1 Simple Rule: Reflect on Your Personal Goals When Setting an Entrepreneurial Strategy

Ensure your conception of your venture delivers outcomes that are desirable to you.

How you think about an entrepreneurial strategy differs from how you think about a corporate strategy. With a corporate strategy, managers are required to pursue goals that shareholders desire. A venture can represent a vehicle for you to achieve your personal goals. Therefore, you must understand what you want to achieve personally through creating and running your venture. These desires could be to make lots of money, have a lifestyle business, or help people in need.

Consider feasibility, but don’t feel too constrained by it.

In addition to assessing the desirability of your entrepreneurial action, you need to assess its feasibility. Your perception of feasibility is based on your assessment of whether you have the skills, knowledge, and resources to exploit a potential opportunity successfully. However, entrepreneurs are often unconcerned about whether they have all the resources needed for successful exploitation because they believe that if they have identified an attractive opportunity, they can somehow access the resources required to exploit it. Therefore, don’t feel overly constrained by your immediate possession of or access to resources to exploit an opportunity.

Ask yourself if you want to be rich or be the king/queen?

This question highlights the founder’s dilemma—namely, that the more successful you are as an entrepreneur, the more likely you are to be replaced as the manager of your organization. The logic goes as follows: The more successful your venture, the faster it grows, and to fund that growth, you need to raise funds from others. Raising these funds requires diluting your ownership of the venture. As the venture grows, the other owners may push to replace you as the venture’s leader because running a larger organization requires different skills than starting one. Therefore, it is essential to understand whether you want to be rich or be the king/queen because if you want to be the king/queen of your venture, then you will need to make decisions to maintain control, such as growing your venture at a slower pace and not seeking equity funding (at least not so much that you can lose control).

Know your desires and decide to craft a venture that delivers on those desires.

You need to know your desires to inform your decisions about what type of venture to create, what funding to seek, and how to manage growth. For example, being replaced as a founder may cause little concern for those motivated by money because they are likely to receive considerable wealth based on the growth and success of their ventures. However, those motivated by controlling their ventures will feel likely frustrated and disappointed from being replaced.

Build and test your self-knowledge about what you desire from your venturing activities.

This self-knowledge can come from reflecting on your plan for your venture and whether it will produce results consistent with your desires. You can also develop this self-knowledge by engaging in thought experiments—think about different venture outcomes, how you are likely to react to those outcomes, and which outcomes you prefer over others. This information can help you realize your preferences and, therefore, what venture outcomes you desire the most. Gain this self-knowledge earlier because delayed course corrections can be costly or too late.

Frequently pause and ask yourself if your venture is heading in a direction that will deliver the outcomes you desire most.

If you do not know your desires for venturing or do not learn about them as you progress, others who can push or pull your venture in directions that match their goals will decide for you. When others make such decisions, you will likely learn your preferences. However, it may be too late to do anything by then.

2 Simple Rule: Think About Your Venture’s Future and Your Future in It

Write a business plan.

On many occasions, you will be asked to present your business plan. Indeed, business planning can be beneficial for the performance of your firm. On the one hand, it can help you have written documentation, including specific steps, goals, and budgets. This documentation allows you to check if your venture is still on track. Moreover, such a plan is essential to communicate with your stakeholders and to reduce doubts they might have about your venture. On the other hand, the activities connected to business planning, such as engaging in market analysis or detailed forecasting, can enhance your firm’s performance. All these activities facilitate your learning about your firm. Therefore, having a written business plan (outcome) and engaging in business planning (process) can benefit you.

Tap into your team members’ knowledge.

Engaging in business planning can also be helpful because it helps you coordinate your venture. In particular, when you work in a team of cofounders, a business plan can represent a scaffold, bringing together the activities necessary to develop your venture. Your teammates may have different areas of expertise, views, and responsibilities. Based on a business plan, you can combine all these contributions to benefit most from your team members’ unique insights. Thus, planning can support your teamwork and help integrate team members’ diverse contributions to your venture.

Think about yourself in relation to your venture’s future.

Many people will tell you to develop a vision for your venture. This vision will enable you to see your venture’s ideal future development and capture its core values. Furthermore, this vision can inspire your employees and potential investors. Indeed, for a young venture, your vision projects your current venture into the future. Instead of developing a vision for your venture independent of a vision for your future, ask yourself how long you want to stay in your venture. Do you see yourself spending your entire career in this venture as (one of) the owner(s)? Are you considering starting a new venture after some years? Could you imagine being acquired by another company and working for them? The answers to these questions have different implications for how you develop your venture. For example, engaging institutional investors can make it more likely that you will need to exit your venture after some years. Thus, an entrepreneurial vision helps you to develop a notion of yourself and your venture in the future while providing you with clear ideas on how to develop (yourself and your venture) in the present.

3 Simple Rule: When Facing Uncertainty, Look for Ways to Capitalize on Learning (Stage Gates Won’t Cut It)

Be wary of using the stage-gate process (go or no go).

