Entrepreneurial Thought & Action:

The Mindset of an Entrepreneur

Angelo Santinelli
 Are Entrepreneurs Born or Made?

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 Which Traits Distinguish Entrepreneurs From
Mere Mortal Business Leaders?
• Decisiveness
• Independence
• Visionary
• Confidence
• Risk Taking
• Creativity
• Controlling
• Passionate

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 How Entrepreneurs Think and Act
• Low appetite for risk; adept at reducing
and spreading it
• Often start without a sharply defined goal
or vision, especially the “Old Masters”
• Distrust projections, extrapolations, studies, etc. that purport to predict the
future
• Creates new businesses, but not necessarily original
• Self-confident? No more than anyone else
• Determined? Yes. Over-controlling? Sometimes, but so are others
• Decisive, yes. but then so are others
• Egotistical? Sometimes, and sometimes not
4

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“Most of what you hear about
entrepreneurship is all wrong. It’s
not magic; it’s not mysterious; and
it has nothing to do with genes. It’s
a discipline and, like any discipline,
it can be learned.”
-- Peter F. Drucker
 Behavior or Thinking?
Behavior
Results
& Actions

Behavior of Serial Entrepreneurs often

looks idiosyncratic and contradictory

Behavior
Thinking Results
& Actions

There is strong consistency

in how these serial entrepreneurs think.
And it largely explains their unconventional behavior.

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How Do Entrepreneurs Think
Differently?
The Entrepreneurial MINDSET
 Evolution from Act to Think
Act

At birth,
awareness Learn
is wide open
the world is unknown Act
Experience
Predict
We quickly learn to act to get Learn
what we want by predicting
responses to our actions.
Experience

As we grow and learn, the

world becomes more known.
our awareness narrows and deepens,
and we get better at predicting.

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 The Three Urns

Prediction or Known Risk or Unknown Uncertainty or

Unknowable

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 Do Entrepreneurs Take Greater Risk Than the
Average Person?
Known the ability to determine
future action based on past
recurring patterns

Unknown the assessment of a future

situation in terms of impact
and likelihood

Unknowable a situation in which no

historical data exists to help
the decision-maker. It cannot
be modeled or predicted.

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 OUTCOMES
KNOWN UNKNOWN

Unknown
KNOWN Prediction
or Risk
(Game 1)
(Game 2)
VARIABLES

Unknowabl
Unknown
UNKNOWN

e or
or Risk Uncertainty
(Game 2)
(Game 3)
“We let go the present, which we
have in our power, and look
forward to that which depends
upon chance, and so relinquish a
certainty for uncertainty.”
-- Lucius Annaeus Seneca
 Where Serial Entrepreneurs Like to Play
Existing Market New Market

Opportunities
Existing Manage Adapt are largely found
Product
(incremental) (evolutionary)

It is this activity that ET&A

Suicide
Opportunities
New Extend is concerned
Create are largelywith
made –
(evolutionary) (revolutionary)
Quadrant
A Logic of Creating
Product

unusual in their comfort and

preference for this quadrant

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 What would rational thinking and
behavior look like in the face of
unknowability?
• Take small steps with what you’ve
got at hand
• Limit the risk for each step
• Build off what you actually find,
whether it be good or bad
• Have some friends and/or
resources standing by to help or
rescue
• Make sure you want to act

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 Different Forms of Reasoning

PREDICTION CREATION

Entrepreneurial Thinking
Large

Managerial Analysis
amounts of
information
analyzed to Every input
narrow down (actions,
options, evaluate, information,
and make resources)
decisions. expands the possible
opportunities
available.

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 Puzzle vs. Quilt
Puzzle v. Quilt
Putting together pieces of a puzzle Using fabric to create a quilt

Comparison courtesy of Saras Sarasvathy and her work on Effectuation

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 The end goal is quickly established
and definable

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 Get resources

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 Now it’s time to plan

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 Get organized and set strategy

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 Execute the plan

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 Measure progress

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 Puzzle complete!
Goal achieved!
What next..?
Managerial Thinking..?

