real-time information, intuition may be helpful. Intuition may help you notice anomalies or signals in the real-time information representing opportunities or threats. Your intuition must be based on expertise; otherwise, it could lead you astray. One way to enhance your intuition is to have a counselor who is experienced in your venture’s domain—a trusted advisor.

7 Simple Rule: Decision Analysis Will Only Get You so Far; Tap into Your Inner Child to Ask Questions

Don’t rely on traditional decision analysis when facing high uncertainty.

Decision analysis involves formulating a problem, listing the courses of action to address the problem, systematically assessing those various courses, and choosing the one with the greatest expected value. However, decision analysis is useless in an uncertain environment, such as identifying and pursuing a potential opportunity, because the courses of action are unknown. It is impossible to put probabilities on the different courses of action to calculate their expected value. While decision analysis is effective for making decisions under risk, it is ineffective in the entrepreneurial context of high uncertainty.

Don’t be frightened to ask questions.

Children show no fear in asking questions. They are curious and learn a lot. Don’t be afraid of asking questions because you think it shows others you don’t know the answers. In an uncertain environment, no one knows all the answers. The way to learn is to act and ask questions, gain information, and move forward.

Ask why and why-not questions.

Like a child asking questions, when you ask why and why-not questions, you challenge the status quo and provide an opportunity to learn. Challenging the status quo can be helpful because sometimes people follow procedures without asking whether they can improve them. As an entrepreneur, you will want to challenge the status quo sometimes.

Ask clarifying questions to understand issues.

Clarifying questions help you understand the nature of a problem or issue. You might ask the following: What problem do we face here? How is this problem similar to other problems we have faced? How is this problem different from other problems we have faced? What do you want to achieve in addressing this problem? Your decision-making process is severely undermined without fully understanding your current situation and task.

Ask adjoining questions to explore related aspects.

Ask adjoining questions to explore the boundaries of a current issue. For example, how can this technology be used in a different market? What other products can we generate from this technology? Answering questions like these allows you to broaden your thinking and perhaps generate innovative responses.

Ask funneling questions to dive deeper.

Funneling questions enhance your understanding by helping you move from a more superficial level of a problem or issue to a deeper, richer understanding of the problem or issue. For example, when you ask why three times (“Why? Why? Why?”), the answer to the final “Why?” is likely to provide a better understanding of the underlying root causes of the focal problem or issue.

Ask elevating questions to see the big picture.

When dealing with an issue or a problem, you may get stuck in the weeds by focusing on the concrete details. There are also benefits from taking a big-picture perspective. By asking elevating questions, you can gain a big picture highlighting how the different pieces come together or what pieces are missing in the overall picture.

Ask metacognitive questions to question assumptions.

You may make decisions automatically and thus not have access to the underlying assumptions of your decisions. Asking metacognitive questions forces you to think about how you think. Metacognitive questions include the following: What is the situation I am facing here? How is this situation similar to other situations I have faced? How is this situation different from situations I faced in the past? What different strategies or approaches can be used to address the issue at hand? After choosing and pursuing an approach, asking yourself, “How I am doing?” allows you to reflect on whether you are pursuing the right action. When you make your decision process more explicit (to yourself and/or others), it is easier to question the validity of the assumptions driving your decisions and make adjustments before committing to a course of action.