Although the stage-gate process effectively reduces escalation of commitment to a losing project, it assumes that we can set the gates and the criteria for a “go” or “no go” from the beginning. However, for more novel opportunities, you will face greater uncertainty, so setting the stage gates at the beginning becomes difficult (if not impossible) and severely restricts your ability to learn and adapt your entrepreneurial course of action.

Experiment.

Rather than stage gates, think of experiments. Formulate a hypothesis and then seek information to disconfirm that hypothesis. Regardless of whether the hypothesis is supported, the test reveals information you can use to formulate your next step—perhaps your next hypothesis. The process continues and provides opportunities to learn and adapt based on that learning.

Create and manage a portfolio of opportunities.

Think of each opportunity as a probe into an uncertain environment. Each probe reveals information. Use that information to terminate potential opportunities that do not show promise and redeploy resources to those that do show promise. This portfolio approach is consistent with the trial and error of experiments for one potential opportunity but across many potential opportunities.

Be prepared to terminate early and often, but make sure you learn.

When you consider opportunities as the basis for experiments within a portfolio of opportunities, you have an entrepreneurial mindset toward terminating potential opportunities early. Terminating opportunities early as part of a portfolio approach means you have invested less in any one opportunity. Therefore, there are fewer sunk costs to encourage you to escalate your commitment. Even the potential opportunities that do not pan out provide important information. Learn from that information as you move your venture forward.

Capitalize on learning from opportunities that do not show promise.

Rather than terminating an opportunity and forgetting about it, consider whether you should keep many of the same resources accumulated and pivot to a new strategic direction. Can you transfer the progress made so far to another part of your organization that can benefit from it or even sell this progress to someone outside your organization? Even with a complete termination, it is worth considering whether you can salvage some of the value created—don’t throw the baby out with the bath water.

Construct a team to review new ventures.

If you created and developed a particular opportunity, you may not be the right person to assess its progress and whether a change is needed. By creating a team to evaluate the opportunity, there is a greater chance that the decision will be unaffected by biases. You can create a team of people that includes outside experts, others within your venture not involved with the focal project but who could benefit from what has been learned, and/or those responsible for exploiting the potential opportunity at scale.

4 Simple Rule: Simplify Your Rules as the Environment Becomes More Complex and Dynamic

Formulate your entrepreneurial strategy as simple rules.

Simple rules are rules of thumb that guide the actions of venture members but also allow members to operate within these guidelines. In a complex and dynamic environment, simple rules provide some guidance. However, within those broad guardrails, they offer considerable freedom in responding to environmental changes. Strategizing using simple rules allows you to make quick decisions, act, and receive feedback from those actions. Quick decisions and actions in dynamic environments are critical to trial-and-error learning and moving forward.

Embrace the chaos of high-velocity environments.

You will likely face a high-velocity environment because that is where opportunities can be found or constructed. It is best to jump into the chaos to capture fleeting opportunities. You can implement simple rules that offer some guidance despite the incredible uncertainty. Therefore, jump into the chaos and shift flexibly based on your simple rules.

Develop your simple rules based on a few of your key strategic processes.

The simple rules you implement will likely come from your past experiences and reflect your capabilities. Simple rules can be categorized as follows: Generate picking rules to help you choose between alternatives quickly. Generate boundary rules to help you quickly decide whether something should or should not be pursued. Generate process rules to guide you in how tasks should be performed. Generate exit rules to guide your decisions on when and how to exit a project, opportunity, or task.

Formulate between five to seven rules.

People can remember up to seven chunks of information. If there are more than seven simple rules, the simplicity is lost because people may not remember each rule. Venture members must remember all the rules to ensure everyone is on the same page.

5 Simple Rule: Be Aware of and Minimize Your Venture’s Vulnerabilities

Be aware that the information you receive may be heavily filtered.

Although most entrepreneurial ventures do not have a hierarchical structure, those that do may be particularly vulnerable to information being filtered on the way up to you as the boss. Each person at each level may be motivated to provide a rosy picture or ingratiate themselves with the person above them. If you are concerned about these resulting vulnerabilities, you may want to use a flatter organizational structure to reduce information filtering. However, a flatter organizational structure may make your whole organization move more slowly. Another way to avoid filtering information through layers of management is for you to empower lower-level employees to notice and respond to signals of threats.

Connect your venture’s information silos.

A venture has different silos when groups work independently of each other within the venture. These silos can mean that information is not exchanged efficiently or effectively across the venture, negatively impacting its threat response. To overcome silos, you can create cross-functional teams that work together, share information, and perhaps take information back to their siloed groups. You could also engage information brokers. Brokers are people who connect different groups from different silos. These connections can facilitate the exchange of information. Furthermore, information can be shared through informal networks within your venture. You can create these informal networks that cross functions and departments, facilitating the exchange of information for effective threat responses.

When threatened centralize decision-making.

Your venture will respond more effectively to local problems if you decentralize decision-making and empower those closest to where a problem occurs. However, threats to your entire venture may require a more coordinated response and a centralized decision-making process. You may need to be able to switch from decentralized to centralized or centralized to decentralized depending on the localness of threat signals.