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Let’s talk about quilts...
 Creating the Crazy Quilt
Creating the Crazy Quilt
► Use fabric (resource) available
at the time
► Other quilters bring additional
resources
► Resources depend on who you
know
► Not tied much to a plan
► Design emerges over time
► Output depends on human
action
► Every action expands
possibilities

Entrepreneurial Thinking..?
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 Puzzle vs. Quilt
Puzzle v. Quilt
So… are we suggesting that crazy quilt making is what ET&A is all about?
WRONG!

Managerial Thinking Entrepreneurial Thinking

Prediction Reasoning Creation Reasoning
Components of ET&A Logic

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 PREDICTION (puzzles) CREATION (quilts)
Big planning Small actions
Wait until you get what you need Starting with what you have
Expected Return Acceptable loss
Linear Iterative
Optimization Experimentation
Avoid failure at all costs Embrace & leverage failure
Competitive Collaborative
Knowable Unknowable
Get Data – Plan – Act Act – Learn – Build

Plan to Act Act to Learn

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 Prediction Creation
Goal3
Goal Goal
Goal2
Goal

? Stay on
Target

Get back
on Plan

Start
Start Start
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 Prediction Creation
You need both.

You employ both reflexively,

like a second language

You will nearly always use Prediction

in forming Creation steps

You will often use Creation as

subordinate to, and part of, Prediction

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 Entrepreneurial Thought & Action

A method comprising two logics for creating the things

that really matter to you by taking swift, confident, and
smart action when faced with the unknown…

How? Defining activities?

The Method of Entrepreneurial Thought & Action®
A BIG
PICTURE GOAL

OR

Start with A SOLID IDEA

means at hand

“Pay” what
you can afford BUILD ON
to lose (“Investment”) ACT WHAT YOU
LEARN
Enroll others to
join your journey
ACT. LEARN. BUILD.
Source: Schlesinger et al., (2012) Just Start. HBS Press.
 When Do You Stop?

You don’t!
• Reshape opportunity -- Change goals?
Additional resources/talents?
Continue until:
• You don’t want it, and/or
• You exceed your Acceptable Loss,
and/or
• You prove to yourself it cannot be
done or it is not something that is for
you
Source: Saras Sarasvathy

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 Now more than ever, the world needs
entrepreneurs of all kinds
who think and act entrepreneurially—
who can transform
opportunity into reality, and
create social and economic
value for themselves and for others.

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 What’s the big picture of what you want to do?

What do you have right now? Who are you ? What do you know? Whom do you know? What questions do you have and what actions must you take to get the answers?

MEANS ACTION

Who can/should you enroll? What do they offer?

THE IDEA TODAY

ENROLLMENT

What did you learn from your actions? What did you learn
about yourself? What did you learn about your idea? How
has your idea changed?
REFLECTION

What are you willing to invest (and possibly lose) to take your next actions?
Time? Money? Reputation? Other opportunities?

INVEST

Not much 1 2 3 4 5 6 7 8 9 10 A Lot Entrepreneurship Thought & Action Worksheet

© 2015 Heidi Neck, Babson College
Appendix
 Popular View v. Reality
Popular View The Reality
• Discover opportunity • Some do- but others create
the opportunity
• Do library research • Most start with “what are
my capabilities?”
• Financial forecasting & • Not a first step- most start
resource calculations with “what resources do I
have?”
• Analyze competition • Focus on the business
• Write a business plan model and how to
differentiate
• Do feasibility experiments
and build on results

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 Issue Prediction Creation
View
View of Prediction. The futurePrediction.
is a continuation of the past and CreAction. The Creation.
future is contingent on human action.

of
thethe Future
Future can be acceptably The future is a continuation of The future
predicted. Unpredictability itself is seen asis contingent on
a resource.

