Which Kind of Entrepreneur are You? - A Visual Exercise

Do you consider yourself an entrepreneur? If you do, are you an analyzer or a doer? Probably both, yes? There are two extremes in the entrepreneur world. There are the people who have great ideas, but research and plan until the idea is rationalized into the “this won’t work” trash bin. These are the “aim, aim, aim,” people. Then there are the extreme doers, who dive into initiatives without proper due diligence. This second group is the “ fire, fire, fire,” group.

Confirmation bias allows an aggressive entrepreneur to rationalize greater expected returns and lower costs of failure. Therefore, they are more likely to pull the trigger sooner in the research process. At the same time, an over-analyzing entrepreneur will rationalize themselves into lower expected returns and greater costs of failure. They will spend much more money on research before going to market.  Let’s look at three graphs showing the decision process of three market actors; the “fire, fire, fire,” the “fire, aim, fire,” and the “aim, aim, aim.” The purple square is the point of indifference.

In large fixed and variable costs industries, the car business for example, somewhere between “Fire! Aim! Fire!” and “Aim. Aim. Aim.” is clearly the way to go. Mistakes are extremely costly. But with the low fixed and variable costs of much of the social technology industry, “fire, aim, fire,” is the way to go. Here are two reasons;

• Low barriers to entry allow anyone and their dog to put business models to the test. Thus speed to market is critical.

• The costs of failure are low enough to allow an entrepreneur to quickly recover and try something else.  This means that you have tons of competing initiatives any any given point.

At the end of the day, the power lies in knowing yourself.

Which type of entrepreneur are you? And is that the winning strategy?

Moral Hazard vs. Business 2.0

Moral hazard can be very hard to isolate. It’s usually hidden in the moments of an employee’s day; one more email to a friend, one more news article, ten minutes to make coffee in the morning.....I hear some people do that.

So how can a manager decrease moral hazard costs?

•Hire more managers to look over employees’ shoulders? This merely shifts the costs of moral hazard to new personnel.

•Implement draconian rules in the workplace? This shifts moral hazard costs to diminished employee engagement, which may be more costly than the original problem.

•Use appropriate Business 2.0 technologies. I’ve been working with Salesforce.com a lot over the past week. The software provides employees with all the information and tools they need to take ownership of their tasks.

Salesforce is just one example of collaborative software that gives employees more ownership over their work. Find the one that suits your organization and give it a shot. Pay attention to employee feedback. To date I haven’t seen a fit-all program for every company and situation, so you’re going to have to tweak it as you go. Good luck!