What makes Entrepreneurs Entrepreneurial?

This is the question raised by Saras Sarasvathy of the University of Washington in her paper. (I came across the paper through an article by John Cook in the Seattle Post-Intelligencer Reporter.)

It is one of the best notes on entrepreneurship that I have read. I have gone through many ups and downs in my 10 years, and for long have believed that an entrepreneur thinks very differently from a professional manager. Sarasvathys paper captures the difference very well. Entrepreneurs think effectually, which is the opposite of causal reasoning.

Causal rationality begins with a pre-determined goal and a given set of means, and seeks to identify the optimal fastest, cheapest, most efficient, etc. alternative to achieve the given goalEffectual reasoning, however, does not begin with a specific goal. Instead, it begins with a given set of means and allows goals to emerge contingently over time from the varied imagination and diverse aspirations of the founders and the people they interact with. While causal thinkers are like great generals seeking to conquer fertile lands (Genghis Khan conquering two thirds of the known world), effectual thinkers are like explorers setting out on voyages into uncharted waters

Its the same process which Ive gone through in 1994 and in 2001 as I thought about what to do in life in both the years. One starts with what one has at hand and then the ideas evolve over time. For Emergic, I said to myself: We have to create something which leverages our base in India and at the same time goes India to other similar markets, creates a software platform like what Microsoft has done, and focuses on value-added aggregation. We may not be able to create the newest technologies, but we can definitely try and integrate them better than anyone else. The information flow on the Internet (a lot of it through weblogs) helps in making the jigsaw puzzle pieces visible; what is important is to put the picture together differently, clearer, faster and better than others.

Some of the other points made by Sarasvathy:

  • For seasoned entrepreneurs, surprises are part of the flora and fauna of the landscape
  • Turn the unexpected into the profitable; Ready-Fire-Aim
  • Causal reasoning is based on the logic, To the extent that we can predict the future, we can control it. Effectual reasoning, however, is based on the logic, To the extent that we can control the future, we do need to predict it.

The last point above is especially true. Entrepreneurs imagine a future which is very different. It is this future that they want to get there first, with a strong belief that it gets created through the strategies of the players.

Lets see how we do with Emergic in the next few years. Whatever happens, youll read about it here!

Three articles I wrote on Entrepreneurship:

  • Entrepreneurship: Entrepreneurship is a lot more than just getting an idea and starting a company. It is the tougher choice, not the easier one. But this is one journey where the joy is as much in the ride as in reaching the destination. (March 12, 2001)

  • Entrepreneurial Learnings: Entrepreneurs do not start to create failures. Yet, only 1 in 100 startups succeeds. If one were to ask entrepreneurs when the start about their chances of success, most would give themselves greater than even odds, even as high as a 60-70% chance of success. The reality though, as we know, is very different. While no one can predict success or failure, it is important to do things right to begin with. (July 16, 2001)

  • Life as an Entrepreneur: An entrepreneur is not necessarily a risk taker, but a risk reducer. Each day at work, the entrepreneur seeks to make decisions to increase the longevity of the business and diminish the risk. And yet, herein lies a paradox. For an entrepreneur, lack of growth (and uncertainty) is like death. When things start becoming too predictable, the challenge ebbs away. It is then time for a new dream, a new vision. (October 15, 2001)

Published by

Rajesh Jain

An Entrepreneur based in Mumbai, India.