the past
Control is achieved by accurately and the
predicting can futurebeand Control is achieved human by “doingaction. Unpredictability
the doable” and continually
positioning yourself to catch the wave. Accuracy of transforming current realities into new and unforeseen possibilities
prediction is paramount.acceptably predicted. itself is seen as a resource.
Basis for Should. Do what you ought Want (& Can). Do what you
Basis for Goals. Goals.
Clarity of goals to
drivedo
Control basedisClarity
on what
achieved of goals driveat hand.
byis “best.” Means
want
Control and isatare Hand.
able What
I create to
achieved bydothe“doing
Commitment a resource acquisition
process. What means do I need to assemble to achieve
Goals determine sub-goals
Means
(which
What effects
iscan
can
notand
with means I
Basis for
Commitment aaccurately
resource acquisition
predicting the future effects
have?
the doable” Inecessarily
create
continuallywith
and ActionThink a lot. Act once itand
these goals?
Commitment
process.
and actions.
positioning Thorough
What means todo
yourself StartIactingthe
“best.”)means
transforming Your Idesires,
have? realities
current means
and
BasisActions
and Actions is logical
Think
for Your next step is basedanalysis
catch
need
to achieve
the
to aprecedes
lot.
wave.
the end.
assembleActAccuracy
once
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to
as soon
issoon as it’sStart
itAsof and
into the
logicalnew
as you can.
toacting
takeactual
and as
step soon as
commitments
unforeseen
the next

logical Your next stepyou can.

achievetothese achieve the end As soon ofasyourit’s
on the previous thought
Commitment prediction is paramount. of others
possibilities form the sub-goals.
goals? is based on reality—the results action
Time and/or other resources logical to take the next step
and ActionShould. Do what you ought are
Your toinvested
donext in
whatupfront
step
based on isis“best.”
basedCan onand Want. Actions
Do what andyou want interactions
and are able to dowith(which is
Goals determine sub-goals and actions. Thorough analysis not necessarily “best.”) Your desires, means and the actual
precedes action. information-gathering
the previous thought commitmentsYour others
of othersnext precede
form thestep and
sub-goals. drive the
is based on
entire process of innovation
Time and/or other resources are invested in upfront reality – the results of your
Actions and interactions with others precede and drive the entire
information-gathering Optimizing process of innovation
action
Optimizing
Creative energies are focused
Creative energies are focused on building a venture with virtually
on building a venture with
no resources invested

virtually Satisficing
no resources
invested
Satisficing
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 Issue Prediction Creation
Attitude Toward Expected Return. Calculate upside potential Affordable Loss. Calculate downside potential and pay
Investment and and pursue (risk adjusted) best opportunity no more than you want or can afford to lose
Attitude Toward Expected Return. Calculate Affordable Loss. Calculate
Risk
Investment upside potential and pursue
Risk management involves the careful avoidance downside potential and pay
Risk management involves keeping failures small and
of failure having them happen early, and then building upon them for
and Risk (risk adjusted) best opportunity no more than you want or can
future success.
Risk management involves the afford to lose
Attitude Competition. ConstrainEach stakeholder Partnership.
invests only whatBuild your
he or she can afford to
careful avoidance of failureor is willing to lose
Toward Others task relationships with market together with
Risk management involves
Dealing with
customer and suppliers to customers,
keeping suppliers
failures small and
and
Dealing
Unexpected with Bring
Bring plan back on
what isplan
track
necessary
Redesign Redesign
plans
even
and evenPlan
prospective
the
surprises having them happen early,
and
vision to even
profit from
To
back the onextent
track we can To the
the visionextent
to we can
profit from
Unexpected
Underlying predict the future, we can
competitors
and
createthen building
the future, upon we themdo
Attitude Toward Logic surprises
The likelihood
Competition. Constrain of
task relationships delivering
with Partnershipfor. future
Build yoursuccess.
market together with
Others control it
customer and suppliers to what is necessary customers,not need
suppliers to prospective
and even predict it
on your targets dictates competitorsThe people who come on
The likelihood of delivering on your targets dictates Each stakeholder invests only
whom to bring onwhom
board to bring on boardThe peopleboard who comehelp determine
on board help determinethe
what
goals
the goals and heand
shape or venture
of the she
shapecan afford
and of
its the to
market
or is willing to lose
venture and its market
Underlying Logic To the extent we can predict the To the extent we can create the future, we
future, we can control it do not need to predict it

Sarasvathy, Schlesinger & Kiefer

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