Create a venture climate that eliminates politics.

You will likely want to get rid of politics. One way to avoid politics interrupting the flow of information between venture members is to institute a climate of psychological safety. In such a climate, venture members are willing to voice their concerns, including information about possible threats. If politics operate through the formal organizational structure and thereby reinforce power imbalances, you may want to rely on your informal networks to understand your vulnerabilities. You can also rely on experts’ intuition for detecting and responding to vulnerabilities regardless of where the experts are in the organizational structure.

6 Simple Rule: Anticipate and Avoid (or Prepare for) Potential Threats

Recognize signals of potential surprises.

This recognition requires you to be aware of your surroundings and particularly sensitive to signals of threats regardless of whether they are where you expect them to be or elsewhere. It may be challenging to notice signals of threats, but increasing your motivation and knowledge of these potential sources can increase your sensitivity to detecting and interpreting them.

Prioritize signals of potential surprises.

Noticing and interpreting signals of potential surprises is insufficient. It would be best to prioritize those signals so you can better understand what they may mean and formulate a response, starting with the most salient.

Mobilize resources for a response.

Noticing, interpreting, and prioritizing signals of potential threats are important, but they must lead to you taking some action in response. That action could be some form of preparation for the anticipated event such that its negative implications would be reduced if it does occur.

Anticipating and avoiding predictable surprises might be easier said than done.

It makes sense to recommend that you take notice of signals in your environment, prioritize those representing threats, and respond to those potential threats. However, in the face of considerable uncertainty, it can be challenging to determine whether a signal is real or just noise. Err on the side that a signal represents a threat (vis-à-vis noise) when the cost of missing the threat would be substantial.

7 Simple Rule: Meetings Can Help Make Effective Transitions from One Project to the Next

Create and manage debriefing sessions to enhance learning.

A debriefing session is a meeting that typically occurs at the end of a project. The purpose of this meeting is to discuss what went well, what went poorly, what the outcomes were, and what could be done differently in the future to generate a better outcome. A debriefing session also signals that a project is complete and it is time to move on to the next project. Debriefing sessions are critical for learning. Provide a pause between projects so that you can reflect, learn, and prepare to move on. Debriefing sessions are especially beneficial when something goes wrong. They are often called postmortems because the goal is to learn what caused a project’s failure or death.

Create and manage briefing sessions to enhance learning.

A briefing session occurs before a project begins. In such meetings, people discuss what the project goals are, who is to do what, how things will be executed, and what the expected outcomes are. Briefing sessions are vital because they ensure all venture members are on the same page. These briefing sessions lay down the assumptions and criteria for assessing a project after execution.

Create and manage premortem sessions to enhance learning.

Premortems are meetings in which you discuss everything that could go wrong with an upcoming project. By highlighting what could go wrong, you pay attention to signals of these disruptions and are thus better prepared to respond if they occur. Thinking about what could go wrong might also help reduce your overconfidence. As all entrepreneurs, you are probably overconfident in your projects. A premortem can help reduce this overconfidence.

Engage in rigorous debate.

Whether it is a debriefing, briefing, or premortem, these meetings will only work if there is rigorous debate. You must ensure that different viewpoints are revealed and debated to improve the task. This task conflict can help generate better decisions and facilitate learning.

8 Simple Rule: Avoid Firefighting Mode to Improve Long-Run Performance

Solve the most critical problems first based on your goals and strategy.

Sometimes, we are drawn to fix problems that are highly prominent or salient rather than those that are the most important for us to achieve our objectives. For example, we know that in organizations, the squeaky wheel often receives the oil (i.e., the employee who complains the most receives management’s attention). It is essential to recognize and prioritize problems based on their importance for achieving your goals and strategy. Then, you can address the most important ones first.

Address causes rather than quick-fix solutions.

Because you are busy, you may be tempted to develop a band-aid solution for a problem. This approach only addresses the symptoms of the problem, and the cause will soon rear its ugly head. You need to invest the extra time to address the underlying causes of problems rather than simply addressing the symptoms. This approach means you will likely take a hit in the short term (i.e., the symptoms persist for longer) but obtain a long-term gain (i.e., spend less time in firefighting mode). In contrast, continually addressing the symptoms of a problem compounds the problem, severely diminishing your effectiveness as an entrepreneur.

Train people to solve problems.

You have likely been trained in many things, and you have likely trained other people in different tasks and situations. This training needs to be extended to yourself and others to learn how to solve problems effectively. While you cannot predict in advance what those problems will be, you can train people to engage in the problem-solving process to address the underlying causes of the problems they face and to address little problems before they become big problems.

Engage in preventative actions.

Again, you may not be able to predict what problems arise, but some issues are likely to reoccur. Engage in preventative actions that enable you to avoid or minimize a likely problem. Preventive actions allow you to choose when to address an issue so that it does not escalate into a major problem rather than react to a problematic event. Choose the timing of your response to prevent issues escalating into major problems.